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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission File No. 1-2267
THE MEAD CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-0535759
(State of Incorporation) (I.R.S. Employer Identification No.)
MEAD WORLD HEADQUARTERS
COURTHOUSE PLAZA NORTHEAST
DAYTON, OHIO 45463
(Address of principal executive offices)
Registrant's telephone number, including area code: 937-495-6323
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
------------------- ---------------------
Common Shares Without Par Value New York Stock Exchange
and Common Share Purchase Rights Chicago Stock Exchange
Pacific Exchange
-------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __.
-------------------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
-------------------------
As of January 23, 1998, the aggregate market value of the voting shares
held by non-affiliates of the Registrant was approximately $3,309,766,961
determined by multiplying the highest selling price of a Common Share on the New
York Stock Exchange--Composite Transactions Tape on such date, times the amount
by which the total shares outstanding exceeded the shares beneficially owned by
directors and executive officers of the Registrant. Such determination shall
not, however, be deemed to be an admission that any person is an "affiliate" as
defined in Rule 405 under the Securities Act of 1933.
The number of Common Shares outstanding at February 24, 1998 was
103,912,400.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held on April 23, 1998, are incorporated by
reference in Part III; definitive copies of said Proxy Statement were filed with
the Securities and Exchange Commission on March 10, 1998.
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PART I
Item 1. Business
Mead manufactures and sells paper, pulp, paperboard, lumber and other wood
products. Mead also manufactures and distributes school and office supplies, and
distributes paper and other industrial supplies.
Mead was incorporated in 1930 under the laws of the state of Ohio as the
outgrowth of a paper manufacturing business founded in 1846, and has its
principal executive offices at Mead World Headquarters, Courthouse Plaza
Northeast, Dayton, Ohio 45463, telephone (937) 495-6323. Except as otherwise
indicated by the context, the terms "Company" or "Mead" as used herein refer to
The Mead Corporation and its subsidiaries.
Segment Information
Segment information is also included in Note R on pages 49-50.
Paper
Mead's Fine Paper division manufactures coated and uncoated papers for
commercial printing; form bond and carbonless paper and papers for conversion by
others into business forms; cut-size copier paper; and other uncoated papers for
conversion by others into such products as greeting cards. Mead's Publishing
Paper division manufactures web coated offset paper for use by book, magazine,
catalog and advertising brochure publishers; and, specialty papers through its
Oxford Specialty Papers business unit. The Fine Paper division sells papers
manufactured by both divisions nationwide, both on a direct basis to printers
and converters and through paper merchants, including merchants owned by Mead.
Additionally, Escanaba Paper Company and Mead Oxford Corporation, wholly-owned
subsidiaries, sell output to the Publishing Paper division of Mead, which
resells the paper directly to publishers and printers. The pulp mills adjacent
to the paper mills of these divisions and the pulp mill owned by an affiliate
(see "Forest Products Affiliates") produce virtually all of the pulp required
for use in these paper mills.
The Company's Gilbert Paper division manufactures cotton content and
premium sulfite paper and premium recycled papers, including bond, banknote,
text and cover, and papers for ink jet and laser printers, and sells these
products principally through paper merchants, including merchants owned by Mead,
as well as retail stores.
Mead's Specialty Paper division manufactures and sells, primarily through
its own sales force, decorative and overlay laminating papers. This division
also manufactures and sells specialty papers used in industrial applications.
The division's principal customers include manufacturers that serve the building
materials, automotive and furniture industries.
The Mead Pulp Sales division sells worldwide market pulp manufactured by
Northwood Pulp and Timber Ltd. of Canada, Great Lakes Pulp and Fibre, Inc. in
Menominee, Michigan, and Mead Publishing Paper of Escanaba, Michigan and
Rumford, Maine. Mead Pulp Sales also represents MODO Paper AB, of Sweden, and
Votorantim Celulose e Papel, of Brazil, for the sale of pulp in North America.
Mead Pulp Sales also sells through its affiliates International Fibre Sales in
Europe and Pulp Asia Ltd. in Japan, and through independent agents in all major
pulp consuming areas of the world.
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Packaging and Paperboard
The Mead Packaging division designs and produces multiple packaging and
packaging systems primarily for the beverage take-home market. The division
operates through a network of subsidiaries, affiliates and licensees in the
United States, Canada, Europe, the Far East, Mexico and Latin America. Demand
for most beverage packaging is seasonal with inventories being built from
November to March for the peak soft drink and beer sales of April through
October.
Mead Coated Board, Inc., a wholly-owned subsidiary of Mead, operates a
coated paperboard mill near Phenix City, Alabama, sawmills in Cottonton, Alabama
and Greenville, Georgia, and owns various timberlands in Alabama and Georgia.
The subsidiary is engaged primarily in the manufacture of coated natural kraft
products used by the beverage packaging industry and by manufacturers of folding
cartons for soaps, food products, hardware and apparel. The entire output of the
Phenix City mill is sold by Mead Coated Board, Inc. to the Mead Coated Board
division. The division sells approximately 50% of the mill output to the Mead
Packaging division. The remainder is sold to a wide range of domestic and
foreign carton converters. The division's customers are most concerned about
physical strength properties of the paperboard and its quality for
reprographics.
The Mead Containerboard division sells standard and special purpose
corrugated shipping containers manufactured at eight converting plants located
in the Midwestern and Southeastern regions of the United States from raw
materials received from outside sources and from the division's Stevenson,
Alabama corrugating medium mill. The division also sells corrugating medium from
the Stevenson mill to unaffiliated manufacturers of containers.
Forest Products Affiliates
Northwood Forest Industries Ltd. ("Northwood"), which is owned 50% by Mead
and 50% by Noranda Forest Inc. ("Noranda"), manufactures bleached softwood kraft
pulp at its 1,700 short ton-per-day mill in Prince George, British Columbia. The
principal markets for its pulp are in North America, western Europe and the Far
East. Lumber and plywood products are also produced at Northwood's five sawmills
and its plywood plant in British Columbia. Northwood has the annual capacity to
produce over one billion board feet of lumber and 170 million square feet of
plywood (3/8-inch basis). Northwood's solid wood products operations provide
about 750,000 tons (Metric ODT) of wood chips or 65% of the fiber requirements
for the pulp mill. A wood preserving operation also treats lumber and custom
treats plywood from other sources.
Northwood Panelboard Company ("Panelboard"), a partnership owned 50% by
Mead and 50% by Noranda Forest, located in Bemidji, Minnesota, has the annual
capacity to produce approximately 390 million square feet of oriented structural
board ("OSB") (3/8-inch basis).
All of the wood products produced by Northwood and Panelboard are sold
through a subsidiary of Noranda primarily in North America with approximately
15% sold to export markets. All of the market pulp produced by Northwood is sold
by Mead Pulp Sales. Mead has a long-term contract with Northwood pursuant to
which Mead is entitled to purchase such of Northwood's pulp production as it may
require.
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Timberlands
Mead obtains most of its wood requirements from private contractors or
suppliers and from Company-owned timberlands. The annual wood requirement for
Mead's wholly-owned operations in 1997 was approximately 8,700,000 tons, of
which approximately 24.1% was obtained from timberlands owned or leased by Mead.
The annual wood requirement for Mead's wholly-owned operations expected in 1998
will be approximately the same.
The approximate annual requirement of wood for both Northwood and
Panelboard is 6,100,000 tons. At Northwood, the majority of wood is obtained
from Crown Lands through various types of cutting rights which are terminable or
renegotiable at the government's initiative and from third parties having
similar cutting rights. At Panelboard, wood is obtained from both private
landowners and various governmental sources (federal, state and county).
As of December 31, 1997, Mead owned or controlled approximately 2,050,000
acres of timberlands in the United States. Approximately 107,000 acres of land
are controlled by Mead under long-term agreements which expire at different
times through 2027.
Distribution and School and Office Products
Zellerbach, Mead's distribution division, is a national distributor of a
full line of printing papers, packaging materials and equipment, and industrial
supplies. These products are distributed through a network of wholesale
locations and printer-supply centers. The business units carry inventory or
order products against sales orders, depending upon the product and service
requirements. Zellerbach distributes not only products of Mead, but also those
of several hundred other manufacturers. In the distribution of paper and other
products, competing merchants frequently distribute products of the same
supplier.
The Mead School and Office Products division manufactures and distributes a
line of school supplies (including filler paper, wirebound notebooks, portfolios
and looseleaf binders), a line of office supply products (including envelopes,
filing supplies and vinyl folders and binders), and computer accessories
(including paper based products for computer use, laptop computer cases and
multi-media storage devices). The division's products are distributed primarily
through mass market retailers, office supply superstores and warehouse clubs.
The school supply segment is highly seasonal with inventories beginning to be
built in the winter and spring for shipment in late spring and summer, while the
home and office products and computer accessories portion of the business is
generally less seasonal in nature. Manufacturing is done in six facilities and
distributed from seven distribution centers in the United States.
Internationally, one manufacturing facility and distribution center is located
in Canada and one manufacturing facility is located in Mexico.
International Sales and Operations
Outside of the United States and Canada, Mead and its affiliates operate a
paperboard sheeting facility and are engaged in the manufacture of multiple
systems and folding carton packaging in Europe, Asia and Latin America. Mead
also has sales subsidiaries, affiliates, agents or distributors in a number of
countries in Europe, Asia, Australia and Latin America.
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Competition
Mead competes on a worldwide basis in its product lines, and the markets in
which Mead sells its products are highly competitive. Several factors affect
Mead's competitive position, including quality, technology, product design,
customer service, price and cost. The Fine Paper and Publishing Paper divisions
compete with numerous other major paper manufacturers. The Specialty division
competes primarily with North American and European based decorative laminating
papermakers. The Gilbert division competes with a number of other manufacturers
of premium cotton, sulfite and recycled papers. The Coated Board division
competes with other boxboard producers, including manufacturers of all types of
coated recycled boxboard, coated solid bleached sulfate and folding boxboard.
The Packaging division competes with a number of carton suppliers and machine
manufacturers and other global systems-based multiple packaging suppliers, as
well as suppliers of other non-boxboard packaging systems. The Containerboard
division competes primarily with container producers, and corrugating and medium
producers in several market areas in the United States. The Zellerbach division
competes with national and regional merchant chains, as well as independent
local merchants. The School and Office Products division competes with national
and regional converters, some with broad product offerings and others focused on
narrow product segments.
Employee and Labor Relations
Mead employs approximately 14,400 persons within the United States and
2,100 persons outside the United States. Approximately 7,600 are production,
maintenance and clerical employees represented by labor unions. Mead's 50% owned
company, Northwood, employs approximately 2,300 persons. Mead and Northwood
together have approximately 50 labor agreements currently in force of which
approximately one-fifth are subject to renegotiation each year.
Mead's employee relation policies are based on mutual confidence and trust.
All Mead labor contract negotiations during 1997 were concluded without any
strikes.
Trademarks, Trade Names, Patents, and Franchises
Mead has a large number of trademarks and trade names under which it
conducts its business, including "Mead," "Mead Papers," "Mead Packaging,"
"Zellerbach," "Z," "Montag," "M and Design," "Trans/Rite," "Trans/Tab,"
"Duodozen," "Cluster-Pak," "Aria," "Cambridge," "Apex," "Info," "Trapper,"
"Trapper Keeper," "Neatbook," "Gilbert," "Oxford," "Gilcrest," "OPAS,"
"Signature," "CNK," "Five Star," "First Gear," "Neu-Tech," "Esse," "Organizer,"
"Spiral," "sig-NATURE," "Management Series," "Duraline," "Appli," "Duoply,"
"Techmates," "Hilroy," "CD Escort," "Mead Mind Meld," "Fill the Void," "Blue
Horse," "Mailbox Collection," "Super Shades," "Matrix," "Jet-Tech," "Voice,"
"PressStock," "Reliable," "Prism," "Chief," "Excel," "Mead Expression,"
"Moistrite," "PTO," "Publishers Matte," "Vision," and many others. Mead also has
a great number and variety of patents, patent rights and licenses relating to
its business. While, in the aggregate, the foregoing are of material importance
to Mead's business, the loss of any one or any related group of such
intellectual property rights would not have a material adverse effect on the
business of Mead.
Environmental Laws and Regulations
Mead's operations are subject to extensive regulation by various federal,
state, provincial and local environmental control statutes and regulations.
These regulations impose effluent and emission limitations, waste disposal and
other requirements upon the operations of Mead, and require Mead to obtain and
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operate in compliance with the conditions of permits and similar authorizations
from the appropriate governmental authorities. Mead has obtained, has
applications pending, or is making application for such permits and
authorizations. Mead does not anticipate that compliance with such statutes and
regulations will have a material adverse effect on its competitive position
since its competitors are subject to the same statutes and regulations to a
relatively similar degree.
During the past five years (January 1, 1993 - December 31, 1997), Mead
(including its share of Northwood expenditures) constructed air and water
pollution control and other environmental facilities at a cost of approximately
$127.5 million. Environmental expenditures in the future are anticipated to
include long-term projects for maintenance and upgrade of wastewater treatment
plants, process modifications and air emission controls. Due to changes in
environmental laws and regulations, the application of such laws and regulations
and changes in environmental control technology, it is not possible for Mead to
predict with certainty the amount of capital expenditures to be incurred for
environmental purposes. Taking these uncertainties into account, Mead estimates
that in the next five years it may be required to incur expenditures of
approximately $110 million.
New regulations under the Clean Air Act and Clean Water Act were announced
by the United States Environmental Protection Agency ("USEPA") in November 1997
and are scheduled for publication in the Federal Register in early 1998. These
regulations are designed to reduce air and water discharges of specific
substances from pulp and paper mills in the United States, and to require
installation of additional pollution control equipment based on best available
technology. Mead has included in its capital spending plans amounts necessary to
comply with the new regulations.
The USEPA issued proposed regulations implementing the Federal Great Lakes
Critical Programs Act of 1990 in 1993, which was enacted as a result of an
agreement between the United States and Canada in the 1970s to seek greater
consistency for water quality standards among the Great Lakes states (the Great
Lakes Initiative or "GLI"). The USEPA issued final regulations in 1995 which
establish minimum water quality criteria, anti-degradation policies and
implementation procedures. Various Great Lakes states, including Michigan and
Ohio, have adopted regulations consistent with the federal GLI regulations. Mead
does not believe that any significant additional capital expenditures beyond
expenditures stated above will be necessary in the next five years at Mead's
Escanaba facility to comply with the requirements of the Michigan GLI
regulations as finally adopted. The State of Ohio has determined at this time
that it will not apply GLI regulations to facilities discharging into the Ohio
River Basin. Mead's Chillicothe, Ohio facility discharges into the Ohio River
Basin.
In 1997, USEPA adopted new National Ambient Air Quality Standards ("NAAQS")
for ozone and particulate matter. The new standards do not create limits or
restrictions directly on air pollution sources. Rather, each state will be
required to review, and if necessary revise, its current plan for achieving and
maintaining compliance with NAAQS throughout the state. Mead does not anticipate
that the promulgation of these new standards will have a material adverse effect
on its competitive position since its competitors are subject to the standards
to a relatively similar degree.
Mead believes that most of the earlier expenditures for environmental
control have been beneficial. However, Mead and the trade associations of which
Mead is a member have challenged and will continue to challenge in
administrative and judicial proceedings, federal and state environmental control
regulations which they do not believe are beneficial to the environment or the
public. In some instances, Mead and those trade associations may also seek
legislative remedies to correct unnecessary or impractical requirements of
existing laws.
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Dioxin currently cannot be detected under normal operating conditions in
treated effluents from Mead's three U. S. bleached paper mills. Taking into
account current regulatory efforts and the process and control equipment
installed at Mead's bleached paper mills, management does not believe that any
required actions in response to dioxin concerns will have a material adverse
effect on the Company.
Mead has been notified by the USEPA or by various state or local
governments that it may be liable under federal environmental laws or under
applicable state or local laws with respect to the cleanup of hazardous
substances at 6 sites currently operated or used by Mead. Mead is also currently
named as a potentially responsible party ("PRP"), or has received third party
requests for contribution under federal, state or local laws with respect to at
least 19 sites sold by Mead over many years or owned by contractors used by Mead
for disposal purposes. Some of these proceedings are described in more detail in
Part I, Item 3, "Legal Proceedings." There are other former Mead facilities and
those of contractors which may contain contamination or which may have
contributed to potential superfund sites but for which Mead has not received any
notice or claim. Mead's potential liability for all these sites will depend upon
several factors, including the extent of contamination, the method of
remediation, insurance coverage and contribution by other PRPs. Although the
costs that Mead may be required to pay for remediation of all these owned and
unowned sites are not certain at this time, Mead has established reserves of
approximately $38 million relating to current environmental litigation and
proceedings which it believes are probable and reasonably estimable. These
reserves were established after considering the number of other PRPs, their
ability to pay their portion of the costs, the volumetric amount, if any, of
Mead's contribution, and other factors. Expenses to be charged to this reserve
are not included in the anticipated capital expenditures for the next five years
discussed above. Mead believes that it is reasonably possible that costs
associated with these owned and unowned sites may exceed current reserves by
amounts that may prove insignificant or by as much as approximately $45 million.
This estimate of the range of reasonably possible additional costs is less
certain than the estimate upon which reserves are based.
Item 2. Properties
Mead considers that its facilities are suitable and adequate for the
operations involved. With the exception of certain warehouses, general offices
and timberlands which are leased and certain warehouses which are owned or
leased and managed by third parties for Zellerbach, Mead owns all of the
properties described herein. For additional information regarding leases see
Note O on page 47. For additional information concerning Mead's timberlands and
properties of affiliates, see Part 1, Item 1. "Business".
Mead's corporate headquarters are in Dayton, Ohio and its principal
facilities are at the locations listed below:
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<TABLE>
<CAPTION>
Business Unit Facility Locations Principal Use
- ------------- ------------------ -------------
<S> <C> <C>
Fine Paper Chillicothe, Ohio Pulp mill, coated, uncoated
and carbonless paper mill
Indianapolis, Indiana Carbonless coating facility
Publishing Paper Escanaba, Michigan Pulp mill, coated paper mill
Rumford, Maine Pulp mill, coated, uncoated and
specialty paper mill
Gilbert Paper Menasha, Wisconsin Cotton and recycled content
and specialty paper mill
Specialty Paper South Lee, Massachusetts Decorative laminating and
specialty paper mill
Packaging Anniston, Alabama Paperboard packaging, multiple
Lanett, Alabama packaging systems for beverage
Atlanta, Georgia and food, packaging machinery
Buena Park, California manufacturing or repair
Chicago, Illinois facilities and ink manufacture
Ajax, Ontario, Canada
Chateauroux, France
Trento, Italy
Roosendaal, The Netherlands
Trier-Ehrang, Germany
Bristol, England
Shimada, Japan
Bilbao, Spain
Containerboard 8 plants within the United Corrugated container
States in midwest and manufacturing facilities
southern regions
Stevenson, Alabama Corrugating medium mill
Coated Board Phenix City, Alabama Coated paperboard mill, sheeting
Venlo, The Netherlands facilities and sawmills
Cottonton, Alabama
Greenville, Georgia
School and Office 6 manufacturing and 7 Home, office and school products
Products distribution locations manufacturing and distribution facilities
throughout the United
States, one manufacturing
and distribution location
in Toronto, Ontario, Canada
and one manufacturing
location in Nuevo Laredo,
Mexico
</TABLE>
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Zellerbach 39 wholesale locations Paper, packaging equipment and
throughout the United supplies distribution facilities
States; one converting
operation; 42 printer-
supply centers; and 5
third party warehouses
8
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Item 3. Legal Proceedings
In September 1993 Mead signed a Consent Order with USEPA under Section
3008(h) of the Resource Conservation and Recovery Act with respect to a
landfill (the Storage Depot Site) owned and operated by Mead Fine Paper
division's Chillicothe, Ohio, mill. Under the terms of that Order, Mead
has performed investigative and remedial work designed to control releases
of hazardous substances from the Site. USEPA has approved the work
performed by Mead, including a long-term operation and monitoring program
for the Site.
In March 1991, Mead was served with a complaint entitled Beazer East
-----------
Inc. v. The Mead Corporation, C.A. No. 91-0408, filed in the United States
----------------------------
District Court for the Western District of Pennsylvania. The complaint
alleges that Mead is liable to Beazer for contribution for past and future
environmental remediation costs to be incurred by Beazer as a result of any
corrective measures required at the Woodward Facility located in Dolomite,
Alabama. Mead acquired the Woodward Facility by merger in 1968, and in
1974 sold it to Koppers, Inc., which was later acquired by Beazer. In May,
1997, the magistrate judge in the proceeding held a hearing to determine
the appropriate equitable factors to be applied in an allocation of
liability among the parties. No rulings on issues raised in the hearing
have been made, and proceedings continue in court regarding Beazer's
contribution claim. Although the extent of contamination and the method of
remediation to be required are not known at this time, based on information
currently available to Mead, after considering established reserves, rights
to contribution and potential insurance coverage, Mead does not expect this
proceeding will have a material adverse effect on the financial condition
or results of operations of the Company.
The Tennessee Department of Environment and Conservation ("TDEC")
advised Mead in September 1991 that a closed coke manufacturing facility
located in Chattanooga, Tennessee (the "Coke Plant Site") is a hazardous
substance site within the meaning of the Tennessee Hazardous Waste
Management Act, and that Mead may be a potentially responsible or liable
party. In June 1994 Mead agreed with TDEC to commence a removal action at
the closed coke plant site to permit demolition of structures, removal of
asbestos, control of surface water ponding and repairs to fencing. The
removal action was completed by December 1994. Mead is engaged in
discussions with TDEC concerning the scope of any additional remedial
actions that may be required for the site. The site is currently being
used by USEPA as a staging area as part of its removal action at
Chattanooga Creek (see discussion below). The coke plant was owned by the
Defense Plant Corporation during World War II and sold by the War Assets
Administration in 1946. Woodward Iron Company, formerly a division of
Mead, acquired the coke plant in 1964, and Mead sold the coke plant site to
third parties in 1974. Although the extent of contamination and the
possible methods of remediation are not known at this time, based on
information currently available to Mead, after considering established
reserves, rights to contribution and potential insurance coverage, Mead
does not believe that this proceeding will have a material adverse effect
on the financial condition or results of operations of the Company.
In June 1996, USEPA announced plans to undertake an interim removal
action involving the excavation and treatment/disposal of bulk tar deposits
located in or near the Chattanooga Creek and certain waste piles located
near the Coke Plant Site. Costs of the proposed removal action were
estimated by USEPA at the time to be approximately $5.1 million. In July
1996, several PRPs, including Mead and the U.S. Department of Defense,
received special notice letters from USEPA advising them of their potential
liability for the removal action. In December 1996, USEPA issued Unilateral
Administrative Orders under Section 106 of CERCLA to Mead and two other
private parties. In January 1997, Mead indicated its intent to not comply
with the 106 Order. Preliminary analyses by USEPA have indicated that
dumping in Chattanooga Creek occurred when the coke plant was doubled in
size to meet World War II government requirements. A party who, without
sufficient cause, refuses to comply with an order issued under Section 106
of CERCLA may be
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subject to fines of up to $27,500 per day and punitive damages in an amount
up to three times the costs incurred by the USEPA as a result of the
failure to comply with such order. Mead believes, based on its review of
the facts and the law applicable to the matter, including the absence of
findings by the USEPA, that it had sufficient cause for its decision not to
comply with the 106 Order. However, if the USEPA decides to bring an
enforcement action against Mead as a result of its failure to comply with
the 106 Order, there can be no assurance as to the outcome of such action.
In the summer of 1997, USEPA hired contractors and commenced implementation
of the interim removal action. More contamination than expected was
discovered and excavated. Costs of the removal action have been revised by
USEPA to be approximately $10 million. USEPA expects the removal action to
continue through at least the 2nd quarter of 1998.
Mead filed a Complaint in the Circuit Court for Jefferson County,
Alabama (Case No. CV9705117) against a number of insurance companies who
had provided insurance to the Woodward Iron Company and/or Mead facilities
operated under the former Industrial Products division. The Complaint
seeks a declaratory judgment and damages for the insurers' failure to
provide a defense and coverage for claims in Beazer East Inc., the Coke
Plant Site and Chattanooga Creek proceedings.
Additional information is included in Part I, Item 1, "Business--
Environmental Laws and Regulations," and Note P on page 48.
Mead is involved in various other litigation and administrative
proceedings arising in the normal course of business, which, in the opinion
of management, after considering established reserves, will not have a
material adverse effect on the financial condition, liquidity or results of
operations of Mead.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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Executive Officers of the Company
The Executive Officers of Mead as of February 1, 1998, their ages, their
positions and offices with Mead, and the principal occupation (unless otherwise
stated, position is with Mead) of such Executive Officers during the past five
years are as follows:
<TABLE>
<CAPTION>
Name Age Position and Offices
---- --- --------------------
<S> <C> <C>
William R. Graber 54 Vice President and Chief Financial Officer
since December 1993; prior to that Vice
President and Treasurer since April 1993; prior
to that Treasurer since September 1992.
Elias M. Karter 57 Executive Vice President since April, 1996;
prior to that Vice President, Operating Officer
since July 1994; prior to that Vice President,
Manufacturing & Technology.
Raymond W. Lane 49 Executive Vice President since April, 1996;
prior to that Vice President, Operating Officer
since July 1994; prior to that President of
Mead School and Office Products Division.
Cynthia A. Niekamp 38 Vice President, Strategy and Planning since
1995; prior to that Managing Director, TRW
Transportation System since 1993.
Wallace O. Nugent 59 Vice President, Purchasing and Logistics.
Thomas E. Palmer 58 Vice President, General Counsel and Secretary
since November 1996; prior to that Vice
President and General Counsel since September
1991.
A. Robert Rosenberger 53 Vice President, Human Resources since June
1997; prior to that Vice President of Human
Resources of Mead Packaging Division from
August 1994; prior to that Vice President of
Human Resources of Mead Containerboard Division
from February 1991.
Jerome F. Tatar 51 Director; Chairman of the Board, Chief
Executive Officer and President since November
1997; prior to that President and Chief
Operating Officer since April 1996; prior to
that Vice President, Operating Officer since
July 1994; prior to that President of Mead Fine
Paper Division.
</TABLE>
All Executive Officers of Mead are elected annually by the Board of Directors.
11
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PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
Mead's Common Shares are listed on the New York, Chicago and Pacific Stock
Exchanges, trading under the symbol "MEA." Information on market prices and
dividends is set forth below:
MARKET PRICES PER COMMON SHARE/(1)/
- ------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
First quarter $30.875 $27.187 $28.812 $24.500
Second quarter 33.812 24.875 28.812 25.437
Third quarter 37.687 30.875 30.687 24.250
Fourth quarter 37.468 27.187 29.687 27.250
</TABLE>
DIVIDENDS PAID PER COMMON SHARE/(1)/
- -------------------------------
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
First quarter $.15 $.14
Second quarter .15 .15
Third quarter .15 .15
Fourth quarter .16 .15
---- ----
Year $.61 $.59
==== ==== ====
</TABLE>
The number of Common shareowners of record as of February 24, 1998, was
37,122. See Note H on page 39 for information regarding the amount of retained
earnings available for dividends.
(1) Market prices and dividends reported have been adjusted to give
retroactive effect resulting from a two-for-one stock split
distributed December 1, 1997.
12
<PAGE>
Item 6. Selected Financial Data
Five-Year Data on Operations, Liquidity, Financial Condition and Capital
Resources
(All dollar amounts in millions, except per share amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Year Ended December 31 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations:
Net sales $5,077.4 $4,706.5 $5,179.4 $4,557.5 $4,239.0
Earnings from continuing operations 150.1 189.9 342.5 89.6 95.7
Earnings per common share from
continuing operations-assuming dilution 1.41 1.79 3.10 0.76 0.80
Liquidity:
Working capital 502.8 431.6 545.5 806.5 380.3
Current ratio 1.7 1.6 1.7 1.7 1.6
Assets:
Property, plant and equipment-net 3,309.8 3,120.4 2,364.1 2,313.9 2,239.6
Total assets 5,229.7 4,985.9 4,372.8 4,862.6 4,073.3
Capital:
Borrowed capital-long-term debt 1,428.0 1,239.7 694.8 957.7 1,360.0
Equity capital 2,288.5 2,246.4 2,160.2 2,182.6 1,578.0
-------- -------- -------- -------- --------
Total capital $3,716.5 $3,486.1 $2,855.0 $3,140.3 $2,938.0
Borrowed capital as a
percent of total capital 38.4% 35.6% 24.3% 30.5% 46.3%
Cash dividends per common share $0.61 $0.59 $0.55 $0.50 $0.50
</TABLE>
13
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
REVIEW OF OPERATIONS
--------------------
OVERVIEW OF 1997
Sales volume increased in 1997 for many of Mead's major products. Earnings
were lower on weaker pricing, especially for corrugating medium, and on
poor operating results in the distribution business. Improvements in
productivity at many of Mead's operations partially offset the negative
impact on earnings of lower prices.
Sales revenue of $5.077 billion increased from $4.707 billion in 1996
as a result of the inclusion of a full year of sales at the Rumford coated
and specialty paper mill acquired in late 1996 and the growth in sales
volume in corrugating medium from the expanded Stevenson mill. Net
earnings of $150.1 million were 23% below 1996.
Within Mead's paper operations, sales volume of coated papers
increased with higher production and shipments at the Publishing Paper
division mills in Escanaba, Michigan, and Rumford, Maine. The Rumford mill
ran at full production levels under the first full year of Mead's
ownership, a significant increase over the mill's operating rates in 1996.
Demand for coated papers was strong for much of the year, though pricing
did not improve until late in the year. Sales for some specialty papers
increased, while sales of carbonless copy papers were slightly lower.
In packaging and paperboard operations, weaker prices for corrugating
medium in the Containerboard division led to a decline in operating
results, despite much higher volumes. At the Coated Board division,
earnings were slightly lower than the prior year as higher shipments of
coated paperboard and strong operations were offset by weaker pricing.
Sales and earnings at Mead Packaging continued to grow worldwide as a
result of stronger markets and improved operating performance.
Operating results for Mead's distribution business, Zellerbach,
declined as sales volume dropped early in the year before recovering
somewhat in the second half, and selling costs increased as the division
moved to strengthen its sales organization. For the School and Office
Products division, earnings were even with the prior year as sales volume
increases were offset by somewhat lower selling prices.
<TABLE>
<CAPTION>
Earnings Per Share Analysis
---------------------------------------------------------------
1997 1996 1995
---------------------------------------------------------------
<S> <C> <C> <C>
Continuing operation $1.41 $1.79 $3.10
Discontinued operations .05 .07
---------------------------------------------------------------
Net earnings - assuming dilution $1.41 $1.84 $3.17
---------------------------------------------------------------
</TABLE>
In 1997, the company approved a 2-for-1 stock split distributed December 1.
In 1996, the company realized a gain of $5.4 million ($.05 per share)
resulting from the sale of the previously discontinued imaging business.
The company also completed the sale of its previously discontinued
reinsurance business with no impact on earnings.
14
<PAGE>
In 1995, the company realized a gain of $7.5 million ($.07 per share)
resulting from adjustments related to the sale of its Electronic Publishing
segment in 1994.
PAPER
<TABLE>
<CAPTION>
-------------------------------------------------------------
Segment Summary (in millions) 1997 1996 1995
-------------------------------------------------------------
<S> <C> <C> <C>
Sales $1,576.1 $1,251.3 $1,243.3
Earnings before
income taxes 194.5 193.8 330.8
-------------------------------------------------------------
</TABLE>
Sales in Mead's paper segment increased 26% over 1996, primarily as a
result of a full year of sales volume from the Rumford, Maine, coated and
specialty paper mill acquired in November 1996. Excluding the sales of the
Rumford mill, 1997 sales for the Paper segment were slightly below last
year. Sales volume increased in 1997 in coated and uncoated papers, but
prices continued to decline from 1995 and 1996 levels in most grades.
Excluding the earnings of the Rumford Mill, 1997 earnings for the segment
were below 1996.
Demand for coated and uncoated paper had weakened in mid-1995 as
customers worked down inventories built during the previous year. By late
1996, customer order rates improved and continued to strengthen throughout
1997. However, prices for coated and uncoated papers did not strengthen
until after mid-year 1997. Average prices for coated, uncoated and
carbonless papers were lower in 1997 than the previous two years. For
example, average selling prices for coated publishing grades were down
about 5% from 1996 and more than 20% from 1995. By the third quarter of
1997, prices for coated groundwood publishing grades showed some
improvement, and additional price increases were announced for the first
quarter of 1998.
Mead's mills operated well in 1997 and continued to improve
productivity by managing costs, increasing output and enhancing product
mix. Production increased in coated, uncoated and specialty papers over
1996 and 1995. Mill inventories decreased significantly from prior year
levels as a result of generally strong shipments.
In 1996, sales revenue increased slightly over 1995 on higher sales
volume. However, earnings declined sharply from 1995 as a result of much
lower selling prices for coated and uncoated papers.
Mead Publishing Paper
- ---------------------
The Publishing Paper division produces coated papers for book and magazine
publishers and for catalog and commercial printers at its mills in
Escanaba, Michigan, and Rumford, Maine. It also produces specialty papers
and some uncoated papers at its Rumford mill.
Division sales revenue increased significantly in 1997 with the
addition of the Rumford mill. Sales volume was strong throughout the year
at both mills; 8% ahead of prior year at Escanaba; and, significantly
stronger at Rumford during the first year of Mead's ownership compared to
the prior year. Despite much higher volumes, division earnings were about
even with 1996 as a result of lower selling prices for coated papers.
Excluding the operations of the acquired mill, earnings were lower than in
1996 and 1995.
15
<PAGE>
Both mills operated well and made improvements in productivity during
the year. Production at both mills was at record levels. With increased
sales volume during 1997, inventories declined at both mills. With the
addition of the Rumford mill, the division broadened its product line to
include a full range of coated papers and increased its sales of specialty
papers. The division improved purchasing effectiveness at Rumford and
enhanced manufacturing efficiencies at both mills.
In 1996, the division's sales revenue decreased from 1995, despite
higher sales volume. Earnings declined sharply from 1995 as a result of
general market weakness and much lower selling prices for coated papers.
In the second half of 1996, customer order rates improved, though selling
prices continued to decline. Mill inventories, which had risen to a high
level in 1995, declined by year end.
Mead Fine Paper
- ---------------
Mead Fine Paper produces coated papers for commercial printing, uncoated
papers for business and specialty uses, and is a leading producer of
carbonless copy papers.
Division sales revenue in 1997 declined slightly from 1996 but remained
ahead of 1995. Earnings were below 1996 and 1995. Sales volume of
carbonless papers in 1997 declined slightly, consistent with the decline in
market demand for multi-part business forms. Operating efficiencies and
reduced costs at the division's Chillicothe, Ohio, mill partially offset
the effect on earnings of lower selling prices and lower sales volume.
Mill inventories of coated and uncoated papers declined during the year as
a result of generally strong market demand, while inventories of carbonless
papers increased.
In 1996, division sales increased over 1995 as a result of increased
sales volume of coated, uncoated and carbonless papers. Earnings were
below 1995 as weaker overall market demand continued through most of 1996,
leading to lower selling prices for coated and uncoated papers. Coated
paper shipments in 1996 were significantly ahead of 1995 following the
introduction of an enhanced grade line and completion of an upgrade of the
mill's coated papermaking capacity.
Gilbert Paper
- -------------
The Gilbert Paper division produces high-quality communications papers,
including cotton-content bond papers, specialty text and cover papers and
papers for ink-jet and laser printers.
In 1997, the division's sales and earnings decreased from 1996 and 1995
levels as a result of lower sales volume and slightly lower selling prices.
Sales volume increased through merchant distribution channels and in the
export market, but were offset by decreases in retail sales volume.
Selling prices, which declined in 1996 as a result of competitive market
forces, declined further in 1997. During the year, the division started up
a new converting and distribution center and related finishing equipment.
In 1996, sales increased over 1995 on higher sales volume, despite
lower average selling prices. Earnings were up slightly over 1995 as a
result of higher sales volume and lower costs for purchased wood pulp.
Mead Specialty Paper
- --------------------
Mead Specialty Paper manufactures a variety of decorative papers for
laminates used in furniture, flooring, countertops and cabinets, and
specialty grades used in various industrial and automotive applications.
16
<PAGE>
The division's sales and earnings increased in 1997 over 1996 and 1995. The
increase was driven by higher sales volume and a stronger sales mix. Improved
manufacturing yields and stronger markets led to higher overall production
volume. Demand strengthened in 1996 and remained strong in 1997 as automotive,
housing construction and remodeling activity remained robust. Product growth
continued in overlay papers used in flooring applications in Europe and the
United States.
In 1996, sales and earnings improved over 1995 as a result of new product
introductions, stronger sales mix and productivity improvements. Overall
production and sales volumes increased slightly over 1995.
PACKAGING AND PAPERBOARD
<TABLE>
<CAPTION>
-------------------------------------------------------------
Segment Summary (in millions) 1997 1996 1995
<S> <C> <C> <C>
-------------------------------------------------------------
Sales $1,431.8 $1,371.4 $1,428.8
Earnings before
income taxes 129.6 138.6 184.9
-------------------------------------------------------------
</TABLE>
Sales for the Packaging and Paperboard segment increased 4% in 1997 on higher
sales volume of coated paperboard, corrugating medium and beverage packaging.
Despite the higher volume, earnings were 6% lower in 1997 primarily as a result
of much lower prices for medium and slightly lower prices for coated paperboard.
Average selling prices for medium declined nearly 50% from 1995 to mid-1997
as a result of new supply in the market. Prices strengthened in the second half
of 1997 as mill inventories declined and market demand strengthened. By year-end
1997, prices regained about 40% of what they had lost since 1995. In the market
for folding cartons, where coated paperboard is used for some packaging
applications, demand strengthened in 1997 from the weak levels in 1996. However,
average selling prices for coated paperboard were slightly lower as a result of
the competitive price pressures from other paperboard grades and additional
supply in coated paperboard markets.
In 1996, sales for the segment decreased despite higher sales volume.
Earnings were lower primarily as a result of a decline in selling prices for
corrugating medium.
Mead Coated Board
- -----------------
Mead Coated Board manufactures coated unbleached kraft paperboard for use in
multiple beverage packaging and folding cartons. Customers include folding
carton manufacturers in North America and Europe, and Mead Packaging's worldwide
beverage packaging business.
Sales for the division increased over 1996 and 1995 on higher sales volume.
Earnings were slightly lower than in 1996 as increased paperboard shipments,
improved mill productivity and higher prices at the division's sawmill
operations were offset by lower selling prices for coated paperboard and the
negative impact of the strong U.S. dollar on sales in Europe. Coated paperboard
shipments increased to Mead Packaging for multiple beverage packaging
applications. Growth also continued in sales to folding carton converters in
Europe and Latin America.
During the year, the division successfully completed the rebuild of the #1
paperboard machine at the Mahrt mill in Alabama. The rebuild included extensive
quality improvements and increased machine capacity by 35,000 tons
17
<PAGE>
annually. Overall mill production for the year was lower as a result of the
four-week machine shutdown and rebuild in June. Inventories, which had been
increased in 1996 in anticipation of the rebuild, were reduced in 1997 as a
result of very strong shipments.
In 1996, division sales increased over 1995. Earnings improved slightly
from the prior year as lower paperboard sales volume in a weak market was offset
by cost reductions, production efficiencies and improved results at the
division's sawmill operations.
Mead Packaging
- --------------
Mead Packaging is a leading worldwide supplier of multiple beverage packaging
and packaging systems. It also provides multiple packaging for food and other
products. Customers include large and small brewers, soft drink bottlers, and
food and other consumer products companies.
Division earnings were much improved over 1996 and 1995. The increase in
earnings was driven by an increase in sales volume of cartons and improved
operating performance from converting operations. Earnings improved in North
America as well as in the division's international operations in Europe and
Latin America, despite a stronger U.S. dollar throughout 1997. During the year,
the division continued to streamline converting operations, closing a facility
in Godfrey, Illinois. New printing equipment was installed at its converting
facilities in Lanett, Alabama, and Trento, Italy. In 1997, Mead Packaging
continued its worldwide placement of modular packaging systems.
In 1996, division earnings improved over 1995 on increased sales volume,
higher selling prices in some markets and cost reductions and productivity
improvements from increased efficiencies in its converting operations.
Mead Containerboard
- -------------------
Mead Containerboard produces corrugating medium used in shipping containers and
operates eight corrugated container plants.
Sales volume of corrugating medium increased by 40% in 1997 over 1996 with
a full year of production from the new paperboard machine at the Stevenson,
Alabama, mill. Despite much higher volume, sales revenue increased only slightly
over 1996, and operating results were significantly lower, as a result of much
lower selling prices for medium. Sales volume of containers improved about 4%
over 1996. Prices of containers improved somewhat in the second half of the
year, but remained below the average of the prior year.
During the year, construction continued at the Stevenson mill to expand the
capacity of the new #2 paperboard machine and to upgrade the environmental
systems at the mill. The $224 million project is proceeding ahead of schedule
and is expected to be completed by mid-1998. It is expected to increase the
annual capacity of the new machine from 225,000 tons to 400,000 tons and further
improve the mill's cost position. The #2 paper machine is designed to produce
lightweight and ultra-lightweight medium for an emerging and growing segment.
Mead's sales in that segment continued to grow in 1997. Division operating
results are expected to improve in 1998, as a result of higher production and
sales volume and improved pricing over 1997.
In 1996, operating results declined significantly from 1995 as market
weakness led to much lower selling prices for corrugating medium and a decline
in prices and sales volume of shipping containers. Despite a slow recovery in
demand for containerboard in the second half of 1996, selling prices for medium
remained at depressed levels throughout 1996.
18
<PAGE>
DISTRIBUTION AND SCHOOL AND OFFICE PRODUCTS
<TABLE>
<CAPTION>
-------------------------------------------------------------
Segment Summary (in millions) 1997 1996 1995
-------------------------------------------------------------
<S> <C> <C> <C>
Sales $2,069.5 $2,083.8 $2,507.3
Earnings before
income taxes 38.7 69.3 77.3
-------------------------------------------------------------
</TABLE>
Sales revenue in the Distribution and School and Office Products segment
decreased slightly from 1996 on lower volume and prices in Mead's distribution
business, Zellerbach. Earnings decreased 44% for the segment on lower results at
Zellerbach. In 1996, sales and earnings decreased from 1995 as a result of lower
sales in distribution.
Zellerbach
- ----------
Zellerbach is a sales and marketing organization distributing products and
services for business through its three units: printing, packaging and
industrial/commercial supplies.
Sales revenue decreased slightly from 1996 and 20% from 1995. Operating
results were significantly lower as a result of lower selling prices for many of
its paper grades and higher selling costs. Margin rates were also lower than in
1996 as a result of the very competitive marketplace. Sales volume declined in
the first half of 1997. In response, the division began a concerted effort to
strengthen its sales force in order to replace lost volume. By the third
quarter, sales volume showed some improvement and sales for the third and fourth
quarters were ahead of the same periods in 1996. Selling costs increased during
the year due to hiring, training and equipping new members of the sales force.
Inventories were increased in 1997 to improve customer service levels. Sales are
expected to continue to improve in 1998 as a result of the investment in
strengthening the sales organization.
Specific initiatives in working capital productivity, cost management and
logistics management are also expected to lead to improved results in 1998.
In 1996, sales revenue declined from 1995 as a result of declines in prices
in all three business units, particularly printing paper. Operating results
declined from 1995 as a result of lower prices and volume. During 1996, the
division continued to improve its processes in an effort to increase efficiency
and the organization's effectiveness in serving customers.
Mead School and Office Products
- -------------------------------
Mead's School and Office Products division is a leading converter and
distributor of school supplies. It also provides stationery products for home
and office use and is the industry leader in fashion and product design.
Sales revenue increased over 1996 on an increase in unit volume. Earnings
were about even with the level of 1996 and slightly lower than the record level
of 1995 as a result of lower selling prices for paper-based products and
slightly lower margin rates. Sales volume growth continued in Mead's
fashion-oriented, value-added product lines such as its licensed sports,
cartoon and specialty brands. Sales growth also continued in the Canadian
market into which Mead expanded in 1995. During the year, the division
introduced a new line of computer accessories including paper-based
products for computer users, laptop computer cases and multimedia storage
19
<PAGE>
devices. Other new products included a new line of backpacks in the Mead
Five-Star (R) line.
In 1996, sales volume increased over 1995 but sales revenue and earnings
declined slightly from the record levels of 1995 on lower selling prices for
paper-based products.
INVESTEES
- ---------
Mead's primary investees are Northwood Forest Industries Limited, a large
producer of northern bleached softwood kraft (NBSK) pulp and solid wood products
in British Columbia, Canada, and Northwood Panelboard Company, an oriented
structural board (OSB) mill in Bemidji, Minnesota. Both are 50%-owned by Mead
and Noranda Forest Inc. of Canada. Pulp from Northwood is sold throughout the
world by Mead Pulp Sales. Sales of wood products, including lumber, plywood and
OSB, are managed by Noranda Forest Sales Inc. Additionally, as part of the
purchase of the Rumford, Maine, paper mill, Mead acquired a 30% ownership
interest in a limited partnership which operates the power cogeneration facility
located at the mill.
Northwood sales in 1997 were down from 1996 as increased shipments of pulp
and OSB were mostly offset by weaker prices for OSB and lower sales volume of
lumber. Pulp shipments were up in 1997 due to improved demand in the first half
of the year. Production also increased based upon record productivity and more
operating days than in 1996 when the mill took three weeks of downtime to reduce
inventories. OSB shipments were up and production increased as a result of
improved productivity in the dryer operation. Prices for OSB, however, fell
sharply in the last two years as a result of significant new supply from the
start up of numerous new mills in the U.S. and Canada. OSB prices declined in
1996 and declined further in 1997. Lumber sales volume declined in 1997.
Mead's share of earnings from all investees in 1997 was $8.9 million, an
increase from earnings of $4.3 million in 1996. Half of this increase was due to
the ownership of the Rumford cogeneration plant for the entire year of 1997 as
compared to two months in 1996. The remaining increase resulted from improved
pulp demand and record production, mostly offset by higher lumber costs and
lower OSB prices.
During 1997, worldwide demand for chemical paper grade market pulp increased
from the prior year with most of the growth occurring during the first half of
the year. As a result of growing demand, producer inventories dropped from high
levels, and by mid-year prices strengthened slightly. However, in the fourth
quarter of the year, market demand in Asia slowed and prices declined. The
domestic list price for NBSK pulp which had peaked near $1,000 per ton in late
1995 fell to $520 in the first quarter of 1996 and improved to $610 in 1997.
Full year average prices were basically unchanged from the prior year.
In the lumber market, strong housing starts and demand for remodeling and
repair led to higher lumber prices during the first half of 1997. However, in
the second half of the year, weaker overseas markets led to sharply lower lumber
prices by year end. For the year, average lumber prices were unchanged from
1996. Panelboard markets experienced three years of record demand, but pricing
weakened as a result of capacity expansions. OSB prices were extremely weak for
the first half of 1997 before recovering slightly before year end. Plywood
prices gradually weakened throughout the year.
20
<PAGE>
SELLING AND ADMINISTRATIVE EXPENSES
- -----------------------------------
From 1996 to 1997, selling and administrative expenses rose by 4.5% compared
with a 2.2% increase from 1995 to 1996. As a percentage of sales, these expenses
were 11.6% in 1997, compared with 12.0% in 1996 and 10.7% in 1995. The majority
of the dollar increase in 1997 was attributable to costs incurred at Zellerbach
to strengthen its sales organization and to a full year of operations at the
Rumford, Maine, paper mill which was acquired late in 1996. The 1996 increase
over 1995 was the result of general inflationary pressures throughout the
company.
INTEREST AND DEBT EXPENSE
- -------------------------
Due to significantly higher average debt levels in 1997 than in each of 1996 and
1995, Mead's interest and debt expense increased to $98 million from $58 million
and $69 million in 1996 and 1995, respectively. The primary reasons for the
lower expense level in 1996 versus 1995 were lower average interest rates and
higher amounts of interest capitalized.
FINANCIAL REVIEW
----------------
Mead's cash flows from operating activities in 1997 were $404.9 million,
$425.5 million in 1996 and $186.9 million in 1995. Cash flows for 1995 include
the effect of tax payments of approximately $300 million in 1995 related to the
1994 sale of the company's Electronic Publishing segment.
During 1997, Mead continued its stock repurchase program, acquiring
2.1 million shares on a post-split basis for $70 million. Share repurchases in
1996 were 2.2 million shares for $60 million, and 13.4 million shares for $355
million in 1995.
Capital spending of $441 million in 1997 exceeded the $433 million and
$263 million of 1996 and 1995, respectively. During all three years the largest
projects were related to the Stevenson, Alabama, paperboard mill.
Mead's total long-term debt (including current maturities) at year-end 1997
stands at $1.430 billion, up from $1.255 billion in 1996 and $768 million in
1995. Mead's 1997 levels of capital spending and stock repurchases were the
primary drivers of the $175 million increase in borrowings. The 1996 increase
resulted from the purchase of the Rumford, Maine, paper mill late in the year.
In 1995 Mead retired $130 million of 9% debentures and $84 million of other
debt. Mead's total debt as a percentage of total capital was 38.5% at the end of
1997 compared with 35.8% at the end of 1996 and 26.2% at the end of 1995. The
percentage may change as Mead continues its announced stock repurchase program
and, as warranted, by borrowings to fund strategic opportunities.
Additional financing capability is afforded by a $460 million bank credit
agreement which extends until October 2002 and by a shelf registration statement
on file with the Securities and Exchange Commission under which the company
could offer up to $300 million of additional debt securities. Up to $154 million
of medium-term notes are authorized to be issued under that shelf registration
statement.
At the end of 1997, Mead paid a fixed or capped rate of interest on 76% of
its debt and paid a floating rate of interest on the remainder. A change of 1%
in the floating rate, on an annual basis, would result in a $.03 change in
earnings per share. The estimated market value of long-term debt, excluding
capitalized leases, was $69 million higher than the book value at the end of
1997.
21
<PAGE>
Working capital at the end of 1997 was $503 million versus $432 million and
$546 million at the end of 1996 and 1995, respectively. The 1997 increase over
1996 was primarily attributable to increases in accounts receivables and
inventories and reductions in accounts payable. The 1996 reduction from 1995 was
attributable to a $214 million reduction in cash and current maturities used in
the stock repurchase program and the Rumford acquisition offset by working
capital resulting from the Rumford acquisition. Mead's current ratios at the end
of 1997, 1996 and 1995 were 1.7, 1.6 and 1.7, respectively.
Mead's inventory levels rose slightly to $525 million in 1997 up from $509
million in 1996 and $411 million in 1995. The growth in 1996 was primarily the
result of the Rumford acquisition. The replacement values of inventories
exceeded their LIFO value by $213 million at the end of 1997. Adjusted for LIFO,
Mead's current ratio would be 1.8 at year end.
CAPITAL SPENDING
Mead's capital spending in 1997 amounted to $441 million, up from $433 million
in 1996 and $263 million in 1995. The major project in 1997 was the beginning of
a $224 million second phase of construction at the Stevenson, Alabama,
corrugating medium mill to expand the capacity of the newly completed paperboard
machine and to upgrade environmental systems. This second phase will add virgin
pulp-making capabilities, a wood fuel boiler and additional dryers to the
machine. This expansion will increase the annual capacity of the mill to 815,000
tons, up from 640,000 tons, and will also replace the mill's chemical recovery
system. Completion of this phase is expected in mid-1998. Also in 1997, a
rebuild was completed of the #1 paperboard machine at the Mahrt coated
paperboard mill in Alabama. The #2 paperboard machine was rebuilt in 1996.
Mead expects capital spending in 1998 to be in the range of $400-450
million, including approximately $60 million for timber and timberland. Mead
expects to fund this spending from 1998 operations, although some external
borrowing may be needed.
ENVIRONMENTAL PROCEEDINGS
Mead has been notified by the United States Environmental Protection Agency
("USEPA") or by various state or local governments that it may be liable under
federal environmental laws or under applicable state or local laws with respect
to the cleanup of hazardous substances at six sites currently operated or used
by Mead. Mead is also currently named a potentially responsible party ("PRP"),
or has received third party requests for contributions under federal, state or
local laws with respect to at least 19 sites sold by Mead over many years or
owned by contractors used by Mead for disposal purposes. There are other former
Mead facilities and those of contractors which may contain contamination or
which may have contributed to potential Superfund sites but for which Mead has
not received any notice or claim. Mead's potential liability for all these sites
will depend upon several factors, including the extent of contamination, the
method of remediation, insurance coverage and contribution by other PRPs.
Although the costs that Mead may be required to pay for remediation of all these
owned and unowned sites are not certain at this time, Mead has reserves of $38
million relating to current environmental litigation and proceedings which it
believes are probable and reasonably estimable.
Mead believes that it is reasonably possible that costs associated with
these sites may exceed current reserves by an amount that could range from an
insignificant amount to as much as $45 million. The estimate of this range is
less certain than the estimates upon which reserves are based.
22
<PAGE>
In November 1997, USEPA announced new regulations under the Clean Air Act
and Clean Water Act (the "Cluster Rules") designed to reduce air and water
discharges of specific substances from U.S. paper and pulp mills. Mead has
included in its capital spending plans amounts necessary to comply with the new
regulations. In 1995, USEPA issued final regulations implementing the Federal
Great Lakes Critical Programs Act (the "GLI") and requiring the Great Lakes
states to develop regulatory programs for the protection and enhancement of the
water quality of the Great Lakes. Various Great Lakes states in 1997, including
Michigan and Ohio, adopted state regulations consistent with the federal GLI
regulations. Mead does not believe that any significant additional capital
expenditures beyond expenditures previously stated will be necessary in the next
five years at Mead's Escanaba facility to comply with the requirements of the
Michigan GLI regulations as finally adopted. The state of Ohio has determined at
this time that it will not apply GLI regulations to facilities discharging into
the Ohio River Basin. Mead's Chillicothe, Ohio facility discharges into the Ohio
River Basin.
EFFECTS OF INFLATION
Inflation remains at a low rate and is not expected to have a significant
effect in the near term.
YEAR 2000
The Year 2000 problem concerns the inability of computerized information systems
to properly recognize and process date-sensitive information as the year 2000
approaches. The company has completed an assessment of its hardware, software
and process control equipment requirements relative to this issue. Mead has also
implemented a continuing program to identify areas affected by this issue not
included in the initial assessment such as relationships with customers and
suppliers. In early 1997, Mead commenced a specific workplan to modify or
replace affected systems and equipment and expects to continue the workplan
through 1998 and into mid-1999. Testing the success of workplan efforts is
expected to occur throughout 1998 and 1999. Much of the issue will be addressed
as part of Mead's ongoing process of upgrading its systems. Mead expects that
Year 2000 costs will not have a material adverse impact on results of
operations, liquidity or capital resources.
DERIVATIVE DISCLOSURE
Mead is exposed to market risk from changes in interest rates, foreign currency
exchange rates, and commodity prices. To manage these market risk exposures, the
company enters into various hedging transactions governed by corporate policies
and procedures that are approved and regularly reviewed by the finance committee
of the board of directors. Mead does not use financial instruments for trading
purposes.
INTEREST RATES
Mead's objective is to reduce its interest expense through a blend of fixed and
floating interest rate instruments. The company primarily funds itself with
long-term debt having final maturities ranging from five to 50 years, a portion
of which has variable interest rates, and variable interest rate commercial
paper. The company uses interest rate swaps and caps in managing its mix of
fixed and floating rate debt.
Mead assesses its interest rate market risk by estimating the potential
increase in its debt portfolio's fair market value resulting from a hypothetical
parallel downward shift of the yield curve. Using the portfolio valuation models
available from Bloomberg/TM/, which use theoretical values as well as market
prices for instruments with similar characteristics, including
23
<PAGE>
the theoretical value of any embedded options (e.g. puts or calls), a
hypothetical 100 basis point parallel downward shift of the yield curve would
increase the fair market value of Mead's debt portfolio by approximately
$99 million.
In 1997, Mead issued $550 million of long-term, fixed-rate debt. In order to
fix interest rates until the time of debt issuance, this debt was hedged with
forward-starting, pay-fixed swaps which were terminated at the time of debt
issuance. During 1998, several financial instruments will mature and the company
will consider alternatives that are consistent with business conditions, the
interest rate environment and its interest rate exposure management policy.
FOREIGN CURRENCY
Mead has foreign-based operations, primarily in Western Europe, which accounted
for approximately 10% of its 1997 net sales, and has a 50% interest in a
Canadian-based investee. In addition, certain of Mead's domestic operations make
sales to foreign customers. In the conduct of its foreign operations, Mead also
makes intercompany sales, and receives royalties and dividends denominated in
many different currencies. All of this exposes Mead to the effect of changes in
foreign currency exchange rates. Flows of foreign currencies into and out of
Mead's domestic operations are generally stable and regularly occurring, and are
recorded at fair market value in Mead's financial statements. Mead also issues
intercompany loans to its foreign subsidiaries in their local currencies,
exposing it to the effect of changes in spot exchange rates at loan issue and
loan repayment dates. Generally, Mead uses forward exchange contracts with terms
of less than one year to hedge these exposures. Based upon Mead's overall
foreign currency exchange rate exposure at December 31, 1997, including
derivative and other foreign currency sensitive instruments, a 10% adverse
change in currency rates would not materially affect Mead's financial position,
or annual results of operations or cash flows.
COMMODITIES
Mead is exposed to price changes in raw materials, components, and items
purchased for resale. The prices of some of these items can vary significantly
over time due to changes in the national and international markets in which the
company's many suppliers operate. Mead's selling prices often change in a
similar fashion, although often to a greater or lesser degree. The company does
not use a significant amount of financial instruments to manage its exposure to
commodity price changes.
OUTLOOK
Selling prices for many grades of paper and paperboard are affected by changes
in supply as well as by changes in market demand. Demand growth for paper and
paperboard generally tracks the rate of economic growth, while new supply often
comes onto the market in large increments with the startup of new production
capacity at paper and paperboard mills. The result can be temporary periods of
oversupply that can lead to price weakness as in 1997.
In the U.S., new capacity in paperboard grew at a faster rate in 1996 and
1997 than in previous years, 5.8% and 2.9% respectively, according to the
American Forest and Paper Association (AF&PA). The growth rate for new U.S.
paperboard capacity is expected to slow to 1.2% during the next three years,
compared to an average growth rate of 3% during the past 10 years. U.S. paper
capacity is expected to grow at a slow rate for the next three years, 1.3%,
compared to the average of 2.0% for the past 10 years, according to the AF&PA.
However, coated paper capacity in Europe has been growing faster than in the
U.S. Imports of coated paper increased in 1997 in the U.S. This increase in
24
<PAGE>
imports was driven by increased European supply, strong U.S. markets and the
strong U.S. dollar relative to foreign currencies. The impact on the U.S. market
of any additional European coated paper capacity scheduled for 1998 is
uncertain.
In the past several years, the growth rate in demand for carbonless paper
appears to have slowed, though Mead's shipment volume continued to increase
during that time. In 1997, overall market demand for carbonless paper declined
in the U.S., and Mead's shipments decreased slightly from the 1996 level. The
future rate of decline in market demand for this grade is uncertain.
Approximately 10% of Mead's overall sales are international, with most of
those sales in Mead's Packaging and Coated Board divisions, primarily in Europe
and Canada. Fluctuations in the currencies in Europe and Canada can affect the
operating results of these divisions, as they did in 1997, though the impact was
not material to Mead's overall results. There was minimal impact on Mead from
the weakening in Asian currencies that occurred in the second half of 1997. Any
direct or indirect impact on the paper and forest products industry or Mead
caused by a slowing in the growth rate of Asian economies is unknown.
FORWARD-LOOKING STATEMENTS
Forward-looking statements throughout this report are based on current
expectations and subject to numerous risks and uncertainties, which could cause
actual results to differ materially from those expressed. These risks and
uncertainties include, but are not limited to: growth of supply in different
sectors of the paper and forest products industry, particularly in the U.S.,
Europe and Asia; demand for pulp in world markets; demand for paper and
paperboard in U.S. and European markets; market prices for these products;
fluctuations in foreign currency, primarily in Europe; capital spending levels
in the industry; general business and economic conditions in the U.S., Europe
and Asia; interest rates and their volatility; government actions; the
introduction of a new European currency (Euro); the ability to timely and cost-
effectively address Year 2000 issues; the stability of financial markets;
competitive factors; and opportunities that may be presented to and pursued by
the company not known at this time.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
See information in Item 7.
25
<PAGE>
Item 8. Financial Statements and Supplementary Data
Financial Statements
<TABLE>
<CAPTION>
Page
----
Financial Statements:
<S> <C>
Independent Auditors' Report.............................. 27
Statements of earnings.................................... 28
Balance sheets............................................ 29
Statements of shareowners' equity......................... 30
Statements of cash flows.................................. 31
Notes to financial statements............................. 32-50
Supplementary Data
Selected quarterly financial data........................... 51
</TABLE>
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
The Mead Corporation
Dayton, Ohio
We have audited the accompanying balance sheets of The Mead Corporation and
consolidated subsidiaries as of December 31, 1997 and 1996, and the related
statements of earnings, shareowners' equity and cash flows for each of the three
years in the period ended December 31, 1997. Our audits also included the
financial statement schedule listed in the Index at Item 14(a)2. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of The Mead Corporation and consolidated
subsidiaries at December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
DELOITTE & TOUCHE LLP
Dayton, Ohio
January 22, 1998
27
<PAGE>
<TABLE>
<CAPTION>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF EARNINGS
- ----------------------
Year Ended December 31 1997 1996 1995
(All amounts in millions except per share amounts)
<S> <C> <C> <C>
Net sales $5,077.4 $4,706.5 $5,179.4
Cost of products sold 4,177.3 3,803.9 4,104.0
-------- -------- --------
Gross profit 900.1 902.6 1,075.4
Selling and administrative expenses 589.3 564.0 552.0
-------- -------- --------
Earnings from operations 310.8 338.6 523.4
Other revenues - net (Note J) 9.9 13.7 33.7
Interest and debt expense (98.2) (57.7) (69.4)
-------- -------- --------
Earnings from continuing operations before income taxes 222.5 294.6 487.7
Income taxes (Note K) 81.3 109.0 184.2
-------- -------- --------
Earnings from continuing operations before
equity in net earnings of investees 141.2 185.6 303.5
Equity in net earnings of investees (Note C) 8.9 4.3 39.0
-------- -------- --------
Earnings from continuing operations 150.1 189.9 342.5
Discontinued operations (Note L) 5.4 7.5
-------- --------
Net earnings $ 150.1 $ 195.3 $ 350.0
======== ======== ========
Earnings per common share (Note A):
Earnings from continuing operations $ 1.44 $ 1.81 $ 3.15
Discontinued operations .05 .07
-------- -------- --------
Net earnings $ 1.44 $ 1.86 $ 3.22
======== ======== ========
Weighted-average number of common shares
outstanding 104.5 104.8 108.8
======== ======== ========
Earnings per common share - assuming dilution (Note A):
Earnings from continuing operations $ 1.41 $ 1.79 $ 3.10
Discontinued operations .05 .07
-------- -------- --------
Net earnings $ 1.41 $ 1.84 $ 3.17
======== ======== ========
Weighted-average number of common shares
outstanding - assuming dilution 106.4 106.3 110.6
======== ======== ========
</TABLE>
See notes to financial statements.
28
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
BALANCE SHEETS
- --------------
ASSETS
- ------
<TABLE>
<CAPTION>
December 31 1997 1996
(All amounts in millions)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 29.5 $ 20.6
Accounts receivable, less allowance for doubtful
accounts of $24.9 in 1997 and $28.0 in 1996 586.1 578.2
Inventories (Note B) 524.5 509.3
Deferred tax asset (Note K) 34.2 36.6
Other current assets 43.3 44.6
-----------------------
Total current assets 1,217.6 1,189.3
Investments and other assets (Notes C and M) 702.3 676.2
Property, plant and equipment, net (Notes D and O) 3,309.8 3,120.4
-----------------------
Total assets $5,229.7 $4,985.9
=======================
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
Current liabilities:
Accounts payable (Note E) $ 330.4 $ 358.9
Accrued expenses and other current liabilities (Notes E and P) 382.6 383.7
Current maturities of long-term debt 1.8 15.1
-----------------------
Total current liabilities 714.8 757.7
Long-term debt (Note F) 1,428.0 1,239.7
Commitments and contingent liabilities (Notes O and P)
Deferred items (Notes K and N) 798.4 742.1
Shareowners' equity (Notes H and I):
Common shares 154.9 155.5
Additional paid-in capital 53.5 13.2
Foreign currency translation adjustment (20.5) (2.4)
Retained earnings 2,100.6 2,080.1
-----------------------
2,288.5 2,246.4
-----------------------
Total liabilities and shareowners' equity $5,229.7 $4,985.9
=======================
</TABLE>
See notes to financial statements.
29
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF SHAREOWNERS' EQUITY
- ---------------------------------
<TABLE>
<CAPTION>
(All dollar amounts in
millions, except per share
amounts; all share Foreign Net
amounts in thousands) Common Shares Currency Unrealized
------------- Additional Translation Gain on Retained
Shares Amount Paid-In Capital Adjustment Securities Earnings
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994 117,298 $174.9 $ $ (4.8) $ 3.7 $2,008.8
Net earnings 350.0
Shares issued 1,890 2.9 38.7
Shares purchased (13,394) (20.0) (38.7) (296.0)
Cash dividends -
$.55 a common
share (59.6)
Change in net
unrealized gain
on securities (3.7)
Foreign currency
translation
adjustment 4.0
---------------------------------------------------------------------------------------------
December 31, 1995 105,794 157.8 (.8) 2,003.2
Net earnings 195.3
Shares issued 672 .9 13.4
Shares purchased (2,194) (3.2) (.2) (56.5)
Cash dividends -
$.59 a common
share (61.9)
Foreign currency
translation
adjustment (1.6)
---------------------------------------------------------------------------------------------
December 31, 1996 104,272 155.5 13.2 (2.4) 2,080.1
Net earnings 150.1
Shares issued 1,743 2.6 41.2
Shares purchased (2,130) (3.2) (.9) (65.8)
Cash dividends -
$.61 a common
share (63.8)
Foreign currency
translation
adjustment (18.1)
---------------------------------------------------------------------------------------------
December 31, 1997 103,885 $154.9 $53.5 $(20.5) $2,100.6
=============================================================================================
</TABLE>
See notes to financial statements.
30
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- ---------------------------------------------------
STATEMENTS OF CASH FLOWS
- ------------------------
(All dollar amounts in millions)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
- ------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 150.1 $ 195.3 $ 350.0
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, amortization and depletion of
property, plant and equipment 242.3 203.0 190.7
Depreciation and amortization of other asset 46.2 47.4 46.0
Deferred income taxes 37.2 54.2 89.1
Investees - earnings and dividends 1.3 7.1 (29.5)
Discontinued operations (5.4) (7.5)
Other (20.8) (16.2) (65.1)
Change in assets and liabilities, excluding
effects of acquisitions and dispositions:
Accounts receivable (7.9) 49.0 20.9
Inventories (15.2) (25.8) (52.7)
Other current assets 1.3 6.6 (23.4)
Accounts payable and accrued liabilities (29.6) (49.2) (325.8)
Cash (used in) discontinued operations (40.5) (5.8)
-------------------------------------------
Net cash provided by operating activities 404.9 425.5 186.9
-------------------------------------------
Cash flows from investing activities:
Capital expenditures (440.7) (433.4) (263.0)
Additions to equipment rented to others (33.7) (40.6) (56.0)
Payment for acquired business (640.4)
Proceeds from sales of businesses 19.6 39.8
Restricted funds 461.0
Other (4.0) 19.2 20.1
-------------------------------------------
Net cash provided by (used in) (478.4) (1,075.6) 201.9
investing activities -------------------------------------------
Cash flows from financing activities:
Additional borrowings 719.5 561.1 6.0
Payments on borrowings (547.2) (75.5) (213.5)
Cash dividends paid (63.8) (61.9) (59.6)
Common shares issued 43.8 14.3 41.6
Common shares purchased (69.9) (59.9) (354.7)
-------------------------------------------
Net cash provided by (used in) 82.4 378.1 (580.2)
financing activities -------------------------------------------
Increase (decrease) in cash and cash equivalents 8.9 (272.0) (191.4)
Cash and cash equivalents at beginning of year 20.6 292.6 484.0
-------------------------------------------
Cash and cash equivalents at end of year $ 29.5 $ 20.6 $ 292.6
===========================================
</TABLE>
See notes to financial statements.
31
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- ---------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------
A - Significant Accounting Policies
CONSOLIDATION. The accompanying financial statements include the accounts of
the Company and its wholly-owned subsidiaries. Investments in investees are
stated at cost plus the Company's equity in their undistributed net earnings
since acquisition. All significant intercompany transactions are eliminated.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid investments
with an original maturity of three months or less when purchased to be cash
equivalents.
INVENTORIES. The inventories of finished and semi-finished products and raw
materials are stated primarily at the lower of cost or market, determined on the
last-in, first-out (LIFO) basis. Stores and supplies are stated at cost
determined on the first-in, first-out (FIFO) basis.
OTHER ASSETS. Included in other assets are goodwill and other intangibles which
are being amortized using the straight-line method over their estimated useful
lives of 10 to 40 years. The Company periodically reviews goodwill balances for
impairment based on the expected future cash flows of the related businesses
acquired.
COMPUTER SOFTWARE COSTS. The Company capitalizes costs of computer software
purchased from third-parties and used for internal purposes. These costs are
amortized over their estimated useful lives of three years.
DEPRECIATION AND DEPLETION. Depreciation of property, plant and equipment and
amortization of capital leases and land improvements are calculated using the
straight-line method over the estimated useful lives of the properties. The
rates used to determine timber depletion are based on projected quantities of
timber available for cutting and are calculated annually.
INTEREST RATE AND FOREIGN EXCHANGE FINANCIAL INSTRUMENTS. Amounts currently due
to or from interest rate swap counterparties are recorded in interest expense in
the period in which they accrue. The premiums paid to purchase interest rate
caps, as well as gains or losses on terminated interest rate swap and cap
agreements, are included in long-term liabilities or assets and amortized to
interest expense over the shorter of the original term of the agreements or the
life of the financial instruments to which they are matched. Gains or losses on
foreign currency forward contracts are recognized currently through income and
generally offset the transaction losses or gains on the foreign currency cash
flows which they are intended to hedge.
ENVIRONMENTAL LIABILITIES. The Company records accruals for environmental costs
based on estimates developed in consultation with environmental consultants and
legal counsel in accordance with the requirements of Statement of Financial
Accounting Standards (SFAS) No. 5. The estimated costs to be incurred in closing
existing landfills, based on current environmental requirements and
technologies, are accrued over the expected useful lives of the landfills.
32
<PAGE>
ESTIMATES AND ASSUMPTIONS. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the reported revenues and expenses during a period. Estimates
and assumptions are also used in the disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates.
NET EARNINGS PER COMMON SHARE. Net earnings per common share are computed by
dividing net earnings by the weighted average number of common shares
outstanding during each year. The difference between earnings per common share
and earnings per common share - assuming dilution is the result of outstanding
stock options. The Company effected a two-for-one stock split on December 1,
1997. Share and per share amounts for all periods presented have been restated
to reflect the stock split and the adoption of SFAS No. 128, Earnings per Share.
STOCK OPTIONS. The Company measures compensation cost for stock options issued
to employees using the intrinsic value based method of accounting in accordance
with Accounting Principles Board Opinion No. 25.
<TABLE>
<CAPTION>
B - Inventories
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Finished and semi-finished products $342.5 $337.8
Raw materials 99.3 91.2
Stores and supplies 82.7 80.3
----------------
$524.5 $509.3
================
</TABLE>
For purposes of comparison to non-LIFO companies, inventories valued at current
replacement cost would have been $213.0 million and $220.0 million higher than
reported at December 31, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
C - Investments and Other Assets
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Investment in investees $151.1 $154.9
Pension asset 237.2 222.5
Equipment rented to others, at cost (net
of accumulated depreciation of $257.0
in 1997 and $242.1 in 1996) 90.7 103.9
Goodwill and other intangibles (net of
accumulated amortization of $43.9 in 1997
and $40.6 in 1996) 71.2 73.8
Cash surrender value of life insurance, less
policy loans of $40.1 in 1997 and $35.0 in 1996 94.3 75.7
Other 57.8 45.4
----------------
$702.3 $676.2
================
</TABLE>
The Company's principal investee is the 50%-owned Northwood Forest Industries
Ltd., which manufactures bleached softwood kraft pulp, lumber and plywood. Under
an agreement with Northwood, Mead is entitled to purchase the pulp it requires.
The Company also has a 30% ownership interest in a limited partnership which
operates the cogeneration facility located at the Rumford, Maine, paper mill.
33
<PAGE>
Total investments in investees are as follows:
<TABLE>
<CAPTION>
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Investments, at cost $ 48.9 $ 46.9
Foreign currency translation adjustment (15.3) (10.5)
Equity in undistributed net earnings 117.5 118.5
-------------------
Total investments in investees (equal
to Mead's share of investees' equity) $151.1 $154.9
===================
</TABLE>
Summarized operating data for all investees is presented in the following table:
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
(All dollar amounts in millions)
<S> <C> <C> <C>
Revenues:
Sales to Mead $ 18.0 $ 21.6 $ 45.8
Sales to other customers 704.1 647.2 730.2
--------------------------
$722.1 $668.8 $776.0
==========================
Gross profit $ 77.0 $ 49.5 $160.0
==========================
Net earnings $ 28.2 $ 14.0 $ 86.8
==========================
Mead's share of net earnings, after
elimination of intercompany
transactions and reduction for Mead's
income taxes on partnership earnings $ 8.9 $ 4.3 $ 39.0
==========================
Dividends and partnership
distributions received $ 11.9 $ 13.4 $ 13.8
==========================
</TABLE>
Summarized balance sheet data for all investees is as follows:
<TABLE>
<CAPTION>
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Current assets $ 271.1 $ 248.3
Noncurrent assets 767.5 801.6
Current liabilities (148.6) (127.2)
Long-term debt and deferred items (562.0) (589.6)
-----------------------
Equity $ 328.0 $ 333.1
=======================
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
D - Property, Plant and Equipment
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Property, plant and equipment, at cost
Land and land improvements $ 168.6 $ 154.0
Buildings 615.7 585.7
Machinery and equipment 4,156.6 3,929.7
Construction in progress 237.5 162.9
-------- --------
5,178.4 4,832.3
Less accumulated amortization and depreciation (2,231.1) (2,078.1)
-------- --------
2,947.3 2,754.2
Timber and timberlands, net of timber depletion 362.5 366.2
-------- --------
Property, plant and equipment, net $3,309.8 $3,120.4
======== ========
E - Current Liabilities
December 31 1997 1996
(All dollar amounts in millions)
Accounts payable:
Trade $ 227.0 $ 271.1
Affiliated companies 37.1 34.9
Outstanding checks 66.3 52.9
------------ --------
$ 330.4 $ 358.9
============ ========
Accrued expenses and other current
liabilities:
Accrued wages $ 100.8 $ 99.7
Taxes, other than income 39.9 46.0
Other current liabilities 241.9 238.0
------------ --------
$ 382.6 $ 383.7
============ ========
</TABLE>
35
<PAGE>
F - Long-Term Debt
<TABLE>
<CAPTION>
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Capital lease obligations $ 187.2 $ 162.7
Variable-rate Industrial Development Revenue Bonds,
due from 2001 through 2023, average effective rate 3.6% 163.4 163.4
8-1/8% debentures, face amount of $150.0, due 2023
(effective rate 8.4%) 147.8 147.7
7-1/8% debentures, face amount of $150.0, due 2025
(effective rate 7.4%) 147.0 146.9
7.35% debentures, face amount of $150.0, due 2017
(effective rate 7.4%) 148.4
6.84% debentures, face amount of $150.0, due 2037
(effective rate 7.0%) 148.0
7.55% debentures, face amount of $150.0, due 2047
(effective rate 7.7%) 143.5
6.60% notes, face amount of $100.0, due 2002
(effective rate 6.9%) 98.7
Medium-term notes, 7.3% to 9.8%, face amount of
$78.5, due from 2000 through 2020 (effective rate 10.0%) 75.0 73.8
Short-term borrowings to be refinanced on a long-term basis
(effective rate 6.4% and 6.2% at 1997 and 1996) 155.3 530.3
Other 13.7 14.9
--------------------
$1,428.0 $1,239.7
====================
</TABLE>
Capital lease obligations consist primarily of Industrial Revenue Bonds and
Notes with an average effective rate of 4.0%. The variable-rate Industrial
Development Revenue Bonds are supported by letters of credit. The interest rates
on the variable-rate tax-exempt bonds closely follow the tax-exempt commercial
paper rates.
The 8-1/8% and 7-1/8% debentures are callable by the Company at approximately
103% beginning in 2003. The 6.84% debentures can be put to the Company at par
value in 2007.
The Company has an unused $460 million bank credit agreement that extends until
October 2002. This agreement contains restrictive covenants and requires
commitment fees in accordance with standard banking practice. At December 31,
1997, the Company has classified $155.3 million of short-term borrowings as
long-term debt based on management's intent and the Company's ability to
refinance the borrowings on a long-term basis. After reduction for these
financings, the Company has unused long-term lines of credit of $304.7 million.
36
<PAGE>
In February 1997, the Company issued $550 million of debentures and notes with
varying maturities. At December 31, 1996, the Company had classified $530.3
million of short-term borrowings as long-term based on management's intent to
refinance the short-term debt on a long-term basis. The weighted-average
interest rate paid on short-term borrowings for 1997 and 1996 was approximately
5.7% and 5.5%, respectively.
Maturities of long-term debt for the next five years are $1.8 million in 1998,
$8.0 million in 1999, $35.5 million in 2000, $13.0 million in 2001 and $291.9
million in 2002.
The Company has guaranteed obligations of certain affiliated operations and
others totaling $39.5 million at December 31, 1997. In addition, the Company has
a 50% interest in a partnership with Kimberly-Clark Corporation, which has
borrowed $300 million under a loan agreement with The Sumitomo Bank, Limited,
New York Branch, which matures in 1998. The loan, one-half of which has been
guaranteed by the Company, may be prepaid at any time either in cash or by
delivery of notes receivable from Georgia-Pacific Corporation held by the
partnership as part of the consideration from the 1988 sale of Brunswick Pulp
and Paper Company, a former affiliate. It is not practicable to estimate the
fair value of the above guarantees, however, the Company does not expect to
incur losses as a result of these guarantees.
G - Financial Instruments
The Company uses various derivative financial instruments as part of an overall
strategy to manage the Company's exposure to market risks associated with
interest rate and foreign currency exchange rate fluctuations. The Company uses
foreign currency forward contracts to manage the foreign currency exchange rate
risks associated with its international operations. The Company utilizes
interest rate swap and cap agreements to manage its interest rate risks on its
debt instruments, including the reset of interest rates on variable rate debt.
The Company does not hold or issue derivative financial instruments for trading
purposes.
The risk of loss to the Company in the event of nonperformance by any
counterparty under derivative financial instrument agreements is not
significant. All counterparties are rated A or higher by Moody's and Standard
and Poor's. Although the derivative financial instruments expose the Company to
market risk, fluctuations in the value of the derivatives are mitigated by
expected offsetting fluctuations in the matched instruments.
As part of an overall strategy to maintain an acceptable level of exposure to
the risk of interest rate fluctuation, the Company has developed a targeted mix
of fixed-rate and cap-protected debt versus variable-rate debt. To efficiently
manage this mix, the Company may utilize interest rate swap, cap and option
agreements to effectively convert the debt portfolio into an acceptable fixed-
rate, capped rate and variable-rate mix.
Under interest rate swap agreements, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed-rate and
variable-rate interest amounts calculated by reference to an agreed-upon
notional principal amount. The Company utilizes interest rate cap agreements to
limit the impact of increases in interest rates on its floating rate debt. The
interest rate cap agreements require premium payments to counterparties based
upon a notional principal amount. Interest rate cap agreements entitle the
Company to receive from the counterparties the amounts, if any, by which the
selected market interest rates exceed the strike rates stated in the agreements.
37
<PAGE>
The fair values of the interest rate swap and cap agreements are estimated using
quotes from brokers and represent the cash requirement if the existing
agreements had been settled at year end. Selected information related to the
Company's interest rate swap and cap agreements is as follows:
<TABLE>
<CAPTION>
Swap agreements Cap agreements
December 31 1997 1996 1997 1996
(All dollar amounts in millions)
<S> <C> <C> <C> <C>
Notional amount $ 180.0 $ 180.0 $ 150.0 $ 150.0
=============================================
Fair value $ (5.6) $ (5.4) $ $ .1
Carrying amount (4.9) (5.7) .3 .6
---------------------------------------------
Net unrecognized gain (loss) $ (.7) $ .3 $ (.3) $ (.5)
=============================================
</TABLE>
At December 31, 1996, the Company was a party to forward-starting interest rate
swaps utilized in order to fix the interest rate on a portion of the long-term
debt issued in early 1997. The swaps had a total notional amount of $374 million
and maturities from 10 years to 30 years and effectively fixed the interest rate
on $384 million of long-term debt with maturities from 10 years to 50 years.
Upon the issuance of the debt, the swaps were terminated and the resulting loss
realized on the swaps was recorded as an adjustment to the carrying amount of
the related debt and will be amortized to interest expense over the term of the
related debt. As of December 31, 1996, the fair value of these swaps was $(2.6)
million with a carrying amount of $1.8 million.
The Company utilizes foreign currency forward contracts to reduce exposure to
exchange rate risks primarily associated with transactions in the regular course
of the Company's international operations. The forward contracts establish the
exchange rates at which the Company will purchase or sell the contracted amount
of local currencies for specified foreign currencies at a future date. The
Company utilizes forward contracts which are short-term in duration (generally
one month) and receives or pays the difference between the contracted forward
rate and the exchange rate at the settlement date. The major currency exposures
hedged by the Company are the Dutch guilder, British pound, Japanese yen and
German mark. The contract amount of foreign currency forwards at December 31,
1997 and 1996, is $129.0 million and $119.9 million, respectively. The carrying
amount and fair value of these contracts are not significant.
The fair value of the Company's long-term debt is estimated based on quoted
market prices for the same or similar issues or on current rates offered to the
Company for debt of the same remaining maturities. The fair value of long-term
debt, excluding capital leases, was $1,310.1 million and $1,087.8 million at
December 31, 1997 and 1996, respectively, and the related carrying amounts were
$1,240.8 million and $1,077.0 million, respectively.
At December 31, 1997 and 1996, the Company held short-term investments which are
included in cash and cash equivalents. The carrying amount of these short-term
investments is a reasonable estimate of fair value.
38
<PAGE>
H - Shareowners' Equity
The Company has authorized 300 million no par common shares. The Company has
outstanding authorization from the Board of Directors to repurchase up to ten
million common shares of which 6.1 million have been repurchased as of December
31, 1997. A total of 30.4 million and 28.3 million common shares were held in
treasury at December 31, 1997 and 1996, respectively.
Under a Rights Agreement, each outstanding common share presently has one right
attached which trades with the common share. Generally, the rights become
exercisable and trade separately ten days after a third party acquires 20% or
more of the common shares or commences a tender offer for a specified percentage
of the common shares. In addition, the rights become exercisable if any party
becomes the beneficial owner of 10% or more of the outstanding common shares and
is determined by the Board of Directors to be an adverse party. Upon the
occurrence of certain additional triggering events specified in the Rights
Agreement, each right would entitle its holder (other than, in certain
instances, the holder of 20% or more of the common shares) to purchase common
shares of the Company (or, in certain circumstances, cash, property or other
securities of the Company) having a value of $200 for $100, the initial exercise
price. The rights expire in 2006 and are presently redeemable at $.005 per
right. At December 31, 1997, there were 149.2 million common shares reserved for
issuance under this plan.
The Board of Directors has approved termination benefits for certain key
executives and a severance plan for all other salaried employees and established
a Benefit Trust in connection with the Company's unfunded supplemental
retirement plan, deferred compensation plan, directors retirement plan and
excess benefits plan to preserve the benefits earned thereunder in the event of
a change in control of the Company. These plans would be required to be
immediately funded upon such an event.
The Company has preferred shares authorized but unissued as follows: 61,500
undesignated cumulative preferred, par value $100; 20 million undesignated
voting cumulative preferred, without par value; 20 million cumulative preferred,
without par value; and 295,540 cumulative second preferred, par value $50.
At December 31, 1997, there is $1.3 billion available for common dividends which
represents the maximum amount of additional indebtedness that can be incurred
solely to pay common dividends while remaining in compliance with certain debt
covenants.
I - Stock-Based Compensation Plans
Officers and key employees have been granted stock options under various plans.
Options as to 3.1 million shares are accompanied by limited rights which may be
exercised in lieu of the option under certain circumstances. The exercise price
of all options equals the market price of the Company's stock on the date of the
grant. The options and rights have a maximum term of ten years and vest after
one year or three years. Under the 1996 Stock Option Plan, additional options
(reload options) can be granted upon the exercise of the original incentive
stock option at the then current market price. The option holder must hold the
shares acquired for three years in order to vest in the reload options. There
are 13.7 million shares reserved for issuance under these plans.
39
<PAGE>
A Restricted Stock Plan provides for the issuance of restricted common shares to
certain employees and to directors who are not officers or employees of the
Company. These shares are restricted for periods of six months to five years. As
of December 31, 1997, 35,000 common shares are issued and outstanding under the
plan. There are 776,000 shares reserved for issuance under this plan. There were
27,000, 4,000 and 18,000 shares granted in 1997, 1996 and 1995, respectively, at
a weighted-average price of $29.58, $27.23 and $26.97, respectively.
The following table summarizes activity in the Company's stock-based
compensation plans:
<TABLE>
<CAPTION>
(All share amounts in thousands) 1997 1996 1995
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 7,470 $22.44 6,528 $20.97 7,032 $19.14
Granted 1,902 29.73 1,744 26.61 1,442 27.20
Exercised (1,825) 21.02 (722) 18.85 (1,920) 18.82
Canceled (67) 25.52 (80) 25.87 (26) 26.86
------- ------ ------
Outstanding at end of year 7,480 $24.62 7,470 $22.44 6,528 $20.97
======= ====== ======
Exercisable at year end 5,445 $22.80 5,778 $21.22 5,132 $19.28
======= ====== ======
Weighted-average fair value of
options granted during the year
using the extended binomial
option-pricing model $ 8.30 $ 6.71 $ 8.03
Weighted-average assumptions
used for grants:
Expected dividend yield 2% 2% 2%
Expected volatility 21% 22% 22%
Risk-free interest rate 6.3% 5.6% 7.2%
Expected life of option
(in years) 5.8 5.5 5.5
</TABLE>
40
<PAGE>
The following table shows various information about stock options outstanding at
December 31, 1997:
(All share amounts in thousands)
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------- --------------------------
Weighted-
Average
Number Remaining Weighted- Number Weighted-
Outstanding Contractual Average Exercisable at Average
Range of at December 31, Life (in Exercise December 31, Exercise
Exercise Prices 1997 years) Price 1997 Price
<S> <C> <C> <C> <C> <C>
$13.31 - $18.31 1,218 3.3 $16.46 1,218 $16.46
20.75 - 26.53 3,214 6.4 23.75 3,111 23.68
27.19 - 31.94 3,048 8.5 28.80 1,116 27.26
----- -----
$13.31 - $31.94 7,480 6.8 $24.62 5,445 $22.80
===== =====
</TABLE>
Total compensation costs charged to earnings from continuing operations before
income taxes for all stock-based compensation awards were less than $1 million
in each of 1997, 1996 and 1995. Had compensation costs been determined based on
the fair value method of SFAS No. 123 for all plans, the Company's net earnings
and earnings per common share would have been reduced to the following pro forma
amounts:
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
<S> <C> <C> <C>
Net earnings (in millions):
As reported $ 150.1 $ 195.3 $ 350.0
=====================================
Pro forma $ 141.4 $ 188.8 $ 344.3
=====================================
Earnings per common share - assuming dilution
As reported $ 1.41 $ 1.84 $ 3.17
=====================================
Pro forma $ 1.33 $ 1.78 $ 3.11
=====================================
</TABLE>
J - Other Revenues - Net
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
(All dollar amounts in millions)
<S> <C> <C> <C>
Investment income $ 3.1 $ 6.2 $ 18.1
Other 6.8 7.5 15.6
--------------------------------
$ 9.9 $ 13.7 $ 33.7
================================
</TABLE>
41
<PAGE>
K - Income Taxes
The principal current and non-current deferred tax assets and (liabilities) are
as follows:
<TABLE>
<CAPTION>
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Deferred tax liabilities:
Accelerated depreciation for tax
purposes $(493.0) $(439.9)
Nontaxable pension asset (90.1) (84.6)
Deferred installment gain (47.5) (47.5)
Other (55.0) (60.7)
-----------------
(685.6) (632.7)
Deferred tax assets:
Alternative minimum tax carryforward 16.0
Compensation and fringe benefits accruals 55.8 53.0
Postretirement benefit accrual 48.3 48.2
Loss provisions and other expenses not
currently deductible 29.3 27.0
Other 21.4 26.9
-----------------
170.8 155.1
-----------------
Net deferred liability $(514.8) $(477.6)
=================
Included in the balance sheets:
Current assets - deferred tax asset $ 34.2 $ 36.6
Deferred items (549.0) (514.2)
-----------------
Net deferred liability $(514.8) $(477.6)
=================
</TABLE>
The significant components of income tax expense are as follows:
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
(All dollar amounts in millions)
<S> <C> <C> <C>
Currently payable:
Federal $15.5 $ 36.9 $ 86.3
Federal alternative minimum
tax 16.0
State and local .2 6.8 6.9
Foreign 14.3 13.1 8.5
-------------------------
46.0 56.8 101.7
Change in deferred income taxes 37.2 57.4 91.3
-------------------------
83.2 114.2 193.0
Allocation to partnership earnings (1.9) (2.0) (4.3)
Allocation to discontinued operations (3.2) (4.5)
-------------------------
$81.3 $ 109.0 $ 184.2
=========================
</TABLE>
42
<PAGE>
The following table summarizes the major differences between the actual income
tax provision attributable to continuing operations and taxes computed at the
federal statutory rates:
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
(All dollar amounts in millions)
<S> <C> <C> <C>
Federal taxes computed at statutory rate $77.9 $103.1 $170.7
State and local income taxes, net of
federal benefit 4.0 6.5 12.9
Impact related to difference in tax
rates for foreign operations (1.2) (1.3) 3.2
Other .6 .7 (2.6)
-----------------------
Income taxes $81.3 $109.0 $184.2
=======================
Effective tax rate 36.5% 37.0% 37.8%
=======================
</TABLE>
At December 31, 1997, no domestic income taxes have been provided on Mead's
share of the undistributed net earnings of corporate investees and overseas
operations. Those earnings totaled $246.2 million, including foreign currency
translation adjustments. The aggregate amount of unrecognized deferred tax
liability is approximately $12 million at December 31, 1997.
L - Discontinued Operations
In December 1994, the Company sold its Electronic Publishing segment. The
additional gain on sale recognized in 1995 resulted primarily from the
adjustment of certain items related to this sale. During 1996, the Company sold
its previously discontinued Imaging business, resulting in a gain of $5.4
million, net of income tax of $3.2 million.
43
<PAGE>
M - Pension Plans
The Company has pension plans that cover substantially all employees.
Pension benefits for bargaining employees are primarily based upon years of
credited service. Benefits for salaried and other non-bargaining employees
are based upon years of service and the employee's average final earnings.
Mead's funding policy is to contribute amounts to the plans sufficient to
meet or exceed the minimum requirements of the Employee Retirement Income
Security Act.
Summary information on the Company's funded plans is as follows:
<TABLE>
<CAPTION>
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Financial status of plans:
Plan assets at fair value (primarily common
stocks and fixed income securities) $ 978.5 $ 888.7
Actuarial present value of accumulated
benefit obligation:
Vested (593.2) (546.8)
Non-vested (60.2) (53.3)
Estimated effect of future salary increases
at 1% over expected inflation (65.1) (62.2)
------- -------
Projected benefit obligation (718.5) (662.3)
------- -------
Plan assets in excess of projected
benefit obligation 260.0 226.4
Reconciliation of financial status of plans to
amounts recorded in Mead's balance sheets:
Unamortized plan assets in excess of plan
liabilities (overfunding) at January 1,
1986 - to be recognized as a reduction of
future years' pension expense (25.3) (33.5)
Unrecorded effect of net (gain) arising from
differences between actuarial assumptions
used to determine periodic pension expense
and actual experience (29.5) (2.2)
Unamortized prior service cost 32.0 31.8
------- -------
Pension asset $ 237.2 $ 222.5
======= =======
Benefit obligation discount rate 7.00% 7.75%
======= =======
</TABLE>
44
<PAGE>
The projected benefit obligation for the Company's unfunded plans was $31.4
million and $30.1 million at December 31, 1997 and 1996, respectively, of
which $26.3 million and $22.6 million represent the accumulated benefit
obligation. Of the projected benefit obligation, $18.8 million and $19.2
million at December 31, 1997 and 1996, respectively, is subject to later
amortization. Unfunded accrued pension cost is $12.6 million and $10.9
million at December 31, 1997 and 1996, respectively.
The components of net pension (income) expense for all pension plans are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
(All dollar amounts in millions)
<S> <C> <C> <C>
Service cost, benefits earned
during the year $ 20.9 $ 20.4 $ 15.5
Interest cost on projected benefit
obligation 51.0 49.6 46.4
Actual return on plan assets (164.0) (99.2) (181.2)
Net amortization and deferral 84.6 21.7 114.4
------- ------ -------
Net pension (income) expense $ (7.5) $ (7.5) $ (4.9)
======= ====== =======
</TABLE>
The expected long-term rate of return on plan assets used in determining
net pension income was 9% in all years.
The Company's pension plans require the allocation of excess plan assets to
plan members if the plans are terminated, merged or consolidated following
a change in control (as defined) of the Company opposed by the Board of
Directors of the Company. Amendment of these provisions after such a change
in control would require approval of plan participants.
N - Postretirement Benefits Other than Pensions
The Company funds certain health care benefit costs principally on a
pay-as-you-go basis, with retirees paying a portion of the costs. Certain
retired employees of businesses acquired by the Company are covered under
other health care plans that differ from current plans in coverage,
deductibles and retiree contributions.
45
<PAGE>
Summary information on the Company's plans is as follows:
<TABLE>
<CAPTION>
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Financial status of plans:
Accumulated postretirement benefit obligation:
Retirees $ (58.7) $ (64.5)
Fully eligible, active plan participant (19.1) (19.9)
Other active plan participants (42.8) (29.9)
------- -------
(120.6) (114.3)
Less plan assets at fair value 9.1 8.2
------- -------
Accumulated postretirement benefit obligation
in excess of plan assets (111.5) (106.1)
Reconciliation of financial status of plans to
amounts recorded in Mead's balance sheets -
Unrecorded effect of net (gain) arising from
differences between actuarial assumptions used
to determine periodic postretirement benefit
expense and actual experience (16.0) (20.8)
------- -------
Accrued postretirement benefit cost - included
in Deferred items $(127.5) $(126.9)
======= =======
Benefit obligation discount rate 7.00% 7.75%
======= =======
</TABLE>
The components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
(All dollar amounts in millions)
<S> <C> <C> <C>
Service cost, benefits attributed to
employee service during the year $ 2.5 $ 2.4 $ 2.3
Interest cost on accumulated
postretirement benefit obligation 8.0 8.6 9.6
Actual return on plan assets (.9) (1.0) (1.1)
Net amortization and deferral (1.1) .3 .5
----- ------- -------
Net periodic postretirement benefit cost $ 8.5 $ 10.3 $ 11.3
===== ======= =======
</TABLE>
46
<PAGE>
The expected long-term rate of return on plan assets used in determining
the net periodic postretirement benefit cost was 8% in each year. The
assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation in 1997 was 8% declining by .8% per year
to an ultimate rate of 5%. The assumed health care trend rates used in 1996
was 9%, declining by .8% per year and 1995 was 12%, declining by 1% per
year.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefit obligation as of December 31, 1997,
would be increased by 7%. The effect of this change on the sum of the
service cost and interest cost components of net periodic postretirement
benefit cost for 1997 would be an increase of 9%.
O - Leases
At December 31, 1997, future minimum annual rental commitments under
noncancelable lease obligations are as follows:
<TABLE>
<CAPTION>
Capital Operating
(All dollar amounts in millions) Leases Leases
<S> <C> <C>
Year Ending December 31:
1998 $ 8.0 $ 39.1
1999 8.7 29.7
2000 9.0 20.6
2001 7.4 14.2
2002 7.5 12.6
Later years through 2028 342.9 61.0
------- ------
Total minimum lease payments 383.5 $177.2
======
Less amount representing interest (195.8)
-------
Present value of net minimum lease payments 187.7
Less current maturities of capital lease obligations (.5)
-------
Capital lease obligations $ 187.2
=======
</TABLE>
Capital leases are for manufacturing facilities, equipment and warehouse
and office space. Capital lease property included in property, plant and
equipment is as follows:
<TABLE>
<CAPTION>
December 31 1997 1996
(All dollar amounts in millions)
<S> <C> <C>
Land and buildings $ 4.4 $ 4.5
Machinery and equipment 195.6 170.6
------ ------
200.0 175.1
Less accumulated amortization (80.5) (73.4)
------ ------
$119.5 $101.7
====== ======
</TABLE>
47
<PAGE>
The majority of rent expense is for operating leases which are for office,
warehouse and manufacturing facilities and delivery, manufacturing and
computer equipment. A number of these leases have renewal options. Rent
expense was $59.2 million, $54.9 million and $49.3 million in 1997, 1996
and 1995, respectively.
P - Litigation and Other Proceedings
The Company is involved in various litigation generally incidental to
normal operations, as well as proceedings regarding equal employment
opportunity matters, among others. The Company has also been identified as
a potentially responsible party in at least 19 environmental proceedings.
It is not possible to determine the ultimate liability, if any, in all
these matters. The Company has established reserves of $38 million relating
to environmental liabilities, including those related to discontinued
operations, which it believes are probable and reasonably estimable. The
Company believes that it is reasonably possible that costs associated with
these sites may exceed current reserves by an amount that could range from
an insignificant amount to as much as $45 million. The estimate of this
range is less certain than the estimates upon which reserves are based. In
order to establish this range, assumptions less favorable to the Company
among those outcomes that are considered reasonably possible were used. In
the opinion of management, after consultation with legal counsel and after
considering established reserves, the resolution of pending litigation and
proceedings is not expected to have a material effect on the financial
condition, results of operations or liquidity of the Company.
Q - Additional Information on Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
(All dollar amounts in millions)
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 90.0 $ 69.0 $ 69.4
Less amount capitalized (9.2) (6.9) (2.0)
------------------------
Interest, net of amount capitalized $ 80.8 $ 62.1 $ 67.4
========================
Income taxes $ 41.3 $ 58.8 $417.4
========================
</TABLE>
48
<PAGE>
R - Segment Information
Industry Segments
-----------------
The Company classifies its businesses into three industry segments. A
comparison of the operations of the Company's businesses based on sales,
earnings from continuing operations before income taxes and identifiable
assets is shown below. The Paper operations manufacture and sell printing,
writing, carbonless copy, publishing and specialty paper primarily to
domestic publishers, printers and converters. The Packaging and Paperboard
operations manufacture and sell beverage and food packaging materials,
corrugated shipping containers and paperboard to those markets primarily
located in the United States with other operations conducted in Europe,
Latin America and the Pacific Rim. The Distribution and School and Office
Products operations are predominantly domestic and market a full line of
paper products to users of printing papers, industrial supplies and
packaging materials. These operations also manufacture and distribute
school and office paper related products to retailers.
Geographic Areas
----------------
The Company has sales from foreign subsidiaries primarily in Canada,
Europe, Latin America and the Pacific Rim. No individual foreign geographic
area is significant to the Company relative to total net sales, earnings
from continuing operations before taxes or identifiable assets. Net sales
to unaffiliated customers from the Company's foreign subsidiaries were
$534.6 million, $528.5 million and $495.3 million in 1997, 1996 and 1995,
respectively. Earnings from operations for foreign subsidiaries were $43.9
million, $45.1 million and $33.8 million in 1997, 1996 and 1995,
respectively. Foreign identifiable assets were $365.8 million, $383.2
million and $427.9 million in 1997, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(All dollar amounts in millions) Sales (1)
----------------------------------------------------------------------------------
Year Ended December 31 1997 1996 1995
----------------------------------------------------------------------------------
Unaffiliated Intersegment Unaffiliated Intersegment Unaffiliated Intersegment
<S> <C> <C> <C> <C> <C> <C>
Industry segments:
Paper $1,576.1 $ 242.6 $1,251.3 $ 197.5 $1,243.3 $ 217.7
Packaging and Paperboard 1,431.8 5.3 1,371.4 4.6 1,428.8 7.0
Distribution and School
and Office Products 2,069.5 9.4 2,083.8 8.9 2,507.3 9.3
Intersegment elimination (257.3) (211.0) (234.0)
----------------------------------------------------------------------------------
Total $5,077.4 $4,706.5 $5,179.4
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
(All dollar amounts in millions) Earnings from Continuing Operations Depreciation,
Before Income Taxes (2) Depletion and Amortization
----------------------------------------------------------------------------------
Year Ended December 31 1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Industry segments:
Paper $ 194.5 $ 193.8 $ 330.8 $ 112.2 $ 84.3 $ 72.3
Packaging and Paperboard 129.6 138.6 184.9 149.1 141.4 139.4
Distribution and School
and Office Products 38.7 69.3 77.3 13.3 13.4 13.0
Corporate and other (140.3) (107.1) (105.3) 13.9 11.3 12.0
------------------------------------------------------------------
Total $ 222.5 $ 294.6 $ 487.7 $ 288.5 $ 250.4 $ 236.7
==================================================================
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
(All dollar amounts in millions)
Identifiable Assets (3) Capital Expenditures
---------------------------------------------------------------
Year Ended December 31 1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Industry segments:
Paper $2,138.5 $2,149.4 $1,425.6 $110.5 $101.5 $ 73.7
Packaging and Paperboard 1,941.3 1,782.7 1,631.6 293.8 294.9 165.0
Distribution and School
and Office Products 554.6 473.4 471.0 15.0 15.4 8.3
Intersegment elimination (23.1) (19.2) (21.7)
Corporate and other 618.4 599.6 866.3 21.4 21.6 16.0
---------------------------------------------------------------
Total $5,229.7 $4,985.9 $4,372.8 $440.7 $433.4 $263.0
===============================================================
</TABLE>
(1) Intersegment sales are made at substantially the same prices and on the same
terms as to unaffiliated customers.
(2) Earnings from continuing operations before income taxes for "Corporate and
other" includes the following:
<TABLE>
<CAPTION>
Year Ended December 31 1997 1996 1995
<S> <C> <C> <C>
Other revenues $ 13.0 $ 10.7 $ 25.9
Interest expense (98.2) (57.7) (69.4)
Other expenses (55.1) (60.1) (61.8)
------- ------- -------
$(140.3) $(107.1) $(105.3)
======= ======= =======
</TABLE>
(3) The identifiable assets of "Corporate and other" consist primarily of cash
and cash equivalents, property, plant and equipment, and investments and other
assets.
50
<PAGE>
Selected Quarterly Financial Data (unaudited)
(All dollar amounts in millions, except per share data)
<TABLE>
<CAPTION>
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Year
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales:
1997 $1,135.7 $1,322.3 $1,375.6 $1,243.8 $5,077.4
1996 $1,067.2 $1,258.5 $1,231.1 $1,149.7 $4,706.5
1995 1,240.8 1,442.2 1,352.4 1,144.0 5,179.4
Gross profit:
1997 195.2 234.0 240.7 230.2 900.1
1996 204.0 258.1 236.0 204.5 902.6
1995 221.9 312.2 299.1 242.2 1,075.4
Earnings from
continuing operations:
1997 20.2 47.8 50.3 31.8 150.1
1996 30.9 67.1 62.7 29.2 189.9
1995 61.7 102.2 104.5 74.1 342.5
Per common share -
basic:(1)
Earnings from
continuing operations:
1997 0.19 0.46 0.48 0.31 1.44
1996 0.29 0.64 0.60 0.28 1.81
1995 0.54 0.95 0.97 0.69 3.15
Net earnings:
1997 0.19 0.46 0.48 0.31 1.44
1996 0.34 0.64 0.60 0.28 1.86
1995 0.54 0.95 0.97 0.76 3.22
Per common share -
assuming dilution:(1)
Earnings from
continuing operations:
1997 0.19 0.45 0.47 0.30 1.41
1996 0.29 0.63 0.59 0.28 1.79
1995 0.54 0.94 0.95 0.68 3.10
Net earnings:
1997 0.19 0.45 0.47 0.30 1.41
1996 0.34 0.63 0.59 0.28 1.84
1995 0.54 0.94 0.95 0.75 3.17
Cash dividends per common share:
1997 0.15 0.15 0.15 0.16 0.61
1996 0.14 0.15 0.15 0.15 0.59
1995 0.13 0.14 0.14 0.14 0.55
</TABLE>
(1) The number of shares used in the calculation of per share data is
computed based on quarterly averages; therefore, the sum of individual
earnings per share may not equal the annual computation.
51
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information pursuant to this item is incorporated herein by reference to
pages 3 through 6 and 26 of the Company's Proxy Statement, definitive
copies of which were filed with the Securities and Exchange Commission
("Commission") on March 10, 1998. Information concerning executive
officers is also included in Part I of this report following Item 4.
Item 11. Executive Compensation
Information pursuant to this item is incorporated herein by reference
to pages 10 through 22 of the Company's Proxy Statement (excluding the
"Report of Compensation Committee on Executive Compensation" on pages 11
through 13 and the "Performance Graph" on page 20), definitive copies of
which were filed with the Commission on March 10, 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information pursuant to this item is incorporated herein by reference
to pages 8 through 11 of the Company's Proxy Statement, definitive copies
of which were filed with the Commission on March 10, 1998.
Item 13. Certain Relationships and Related Transactions
Information pursuant to this item is incorporated herein by reference
to page 26 of the Company's Proxy Statement, definitive copies of which
were filed with the Commission on March 10, 1998.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
The financial statements of The Mead Corporation and
consolidated subsidiaries are included in Part II, Item 8.
52
<PAGE>
2. Financial Statement Schedule
Page
----
Schedule II --Valuation and Qualifying Accounts........... 60
The information required to be submitted in Schedules I and III
through V for The Mead Corporation and consolidated subsidiaries has either
been shown in the financial statements or notes thereto, or is not
applicable or required under rules of Regulation S-X, and, therefore, those
schedules have been omitted.
3. Exhibits
(3) Articles of Incorporation and Bylaws:
(i) Amended Articles of Incorporation of the Registrant adopted
May 28, 1987 (incorporated by reference to Exhibit (3)(i) of
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
(ii) Regulations of the Registrant, as amended April 25, 1996
(incorporated by reference to Exhibit (3)(ii) of Registrant's
Quarterly Report on Form 10-Q for the Quarterly Period ended March
31, 1996).
(4) Instruments defining the rights of security holders, including
indentures:
(i) Credit Agreement dated as of November 15, 1989 with Bankers
Trust Company, The First National Bank of Chicago, Morgan Guaranty
Trust Company of New York and fifteen other banks; Amendment No. 1
thereto dated as of November 30, 1991; Amendment No. 2 thereto
dated as of May 1, 1994 (incorporated by reference to Exhibit
(10)(1) to Registrant's Quarterly Report on Form 10-Q for the
Quarterly Period ended July 3, 1994); Amendment No. 3 thereto dated
as of August 31, 1995 (incorporated by reference to Exhibit (4)(1)
to Registrant's Quarterly Report on Form 10-Q for the Quarterly
Period ended October 1, 1995); Amendment No. 4 thereto dated as of
August 31, 1996 (incorporated by reference to Exhibit (4)(i) to
Registrant's Quarterly Report on Form 10-Q for the Quarterly Period
ended September 29, 1996); and Amendment No. 5 thereto dated as of
October 31, 1997.
(ii) Indenture dated as of July 15, 1982 between the Registrant
and Bankers Trust Company, as Trustee, First Supplemental Indenture
dated as of March 1, 1987, Second Supplemental Indenture dated as
of October 15, 1989 and Third Supplemental Indenture dated as of
November 15, 1991.
(iii) Indenture dated as of February 1, 1993 between Registrant
and The First National Bank of Chicago, as Trustee.
(iv) Indenture dated as of October 20, 1997 between Registrant
and Citibank, N.A., as Trustee (incorporated by reference to
Exhibit 4(g) of Registrant's Current Report on Form 8-K dated
October 20, 1997).
The total amount of securities authorized under other long-term
debt instruments does not exceed 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis. A copy of
each such instrument will be furnished to the Commission upon
request.
53
<PAGE>
(10) Material Contracts:
(i) Agreement dated as of April 24, 1964 between Northwood
Mills Limited, Canamead, Inc., the Registrant and Noranda Mines,
Limited and Supplemental Agreements relating thereto dated as of
July 2, 1964, April 5, 1965, March 15, 1966, February 1, 1967,
December 15, 1970 and April 1, 1974.
(ii) Pulp Purchase Agreement dated as of April 1, 1965 among
Northwood Pulp Limited, the Registrant, Northwood Mills Ltd. and
Noranda Mines Limited.
(iii) Restated Rights Agreement dated as of November 9, 1996
between Registrant and First National Bank of Boston, as Rights
Agent, (incorporated herein by reference to Registrant's Form 8-A,
dated November 13, 1996), as amended November 1, 1997 (incorporated
by reference to Registrant's Form 8-A/A dated November 3, 1997).
(iv) Amended Board Purchase Agreement dated as of January 4,
1988 among the Registrant, Georgia Kraft Company and Inland
Container Corporation.
(v) Indemnification Agreement dated as of January 4, 1988
among the Registrant, Mead Coated Board, Inc., Temple-Inland Inc.,
Inland Container Corporation I, Inland Container Corporation, GK
Texas Holding Company and Georgia Kraft Company.
(vi) Lease Agreement between The Industrial Development Board
of the City of Phenix City, Alabama and Mead Coated Board, Inc.,
dated as of December 1, 1988, as amended.
(vii) Lease Agreement between The Industrial Development Board
of the City of Phenix City, Alabama and Mead Coated Board, Inc.,
dated as of June 1, 1993, as amended.
The following are compensatory plans and arrangements in which
directors or executive officers participate:
(viii) 1984 Stock Option Plan of the Registrant, as amended and
restated through November 9, 1996 (incorporated by reference to
Exhibit (10)(ix) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996).
(ix) 1991 Stock Option Plan of the Registrant, as amended
through November 9, 1996 (incorporated by reference to Exhibit
(10)(x) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996).
(x) 1996 Stock Option Plan of the Registrant as amended
through November 9, 1996 (incorporated by reference to Exhibit
(10)(xi) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996).
(xi) Incentive Compensation Election Plan of the Registrant as
amended November 17, 1987, as amended October 29, 1988.
(xii) 1985 Supplement to Registrant's Incentive Compensation
Election Plan, as amended November 17, 1987, and as further amended
October 29, 1988.
(xiii) Excess Benefit Plan of the Registrant dated January 1,
1996 (incorporated by reference to Exhibit (10)(3) to Registrant's
54
<PAGE>
Quarterly Report on Form 10-Q for the Quarterly Period ended March
31, 1996).
(xiv) Excess Earnings Benefit Plan of the Registrant dated
January 1, 1996 (incorporated by reference to Exhibit (10)(4) to
Registrant's Quarterly Report on Form 10-Q for the Quarterly Period
ended March 31, 1996).
(xv) Restated Supplemental Executive Retirement Plan effective
January 1, 1997 (incorporated by reference to Exhibit (10)(3) to
Registrant's Quarterly Report on Form 10-Q for the Quarterly Period
ended March 30, 1997).
(xvi) Form of Indemnification Agreement between Registrant and
each of John C. Bogle, John G. Breen, William E. Hoglund, James G.
Kaiser, Robert J. Kohlhepp, John A. Krol, Susan J. Kropf, Charles
S. Mechem, Jr., Paul F. Miller, Jr., Lee J. Styslinger, Jr., Jerome
F. Tatar and J. Lawrence Wilson.
(xvii) Form of Severance Agreement between Registrant and each
of William R. Graber, Elias M. Karter, Raymond W. Lane, Thomas E.
Palmer, Jerome F. Tatar and other key employees.
(xviii) Restated Benefit Trust Agreement dated August 27, 1996
between Registrant and Society Bank, National Association
(incorporated by reference to Exhibit (10)(1) of Registrant's
Quarterly Report on Form 10-Q for the Quarterly Period ended
September 29, 1996).
(xix) Restricted Stock Plan effective December 10, 1987, as
amended through November 9, 1996 (incorporated by reference to
Exhibit (10)(xxi) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996).
(xx) Deferred Compensation Plan for Directors of the
Registrant, as amended through October 29, 1988.
(xxi) 1985 Supplement to Registrant's Deferred Compensation
Plan for Directors, as amended through October 29, 1988.
(xxii) Directors Capital Accumulation Plan (incorporated by
reference to Exhibit (10)(1) of Registrant's Quarterly Report on
Form 10-Q for the Quarterly Period ended June 30, 1996).
(xxiii) Form of Executive Life Insurance Policy for Key
Executives.
(xxiv) Long Term Incentive Plan effective 1997 (incorporated by
reference to Exhibit (10)(2) of Registrant's Quarterly Report on
Form 10-Q for the Quarterly Period ended March 30, 1997).
(xxv) Annual Incentive Plan for 1997 (incorporated by
reference to Exhibit (10)(1) of Registrant's Quarterly Report on
Form 10-Q for the Quarterly Period ended March 30, 1997).
(xxvi) Form of Mead Executive Capital Accumulation Plan
effective January 1, 1995 (incorporated by reference to Exhibit
(10)(1) of Registrant's Quarterly Report on Form 10-Q for the
Quarterly Period ended July 2, 1995.), amended as of March 1, 1997
(incorporated by reference to Exhibit 10(4) to Registrant's
Quarterly Report on Form 10-Q for the Quarterly Period ended March
30, 1997), and amended as of July 1, 1997.
55
<PAGE>
(12) Statements re Computation of Ratios.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
(27) Financial Data Schedule
(b) Reports on Form 8-K
(1) A Form 8-K was filed on October 17, 1997 reporting under Item 5
certain financial results of Registrant for the Quarterly Period ended September
28, 1997. Also filed as an exhibit was a copy of a Press Release dated October
15, 1997.
(2) A Form 8-K was filed on October 27, 1997 reporting under Item 5
Registrant's execution of a Distribution Agreement dated October 20, 1997 with
Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated
relating to the sale by the Registrant through the Agents from time to time of
up to $154,000,000 aggregate offering price of the Registrant's Medium Term
Notes, Series A Due Nine Months to Thirty Years from date of issue. Also filed
as exhibits were copies of the Distribution Agreement, Indenture, Form of Fixed
Rate and Floating Rate Notes and legal opinions.
56
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE MEAD CORPORATION
Date: February 26, 1998 By JEROME F. TATAR
-------------------------------------
Jerome F. Tatar
Chairman of the Board,
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: February 26, 1998 By JEROME F. TATAR
-------------------------------------
Jerome F. Tatar
Director, Chairman of the Board,
Chief Executive Officer and
President
Date: February 26, 1998 By WILLIAM R. GRABER
-------------------------------------
William R. Graber
Vice President and Chief
Financial Officer (principal
financial officer)
Date: February 26, 1998 By GREGORY T. GESWEIN
-------------------------------------
Gregory T. Geswein
Vice President and Controller
(principal accounting officer)
Date: February 26, 1998 By JOHN C. BOGLE
-------------------------------------
John C. Bogle
Director
Date: February 26, 1998 By JOHN G. BREEN
-------------------------------------
John G. Breen
Director
Date: February 26, 1998 By WILLIAM E. HOGLUND
-------------------------------------
William E. Hoglund
Director
57
<PAGE>
Date: February 26, 1998 By JAMES G. KAISER
----------------------------------
James G. Kaiser
Director
Date: February 26, 1998 By JOHN A. KROL
----------------------------------
John A. Krol
Director
Date: February 26, 1998 By SUSAN J. KROPF
----------------------------------
Susan J. Kropf
Director
Date: February 26, 1998 By CHARLES S. MECHEM, JR.
----------------------------------
Charles S. Mechem, Jr.
Director
Date: February 26, 1998 By PAUL F. MILLER, JR.
----------------------------------
Paul F. Miller, Jr.
Director
Date: February 26, 1998 By LEE J. STYSLINGER, JR.
----------------------------------
Lee J. Styslinger, Jr.
Director
Date: February 26, 1998 By J. LAWRENCE WILSON
-----------------------------------
J. Lawrence Wilson
Director
58
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE FURNISHED PURSUANT TO
REQUIREMENTS OF FORM 10-K
Years Ended December 31, 1997, 1996 and 1995
59
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
(All dollar amounts in millions)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ---------------------------------- ---------- ------------------- ----------- --------
Additions
-------------------
<S> <C> <C> <C> <C> <C>
Charged Charged Balance
Balance at to to Other at
Beginning Costs & Accounts- Deductions- End of
Description of Period Expenses Describe Describe Period
- ---------------------------------- ---------- -------- --------- ----------- --------
Year Ended December 31, 1996:
Allowance for doubtful accounts $ 28.0 $ 3.7 $-0- $ 6.8 (A) $ 24.9
========== ======== ========= =========== ========
Accumulated amortization of good-
will and other intangibles $ 40.6 $ 3.3 $ -0- $ -0- $ 43.9
========== ======== ========= =========== ========
Year Ended December 31, 1995:
Allowance for doubtful accounts $ 26.8 $ 7.1 $ -0- $ 5.9 (A) $ 28.0
========== ======== ========= =========== ========
Accumulated amortization of good-
will and other intangibles $ 37.3 $ 3.3 $ -0- $ -0- $ 40.6
========== ======== ========= =========== ========
Year Ended December 31, 1994:
Allowance for doubtful accounts $ 23.9 $ 10.2 $ -0- $ 7.3 (A) $ 26.8
========== ======== ========= =========== ========
Accumulated amortization of good-
will and other intangibles $ 34.0 $ 3.3 $ -0- $ -0- $ 37.3
========== ======== ========= =========== ========
Reserve for asset impairment $ 60.0 $ -0- $ -0- $ 60.0 (B) $ -0-
========== ======== ========= =========== ========
</TABLE>
(A) Accounts charged off, net of recoveries.
(B) Reserve of sold business.
60
<PAGE>
THE MEAD CORPORATION
EXHIBITS TO FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1997
<PAGE>
[CONFORMED COPY]
- --------------------------------------------------------------------------------
THE MEAD CORPORATION
$650,000,000
CREDIT AGREEMENT
Dated as of November 15, 1989
BANKERS TRUST COMPANY
THE FIRST NATIONAL BANK OF CHICAGO
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Co-Agents
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS*
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. AMOUNTS AND TERMS OF LOANS.................................. 1
1.1 Commitments................................................. 1
1.2 Amount of Each Borrowing; Number of Borrowings.............. 2
1.3 Notices of Borrowing........................................ 2
1.4 Disbursement of Funds....................................... 4
1.5 The Notes................................................... 5
1.6 Allocation of Borrowings.................................... 6
1.7 Interest.................................................... 6
1.8 Interest Periods............................................ 7
1.9 Increased Costs, Illegality, Etc............................ 8
1.10 Compensation................................................ 10
1.11 Special Payment Provisions.................................. 10
1.12 Fees........................................................ 11
1.13 Reductions and Terminations of Commitments.................. 11
1.14 Substitutions............................................... 12
1.15 Election Revision........................................... 12
SECTION 2. SPECIAL PROVISIONS APPLICABLE TO SPECIAL FACILITY LOANS
AND ACCEPTANCES........................................... 12
2.1 Interest.................................................... 12
2.2 Interest Payment Dates...................................... 12
2.3 Overdue Payment of Principal and Interest................... 13
2.4 Special Facility Interest Periods........................... 13
2.5 Compensation................................................ 13
2.6 Acceptance Obligation....................................... 14
2.7 Notices..................................................... 14
2.8 Optional Currency Loans..................................... 14
SECTION 3. PAYMENTS.................................................... 14
3.1 Payments on Non-Business Days............................... 14
3.2 Voluntary Prepayments....................................... 14
3.3 Method and Place of Payment, Etc............................ 15
Net Payments................................................ 15
</TABLE>
- ---------------
* This Table of Contents is for the convenience of the parties only and is not a
part of the attached Agreement.
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4. CONDITIONS PRECEDENT............................ 16
4.1 Conditions to Effectiveness..................... 16
4.2 Conditions to Each Loan......................... 17
SECTION 5. AFFIRMATIVE COVENANTS........................... 18
5.1 Furnish Financial Statements and Information,
Etc........................................... 18
5.2 ERISA........................................... 20
5.3 Insurance....................................... 20
5.4 Taxes, Charges, Etc............................. 21
5.5 Property........................................ 21
5.6 Corporate Existence, Etc........................ 21
SECTION 6. NEGATIVE COVENANTS.............................. 21
6.1 Liens........................................... 21
6.2 Indebtedness.................................... 23
6.3 Consolidation; Merger; Sale of Properties....... 24
6.4 Sale and Leasebacks............................. 24
6.5 Dividends....................................... 25
SECTION 7. EVENTS OF DEFAULT............................... 25
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS...... 27
8.1 Financial Information........................... 28
8.2 No Violation.................................... 28
8.3 Corporate Status................................ 28
8.4 Taxes, Etc...................................... 28
8.5 Governmental Approvals.......................... 29
8.6 Compliance with ERISA........................... 29
8.7 Regulations G, T, U and X....................... 29
8.8 Dividends....................................... 29
SECTION 9. AGENTS.......................................... 30
9.1 Appointment..................................... 30
9.2 Nature of Duties................................ 30
9.3 Rights, Exculpation, Etc........................ 30
9.4 Reliance........................................ 31
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
9.5 Indemnification................................. 31
9.6 The Agents, Individually........................ 31
9.7 Holders of Notes................................ 32
9.8 Resignation by an Agent......................... 32
SECTION 10. MISCELLANEOUS................................... 32
10.1 Definitions..................................... 32
10.2 Accounting Principles; Computations............. 45
10.3 Exercise of Rights.............................. 45
10.4 Amendment and Waiver............................ 46
10.5 Expenses........................................ 46
10.6 Benefit of Agreement............................ 47
10.7 Descriptive Headings............................ 47
10.8 Notices, Requests, Demands...................... 47
10.9 Survival of Representations and Warranties...... 48
10.10 Governing Law; Submission to Jurisdiction....... 48
10.11 Counterparts.................................... 48
10.12 Right of Setoff................................. 48
10.13 Proration of Excess Payments.................... 49
10.14 Judgment Currency............................... 49
Exhibits:
A - Note
B - Opinion of Company's Counsel
Schedules:
I Indebtedness Percentage
II Commitments
III - Existing Agreements
</TABLE>
(iii)
<PAGE>
CREDIT AGREEMENT, dated as of November 15, 1989, among THE MEAD
CORPORATION, an Ohio corporation (the "Company"), the banks listed on Schedule
II hereto (each a "Bank" and collectively, the "Banks") and BANKERS TRUST
COMPANY, THE FIRST NATIONAL BANK OF CHICAGO and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Co-Agents for the Banks to the extent and in the manner provided in
(S)9 below (in such capacity, each an "Agent" and together, the "Agents").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Company the credit
facility herein provided;
NOW, THEREFORE, it is agreed:
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Commitments. (a) Subject to and upon the terms and conditions
------------
herein set forth, each Bank severally agrees, at any time and from time to time
prior to the Termination Date (all capitalized terms used herein shall have the
meaning specified therefor in (S)10.1 unless otherwise defined herein), to make
a loan or loans (each a "Loan" and collectively, the "Loans") to the Company,
which Loans may be repaid and borrowed in accordance with the provisions hereof
and shall, at the option of the Company, be Base Rate Loans, Fixed CD Rate
Loans, Eurodollar Loans or, in such Bank's sole discretion if the Company
requests, Special Facility Loans. Such Loans may, at the option of the Company
be Syndicate Loans or Commitment Loans or both, provided that, except as
provided in (S)1.9, all the Syndicate Loans made by all the Banks at any one
Borrowing hereunder must be either all Base Rate Loans, all Fixed CD Rate Loans
or all Eurodollar Loans and any Commitment Loan made by a Bank at any one
Borrowing hereunder must be a Base Rate Loan, Fixed CD Rate Loan or Eurodollar
Loan. The Loans (other than the Special Facility Loans) of any Bank shall not
exceed in aggregate principal amount at any time outstanding (including the
Dollar Equivalent of Loans made in Optional Currencies determined at the
Exchange Rate in effect on the date such Loan is made) an amount equal to such
Bank's Commitment, less the sum of (i) the outstanding Principal Component of
all Acceptances discounted by such Bank, and (ii) such Bank's ratable share at
such time of the outstanding principal amount of all Special Facility Loans.
(b) Subject to and upon the terms and conditions herein set forth,
each Bank severally may, in its sole discretion, at any time and from time to
time prior to the Termination Date, extend credit to the Company by accepting
drafts drawn by the Company on such Bank and
<PAGE>
discounting such accepted drafts (each draft accepted and discounted hereunder,
an "Acceptance") at the Discount Rate. Each Bank shall follow its normal
procedures in effecting any such acceptance and discount. The aggregate
Principal Component of outstanding Acceptances discounted by each Bank shall not
exceed at any one time outstanding an amount equal to such Bank's Commitment
less (i) the aggregate outstanding principal amount of the Loans made by such
Bank and (ii) such Bank's pro rata share of the outstanding principal amount of
Special Facility Loans (including the Dollar Equivalent of Special Facility
Loans made in an Optional Currency determined at the Exchange Rate in effect on
the date such Loan is made). No Acceptance shall mature after the Termination
Date. It is understood and agreed that the foregoing shall not preclude the
Company from requesting that any Bank accept and discount drafts drown on such
Bank by the Company or otherwise extend credit to the Company, in each case not
pursuant to this Agreement, and that any such acceptance of drafts or extension
of credit shall not be deemed to be an Acceptance or Loan.
1.2 Amount of Each Borrowing; Number of Borrowings. (a) The aggregate
principal amount of all Syndicate Loans made by all the Banks at any one
Borrowing and the aggregate principal amount of any Commitment Loan shall be not
less than $5,000,000 or, if greater, an integral multiple of $1,000,000,
provided that, except as provided in (S)1.9(b), the aggregate principal amount
of Fixed Rate Loans made at any one Borrowing shall not be less than $10,000,000
or, if greater, an integral multiple of $1,000,000.
(b) The principal amount of each Special Facility Loan and the
Principal Component of each Acceptance shall be as agreed upon by the Company
and the Bank making such Special Facility Loan or discounting such Acceptance,
provided that the aggregate principal amount of Special Facility Loans made by
all Banks shall not exceed at any one time outstanding the Total Commitment less
(i) the aggregate principal amount of Loans (other than Special Facility Loans)
and (ii) the outstanding Principal Component of all Acceptances discounted by
all Banks.
(c) The principal amount of each Commitment Loan shall not exceed the
lesser of (i) the Unutilized Commitment of the Bank making such Loan and (ii)
$50,000,000. If agreed to by the Company and the Bank making a Commitment Loan,
such Loan may be made available in such Optional Currencies as agreed by the
Company and such Bank, provided that no Bank shall have any obligation to make a
--------
Commitment Loan in an Optional Currency. The principal of and interest on each
Commitment Loan made in an Optional Currency shall be paid only in such Optional
Currency.
(d) The Company shall not be entitled to have more than 10 Borrowings
of Syndicate Loans outstanding at any one time.
1.3 Notices of Borrowing. (a) Whenever the Company desires to borrow
--------------------
Syndicate Loans hereunder prior to the Termination Date, it shall give the
Paying Agent at the Notice Office written notice or telephonic
-2-
<PAGE>
notice (confirmed promptly in writing) by no later than 10:00 A.M. (Chicago
time) on the third Business Day next preceding the date of Borrowing. Each such
notice (a "Notice of Syndicate Borrowing") shall specify: (i) the aggregate
principal amount the Company desires to borrow hereunder, (ii) the date of
borrowing (which shall be a Business Day), (iii) whether the Syndicate Loans are
to be maintained as Base Rate Loans, Fixed CD Rate Loans or Eurodollar Loans,
(iv) the Interest Period to be applicable thereto and (v) the Outstanding
Utilization of each Bank. The Paying Agent shall promptly give each Bank
telephonic notice (confirmed promptly in writing) of the proposed borrowing, of
such Bank's proportionate share thereof and of the other matters (other than the
Outstanding Utilization of each Bank) covered by the Notice of Syndicate
Borrowing.
(b) Whenever the Company desires to borrow a Commitment Loan from any
Bank prior to the Termination Date, it shall give such Bank and the Paying Agent
at the Notice Office written notice, or telephonic notice (confirmed promptly in
writing) by no later than 10:00 A.M. (local time) on the third Business Day next
preceding the date of Borrowing. Each such notice (a "Notice of Commitment
Borrowing") shall specify: (i) the aggregate principal amount the Company
desires to borrow with respect to such Commitment Loan (in U.S. dollars or, if
agreed, in the respective Optional Currency), (ii) the date the borrowing (which
shall be a Business Day), (iii) whether the Commitment Loan is to be maintained
as a Base Rate Loan, Fixed CD Rate Loan or Eurodollar Loan (iv) the Interest
Period to be applicable thereto, and (v) the Outstanding Utilization of such
Bank.
(c) The Company shall have the right, whenever it desires to incur a
Special Facility Loan or to create Acceptances, to contact any or all of the
Banks separately to determine the Special Rate that would be applicable to a
Special Facility Loan made by such Bank or Banks for the interest period
requested by the Company or the Discount Rate that would be applicable to
Acceptances accepted and discounted by such Bank or Banks for the maturity
requested by the Company, as the case may be, and each Bank contacted by the
Company may, in its sole discretion, provides a quote of a Special Rate for such
interest period or the Discount Rate for such maturity, as the case may be. Each
notice requesting the determination of a Special Rate or Discount Rate hereunder
shall specify that such request is being made pursuant to the terms of this
Agreement. Each Bank shall separately agree with the Company from time to time
on the procedures to be utilized in making a request for Special Facility Loans
or Acceptances (including, without limitation, the notice period and the time
period during which the Special Rate or Discount Rate, if any, quoted by such
Bank shall remain available). Upon electing to incur a Special Facility Loan or
to create an Acceptance from one or more Banks the Company shall notify such
Bank or Banks in accordance with the aforesaid procedures established with such
Bank or Banks and shall give the Paying Agent written or telephonic (confirmed
in writing) notice thereof. In the case of a Special Facility Loan, such notice
to the Paying Agent shall specify the principal amount (in U.S. dollars or the
respective Optional Currency)
-3-
<PAGE>
of such Special Facility Loan (and, if made in Optional Currency, the Dollar
Equivalent thereof on the date of Borrowing), the date of Borrowing, the Bank
from which incurred, the maturity thereof, and, if such Special Facility Loan is
to be made in an Optional Currency, the Optional Currency applicable thereto.
Subject to availability each Bank agrees to use its best efforts to make Special
Facility Loans and to create Acceptances, provided that it is understood that no
Bank shall be obligated to make Special Facility Loans or to create Acceptances
under this Agreement.
(d) With respect to any Syndicate Loan made by the Banks hereunder,
unless the Company shall have given (x) a Notice of Syndicate Borrowing,
requesting that Syndicate Loans be made on the Interim Maturity Date for such
Syndicate Loan or (y) the Paying Agent written or telephonic notice (confirmed
in writing) prior to the 10:00 A.M. (Chicago time) on such Interim Maturity Date
of the Company's intent not to incur Syndicate Loans on such date, the Company
shall be deemed to have requested that the Banks make Syndicate Loans maintained
as Base Rate Loans to the Company on such Interim Maturity Date. With respect to
any Commitment Loan made by any Bank hereunder, unless the Company shall have
given (x) a Notice of Commitment Borrowing requesting that a Commitment Loan be
made by such Bank on the Interim Maturity Date for such Commitment Loan or (y)
the Paying Agent and such Bank written or telephonic notice (confirmed in
writing) prior to 10:00 A.M. (local time) on such Interim Maturity Date of the
Company's intent not to incur a Commitment Loan from such Bank on such date, the
Company shall be deemed to have requested that such Bank make a Commitment Loan
maintained as a Base Rate Loan to the Company on such Maturity Date. The Base
Rate Loans deemed requested by the Company pursuant to this (S)1.3(d) shall have
an Interest Period of 30 days and shall be in principal amount equal to (m) the
Syndicate Loans maturing on such date, in the case of Base Rate Loans deemed
requested pursuant to the first sentence hereof and (n) the Commitment Loans of
the relevant Bank maturing on such date, in the case of Base Rate Loans deemed
requested pursuant to the second sentence hereof.
1.4 Disbursement of Funds. (a) No later than 12:00 Noon (Chicago time)
---------------------
on the date specified in each Notice of Syndicate Borrowing, each Bank will make
available its portion of the amount (determined in accordance with (S)1.6), if
any, by which the principal amount of the Syndicate Loans requested to be made
on such date exceeds the principal amount of the Syndicate Loans maturing on
such date in U.S. dollars and in immediately available funds, at the Payment
Office (for the account of such non-U.S. office of the Paying Agent as the
Paying Agent may direct in the case of Eurodollar Loans). The Paying Agent will
make available to the Company at the Payment Office the aggregate of the amounts
made available by the Banks against delivery to the Paying Agent at its Notice
Office, or at such other office as the Paying Agent may specify, of the
documents and papers as are provided for herein. The Paying Agent shall deliver
such documents and papers received by it for the account of each Bank to such
Bank or upon its order. To the extent that a Syndicate Loan of any Bank matures
on the
-4-
<PAGE>
date of a requested Borrowing, such Bank shall apply the proceeds of the
Syndicate Loan it is then making, to the extent thereof, to the repayment of
such maturing Syndicate Loan.
(b) No later than 12:00 Noon (local time) on the date specified in
each Notice of Commitment Borrowing delivered to a Bank with respect to a
Commitment Loan, such Bank will make available to the Company the amount, if
any, by which the principal amount of Commitment Loan requested to be made by
such Bank on such date exceeds the principal amount of the Commitment Loans made
by such Bank maturing on such date in U.S. dollars and in immediately available
funds, or in the case of a Commitment Loan made in an Optional Currency, in the
respective Optional Currency and in such funds as may be agreed upon by the
Company and such Bank, at the office of such Bank specified opposite its
signature hereto or at such other office as such Bank may designate to the
Company from time to time (each a "Bank Payment Office"). The amount of the
Commitment Loan will be made available to the Company at the Bank Payment Office
against delivery to such Bank at its Notice Office, or at such other office as
such Bank may specify, of the documents and papers as are provided for herein.
To the extent that a Commitment Loan made by any Bank matures on the date of a
requested Borrowing of a Commitment Loan from such Bank, such Bank shall apply
the proceeds of the Commitment Loan it is then making, to the extent thereof, to
the repayment of such maturing Commitment Loan.
(c) No later than 12:00 Noon (local time) on each date for the making
of a Special Facility Loan or the discount of Acceptances, the Bank making such
Special Facility Loan or discounting such Acceptances shall make available to
the Company the proceeds of such Special Facility Loan or the Principal
Component of such Acceptances, as the case may be, in U.S. dollars and in
immediately available funds, or, in the case of Loans made in Optional
Currencies, in the respective Optional Currency and in such funds as may be
agreed upon by the Company and such Bank, at the Bank Payment Office of such
Bank.
1.5 The Notes. The Company's obligation to pay the principal of, and
---------
interest on, all Loans (including Special Facility Loans) made by each Bank
shall be evidenced by a promissory note substantially in the form of Exhibit A
hereto (each a "Note" and collectively for all Banks, the "Notes") with blanks
appropriately completed. Each Note shall: (i) be dated the Effective Date; (ii)
be in the original principal amount of the Commitment of such Bank evidenced
thereby; (iii) mature, in the case of each Loan evidenced thereby, on the
expiration of the Interest Period applicable thereto or, if earlier, on the
Termination Date; (iv) bear interest as provided in the appropriate clause of
(S)1.7 in respect of the Base Rate Loans, Fixed CD Rate Loans and Eurodollar
Loans, as the case may be, evidenced thereby, and (S)2, in the case of Special
Facility Loans, evidenced thereby; (v) be entitled to the benefits of this
Agreement; and (vi) have attached thereto a schedule ("Loan and Repayment
Schedule") substantially in the form of Schedule I to Exhibit A. At the time of
the making of each Loan and upon each payment of the principal of its Loans,
each Bank
-5-
<PAGE>
shall, and is hereby authorized to, make a notation on the Loan and Repayment
Schedule of the date and the amount of such Loan or such payment. Failure to
make any notation with respect to the making of any Loan shall not limit or
otherwise affect the obligation of the Company hereunder or under any Note with
respect to any Loan, and payments of principal by the Company shall not be
affected by the failure to make a notation thereof on said Schedules. Although
each Note shall be dated the Effective Date, interest in respect thereof shall
be payable only for the periods during which Loans are evidenced thereby and
although the stated amount of each Note shall be equal to the Commitment of the
Bank holding same, each Note shall be enforceable with respect to the Company's
obligation to pay principal thereof only to the extent of the unpaid principal
amount of the Loans evidenced thereby. Prior to the transfer of a Note pursuant
to (S)10.6, each Bank agrees to record on the Loan and Repayment Schedule
attached to such Note the initial principal amount of all Loans then evidenced
thereby, all payments of principal made to date of transfer in respect of such
Loans and the then accrued and unpaid interest on such Note.
1.6 Allocation of Borrowings. All Syndicate Loans under this
------------------------
Agreement shall be made by the Banks simultaneously and in such amount as
necessary so that after giving effect thereto, to the extent possible, the
Outstanding Utilization of each Bank shall bear the same proportion to all
Outstanding Utilizations of all Banks as such Bank's Commitment bears to the
Total Commitments, it being understood, however, that the Company may, at its
option but subject to (S)1.1, incur Commitment Loans or Special Facility Loans
or create Acceptances from the Banks in such proportion as it may select. It is
understood that no Bank shall be responsible for any default by any other Bank
in fulfilling its obligations hereunder and that each Bank shall be obligated to
fulfill its obligations hereunder, regardless of the failure of any other Bank
to fulfill its obligations hereunder.
1.7 Interest. (a) The Company agrees to pay interest in respect of
--------
the unpaid principal amount of each Base Rate Loan on and from the date the
proceeds thereof are made available to the Company until maturity (whether by
acceleration or otherwise) at a rate per annum which shall equal the Base Rate
in effect from time to time.
(b) The Company agrees to pay interest in respect of the unpaid
principal amount of each Fixed CD Rate Loan on and from the date the proceeds
thereof are made available to the Company until maturity (whether by
acceleration or otherwise) at a rate per annum which shall equal 5/16 of 1% plus
the relevant Fixed CD Rate.
(c) The Company agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan on and from the date the proceeds
thereof are made available to the Company until maturity (whether by
acceleration or otherwise) at a rate per annum which shall equal 3/16 of 1% plus
the relevant Quoted Rate.
-6-
<PAGE>
(d) Overdue principal and (to the extent permitted by law) overdue
interest in respect of each Syndicate Loan and each Commitment Loan shall bear
interest at a rate per annum equal to 1% plus the Base Rate in effect from time
to time; provided, however, that no Loan shall bear interest after maturity at
--------
a rate per annum less than the rate of interest applicable thereto at maturity.
(e) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (x) in respect of each Base Rate Loan, quarterly in arrears on the last
day of each March, June, September and December of each year, commencing the
last day of December, 1989, and at maturity (whether by acceleration
or otherwise), and (y) in respect of each Fixed Rate Loan, on the last day of
each Interest Period applicable to such Loan, and in the case of an Interest
Period in excess of three months on each three month anniversary of the initial
date of such Interest Period and on any prepayment (on the amount prepaid), and
at maturity (whether by acceleration or otherwise), and (z) in the case of all
Loans, after maturity, on demand.
(f) The Paying Agent, upon determining the Fixed CD Rate or Quoted
Rate for any Interest Period shall promptly notify the Company and the other
Banks thereof by telephone (confirmed promptly in writing).
1.8 Interest Periods. At the time it gives any Notice of Borrowing,
----------------
the Company shall have the right to elect, by giving the Paying Agent and, in
the case of Commitment Loans, the Bank making such Commitment Loan, at the
Notice Office written notice or telephonic notice (confirmed promptly in
writing), the interest period (each, together with any interest period
applicable to Special Facility Loans determined in accordance with (S)2.4, an
"Interest Period") applicable to such Loans, which Interest Period shall (x) in
the case of Fixed CD Rate Loans be either a 30-, 60-, 90- or 180-day (and,
subject to availability, 270- or 360-day) period, (y) in the case of Eurodollar
Loans be either a one-, two-, three-, six-, nine-, or twelve-month period and
(z) in the case of Base Rate Loans be a period of from 5 days to 180 days. The
Paying Agent shall promptly give similar notice to each Bank with respect to any
Syndicate Loan. The determination of Interest Periods shall be subject to the
following provisions:
(i) the Interest Period for any Loan shall commence on the date of
such Loan;
(ii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period in
-----------------
respect of a Eurodollar Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
-7-
<PAGE>
(iii) no Interest Period in respect of the Loans shall extend beyond
the Termination Date; and
(iv) if any Interest Period relating to a borrowing of Eurodollar
Loans begins on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month.
1.9 Increased Costs, Illegality, Etc. (a) In the event that any Bank
---------------------------------
shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto and, with respect to
all but the following clauses (ii)(x) and (iii), shall be made only after
consultation with the Company and the Agents):
(i) on any date for determining the Quoted Rate or Fixed CD Rate for
any Interest Period, that by reason of any changes arising after the date
of this Agreement affecting the interbank Eurodollar market or the
secondary certificate of deposit market, as the case may be, or affecting
the position of such Bank in either of such markets, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Quoted Rate or Fixed CD Rate, as
the case may be; or
(ii)(x) on any date for determining the Quoted Rate or Fixed CD Rate
for any Interest Period, that by reason of the requirements of Regulation D
(excluding all reserves required under Regulation D to the extent included
in the computation of the Fixed CD Rate), (y) at any time, that by reason
of any change since the date of this Agreement in any applicable law or
governmental rule, regulation, guideline or order (or any interpretation
thereof and including the introduction of any new law or governmental rule,
regulation, guideline or order) and/or (z) on any date for determining the
Quoted Rate, that by reason of other circumstances affecting such Bank or
the interbank Eurodollar market or the position of such Bank in such market
(such as for example but not limited to a change in the official reserve
requirements to the extent not provided for in clause (ii)(x) above), the
Quoted Rate or Fixed CD Rate, as the case may be, shall not represent the
effective pricing to such Bank for funding or maintaining the affected
Fixed Rate Loan; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has become unlawful by compliance by such Bank in good faith with any
law, governmental rule, regulation, guideline or order, or has become
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank shall on such date give notice (by
telephone confirmed in writing) to the Company and to the Agents (which in all
cases other than a determination pursuant to clause
-8-
<PAGE>
(ii)(x) above the Paying Agent shall promptly give similar notice to the other
Banks) of such determination. Thereafter (x) in the case of clauses (i) and (ii)
of this (S)1.9, the Company shall pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Bank in its sole
discretion shall determine) as shall be required to cause such Bank to receive
interest with respect to its affected Fixed Rate Loan at a rate per annum which
shall equal the effective pricing to the Bank to make or maintain such Fixed
Rate Loan plus the then applicable Differential (a written notice as to
additional amounts owed such Bank, showing the basis for the calculation
thereof, submitted to the Company by such Bank shall, absent manifest error, be
final and conclusive and binding upon all of the parties hereto) and (y) in the
case of clause (iii), take one of the actions specified in (S)1.10(b) as
promptly as possible and, in any event, within the time period required by law.
(b) At any time that any of its Fixed Rate Loans are affected by the
circumstances described in (S)1.9(a), the Company may (and in the case of a
Fixed Rate Loan affected by the circumstances described in (S)1.9(a)(iii) shall)
either (x) if the affected Fixed Rate Loan is then being made pursuant to a
Notice of Borrowing, by giving the Paying Agent (and, with respect to Notice of
Commitment Borrowing, the Bank to whom such Notice was given) telephonic notice
(confirmed promptly in writing) thereof on the same date that the Company was
notified by the Bank pursuant to (S)1.9(a) either (i) cancel said Borrowing,
(ii) require the Bank or Banks to make the requested Fixed Rate Loans as Base
Rate Loans or convert the outstanding Fixed Rate Loans into Base Rate Loans on
the first day of the affected Interest Period, or (iii) require the affected
Bank to make its Fixed Rate Loan as a Base Rate Loan, or (y) if the affected
Fixed Rate Loan or Loans are then outstanding, upon at least three Business
Days' written notice to the Paying Agent and the affected Bank, require the
affected Bank to convert each Fixed Rate Loan so affected into a Loan or Loans
of a different Type, provided that if more than one Bank is affected at any
time, then all affected Banks must be treated in the same manner pursuant to
this (S)1.9(b).
(c) If any bank determines at any time that any applicable law or
governmental rule, regulation, order or request (whether or not having the force
of law) concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency, will have the effect of increasing the amount of capital required to be
maintained by such Bank based on the existence of such Bank's Commitment
hereunder or its obligations hereunder, then the Company shall pay to such Bank,
upon its written demand therefor, such additional amounts as shall be required
to compensate such Bank for the increased cost or reduced rate of return to such
Bank as a result of such increase of capital. In determining such additional
amounts, such Bank will act reasonably and in good faith and will use averaging
and attribution methods which are reasonable, provided that such Bank's
determination of compensation owning under this clause (c) shall, absent
manifest error, be final and conclusive
-9-
<PAGE>
and binding on all the parties hereto. Any Bank, upon determining that any
additional amounts will be payable pursuant to this clause (c), (i) shall give
prompt written notice thereof to the Company within 90 days of the incurrence of
such costs, and (ii) shall as promptly as possible after the giving of such
notice notify the Company of such additional amounts due hereunder, which notice
shall show the basis for calculation of such additional amounts, although the
failure to so notify the Company under this clause (ii) shall not release or
diminish any of the Company's obligations to pay additional amounts pursuant to
this clause (c).
1.10 Compensation. The Company shall compensate each Bank, upon its
-------------
written request (which request shall set forth the basis in reasonable detail
for requesting such amounts), for all reasonable losses, expenses and
liabilities (including, without limitation, any interest paid by such Bank to
lenders of funds borrowed by it to make or carry its Fixed Rate Loans to the
extent not recovered by such Bank in connection with the re-employment of such
funds), which such Bank may sustain: (i) if for any reason (other than a default
by such Bank) a Borrowing of Fixed Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing (whether or not withdrawn), (ii) if any
prepayment of any of its Fixed Rate Loans occurs on a date which is not the last
day of an Interest Period applicable thereto, (iii) if any prepayment of any of
its Fixed Rate Loans is not made on the date specified in a notice of prepayment
given by the Company, or (iv) as a consequence of (x) without duplication of any
amounts paid pursuant to (S)1.7(d), any other default by the Company to repay
its Fixed Rate Loans when required by the terms of this Agreement or (y) an
election made by the Company pursuant to (S)1.9(b).
1.11 Special Payment Provisions. Unless the Paying Agent shall have
---------------------------
been notified by any Bank prior to any date of a Borrowing that such Bank does
not intend to make available to the Paying Agent such Bank's portion of the
total amount of the Syndicate Loans to be made on such date (as determined in
accordance with (S)1.6), the Paying Agent may (but shall not be obligated to)
assume that such Bank has made such amount available to the Paying Agent on such
borrowing date and the Paying Agent may, in reliance upon such assumption, make
available to the Company a corresponding amount. If such corresponding amount is
not in fact made available to the Paying Agent by such Bank, the Paying Agent
shall be entitled to recover such corresponding amount on demand from such Bank,
which demand shall be made in a reasonably prompt manner. If such Bank does not
pay such corresponding amount forthwith upon the Paying Agent's demand therefor,
the Paying Agent shall promptly notify the Company and the Company shall pay
such corresponding amount to the Paying Agent. The Paying Agent shall also be
entitled to recover interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Paying Agent
to the Company to the date such corresponding amount is recovered by the Paying
Agent, (x) in the case of the Company at a rate per annum equal to the
applicable rate provided in the appropriate clause of (S)1.8 for Base Rate
Loans, Fixed CD Rate Loans or Eurodollar Loans, as the case may be and (y) in
the case of the Banks, at the overnight Federal funds
-10-
<PAGE>
rate in effect from time to time. Nothing herein shall be deemed to relieve any
Bank from its obligation to fulfill its Commitment hereunder or to prejudice any
rights which the Company may have against any Bank as a result of any default by
such Bank hereunder.
1.12 Fees. The Company agrees to pay to the Paying Agent for the
-----
account of each Bank (i) a commitment commission (the "Commitment Commission")
for the period on and from the Effective Date until the Termination Date, or the
earlier termination in full of the Total Commitments, on the average daily
Unutilized Commitment of such Bank, computed at the rate of .025 of 1% per annum
and (ii) a facility fee (the "Facility Fee") for the period from the Effective
Date until the Termination Date, or the earlier termination in full of the Total
Commitments, on the full amount of the Commitment of such Bank, computed at the
rate of .125 of 1% per annum (such Commitment Commission and the Facility Fee
being referred to herein as the "Commissions"). Such Commissions are payable
quarterly in arrears on the fifth Business Day immediately succeeding the last
day of each March, June, September and December of each year, commencing the
last day of December, 1989, and on the Termination Date or, if earlier, the date
of termination in full of the Total Commitments. On the fifth Business Day
immediately succeeding the last day of each March, June, September and December
of each year, the Company shall pay to the Paying Agent at the Payment Office
the aggregate Commissions then due and shall specify in writing which portion of
the amounts so paid shall be paid to each Bank.
1.13 Reductions and Terminations of Commitments. The Company shall
-------------------------------------------
have the right, in its sole discretion, at any time and from time to time (i)
upon at least three Business Days' prior written notice to the Paying Agent, to
reduce the Total Commitment, in whole or in part in an aggregate amount of
$5,000,000 or, if greater, in integral multiples of $1,000,000 or, if less, the
amount of the Total Commitments, provided that (A) each such reduction shall be
applied pro rata to the Commitment of each Bank and (B) no such reduction shall
--------
reduce the Commitment of any Bank below the Outstanding Utilization of such Bank
and (ii) upon at least 30 days prior notice to the Paying Agent and each
affected Bank, to terminate the Commitment of any Bank, in whole, in the event
that such Bank (A) has failed or refused to make available the full amount of
any Syndicate Loans or Commitment Loans as required by (SS)1.4(a) and 1.4(b),
(B) failed or refused to consent to any amendment, waiver, supplement,
restatement, discharge or termination of any provision of this Agreement when
requested by the Company pursuant to (S)10.4, (C) has been merged or
consolidated with, or transferred all or substantially all of its assets to, or
otherwise been acquired by, any Person, (D) has demanded that the Company pay
additional amounts to such Bank pursuant to (S)1.09(c) at a time when less than
a majority of the Banks have also demanded that the Company pay such additional
amounts or (E) at any time after the second anniversary of the Effective Date,
provided that all amounts owed to such Bank under this Agreement or the Notes
- --------
(including without limitation accrued and unpaid Commissions and interest to the
Termination Date) shall have been paid in full, and provided further that, in
----------------
the event that a Default or Event of Default shall have occurred and be
continuing, the termination of the Commitment of any
-11-
<PAGE>
Bank pursuant to clause (ii) of this (S)1.13 shall not become effective until
and unless a substitute bank or banks (which may be one or more of the Banks)
with a Commitment in the aggregate equal to the Commitments of the Bank being
terminated shall have become a party to this Agreement pursuant to (S)1.14.
1.14 Substitutions. In the event that the Company shall deliver a
--------------
notice of reduction or termination of any Bank pursuant to clause (ii) of
(S)1.13 or in the event that any Bank delivers a notice of termination of its
Commitment pursuant to clause (i)(A) of the definition of "Termination Date" in
this Agreement, then the Company shall have the right, which may be exercised in
its sole discretion from time to time, with the assistance of the Agents, to
seek a substitute bank or banks (which may be one or more of the Banks) to
purchase any outstanding Notes of such Bank and assume the Commitment of such
Bank, and such substitute bank or banks shall become a party hereto with respect
to such Notes and such Commitment upon execution such supplements hereto as the
Company and Agents shall require.
1.15 Election Revision. At any time after the Company has given the
------------------
Paying Agent a Notice of Borrowing in respect of Fixed CD Rate Loans or
Eurodollar Loans or has selected an Interest Period pursuant to (S)1.8, as the
case may be, and (x) prior to the close of business on the third Business Day
preceding the first day of the Interest Period applicable to such Eurodollar
Loans or (y) prior to the close of business on the Business Day preceding the
first day of the Interest Period applicable to such Fixed CD Rate Loans, the
Company shall have the right to notify the Paying Agent, each Bank in the case
of Syndicate Loans and the affected Bank in the case of Commitment Loans (by
telephone, confirmed promptly in writing) that it no longer elects to incur, or
to continue, such Fixed CD Rate Loans or Eurodollar Loans, as the case may be.
Pursuant to such notice, the Company shall withdraw such Notice of Borrowing or,
at its option, convert such Notice into one request Base Rate Loans in equal
principal amount. No amounts shall be payable pursuant to (S)1.10 as a result of
any notice withdrawal or conversion or Loan conversion effected in compliance
with this (S)1.15.
SECTION 2
SPECIAL PROVISIONS APPLICABLE TO
SPECIAL FACILITY LOANS AND ACCEPTANCES
2.1 Interest. The Company agrees to pay interest in respect of the
---------
unpaid principal amount of each Special Facility Loan incurred from each Bank on
and from the date the proceeds thereof are made available to the Company until
maturity (whether by acceleration or otherwise) at a rate per annum which shall
be such Bank's Special Rate for such Loan.
2.2 Interest Payment Dates. Interest in respect of each Special
-----------------------
Facility Loan shall be payable on the expiration of each Interest Period
applicable to such Special Facility Loan and at maturity (whether by
acceleration or otherwise).
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<PAGE>
2.3 Overdue Payment of Principal and Interest. Overdue principal of,
------------------------------------------
and (to the extent permitted by law) overdue interest in respect of, all Special
Facility Loans and all Acceptances shall bear interest, payable on demand, at a
rate per annum that shall be 1% in excess of the Base Rate in effect from time
to time; provided, however, that no Special Facility Loan or Acceptance shall
--------- --------
bear interest after maturity at a rate per annum less than the rate of interest
applicable thereto at maturity or the Discount Rate at which such Acceptance was
discounted, as the case may be.
2.4 Special Facility Interest Periods. When it requests a Bank to
----------------------------------
make a Special Facility Loan, the Company shall specify to such Bank the
Interest Period to be applicable to such Loan, which Interest Period shall be as
agreed upon by the Company and such Bank; provided, however, that (i) no
--------- --------
Interest Period shall extend beyond the Termination Date, (ii) if any Interest
Period would otherwise expire on a day which is not a Business Day, such
Interest Period shall expire on the next succeeding Business Day and (iii)
unless otherwise agreed by the Bank making the Loan, no Interest Period in
respect of such Loan shall be longer than 90 days. No Special Facility Loan
shall be extended for an additional Interest Period, provided that the Company
shall have the right pursuant to (S)1.3(c), but subject to the terms and
conditions hereof, to incur a Special Facility Loan or Loans from one or more
Banks (including the Bank that made the maturing Special Facility Loan) to
replace such maturing Special Facility Loan, and provided, further, that if upon
the maturity of a Special Facility Loan the Company requests the Bank which made
the same to make a new Special Facility Loan in the amount of such maturing
Special Facility Loan and such Bank notifies the Company that it is not able as
a result of unavailability to make such new Special Facility Loan, then the
Company shall have the right by telephonic notice to such Bank to convert the
maturing Special Facility Loan into a Base Rate Loan from such Bank effective on
the maturity date of such Special Facility Loan, which Base Rate Loan shall have
an aggregate principal amount equal to the aggregate principal amount of the
Special Facility Loan maturing on such date and shall have an Interest Period of
30 days.
2.5 Compensation. The Company shall compensate each Bank, upon
-------------
written request by such Bank (which request shall set forth in reasonable detail
the basis for requesting such amounts), for all reasonable losses, expenses and
liabilities (including, without limitation, any interest paid by such Bank to
lenders of funds borrowed by it to make or carry its Special Facility Loans to
the extent not recovered by such Bank in connection with the re-employment of
such funds) which such Bank may sustain: (i) if for any reason (other than a
default by such Bank) a borrowing of any Special Facility Loan does not occur on
a date specified therefor in a notice of borrowing delivered by the Company
pursuant to (S)1.3(c), (ii) if any repayment of its Special Facility Loans
occurs on a date which is not the last day of an Interest Period applicable
thereto, or (iii) without duplication of any amounts paid pursuant to (S)2.3, as
a consequence of any other default by the
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<PAGE>
Company to repay its Special Facility Loans when required by the terms of this
Agreement.
2.6 Acceptance Obligation. The Company hereby unconditionally agrees
----------------------
to pay each Bank in immediately available funds the face amount of each
Acceptance created by such Bank on the maturity date thereof or on such earlier
date as may be required pursuant to the other provisions of this Agreement.
2.7 Notices. Within 10 Business Days after the end of each calendar
--------
month, so long as any Loans are outstanding under this Agreement, the Company
hereby agrees that it will give the Paying Agent written notice of the average
daily Unutilized Commitment during such month and the Unutilized Commitment on
the last day of such month.
2.8 Optional Currency Loans. Special Facility Loans may, in a Bank's
------------------------
sole discretion, be made available in U.S. dollars or such Optional Currencies
as may be agreed upon by the Company and such Bank. The principal of and
interest on each Special Facility Loan made in an Optional Currency shall be
paid only in such Optional Currency.
SECTION 3
PAYMENTS
3.1 Payments on Non-Business Days. Whenever any payment to be made
------------------------------
hereunder or under any Note or Acceptance shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, if a payment of principal has been so extended,
interest shall be payable on such principal at the applicable rate during such
extension; provided, however, in the event that the day on which any such
--------- --------
payment relating to a Eurodollar Loan is due is not a Business Day but is a day
of the month after which no further Business Day occurs in such month, then the
due date thereof shall be the next preceding Business Day.
3.2 Voluntary Prepayments. The Company shall have the right to prepay
----------------------
the Loans, in whole or in part, without premium or penalty, from time to time
pursuant to this (S)3.2 on the following terms and conditions: (i) the Company
shall give the Paying Agent and, with respect to any Commitment Loan or Special
Facility Loan, the Bank making such Loan, at the Notice Office at least three
Business Days', in the case of a prepayment of Fixed Rate Loans, and one
Business Days', in the case of a prepayment of Base Rate Loans, prior written
notice or telephonic notice (confirmed promptly in writing) of its intent to
prepay the Loans, the amount of such prepayment and what Types of Loans are to
be prepaid, which notice the Paying Agent shall promptly transmit to each of the
Banks with respect to a prepayment of a Syndicate loan; (ii) each prepayment of
Base Rate Loans shall be in a principal amount of $5,000,000 (or the amount then
remaining outstanding in respect of any Borrowing) and each prepayment of Fixed
Rate Loans made pursuant to a single Borrowing shall be in a principal amount of
$10,000,000,000 (or the
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<PAGE>
amount then remaining outstanding in respect of any Borrowing) or in the case of
all Loans if greater, an integral multiple of $1,000,000; (iii) each prepayment
in respect of Syndicate Loans made pursuant to one Borrowing shall be applied
pro rata among the Banks on the basis of such Syndicate Loans; (iv) after giving
- --- ----
effect to any prepayment, the outstanding principal amount of Fixed Rate Loans
made pursuant to a single Borrowing shall not be less than $10,000,000; and (v)
at the time of any prepayment of Fixed Rate Loans or Special Facility Loans, the
Company shall pay all interest accrued on the principal amount of said
prepayment. It is understood that each prepayment of Fixed Rate Loans shall be
subject to (S)1.10.
3.3 Method and Place of Payment, Etc. (a) Except for payments in
---------------------------------
respect of Commitment Loans, Special Facility Loans and Acceptances, all
payments under this Agreement shall be made to the Paying Agent for the pro rata
--- ----
benefit (on the basis of the category of obligation then being paid, i.e.,
----
principal, interest or Fees) of all Banks, not later than 12:00 Noon (Chicago
time) on the date when due and shall be made in freely transferable U.S. dollars
and in immediately available funds at the Payment Office (for the account of
such non-U.S. office of the Paying Agent as the Paying Agent may from time to
time direct, if such payment is made in respect of principal of or interest on
any Eurodollar Loan). Unless the Paying Agent shall have been notified by the
Company prior to the date on which any payment to be made by the Company
hereunder is due that the Company does not intend to remit such payment, the
Paying Agent may, at its discretion, assume that the Company has remitted such
payment when so due and the Paying Agent may, at its discretion and in reliance
upon such assumption, make available to each Bank with respect to a Syndicate
Loan (or to the appropriate Bank in the case of a Commitment Loan) on such
payment date (for the account of its Eurodollar Office or CD Office in the case
of payments in respect of Eurodollar Loans or Fixed CD Rate Loans, as the case
may be) an amount equal to such Bank's share of such assumed payment. If the
Company has not in fact remitted such payment to the Paying Agent, each such
Bank shall forthwith on demand repay to the Paying Agent the amount of such
assumed payment made available to such Bank together with interest thereon in
respect of each day from and including the date such amount was made available
by the Paying Agent to such Bank to the date such amount is repaid to the Paying
Agent at the overnight Federal Funds rate in effect from time to time.
(b) All payments in respect of Commitment Loans, Special Facility
Loans and Acceptances shall be made to the relevant Bank not later than 12:00
Noon (local time) on the date when due and shall be made in U.S. dollars and in
immediately available funds, or, in the case of a Loan made in an Optional
Currency, in the respective Optional Currency and in such funds as may be agreed
upon by the Company and such Bank, at the relevant Bank Payment Office.
3.4 Net Payments. All payments under this Agreement shall be made
-------------
without set-off or counterclaim and in such amounts as may be necessary in order
that all such payments (after deduction or
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<PAGE>
withholding for or on account of any present or future taxes, levies, imposts,
duties or other charges of whatsoever nature imposed by any government or any
political subdivision or taxing authority thereof, other than any tax on or
measured by the net income of a Bank pursuant to the income tax laws of the
United States or the jurisdictions where such Bank's principal or lending
offices are located (collectively, the "Taxes")) shall not be less than the
amounts otherwise specified to be paid under this Agreement and the Notes. A
certificate as to any additional amounts payable to any Bank under this (S)3.4
submitted to the Company by such Bank shall show in reasonable detail the amount
payable and the calculations used to determine in good faith such amount and
shall, absent manifest error, be final, conclusive and binding upon all parties
hereto. With respect to each deduction or withholding for or on account of any
Taxes, the Company shall promptly furnish to each Bank such certificates,
receipts and other documents as may be required (in the judgment of such Bank)
to establish any tax credit to which such Bank may be entitled. Without in any
way affecting any of its rights under this (S)3.4, each Bank agrees that, upon
its becoming aware that any of its present or future Loans under this Agreement
would be subject to deduction or withholding for Taxes, it will promptly notify
the Company thereof in writing and will use reasonable efforts to avoid or
reduce the amount of such Taxes (it being understood that no Bank shall be
obligated to take any action which would violate law or subject such Bank to any
potential liability or cost).
SECTION 4
CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. This Agreement shall become
----------------------------
effective on the date (the "Effective Date") on which all of the following
conditions have been satisfied (at which time the Agents shall so notify all the
parties hereto):
(a) Execution. Each of the Banks and the Company shall have signed
----------
counterpart copy hereof and shall have delivered the same to an Agent or
(in the case of the Banks) shall have notified an Agent in writing that the
same has been signed and mailed to it.
(b) No Default. On the Effective Date and after giving effect to the
-----------
effectiveness of this Agreement, there shall exist no Default or Event of
Default.
(c) Representations and Warranties. On the Effective Date and after
-------------------------------
giving effect to the effectiveness of this Agreement, all representations
and warranties contained herein or otherwise made in writing in connection
herewith shall be true and correct with the same force and effect as though
such representations and warranties had been made as of such time.
(d) Notes. There shall have been delivered to the Paying Agent for
------
delivery to each Bank the appropriate Note payable to the order of such
Bank in the amount and as otherwise provided for in (S)1.
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<PAGE>
(e) Opinion of Counsel for Company. On the Effective Date, the Agents
-------------------------------
shall have received from counsel to the Company (which may include in-
house counsel) a favorable opinion, in sufficient counterparts for each of
the Banks and dated the Effective Date, (x) substantially in the form of
Exhibit B hereto and (y) covering such other matters as the Agents or the
Required Banks may reasonably request.
(f) Opinion of Counsel for Banks. On the Effective Date, the Agents
-----------------------------
shall have received in sufficient counterparts for each of the Banks an
opinion of White & Case, Special Counsel for the Banks, dated the Effective
Date, to the effect that the legal opinion and certificate delivered
pursuant to (SS)4.1.(e) and (g) are substantially responsive to the
requirements of such Sections.
(g) Certificate. On the Effective Date, the Agents shall have
------------
received a certificate, dated the Effective Date and executed by the
Chairman of the Board, the President, any Vice President or the Treasurer
of the Company, stating that all the conditions specified in (SS)4.1(b)
and (c) are then satisfied.
(h) Documentation and Proceedings. All corporate and legal
------------------------------
proceedings and all instruments in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance
to the Agents, and the Agents shall have received all information and
copies of all documents that it has requested, such documents where
appropriate to be certified by proper corporate or governmental
authorities.
(i) Existing Agreements. Each of the Existing Agreements shall have
--------------------
been terminated in accordance with the terms thereof, and all amounts then
owed by the Company thereunder shall have been paid in full. Each Bank
which is a party to an Existing Agreement hereby consents and agrees that
such Existing Agreement shall be terminated on and as of the Effective Date
of this Agreement provided that all amounts owed by the Company to such
Bank thereunder shall have been paid in full.
4.2 Conditions to Each Loan. The obligation of each Bank to make
------------------------
Loans and to create Acceptances hereunder (each a "Credit Utilization") is
subject, at the time of each Credit Utilization (except as hereinafter
indicated), to the satisfaction of the following conditions, with each
Credit Utilization constituting a representation and warranty by the
Company that the conditions specified in (SS)4.2(a) and (b) below are
then satisfied:
(a) No Default. At the time of each Credit Utilization and after
-----------
giving effect thereto, there shall exist no Default or Event of Default.
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<PAGE>
(b) Representations and Warranties. At the time of each Credit
-------------------------------
Utilization and after giving effect thereto, all representations and
warranties contained herein or otherwise made in writing in connection
herewith shall be true and correct with the same force and effect as though
such representations and warranties had been made as of such time.
(c) Opinion of Counsel for the Company. At the time of any Credit
-----------------------------------
Utilization if reasonably requested by the Required Banks, the Agents shall
have received, in sufficient copies for each Bank, an opinion (in form and
substance satisfactory to the Agents) of counsel to the Company (which may
include in-house counsel) covering such matters incident to the
transactions herein contemplated as the Required Banks may reasonably
request.
SECTION 5
AFFIRMATIVE COVENANTS
While this Agreement is in effect and until all indebtedness hereunder
and under the Notes and the Acceptances shall have been paid in full, the
Company agrees that it will, except to the extent waived in writing by
the Required Banks:
5.1 Furnish Financial Statements and Information, Etc. Furnish to
--------------------------------------------------
each Bank:
(a) within 120 days after the close of each of the Company's fiscal
years, the balance sheets of the Company and its consolidated Subsidiaries
as of the end of such period and the related consolidated statements of
profit and loss, share owners' equity and cash flows prepared in accordance
with generally accepted accounting principles for such year and the
preceding year, together with the report of the Company's independent
certified public accountants;
(b) within 60 days after the close of each of the first three quarters
of each of the Company's fiscal years, a balance sheet of the Company and
its consolidated Subsidiaries as of the last day of such quarter, together
with consolidated statements of profit and loss and cash flows (which
statements shall be prepared in accordance with quarterly reporting
requirements of the Securities and Exchange Commission applicable to the
Company), all of which shall be certified by the Controller, or the chief
financial officer, of the Company;
(c) within 60 days after the close of the first three quarters of
each of the Company's fiscal years, and within 120 days after the close of
each fiscal year, quarterly and annual consolidated summary financial
statements for Northwood Forest Industries Limited so long as the Company
shall own, directly or indirectly, at least 50% of the voting stock
thereof;
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<PAGE>
(d) as soon as available, copies of all proxy statements submitted by
the Company to its shareholders and of all periodic reports filed by the
Company with the Securities and Exchange Commission;
(e) within 60 days after the close of each of the first three
quarters, and within 120 days after the close of the fourth quarter, of
each of the Company's fiscal years, statements, certified by the
Controller, or the chief financial officer, of the Company, (i) that the
Company is in complete compliance with the limitations on Funded Debt
contained in (S)6.2 hereof, which certificate shall set forth, in the form
set forth in Schedule I attached hereto, the computation made in connection
therewith, and (ii) of inventory adjustments which state inventories at
less than the lower of current cost or market;
(f) immediately after the Company obtains knowledge thereof, notice of
any event which constitutes a Default or an Event of Default (such notice
to specify the nature thereof, the period of existence thereof and the
action that is proposed to be taken with respect thereto);
(g) together with the financial statements required to be delivered
pursuant to clause (a) above, a letter which conforms to professional
pronouncements promulgated by the American Institute of Certified Public
Accountants) from the firm of independent certified public accountants
which reported on such financial statements to the effect that in the
course of, and based solely upon, their audit of such financial statements
nothing has come to their attention to cause them to believe that there
existed on the date of such statements any Default or Event of Default
under (SS)6.2, 6.5, 7.1 or 7.2 or, if in the opinion of such accountants
any such Default or Event of Default exists, the statement shall state its
nature and length of time it has existed, provided that, for purposes of
the definition of "Indebtedness" in this Agreement, such firm shall rely
solely on information provided by the Company as to the items included in
clause (i) of such definition; and
(h) such other information as any Bank may from time to time
reasonably request, including but not limited to, the computation made in
connection with any certificate furnished pursuant to this (S)5.1, which
computation shall be furnished to such Bank within 15 days of any request
therefor, but in any event excluding such information that counsel to the
Company shall have advised the Company in a written opinion should not be
disclosed to any Bank because such disclosure is reasonably likely to
result in the waiver of the attorney-client privilege with respect to such
information or is reasonably likely to result in a violation of applicable
laws;
and will permit the duly authorized representatives of any Bank at all
reasonable times to examine the books and records of the Company and its
Subsidiaries, and take memoranda and extracts therefrom; provided, that
information, including financial information, which is non-public and
confidential or proprietary in nature, disclosed to any Bank (as a
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<PAGE>
result of any examination of the books and records of the Company and its
Subsidiaries or pursuant to (S)5.1(h) or otherwise) will be kept confidential
and will not, without the prior written consent of the Company, be disclosed in
any manner whatsoever, in whole or in part, except that such Bank shall be
permitted to disclose such information (i) to any regulatory agencies having
jurisdiction over such Bank in connection with their regulating functions and
(ii) as required by law or court order, or in connection with any investigation
or proceeding arising out of the transactions contemplated by this Agreement.
5.2 ERISA. As soon as possible and, in any event, within 10 days after
------
the Company or any Subsidiary knows or has reason to know any of the following,
the Company will deliver to each of the Banks a certificate of the chief
financial officer of the Company setting forth details as to such occurrence and
such action, if any, which the Company, such Subsidiary or such ERISA affiliate
is required or proposes to take, together with any notices required or proposed
to be given to or filed with or by the Company, the Subsidiary, ERISA Affiliate,
the PBGC, a Plan participant or the Plan Administrator with respect thereto:
that a Reportable Event has occurred, that an accumulated funding deficiency has
been incurred or an application has been made to the Secretary of the Treasury
for a waiver or modification of the minimum funding standard (including any
required installment payments) or an extension of any amortization period under
Section 412 of the Code with respect to a Plan, that a Plan has been terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA, that a
Plan has an Unfunded Current Liability giving rise to a lien under ERISA, that
proceedings have been instituted by the PBGC to terminate a Plan, that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan, or that the Company, any Subsidiary or any
ERISA Affiliate will incur any liability (including any contingent or secondary
liability) to or on account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4201 or 4204 of ERISA. At the request of any
Bank, the Company will deliver to such Bank a complete copy of the annual report
(Form 5500) of each Plan required to be filed with the Internal Revenue Service.
In addition to any certificates or notices delivered to the Banks pursuant to
the first sentence hereof, copies of annual reports and any other notices
received by the Company or any Subsidiary required to be delivered to the Banks
hereunder shall be delivered to the Banks no later than 10 days after the later
of the date such report or notice has been filed with the Internal Revenue
Service or the PBGC, given to Plan participants or received by the Company or
the Subsidiary.
5.3 Insurance. Insure and keep insured, and cause each Subsidiary to
----------
insure and keep insured, with good and responsible insurance companies, all of
its and their property of an insurable nature (including, without limitation,
all buildings, machinery, plants, equipment, fixtures and inventories of raw
materials, goods in process and completed goods) against fire and other
casualties in such manner and to the extent that like properties are usually
insured by others operating plants and properties of a similar character in the
same
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<PAGE>
locality (provided, however, the Company may maintain self-insurance in
connection with the foregoing property insurance requirements in accordance with
sound business practice), and insure and keep insured, and cause each Subsidiary
to insure and keep insured, at all times with good and responsible insurance
companies or pursuant to self-insurance maintained in accordance with sound
business practice against liability on account of damage to Persons or property
and under all applicable workers' compensation laws.
5.4 Taxes, Charges, Etc. Duly pay and discharge, or cause to be paid
--------------------
and discharged, when due, all taxes, assessments and other governmental charges
imposed upon it or any Subsidiary and its and their properties, or any part
thereof or upon the income or profits therefrom, as well as all claims for
labor, materials or supplies which if unpaid might by law become a lien or
charge upon any property of the Company or any Subsidiary, except such items as
are being in good faith appropriately contested by the Company or any Subsidiary
and for which adequate reserves are being maintained in accordance with
generally accepted accounting principles.
5.5 Property. Maintain, preserve and keep its own and all
---------
Subsidiaries, principal plants and properties and every part thereof in good
repair, working order and condition and from time to time make all needful and
proper repairs, renewals, replacements, additions, betterments and improvements
thereto so that all times the efficiency thereof shall be fully preserved and
maintained.
5.6 Corporate Existence, Etc. Maintain its corporate existence and
-------------------------
comply, and cause each Subsidiary to comply, with all valid and applicable
statutes, rules and regulations.
SECTION 6
NEGATIVE COVENANTS
While this Agreement is in effect and until all indebtedness hereunder
and under the Notes and the Acceptances shall have been paid in full, the
Company agrees that, except to the extent waived in writing by the Required
Banks, it will not, and will not permit any Subsidiary to:
6.1 Liens. Issue, assume or guarantee directly or indirectly any
------
indebtedness for money borrowed (hereinafter in this Section 6.1 referred to as
"Debt"), if such Debt is secured (whether at the time such Debt is first issued,
assumed or guaranteed or at any time thereafter) by a mortgage, pledge, security
interest, lien or other encumbrance (any such mortgage, pledge, security
interest, lien or other encumbrance being hereinafter in this (S)6.1 and in
(S)6.4 referred to as a "mortgage" or "mortgages") upon any Principal Property
or upon any indebtedness of or equity securities of any Subsidiary or any
Affiliate (other than Unrestricted Margin Stock), now owned or hereafter
required, without in any such case effectively providing, concurrently with the
issuance, assumption or guarantee of such Debt, that all of the
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Company's obligations under this Agreement and the Notes (together with, if the
Company shall so determine, any other indebtedness of or guaranteed by the
Company or such Subsidiary ranking equally with the Loans and then existing or
thereafter created) shall be secured equally and ratably with (or prior to) such
Debt; provided, that the foregoing restriction shall not apply to:
---------
(a) mortgages on any property acquired, constructed or improved by the
Company or any Subsidiary after the date of this Agreement which are
created or incurred contemporaneously with or within 120 days after such
acquisition, construction or improvement to secure or provide for the
payment of any part of the purchase price of such property or the cost of
such construction or improvement (the date of such construction or
improvement being, for the purpose of this clause (a), deemed to be the
date of completion of such construction or improvement); provided that any
--------
such mortgage shall not apply to any other property of the Company or any
Subsidiary except, in the case of any construction or improvement,
theretofore unimproved real property on which the property so constructed,
or the improvement, is located;
(b) mortgages on any property acquired from a corporation which is
merged with or into the Company or a Subsidiary or mortgages outstanding on
property at the time it is acquired by the Company or a Subsidiary or
mortgages outstanding on property of a corporation at the time it becomes a
Subsidiary, provided that such mortgage is not imposed, and the related
Debt incurred, in contemplation of any acquisitions by the Company;
(c) mortgages to secure Debt of a Subsidiary to the Company or to
another Subsidiary;
(d) mortgages or other restrictions relating to equity securities of
any Affiliate under any agreement or arrangement between the Company or any
Subsidiary and such Affiliate (or the other stockholder or stockholders of
such Affiliate) providing for the operations, financing or purchase of
products of such Affiliate or under any agreement among any such parties
imposing restrictions on the disposition of or granting options to purchase
the equity securities of such Affiliate;
(e) mortgages upon property or assets of the Company or any Subsidiary
in favor of any governmental agency or authority or guarantees given for
the purpose of financing, through industrial revenue bonds or notes the
interest on which is exempt from federal income taxation under Section 103
of the Code, the construction, acquisition or purchase of industrial
plants, machinery, equipment or other property or facilities; and
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage referred to
in the foregoing clauses (a) to (e), inclusive; provided that the principal
--------
amount of Debt secured thereby shall not exceed the principal amount of
Debt so secured at the time of
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<PAGE>
such extension, renewal or replacement, and that such extension, renewal or
replacement shall be limited to all or a part of the property which secured
the mortgage so extended, renewed or replaced (plus improvements on such
property);
provided further, however, notwithstanding the provisions of this (S)6.1, the
- -------- -------- --------
Company or any Subsidiary may, without equally and ratably securing the
outstanding Loans, create or assume mortgages which would otherwise be subject
to the foregoing restrictions if, at the time of such creation or assumption,
and after giving effect thereto, Exempted Indebtedness does not exceed 5% of
Consolidated Net Tangible Assets.
6.2 Indebtedness. Create, incur, guarantee or become liable in
-------------
respect of any Indebtedness, and will not permit any Affiliate to create, incur
or become liable for Affiliate Debt of the type described in clause (d) below,
except:
(a) pursuant to this Agreement and to other credit agreements entered
into by the Company and any other domestic or foreign banks to the extent
that the aggregate outstanding principal amount of Indebtedness under this
clause (a) does not exceed $650,000,000;
(b) Indebtedness incurred or assumed in connection with acquisitions
permitted by (S)(S)6.1(a), 6.1(b) and 6.1(f) (as it relates to (S)(S)6.1(a)
and 6.1(b)) hereof;
(c) Indebtedness of the Company to a Subsidiary or of a Subsidiary to
the Company or another Subsidiary; and
(d) that the Company or any Subsidiary may create, incur, guarantee
or in any way become liable for, directly or indirectly, any additional
Indebtedness or create, incur, guarantee or in any way become liable for,
directly or indirectly, or permit any Affiliate to create, incur, guarantee
or in any way become liable for, directly or indirectly, any Affiliate Debt
as to which the Company or any Subsidiary has an agreement (whether with
such Affiliate or any existing or prospective creditor of, or lender to,
such Affiliate) to make an advance to such Affiliate as a loan or as a
contribution to the capital of such Affiliate or as a prepayment of the
purchase price for any property to be purchased in the future (whether
payable to such Affiliate or any such creditor or lender) if, at the time
---
of issuance of such Indebtedness or Affiliate Debt, the Company's
Proportion of such Affiliate Debt, when added to the Company's Proportion
of all such other Affiliate Debt then outstanding, and the Consolidated
Indebtedness of the Company and its Subsidiaries then outstanding will not
exceed 60% of the total of (i) the Consolidated Net Tangible Assets of the
Company and its Subsidiaries less any portion thereof attributable to
Affiliates, (ii) the Company's Share of the Net Tangible Assets of all
Affiliates, and subsidiaries thereof and (iii) 75% of the excess of the
aggregate Appraised Value over the aggregate book value of (A) such
proportion of timberlands owned by each Affiliate as the equity of each
such Affiliate owned by the Company and its Subsidiaries is
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<PAGE>
of the total equity of such Affiliate, (B) timberlands subject to leases
which grant to the Company or a Subsidiary as lessee an option to acquire
title to the property which is the subject of such leases without payment
of more than a nominal consideration upon the exercise thereof and (C) in
the case of timberlands subject to leases which grant to an Affiliate as
lessee an option to acquire title to the property which is the subject of
such leases without payment of more than a nominal consideration upon the
exercise thereof, such proportion of such timberlands as the equity of each
such Affiliate owned by the Company and its Subsidiaries is of the total
equity of such Affiliate. For purposes of this (S)6.2(d), a portion of the
Cabin Bluff Guaranteed Funded Debt shall be deemed to have been incurred
upon the occurrence of any event if, as a result of such event: (i) such
portion of the Cabin Bluff Guaranteed Funded Debt may not then be satisfied
by the tender of GP(M) Notes pursuant to Article IX of the Loan and
Guaranty Agreement or (ii) the Company is not then able, directly (or
indirectly through a Subsidiary) and without being required to obtain the
consent or approval of any Person, to cause such portion of the Cabin Bluff
Guaranteed Funded Debt to be satisfied by the tender of GP(M) Notes
pursuant to Article IX of the Loan and Guaranty Agreement upon the
occurrence of "event of default" (as defined in the GP(M) Notes).
6.3 Consolidation; Merger; Sale of Properties. Consolidate the
------------------------------------------
Company with or merge the Company into any other Person, or sell, transfer or
dispose of all or substantially all of the properties of the Company.
6.4 Sale and Leasebacks. Enter into any arrangement with any Person
--------------------
providing for the leasing to the Company or Subsidiary of any Principal Property
(except for temporary leases for a term of not more than three years), which
property has been owned more than 120 days by the Company or such Subsidiary and
has been or is to be sold or transferred by the Company or such Subsidiary to
such person (herein referred to as a "Sale and Lease-Back Transaction"), unless
either (a) the Company or such Subsidiary would be entitled to incur debt
secured by a mortgage on the property to be leased without equally and ratably
securing the Company's obligations under this Agreement and the Notes pursuant
to (S)6.1 or (b) the Company shall, and in any such case the Company covenants
that it will, apply an amount equal to the fair value (as determined by the
Board of Directors) of the property so leased to the permanent prepayment,
within 120 days of the effective date of any such Sale and Lease-Back
Transaction, of the Loans and the reduction of the Total Commitment (subject to
the provisions of (S)3.2) or other indebtedness of the Company with a maturity
in excess of one year from the date of such Sale and Lease-Back Transaction and
which ranks on a parity with the Loans, provided that the Company or any
--------
Subsidiary may enter into Sale and Lease-Back Transactions which would otherwise
be prohibited by the foregoing restrictions if, at the time such transactions
are entered into, and after giving effect thereto, Exempted Indebtedness does
not exceed 5% of Consolidated Net Tangible Assets.
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<PAGE>
6.5 Dividends. Declare or pay any dividend or make any distribution
----------
on the Company's capital stock of any class (other than dividends or
distributions payable in shares of capital stock of any class of the Company) or
purchase, redeem or otherwise acquire for value, or permit any Subsidiary to
purchase, redeem or otherwise acquire for value, any shares of capital stock of
any class of the Company or any options, rights or warranties with respect to
such capital stock (other than acquisitions of preferred stock of the Company in
exchange for capital stock of any other class of the Company), if upon giving
effect to such dividend, distribution, purchase, redemption or other acquisition
the Company would not be permitted to issue or incur at least one dollar of
additional Indebtedness pursuant to (S)6.2(d).
SECTION 7
EVENTS OF DEFAULT
Upon the occurrence of any of the following events (each an "Event of
Default"):
7.1 Default shall be made in the payment of any Commission or any
interest on any of the Notes within 10 days after the same shall become due and
payable, as in the Notes or herein provided; or
7.2 Default shall be made in the payment of any principal of any of
the Notes or the face amount of any Acceptance, when and as the same shall
become due and payable, whether by the terms thereof or as herein provided; or
7.3 Default shall be made in the due observance or performance of any
covenant or condition required to be observed or performed by the Company
pursuant to (S)(S) 6.1, 6.2, 6.3 or 6.5 herein; or
7.4 Default shall be made in the due observance or performance of any
other covenant or condition herein required to be observed or performed by the
Company, which default is not remedied within 30 days after written notice from
any Agent or any Bank; or
7.5 Any representation or warranty made by the Company herein or in
any writing delivered pursuant hereto shall prove to have been incorrect in any
material respect when made, provided that the representation and warranty set
--------
forth in (S)8.8 shall be made only at the time the proceeds of any Loan are
utilized, directly or indirectly, to fund a dividend, distribution, purchase,
redemption or other acquisition restricted by (S)6.5; or
7.6 The Company or any Significant Subsidiary shall fail to pay any
installment of principal of, or interest on, any other indebtedness for borrowed
money, the outstanding principal amount of which, at the time of such default,
shall be not less than $50,000,000, whether now or at any time hereafter
outstanding, whether at maturity, by call for
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<PAGE>
redemption, acceleration, declaration or otherwise, and such principal and
interest, or any part thereof, shall remain unpaid for more than the period of
grace, if any, provided for therein, unless the time of payment shall have been
effectively extended by written agreement of the parties thereto; or
7.7 The Company or any Significant Subsidiary commences a voluntary
case concerning the Company or such Significant Subsidiary under Title 11 of the
United States Code entitled "Bankruptcy" as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Company or any Significant Subsidiary under the Bankruptcy Code and
relief is ordered against the Company or any Significant Subsidiary or the
petition is controverted but is not dismissed within 60 days after the
commencement of the case; or the Company or any Significant Subsidiary is not
generally paying its debts as such debts become due; or a custodian (as defined
in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Company or any Significant Subsidiary;
or the Company or any Significant Subsidiary commences any other proceeding
under any reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or any Significant
Subsidiary or there is commenced against the Company or any Significant
Subsidiary any such proceeding which remains undismissed for a period of 60
days or the Company or any Significant Subsidiary is adjudicated insolvent or
bankrupt; or the Company or any Significant Subsidiary fails to controvert in a
timely manner any such case under the Bankruptcy Code or any such proceeding, or
any order of relief or other order approving any such case or proceeding is
entered; or the Company or any Significant Subsidiary by any act or failure to
act indicates its consent to, approval of or acquiescence in any such case or
proceeding or in the appointment of any custodian or the like of or for it or
any substantial part of its property or suffers any such appointment to continue
undischarged or unstayed for a period of 60 days; or the Company or any
Significant Subsidiary makes a general assignment for the benefit of creditors;
or any action is taken by the Company or any Significant Subsidiary for the
purpose of effecting any of the foregoing; or
7.8 Any Person or "group" (as defined in (S)13(d)(3) of the
Securities Exchange Act of 1934, as amended) acquires 20% or more, in the
aggregate, of the capital stock of the Company entitled, at the time, to vote
for the election of the Company's directors; or
7.9 Any Plan shall fail to maintain the minimum funding standard
required for any plan year or part thereof or a waiver of such standard or
extension or any amortization period is sought or granted under Section 412 of
the Code, any Plan is or shall have been terminated or the subject of
termination proceedings by the PBGC under ERISA, any Plan that is a single-
employer plan (within the meaning of Section
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<PAGE>
4001(a)(15) of ERISA) shall have an Unfunded Current Liability, or the Company
or a Subsidiary of any ERISA Affiliate has incurred a liability to or on account
of a plan under Section 515, 4062, 4063 or 4064 of ERISA, and there shall
result from any such event or events the imposition of a lien upon the assets of
the Company or any Subsidiary, the granting of a security interest, or a
liability to the PBGC or a Plan or a trustee appointed under ERISA or a penalty
under Section 4971 of the Code, which, in the opinion of the Required Banks,
will have a material adverse effect upon the consolidated financial condition of
the Company and its Subsidiaries taken as a whole, or the Company, any
Subsidiary or any ERISA Affiliate shall incur any withdrawal liability (whether
contingent or secondary) to any Plan that is a multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) under Section 4201 or 4204 of ERISA in
excess of $50,000,000;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, either or both of the following actions may be taken:
(i) the Agents, acting under instructions from the Required Banks, by written
notice to the Company, shall declare the principal of the accrued interest in
respect of all of the Notes and outstanding Acceptances to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Company, anything contained herein or in the Notes to the contrary
notwithstanding, and (ii) the Agents, acting under instructions from the
Required Banks, by written notice to the Company, shall declare the Total
Commitments terminated, whereupon the Commitment of each Bank and the obligation
of each Bank to make its Loans and to discount Acceptances hereunder shall
terminate immediately and any accrued Commissions shall forthwith become due
and payable without any other notice of any kind; provided that if an Event of
Default described in (S)7.7 shall occur, the result which would otherwise occur
only upon the giving of written notice by the Agents to the Company as specified
in clauses (i) and (ii) above shall occur automatically without the giving of
any such notice and without any instruction by the Required Banks to give such
notice.
SECTION 8
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce the Banks to enter into this Agreement and to make
the Loans provided for herein and to create Acceptances, the Company makes the
following representations and warranties to, and covenants with, the Banks, all
of which shall survive the execution and delivery of this Agreement and the
Notes and the creation of Acceptances, provided that representation and warranty
--------
set forth (S)8.8 shall be made only at the time the proceeds of any Loan are
utilized, directly or indirectly, to fund a dividend, distribution, purchase,
redemption or other acquisition restricted by (S)6.5:
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<PAGE>
8.1 Financial Information. It has furnished to each Bank the
----------------------
consolidated statement of financial condition of the Company and of such
companies as were then its Subsidiaries as at December 31, 1988 and October 1,
1989, and the related consolidated statements of net earnings and retained
earnings for the year and nine month period then ended, as the case may be,
accompanied in the case of the December 31, 1988 financial statements by the
report on examination thereof by Touche Ross & Co.; said statements fairly
present the financial condition of the Company and the pertinent Subsidiaries
and the results of their operations for the periods then ended, subject, in the
case of the October 1, 1989 financial statements to normal year-end audit
adjustments.
8.2 No Violation. The making of this Agreement and compliance with its
-------------
terms and the issuance of the Notes and the creation of Acceptances as
contemplated herein will not violate any provision of applicable law or of the
Company's charter or Regulations and will not result in a breach of any of the
terms and conditions of or result in the imposition of any lien, charge or
encumbrance upon any property of the Company pursuant to, or constitute a
default under, any indenture or other agreement or instrument under which the
Company is a party or is obligated, the Company's charter or Regulations or any
law, order, rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court having jurisdiction over the Company or
its property. All acts, things and conditions required by law and by the
Company's charter or Regulations to make this Agreement and each Note and
Acceptance, when executed and delivered, the legal, valid and binding obligation
of the Company will have been duly performed and complied with at or prior to
the execution and delivery of this Agreement.
8.3 Corporate Status. The Company is a duly organized and existing
-----------------
Ohio corporation in good standing in Ohio, and each Subsidiary is a duly
organized and existing corporation in good standing under the laws of the
jurisdiction where it is incorporated. The Company and each Subsidiary are
licensed or qualified and in good standing in every jurisdiction in which the
failure to be licensed or qualified could have a material adverse effect on the
consolidated financial condition of the Company and its Subsidiaries taken as a
whole.
8.4 Taxes, Etc. Except such as are being contested in good faith by
-----------
appropriate proceedings for which adequate reserves are being maintained in
accordance with generally accepted accounting principles, all material taxes,
assessments, fees and other governmental charges (other than those presently
payable without penalty or interest) upon the Company and its Subsidiaries or
upon any property thereof, which are due and payable, have been paid and no
material claims are being asserted with respect to any past due taxes,
assessments, fees or other governmental charges against the Company or any of
its Subsidiaries.
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<PAGE>
8.5 Governmental Approvals. No authorization, approval, consent,
-----------------------
permit, license or other order of any federal, state or local government or
agency thereof is required for the execution, delivery or performance of this
Agreement or the Notes.
8.6 Compliance with ERISA. Each Plan is in substantial compliance with
----------------------
ERISA; no Plan is insolvent or in reorganization, no Plan which is a single-
employer plan (within the meaning of Section 4001(a)(15) of ERISA) has an
Unfunded Current Liability, and no Plan has an accumulated or waived funding
deficiency or permitted decreases in its funding standard account within the
meaning of Section 412 of the Code; neither the Company nor any Subsidiary nor
any ERISA Affiliate has incurred any material liability to or on account of a
Plan pursuant to Section 515, 4062, 4063 or 4064 of ERISA or expects to incur
any liability under any of the foregoing Sections on account of the termination
of participation in any such Plan; no proceedings have been instituted by the
PBGC to terminate any Plan; no condition exists which presents a risk to the
Company or any Subsidiary of incurring a material liability to or on account of
a Plan pursuant to the foregoing provisions of ERISA and the Code; no lien
imposed under the Code or ERISA on the assets of the Company or any Subsidiary
exists or is likely to arise on account of any Plan; and the Company and its
Subsidiaries may terminate contributions to any other employee benefit plans
maintained by them without incurring any material liability to any person
interested therein. Neither the Company nor any Subsidiary nor any ERISA
Affiliate has incurred any withdrawal liability (including any contingent or
secondary withdrawal liability) within the meaning of Sections 4201 and 4204 of
ERISA to any Plan which is a Multiemployer Plan (within the meaning of Section
4001(a)(3) of ERISA) or expects to incur any liability under the foregoing
Sections on account of the termination of contributions to any such
Multiemployer Plan in excess of $50,000,000. With respect to plans that are
Multiemployer plans, the representations the preceding two sentences are made to
the best knowledge of the Company. The aggregate liabilities of the Company, its
Subsidiaries and its ERISA Affiliates to all Multiemployer Plans in the event of
a complete withdrawal therefrom, would not exceed $50,000,000.
8.7 Regulations G, T, U and X. While it is understood that the
--------------------------
proceeds of the Loans hereunder shall be used for general corporate purposes,
which may include the purchasing or carrying of Margin Stock (provided that the
Company gives each of the Banks prior written notice or telephonic notice
confirmed in writing of such intended use), no part of the proceeds of any Loan
hereunder will be used to purchase or carry any Margin Stock or to extend credit
to others for such purpose in violation of Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System.
8.8 Dividends. On and as of the date any of the proceeds of any Loan
----------
are utilized, directly or indirectly, to fund a dividend, a dividend,
distribution, purchase, redemption or other acquisition restricted by (S)6.5, as
a result thereof and after giving effect to all Indebtedness incurred and Liens
created in connection therewith, (i) the Company shall not be insolvent and the
Company shall not have reasonable grounds to believe that by such payment it
would be rendered insolvent, (ii) the Company shall not be engaged in a business
for which any property remaining with the Company shall be unreasonably small
capital
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<PAGE>
and (iii) the Company shall not have intended to incur, or believed that it
would incur, debts (as such term is used in the United States Bankruptcy Code)
that would be beyond its ability to pay as such debts matured.
SECTION 9
AGENTS
9.1 Appointment. The Banks hereby appoint Bankers Trust Company, The
------------
First National Bank of Chicago and Morgan Guaranty Trust Company of New York as
Agents to act as herein specified. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of a Note shall be deemed irrevocably
to authorize, the Agents to take such action on its behalf under the provisions
of this Agreement, the Notes, the Acceptances and any other instruments,
documents and agreements referred to herein (such Notes, Acceptances and other
instruments, documents and agreements being herein referred to as the Loan
Documents) and to exercise such powers hereunder and thereunder as are
specifically delegated to the Agents by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agents may perform any of
their duties hereunder, or under the Loan documents, by or through their agents
or employees.
9.2 Nature of Duties. The Agents shall have no duties or
-----------------
responsibilities except those expressly set forth in this Agreement. The duties
of the Agents shall be mechanical and administrative in nature. The Agents shall
not have by reason of this Agreement a fiduciary relationship in respect of any
Bank. Nothing in this Agreement or any of the Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon the Agents
any obligations in respect of this Agreement or any of the Loan Documents except
as expressly set forth herein. Each Bank shall make its own independent
investigation of the financial condition and affairs of the Company, its
Subsidiaries and Affiliates in connection with the making and the continuance of
the Loans hereunder and shall make its own appraisal of the creditworthiness of
the Company, its Subsidiaries and Affiliates; and the Agents shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Bank with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter.
9.3 Rights, Exculpation, Etc. Neither the Agents nor any of their
-------------------------
officers, directors, employees or agents shall be liable to any Bank for any
action taken or omitted by it hereunder or under any of the Loan Documents, or
in connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The Agents shall not be responsible to any
Bank for any recitals, statements, representations or warranties herein or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the financial condition of the Company, its Subsidiaries and Affiliates. The
Agents shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Loan Documents or the financial condition of the
Company, any Subsidiary or Affiliate, or the existence or possible existence of
any
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<PAGE>
Default or Event of Default. The Agents may at any time request instructions
from the Banks with respect to any actions or approvals which by the terms of
this Agreement or any of the Loan Documents the Agents are permitted or required
to take or to grant, and if such instructions are requested, the Agents shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under this Agreement or
any of the Loan Documents until it shall have received such instructions from
the Required Banks. Without limiting the foregoing, no Bank shall have any right
of action whatsoever against the Agents as a result of the Agents acting or
refraining from acting hereunder or under any of the Loan Documents in
accordance with the instructions of the Required Banks.
9.4 Reliance. The Agents shall be entitled to rely upon any written
---------
notice, statement, certificate, order or other document or any telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person, and, with respect to all legal matters pertaining to this
Agreement or any of the Loan Documents and its duties hereunder or thereunder,
upon advice of counsel selected by it.
9.5 Indemnification. To the extent that any Agent is not reimbursed
----------------
and indemnified by the Company, the Banks will reimburse and indemnify such
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against such Agent, acting pursuant hereto, in any way relating to or arising
out of this Agreement or any of the Loan Documents or any action taken or
omitted by such Agent under this Agreement or any of the Loan Documents, in
proportion to their respective Commitments hereunder; provided, however, that no
Bank shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Agent's gross negligence or willful misconduct. The
obligations to the Banks under this (S)9.5 shall survive the payment in full of
the Notes, the Acceptances and the termination of this Agreement.
9.6 The Agents, Individually. With respect to its Commitment
-------------------------
hereunder, the Loans made by it, any Notes issued to or held by it and any
Acceptances discounted by it, each Agent shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Bank or holder
of a Note. The terms "Banks", "Required Banks" or "Holders of Notes" or any
similar terms shall, unless the context clearly otherwise indicates, include
each Agent in its individual capacity as a Bank, one of the Required Banks or a
Noteholder. Each Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Company or any
of its Subsidiaries or Affiliates as if it were not acting pursuant hereto.
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<PAGE>
9.7 Holders of Notes. The Agents may deem and treat the named payee
-----------------
(or any subsequent holder, transferee, assignee or payee of which the Agents
have received written notice) of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment of transfer thereof
shall have been received by the Agents. Any request, authority or consent of any
Person, who at the time of making such request or of giving such authority or
consent is the named payee (or any subsequent holder, transferee, assignee or
payee of which the Agents have received written notice) of any Note, shall be
conclusive and binding on any subsequent holder, transferee, assignee or payee
of such Note or of any Note or Notes issued in exchange therefor.
9.8 Resignation by an Agent. Any Agent may resign from the performance
------------------------
of all of their functions and duties hereunder at any time by giving 15 Business
Days' prior written notice to the Company and the Banks. Such resignation shall
take effect upon the expiration of such 15 Business Day period or upon the
earlier appointment of a successor pursuant to this (S)9.8 or as provided in the
definition of Paying Agent. Upon any such resignation, the Required Banks may
(and upon the resignation of all such Agents, shall) appoint a successor Agent
who shall be satisfactory to the Company and shall be an incorporated bank or
trust company. In the event no such successor shall have been so appointed by
the 15th Business Day after the date such notice of resignation was given by the
Agent, the Agent's resignation shall become effective, the remaining Agents, if
any, shall perform all the duties of the Agents hereunder, or if there shall be
no Agent, then, until such time as the Required Banks shall appoint a successor
Agent, any notification, demand or other communication required or permitted to
be given by the Agent on behalf of the Banks to the Company hereunder shall be
sufficiently given if given by the Required Banks, and any notification, demand,
other communication, document, statement, other paper or payment required to be
made, given or furnished by the Company to the Agent for distribution to the
Banks shall be sufficiently made, given or furnished if made, given or furnished
by the Company directly to each Bank entitled thereto and, in the case of
payments, in the amount to which each such Bank is entitled. All powers
specifically delegated to the Agent by the terms hereof may be exercised by the
Required Banks.
SECTION 10
MISCELLANEOUS
10.1 Definitions. As used herein the following terms shall have the
------------
meanings herein specified and shall include in the singular number the plural
and in the plural number the singular:
"Acceptance" shall have the meaning specified in (S)1.1(b).
------------
"Adjusted Certificate of Deposit Rate" shall mean, on any day, 1/2 of
--------------------------------------
1% in excess of the sum (rounded to the nearest 1/100 of 1%) of (1) the rate
obtained by dividing (x) the most recent weekly average dealer offering rate per
annum for negotiable certificates of deposit
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<PAGE>
with a three-month maturity in the secondary market as published in the most
recent Federal Reserve Statistical Release on Form H.15 entitled "Selected
Interest Rate," or, if such publication or a substitute containing the foregoing
rate information shall not be published by the Federal Reserve System for any
week, the weekly average offering rate determined in good faith by Bankers on
the basis of quotations for such certificates received by it from two or more
certificate of deposit dealers in New York of recognized standing or, if such
quotations are unavailable, then on the basis of other sources reasonably
selected by Bankers, by (y) a percentage equal to 1 minus the stated maximum
rate (expressed as a decimal) for all reserve requirements as specified in
Regulation D (including, without limitation, any marginal, emergency,
supplemental, special or other reserves), applicable on such day to a
three-month certificate of deposit in excess of $100,000 of any member bank of
the Federal Reserve System, plus (2) the then daily net annual assessment rate
----
as estimated in good faith by Bankers for determining the current annual
assessment payable by Bankers to the Federal Deposit Insurance Corporation for
insuring three-month certificates of deposit.
"Affiliate" shall mean any Person in which the Company or any
-----------
Subsidiary or any other Affiliate at any time owns or is a member of a control
group that owns in the aggregate between (and including) 50% and up to (but not
including) 90% of the voting stock; provided that the term "Affiliate" shall not
include any Person designated as an Unrestricted Company until 30 days after the
giving of written notice by the Company to the Banks of a date (a) which
occurred within the 10 day period ending with the date upon which such notice is
given, (b) which has been fixed by the Chairman of the Board or the President of
the Company as the date upon which such person shall no longer be an
Unrestricted Company and (c) which is a date upon which all of the indebtedness
of such Person would have been permitted to be incurred under this Agreement if
such Person was an Affiliate. The term "control group" as used in this paragraph
means a group which has placed in a jointly-owned corporation, partnership or
voting trust the voting rights of the shares of the Affiliate held by each to
the extent necessary for voting control of the Affiliate. Any reference herein
to an "affiliate" of any Person other than the Company or its Subsidiaries shall
mean any other Person in which such Person, or its subsidiaries, at any time
owns or is a member of a control group that owns in the aggregate between (and
including) 50% and up to (but not including) 90% of the voting stock.
"Affiliate Debt" shall mean any Indebtedness of an Affiliate,
----------------
including, without limitation, any Indebtedness of any other Person as to which
such Affiliate is directly or contingently liable or which is secured by
property or assets of such Affiliate excluding (i) any obligations of such
Affiliate as lessee which are capitalized in accordance with generally accepted
accounting principles, (ii) any obligation under any agreement to purchase
timber, whether standing or cut, or to cut and purchase standing timber
regardless of whether such agreement requires payment thereunder by such
Affiliate, the Company or
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<PAGE>
a Subsidiary prior to and without delivery of or cutting such timber and (iii)
the obligations of Cabin Bluff Partners under the Loan and Guaranty Agreement.
"Agents" shall have the meaning specified in the first paragraph of
--------
this Agreement.
"Agreement" shall mean this Credit Agreement, as amended or modified
-----------
from time to time.
"Appraisal Date" shall mean the most recent date on which an appraisal
----------------
with respect to any parcel of timberland shall have been made, but not more than
five years prior to the event for which a determination is being made on the
basis of the Appraised Value.
"Appraised Value" shall mean the fair market value as determined on
-----------------
an Appraisal Date by a Person satisfactory to the Agents and the Company.
"Attributable Debt" shall mean, as to any particular lease entered
-------------------
into after July 15, 1982 under which any Person is at the time liable and at any
date as of which the amount thereof is to be determined, the total net amount of
rent required to be paid by such Person under such lease during the remaining
term thereof, discounted from the respective due dates thereof to such date at a
rate equal to the weighted average of the interest rates borne by the securities
issued from time to time by the Company under the Indenture, dated as of July
15, 1982, between the Company and Bankers, as Trustee, as amended. The net
amount of rent required to be paid under any such lease for any such period
shall be the aggregate amount of the rent payable by the lessee with respect to
such period after excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water and utility rates
and similar charges. In the case of any lease which is terminable by the lessee
upon the payment of a penalty, such net amount shall also include the amount of
such penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated.
"Bank" shall have the meaning specified in the first paragraph of this
------
Agreement.
"Bank Payment Office" shall have the meaning specified in (S)1.4(b).
---------------------
"Bankers" shall mean Bankers Trust Company.
---------
"Base Rate" shall mean on any day the higher of (x) the Prime Lending
-----------
Rate or (y) the Adjusted Certificate of Deposit Rate.
"Base Rate Loan" shall mean any Loan which is bearing interest at the
----------------
rates provided in (S)1.7(a).
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<PAGE>
"Board of Directors" shall mean either the board of directors of the
--------------------
Company or any duly authorized committee of that board.
"Borrowing" shall mean the incurrence of one Type of Syndicate Loan
-----------
from all the Banks, or one Type of Commitment Loan from a Bank, on any given
date, having in the case of Fixed Rate Loans the same Interest Period.
"Business Day" shall mean (i) for all purposes other than as covered
--------------
by clause (ii) below, any day excluding Saturday, Sunday and any day on which
banks in New York City or Chicago are authorized by law or other governmental
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans and
Loans made in an Optional Currency, any day which is a Business Day described in
clause (i) and which is also a day for trading by and between banks in U.S.
dollar deposits in the interbank Eurodollar market or for trading by and between
banks in the relevant Optional Currency, as the case may be.
"Cabin Bluff Guaranteed Founded Debt" shall mean the principal amount
-------------------------------------
of the indebtedness (not to exceed $150,000,000 in the aggregate) guaranteed by
the Company from time to time pursuant to the Loan and Guaranty Agreement and
shall include the obligations of any Subsidiary with respect to the indebtedness
so guaranteed.
"CD Office" shall mean the office of each Bank set forth opposite its
-----------
name on the signature page of this Agreement under such heading, or if no such
office is set forth opposite its name, then its Domestic Office, or such other
office as such Bank may specify from time to time.
"Certificate of Deposit Rate" shall mean the average (rounded upward
-----------------------------
to the next whole multiple of 1/100 of 1%) of the consensus bid rate determined
by each Reference Bank as the bid rates per annum, at 10:00 A.M. (New York time)
on the first day of the Interest Period for which such Certificate of Deposit
Rate is to be applicable of two or more New York certificate of deposit dealers
of recognized standing selected by such Reference Bank for the purchase at face
value from such Reference Bank in New York of certificates of deposit in an
aggregate amount approximately comparable to the Fixed CD Rate Loan of such
Reference Bank to which such Certificate of Deposit Rate is to be applicable and
with a maturity equal to such Interest Period, provided that if any Reference
Bank fails to provide the Paying Agent with its aforesaid rate, then the
Certificate of Deposit Rate shall equal the rate, or average of the rates,
provided to the Paying Agent by the other Reference Bank or Reference Banks.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
------
time to time.
"Commissions" shall mean the Commitment Commission and the Facility
-------------
Fee payable pursuant to (S)1.12.
-35-
<PAGE>
"Commitment" shall mean for each Bank the amount specified opposite
------------
its name on Schedule II hereto, as such amount may be reduced or increased from
time to time pursuant to (SS)1.13 and 1.14.
"Commitment Loan" shall mean a Loan which is a Base Rate Loan (except
-----------------
to the extent made pursuant to (S)2.4), a Fixed CD Rate Loan or a Eurodollar
Loan that is made pursuant to a Notice of Commitment Borrowing.
"Company" shall have the meaning specified in the first paragraph of
---------
this Agreement.
"Company's Proportion" shall mean that portion of any Affiliate Debt
----------------------
as to which the Company or a Subsidiary has agreed to make an advance to the
Affiliate owing same as a loan or as a contribution to the capital of such
Affiliate or as a prepayment of the purchase price for any property to be
purchased in the future (whether payable to such Affiliate or any creditor of,
or lender to, such Affiliate).
"Company's Share" shall mean with respect to the Net Tangible Assets
-----------------
of any Affiliate, such portion of such Assets as the equity of such Affiliate
owned by the Company and its Subsidiaries is of the total equity of such
Affiliate.
"Consolidated Indebtedness" shall mean the aggregate of all
---------------------------
Indebtedness (other than any owned by the Company or any Subsidiary) created,
issued, reissued, assumed or guaranteed by the Company or by any Subsidiary, or
secured by a lien or charge on or pledge of any property of the Company or a
Subsidiary, provided that in any computation of Consolidated Indebtedness there
shall be excluded (i) all obligations with respect to which an amount sufficient
to discharge the same in full shall have been deposited in trust for the
payments thereof and (ii) the Cabin Bluff Guaranteed Funded Debt; provided,
however, that if, at the time of any such computation: (x) any portion of the
Cabin Bluff Guaranteed Funded Debt may not then be satisfied by the tender of
GP(M) Notes as provided in Article IX of the Loan and Guaranty Agreement or (y)
the Company is not then able, directly (or indirectly through a Subsidiary) and
without being required to obtain the consent or approval of any Person, to cause
any portion of the Cabin Bluff Guaranteed Funded Debt to be satisfied by the
tender of GP(M) Notes as provided in Article IX of the Loan and Guaranty
Agreement upon the occurrence of an "event of default" (as defined in the GP(M)
Notes), then there shall be added to Consolidated Indebtedness an amount equal
to the portion of the Cabin Bluff Guaranteed Funded Debt described in the
foregoing clauses (x) and (y).
"Consolidated Net Earnings" of the Company for any period shall mean
---------------------------
the net earnings of the Company and its Subsidiaries determined in accordance
with generally accepted accounting principles on a consolidated basis for such
period taken as one accounting period, after
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<PAGE>
all proper charges, including charges for depreciation, depletion, obsolescence,
amortization, interest on indebtedness and all taxes, including taxes in respect
of income.
"Consolidated Net Tangible Assets" shall mean the total of all assets
----------------------------------
of the Company and its Subsidiaries (excluding any inventory adjustments which
state inventories at less than the lower of current cost or market), as shown on
a consolidated balance sheet prepared in accordance with generally accepted
accounting principles as of a date not more than 60 days prior to the date on
which any such determination is being made, but after giving effect to the
issuance of the additional Indebtedness with respect to which a determination of
Consolidated Net Tangible Assets is being made, plus 75% of the excess of the
Appraised Value of all timberlands owned by the Company and its Subsidiaries
over the book value thereof and less the sum of the following: (a) the amounts
at which intangible assets (such as organization expense, good will, trademarks,
brands, trade names, patents and unamortized discount and expense resulting from
the issuance of Indebtedness or capital shares) are carried on such balance
sheet, (b) the amount of all reserves (other than reserves for deferred income
tax and appropriate surplus reserves not set aside for liabilities recognized as
such under generally accepted accounting principles) appearing on such balance
sheet as non-current liabilities and not otherwise deducted from assets, (c) the
amount of all indebtedness and liabilities appearing on such balance sheet other
than Indebtedness and share capital, (d) the amount, if any, at which any of the
Company's capital shares appear on the asset side of such balance sheet, (e)
appropriate adjustment for outstanding stock interests in Subsidiaries
(determined in accordance with generally accepted accounting principles) and (f)
any surplus resulting from write-up (other than revaluation of timberlands as
provided for hereinbefore) subsequent to October 1, 1967 of the book value of
any such assets owned on such date resulting from a revaluation thereof
subsequent to such date, or any write-up (other than revaluation of timberlands
as provided for hereinbefore) in excess of costs of assets acquired subsequent
to such date, provided that there shall not be subtracted any surplus resulting
from any write-up of the book value of the shares held by the Company of any
Affiliate to the value thereof as shown on the books of such Affiliate, if the
books of such Affiliate are kept in accordance with generally accepted
accounting principles. For purposes of any computation of Consolidated Net
Tangible Assets, there shall be excluded the principal amount of the GP Notes;
provided, however, that if, at the time of any such computation: (x) any portion
of the Cabin Bluff Guaranteed Funded Debt may not then be satisfied by the
tender of GP(M) Notes as provided in Article IX of the Loan and Guaranty
Agreement or (y) the Company is not then able, directly (or indirectly through a
Subsidiary) and without being required to obtain the consent or approval of any
Person, to cause any portion of the Cabin Bluff Guaranteed Funded Debt to be
satisfied by the tender of GP(M) Notes as provided in Article IX of the Loan and
Guaranty Agreement upon the occurrence of an "event of default" (as defined in
the GP(M) Notes), then there shall be added to Consolidated Net Tangible Assets
an amount equal to (i) the principal amount of the GP(M) Notes then held by
Cabin
-37-
<PAGE>
Bluff Partners (or the Company of any Subsidiary) minus (ii) the portion of the
Cabin Bluff Guaranteed Funded Debt which is not described in either of the
foregoing clauses (x) or (y).
"Credit Utilization" shall have the meaning specified in (S)4.2.
------------------
"Debt" shall have the meaning specified in (S)6.1.
----
"Default" shall mean any event, act or condition which with notice or
-------
lapse of time or both would constitute an Event of Default.
"Differential" shall mean each of the percentages in excess of the
------------
Quoted Rate and Fixed CD Rate referred to in (S)1.7(b) and (S)1.7(c), as the
case may be.
"Discount Rate" for each Bank shall mean the rate for acceptance of
-------------
drafts or bills determined by such Bank in its sole discretion.
"Dollar Equivalent" shall mean, with respect to any currency other
-----------------
than U.S. dollars, the amount of U.S. dollars into which such currency could be
converted at the Exchange Rate.
"Domestic Office" shall mean the office of each Bank set forth
---------------
opposite its name on the signature page of this Agreement under such heading, or
if only one office is set forth opposite its name, then such office.
"Effective Date" shall have the meaning specified in (S)4.1.
--------------
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time. Section references to ERISA are to ERISA, as
in effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
---------------
of ERISA) which together with the Company or a Subsidiary would be deemed to be
a member of the same "controlled group" within the meaning of Section 414(b),
(c), (m) and (o) of the Code.
"Eurodollar Loan" or "Eurodollar Loans" shall mean any Loan or Loans
--------------- ----------------
during any period during which such Loan or Loans are bearing interest at the
rates provided for in (S)1.7(c).
"Eurodollar Office" shall mean the office of each Bank set forth
-----------------
opposite its name on the signature page of this Agreement under such heading, or
if only one office is set forth opposite its name, then such office, or such
other office as such Bank may specify from time to time.
-38-
<PAGE>
"Event of Default" shall mean each of the Events of Default provided
----------------
in (S)7.
"Exchange Rate" shall mean, when converting any amount denominated in
-------------
a currency other than U.S. dollars into U.S. dollars, the rate quoted by the
respective Bank making such Optional Currency Loan at the opening of business in
New York, on the date as to which any determination thereof is to be made, for
the spot rate at which such currency is offered for sale by such Bank against
delivery of U.S. dollars.
"Exempted Indebtedness" shall mean, as of any particular time, the
---------------------
sum of (i) the aggregate principal amount of all then outstanding indebtedness
for money borrowed of the Company and Subsidiaries issued, assumed or guaranteed
directly or indirectly after July 15, 1982 and secured by any mortgage, security
interest, pledge, lien or other encumbrance other than those permitted by
(S)6.1 (without giving effect to the final proviso thereto) and (ii) all
Attributable Debt in respect of Sale and and Lease-Back Transactions (as defined
in (S)6.4) incurred after July 15, 1982 and at such time outstanding other than
that permitted pursuant to (S)6.4 (without giving effect to the proviso
thereto).
"Existing Agreements" shall mean the agreements set forth on Schedule
-------------------
III hereto.
"First Chicago" shall mean The First National Bank of Chicago.
-------------
"Fixed CD Rate" shall mean with respect to each Interest Period the
-------------
sum (rounded upward to the nearest 1/100 of 1%) of (A) the rate obtained by
dividing (x) the Certificate of Deposit Rate for such Interest Period by (y) a
percentage equal to 100% minus the stated maximum rate of all reserve
requirements as specified in Regulation D (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that would be
applicable during such Interest Period to a negotiable certificate of deposit in
excess of $100,000 and with a maturity equal to such Interest Period of any
member bank of the Federal Reserve System, plus (B) the then daily net annual
assessment payable by Bankers to the Federal Deposit Insurance Corporation for
insuring such certificates of deposit.
"Fixed CD Rate Loan" or "Fixed CD Rate Loans" shall mean any Loan or
------------------ -------------------
Loans during any period during which such Loan or Loans are bearing interest at
the rates provided for in (S)1.8(b).
"Fixed Rate Loans" shall mean the Eurodollar Loans and the Fixed CD
----------------
Rate Loans.
"GP(M) Notes" shall have the meaning assigned to such term in the Loan
-----------
and Guaranty Agreement.
"GP Notes" shall have the meaning assigned to such term in the Loan
--------
and Guaranty Agreement.
-39-
<PAGE>
"Indebtedness" shall mean, as to any Person, without duplication, the
------------
sum of (i) all obligations of such Person for borrowed money and (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments; provided that, unless otherwise provided herein with
respect to any Person, Indebtedness shall not be deemed to include (a) any lease
regardless of whether or not the lessee has an option to acquire title to the
property which is subject to such lease with or without the payment of any
consideration upon the exercise thereof, or (b) any agreement (whether with an
affiliate or any existing or prospective creditor of, or lender to, such
affiliate) to make any advance to any affiliate as a loan or as a contribution
to the capital of such affiliate or as a prepayment of the purchase price for
any property to be purchased in the future (whether payable to the affiliate or
any such creditor or lender), or (c) the indebtedness of or to any affiliate (or
in the case of the Company and its Subsidiaries, any Affiliate) and any other
intercompany items, or (d) any agreement to purchase timber, whether standing or
cut, or to cut and purchase standing timber, regardless of whether such
agreement requires payment thereunder by the Company or a Subsidiary prior to
and/or without delivery of, or cutting of, such timber, or (e) any reserves or
deferred items, including reserves for deferred income taxes. Notwithstanding
the foregoing provisions hereof, there shall be included in Indebtedness of the
Company or a Subsidiary the appropriately discounted (in accordance with
generally accepted financial practices) amount of future payments under leases
under which the Company or such Subsidiary is the lessee but only if such leases
are required to be capitalized in accordance with generally accepted accounting
principles (exclusive of any agreement to purchase timber, whether standing or
cut, or to cut and purchase standing timber regardless of whether such agreement
requires payment thereunder by the Company or a Subsidiary prior to and/or
without delivery of or cutting of such timber). In the event that any amount is
included within Indebtedness of the Company or a Subsidiary because of any lease
described in the preceding sentence hereof, an amount equal to the book value of
the property which is subject to such lease shall be included in any computation
of Consolidated Net Tangible Assets.
"Interest Period" shall have the meaning specified in (S)1.8.
---------------
"Interim Maturity Date" shall mean each date prior to the Termination
---------------------
Date on which Syndicate Loans or Commitment Loans mature.
"Lending Office" shall mean for each Bank the office specified
--------------
opposite such Bank's name on the signature pages hereof with respect to
-40-
<PAGE>
each Type of Loan, or such other office as such Bank may designate in writing
from time to time to the Company and the Paying Agent with respect to such Type
of Loan.
"Loan and Guaranty Agreement" shall mean the Loan and Guaranty
---------------------------
Agreement dated as of August 23, 1988 among Cabin Bluff Partners, the Company
and Scott Paper Company, as Guarantors, and The Sumitomo Bank, Limited, New York
Branch, as the same may be amended or modified from time to time.
"Loans" shall have the meaning specified in (S)1.1.
-----
"Margin Stock" shall have the meaning assigned to such term in
------------
Regulation U of the Board of Governors of the Federal Reserve System as from
time to time in effect.
"Net Tangible Assets" in the case of an Affiliate shall mean the total
-------------------
of all assets of such Affiliate and subsidiaries thereof (excluding all
intercompany items and any inventory adjustments which state inventories at less
than the lower of current cost or market), as shown on a balance sheet prepared
in accordance with generally accepted accounting principles as of a date not
more than 60 days prior to the date on which such determination is being made
less the sum of the following: (a) the amount at which intangible assets (such
- ----
as organization expense, good will, trademarks, brands, trade names, patents and
unamortized discount and expense resulting from the issuance of Funded Debt or
shares) are carried on such balance sheet, (b) the amount of all reserves (other
than reserves for deferred income tax and appropriated surplus reserves not set
aside for liabilities recognized as such under generally accepted accounting
principles) appearing on such balance sheet as non-current liabilities and not
otherwise deducted from assets, (c) the amount of all indebtedness and
liabilities appearing on such balance sheet other than Indebtedness and share
capital, (d) the amount, if any, at which any of the Company's shares appear on
the asset side of such balance sheet, (e) appropriate adjustment for outstanding
stock interests not owned by such Affiliate or subsidiaries thereof in
subsidiaries of such Affiliate, (f) any surplus resulting from any write-up
subsequent to October 1, 1967 of the book value of any of such assets owned on
any such date resulting from a revaluation thereof subsequent to such date, or
any write-up in excess of costs of assets acquired subsequent to such date and
(g) in the case of Cabin Bluff Partners, the principal amount of the GP Notes.
"Notes" shall have the meaning specified in (S)1.5.
-----
"Notice of Borrowing" shall mean a Notice of Syndicate Borrowing or a
-------------------
Notice of Commitment Borrowing.
"Notice of Commitment Borrowing" shall have the meaning specified in
------------------------------
(S)1.3(b).
-41-
<PAGE>
"Notice of Syndicate Borrowing" shall have the meaning specified in
-----------------------------
(Sec.)1.3(a).
"Notice Office" shall mean (i) with respect to any Syndicate Loan, the
-------------
office of the Paying Agent located at One First National Plaza, Chicago,
Illinois, or such other office of the Paying Agent as the Paying Agent may
designate in writing to the Company and the other Banks, and (ii) with respect
to any Commitment Loan, the office of the Bank making such Commitment Loan
specified opposite its signature hereto or at such other office of such Bank as
such Bank may designate in writing to the Company from time to time.
"Optional Currency" shall mean any currency other than U.S. dollars.
-----------------
"Outstanding Utilization" shall mean at any time the sum of the
-----------------------
outstanding principal amount (including the Dollar Equivalent of Loans made in
an Optional Currency determined at the Exchange Rate in effect on the date such
Loan is made) of all Loans (including Special Facility Loans) and the
outstanding Principal Component of all Acceptances; the Outstanding Utilization
of any Bank shall mean at any time the sum of the outstanding principal amount
(including the Dollar Equivalent of Loans made in an Optional Currency
determined at the Exchange Rate in effect on the date such Loan is made) of
Loans (other than Special Facility Loans) made by such Bank and the outstanding
Principal Component of Acceptances discounted by such Bank and such Bank's pro
rata share of outstanding Special Facility Loans (including the Dollar
Equivalent of Special Facility Loans made in an Optional Currency determined at
the Exchange Rate in effect on the date such Loan is made).
"Payment Agent" shall mean First Chicago, provided that if First
------------
Chicago shall cease to constitute a Bank hereunder, Bankers shall become the
Paying Agent.
"Payment Office" shall mean the office of the Paying Agent located at
-------------
One First National Plaza, Chicago, Illinois, or such other office of the Paying
Agent as the Paying Agent may designate in writing to the Company and the other
Banks.
"Person" shall mean and include any person, firm, corporation,
------
association, trust or other enterprise or any governmental or political
subdivision or agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as defined
----
in Section 4001 of ERISA, which is maintained, or at any time during the five
calendar years preceding the date of this Agreement was maintained for employees
of the Company or a Subsidiary or an ERISA Affiliate.
-42-
<PAGE>
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Section 4002 of ERISA, or any successor thereto.
"Prime Lending Rate" shall mean the rate which Bankers announces from
------------------
time to time at its principal office as its prime lending rate; any change of
interest resulting from a change in the Prime Lending Rate shall be effective on
the effective date of each change therein.
"Principal Component" shall mean the face amount of an Acceptance less
-------------------
the discount incurred in respect thereof.
"Principal Property" shall mean (i) any paperboard, paper or pulp
------------------
mill or any paper converting plant or foundry or any other manufacturing plant
or facility located within the United States of America or Canada of the Company
or any Subsidiary except any such plant or facility which the Board of Directors
by resolution declares is not of material importance to the total business
conducted by the Company and its Subsidiaries as an entirety and (ii) any timber
or timberlands of the Company or any Subsidiary.
"Quoted Rate" shall mean the average of the offered quotation to
-----------
first class banks in the interbank Eurodollar market by each of the Reference
Banks for U.S. dollar deposits of amounts in immediately available funds
comparable to the outstanding principal amount of the Eurodollar Loan of such
Reference Bank as to which a Quoted Rate determined with reference to such
offered rate will apply with maturities comparable to the Interest Period for
which such Quoted Rate will apply as of 10:00 A.M. (New York time) two Business
Days prior to the commencement of such Interest Period, without any addition to
such offered quote to give effect to the reserve requirements established for
Eurodollar transactions by Regulation D, provided that, if any Reference Bank
fails to provide the Paying Agent with its aforesaid quotation, then the Quoted
Rate shall be based on the quotation or quotations provided to the Paying Agent
by the other Reference Bank or Reference Banks.
"Reference Banks" shall mean Bankers, First Chicago and Morgan
---------------
Guaranty Trust Company of New York.
"Regulation D" shall mean Regulation D of the Board of Governors of
------------
the Federal Reserve System as from time to time in effect or any successor to
all or a portion thereof establishing reserve requirements.
"Reportable Event" shall mean an event described in Section 4043(b) of
----------------
ERISA with respect to a Plan as to which the notice requirement has not been
waived by the PBGC.
"Required Banks" shall mean (i) for all purposes of this Agreement
--------------
other than (Sec.)7 and prior to the Termination Date for all Banks, Banks with
Commitments aggregating at least 66 2/3% of the Total Commitments, (ii) solely
for purposes of (Sec.)7 of this Agreement and prior to the Termination Date for
all Banks, either (x) Banks with Commitments aggregating at least 66 2/3% of the
Total Commitments or (y) Banks with Commitments and Qualified Loans (as defined
in the next sentence) aggregating at least 66 2/3% of the Total Commitments and
(iii) on and after the Termination Date for all Banks, the holders of Notes theb
-43-
<PAGE>
outstanding principal amount of which aggregate at least 66 2/3% of the
aggregate outstanding principal amount of all Notes. The "Qualified Loans" of
any Bank shall mean the amount by which (i) the outstanding principal amount of
Loans by such Bank (including Special Facility Loans) calculated, in the case of
Loans made in Optional Currencies, on the basis of the Exchange Rate on the date
the Loan is made, plus the Principal Component of all outstanding Acceptances by
such Bank, exceeds (ii) the Commitment of such Bank.
"Restricted Margin Stock" shall mean at the time of determination
-----------------------
thereof, all of the Margin Stock owned by the Company to the extent the value of
such Margin Stock does not exceed 25% of the value of the consolidated total
assets of the Company and its Subsidiaries subject to the provisions of (Sec.)6.
"Roll-Over Borrowing" shall mean a Borrowing wherein the aggregate
-------------------
principal amount of the Interim Syndicate Loans being incurred equals or is less
than the aggregate principal amount of the Interim Syndicate Loans maturing on
the date of such Borrowing.
"Significant Subsidiary" shall mean the Subsidiaries listed in the
----------------------
appropriate exhibit to the Company's Annual Report on Form 10-K most recently
filed with the United States Securities and Exchange Commission.
"Special Facility Loan" shall mean any Loan bearing interest at the
---------------------
rates provided in (Sec.)2.
"Special Rate" for each Bank shall mean the rate of interest
-------------
determined by such Bank in its sole discretion to be applicable to a Special
Facility Loan for a specified Interest Period.
"Subsidiary" shall mean any company in which the Company and its
-----------
Subsidiaries now have or may hereafter acquire an aggregate of at least 90% of
the voting stock, provided that the term "Subsidiary" shall not include any
company which the Chairman of the Board or the President of the Company has
designated as an "Unrestricted Company" by 30 days, written notice to the Banks;
provided, however, that in no event shall the aggregate of all investments,
loans and advances made by the Company and its Subsidiaries, on a consolidated
basis, in Unrestricted Companies exceed at any one time outstanding
$250,000,000; and such Unrestricted Company shall not thereafter be deemed a
"Subsidiary" under this Agreement until 30 days after the giving of written
notice by the Company to the Banks of a date (a) which occurred within the 10
day period ending with the date upon which such notice is given, (b) which has
been fixed by the Chairman of the Board of the President of the Company as the
date upon which such company shall no longer be an Unrestricted Company and (c)
which is a date upon which all of the Funded Debt of such company would have
been permitted to be incurred under this Agreement if such Company was a
Subsidiary. On the date hereof Mead Leasing Company, M-B Pulp Company, Mead
Timber Company, R. Corp., Mead Reco, Inc., Mead Reinsurance Corporation, Adena
Syndicate, Ltd., Westbury Reinsurance Limited, Mead Holdings S.A. and Mead
Reassurance S.A. constitute the only Unrestricted Companies.
"Syndicate Loan" shall mean a Loan which is a Base Rate Loan (except
--------------
to the extent made pursuant to (Sec.)2.4), a Fixed CD Rate Loan or a Eurodollar
Loan and which is not a Commitment Loan, Special Facility Loan or Acceptance.
-44-
<PAGE>
"Termination Date" shall mean (i) with respect to any Bank, the
----------------
earlier of (A) the fourth anniversary of the date (the "Notice Date") specified
in a notice delivered by such Bank to the Company and the Paying Agent on, or
not more than 30 days prior to, such Notice Date, to the effect that such Bank
will terminate its Commitment in full effective on such fourth anniversary,
provided that no Termination date pursuant to this clause (A) shall occur prior
to November 15, 1993, and (B) the date upon which the Company has terminated the
Commitment of such Bank pursuant to (Sec.)1.13, and (ii) with respect to all the
Banks, the date upon which the Total Commitment is terminated by the Company
pursuant to (Sec.)1.13 or by all Banks pursuant to clause (i) of this
definition.
"Total Commitments" shall mean at any time the aggregate of all the
-----------------
Commitments of all the Banks.
"Type" shall mean any kind of Loan, i.e., whether such Loan is a Base
----
Rate Loan, a Fixed CD Rate Loan or a Eurodollar Loan.
"Unutilized Commitment" shall mean, at any time for any Bank, an
---------------------
amount equal to the Commitment of such Bank less the sum of (i) outstanding
principal amount of Loans (including Special Facility Loans) calculated, in the
case of Loans made in an Optional Currencies, on the basis of the Exchange Rate
in effect on the date such Loan is made, and (ii) the outstanding Principal
Component of all Acceptances discounted by such Bank.
"Unfunded Current Liability" of any Plan means the amount, if any, by
--------------------------
which the present value of the accrued vested benefits under the Plan as of the
close of its most recent plan year exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
"Unrestricted Margin Stock" shall mean all of the Margin Stock owned
-------------------------
by the Company and its Subsidiaries which is not Restricted Margin Stock.
"written" or "in writing" shall mean any form of written communication
------- -------
or a communication by means of telex, telecopier device, telegraph or cable.
10.2 Accounting Principles; Computations. (a) Except as otherwise
-----------------------------------
specifically provided herein, all statements to be prepared and determinations
to be made under this Agreement, including (without limitation) those pursuant
to (Sec.)5, shall be prepared and made in accordance with generally accepted
accounting principles applied on a basis consistent with the accounting
principles reflected in the audited consolidated financial statements of the
Company and its Subsidiaries for the most recent fiscal year. All calculations
and computations determined in compliance with (Sec.)6 shall utilize accounting
principles and policies in conformity with those used to prepare the financial
statements referred to in (Sec.)8.1.
(b) All computations of interest and Commissions hereunder shall be
made on the actual number of days elapsed over a year of 365 or 366 days, as the
case may be, provided that interest in respect of Fixed Rate Loans and Special
Facility Loans and the Discount Rate in respect of Acceptances shall be computed
on the basis of the actual number of days elapsed over a year of 360 days.
10.3 Exercise of Rights. Neither the failure nor delay on the part of
-----------------------
any of the Banks or any holder of a Note to exercise any right, power or
-45-
<PAGE>
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise thereof, or the exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Banks and the
holders of the Notes would otherwise have. No notice to or demand on the Company
in any case shall entitle the Company to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the right of the
Banks and the holders of the Notes to any other or further action in any
circumstances without notice or demand.
10.4 Amendment and Waiver. With the prior written consent of the
--------------------
Required Banks and the Company any provision of this Agreement may be amended,
waived, supplemented, restated, discharged or terminated; except that the
written consent of the Company, all of the Banks and each holder of a Note shall
be required: (i) to extend the final maturity of any Loan or Note, or reduce the
rate or extend the time of payment of interest or Fees thereon, or reduce the
principal amount thereof, or, except as provided in (Sec.)1.14, increase the
Commitment of any Bank over the amount thereof then in effect (it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment shall not constitute a change in the terms of
any Commitment of any Bank), (ii) to amend, modify or waive any provision of
this Section, or (Secs.)9.5, 10.2(b), 10.5, 10.6, 10.12, or 10.13 or (iii) to
reduce the percentage specified in the definition of Required Banks.
10.5 Expenses. The Company shall pay all reasonable out-of-pocket
--------
expenses (x) of the Agents incurred in connection with the development,
preparation, execution, delivery, enforcement and administration of this
Agreement and any and all agreements supplementary hereto and the Notes and the
making and repayment of the Loans and the payment of interest, including,
without limitation, the reasonable fees and expenses of White & Case, special
counsel for the Banks and (y) of each Bank incurred in connection with the
enforcement of any of the foregoing, including, without limitation, the
reasonable fees and expenses of any counsel for any of the Banks (who may be
employees of such Bank). In addition, the Company agrees to pay, and to save the
Agents and the Banks harmless from all liability for, any stamp or other
documentary taxes which may be payable in connection with the execution or
delivery of this Agreement, the borrowings hereunder, the issuance of the Notes,
or the creation of Acceptances or of any other instruments or documents provided
for herein or delivered or to be delivered hereunder or in connection herewith.
The Company agrees to indemnify, defend and hold the Agents and each of the
Banks harmless from and against any and all liability (including, without
limitation, interest, penalties and all reasonable attorneys' fees) to which
either Agent or any of the Banks may become subject insofar as such liability
arises out of or is based upon a suit or proceeding or governmental action
brought or taken in connection with the use of the proceeds of the loans to
acquire the stock or assets of any Person, whether such Agent or such Bank is a
party thereto or is otherwise required to respond thereto, provided that the
Company shall not be liable hereunder with respect to claims directly arising
out of (i) any settlement made without its consent, which consent will not
unreasonably be withheld, (ii) any proceeding brought against such Agent or such
Bank by a security holder of such Agent or such Bank based upon rights
-46-
<PAGE>
afforded such security holder solely in its capacity as such, and (iii) the
gross negligence or wilful misconduct of such Agent or such Bank. All
obligations provided for in this (Sec.)10.5 shall survive any termination of
this Agreement.
Section 10.6. Benefit of Agreement. (a) This Agreement shall be
--------------------
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto, provided that the Company may not
assign or transfer any of its interest hereunder without the prior written
consent of each Bank.
(b) Any Bank may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Bank, provided that the Company shall not be liable for any increased cost or
taxes or other identified liabilities that a Bank may incur as a result of any
transfer by such Bank of any Type of Loans from the office where initially
maintained. For the purposes of this clause (b), "Affiliate" shall mean, with
respect to any Bank, any other Person (i) directly or indirectly controlling
(including, but not limited to, all directors and officers of such Bank),
controlled by, or under direct or indirect common control with, such Bank or
(ii) that directly or indirectly owns more than 5% of the voting securities of
such Bank. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract or otherwise.
(c) No Bank may assign its rights and its obligations under this
Agreement, and no Bank may sell participations in all or any part of any Loan or
Loans made by it or its Commitment or any other interest herein or in its Note,
except in either case upon notice to the Company and each Agent and with the
prior written consent of the Company, which consent shall be given in the sole
discretion of the Company. In the case of an assignment consented to by the
Company, the assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights and benefits as it would have if it
were a Bank hereunder and the holder of a Note. In the case of a participation
consented to by the Company, the participant shall not have any rights under
this Agreement or any Note or any other document delivered in connection
herewith (the participant's rights against such Bank in respect of such
participation to be those set forth in the agreement executed by such Bank in
favor of the participant relating thereto) and all amounts payable by the
Company under (Secs.)1.9, 1.10 and 3.4 hereof shall be determined as if such
Bank had not sold such participation.
10.7 Descriptive Headings. The descriptive headings of the various
--------------------
provisions of this Agreement are inserted for convenience of reference only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
10.8 Notices, Requests, Demands. All notices, requests, demands or
--------------------------
other communications to or upon the respective parties hereto shall be deemed to
have been given or made three days after having been deposited in the mails,
postage prepaid, or, in the case of telex or telegraphic notice, when delivered
-47-
<PAGE>
to the telex or telegraph company, or in the case of telex or telecopier notice
sent over a telex or a telecopier machine owned or operated by a party hereto,
when sent, addressed to the Company, the Agents or the Banks, as the case may
be, at their respective addresses shown opposite their signatures hereto or at
such other address as any of the parties hereto may hereafter specify in writing
to the others, except that any communication with respect to a change of address
shall be deemed to be given or made when received by the party to whom such
communication was sent. No other method of giving notice is hereby precluded.
10.9 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or otherwise made in writing by the Company in
connection herewith shall survive the execution and delivery of this Agreement
and the Notes.
10.10 Governing Law; Submission to Jurisdiction. (a) THIS AGREEMENT
-----------------------------------------
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT, AND UNDER
THE NOTES SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to
this Agreement or any Note may be brought in the courts of the State of New York
or of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, the Company hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts in connection with such legal action or
proceeding. The Company further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Company at its address set forth opposite its signature below, such service
to become effective 30 days after such mailing. Nothing herein shall affect the
right of the Agent, any Bank or the holder of any Note to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Company in any other jurisdiction.
(b) The Company hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any Note
brought in the courts referred to in clause (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
10.11 Counterparts. This Agreement may be executed in any number of
------------
copies, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
Complete counterparts of this Agreement shall be lodged with the Company and the
Agents and each Bank shall receive an executed counterpart of this Agreement
executed by the Company and the Agents.
10.12 Right of Setoff. In addition to any rights now or hereafter
---------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Bank is hereby
-48-
<PAGE>
authorized at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Company or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other indebtedness at
any time held or owing by such Bank (including without limitation by branches
and agencies of such Bank wherever located) to or for the credit or the account
of the Company against and on account of the obligations and liabilities of the
Company to such Bank under this Agreement, the Notes and the Acceptances,
including, without limitation, all interests, in obligations purchased by such
Bank pursuant to Section 10.13, and all other claims of any nature or
description arising out of or connected with this Agreement, the Notes and the
Acceptances, irrespective of whether or not such Bank shall have made any
demand hereunder and although said obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
10.13 Proration of Excess Payments. The Banks agree among themselves
----------------------------
that, with respect to all amounts received by them which are applicable to the
payment of principal of or interest on the Notes and Acceptances, equitable
adjustment will be made so that, in effect, all such amounts will be shared
ratably among the Banks on the basis of the amounts then owed and due to each of
them in respect of such obligation, whether received by voluntary payment, by
realization upon security, by the exercise of the right of set-off or bankers,
lien, by counterclaim or cross action, under or pursuant to this Agreement, the
Notes or otherwise. Each of the Banks agrees that if it should receive any
payment on its Notes of a sum or sums in excess of its pro rata portion, then
--------
the Bank receiving such excess payment shall purchase for cash from the other
Banks an interest in the Notes of such Banks in such amount as shall result in a
ratable participation by each of the Banks in the aggregate unpaid amount of all
outstanding Notes then held by all of the Banks. If all or any portion of such
excess payment is thereafter recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
10.14 Judgment Currency. If for the purposes of obtaining or
-----------------
enforcing a judgment in any court with respect to any obligation of the Company
to any Bank hereunder or under any Note it becomes necessary to convert any
amount due hereunder or under such Note in one currency (the "first currency")
into another currency (the "second currency"), then such conversion shall be
made at the buying spot rate of exchange for which the respective Bank would
purchase the first currency with the second currency at the close of business on
the day before the day on which the judgment is given at the place where such
court is located, of which rate of exchange such Bank shall notify the Company.
If there is a change in such rate of exchange prevailing between the day before
the day on which the judgment is given and the date of payment thereof, the
Company agrees to pay such additional amounts (if any) as may be necessary to
insure that the amount paid on such date is the amount in the second currency
which, when converted into the first currency at such rate of exchange in effect
on the date of payment, is the amount then due under this Agreement or under
such Note in the first currency. Any amount due under this Section 10.14 will be
due as a separate debt and shall not be affected by or merged into any judgment
being obtained for any other sums due under or in respect of the loans. In no
event, however, shall the Company be required to
-49-
<PAGE>
pay more in the first currency at such rate of exchange when payment is made
than the amount of the first currency stated to be due hereunder or under such
Note, so that in any event the Company's obligations hereunder and under the
Notes will be effectively maintained as obligations in the first currency.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the date
first above written.
<TABLE>
<CAPTION>
<S> <C>
Courthouse Plaza Northeast THE MEAD CORPORATION
Dayton, Ohio 45463
Telephone No.: 513-222-6323
Telecopy No.: 513-228-5555 By: W. A. ENOUEN
Telex No.: 288033 Senior Vice President
Attention: Treasurer and Chief Financial Officer
280 Park Avenue, 14M BANKERS TRUST COMPANY,
New York, New York 10017 Individually and as Agent
Telephone No.: 212-850-3582
Telecopy No.: 212-850-2605 By: RAYMOND S. MILLER
Managing Director
Attention: Mark A. Attarian
One First National Plaza THE FIRST NATIONAL BANK OF
Suite 0088 CHICAGO, Individually and as Agent
Chicago, Illinois 60670
Telephone No.: 312-732-6246
Telecopy No.: 312-732-4840
Telex No.: 190201 Answerback: By: ROBERT L. JACKSON
FNBC UT Vice President
Attention: Dennis E. Degen
Domestic Office MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, Individually and as Agent
60 Wall Street
New York, New York 10260
Telephone No.: 212-483-2323 By: ROBERT ELLIOTT
Telecopy No.: 212-837-5008 Vice President
Telex No.: 232194
Attention: Robert Elliott
</TABLE>
-50-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
399 Park Avenue CITIBANK, N.A.
New York, New York 10022
Telephone No.: 212-559-8324
Telecopy No.: 212-308-1830 By: JAMES P. LYDON
Telex No.: 4312033 Vice President
Attention: James Lydon
Two First National Plaza AMSTERDAM-ROTTERDAM BANK N.V.
20 South Clark Street
Suite 500
Chicago, Illinois 60603 By: JAMES A. RAFF
Telephone No.: 312-641-2676 Vice President
Telecopy No.: 312-641-2677
Telex No.: 203042 By: THOMAS A. BYRON
Attention: Tom Byron Senior Vice President
New York Branch DEUTSCHE BANK AG
31 West 52nd Street New York/Cayman Islands Branch
New York, New York 10019
Telephone No.: 212-474-8000
Telecopy No.: 212-474-8212 By: MARTIN E. RAY
Telex No.: 177747 or 428360 Assistant Vice President
Attention: Mr. Nikita Rossinsky
By: DETLEV STAECKER
Executive Vice President
Domestic Office NATIONAL WESTMINSTER BANK, PLC
Suite 1130
33 North Dearborn Street
Chicago, Illinois 60602-3105 By: ANDY OBBARD
Telephone No.: 312-621-1500 Vice President
Telecopy No.: 312-621-1564
Telex No.: 256150
Attention: Andy Obbard
The Equitable Tower BANQUE PARIBAS
787 Seventh Avenue
New York, New York 10019
Telephone No.: 212-841-2000 By: STANLEY BERKMAN
Telecopy No.: 212-265-9056 Vice President
Telex No.: WU 640149
Attention: Stanley Berkman By: MARY FINNEGAN
Mary Finnegan Assistant Vice President
</TABLE>
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<PAGE>
Domestic Office THE BANK OF NOVA SCOTIA
Atlanta Agency
55 Park Place, Suite 650
Atlanta, Georgia 30303 By: F. C. H. ASHBY
Telephone No.: 404-581-0807 Senior Assistant Agent
Telecopy No.: 404-525-3833
Telex No.: 00542319
Attention: C. Ashby
Eurodollar Lending Office-Nassau
Corporate Branch c/o Atlanta Agency
New York Branch SWISS BANK CORPORATION
Box 395 Church Street Station
New York, New York 10008
Telephone No.: 212-574-3526 By: TERRENCE P. SWEENEY
Telecopy No.: 212-574-3852 Vice President
Telex No.: RCA 232432-33
Attention: Mark Sheetz
611 Woodward NATIONAL BANK OF DETROIT
Detroit, Michigan 48226
Telephone No.: 313-225-2523
Telecopy No.: 313-225-1671 By: MARITA GROBBEL
Telex No.: 4320060 Vice President
Attention: Marita Grobbel
One World Trade Center THE SUMITOMO BANK, LIMITED
Suite 9651 NEW YORK BRANCH
New York, New York 10048
Telephone No.: 212-553-0100
Telecopy No.: 212-524-0612 By: C. MICHAEL GARRIDO
Telex No.: 125790 Vice President
Attention: C. Michael Garrido
225 West Washington Street WESTPAC BANKING CORPORATION
Chicago, Illinois 60606
Telephone No.: 312-630-0170
Telecopy No.: 312-332-3527 By: PHILIP DEROZIERE
Telex No.: 210103 Vice President
Attention: Karin Janowski
-52-
<PAGE>
30 South Wacker Drive UNION BANK OF SWITZERLAND
Chicago, Illinois 60606
Telephone No.: 312-993-5400
Telecopy No.: 312-993-5530 By: DAVID M. DANHAUER
Telex No.: 253674 Vice President
Attention: David Danhauer
By: ROBERT R. REUTER
Vice President
301 North Main Street WACHOVIA BANK AND TRUST CO., N.A.
Winston-Salem, North Carolina 27103
Telephone No.: 919-770-4194
Telecopy No.: 919-770-6136 By: MARK C. FLATIN
Telex No.: 440585 Vice President
Attention: Mark Flatin
1111 East Main Street SOVRAN BANK, N.A.
Richmond, Virginia 23219
Telephone No.: 804-788-2000
Telecopy No.: 804-788-6954 By: JOHN D. STAKEL
Telex No.: 823468 Assistant Vice President
Attention: John D. Stakel
National Banking Department
1900 Fifth Avenue North AMSOUTH BANK, N.A.
Birmingham, Alabama 35203
Telephone No.: 205-326-5075
Telecopy No.: 205-326-5601 By: ROBERT C. COFIELD, JR.
Telex No.: 6827189 Assistant Vice President
Attention: Robert C. Cofield, Jr.
425 Walnut Street STAR BANK, N.A., CINCINNATI
Cincinnati, Ohio 45202
Telephone No.: 513-632-4028
Telecopy No.: 513-632-2068 By: WAYNE J. SHIRCLIFF
Telex No.: 214515 Senior Vice President
Attention: Carol Browning
-53-
<PAGE>
EXHIBIT A
NOTE
New York, New York
___________, 19___
THE MEAD CORPORATION, an Ohio corporation (the "Company"), FOR VALUE
RECEIVED, hereby promises to pay to the order of _________ (the "Payee") at the
office of The First National Bank of Chicago located at One First National
Plaza, Chicago, Illinois, the principal amount of each Loan made pursuant to,
and as defined in, the Agreement referred to below on the last day of the
Interest Period (as defined in the Agreement) applicable thereto or if less, the
aggregate unpaid principal amount of the Loans made pursuant to the Agreement,
in lawful money of ______________________________________________ (in __________
funds), provided that all Commitment Loans and Special Facility Loans (each as
defined in the Agreement) evidenced hereby shall be payable at the office of the
Payee located at _______________________________.
The Company promises also to pay interest on the unpaid principal amount
hereof in like money at said office from the date hereof until paid at the rates
per annum which shall be determined in accordance with the provisions of 1.7 and
2 of the Credit Agreement (as the same may be amended or modified from time to
time, the "Agreement"), dated as of November 15, 1989, among the Company, the
Payee and the other banks party thereto, said interest to be payable at the
times provided for in the Agreement.
This Note evidences all Special Facility Loans, including all Loans made in
an Optional Currency (as defined in the Agreement). The principal and interest
of all Loans made in an Optional Currency evidenced hereby shall be payable in
the Optional Currency (as defined in the Agreement) in which made and in the
amount in which made, whether or not the Dollar Equivalent (as defined in the
Agreement) of any such Loan, together with all other Loans evidenced hereby,
shall from time to time exceed the amount hereof.
This Note is one of the Notes referred to in the Agreement and is entitled
to the benefits thereof. As provided in the Agreement, this Note is subject to
prepayment, in whole or in part, as specified in the Agreement. In case an Event
of Default (as defined in the Agreement) shall occur and be continuing, the
principal of and accrued interest on this Note may be declared to be due and
payable in the manner and with the effect provided in the Agreement.
The Company hereby waives presentment, demand, protest or notice of any
kind in connection with this Note.
<PAGE>
This Note shall be construed in accordance with and be governed by the law
of the State of New York.
THE MEAD CORPORATION
By ___________________
Title:
<PAGE>
SCHEDULE I
----------
(to Exhibit A)
LOAN AND REPAYMENT SCHEDULE
Amount of Unpaid
Amount and Principal Principal Notation
Date Type of Loan Repayment Balance Made by
- ---- ------------ --------- --------- --------
<PAGE>
EXHIBIT B
---------
OPINION OF COMPANY'S COUNSEL
The opinion of ____________________________________________, counsel to the
Company, referred to in Section 4.1(e) of the Agreement to which this Exhibit is
annexed shall be to the effect that:
1. The Company is a duly organized and existing Ohio corporation in good
standing in Ohio.
2. The Company has the corporate power and authority to execute, deliver
and carry out the terms and provisions of the Agreement, the Acceptances and the
Notes and has taken all necessary corporate action to authorize the execution
and delivery of the Agreement, the Acceptances and the Notes and the borrowings
under the Agreement.
3. The Agreement and the Notes constitute, and each of the Acceptances
when executed and delivered pursuant to the Agreement will constitute, the
legal, valid and binding obligations of the Company enforceable in accordance
with their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency or similar laws affecting generally the
enforcement of creditors' rights and except that the enforceability of the
Company's obligations under the Agreement, the Acceptances and the Notes is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4. The making of the Agreement and compliance with its terms and the
issuance of the Notes and the creation of Acceptances as contemplated therein
will not violate any provision of applicable law or of the Company's Amended
Articles of Incorporation or Regulations and will not result in a breach of any
of the terms and conditions of or result in the imposition of any lien, charge
or encumbrance upon any property of the Company pursuant to, or constitute a
default under, any indenture or other agreement or instrument known to such
counsel under which the Company is a party or is obligated, the Company's
Amended Articles of Incorporation or Regulations or any law or any order, rule,
regulation, writ, injunction or decree known to such counsel of any government,
governmental instrumentality or court having jurisdiction over the Company or
its property.
5. No authorization, approval, consent, permit, license or order of any
federal, state or local government or agency thereof is required for the
execution, delivery or performance of the Agreement, the Acceptances or the
Notes.
6. Except as set forth in the Company's Form 10-K for the period ended
December 31, ______, and the Company's Form 10-Q for the quarter[s] ended
_________, each of which has been previously delivered to you, as to which such
counsel is not called upon to render an opinion, there is, to such counsel's
knowledge, no litigation or proceeding pending or threatened against
<PAGE>
or affecting either the Company or any of its present Subsidiaries or Affiliates
in which the possible liability, if any, would have a material adverse effect on
the consolidated financial condition of the Company and its Subsidiaries taken
as a whole.
<PAGE>
SCHEDULE I
A. INDEBTEDNESS PERCENTAGE ($000)
-----------------------------
<TABLE>
<CAPTION>
<S> <C>
A(1) Funded Debt
-------
A(2) Sum of (S)6.2(d)(i),
(ii) and (iii) Assets
-------
A(3) Indebtedness Percentage %
=======
B. ADDITIONAL DEBT CAPACITY
------------------------
B(1) Present Sum of (S)6.2(d)(i),
(ii) and (iii) Assets
-------
B(2) Percentage of Test 0.60
-------
B(3) Test Percent of Sum of
(S)6.2(d)(i), (ii) and
(iii) Assets -------
B(4) Less: Present Funded Debt
-------
B(5) Subtotal
-------
B(6) Factor of Test 2.50
-------
B(7) Additional Debt Capacity
(assuming such additional -------
debt is invested in (S)6.2(d)(i)
and (ii) assets)
C. POSSIBLE REDUCTION IN (S)6.2(d) ASSETS
--------------------------------------
C(1) Debt
-------
C(2) Percentage of Test 0.60
-------
C(3) Adjusted Debt
-------
C(4) Sum of (S)6.2(d)(i), (ii)
and (iii) Assets
C(5) Less: Adjusted Debt -------
-------
C(6) Possible Reduction in
(S)6.2(d)(i), (ii) and
(iii) Assets
=======
</TABLE>
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
BANK COMMITMENT
---- ----------
(Thousands of
Dollars)
<S> <C>
Bankers Trust Company $ 50,000
The First National Bank of Chicago 50,000
Morgan Guaranty Trust Company of New York 50,000
Citibank, N.A. 40,000
Amsterdam-Rotterdam Bank N.V. 40,000
Deutsche Bank AG 40,000
National Westminster Bank, PLC 40,000
Banque Paribas 40,000
The Bank of Nova Scotia 40,000
Swiss Bank Corporation 40,000
National Bank of Detroit 40,000
The Sumitomo Bank, Limited 40,000
Westpac Banking Corporation 40,000
Union Bank of Switzerland 30,000
Wachovia Bank and Trust Co., N.A. 25,000
Sovran Bank, N.A. 25,000
Amsouth Bank, N.A. 10,000
Star Bank, N.A., Cincinnati 10,000
Total Commitments $650,000,000
============
</TABLE>
<PAGE>
SCHEDULE III
EXISTING AGREEMENTS
-------------------
1. Credit Agreement, dated as of December 31, 1987, as amended by a First
Amendment dated as of December 1, 1988, between The Mead Corporation, the
banks named therein and Bankers Trust Company and The First National Bank
of Chicago, as agents.
2. Credit Agreement, dated as of December 31, 1987, as amended by a First
Amendment dated as of March 1, 1988 and a Second Amendment dated as of
December 1, 1988, between The Mead Corporation, the banks named therein and
Morgan Guaranty Trust Company of New York, as agent.
<PAGE>
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of November 30, 1991,
among THE MEAD CORPORATION, an Ohio corporation (the "Company"), the banks
listed on the signature page hereto (each a "Bank" and collectively, the
"Banks") and BANKERS TRUST COMPANY, THE FIRST NATIONAL BANK OF CHICAGO and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Co-Agents for the Banks (in such
capacity, each an "Agent" and together, the "Agents").
WITNESSETH:
WHEREAS, the Banks, the Agents and the Company entered into a Credit
Agreement, dated as of November 15, 1989 (the "1989 Credit Agreement"); and
WHEREAS, the Banks, the Agents and the Company desire to amend the 1989
Credit Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. The following errors in the 1989 Credit Agreement are hereby corrected
as follows:
<TABLE>
<CAPTION>
Words Replacing
Section/Reference Deleted Words Deleted Words
----------------- ------------- -------------
<S> <C> <C>
1.9(a), "(S) 1.10(b)" "(S) 1.9(b)"
last sentence
1.13, "in the event that "in the event
eleventh and such Bank" that such Bank"
twelfth lines is inserted
following
"(A)," "(B),"
"(C)" and "(D)"
5.1(e) "Funded Debt" "Indebtedness"
5.1(g), "which" "(which"
second line
6.1, "required" "acquired"
tenth line
Schedule I, A(1) "Funded Debt" "Indebtedness"
and B(4)
</TABLE>
2. The definition of "Termination Date" in Section 10.1 of the 1989
Credit Agreement is hereby rewritten in full as follows:
1
<PAGE>
"'Termination Date' shall mean the earlier of (i) November 30, 1995,
-------------------
or (ii) the date on which the Company has terminated a Bank's
Commitment or the Total Commitment, as the case may be, pursuant to
Section 1.13; unless prior to November 30, 1995, the Banks and the
Company shall have agreed to revise Section 1.7 (Interest) and 1.12
(Fees) in a manner satisfactory to each Bank and the Company, and to
extend or otherwise restructure the date or dates for termination of
Commitments. The Banks and the Company agree to use good faith efforts
to negotiate such sections and termination dates prior to November 30,
1995, provided that the failure to reach any agreement on such
sections and termination dates shall not be cause or reason to extend
the Termination Date beyond November 30, 1995."
3. In Section 1.14, the phrase "or in the event that any Bank delivers a
notice of termination of its Commitment pursuant to clause (i) (A) of
the definition of 'Termination Date' in this Agreement" is hereby
deleted.
4. This Amendment No. 1 shall be effective when executed by the Company
and the Required Banks (as defined in the 1989 Credit Agreement).
Except as modified hereby, the 1989 Credit Agreement is ratified and
confirmed in all respects and remains in full force and effect. All
references to the "Agreement" in the 1989 Credit Agreement shall
include and mean the 1989 Credit Agreement as amended hereby.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment No. 1 to be duly executed and delivered as of the date first
above written.
THE MEAD CORPORATION
By: /s/ W. D. Bloebaum, Jr.
-------------------------------
Name: W. D. Bloebaum, Jr.
---------------------------
Title: Treasurer
-------------------------
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ Michael V. Stiglianese
-------------------------------
Name: Michael V. Stiglianese
---------------------------
Title: Vice President
-------------------------
2
<PAGE>
THE FIRST NATIONAL BANK OF
CHICAGO,
Individually and as Agent
By: /s/ Robert L. Jackson
------------------------------------
Name: Robert L. Jackson
-------------------------------
Title: Vice President
------------------------------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
Individually and as Agent
By: /s/ Robert C. Elliott
------------------------------------
Name: Robert C. Elliott
-------------------------------
Title: Vice President
------------------------------
CITIBANK, N.A.
By: /s/ Tylene J. Elliott
------------------------------------
Name: Tylene J. Elliott
-------------------------------
Title: Vice President
------------------------------
ABN AMRO BANK N.V.
(formerly AMSTERDAM-ROTTERDAM BANK N.V.)
By: /s/ Dennis F. Lennon
------------------------------------
Name: Dennis F. Lennon
-------------------------------
Title: Vice President
------------------------------
By: /s/ J. M. Janovsky
------------------------------------
Name: J. M. Janovsky
-------------------------------
Title: Vice President
------------------------------
3
<PAGE>
DEUTSCHE BANK AG
New York/Cayman Islands Branch
By: /s/ Nikita Rossinsky
-------------------------------
Name: Nikita Rossinsky
---------------------------
Title: Vice President
--------------------------
By: /s/ Rolf-Peter Mikolayczyk
-------------------------------
Name: Rolf-Peter Mikolayczyk
---------------------------
Title: First Vice President
--------------------------
NATIONAL WESTMINSTER BANK, PLC
By: /s/ Ernest V. Hodge
-------------------------------
Name: Ernest V. Hodge
---------------------------
Title: Vice President
--------------------------
BANQUE PARIBAS
By: /s/ Stanley P. Berker
-------------------------------
Name: Stanley P. Berker
---------------------------
Title: Group Vice President
--------------------------
By: /s/ Mary T. Finnegan
-------------------------------
Name: Mary T. Finnegan
---------------------------
Title: Assistant Vice President
--------------------------
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-------------------------------
Name: F.C.H. Ashby
---------------------------
Title: Senior Assistant Agent
-------------------------
4
<PAGE>
SWISS BANK CORPORATION
By: /s/ J. Randell Barclay
---------------------------------------------
Name: J. Randell Barclay
-----------------------------------------
Title: Vice President
----------------------------------------
By: /s/ Nancy A. Hanrahan
---------------------------------------------
Name: Nancy A. Hanrahan
-----------------------------------------
Title: Assistant Vice President
----------------------------------------
NBD BANK, N.A.
(formerly NATIONAL BANK OF DETROIT)
By: /s/ Marita S. Grobbel
---------------------------------------------
Name: Marita S. Grobbel
-----------------------------------------
Title: Vice President
----------------------------------------
THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ Ryuzo Kodoma
---------------------------------------------
Name: Ryuzo Kodoma
-----------------------------------------
Title: Joint General Manager
----------------------------------------
WESTPAC BANKING CORPORATION
By: /s/ David B. Beatty
---------------------------------------------
Name: David B. Beatty
-----------------------------------------
Title: Vice President and Chief Representative
----------------------------------------
UNION BANK OF SWITZERLAND
By: /s/ David M. Danhauel
---------------------------------------------
Name: David M. Danhauel
-----------------------------------------
Title: Vice President
----------------------------------------
By: /s/ Michelle Moreno
---------------------------------------------
Name: Michelle Moreno
-----------------------------------------
Title: Asst. Vice President
----------------------------------------
5
<PAGE>
WACHOVIA BANK OF GEORGIA
(formerly WACHOVIA BANK AND
TRUST CO., N.A.)
By: /s/ Richard C. Spangler III
------------------------------------
Name: Richard C. Spangler III
--------------------------------
Title: Vice President
-------------------------------
SOVRAN BANK, N.A.
By: /s/ Timothy Geraghty
------------------------------------
Name: Timothy Geraghty
--------------------------------
Title: SVP
-------------------------------
AMSOUTH BANK, N.A.
By: /s/ Jeffrey M. Noel
------------------------------------
Name: Jeffrey M. Noel
--------------------------------
Title: Vice President
-------------------------------
STAR BANK, N.A., CINCINNATI
By: /s/ Michael T. Vea
------------------------------------
Name: Michael T. Vea
--------------------------------
Title: SVP
-------------------------------
6
<PAGE>
THIS AMENDMENT NO. 5 dated as of October 31, 1997, to the CREDIT AGREEMENT,
dated as of November 15, 1989, as amended November 30, 1991, as supplemented by
letter dated February 26, 1993 and by supplement dated April 6, 1993, as amended
May 1, 1994, August 31, 1995 and August 31, 1996, and as supplemented by two
agreements dated July 15, 1996 and by letter dated October 21, 1997 (as so
amended and supplemented, the "Credit Agreement"), among THE MEAD CORPORATION,
an Ohio corporation (the "Company"), the banks listed on the signature page
hereto (each a "Bank" and collectively, the "Banks") and THE FIRST NATIONAL BANK
OF CHICAGO and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Co-Agents for the
Banks (in such capacity, each an "Agent" and together, the "Agents").
WITNESSETH:
WHEREAS, the Banks, the Agents and the Company have entered the Credit
Agreement; and
WHEREAS, the Banks, the Agents and the Company desire to amend the Credit
Agreement as herein provided;
NOW THEREFORE, it is agreed:
1. The definition of "Termination Date" in Section 10.1 of the Credit
Agreement is hereby rewritten in full as follows:
"Termination Date" shall mean (i) with respect to each Bank, the earlier of
(A) October 31, 2002 (the "Renewal Date"), or (B) the date on which the
Company has terminated such Bank's Commitment pursuant to Section 1.13;
provided that (1) at least 30 calendar days before each July 1, commencing
October 31, 1998 the Company may request all the Banks in writing (such
request being irrevocable) to extend the Renewal Date for an additional one
year period; and (2) the Renewal Date with respect to each Bank shall be
automatically extended by one additional year if such Bank agrees in
writing to extend the Renewal Date for one additional year and all
conditions, if any, to the extension shall have been met, and (ii) with
respect to all the Banks, the date upon which the Total Commitment is
terminated by the Company pursuant to Section 1.13 or by all Banks pursuant
to clause (i) of this definition."
2. The following changes in the Credit Agreement are hereby made:
<TABLE>
<CAPTION>
Section/Reference Deleted Words Words Replacing Deleted Words
----------------- ------------- -----------------------------
<S> <C> <C>
1.12(ii) ".100" ".090"
1.12, second "September, 1995" "December, 1997 (except,
sentence however, that a rate of .100
of 1% per annum shall be used
in calculating the Facility
Fee due only for the month of
October, 1997)"
</TABLE>
<PAGE>
3. The Company represents and warrants that the representations and warranties
of the Company contained in the Credit Agreement are true and correct in
all material respects on and as of the date hereof as though made on and as
of such date. The Company hereby certifies that no event has occurred and
is continuing which constitutes an Event of Default under the Credit
Agreement or which upon the giving of notice or the lapse of time or both
would constitute such an Event of Default.
4. This Amendment No. 5 shall be effective when executed by the Company and
each of the Banks. Except as modified hereby, the Credit Agreement is
ratified and confirmed in all respects and remains in full force and
effect. All references to the "Agreement" in the Credit Agreement shall
include and mean the Credit Agreement as supplemented and amended hereby.
Terms defined in the Credit Agreement are used with the same meaning
herein.
5. This Amendment No. 5 may be executed in counterparts, each of which will be
deemed an original instrument. This Amendment No. 5 shall be governed by
and construed and interpreted in accordance with the law of State of New
York.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment No. 5 to be duly executed and delivered as of the date first
above written.
THE MEAD CORPORATION
By /s/ William B. Plummer
-----------------------------------------
Name: William B. Plummer
-----------------------------------------
Title: Treasurer
-----------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By /s/ Robert L. Jackson, authorized agent
-----------------------------------------
Name: Robert L. Jackson
-----------------------------------------
Title: Managing Director
-----------------------------------------
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
Individually and as Agent
By /s/ John M. Mikolay
-----------------------------------------
Name: John M. Mikolay
-----------------------------------------
Title: Vice President
-----------------------------------------
CITIBANK, N.A.
By /s/ W. Martens
-----------------------------------------
Name: W. Martens
-----------------------------------------
Title: Attorney in fact
-----------------------------------------
ABN AMRO BANK N.V.
By /s/ Patrick M. Pastore
-----------------------------------------
Name: Patrick M. Pastore
-----------------------------------------
Title: Vice President
-----------------------------------------
By /s/ Gregory D. Amoroso
-----------------------------------------
Name: Gregory D. Amoroso
-----------------------------------------
Title: Vice President
-----------------------------------------
DEUTSCHE BANK AG
New York and/or Cayman Islands Branches
By /s/ Hans-Josef Thiele
-----------------------------------------
Name: Hans-Josef Thiele
-----------------------------------------
Title: Director
-----------------------------------------
By /s/ Belinda J. Wheeler
-----------------------------------------
Name: Belinda J. Wheeler
-----------------------------------------
Title: Vice President
-----------------------------------------
<PAGE>
NATIONAL WESTMINSTER BANK PLC
New York Branch
By /s/ Anne Marie Torre
-----------------------------------------
Name: Anne Marie Torre
-----------------------------------------
Title: Vice President
-----------------------------------------
NATIONAL WESTMINSTER BANK PLC
Nassau Branch
By /s/ Anne Marie Torre
-----------------------------------------
Name: Anne Marie Torre
-----------------------------------------
Title: Vice President
-----------------------------------------
THE BANK OF NOVA SCOTIA
By /s/ F. C. H. Ashby
-----------------------------------------
Name: F. C. H. Ashby
-----------------------------------------
Title: Senior Manager Loan Operations
-----------------------------------------
THE SUMITOMO BANK, LIMITED
New York Branch
By /s/ Kazuyoshi Ogawa
-----------------------------------------
Name: Kazuyoshi Ogawa
-----------------------------------------
Title: Joint General Manager
-----------------------------------------
WACHOVIA BANK OF GEORGIA
(formerly WACHOVIA BANK AND TRUST CO., N.A.)
By /s/ Holger B. Ebert
-----------------------------------------
Name: Holger B. Ebert
-----------------------------------------
Title: Sr. Vice President
-----------------------------------------
<PAGE>
NATIONSBANK, N.A.
formerly SOVRAN BANK, N.A.)
By /s/ Michael W. Colon
-----------------------------------------
Name: Michael W. Colon
-----------------------------------------
Title: Officer
-----------------------------------------
SOCIETE GENERALE
By /s/ Eric Bellaiche
-----------------------------------------
Name: Eric Bellaiche
-----------------------------------------
Title: Vice President
-----------------------------------------
<PAGE>
[CONFORMED COPY]
================================================================================
- --------------------------------------------------------------------------------
THE MEAD CORPORATION
TO
BANKERS TRUST COMPANY,
Trustee
-------------------
INDENTURE
Dated as of July 15, 1982
-------------------
- --------------------------------------------------------------------------------
================================================================================
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of July 15, 1982
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
(S) 310(a)(1)................................................. 609
(a)(2)................................................. 609
(a)(3)................................................. Not Applicable
(a)(4)................................................. Not Applicable
(b).................................................... 608
610
(S) 311(a).................................................... 613(a)
(b).................................................... 613(b)
(b)(2)................................................. 703(a)(2)
703(b)
(S) 312(a).................................................... 701
702(a)
(b).................................................... 702(b)
(c).................................................... 702(c)
(S) 313(a).................................................... 703(a)
(b).................................................... 703(b)
(c).................................................... 703(a), 703(b)
(d).................................................... 703(c)
(S) 314(a).................................................... 704
(b).................................................... Not Applicable
(c)(1)................................................. 102
(c)(2)................................................. 102
(c)(3)................................................. Not Applicable
(d).................................................... Not Applicable
(e).................................................... 102
(S) 315(a).................................................... 601(a)
(b).................................................... 602
703(a)(6)
(c).................................................... 601(b)
(d).................................................... 601(c)
(d)(1)................................................. 601(a)(1)
(d)(2)................................................. 601(c)(2)
(d)(3)................................................. 601(c)(3)
(e).................................................... 514
(S) 316(a).................................................... 101
(a)(1)(A).............................................. 502
512
(a)(1)(B).............................................. 513
(a)(2)................................................. Not Applicable
(b).................................................... 508
(S) 317(a)(1)................................................. 503
(a)(2)................................................. 504
(b).................................................... 1003
(S) 318(a).................................................... 107
- -------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
----------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PARTIES................................................................... 1
RECITALS OF THE COMPANY................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:
Act........................................................ 2
Affiliate.................................................. 2
Appraised Value............................................ 2
Attributable Debt.......................................... 2
Authenticating Agent....................................... 3
Board of Directors......................................... 3
Board Resolution........................................... 3
Business Day............................................... 3
Commission................................................. 3
Company.................................................... 3
Company Request; Company Order............................. 3
Consolidated Shareholders' Equity.......................... 3
Corporate Trust Office..................................... 3
corporation................................................ 4
Defaulted Interest......................................... 4
Event of Default........................................... 4
Exempted Indebtedness...................................... 4
Experts.................................................... 4
Holder..................................................... 4
Indenture.................................................. 4
interest................................................... 4
Interest Payment Date...................................... 5
Maturity................................................... 5
Officers' Certificate...................................... 5
Opinion of Counsel......................................... 5
Original Issue Discount Security........................... 5
Outstanding................................................ 5
Paying Agent............................................... 6
Person..................................................... 6
</TABLE>
- ----------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
ii
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Place of Payment........................................... 6
Predecessor Security....................................... 6
Principal Property......................................... 6
Redemption Date............................................ 7
Redemption Price........................................... 7
Regular Record Date........................................ 7
Responsible Officer........................................ 7
Securities................................................. 7
Security Register and Security Registrar................... 7
Special Record Date........................................ 7
Stated Maturity............................................ 7
Subsidiary................................................. 8
Trustee.................................................... 8
Trust Indenture Act........................................ 8
Vice President............................................. 8
SECTION 102. Compliance Certificates and Opinions....................... 8
SECTION 103. Form of Documents Delivered to Trustee..................... 9
SECTION 104. Acts of Holders............................................ 10
SECTION 105. Notices, Etc., to Trustee and Company...................... 11
SECTION 106. Notice to Holders; Waiver.................................. 11
SECTION 107. Conflict with Trust Indenture Act.......................... 12
SECTION 108. Effect of Headings and Table of Contents................... 12
SECTION 109. Successors and Assigns..................................... 12
SECTION 110. Separability Clause........................................ 12
SECTION 111. Benefits of Indenture...................................... 12
SECTION 112. Governing Law.............................................. 12
SECTION 113. Legal Holidays............................................. 12
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally............................................ 13
SECTION 202. Form of Face of Security................................... 13
</TABLE>
<PAGE>
iii
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
SECTION 203. Form of Reverse of Security................................. 16
SECTION 204. Form of Trustee's Certificate of Authentication............. 20
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series........................ 20
SECTION 302. Denominations............................................... 22
SECTION 303. Execution, Authentication, Delivery and Dating.............. 22
SECTION 304. Temporary Securities........................................ 24
SECTION 305. Registration, Registration of Transfer and Exchange......... 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities............ 25
SECTION 307. Payment of Interest; Interest Rights Preserved.............. 26
SECTION 308. Persons Deemed Owners....................................... 28
SECTION 309. Cancellation................................................ 28
SECTION 310. Computation of Interest..................................... 28
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture..................... 29
SECTION 402. Application of Trust Money.................................. 30
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default........................................... 30
SECTION 502. Acceleration of Maturity; Rescission and Annulment.......... 32
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee................................................ 34
SECTION 504. Trustee May File Proofs of Claim............................ 35
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities................................................ 36
SECTION 506. Application of Money Collected.............................. 36
SECTION 507. Limitation on Suits......................................... 36
</TABLE>
<PAGE>
iv
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest...................................... 37
SECTION 509. Restoration of Rights and Remedies.......................... 37
SECTION 510. Rights and Remedies Cumulative.............................. 38
SECTION 511. Delay or Omission Not Waiver................................ 38
SECTION 512. Control by Holders.......................................... 38
SECTION 513. Waiver of Past Defaults..................................... 38
SECTION 514. Undertaking for Costs....................................... 39
SECTION 515. Waiver of Stay or Extension Laws............................ 39
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities......................... 40
SECTION 602. Notice of Defaults.......................................... 41
SECTION 603. Certain Rights of Trustee................................... 42
SECTION 604. Not Responsible for Recitals or Issuance of Securities...... 43
SECTION 605. May Hold Securities......................................... 43
SECTION 606. Money Held in Trust......................................... 43
SECTION 607. Compensation and Reimbursement.............................. 43
SECTION 608. Disqualification; Conflicting Interest...................... 44
(a) Elimination of Conflicting Interest or
Resignation........................................ 44
(b) Notice of Failure to Eliminate Conflicting
Interest or Resign................................. 44
(c) "Conflicting Interest" Defined....................... 44
(d) Definitions of Certain Terms Used in This
Section............................................ 48
(e) Calculation of Percentages of Securities............. 49
SECTION 609. Corporate Trustee Required; Eligibility..................... 50
SECTION 610. Resignation and Removal; Appointment of Successor........... 51
SECTION 611. Acceptance of Appointment by Successor...................... 52
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business.................................................. 54
</TABLE>
<PAGE>
v
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 613. Preferential Collection of Claims Against Company............ 54
(a) Segregation and Apportionment of Certain
Collections by Trustee, Certain Exceptions.......... 54
(b) Certain Creditor Relationships Excluded from
Segregation and Apportionment....................... 57
(c) Definitions of Certain Terms Used in This
Section............................................. 58
SECTION 614. Appointment of Authenticating Agent.......................... 59
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders................................................. 61
SECTION 702. Preservation of Information; Communications to
Holders.................................................... 61
SECTION 703. Reports by Trustee........................................... 63
SECTION 704. Reports by Company........................................... 63
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain
Terms...................................................... 65
SECTION 802. Successor Corporation Substituted............................ 66
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders........... 67
SECTION 902. Supplemental Indentures with Consent of Holders.............. 68
SECTION 903. Execution of Supplemental Indentures......................... 69
SECTION 904. Effect of Supplemental Indentures............................ 69
SECTION 905. Conformity with Trust Indenture Act.......................... 70
SECTION 906. Reference in Securities to Supplemental Indentures........... 70
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and Interest................... 70
SECTION 1002. Maintenance of Office or Agency.............................. 70
SECTION 1003. Money for Securities Payments to Be Held in Trust............ 71
</TABLE>
<PAGE>
vi
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1004. Corporate Existence......................................... 72
SECTION 1005. Maintenance of Properties................................... 73
SECTION 1006. Limitation on Liens......................................... 73
SECTION 1007. Limitation on Sale and Lease-Back........................... 75
SECTION 1008. Statement by Officers as to Default......................... 76
SECTION 1009. Waiver of Certain Covenants................................. 76
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Applicability of Article.................................... 76
SECTION 1102. Election to Redeem; Notice to Trustee....................... 76
SECTION 1103. Selection by Trustee of Securities to Be Redeemed........... 77
SECTION 1104. Notice of Redemption........................................ 77
SECTION 1105. Deposit of Redemption Price................................. 78
SECTION 1106. Securities Payable on Redemption Date....................... 78
SECTION 1107. Securities Redeemed in Part................................. 79
ARTICLE TWELVE
Sinking Funds
SECTION 1201. Applicability of Article.................................... 79
SECTION 1202. Satisfaction of Sinking Fund Payments with
Securities................................................ 79
SECTION 1203. Redemption of Securities for Sinking Fund................... 80
TESTIMONIUM................................................................ 81
SIGNATURES AND SEALS....................................................... 81
ACKNOWLEDGMENTS............................................................ 82
</TABLE>
<PAGE>
INDENTURE, dated as of July 15, 1982, between The Mead Corporation, a
corporation duly organized and existing under the laws of the State of Ohio
(herein called the "Company"), having its principal office at Dayton, Ohio and
Bankers Trust Company, a corporation duly organized and existing under the laws
of New York, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
<PAGE>
2
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" means any Person, other than a Subsidiary, in which the Company
and/or any Subsidiary at any time owns, directly or indirectly, an aggregate of
at least 50% of the voting stock.
"Appraised Value" means the fair market value as determined on the
appraisal date or dates by an "expert" acceptable to the Trustee and the
Company. The term "Appraisal Date" as used in this paragraph shall mean: (a)
the date or dates on which the appraisals conducted during 1980 were completed,
which appraisals were delivered by the Company on January 5, 1981; and (b)
thereafter, such later date or dates, if any, which is five years after the last
previous appraisal date under this Indenture, provided that the Company
may, at its option by thirty days' written notice to the Trustee, fix any
appraisal date at any date which is not less than two and one-half years nor
more than five years after the last previous appraisal date under this
Indenture.
"Attributable Debt" means, as to any particular lease entered into after
the date hereof under which any Person is at the time liable and at any date as
of which the amount thereof is to be determined, the total net amount of rent
required to be paid by such Person under such lease during the remaining term
thereof, discounted from the respective due dates thereof to such date at a rate
equal to the weighted average of the interest rates borne by the Securities.
The net amount of rent required to be paid under any such lease for any such
period shall be the aggregate amount of the rent payable by the lessee with
respect to such period after excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water and utility rates
and similar charges. In the case of any lease which is terminable by the lessee
upon the payment of a penalty, such net amount shall also include the amount of
such penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated.
<PAGE>
3
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Securities.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor corporation shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Shareholders' Equity" means the sum of the consolidated
shareholders' equity of the Company and its consolidated subsidiaries, as shown
on the most recent audited consolidated balance sheet of the Company plus 75% of
the excess of the "Appraised Value" (as herein defined) of all timberlands owned
by the Company and its Subsidiaries over the book value thereof.
"Corporate Trust Office" means the principal office of the Trustee in The
City of New York, State of New York at which at any particular time its
corporate trust business shall be administered, which office is, as
<PAGE>
4
of the date of this Indenture, located at One Bankers Trust Plaza, New York, New
York 10006.
"corporation" includes corporations, associations, companies and business
trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Event of Default" has the meaning specified in Section 501.
"Exempted Indebtedness" means, as of any particular time, the sum of (i)
the aggregate principal amount of all then outstanding indebtedness for money
borrowed of the Company and Subsidiaries issued, assumed or guaranteed directly
or indirectly after the date of this Indenture and secured by any mortgage,
security interest, pledge, lien or other encumbrance other than those permitted
by paragraph (a) of Section 1006 and (ii) all Attributable Debt in respect of
Sale and Lease-Back Transactions (as defined in Section 1007) incurred after the
date of this Indenture and at such time outstanding other than that permitted
pursuant to paragraph (a) of Section 1007.
"Experts", except as otherwise herein specifically provided, the engineer,
appraiser, accountant, counsel or other person giving any opinion, certificate,
audit or report provided for herein shall be selected by the Board of Directors
and shall not be disqualified by reason of his regular employment or retention
by the Company, but in all cases such selection of the Board of Directors must
be acceptable to the Trustee. In any case, more than one person of the
designated class may join in any such opinion, certificate, audit or report,
each certifying to a party of the required facts, opinions or conclusions. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for herein shall conform to the requirements of Section 102.
"Holder" means a person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 301.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
<PAGE>
5
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an instalment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security or an instalment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors, the Vice Chairman of the Board of Directors, the President
or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary, the Controller or an Assistant Controller, of the
Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
and
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities
<PAGE>
6
are held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Company or with such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any such Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company or with such
other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of (and premium, if any) and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Property" means (i) any paperboard, paper or pulp mill or any
paper converting plant or foundry or any other manufacturing plant
<PAGE>
7
or facility located within the United States of America or Canada of the
Company or any Subsidiary except any such plant or facility which the Board of
Directors by resolution declares is not of material importance to the total
business conducted by the Company and its Subsidiaries as an entirety and (ii)
any timber or timberlands of the Company or any Subsidiary.
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any instalment
of principal thereof or interest thereon, means the date specified in such
Security as the fixed date on which the principal of such Security or such
instalment of principal or interest is due and payable.
<PAGE>
8
"Subsidiary" means any corporation at least a majority of the outstanding
securities of which having ordinary voting power to elect a majority of the
board of directors of such corporation (whether or not any other class of
securities has or might have voting power by reason of the happening of a
contingency) is at the time owned or controlled directly or indirectly by the
Company, or by one or more Subsidiaries, or by the Company and one or more
Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed, except as provided in Section
905.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
<PAGE>
9
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based, are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
<PAGE>
10
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 601) conclusive in favor of the Trustee and the Company,
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
<PAGE>
11
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
<PAGE>
12
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, provided that no interest
<PAGE>
13
shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. Form of Face of Security.
[If the Security is an Original Issue Discount Security, insert--FOR
PURPOSES OF SECTION 1232 of the United States Internal Revenue Code of 1954, as
amended, the issue price of this Security is ...% of its principal amount and
the issue date is ...................., 19...]
<PAGE>
14
THE MEAD CORPORATION
No...... $......
THE MEAD CORPORATION, a corporation duly organized and existing under the
laws of the State of Ohio (herein called the "Company"), for value received,
hereby promises to pay to............................... or registered assigns,
the principal sum of...................................... Dollars on ..........
................................... [If the Security is to bear interest prior
to Maturity, insert--, and to pay interest thereon from ........ or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semi-annually on ....... and ...... in each year, commencing ....,
at the rate of ..% per annum, until the principal hereof is paid or made
available for payment [If applicable insert--, and (to the extent that the
payment of such interest shall be legally enforceable) at the rate of ..% per
annum on any overdue principal and premium and on any overdue instalment of
interest]. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the ..... or ..... (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.]
[If the Security is not to bear interest prior to Maturity, insert-- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security
<PAGE>
15
shall bear interest at the rate of ..% per annum (to the extent that the payment
of such interest shall be legally enforceable), which shall accrue from the date
of such default in payment to the date payment of such principal has been made
or duly provided for. Interest on any overdue principal shall be payable on
demand. Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of .....% per annum (to the extent that
the payment of such interest shall be legally enforceable), which shall accrue
from the date of such demand for payment to the date payment of such interest
has been made or duly provided for, and such interest shall also be payable on
demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert--any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts [if applicable, insert--; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of the
Person entitled thereto as such address shall appear in the Security Register].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
THE MEAD CORPORATION
By
.............................
Attest:
...............................
<PAGE>
16
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of July 15, 1982 (herein called the
"Indenture"), between the Company and Bankers Trust Company, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of
the Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [, limited in aggregate principal amount to $......].
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable,
insert--(1) on ...... in any year commencing with the year .... and ending with
the year .... through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time [on
or after .............., 19..], as a whole or in part, at the election of the
Company, at the following Redemption Prices (expressed as percentages of the
principal amount): If redeemed [on or before ......, ....%, and if
redeemed] during the 12-month period beginning ........... of the years
indicated,
<TABLE>
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
<S> <C> <C> <C>
</TABLE>
<PAGE>
17
and thereafter at a Redemption Price equal to ......% of the principal amount,
together in the case of any such redemption [if applicable, insert--(whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest instalments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on .................
.......... in any year commencing with the year ..... and ending with the year
..... through operation of the sinking fund for this series at the Redemption
Prices for redemption through operation of the sinking fund (expressed as
percentages of the principal amount) set forth in the table below, and (2) at
any time [on or after ..............], as a whole or in part, at the election of
the Company, at the Redemption Prices for redemption otherwise than through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below: If redeemed during the 12-month period beginning
............ of the years indicated,
<TABLE>
<CAPTION>
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
---- ----------------- ----------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ....% of the principal amount,
together in the case of any such redemption (whether through
<PAGE>
18
operation of the sinking fund or otherwise) with accrued interest to the
Redemption Date, but interest instalments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to
...................., redeem any Securities of this series as contemplated by
[Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly, of moneys
borrowed having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than ....% per annum.]
[The sinking fund for this series provides for the redemption on
.................... in each year beginning with the year .... and ending with
the year .... of [not less than] $.......... [("mandatory sinking fund") and not
more than $..........] aggregate principal amount of Securities of this series.
[Securities of this series acquired or redeemed by the Company otherwise than
through [mandatory] sinking fund payments may be credited against subsequent
[mandatory] sinking fund payments otherwise required to be made--in the inverse
order in which they become due.]
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
[If the Security is not an Original Issue Discount Security,--If an Event
of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security,--If an Event of
Default with respect to Securities of this series shall occur and be continuing,
an amount of principal of the Securities of this series may be declared due and
payable in the manner and with the effect provided in the Indenture. Such amount
shall be equal to--insert formula for determining the amount. Upon payment (i)
of the amount of principal so declared due and payable and (ii) of interest on
any overdue principal and overdue interest (in each case to the extent that the
payment of such
<PAGE>
19
interest shall be legally enforceable), all of the Company's obligations in
respect of the payment of the principal of and interest, if any, on the
Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66 2/3% in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $.... and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations
<PAGE>
20
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Section 204. Form of Trustee's Certificate of Authentication.
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By
----------------------------
Authorized Officer
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth in an
<PAGE>
21
Officers' Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
Series pursuant to Section 304, 305, 306, 906 or 1107);
(3) the date or dates on which the principal of the Securities of the
series is payable;
(4) the rate or rates at which the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall accrue,
the Interest Payment Dates on which such interest shall be payable and the
Regular Record Date for the interest payable on any Interest Payment Date;
(5) the place or places where the principal of (and premium, if any)
and interest on Securities of the Series shall be payable;
(6) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable
<PAGE>
22
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502; and
(10) any other terms of the series or covenants for the benefit
thereof (which terms or covenants shall not be inconsistent with the
provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
Board Resolution and set forth in such Officers' Certificate or in any such
indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
301. In the absence of any such provisions with respect to the Securities of any
series, the Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board of Directors, its Vice Chairman of the Board of Directors, its
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the
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23
Trustee in accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
and
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
<PAGE>
24
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations. Until so
exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series
at the office or agency in a Place of Payment for that series, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new
<PAGE>
25
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of a
like aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 1103 and ending
at the close of business on the day of such mailing, (i) to issue, register the
transfer of or exchange Securities of any series or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
<PAGE>
26
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to
<PAGE>
27
the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to
be mailed, first-class postage prepaid, to each Holder of Securities of
such series at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to
<PAGE>
28
the Trustee of the proposed payment pursuant to this Clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities held by the Trustee shall be
disposed of as directed by a Company Order.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a year of twelve 30-day months.
<PAGE>
29
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and
(ii) Securities for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
<PAGE>
30
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
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31
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in the Indenture solely for the benefit of series of Securities other than
that series), and continuance of such default or breach for a period of 60
days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holders of
at least 25% in principal amount of the Outstanding Securities of that
series a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) a default by the Company in the payment of any indebtedness for
borrowed money (including a default with respect to Securities of any
series other than that series), whether such indebtedness now exists or
shall hereafter be created, whether at maturity, by call for redemption,
by acceleration, declaration or otherwise, and any period of grace with
respect thereto shall have expired, unless the time for payment shall have
been effectively extended; provided, however, that, subject to the
provisions of Sections 601 and 602, the Trustee shall not be charged with
knowledge of any such default unless written notice thereof shall have
been given to the Trustee at its Corporate Trust Office by the Company, by
the holder or an agent of a holder of any such indebtedness, or by the
trustee then acting under any indenture or other instrument under which
such default shall have occurred, or by the holders of not less than 25%
in principal amount of the Outstanding Securities of that series;
provided, however, that if, prior to a declaration of acceleration of the
maturity of the Securities of that series or the entry of judgment in
favor of the Trustee in a suit pursuant to Section 503, such default shall
be remedied or cured by the Company or waived by the holders of such
indebtedness, then the Event of Default hereunder by reason thereof shall
be deemed likewise to have been thereupon remedied,
<PAGE>
32
cured or waived without further action upon the part of either the Trustee
or any of the Securityholders; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or relief
under any applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the taking of corporate action by the Company in
furtherance of any such action; or
(8) any other Event of Default provided with respect to Securities of
that series.
<PAGE>
33
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount (or, if the Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all of the Securities
of that series to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) shall become immediately due and
payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
<PAGE>
34
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
<PAGE>
35
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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36
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium, if
any) and interest, respectively.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request
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37
to the Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the cost, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their
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38
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all
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39
the Securities of such series waive any past default hereunder with respect to
such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series, or to any suit instituted by
any Holder for the enforcement of the payment of the principal of (or premium,
if any) or interest on any Security on or after the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on or
after the Redemption Date).
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may
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40
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
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41
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount of the Outstanding
Securities of any series, determined as provided in Section 512, relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture with respect to the Securities of such
series; and
(4) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with respect
to the Securities of any series, the Trustee shall transmit by mail to all
Holders of Securities of such series, as their names and addresses appear in the
Security Register, notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived; provided, however, that, except in
the case of a default in the payment of the principal of (or premium, if any) or
interest on any Security of such series or in the payment of any sinking fund
instalment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such series; and
provided, further, that in the case of any default of the character specified in
Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
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42
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
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43
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance
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44
with any provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, with respect to the Securities of any series, it shall,
within 90 days after ascertaining that it has such conflicting interest, either
eliminate such conflicting interest or resign with respect to the Securities of
that series in the manner and with the effect hereinafter specified in this
Article.
(b) In the event that the Trustee shall fail to comply with the provisions
of Subsection (a) of this Section with respect to the Securities of any series,
the Trustee shall, within 10 days after the expiration of such 90-day period,
transmit by mail to all Holders of Securities of that series, as their names and
addresses appear in the Security Register, notice of such failure.
(c) For the purposes of this Section, the Trustee shall be deemed to have
a conflicting interest with respect to the Securities of any series if
(1) the Trustee is trustee under this Indenture with respect to the
Outstanding Securities of any series other than that series or is trustee
under another indenture under which any other securities, or certificates
of interest or participation in any other securities, of the Company are
outstanding, unless such other indenture is a collateral trust indenture
under which the only collateral consists of Securities issued under this
Indenture, provided that there shall be excluded from the operation of this
paragraph any securities or certificates of interest or participation in
other securities of the Company which may be deemed to be outstanding by
virtue of its Lease dated as of October 1, 1973 with the Ohio Air Quality
Development Authority
<PAGE>
45
or its Guaranty Agreement dated October 1, 1973 in respect of Bonds of the
Ohio Air Quality Development Authority, this Indenture with respect to the
Securities of any series other than that series or any indenture or
indentures under which other securities, or certificates of interest or
participation in other securities, of the Company are outstanding, if
(i) this Indenture and such other indenture or indentures are
wholly unsecured and such other indenture or indentures are hereafter
qualified under the Trust Indenture Act, unless the commission shall
have found and declared by order pursuant to Section 305(b) or Section
307(c) or the Trust Indenture Act that differences exist between the
provisions of this Indenture with respect to Securities of that
series and one or more other series or the provisions of such other
indenture or indentures which are so likely to involve a material
conflict of interest as to make it necessary in the public interest or
for the protection of investors to disqualify the Trustee from acting
as such under this Indenture with respect to the Securities of that
series and such other series or under such other indenture or
indentures, or
(ii) the Company shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing
thereon, that trusteeship under this Indenture with respect to the
Securities of that series and such other series or such other
indenture or indentures is not so likely to involve a material
conflict of interest as to make it necessary in the public interest or
for the protection of investors to disqualify the Trustee from acting
as such under this Indenture with respect to the Securities of that
series and such other series or under such other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers is an
obligor upon the Securities or an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control with
the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee or representative of the
Company, or of an underwriter (other than the Trustee itself) for the
Company who is currently engaged in the business of underwriting,
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46
except that (i) one individual may be a director or an executive officer,
or both, of the Trustee and a director or an executive officer, or both, of
the Company but may not be at the same time an executive officer of both
the Trustee and the Company; (ii) if and so long as the number of directors
of the Trustee in office is more than nine, one additional individual may
be a director or an executive officer, or both, of the Trustee and a
director of the Company; and (iii) the Trustee may be designated by the
Company or by any underwriter for the Company to act in the capacity of
transfer agent, registrar, custodian, paying agent, fiscal agent, escrow
agent or depositary, or in any other similar capacity, or, subject to the
provisions of paragraph (1) of this Subsection, to act as trustee, whether
under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons; or
10% or more of the voting securities of the Trustee is beneficially owned
either by an underwriter for the Company or by any director, partner or
executive officer thereof, or is beneficially owned, collectively, by any
two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), (i) 5% or more of the voting securities, or 10% or
more of any other class of security, of the Company not including the
Securities issued under this Indenture and securities issued under any
other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 5% or more of the voting securities of any person who,
to the knowledge of the Trustee, owns 10% or more of the voting securities
of, or controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default (as hereinafter in this
Subsection defined), 10% or more of any class of security of any
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47
person who, to the knowledge of the Trustee, owns 50% or more of the voting
securities of the Company; or
(9) the Trustee owns, on May 15 in any calendar year, in the capacity
of executor, administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an aggregate of
25% or more of the voting securities, or of any class of security, of any
person, the beneficial ownership of a specified percentage of which would
have constituted a conflicting interest under paragraph (6),(7) or (8) of
this Subsection. As to any such securities of which the Trustee acquired
ownership through becoming executor, administrator or testamentary trustee
of an estate which included them, the provisions of the preceding sentence
shall not apply, for a period of two years from the date of such
acquisition, to the extent that such securities included in such estate do
not exceed 25% of such voting securities or 25% of any such class of
security. Promptly after May 15 in each calendar year, the Trustee shall
make a check of its holdings of such securities in any of the above-
mentioned capacities as of such May 15. If the Company fails to make
payment in full of the principal of (or premium, if any) or interest on any
of the Securities when and as the same becomes due and payable, and such
failure continues for 30 days thereafter, the Trustee shall make a prompt
check of its holdings of such securities in any of the above-mentioned
capacities as of the date of the expiration of such 30-day period, and
after such date, notwithstanding the foregoing provisions of this
paragraph, all such securities so held by the Trustee, with sole or joint
control over such securities vested in it, shall, but only so long as such
failure shall continue, be considered as though beneficially owned by the
Trustee for the purposes of paragraphs (6), (7) and (8) of this Subsection.
The specification of percentages in paragraphs (5) to (9), inclusive, of
this Subsection shall not be construed as indicating that the ownership of such
percentages of the securities of a person is or is not necessary or sufficient
to constitute direct or indirect control for the purposes of paragraph (3) or
(7) of this Subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an
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48
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed
to be "in default" when a default in payment of principal shall have continued
for 30 days or more and shall not have been cured; and (iii) the Trustee shall
not be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default hereunder,
or (C) any security which it holds as agent for collection, or as custodian,
escrow agent or depositary, or in any similar representative capacity.
(d) For the purposes of this section:
(1) The term "underwriter", when used with reference to the Company,
means every person who, within three years prior to the time as of which
the determination is made, has purchased from the Company with a view to,
or has offered or sold for the Company in connection with, the distribution
of any security of the Company outstanding at such time, or has
participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or any
individual performing similar functions with respect to any organization,
whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only a
trust where the interest or interests of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee
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49
or trustees or agent or agents for the owner or holder of such security are
presently entitled to vote in the direction or management of the affairs of
a person.
(5) The term "Company" means any obligor upon the Securities.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of voting securities and other securities specified in
this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the Trustee,
the Company or any other person referred to in this Section (each of whom
is referred to as a "person" in this paragraph) means such amount of the
outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares and the number of units if relating
to any other kind of security.
(4) The term "outstanding" means issued and not held by or for the
account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund relating to
securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating to
another class of securities of the issuer, if the obligation
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evidenced by such other class of securities is not in default as to
principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security for an
obligation of the issuer not in default as to principal or interest or
otherwise; and
(iv) securities held in escrow if placed in escrow by the issuer
thereof;
provided, however, that any voting securities of an issuer shall be deemed
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders thereof
substantially the same rights and privileges; provided, however, that, in
the case of secured evidences of indebtedness, all of which are issued
under a single indenture, differences in the interest rates or maturity
dates of various series thereof shall not be deemed sufficient to
constitute such series different classes and provided, further, that, in
the case of unsecured evidences of indebtedness, differences in the
interest rates or maturity dates thereof shall not be deemed sufficient to
constitute them securities of different classes, whether or not they are
issued under a single indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 subject to supervision or examination by Federal or
State authority and having its Corporate Trust Office in any State of the United
States. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
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SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a) after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
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(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611, become the successor
Trustee with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the
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53
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trust and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all
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54
property and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be or
shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within four months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Securities and the holders of other indenture securities, as defined in
Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or
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55
interest, effected after the beginning of such four months' period and
valid as against the Company and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of this Subsection, or from the exercise of any
right of set-off which the Trustee could have exercised if a petition in
bankruptcy had been filed by or against the Company upon the date of such
default; and
(2) all property received by the Trustee in respect of any claims as
such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such four months'
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of the Company and
its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than the Company) who is liable thereon,
and (ii) the proceeds of the bona fide sale of any such claim by the
Trustee to a third Person, and (iii) distributions made in cash, securities
or other property in respect of claims filed against the Company in
bankruptcy or receivership or in proceedings for reorganization pursuant to
the Federal Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four months' period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such four
months' period and such property was received as security therefor
simultaneously with the creation thereof, and if the Trustee shall sustain
the burden of proving that at the time such property was so received the
Trustee had no reasonable cause to believe that a default, as defined in
Subsection (c) of this Section, would occur within four months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for
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56
such claim as provided in paragraph (B) or (C), as the case may be, to the
extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted after
the beginning of such four months' period for property held as security at the
time of such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Trustee as such creditor, such claim shall have the same status as
such pre-existing claim.
If the Trustee shall be required to account, the funds and property held in
such special account and the proceeds thereof shall be apportioned among the
Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on
account of the receipt by it from the Company of the funds and property in such
special account and before crediting to the respective claims of the Trustee and
the Holders and the holders of other indenture securities dividends on claims
filed against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceedings for reorganization is pending shall have
jurisdiction (i) to apportion among the Trustee, the Holders and the holders of
other indenture securities, in
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accordance with the provisions of this paragraph, the funds and property held in
such special account and proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made to
the Trustee and the Holders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning of such
four months' period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such four months' period, it shall be
subject to the provisions of this Subsection if and only if the following
conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account, if such Trustee had continued as
Trustee, occurred after the beginning of such four months' period; and
(ii) such receipt of property or reduction of claim occurred within
four months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of this
Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Holders at the time and in the manner
provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
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custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of this
Section;
(5) the ownership of stock or of other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper, as defined in Subsection (c) of
this Section.
(c) For the purposes of this Section only:
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Securities or upon the other
indenture securities when and as such principal or interest becomes due and
payable;
(2) the term "other indenture securities" means securities upon which
the Company is an obligor outstanding under any other indenture (i) under
which the Trustee is also trustee, (ii) which contains provisions
substantially similar to the provisions of this Section, and (iii) under
which a default exists at the time of the apportionment of the funds and
property held in such special account;
(3) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security,
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59
provided the security is received by the Trustee simultaneously with the
creation of the creditor relationship with the Company arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation;
(5) the term "Company" means any obligor upon the Securities;
and
(6) the term "Federal Bankruptcy Act" means the Bankruptcy Act or
Title 11 of the United States Code.
SECTION 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporated agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If any appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
BANKERS TRUST COMPANY
As Trustee
By.........................
As Authenticating Agent
By.........................
Authorized Officer
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ARTICLE SEVEN
HOLDERS' LIST AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than January 15 and July 15 in each
year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of the preceding January 1 or July 1,
as the case may be, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants") apply in
writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Indenture or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit,
then the Trustee shall, within five business days after the receipt of such
application, at its election, either
(i) afford such applicants access to the information preserved at the
time by the Trustee in accordance with Section 702(a), or
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(ii) inform such applicants as to the approximate number of Holders
whose names and addresses appear in the information preserved at the time
by the Trustee in accordance with Section 702(a), and as to the approximate
cost of mailing to such Holders the form of proxy or other communication,
if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
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SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the year
1983, the Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, a brief report dated as of such May
15 with respect to:
(1) its eligibility under Section 609 and its qualifications
under Section 608, or in lieu thereof, if to the best of its knowledge
it has continued to be eligible and qualified under said Sections, a
written statement to such effect;
(2) the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making thereof)
made by the Trustee (as such) which remain unpaid on the date of such
report, and for the reimbursement of which it claims or may claim a
lien or charge, prior to that of the Securities, on any property or
funds held or collected by it as Trustee, except that the Trustee
shall not be required (but may elect) to report such advances of such
advances so remaining unpaid aggregate not more than 1/2 of 1% of the
principal amount of the Securities Outstanding on the date of such
report;
(3) the amount, interest rate and maturity date of all other
indebtedness owing by the Company (or by any other obligor on the
Securities) to the Trustee in its individual capacity, on the date of
such report, with a brief description of any property held as
collateral security therefor, except in indebtedness based upon a
creditor relationship arising in any manner described in Section
613(b)(2), (3), (4) or (6);
(4) the property and funds, if any, physically in the possession
of the Trustee as such on the date of such report;
(5) any additional issue of Securities which the Trustee has not
previously reported; and
(6) any action taken by the Trustee in the performance of its
duties hereunder which it has not previously reported and which in its
opinion materially affects the Securities, except action in respect of
a default, notice of which has been or is to be withheld by the
Trustee in accordance with Section 602.
(b) The Trustee shall transmit by mail to Holders, as their names and
addresses appear in the Security Register, a brief report with respect
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64
to the character and amount of any advances (and if the Trustee elects so to
state, the circumstances surrounding the making thereof) made by the Trustee (as
such) since the date of the last report transmitted pursuant to Subsection (a)
of this Section (or if no such report has yet been so transmitted, since the
date of execution of this instrument) for the reimbursement of which it claims
or may claim a lien or charge, prior to that of the Securities, on property or
funds held or collected by it as Trustee and which it has not previously
reported pursuant to this Subsection, except that the Trustee shall not be
required (but may elect) to report such advances if such advances remaining
unpaid at any time aggregate 10% or less of the principal amount of the
Securities Outstanding at such time, such report to be transmitted within 90
days after such time.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if the Company is not required to file
information, documents or reports pursuant to either of said Sections, then
it shall file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the
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Commission, such additional information, documents and reports with respect
to compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not, and will not permit any Subsidiary to, consolidate
with or merge into any other corporation or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, and the
Company shall not permit any Person to consolidate with or merge into the
Company or any Subsidiary or convey, transfer or lease its properties and assets
substantially as an entirety to the Company or any Subsidiary, unless:
(1) in case the Company shall consolidate with or merge into another
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities and
the performance of every covenant of this Indenture on the part of the
Company to be performed or observed;
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(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary
as a result of such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, any Principal Property of the Company or of
any Subsidiary, or any indebtedness of or equity securities of any
Subsidiary or Affiliate (but not including any such indebtedness and equity
securities or any other property not owned by the Company or a Subsidiary
immediately prior to any such consolidation, merger, conveyance, transfer
or lease) would become subject to a mortgage, pledge, lien, security
interest or other encumbrance which would not be permitted by this
Indenture, the Company or such successor corporation or Person, as the case
may be, shall take such steps as shall be necessary effectively to secure
the Securities equally and ratably with (or prior to) all indebtedness
secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 802. Successor Corporation Substituted.
Upon any consolidation by the Company with or merger by the Company into
any other corporation or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor corporation formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation had been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Securities.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(6) to secure the Securities pursuant to the requirements of Section
1006 or otherwise; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the
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administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 611(b); or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided such action shall not adversely affect the
interests of the Holders of Securities of any series in any material
respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) changed the Stated Maturity of the principal of, or any instalment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of
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this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1009, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, provided, however, that this clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1009, or the
deletion of this proviso, in accordance with the requirements of Sections
611(b) and 901(8).
A supplemental indenture which changes or eliminates any convenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
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SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities of that series in accordance with the
terms of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
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The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in each Place of Payment for Securities of any series for such purposes.
The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with a Paying Agent a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of
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any payment of principal (and premium, if any) or interest on the
Securities of that series; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for three
years after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 1004. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such
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right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
SECTION 1006. Limitation on Liens.
(a) The Company will not, nor will it permit any Subsidiary to, issue,
assume or guarantee directly or indirectly any indebtedness for money borrowed
(hereinafter in this Article Ten referred to as "Debt"), if such Debt is secured
by a mortgage, pledge, security interest, lien or other encumbrance (any such
mortgage, pledge, security interest, lien or other encumbrance being hereinafter
in this Article Ten referred to as a "mortgage" or "mortgages") upon any
Principal Property or upon any indebtedness of or equity securities of any
Subsidiary or any Affiliate, now owned or hereafter acquired, without in any
such case effectively providing, concurrently with the issuance, assumption or
guarantee of such Debt, that the Securities then Outstanding (together with, if
the Company shall so determine, any other indebtedness of or guaranteed by the
Company or such Subsidiary ranking equally with the Securities and then existing
or thereafter created) shall be secured equally and ratably with (or prior to)
such Debt; provided, however, that the foregoing restriction shall not apply to
(1) mortgages on any property acquired, constructed or improved by the
Company or any Subsidiary after the date of this Indenture which are
created or incurred contemporaneously with or
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within one hundred twenty days after such acquisition, construction or
improvement to secure or provide for the payment of any part of the
purchase price of such property or the cost of such construction or
improvement (the date of such construction or improvement being, for the
purpose of this clause (1), deemed to be the date of completion of such
construction or improvement); provided that any such mortgage shall not
apply to any other property of the Company of any Subsidiary except, in the
case of any construction or improvement, theretofore unimproved real
property on which the property so constructed, or the improvement, is
located;
(2) mortgages on any property acquired from a corporation which is
merged with or into the Company or a Subsidiary or mortgages outstanding on
property at the time it is acquired by the Company or a Subsidiary or
mortgages outstanding on property of a corporation at the time it becomes a
Subsidiary;
(3) mortgages to secure Debt of a Subsidiary to the Company or to
another Subsidiary;
(4) mortgages or other restrictions relating to equity securities of
any Affiliate under any agreement or arrangement between the Company or any
Subsidiary and such Affiliate (or the other stockholder or stockholders of
such Affiliate) providing for the operations, financing or purchase of
products of such Affiliate or under any agreement among any such parties
imposing restrictions on the disposition of or granting options to purchase
the equity securities of such Affiliate;
(5) mortgages upon property or assets of the Company or any Subsidiary
in favor of any governmental agency or authority or guarantees given for
the purpose of financing, through industrial revenue bonds or notes the
interest on which is exempt from federal income taxation under Section 103
of the Internal Revenue Code of 1954, as amended, the construction,
acquisition or purchase of industrial plants, machinery, equipment or other
property or facilities; and
(6) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage referred to
in the foregoing clauses (1) to (5), inclusive; provided, however, that the
principal amount of Debt secured thereby shall not exceed the principal
amount of Debt so secured at the time of such extension, renewal or
replacement, and that such extension, renewal
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or replacement shall be limited to all or a part of the property which
secured the mortgage so extended, renewed or replaced (plus improvements on
such property).
(b) Notwithstanding the provisions of paragraph (a) of this Section
1006, the Company or any Subsidiary may, without equally and ratably
securing the Securities, create or assume mortgages which would otherwise
be subject to the foregoing restrictions if, at the time of such creation
or assumption, and after giving effect thereto, Exempted Indebtedness does
not exceed 5% of Consolidated Shareholders' Equity.
SECTION 1007. Limitation on Sale and Lease-Back.
(a) The Company will not, nor will it permit any Subsidiary to, enter into
any arrangement with any person providing for the leasing to the Company or
Subsidiary of any Principal Property (except for temporary leases for a term of
not more than three years), which property has been owned more than one hundred
twenty days by the Company or such Subsidiary and has been or is to be sold or
transferred by the Company or such Subsidiary to such person (herein referred to
as a "Sale and Lease-Back Transaction"), unless either (1) the Company or such
Subsidiary would be entitled to incur debt secured by a mortgage on the property
to be leased without equally and ratably securing the Securities pursuant to
clause (a) or (b) of Section 1006 or (2) the Company shall, and in any such case
the Company covenants that it will, apply an amount equal to the fair value (as
determined by the Board of Directors) of the property so leased to the
retirement, within one hundred twenty days of the effective date of any such
Sale and Lease-Back Transaction, of Securities (in the manner, subject to the
restrictions and at the redemption prices then applicable to redemption of
Securities at the option of the Company) or other indebtedness of the Company
with a maturity in excess of one year from the date of such Sale and Lease-Back
Transaction and which ranks on a parity with the Securities.
(b) Notwithstanding the provisions of paragraph (a) of this Section 1007,
the Company or any Subsidiary may enter into Sale and Lease-Back Transactions
which would otherwise be prohibited by the foregoing restrictions if, at the
time such transactions are entered into, and after
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giving effect thereto, Exempted Indebtedness does not exceed 5% of Consolidated
Shareholders' Equity.
SECTION 1008. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of Sections 1004 to 1007, inclusive, and if the
company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 1009. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Section 1004 to 1007, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least 66 2/3% in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the
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election of the Company of less than all the Securities of any series, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of other principal amount of Securities
of such series to be redeemed. In the case of any redemption of Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction.
SECTION 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that instalments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 307.
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If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption
of Securities of any series as provided for by the terms of Securities of such
series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which have been redeemed either at the
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80
election of the Company pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of
such Securities, in each case in satisfaction of all or any part of any sinking
fund payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
Series; provided that Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 31 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1104. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 1006 and 1007.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
<PAGE>
81
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE MEAD CORPORATION
BY JAMES R. SAMARTINI
Attest:
GEORGE J. MALY, JR.
BANKERS TRUST COMPANY
[SEAL]
BY M. K. KLUGMAN
Attest:
HARRIET A. DRANDOFF
[SEAL]
<PAGE>
82
STATE OF OHIO }
COUNTY OF MONTGOMERY }SS.:
On the 23rd day of July, 1982, before me personally came James R.
Samartini, to me known, who, being by me duly sworn, did depose and say that he
is a Vice President of THE MEAD CORPORATION, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
EVA L. KEMPFER
EVA L. KEMPFER, Notary Public
In and for the State of Ohio
My Commission Expires June 29, 1987
STATE OF NEW YORK }
COUNTY OF NEW YORK } SS.:
On the 22nd day of July, 1982, before me personally came M. K. Klugman, to
me known, who, being by me duly sworn, did depose and say that he is a Vice
President of BANKERS TRUST COMPANY, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
ROSEMARY MELENDEZ
ROSEMARY MELENDEZ
Notary Public, State of New York
No. 4679497
Qualified in Bronx County
Certificate Filed in New York County
Commission Expires March 30, 1984
<PAGE>
================================================================================
THE MEAD CORPORATION
TO
BANKERS TRUST COMPANY,
Trustee
---------------------
First Supplemental Indenture
Dated as of March 1, 1987
TO INDENTURE
Dated as of July 15, 1982
---------------------
================================================================================
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of March 1, 1987, between THE
MEAD CORPORATION, a corporation duly organized and existing under the laws of
the State of Ohio (the "Company"), having its principal offices at Dayton, Ohio,
and BANKERS TRUST COMPANY, a corporation duly organized and existing under the
laws of the State of New York, as Trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of July 15, 1982 (the "Indenture"), providing for
the issuance from time to time of its unsecured debentures, notes and other
evidences of indebtednesses (herein and therein called the "Securities"), to be
issued in one or more series as in the Indenture provided;
WHEREAS, Section 901(5) of the Indenture provides, among other things,
that the Company, when authorized by a Board Resolution, and the Trustee, at any
time and from time to time, may enter into an indenture supplemental to the
Indenture for the purpose of changing or eliminating any provision of the
Indenture, provided that such change or elimination shall not be effective as to
any Security Outstanding of any series created prior to the execution of such
supplemental indenture which is entitled to the benefit of such provision;
WHEREAS, the Company pursuant to the foregoing authority, proposes in
and by this First Supplemental
<PAGE>
Indenture to amend the Indenture in certain respects with respect to the
Securities of any series created on or after the date hereof; and
WHEREAS, all things necessary to make this First Supplemental
Indenture a valid agreement of the Company, in accordance with its terms, have
been done.
AGREEMENT
NOW, THEREFORE, the Company and the Trustee hereby agree as follows:
1. Subparagraph (iii) of the definition of "Outstanding" set forth in
Section 101 of the Indenture is hereby renumbered subparagraph (iv), and a new
subparagraph (iii) is added as follows:
"(iii) Securities for whose payment or redemption money or U.S.
Government Obligations as contemplated by Section 1304 in the necessary
amount have been theretofore deposited with the Trustee (or another trustee
satisfying the requirements of Section 609) in trust for the Holders of
such Securities in accordance with Section 1305; and"
2. Section 203 of the Indenture is hereby amended by adding
immediately after the sixth paragraph thereof the following:
"[The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of the Securities of this series and (b) certain
restrictive covenants and other provisions, in each case upon compliance by
the Company with certain conditions set forth therein, which provisions
apply to the Securities of this series.]"
-2-
<PAGE>
3. Section 301 of the Indenture is hereby amended by deleting the
word "and" from the end of Section 301(9), by renumbering Section 301(10) as
Section 301(11) and by inserting a new Section 301(10) as follows:
"(10) the application, if any, of either or both of Section 1302 and
Section 1303 to the Securities of the series; and"
4. The fifth paragraph of Section 1003 of the Indenture is hereby
amended by adding "or received by the Trustee (or another trustee satisfying the
requirements of Section 609) in respect of U.S. Government Obligations deposited
with the Trustee (or such other trustee) pursuant to Section 1304," immediately
after "Any money deposited with the Trustee or any Paying Agent" in the first
line thereof.
5. The Indenture is hereby amended by adding a new Article Thirteen
as follows:
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
----------------------------------
Section 1301. Applicability of Article;
Company's Option to Effect
Defeasance or Covenant
Defeasance.
--------------------------
If pursuant to Section 301 provision is made for either or both
of (a) defeasance of the Securities of a series under Section 1302 or (b)
covenant defeasance of the Securities of a series under Section 1303, then
the provisions
-3-
<PAGE>
of such Section or Sections, as the case may be, together with the other
provisions of this Article Thirteen, shall be applicable to the Securities
of such series, and the Company may at its option by Board Resolution, at
any time, with respect to the Securities of such series, elect to have
either Section 1302 (if applicable) or Section 1303 (if applicable) be
applied to the Outstanding Securities of such series upon compliance with
the conditions set forth below in this Article Thirteen.
Section 1302. Defeasance and Discharge.
-------------------------
Upon the Company's exercise of the above option applicable to
this Section, the Company shall be deemed to have been discharged from its
obligations with respect to the Outstanding Securities of such series on
the date the conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness
represented by the Outstanding Securities of such series and to have
satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense
-4-
<PAGE>
of the Company, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of Outstanding Securities
of such series to receive, solely from the trust fund described in Section
1304 and as more fully set forth in such Section, payments in respect of
the principal of (and premium, if any) and interest on such Securities when
such payments are due, (B) the Company's obligations with respect to such
Securities under Sections 304, 305, 306, 607, 1002 and 1003, (C) the
rights, powers, trusts, duties, and immunities of the Trustee hereunder and
(D) this Article Thirteen. Subject to compliance with this Article
Thirteen, the Company may exercise its option under this Section 1302
notwithstanding the prior exercise of its option under Section 1303 with
respect to the Securities of such series.
Section 1303. Covenant Defeasance.
--------------------
Upon the Company's exercise of the above option applicable to this
Section, the Company shall be released from its obligations under Sections
801, 1005, 1006, 1007, 1008,
-5-
<PAGE>
501(4) (as to Sections 801, 1005, 1006, 1007 and 1008), 501(5), 501(6),
501(7) and 501(8) (if Section 501(8) is specified as applicable to the
Securities of such series) with respect to the Outstanding Securities of
such series on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"). For this purpose, such
covenant defeasance means that, with respect to the Outstanding Securities
of such series, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any
such Section, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or by reason of any reference in any
such Section to any other provision herein or in any other document, but
the remainder of this Indenture and such Securities shall be unaffected
thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
------------------------------------------------
The following shall be the conditions to application of either
Section 1302 or Section 1303 to the Outstanding Securities of such series:
-6-
<PAGE>
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this
Article Thirteen applicable to it) as trust funds in trust for the purpose
of making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, money or in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied
by the Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of (and premium, if any, on) and each installment of principal of
(and premium, if any) and interest on the Out-
-7-
<PAGE>
standing Securities of such series on the Stated Maturity of such principal
or installment of principal or interest and (ii) any mandatory sinking fund
payments or analogous payments applicable to the Outstanding Securities of
such series on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities. For
this purpose, "U.S. Government Obligations" means securities that are (x)
direct obligations of the United States of America for the payment of which
its full faith and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of
1933, as amended) as custodian with respect to any such U.S. Government
Obligation or a specific
-8-
<PAGE>
payment of principal of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of such depository
receipt, provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government Obligation evidenced by
such depository receipt.
(2) No Event of Default or event with which notice or lapse of time
or both would become an Event of Default with respect to the Securities of
such series shall have occurred and be continuing on the date of such
deposit or, insofar as subsections 501(6) and (7) are concerned, at any
time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(3) Such defeasance or covenant defeasance shall not cause the
Trustee for the
-9-
<PAGE>
Securities of such series to have a conflicting interest as defined in
Section 608 and for purposes of the Trust Indenture Act with respect to
any securities of the Company.
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Company is a party or by
which it is bound.
(5) Such defeasance or covenant defeasance shall not cause any
Securities of such series then listed on any registered national securities
exchange under the Securities Exchange Act of 1934, as amended, to be
delisted.
(6) In the case of an election under Section 1302, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the date of this Indenture there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
-10-
<PAGE>
Holders of the Outstanding Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such defeasance had not occurred.
(7) In the case of an election under Section 1303, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities of such series will not recognize
income, gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred.
(8) Such defeasance or covenant defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may
be imposed on the Company in connection therewith pursuant to Section 301
-11-
<PAGE>
(9) The Company shall have delivered to the Trustee an Officers
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in the Indenture relating to either the defeasance
under Section 1302 or the covenant defeasance under Section 1303 (as the
case may be) have been complied with.
Section 1305. Deposited Money and U.S.
Government Obligations to be
Held in Trust; Other
Miscellaneous Provisions.
----------------------------
Subject to the provisions of the last paragraph of Section 1003,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee -- collectively,
for purposes of this Section 1305, the "Trustee") pursuant to Section 1304
in respect of the Outstanding Securities of such series shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Holders of such Securities, of all sums
due and to become due thereon in respect of
-12-
<PAGE>
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Securities of such
series.
Anything in this Article Thirteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money or U.S. Government Obligations held by it
as provided in Section 1304 which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent defeasance or
covenant defeasance.
6. All provisions of this First Supplemental Indenture shall be
deemed to be incorporated in, and made a
-13-
<PAGE>
part of, the Indenture; and the Indenture, as supplemented by this First
Supplemental Indenture, shall be read, taken and construed as one and the same
instrument.
7. The Trustee accepts the trusts created by the Indenture, as
supplemented by this First Supplemental Indenture, and agrees to perform the
same upon the terms and conditions in the Indenture, as supplemented by this
First Supplemental Indenture.
8. The recitals contained in the Indenture and the Securities,
except the Trustee's certificate of authentication, shall be taken as statements
of the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of the
Indenture or the Securities.
9. All amendments to the Indenture made hereby shall have effect
only with respect to the Securities of any series created on or after the date
hereof, and not with respect to the Securities of any series created prior to
the date hereof.
10. All capitalized terms used and not defined herein shall have the
respective meanings assigned to them in the Indenture.
11. This First Supplemental Indenture may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective seals to be
hereunto affixed and attested, all as of the date first above written.
THE MEAD CORPORATION
By: /s/ W. A. Enouen
-----------------------------
William A. Enouen
Title: Senior Vice President
and Chief Financial Officer
[Corporate Seal]
Attest:
/s/ George J. Maly Jr.
----------------------------
George J. Maly Jr.
Title: Secretary and
Associate General Counsel
BANKERS TRUST COMPANY
By: /s/ Daniel C. Brown, Jr.
-----------------------------
Daniel C. Brown, Jr.
Title: Vice President
[Corporate Seal]
Attest:
/s/ Mary A. Polar
----------------------------
Mary A. Polar
Title: Assistant Secretary
-15-
<PAGE>
STATE OF OHIO )
) SS.:
COUNTY OF MONTGOMERY )
On the 24th day of March, 1987, before me personally came William A.
Enouen, to me known, who, being duly sworn, did depose and say that he is Senior
Vice President and Chief Financial Officer of THE MEAD CORPORATION, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Laurene L. Holloway
----------------------------------
LAURENE L. HOLLOWAY, Notary Public
Notary Public, State of Ohio
No.________________
Qualified in _________________County
Commission Expires August 28, 1990
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 26th day of March, 1987, before me personally came Daniel C.
Brown, Jr., to me known, who, being duly sworn, did depose and say that he is
Vice President of BANKERS TRUST COMPANY, one of the corporations described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Joanne Itskovitz
---------------------------------
JOANNE ITSKOVITZ
Notary Public, State of New York
No. 4803877
Qualified in Westchester County
Commission Expires March 30, 1988
-16-
<PAGE>
[EXECUTION COPY]
- --------------------------------------------------------------------------------
THE MEAD CORPORATION
TO
BANKERS TRUST COMPANY, TRUSTEE
------------------------------
Second Supplemental Indenture
Dated as of October 15, 1989
TO INDENTURE
Dated as of July 15, 1982
As Amended by
First Supplemental Indenture
Dated as of March 1, 1987
------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of October 15, 1989, between THE
MEAD CORPORATION, a corporation duly organized and existing under the laws of
the State of Ohio (the "Company"), having its principal offices at Dayton, Ohio
and BANKERS TRUST COMPANY, a corporation duly organized and existing under the
laws of the State of New York, as Trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an Indenture, dated as of July 15, 1982, and a First Supplemental Indenture (the
"First Supplemental Indenture"), dated as of March 1, 1987 (as so supplemented,
the "Indenture"), providing for the issuance from time to time of its unsecured
debentures, notes and other evidences of indebtedness (herein and therein called
the "Securities"), to be issued in one or more series as in the Indenture
provided;
WHEREAS, Sections 901(5) and 901(9) of the Indenture provide, among other
things, that the Company, when authorized by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into an indenture
supplemental to the Indenture (1) for the purpose of changing or eliminating any
provision of the Indenture, provided that such change or elimination becomes
effective only when there is no Security
2
<PAGE>
Outstanding of any series created prior to the execution of such supplemental
indenture which is entitled to the benefit of such provision and (2) for the
purpose of making any other provisions with respect to matters arising under the
Indenture, provided that such action does not adversely affect the interests of
the Holders of Securities of any series in any material respect;
WHEREAS, the Company pursuant to the foregoing authority, proposed in and
by this Second Supplemental Indenture to amend the Indenture in certain respects
with respect to the Securities of any series created on or after the date
hereof; and
WHEREAS, all things necessary to make this Second Supplemental Indenture a
valid agreement of the Company, in accordance with its terms, have been done.
AGREEMENT
NOW, THEREFORE, the Company and the Trustee hereby agree as follows:
1. Section 101 of the Indenture is hereby amended by adding the following
definitions:
"Authorized Newspaper" means a newspaper in an official language of the
country of publication or in the English language, in either case
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in the place in
connection with which the term is used or in the financial community of
such place. Where successive publications are required to be made in
Authorized Newspapers, the successive publications may be made in the same
or in different newspapers in the same city meeting the foregoing
requirements and in each case on any Business Day.
3
<PAGE>
"Bearer Security" means any Security in the form of bearer securities
established pursuant to Section 201 that is payable to bearer.
"CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres S.A.
The term "coupon" means any interest coupon appertaining to a Bearer
Security.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities,
the Person designated as Depositary by the Company pursuant to Section 301
until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depositary" shall
mean or include each Person who is then a Depositary hereunder, and if at
any time there is more than one such Person, "Depositary" as used with
respect to the Securities of any such series shall mean the Depositary with
respect to the Debt Securities of that series.
"Designated Currency" has the meaning specified in Section 313.
"Dollar" or "$" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and
private debts.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels
office, or its successor as operator of the Euro-clear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Exchange Rate" means the exchange rate set forth in the Officers'
Certificate or supplemental indenture establishing a series of Securities
pursuant to Section 301.
"Foreign Currency" means a currency issued by the government of any country
other than the United States of America.
4
<PAGE>
"Global Security" means a Registered or Bearer Security evidencing all or
part of a series of Securities, issued to the Depositary for such series or
its nominee in accordance with Section 303, and bearing the legend
prescribed in Section 303.
"Registered Security" means any Security in the form of registered
securities established pursuant to Section 201 that is registered in the
Security Register.
"United States" means the United States of America (including the States
thereof and the District of Columbia), its territories and possessions and
other areas subject to its jurisdiction.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or
a foreign partnership one or more of the members of which is, for United
States Federal income tax purposes, a foreign corporation, a non-resident
alien individual or a non-resident alien fiduciary of a foreign estate or
trust.
"U.S. Government Obligations" has the meaning specified in Section 1304.
2. The definitions of "Business Day", "Holder", "Place of Payment" and
"Securities" in Section 101 of the Indenture are hereby amended to read in full
as follows:
"Business Day", when used with respect to any Place of Payment or any other
particular location referred to in the Indenture or in the Securities,
means, except as may otherwise be provided in the form of Securities of any
particular series pursuant to the provisions of this Indenture, each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated
by law to close.
"Holder", with respect to a Registered Security, means a Person in whose
name such Registered Security is registered in the Security Register and,
with respect to a Bearer Security or a coupon, means the bearer thereof.
5
<PAGE>
"Place of Payment", when used with respect to the Securities of any series
payable in Dollars, means the Corporate Trust Office of the Trustee in the
Borough of Manhattan, the City and State of New York, when used with
respect to the Securities of any series payable in a Foreign Currency,
means the place or places where such Foreign Currency is the legal tender,
and, when used with respect to the Securities of any series, means such
other place or places, if any, where the principal of (and premium, if any)
and any interest on the Securities of that series are payable as specified
as contemplated by Section 301, in all cases subject to the provisions of
Section 1002.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered
under this Indenture. Where appropriate in the context of this Indenture,
the term "Securities" includes any coupons appertaining to any Bearer
Securities.
3. Section 104 of the Indenture is hereby amended as follows:
(a) By adding the following immediately after the first sentence of
subdivision (a):
If Securities of a series are issuable in whole or part as Bearer
Securities, any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may, alternatively, be embodied in and evidenced by the record of
Holders of Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities
duly called and held in accordance with the provisions of Article Fourteen,
or a combination of such instruments and any such record.
(b) By adding the following at the end of subdivision (a):
The record of any meeting of Holders of Securities shall be proved in the
manner provided in Section 1406.
6
<PAGE>
(c) By relettering Section 104(d) as Section 104(h) and by adding the
following immediately prior to new Section 104(h):
(d) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the
production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary,
wherever situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such Person had on
deposit with such depositary, or exhibited to it, the Bearer Securities in
the amount and with the serial numbers therein described; or such facts may
be proved by the certificate or affidavit of the Person holding such Bearer
Securities, if such certificate or affidavit is deemed by the Trustee to be
satisfactory. The Trustee and the Company may assume that such ownership of
any Bearer Security continues until (1) another certificate of affidavit
bearing a later date issued in respect of the same Bearer Security is
produced, or (2) such Bearer Security is produced to the Trustee by some
other Person, or (3) such Bearer Security is surrendered in exchange for a
Registered Security, or (4) such Bearer Security is no longer Outstanding.
(e) The fact and date of execution of any such instrument or writing, the
authority of the Person executing the same and the principal amount and
serial numbers of Bearer Securities held by the Person so executing such
instrument or writing and the date of holding the same may also be proved
in any other manner which the Trustee deems sufficient; and the Trustee may
in any instance require further proof with respect to any of the matters
referred to in this Section.
(f) If the Company shall solicit from the Holders of Securities of any
series any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by Board Resolution,
fix in advance a record date for the determination of Holders of Registered
Securities entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. Any such record date shall be fixed at the Company's
discretion.
7
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If such a record date is fixed, such request, demand, authorization,
direction, notice, consent and waiver or other Act may be sought or given
before or after the record date, but only the Holders of Registered
Securities of record at the close of business on such record date shall be
deemed to be Holders of Registered Securities for the purpose of
determining whether Holders of the requisite proportion of Securities of
such series Outstanding have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Registered Securities of such series
Outstanding shall be computed as of such record date.
(g) For purposes of determining the principal amount of Outstanding
Securities of any series the Holders of which are required, requested or
permitted to give any request, demand, authorization, direction, notice,
consent, waiver or take any other Act under this Indenture and for purposes
of determining whether a quorum is present at a meeting of Holders of
Securities, (i) each Original Issue Discount Security shall be deemed to
have the principal amount determined by the Trustee that would be due and
payable upon acceleration of the Maturity thereof pursuant to Section 502
and the terms of such Original Issue Discount Security as of the date such
Act is delivered to the Trustee and, where it is hereby expressly required,
the Company and (ii) each Security denominated in a Foreign Currency or
composite currency shall be deemed to have the principal amount determined
by the exchange rate agent specified pursuant to Section 301 by converting
the principal amount of such Security in the currency in which such
Security is denominated into Dollars at the Exchange Rate as of the date
such Act is delivered to the Trustee and, where it is hereby expressly
required, to the Company (or, if there is no such rate on such date, such
rate as determined by such exchange rate agent).
4. Section 106 of the Indenture is hereby amended as follows:
(a) By deleting the first sentence of the first paragraph and inserting
in its place the following:
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any
8
<PAGE>
event, (1) such notice shall be sufficiently given to Holders of Registered
Securities if in writing and mailed, first-class postage prepaid, to each
Holder of a Registered Security affected by such event, at his address as
it appears in the Security Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice; and (2) such notice shall be sufficiently given to Holders of
Bearer Securities if published in an Authorized Newspaper in The City of
New York and, if the Securities of such series are then listed on the
International Stock Exchange of the United Kingdom and the Republic of
Ireland and such stock exchange shall so require, in London and, if the
Securities of such series are then listed on the Luxembourg Stock Exchange
and such stock exchange shall so require, in Luxembourg and, if the
Securities of such series are then listed on any other stock exchange
outside the United States and such stock exchange shall so require, in any
other required city outside the United States or, if not practicable, in
Europe on a Business Day at least twice, the first such publication to be
not earlier than the earliest date and not later than the latest date
prescribed for the giving of such notice.
(b) By adding the following to the end thereof:
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall
be impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither failure to give
notice by publication to Holders of Bearer Securities as provided above,
nor any defect in any notice so published, shall affect the sufficiency of
any notice mailed to Holders of Registered Securities as provided above.
Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act required or permitted under this Indenture shall be in
the English language, except that any published notice may be in an
official language of the country of publication.
9
<PAGE>
5. Section 301 of the Indenture (as amended by the First Supplemental
Indenture) is hereby further amended as follows:
(a) By deleting Section 301(8) and inserting in its place the following:
(8) the denominations in which Registered Securities of the series, if
any, shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof, and the denominations in which Bearer Securities
of the series, if any, shall be issuable if other than the denomination of
$5,000;
(b) By deleting the word "and" from the end of Section 301(10), by
renumbering Section 301(11) as Section 301(18) and by inserting the
following immediately prior to new Section 301(18):
(11) whether Bearer Securities of the series are to be issuable and, if
so, whether Registered Securities of the series are also to be issuable;
(12) if Bearer Securities of the series are to be issuable, (x) whether
interest in respect of any portion of a temporary Security in global form
(representing all of the Outstanding Bearer Securities of the series)
payable in respect of any Interest Payment Date prior to the exchange of
such temporary Security for definitive Securities of the series shall be
paid to any clearing organization with respect to the portion of such
temporary Security held for its account and, in such event, the terms and
conditions (including any certification requirements) upon which any such
interest payment received by a clearing organization will be credited to
the Persons entitled to interest payable on such Interest Payment Date, and
(y) the terms upon which interests in such temporary Security in global
form may be exchanged for interests in a permanent Global Security or for
definitive Securities of the series and the terms upon which interest in a
permanent Global
10
<PAGE>
Security, if any, may be exchanged for definitive Securities of the series;
(13) whether the Securities of the series shall be issued in whole or in
part in the form of one or more Global Securities and, in such case, the
Depositary for such Global Security or Securities;
(14) if other than Dollars, the currency of denomination of the Securities
of any series, which may be in Dollars, any Foreign Currency or any
composite currency, including but not limited to the ECU, and, if such
currency of denomination is a composite currency other than the ECU, the
agency or organization, if any, responsible for overseeing such composite
currency;
(15) if other than Dollars, the currency or currencies in which payment of
the principal of (and premium, if any) and interest on the Securities of
the series will be made, and the currency or currencies, if any, in which
payment of the principal of (and premium, if any) or the interest on
Registered Securities of the series, at the election of each of the Holders
thereof, may also be payable, and the periods within which and the terms
and conditions upon which such election is to be made, the manner in which
the exchange rate with respect to such payment shall be determined and the
agent appointed by the Company in connection with the determination of the
exchange rate, and whether Section 312 will be applicable to Securities of
the Series;
(16) if the amount of payments of principal of (and premium, if any) or
interest on the Securities of the series may be determined with reference
to an index, the manner in which such amounts shall be determined;
(17) whether and under what conditions additional amounts shall be payable
to Holders of Securities pursuant to or in a manner different from Section
1010; and
(c) By adding the following at the end of Section 301:
Securities of any particular series may be issued at various times, with
different dates on which the principal or any installment of principal is
payable, with different rates of interest, if any, or different methods by
which rates of interest may be determined, with different dates on which
such interest may be
11
<PAGE>
payable, with different Redemption Dates and may be denominated in
different currencies or payable in different currencies.
6. The second sentence of Section 302 of the Indenture is hereby amended
by adding the following to the end thereof:
, except that Bearer Securities of each series, if any, shall be issuable
in the denomination of $5,000.
7. Section 303 of the Indenture is hereby amended as follows:
(a) By adding the following to the end of the first paragraph:
Coupons shall bear the facsimile signature of the Treasurer or any
Assistant Treasurer of the Company.
(b) By adding the following to the end of the first sentence of the third
paragraph:
; provided, however, that in connection with its original issuance, no
------------------
Bearer Security (including any Security in global form that is either a
Bearer Security or exchangeable for Bearer Securities) or Security
delivered in exchange for an interest in the temporary Global Security
shall be mailed or otherwise delivered to any location in the United
States; and provided further that a Bearer Security (other than a temporary
Global Security) and any Security delivered in exchange for an interest in
the temporary Global Security may be delivered, in connection with its
original issuance, only if the Person entitled to receive such Security
shall have furnished either (i) a certificate in the form set forth in
Exhibit A to this Indenture, dated no earlier than 15 days prior to the
earlier of the date on which such Security is delivered or the date on
which any temporary Global Security first becomes exchangeable for such
Securities in accordance with the terms of such temporary Security or this
Indenture, or (ii) a certificate in the form set forth in Exhibit D to this
Indenture if such certificate has been furnished after the Exchange Date.
If any Security is represented by a permanent Global Security then, for the
purposes of this Section and Section 304, the notation of a beneficial
owner's interest therein upon original issuance of such
12
<PAGE>
Security or upon exchange of a portion of a temporary Global Security shall
be deemed to be delivery in connection with its original issuance of such
beneficial owner's interest is such permanent Global Security. To the
extent authorized in or pursuant to a Board Resolution and set forth in an
Officers' Certificate, or established in one or more indentures
supplemental hereto, such Company Order may be given by any one officer of
the Company, may be electronically transmitted, and may provide
instructions as to registration of holders, principal amounts, rates of
interest, maturity dates and other matters contemplated by such Board
Resolution and Officers' Certificate or supplemental indenture to be so
instructed in respect thereof. Before authorizing and delivering the first
Securities of any series (and upon reasonable request of the Trustee
thereafter), the Company shall deliver to the Trustee (i) the certificates
called for under Sections 201 and 301 hereof and (ii) an Opinion of Counsel
described in the next sentence.
(c) By adding the following immediately after the third paragraph:
If the Company shall establish pursuant to Section 301 that the Securities
of a series are to be issued in whole or in part in the form of one or more
Global Securities, then the Company shall execute and the Trustee shall, in
accordance with this Section and the Company Order with respect to such
series, authenticate and deliver one or more Global Securities in temporary
or permanent form that (i) shall represent and shall be denominated in an
amount equal to the aggregate principal amount of Outstanding Securities of
such series to be represented by one or more Global Securities; (ii) shall
be registered, if in registered form, in the name of the Depositary for
such Global Security or Securities or the nominee of such Depositary, (iii)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instruction and (iv) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or in part for
Securities in definitive form in accordance with the provisions of the
Indenture and the terms of the Securities, this Security may not be
transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
13
<PAGE>
Each Depositary designated pursuant to Section 301 for a Global Security in
registered form must, at the time of its designation and at all times while
it serves as Depositary, be a clearing agency registered under the
Securities Exchange Act of 1934 and any other applicable statute or
regulation.
(d) By deleting the fourth paragraph and inserting the following in its
place:
Each Registered Security shall be dated the date of its authentication.
Each Bearer Security shall be dated as of the date specified as
contemplated by Section 301.
(e) By adding the following at the end of the fifth paragraph:
Except as permitted by Section 306 or 307, the Trustee shall not
authenticate and deliver any Bearer Security unless all appurtenant coupons
for interest then matured have been detached and cancelled.
8. Section 304 of the Indenture is hereby amended by deleting the text of
Section 304 in its entirety and inserting the following in its place:
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and
deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which
they are issued, in registered form or, if authorized, in bearer form with
one or more coupons or without coupons, and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of
such Securities. In the case of any series issuable as Bearer Securities,
such temporary Securities may be in global form and shall be delivered only
in compliance with the applicable conditions set forth in Section 303.
14
<PAGE>
Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of the following paragraphs),
if temporary Securities of any series are issued, the Company will cause
definitive Securities of that series to be prepared without unreasonable
delay. Except as otherwise specified or contemplated in Section 301 with
respect to a series of Securities issuable as Bearer Securities, after the
preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities
of such series upon surrender of the temporary Securities of such series at
the office or agency of the Company maintained pursuant to Section 1002 in
a Place of Payment for such series for the purpose of exchanges of
Securities of such series, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities of any series
(accompanied by any unmatured coupons appertaining thereto) the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like aggregate principal amount of definitive Securities of the
same series and of like tenor of authorized denominations; provided,
---------
however, that no definitive Bearer Security shall be issued in exchange for
--------
a temporary Registered Security.
If temporary Securities of any series are issued in global form, any such
temporary Global Security shall, unless otherwise provided therein, be
delivered to the London office of a depositary or common depositary (the
"Common Depositary"), for the benefit of Euro-clear and CEDEL S.A. for
credit to the respective accounts of the beneficial owners of such
Securities (or to such other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary
Global Security of a series (the "Exchange Date"), the Company shall
deliver to the Trustee definitive Securities of that series in aggregate
principal amount equal to the principal amount of such temporary Global
Security, executed by the Company. On or after the Exchange Date such
temporary Global Security shall be surrendered by the Common Depositary to
the Trustee, as the Company's agent for such purpose, to be exchanged, in
whole or from time to time in part, for definitive Securities of that
series, without charge and the Trustee shall authenticate and deliver, in
exchange for each portion of such temporary Global Security a like
aggregate principal amount of
15
<PAGE>
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such temporary Global Security to be
exchanged; provided, however, that, unless otherwise specified in such
-------- -------
temporary Global Security, upon such presentation by the Common Depositary,
such temporary Global Security is accompanied by a certificate dated the
Exchange Date or a subsequent date and signed by Euro-clear as to the
portion of such temporary Global Security held for its account then to be
exchanged and a certificate dated the Exchange Date or a subsequent date
and signed by CEDEL S.A. as to the portion of such temporary Global
Security held for its account then to be exchanged, each in the form set
forth in Exhibit B to this Indenture. The definitive Securities to be
delivered in exchange for any such temporary Global Security shall be in
bearer form, registered form, permanent global bearer form or permanent
global registered form, or any combination thereof, as specified as
contemplated by Section 301, and, if any combination thereof is so
specified, as requested by the beneficial owner thereof, provided, however
-------- -------
that definitive Securities shall be delivered in exchange for a portion of
a temporary Global Security only in compliance with the requirements of
Section 303.
Unless otherwise specified in such temporary Global Security, the interest
of a beneficial owner of Securities of a series in a temporary Global
Security shall be exchanged for definitive Securities of the same series
and of like tenor following the Exchange Date upon the earlier of (i) the
receipt by Euro-clear or CEDEL S.A., as the case may be, after the Exchange
Date from the account holder of a certificate in the form set forth in
Exhibit D to this Indenture, or (ii) the receipt by Euro-clear or CEDEL
S.A., as the case may be, of instructions from the account holder to
request such exchange on his behalf and the delivery to Euro-clear or CEDEL
S.A., as the case may be, of a certificate in the form set forth in Exhibit
A to this Indenture, dated no earlier than 15 days prior to the Exchange
Date, copies of which certificate shall be available from the offices of
Euro-clear and CEDEL S.A., the Trustee, any Authenticating Agent appointed
for such series of Securities and each Paying Agent. Unless otherwise
specified in such temporary Global Security, any such exchange shall be
made free of charge to the beneficial owners of such temporary Global
Security, except that a Person receiving definitive Securities must bear
the cost of insurance, postage, transportation and the like in the event
that such Person does not take delivery of such definitive Securities in
person at the offices of
16
<PAGE>
Euro-clear or CEDEL S.A. Definitive Securities to be delivered in exchange
for any portion of a temporary Global Security shall be delivered only
outside the United States.
Until exchanged in full as hereinabove provided, the temporary Securities
of any series shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities of the same series and of like
tenor authenticated and delivered hereunder, except that, unless otherwise
specified as contemplated by Section 301, interest payable on a temporary
Global Security on any Interest Payment Date for Securities of such series
shall be payable to Euro-clear and CEDEL S.A. on such Interest Payment Date
upon delivery by Euro-clear and CEDEL S.A. to the Trustee of a certificate
or certificates in the form set forth in Exhibit C to this Indenture, for
credit without further interest on or after such Interest Payment Date to
the respective accounts of the Persons for which Euro-clear or CEDEL S.A.,
as the case may be, hold such temporary Global Security on such Interest
Payment Date and who have each delivered to Euro-clear or CEDEL S.A., as
the case may be, a certificate in the form set forth in Exhibit D to this
Indenture. Any interest so received by Euro-clear and CEDEL S.A. and not
paid as herein provided shall be returned to the Trustee immediately prior
to the expiration of two years after such Interest Payment Date in order to
be repaid to the Company in accordance with Section 1003.
9. Section 305 of the Indenture is hereby amended as follows:
(a) By deleting this second paragraph in its entirety and the first
sentence of the third paragraph and inserting the following in their place:
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or
more new Registered Securities of the same series of any authorized
denomination or denominations, of like tenor and aggregate principal
amount.
17
<PAGE>
Notwithstanding any other provision of this Section, unless and until it is
exchanged in whole or in part for Securities in definitive form, a Global
Security representing all or a portion of the Securities of a series may
not be transferred except as a whole by the Depositary for such series to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor Depositary for such series or a nominee of
such successor Depositary.
At the option of the Holder, Registered Securities of any series (except a
Global Security) may be exchanged for other Registered Securities of the
same series of any authorized denomination or denominations, of a like
aggregate principal amount, upon surrender of the Registered Securities to
be exchanged at such office or agency. Bearer Securities may not be
delivered by the Trustee in exchange for Registered Securities.
At the option of the Holder, except as otherwise specified as contemplated
by Section 301 with respect to a Global Security issued in bearer form,
Bearer Securities of any series may be exchanged for Registered Securities
(if the Securities of such series are issuable as Registered Securities) or
Bearer Securities (if Bearer Securities of such series are issuable in more
than one denomination) of the same series, of any authorized denominations
and of like tenor and aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any such office or agency, with all
unmatured coupons and all matured coupons in default appertaining thereto;
provided, however, delivery of a Bearer Security shall occur only outside
the United States. If the Holder of a Bearer Security is unable to produce
any such unmatured coupon or coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company and the Trustee in an amount equal to the face
amount of such missing coupon or coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of
such Security shall surrender to any Paying Agent any such missing coupon
in respect of which such a payment shall have been made, such Holder shall
be entitled to receive the amount of such payment; provided, however, that,
-------- -------
except as otherwise provided in Section 1002, interest
18
<PAGE>
represented by coupons shall be payable only upon presentation and
surrender of those coupons at an office or agency located outside the
United States. Notwithstanding the foregoing, in case a Bearer Security of
any series is surrendered at such office or agency in exchange for a
Registered Security of the same series after the close of business at such
office or agency on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and before the opening of business at such
office or agency on the related date for payment of Defaulted Interest,
such Bearer Security shall be surrendered without the coupon relating to
such Interest Payment Date or proposed date of payment, as the case may be.
(b) By adding the following immediately after the third paragraph:
If at any time the Depositary for the Securities of a series notifies the
Company that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for the
Securities of such series shall no longer be eligible under Section 303,
the Company shall appoint a successor Depositary with respect to the
Securities of such series. If a successor Depositary for the Securities of
such series is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the
Company's election pursuant to Section 301(13) shall no longer be effective
with respect to the Securities of such series and the Company will execute,
and the Trustee, upon receipt of a Company Order for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, Securities of such series in definitive form in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such series in exchange for such Global Security or
Securities.
The Company may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by such Global Security or
Securities. In such event the Company will execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver,
Securities of such series in definitive form and in an aggregate
19
<PAGE>
principal amount equal to the principal amount of the Global Security or
Securities representing such series in exchange for such Global Security or
Securities.
If (a) there shall have occurred and be continuing an Event of Default or
an event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to a series of Securities
issued in the form of one or more Global Securities, or (b) if specified by
the Company pursuant to Section 301 with respect to a series of Securities,
the Depositary for such series of Securities may surrender a Global
Security for such series of Securities in exchange in whole or in part for
Securities of such series in definitive form. Thereupon, the Company shall
execute, and the Trustee shall authenticate and deliver, without service
charge:
(i) to each Person specified by such Depositary a new Security or
Securities of the same series, of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Global Security;
and
(ii) to such Depositary a new Global Security in a denomination equal
to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities delivered to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver
Securities (a) in definitive registered form in authorized denominations,
if the Securities of such series are issuable as Registered Securities, (b)
in definitive bearer form in authorized denominations, with coupons
attached, if the Securities of such series are issuable as Bearer
Securities or (c) as either Registered or Bearer Securities, if the
Securities of such series are issuable in either form; provided, however,
that no definitive Bearer Security shall be delivered in exchange for a
temporary Global Security unless the Company or its agent shall have
received from the person entitled to receive the definitive Bearer Security
a certificate substantially in the form set forth in Exhibit A hereto in
accordance with Section 303; and provided further that delivery of a Bearer
Security shall occur only outside the United States; and provided further
that no definitive Bearer Security will be
20
<PAGE>
issued if the Company has reason to know that such certificate is false.
Upon the exchange of a Global Security for Securities in definitive form,
such Global Security shall be cancelled by the Trustee. Registered
Securities issued in exchange for a Global Security pursuant to this
Section shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver Bearer Securities issued in
exchange for a Global Security pursuant to this Section to the persons, and
in such authorized denominations, as the Depositary for such Global
Security, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee; provided, however, that no
definitive Bearer Security shall be delivered in exchange for a temporary
Global Security unless the Company or its agent shall have received from
the person entitled to receive the definitive Bearer Security a certificate
substantially in the form set forth in Exhibit A to this Indenture in
accordance with Section 303; and provided further that delivery of a Bearer
Security shall occur only outside the United States; and provided further
that no definitive Bearer Security will be issued if the Company has reason
to know that such certificate is false.
(c) By adding the following to the end of the sentence comprising the
seventh paragraph:
, or (iii) to exchange any Bearer Security so selected for redemption
except that such a Bearer Security may be exchanged for a Registered
Security of that series (if the Securities of such series are issuable as
Registered Securities), provided that such Registered Security shall be
simultaneously surrendered for redemption with written instruction for
payment consistent with the provisions of this Indenture.
10. The third paragraph of Section 306 is hereby amended by adding the
following to the end of the sentence comprising the third paragraph:
21
<PAGE>
; provided, however, that payment of principal of (and premium, if any) and
any interest on Bearer Securities shall, except as otherwise provided in
Section 1002, be payable only at an office or agency located outside the
United States; and provided, further, that, with respect to any such
coupons, interest represented thereby (but not any additional amounts
payable as provided in Section 1010), shall be payable only upon
presentation and surrender of the coupons appertaining thereto.
11. Section 307 of the Indenture is hereby amended as follows:
(a) By adding the following to the end of the first paragraph:
In case a Bearer Security of any series is surrendered in exchange for a
Registered Security of such series after the close of business (at an
office or agency in a Place of Payment for such series) on any Regular
Record Date and before the opening of business (at such office or agency)
on the next succeeding Interest Payment Date, such Bearer Security shall be
surrendered without the coupon relating to such Interest Payment Date and
interest will not be payable on such Interest Payment Date in respect of
the Registered Security issued in exchange for such Bearer Security, but
will be payable only to the Holder of such coupon when due in accordance
with the provisions of this Indenture.
(b) By adding the following to the end of Section 307(1):
In case a Bearer Security of any series is surrendered at the office or
agency in a Place of Payment for such series in exchange for a Registered
Security of such series after the close of business at such office or
agency on any Special Record Date and before the opening of business at
such office or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the coupon
relating to such proposed date of payment and Defaulted Interest will not
be payable on such proposed date of payment in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable
only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
22
<PAGE>
12. Section 308 of the Indenture is hereby amended by adding the following
to the end thereof:
Title to any Bearer Security and any coupons appertaining thereto shall
pass by delivery. The Company, the Trustee and any agent of the Company or
the Trustee may treat the bearer of any Bearer Security and the bearer of
any coupon as the absolute owner of such Bearer Security or coupon for the
purpose of receiving payment thereof or on account thereof and for all
other purposes whatsoever, whether or not such Bearer Security or coupon be
overdue, and neither the Company, the Trustee nor any agent of the Company
or the Trustee shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Security, nothing
herein shall prevent the Company, the Trustee or any agent of the Company
or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by a Depositary or impair, as between a
Depositary and holders of beneficial interests in any Global Security, the
operation of customary practices governing the exercise of the rights of
the Depositary as Holder of such Global Security. None of the Company, the
Trustee, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a Global
Security or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
13. The Indenture is hereby amended by adding new Sections 311 and 312
immediately after Section 310, as follows:
SECTION 311. Certification by a Person Entitled to Delivery of Bearer
--------------------------------------------------------
Security.
---------
Whenever any provision of this Indenture or a Security contemplates that
certification be given by a Person entitled to delivery of a Bearer
Security, such certification shall be provided substantially in the form of
Exhibit A hereto, with only such changes as shall be approved by the
Company.
SECTION 312. Judgments.
----------
The Company may provide, pursuant to Section 301, for the Securities of any
series that, to the fullest extent provided under applicable law, (a) the
23
<PAGE>
obligation, if any, of the Company to pay the principal of (and premium, if
any) and interest on the Securities of such series and any appurtenant
coupons in a Foreign Currency, composite currency or Dollars (the
"Designated Currency") as may be specified pursuant to Section 301 is of
the essence and agree that judgments in respect of such Securities shall be
given in the Designated Currency; (b) the obligation of the Company to make
payments in the Designated Currency of the principal of (and premium, if
any) and interest on such Securities and any appurtenant coupons shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in
the Designated Currency that the Holder receiving such payment may, in
accordance with normal banking procedures, purchase with the sum paid in
such other currency (after any premium and cost of exchange) in the country
of issue of the Designated Currency in the case of Foreign Currency or
Dollars or in the international banking community in the case of a
composite currency on the Business Day immediately following the day on
which such Holder receives such payment; (c) if the amount in the
Designated Currency that may be so purchased for any reason falls short of
the amount originally due, the Company shall pay such additional amounts as
may be necessary to compensate for such shortfall; and (d) any obligation
of the Company not discharged by such payment shall be due as a separate
and independent obligation and, until discharged as provided herein, shall
continue in full force and effect.
14. Section 401 of the Indenture is hereby amended as follows:
(a) By adding the following to the end of the first parenthetical in the
first paragraph: "and any right to receive additional amounts as provided in
Section 1010."
(b) By deleting in the parenthetical in Section 401(1)(A) the word "and"
immediately prior to subsection (ii), and adding the following immediately after
the end of subsection (ii):
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<PAGE>
(iii) coupons appertaining to Bearer Securities surrendered in exchange for
Registered Securities and maturing after such exchange, surrender of which
is not required or has been waived as provided in Section 305, and (iv)
coupons appertaining to Bearer Securities called for redemption and
maturing after the relevant Redemption Date, surrender of which has been
waived as provided in Section 1106.
15. Section 506 of the Indenture is hereby amended as follows:
(a) By adding the following to the end of clause SECOND of Section 506:
Except to the extent otherwise provided in Section 312 if such Section is
specified as applicable to Securities of a particular series, the Holders
of each series of Securities denominated in ECU, any other composite
currency or a Foreign Currency and any matured coupons relating thereto
shall be entitled to receive a ratable portion of the amount determined by
the exchange rate agent specified pursuant to Section 301 by converting the
principal amount Outstanding of such series of Securities and matured but
unpaid interest on such series of Securities in the currency in which such
series of Securities is denominated into Dollars at the Exchange Rate as of
the date of declaration of acceleration of the Maturity of the Debt
Securities (or, if there is no such rate on such date, such rate as
determined by such exchange rate agent).
(b) By adding the following to the end thereof:
Upon receipt by the Trustee of any declaration of acceleration, or
rescission and annulment thereof, with respect to Securities of a series
all or part of which is represented by a Global Security, the Trustee shall
establish a record date for determining Holders of Outstanding Securities
of such series entitled to join in such declaration of acceleration, or
rescission and annulment, as the case may be, which record date shall be at
the close of business on the day the Trustee receives such declaration of
acceleration, or rescission and annulment, as the case may be. The Holders
on such record date, or their duly designated proxies, and only such
Persons, shall be entitled to join in such
25
<PAGE>
declaration of acceleration, or rescission and annulment, as the case may
be, whether or not such Holders remain Holders after such record date;
provided, that unless such declaration of acceleration, or rescission and
--------
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having been obtained prior to the day which is 90 days
after such record date, such declaration of acceleration, or rescission and
annulment, as the case may be, shall automatically and without further
action by any Holder be canceled and of no further effect. Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new declaration of acceleration,
or rescission or annulment thereof, as the case may be, that is identical
to a declaration of acceleration, or rescission or annulment thereof, which
has been cancelled pursuant to the proviso to the preceding sentence, in
which event a new record date shall be established pursuant to the
provisions of this Section 502.
16. Section 512 of the Indenture is hereby amended by adding the following
to the end thereof:
Upon receipt by the Trustee of any such direction with respect to
Securities of a series all or part of which is represented by a Global
Security, the Trustee shall establish a record date for determining Holders
of Outstanding Securities of such series entitled to join in such
direction, which record data shall be at the close of business on the day
the Trustee receives such direction. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to
join in such direction, whether or not such Holders remain Holders after
such record date; provided, that unless such majority in principal amount
--------
shall have been obtained prior to the day which is 90 days after such
record date, such direction shall automatically and without further action
by any Holder be cancelled and of no further effect. Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new direction identical to a
direction which has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant to
the provisions of this Section 512.
26
<PAGE>
17. Section 513 of the Indenture is hereby amended by adding the
following to the end thereof:
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to waive any past default
hereunder. If a record date is fixed, the Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to
waive any default hereunder, whether or not such Holders remain Holders
after such record date; provided, that unless such majority in principal
--------
amount shall have been obtained prior to the date which is 90 days after
such record date, any such waiver previously given shall automatically and
without further action by any Holder be cancelled and of no further effect.
18. Section 608(b) of the Indenture is hereby amended by deleting the
words "by mail" and inserting the following in their place:
in the manner and to the extent provided in Section 703(c)
19. Section 610(f) of the Indenture is hereby amended by deleting the
words "by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders of Securities of such series as their names and
addresses appear in the Security Register", and inserting in their place the
words "in the manner provided in Section 106."
20. Section 701 of the Indenture is hereby amended by adding the following
to the end thereof:
The Trustee shall preserve for at least two years the names and addresses
of Holders of Bearer Securities filed with the Trustee pursuant to
Section 703(c).
27
<PAGE>
21. Section 703 of the Indenture is hereby amended as follows:
(a) By deleting the following in the first sentence of Section 703(b): ",
as their names and addresses appear in the Security Register," and inserting in
its place the following: ", as provided in Section 703(c)."
(b) By relettering Section 703(c) as Section 703(d) and inserting the
following immediately prior to new Section 703(d):
(c) Reports pursuant to this Section shall be transmitted by mail:
(1) to all Holders of Registered Securities, as the names and
addresses of such Holders appear in the Security Register;
(2) to such Holders of Bearer Securities as have, within the two
years preceding such transmission, filed their names and addresses
with the Trustee for that purpose; and
(3) except in the case of reports pursuant to Subsection (b) of this
Section, to each Holder of a Security whose name and address is
preserved at the time by the Trustee, as provided in Section 702(a).
22. Section 704(3) of the Indenture is hereby amended by deleting the
words "as their names and addresses appear in the Security Register", and
inserting the following in their place:
in the manner and to the extent provided in Section
703(c) with respect to reports pursuant to Section
703(a)
28
<PAGE>
23. Section 801(1) of the Indenture is hereby amended to insert the
following immediately after the words "interest on all the Securities":
(including all additional amounts, if any, payable pursuant to Section
1010)
24. Section 901(4) of the Indenture is hereby amended by deleting the
same in its entirety, and inserting the following in its place:
(4) to add to or change any of the provisions of this Indenture to provide
that Bearer Securities may be registrable as to principal, to change or
eliminate any restrictions on the payment of principal (or premium, if any)
on Registered Securities or of principal (or premium, if any) or any
interest on Bearer Securities, to permit Registered Securities to be
exchanged for Bearer Securities, provided any such action shall not
adversely affect the interests of the Holders of Securities of any series
or any related coupons in any material respect; or
25. Section 902 of the Indenture is hereby amended as follows:
(a) By adding to the end of Section 902(1) the following: "change any
obligation of the Company to pay additional amounts pursuant to Section 1010
(except as contemplated by Sections 301 or 801(1) or permitted by Section
901(1)), or"
(b) By adding to the end of Section 902(2) the following: "reduce the
requirements of Section 1404 of quorum or voting, or"
29
<PAGE>
(c) By adding to the end of Section 902 the following:
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record
date or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such
Holders remain Holders after such record date; provided, that unless such
--------
consent shall have become effective by virtue of the requisite percentage
having been obtained prior to the date which is 90 days after such record
date, any such consent previously given shall automatically and without
further action by any Holder be cancelled and of no further effect.
27. Section 1001 of the Indenture is hereby amended by adding the
following to the end thereof:
Any interest due on Bearer Securities on or before Maturity, other than
additional amounts, if any, payable as provided in Section 1010 in respect
of principal of (or premium, if any, on) such a Security, shall be
payable only upon presentation and surrender of the several coupons for
such interest installments as are evidenced thereby as they severally
mature.
27. Section 1002 of the Indenture is hereby amended as follows:
(a) By adding the following immediately after the first sentence of the
first paragraph:
If Securities of a series are issuable as Bearer Securities, the Company
will maintain, subject to any laws or regulations applicable thereto, (A)
an office or agency in a Place of Payment for such series that is located
outside the United States where Securities of such series and the related
coupons may be presented and surrendered for payment (including payment of
any additional amounts payable on Securities of such series pursuant to
Section 1010); provided, however, that if the Securities of such series are
listed on The International Stock Exchange of the United Kingdom and
30
<PAGE>
the Republic of Ireland or the Luxembourg Stock Exchange or any other stock
exchange located outside the United States and such stock exchange shall so
require, the Company will maintain a Paying Agent in London or Luxembourg
or any other required city located outside the United States, as the case
may be, so long as the Securities of such series are listed on such
exchange, and (B) an office or agency in a Place of Payment for such series
that is located outside the United States where any Registered Securities
of such series may be surrendered for registration of transfer, where
securities of that series may be surrendered for exchange and where notices
and demands to or upon the Company in respect of the Securities of that
series and the Indenture may be served.
(b) By adding the following to the end of the former third sentence of the
first paragraph:
; provided that Bearer Securities of that series and the related coupons
--------
may be presented and surrendered for payment (including payment of any
additional amounts payable on Bearer Securities of that series pursuant to
Section 1010) at the place specified for the purpose pursuant to Section
301 or, if no such place is specified, at the main office of the Trustee in
London.
(c) By adding the following immediately after the first paragraph:
No payment of principal of or premium or interest on Bearer Securities
shall be made at any office or agency of the Company in the United States
or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
however, that, if the Securities are denominated and payable in Dollars,
payment of principal of and any premium and interest (including any
additional amounts payable in respect thereof pursuant to Section 1010) on
any Bearer Security shall be made in Dollars at the Corporate Trust Office
of the Trustee in the Borough of Manhattan, The City of New York if (but
only if) payment of the full amount of such principal, premium, interest or
additional amounts at all offices outside the United States maintained for
the purpose by the Company in accordance with this Indenture is illegal or
effectively precluded by exchange controls or other similar restrictions.
31
<PAGE>
27. The fifth paragraph of Section 1003 of the Indenture is hereby further
amended as follows:
(a) By changing the words "three years" to "two years".
(b) By deleting the words "in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the Borough of Manhattan, The City of New York" from the proviso in said
fifth paragraph, and inserting the following in their place:
in an Authorized Newspaper of general circulation in the Borough of
Manhattan, The City of New York, and each Place of Payment
29. The Indenture is hereby amended by adding a new Section 1010
immediately after Section 1009 as follows:
SECTION 1010. Payment of Additional Amounts.
------------------------------
If the Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Security of any series
or any coupon appertaining thereto additional amounts upon the terms and
subject to the conditions provided therein. Whenever in this Indenture
there is mentioned, in any context, the payment of the principal of (or
premium, if any) or interest on, or in respect of, any Security of any
series or any related coupon or the net proceeds received on the sale or
exchange or any Security of any series, such mention shall be deemed to
include mention of the payment of additional amounts provided for in the
terms of such Securities and this Section to the extent that, in such
context, additional amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section and express mention of
the payment of additional amounts (if applicable) in any provisions hereof
shall not be construed as excluding additional amounts in those provisions
hereof where such express mention is not made.
32
<PAGE>
If the Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with
respect to that series of Securities (or if the Securities of that series
will not bear interest prior to the Maturity, the first day on which a
payment of principal (and premium, if any) is made, and at least 10 days
prior to each date of payment of principal (and premium, if any) or
interest if there has been any change with respect to the matters set forth
in the below-mentioned Officers' Certificate, the Company will furnish the
Trustee and the Company's principal Paying Agent or Paying Agents, if other
than the Trustee, with an Officers' Certificate instructing the Trustee and
such Paying Agent or Paying Agents whether such payment of principal of
(and premium, if any) or interest on the Securities of that series shall
be made to Holders of Securities of that series or the related coupons who
are United States Aliens without withholding for or on account of any tax,
assessment or other governmental charge described in the Securities of that
series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities or coupons and the
Company will pay to the Trustee or such Paying Agent the additional
amounts, if any, required by the terms of such Securities and the first
paragraph of this Section. The Company covenants to indemnify the Trustee
and any Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with Actions taken or omitted by
any of them in reliance on any Officers' Certificate furnished pursuant to
this Section 1010.
30. The first paragraph of Section 1104 of the Indenture is hereby amended
to delete the words "by first-class mail, postage prepaid, mailed"; to insert
the following in their place: "in the manner provided in Section 106;" and to
delete the words "at his address appearing in the Security Register."
33
<PAGE>
31. Section 1106 of the Indenture is hereby amended as follows:
(a) By adding the following to the end of the first sentence of the first
paragraph:
and the coupons for such interest appertaining to any Bearer Securities so
to be redeemed, except to the extent provided below, shall be void.
(b) By adding the following immediately prior to the proviso to the second
sentence of the first paragraph:
Provided, however, that installments of interest on Bearer Securities
-------- -------
whose Stated Maturity is on or prior to the Redemption Date shall be
payable only upon presentation and surrender of coupons for such interest
(at an office or agency located outside the United States except as
otherwise provided in Section 1002), and
(c) By adding the following immediately following the first paragraph:
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Bearer
Security may be paid after deducting from the Redemption Price an amount
equal to the face amount of all such missing coupons, or the surrender of
such missing coupon or coupons may be waived by the Company and the Trustee
if there be furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter
the Holder of such Bearer Security shall surrender to the Trustee or any
Paying Agent any such missing coupon in respect of which a deduction shall
have been made from the Redemption Price, such Holder shall be entitled to
receive the amount so deducted; provided, however, that interest
represented by coupons shall be payable only upon presentation and
surrender of those coupons at an office or agency located outside of the
United States except as otherwise provided in Section 1002.
32. Section 1107 of the Indenture is hereby amended to add the following to
the end of the sentence comprising Section 1107:
34
<PAGE>
, except that if a Global Security is so surrendered, the Company shall
execute, and the Trustee shall authenticate and deliver to the Depositary
for such Global Security, without service charge, a new Global Security in
a denomination equal to and in exchange for the unredeemed portion of the
principal of the Global Security so surrendered.
33. Section 1202(1) of the Indenture is hereby amended to add the following
after the parenthetical and immediately prior to the word "and":
, together in the case of any Bearer Securities of such series with all
unmatured coupons appertaining thereto,
34. Section 1302(B) of the Indenture is hereby amended to add the words
"and Section 1010" at the end thereof.
35. The Indenture is hereby amended to add a new Article Fourteen as
follows:
ARTICLE FOURTEEN
MEETINGS OF HOLDERS
SECTION 1401. Purposes for Which Meeting May be Called.
-----------------------------------------
If Securities of a series are issuable in whole or in part as Bearer
Securities, a meeting of Holders of Securities of such series may be called
at any time and from time to time pursuant to this Article to make, give or
take any request, demand, authorization, notice, consent, waiver or other
Act provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
SECTION 1402. Call, Notice and Place of Meetings.
-----------------------------------
(a) The Trustee may at any time call a meeting of Holders of
Securities of any series issuable in whole or in part as Bearer Securities
for any purpose specified in Section 1401, to be held at such time and
at such place in the Borough of Manhattan, The City of New York, or in
London, as the Trustee shall determine. Notice of every meeting of Holders
of Securities of any series, setting forth the time and the place of such
35
<PAGE>
meeting and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 106, not less
than 21 or more than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution,
or the Holders of at least 10% in principal amount of the Outstanding
Securities of any series shall have requested the Trustee to call a meeting
of the Holders of Securities of such series for any purpose specified in
Section 1401, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
made the first publication of the notice of such meeting within 21 days
after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above specified, as the case may
be, may determine the time and the place in the Borough of Manhattan, The
City of New York, or in London for such meeting and may call such meeting
for such purposes by giving notice thereof as provided in Subsection (a)
of this Section.
SECTION 1403. Persons Entitled to Vote at Meetings.
-------------------------------------
To be entitled to vote at any meeting of Holders of Securities of any
series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such series, or (2) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding
Securities of such series by such Holder or Holders. The only Persons who
shall be entitled to be present or to speak at any meeting of Holders of
Securities of any series shall be the Persons entitled to vote at such
meeting and their counsel, any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
SECTION 1404. Quorum; Action.
---------------
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver
which this Indenture expressly provides may be given by the Holders of not
less than 66 2/3% in principal amount of the Outstanding Securities of a
series, the Persons entitled to vote 66 2/3% in
36
<PAGE>
principal amount of the Outstanding Securities of such series shall
constitute a quorum. In the absence of a quorum within 30 minutes of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series, be dissolved. In the
absence of a quorum in any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the
meeting prior to the adjournment of such meeting. In the absence of a
quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as
provided in Section 1402(a), except that such notice need be given only
once not less than five days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned
meeting shall state expressly the percentage, as provided above, of the
principal amount of the Outstanding Securities of such series that shall
constitute a quorum.
Except as limited by the first proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a
quorum is present as aforesaid may be adopted only by the affirmative vote
of the Holders of a majority in principal amount of the Outstanding
Securities of that series; provided, however, that, except as limited by
such first proviso to Section 902, any resolution with respect to any
consent or waiver which this Indenture expressly provides may be given by
the Holders of not less than 66 2/3% in principal amount of the Outstanding
Securities of a series may be adopted at a meeting or an adjourned meeting
duly reconvened and at which a quorum is present as aforesaid only by the
affirmative vote of the Holders of 66 2/3% in principal amount of the
Outstanding Securities of that series; and provided further that, except as
limited by such first proviso to Section 902, any resolution with respect
to any request, demand, authorization, direction, notice, consent, waiver
or other Act which this Indenture expressly provides may be made, given or
taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of a series may
be adopted at a meeting or an adjourned meeting duly reconvened and at
which a quorum is present as aforesaid by the affirmative vote of the
Holders of such specified percentage in principal amount of the Outstanding
Securities of that series.
37
<PAGE>
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
SECTION 1405. Determination of Voting Rights; Conduct and Adjournment of
----------------------------------------------------------
Meetings.
---------
(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities of such series in regard to proof of
the holding of Securities of such series and of the appointment of proxies
and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the
meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved
in the manner specified in Section 104 and the appointment of any proxy
shall be proved in the manner specified in Section 104 or, in the case of
Bearer Securities, by having the signature of the person executing the
proxy witnessed or guaranteed by any trust company, bank or banker
authorized by Section 104 to certify to holding of Bearer Securities. Such
regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the proof
specified in Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
1402(b), in which case the Company or the Holders of Securities of the
series calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled
to vote a majority in principal amount of the Outstanding Securities of
such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy
shall be entitled to one vote for each $1,000 principal amount (or the
equivalent in ECU,
38
<PAGE>
any other composite currency or a Foreign Currency) of Securities of such
series held or represented by him; provided, however, that no vote shall be
cast or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding.
The chairman of the meeting shall have no right to vote, except as a Holder
of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly pursuant
to Section 1402 at which a quorum is present may be adjourned from time to
time by Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting; and the
meeting may be held as so adjourned without further notice.
SECTION 1406. Counting Votes and Recording Action of Meetings.
------------------------------------------------
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers
of the Outstanding Securities of such series held or represented by them.
The permanent chairman of the meeting shall appoint two inspectors of votes
who shall count all votes cast at the meeting for or against any resolution
and who shall make and file with the secretary of the meeting their
verified written reports in triplicate of all votes cast at the meeting. A
record, at least in triplicate, of the proceedings of each meeting of
Holders of Securities of any series shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports
of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts setting
forth a copy of the notice of the meeting and showing that said notice was
given as provided in Section 1402 and, if applicable, Section 1404. Each
copy shall be signed and verified by the affidavits of the permanent
chairman and secretary of the meeting and one such copy shall be delivered
to the Company, and another to the Trustee to be preserved by the Trustee,
the latter of have attached thereto the ballots voted at the meeting. Any
record so signed and verified shall be conclusive evidence of the matters
therein stated.
39
<PAGE>
33. The Indenture is hereby amended by adding Exhibits A, B, C and D to the
end thereof, as such Exhibits are attached to this Second Supplemental
Indenture.
34. All provisions of this Second Supplemental Indenture shall be deemed to
be incorporated in, and made a part of, the Indenture; and the Indenture, as
supplemented by this Second Supplemental Indenture, shall be read, taken and
construed as one and same instrument.
35. The Trustee accepts the trusts created by the Indenture, as
supplemented by this Second Supplemental Indenture, and agrees to perform the
same upon the terms and conditions in the Indenture, as supplemented by the
Second Supplemental Indenture.
36. The recitals contained in the Indenture and the Securities, except the
Trustee's certificate of authentication, shall be taken as statement of the
Company, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of the
Indenture or the Securities.
37. All amendments to the Indenture made hereby shall have effect only with
respect to the Securities of any series created on or after the date hereof, and
not with respect to the Securities of any series created prior to the date
hereof.
38. All capitalized terms used and not defined herein shall have the
respective meanings assigned to them in the Indenture.
40
<PAGE>
39. This Second Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental
Indenture to be duly executed, and their respective seals to be hereunto affixed
and attested, all as of the date first above written.
THE MEAD CORPORATION
By /s/ W. A. Enoven
--------------------------------
Title: Senior Vice President and
Chief Financial Officer
[Corporate Seal]
Attest:
/s/ Lorraine J. Francis
- ----------------------------------
Title: Assistant Secretary
BANKERS TRUST COMPANY
By /s/ Louise A. Buckley
--------------------------------
Title: Assistant Vice President
[Corporate Seal]
Attest:
/s/ Virginia Cheng Shames
- ----------------------------------
Title: Assistant Vice President
41
<PAGE>
STATE OF OHIO )
) s.s.:
COUNTY OF MONTGOMERY )
On the 18th day of October, 1989, before me personally came W.A. Enoven, to
be known, who, being duly sworn, did depose and say that he is Senior VP and
Chief Financial Officer of THE MEAD CORPORATION, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Jeffrey L. Hayman
--------------------------------
JEFFREY L. HAYMAN
ATTORNEY AT LAW
NOTARY PUBLIC - STATE OF OHIO
LIFETIME COMMISSION
SECTION 147.03 R. C.
STATE OF NEW YORK )
) s.s.:
COUNTY OF NEW YORK )
On the 16th day of October, 1989, before me personally came Louise A.
Buckley, to be known, who, being duly sworn, did depose and say that she is
Assistant Vice President of BANKERS TRUST COMPANY, one of the corporations
described in and which executed the foregoing instrument; that she knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said corporation, and that she signed her name thereto by like authority.
/s/ Desiree Marshall
-----------------------------------
DESIREE MARSHALL
Notary Public, State of New York
No. 24-4885294
Qualified in Kings County
Certificate filed in New York County
Commission Expires February 17, 1991
42
<PAGE>
EXHIBIT A
[FORM OF CERTIFICATE TO BE GIVEN BY PERSON
ENTITLED TO RECEIVE BEARER SECURITY OR SECURITY
INITIALLY REPRESENTED BY TEMPORARY GLOBAL SECURITY]
CERTIFICATE
-----------
------------
[Insert title or sufficient description
of Securities to be Delivered]
This is to certify that the above-captioned Securities is not being
acquired by or on behalf of a United States person, or for offer to resell or
for resale to a United States person, or any person inside the United States,
or, if a beneficial interest in the Securities is being acquired by a United
States person, that such United States person is a financial institution within
the meaning of Section 1.165-12(c)(l)(v) of the United States Treasury
Regulations or is acquiring through such a financial institution and that in
either case the Securities are held by a financial institution that has agreed
in writing to comply with the requirements of Section 165(j)(3)(A), (B) or (C)
of the Internal Revenue Code of 1986, as amended, and the regulations thereunder
and that is not purchasing for offer to resell or for resale inside the United
States. If this certificate is being provided by a clearing organization, it is
based on similar certificates provided to it by its member organizations;
provided, however, that, if the undersigned has actual knowledge that the
information contained in such a certificate is false (and, absent documentary
evidence that the beneficial owner of such Security is not a United States
person, it will be deemed to have actual knowledge that such beneficial owner,
other than a financial institution described above, is a United States person if
it has a United States address for such beneficial owner), the undersigned will
not deliver a Security in temporary or definitive bearer form, to the person who
signed such certificate notwithstanding the delivery of such certificate to the
undersigned.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction, and "United States
person" means any citizen or resident of the United States, any corporation,
partnership or other entity created or organized in or under the laws of the
United States and any estate or trust the income of which is subject to Federal
income taxation regardless of its source.
43
<PAGE>
We undertake to advise you by telex if the above statement as to beneficial
ownership is not correct on the date of delivery of the above-captioned
Securities as to all of such Securities.
We understand that this certificate is required in connection with certain
tax legislation in the United States. If administrative or legal proceedings are
commenced or threatened in connection with which this certificate is or would be
relevant, we irrevocably authorize you to produce this certificate or a copy
thereof to any interested party in such proceedings.
Dated: __________________________, 19__
____________________________________
44
<PAGE>
EXHIBIT B
[FORM OF CERTIFICATE TO BE GIVEN BY EURO-CLEAR
AND CEDEL S.A. IN
CONNECTION WITH THE EXCHANGE OF A PORTION OF
A TEMPORARY GLOBAL SECURITY]
CERTIFICATE
------------
[Insert title or sufficient description
of Securities to be delivered]
This is to certify with respect to $__________ principal amount of the
above-captioned Securities that we have received from each of the persons
appearing in our records as persons entitled to a portion of such principal
amount (our "Qualified Account Holders") a certificate with respect to such
portion substantially in the form attached hereto.
We further certify that as of the date hereof we have not received any
notification from any of our Qualified Account Holders to the effect that the
statements made by such Qualified Account Holders with respect to any portion of
the part submitted herewith for exchange are no longer true and cannot be relied
upon as of the date hereof.
Dated:__________ , 19__.
[To be dated no earlier than
the Exchange Date]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
BRUSSELS OFFICE, AS
OPERATOR OF THE EURO-
CLEAR SYSTEM]
[CEDEL S.A.]
By____________________
45
<PAGE>
EXHIBIT C
[FORM OF CERTIFICATE TO BE GIVEN BY EURO-CLEAR
AND CEDEL S.A. TO OBTAIN INTEREST]
CERTIFICATE
----------
[Insert title or sufficient description of Securities]
We confirm that the interest payable on the Interest Payment Date(s) on
[Insert Date(s)] will be paid to each of the persons appearing in our records as
being entitled to interest payable on such date from whom we have received a
written certification, dated not earlier than such Interest Payment Date(s),
substantially in the form attached hereto.
We undertake that any interest received by us and not paid as provided
above shall be returned to the Trustee for the above Securities immediately
prior to the expiration of two years after such Interest Payment Date in order
to be repaid by such Trustee to the above issuer at the end of two years after
such Interest Payment Date.
Dated: ___________, 19__.
[To be dated on or after the most recent
Interest Payment Date]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
BRUSSELS OFFICE, AS
OPERATOR OF THE EURO-
CLEAR SYSTEM]
[CEDEL S.A.]
By____________________
46
<PAGE>
EXHIBIT D
[FORM OF CERTIFICATE TO BE GIVEN BY
ACCOUNT HOLDERS TO OBTAIN INTEREST]
CERTIFICATE
------------
[Insert title or sufficient description of Securities]
This is to certify that (i) as of the Interest Payment Date(s) on [Insert
Date(s)], none of the above-captioned Securities held by you for our account was
beneficially owned by a United States person or, if any of such Securities held
by you for our account were beneficially owned by a United States person, such
United States person was a financial institution as defined in Section
1.165-12(c)(1)(v) of the United States Treasury Regulations under the Internal
Revenue Code of 1986, as amended or acquired such Securities through a financial
institution and that such Securities were held by a financial institution that
agreed to comply with Section 165(j)(3)(A), (B) or (C) of the Internal Revenue
Code of 1986 and the regulations thereunder and that was not purchasing for
offer to resell or for resale inside the United States (a "qualifying financial
institution") and (ii) the above-captioned Securities are not being acquired by
or on behalf of a United States person or for offer to resell or for resale to a
United States person or any person inside the United States or, if a beneficial
interest in the Securities is being acquired by or on behalf of a United States
person, that such United States person is a qualifying financial institution. If
the undersigned is a clearing organization, the undersigned has obtained a
similar certificate from its member organizations on which this certificate is
based; provided that, if the undersigned has actual knowledge that the
information contained in such a certificate is false, the undersigned will not
pay interest in respect of such Securities to, or credit interest in respect of
such Securities to the account of, or deliver a Security in temporary or
definitive bearer form to, the person who signed such certificate,
notwithstanding the delivery of such certificate to the undersigned.
As used herein, "United States person" means any citizen or resident of the
United States, any corporation, partnership
47
<PAGE>
or other entity created or organized in or under the laws of the United States
and any estate or trust the income of which is subject to United States Federal
income taxation regardless of its source, and "United States" means the United
States of America (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Dated:___________, 19__.
[To be dated on or after the
most recent Interest Payment Date]
[Name of Person Entitled
to Receive Interest]
________________________
(Authorized Signatory)
Name:___________________
Title:__________________
48
<PAGE>
- -------------------------------------------------------------------------------
THE MEAD CORPORATION
TO
BANKERS TRUST COMPANY, TRUSTEE
------------------------------
Third Supplemental Indenture
Dated as of November 15, 1991
TO INDENTURE
Dated as of July 15, 1982
As Amended by
First Supplemental Indenture
Dated as of March 1, 1987
And As Amended by
Second Supplemental Indenture
Dated as of October 15, 1989
- -------------------------------------------------------------------------------
<PAGE>
THIRD SUPPLEMENTAL INDENTURE, dated as of November 15, 1991, between THE
MEAD CORPORATION, a corporation duly organized and existing under the laws of
the State of Ohio (the "Company"), having its principal offices at Dayton, Ohio
and BANKERS TRUST COMPANY, a corporation duly organized and existing under the
laws of the State of New York, as Trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of July 15, 1982, a First Supplemental Indenture
(the "First Supplemental Indenture"), dated as of March 1, 1987, and a Second
Supplemental Indenture (the "Second Supplemental Indenture"), dated as of
October 15, 1989 (as so supplemented, the "Indenture"), providing for the
issuance from time to time of its unsecured debentures, notes and other
evidences of indebtedness (herein and therein called the "Securities"), to be
issued in one or more series as in the Indenture provided;
WHEREAS, Sections 901(5) and 901(9) of the Indenture provide, among other
things, that the Company, when authorized by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into an indenture
supplemental to the Indenture (1) for the purpose of changing or eliminating any
provision of the Indenture, provided that such change or elimination becomes
effective only when there is no Security Outstanding of any series created prior
to the execution of such supplemental indenture which is entitled to the
1
<PAGE>
benefit of such provision and (2) for the purpose of making any other
provisions with respect to matters arising under the Indenture, provided that
such action does not adversely affect the interests of the Holders of Securities
of any series in any material respect;
WHEREAS, the Company pursuant to the foregoing authority, proposed in and
by this Third Supplemental Indenture to amend the Indenture in certain respects
with respect to the Securities of any series created on or after the date
hereof; and
WHEREAS, all things necessary to make this Third Supplemental Indenture a
valid agreement of the Company, in accordance with its terms, have been done.
AGREEMENT
NOW, THEREFORE, the Company and the Trustee hereby agree as follows:
1. References to "The International Stock Exchange of the United Kingdom
and the Republic of Ireland" in Sections 106 and 1002 are hereby
amended to "The London Stock Exchange."
2
<PAGE>
2. The definition of "United States" in Section 101 of the Indenture is
hereby amended to read in full as follows:
"United States" means the United States of America (including
the States thereof and the District of Columbia), and its
possessions, which include Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
3. Section 302 of the Indenture is hereby amended to read in full as
follows:
Unless otherwise provided as contemplated by Section 301 with
respect to the Securities of any series, the Securities of such
series shall be issuable in denominations of $1,000 and any
integral multiple thereof, except that Bearer Securities of each
series, if any, shall be issuable in the denomination of $5,000.
4. The proviso to the first sentence of the third paragraph of Section
303 is hereby amended to read in full as follows:
provided, however, that in connection with its original issuance,
-------- -------
no Bearer Security (including any Security in global form that is
either a Bearer Security or exchangeable for Bearer Securities)
or Security delivered in exchange for an interest in the
temporary Global Security shall be mailed or otherwise delivered
to any location in the United States; and provided further that a
Bearer Security (other than a temporary Global Security) and any
Security delivered in exchange for an interest in the temporary
Global Security may be delivered, in connection with its original
issuance, only if the Person entitled to receive such Security
shall have furnished a certificate substantially in the form set
forth in Exhibit A to this Indenture, dated no
3
<PAGE>
earlier than 15 days prior to (i) any Interest Payment Date that
occurs prior to the Exchange Date (as defined in Section 304)
with respect to a temporary Global Security for such Security or
(ii) the earlier of the date on which such Security is delivered
or the date on which any temporary Global Security first becomes
exchangeable for such Securities in accordance with the terms of
such temporary Security or this Indenture.
5. The proviso to the second sentence of the fourth paragraph of Section
304 is hereby amended to read in full as follows:
provided, however, that, unless otherwise specified in such
-------- -------
temporary Global Security, or unless interest is payable on the
temporary Global Security on an Interest Payment Date occurring
prior to the Exchange Date for Securities of such series and the
certifications described in the second succeeding paragraph
hereafter is provided, upon such presentation by the Common
Depositary, such temporary Global Security is accompanied by a
certificate dated the Exchange Date or a subsequent date and
signed by Euro-clear as to the portion of such temporary Global
Security held for its account then to be exchanged and a
certificate dated the Exchange Date or a subsequent date and
signed by CEDEL S.A. as to the portion of such temporary Global
Security held for its account then to be exchanged, each in the
form set forth in Exhibit B to this Indenture.
6. The first sentence of the fifth paragraph of Section 304 is hereby
amended in full as follows:
Unless otherwise specified in such temporary Global Security, the
interest of a beneficial owner of Securities of a series in a
temporary Global Security shall be exchanged for definitive
Securities of the same series and of like tenor following the
Exchange Date upon the receipt by Euro-clear or CEDEL S.A., as
the case may be, of a certificate in the form set forth in
Exhibit A to this Indenture, dated no earlier than 15 days prior
to (i) any Interest Payment Date that
4
<PAGE>
occurs prior to the Exchange Date or (ii) the Exchange Date,
copies of which certificate shall be available from the offices
of Euro-clear and CEDEL S.A., the Trustee, any Authenticating
Agent appointed for such series of Securities and each
Paying Agent.
7. The sixth paragraph of Section 304 is hereby amended in full as
follows:
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of
the same series and of like tenor authenticated and delivered
hereunder, except that no interest shall be payable on a
temporary Global Security on any Interest Payment Date occurring
after the Exchange Date for Securities of such series. Unless
otherwise specified as contemplated by Section 301, interest
payable on a temporary Global Security on any Interest Payment
Date prior to the Exchange Date for Securities of such series
shall be payable to Euro-clear and CEDEL S.A. on such Interest
Payment Date only upon delivery by Euro-clear and CEDEL S.A. to
the Trustee of a certificate or certificates in the form set
forth in Exhibit B to this Indenture, dated no earlier than 15
days prior to the Interest Payment Date, for credit without
further interest on or after such Interest Payment Date to the
respective accounts of the Persons for which Euro-clear or CEDEL
S.A., as the case may be, holds such temporary Global Security on
such Interest Payment Date and who have each delivered to Euro-
clear and CEDEL S.A., as the case may be, a certificate in the
form set forth in Exhibit A to this Indenture. Notwithstanding
anything to the contrary herein contained, the certifications
made pursuant to this paragraph shall satisfy the certification
requirements of the preceding two paragraphs of this Section 304
and of the tenth paragraph of Section 305. The delivery of such
certification by Persons for whom Euro-clear or CEDEL S.A., as
the case may be, holds such temporary Global Security shall
constitute irrevocable instructions by such Person to Euro-clear
or CEDEL S.A. to exchange such Person's interest in the temporary
Global Security for definitive Securities of the same
5
<PAGE>
series and of like tenor on the Exchange Date. Any interest so
received by Euro-clear and CEDEL S.A. and not paid as herein
provided shall be returned to the Trustee immediately prior to
the expiration of two years after such Interest Payment Date in
order to be repaid to the Company in accordance with Section
1003.
8. The first proviso to the third sentence of the tenth paragraph of
Section 305 is hereby amended in full as follows:
provided, however, that no definitive Bearer Security shall be
delivered in exchange for a temporary Global Security except in
accordance with the delivery of a certificate required by Section
304;
9. Exhibits A, B, C and D to the Indenture are hereby deleted, and new
Exhibits A and B are added to the end thereof, as such Exhibits are
attached to this Third Supplemental Indenture.
10. All provisions of this Third Supplemental Indenture shall be deemed to
be incorporated in, and made a part of, the Indenture; and the
Indenture, as supplemented by the First Supplemental Indenture, the
Second Supplemental Indenture and this Third Supplemental Indenture,
shall be read, taken and construed as one and same instrument.
6
<PAGE>
11. The Trustee accepts the trusts created by the Indenture, as
supplemented by this Third Supplemental Indenture, and agrees to
perform the same upon the terms and conditions in the Indenture, as
supplemented by the First Supplemental Indenture, the Second
Supplemental Indenture and this Third Supplemental Indenture.
12. The recitals contained in the Indenture and the Securities, except the
Trustee's certificate of authentication, shall be taken as statement
of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity
or sufficiency of the Indenture or the Securities.
13. All amendments to the Indenture made hereby shall have effect only
with respect to the Securities of any series created on or after the
date hereof, and not with respect to the Securities of any series
created prior to the date hereof.
14. All capitalized terms used and not defined herein shall have the
respective meanings assigned to them in the Indenture.
7
<PAGE>
15. Except to the extent specifically provided therein, no provision of
this Third Supplemental Indenture or any future supplemental indenture
is intended to modify, and the parties do hereby adopt and confirm,
the provisions of Section 318(c) of the Trust Indenture Act which
amend and supersede provisions of the Indenture in effect prior to
November 15, 1990.
16. This Third Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one
and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed, and their respective seals to be hereunto affixed
and attested all as of the date first above written.
THE MEAD CORPORATION
By /s/ W A Enouen
--------------------------------
Title: Senior Vice President and
Chief Financial Officer
[Corporate Seal]
Attest:
/s/ Jeff Hayman
- -------------------------------
Title: Secretary and Associate
General Counsel
BANKERS TRUST COMPANY
By /s/ Remo J. Reale
--------------------------------
Title: Assistant Vice President
[Corporate Seal]
Attest:
/s/ Janine M. Shugar
- -------------------------------
Title: Assistant Vice President
9
<PAGE>
State of Ohio
----------------- )
County of Montgomery ) SS:
----------------- )
On the 26th day of November, 1991, before me personally came William A.
Enouen, to be known, who being duly sworn, did depose and say that he is Senior
VP and CFO of THE MEAD CORPORATION, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Tina Marie Boyd
---------------------------------
Notary Public
f/k/a Tina Marie Earnest
TINA MARIE EARNEST, Notary Public
In and for the State of Ohio
My Commission Expires Jan. 25, 1993
State of New York
----------------- )
County of New York ) SS:
----------------- )
On the 27th day of November, 1991, before me personally came Remo J. Reale,
to be known, who being duly sworn, did depose and say that he is Assistant Vice
President of BANKERS TRUST COMPANY, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Joan Caruso
---------------------------------
Notary Public
10
<PAGE>
EXHIBIT A
[FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE]
CERTIFICATE
---------------------------
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by person(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) that are
(a) foreign branches of United States financial institutions (as defined in
United States Treasury Regulations Section 1.165-12(c)(1)(v)) purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise the Issuer or its agent that such financial institution will comply with
the requirements of Section 165(j)(3)(A), (B) or (C) of the United States
Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) are owned by United States or foreign financial institutions for purposes
of resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a
United States or foreign financial institution described in clause (iii) above
(whether or not also described in clause (i) or (ii)), this is to further
certify that such financial institution has not acquired the Securities for
purposes of resale directly or indirectly to a United States person or to a
person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and District of Columbia); and its "possessions" include
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
11
<PAGE>
We undertake to advise you promptly by tested telex or by electronic
transmission on or prior to the date on which you intend to submit your
certification relating to the above-captioned Securities held by you for our
account in accordance with your Operating Procedures if any applicable statement
herein is not correct on such date, and in the absence of any such notification
it may be assumed that this certification applies as of such date.
This certificate excepts and does not relate to___________of such interest
in the above-captioned Securities in respect of which we are not able to certify
and as to which we understand an exchange for an interest in a permanent Global
Security or an exchange for and delivery of definitive Securities (or, if
relevant, collection of any interest) cannot be made until we do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Date: , 19
----------------------------- --
[To be dated no earlier
than the 15th day prior to
(i) the Exchange Date or (ii)
the relevant Interest Payment
Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making
Certification]
------------------------
(Authorized Signatory)
Name:
Title:
12
<PAGE>
EXHIBIT B
[FORM OF CERTIFICATE TO BE GIVEN BY EURO-CLEAR
AND CEDEL S.A. IN CONNECTION WITH THE
EXCHANGE OF A PORTION OF A TEMPORARY
GLOBAL SECURITY OR TO OBTAIN
INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE]
CERTIFICATE
-------------------------
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that based solely on written certifications that we have
received in writing, by tested telex or by electronic transmission from each of
the persons appearing in our records as persons entitled to a portion of the
principal amount set forth below (our "Member Organizations") substantially in
the form attached hereto, as of the date hereof, _____________ principal amount
of the above-captioned Securities (i) is owned by person(s) that are not
citizens or residents of the United States, domestic partnerships, domestic
corporations or any estate or trust the income of which is subject to United
States Federal income taxation regardless of its source ("United States
person(s)"), (ii) is owned by United States person(s) that are (a) foreign
branches of United States financial institutions (as defined in U.S. Treasury
Regulations Section 1.165-12(c)(1)(v)) purchasing for their own account or for
resale, or (b) United States person(s) who acquired the Securities through
foreign branches of United States financial institutions and who hold the
Securities through such United States financial institutions on the date hereof
(and in each case (a) or (b), each such financial institution has agreed, on its
own behalf or through its agent, that we may advise the Issuer or its agent that
such financial institution will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder), or (iii) is owned by United States or foreign
financial institution(s) for purposes of resale during the restricted period
(as defined in United States Treasury Regulations Section 1.163-
5(c)(2)(i)(D)(7)), and to the further effect, that financial institutions
described in clause (iii) above (whether or not also described in clause (i) and
(ii)) have certified that they have not acquired the Securities for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
13
<PAGE>
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary Global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Date: ________________________, 19__
[To be dated no earlier
than the Exchange Date
or the relevant Interest
Payment Date occurring
prior to the Exchange
Date, as applicable]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
BRUSSELS OFFICE, as
Operator of the
Euro-clear System]
[CEDEL S.A.]
By ______________________
14
<PAGE>
================================================================================
THE MEAD CORPORATION
TO
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
_____________________
INDENTURE
Dated as of February 1, 1993
_____________________
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
PARTIES.................................................. 1
RECITALS OF THE COMPANY.................................. 1
ARTICLE ONE
-----------
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions:.......................... 1
Act................................... 2
Affiliate............................. 2
Appraised Value....................... 2
Attributable Debt..................... 2
Authenticating Agent.................. 2
Authorized Newspaper.................. 2
Bearer Security....................... 3
Board of Directors.................... 3
Board Resolution...................... 3
Business Day.......................... 3
CEDEL S.A............................. 3
Commission............................ 3
Company............................... 3
Company Request; Company Order........ 3
Consolidated Shareholders' Equity..... 4
Corporate Trust Office................ 4
Corporation........................... 4
Coupon................................ 4
Defaulted Interest.................... 4
Depositary............................ 4
Defaulted Currency.................... 4
Dollar; $............................. 4
ECU................................... 4
Euro-clear............................ 4
European Communities.................. 4
Event of Default...................... 4
Exchange Rate......................... 5
Exempted Indebtedness................. 5
Experts............................... 5
Foreign Currency...................... 5
Global Security....................... 5
Holder................................ 5
Indenture............................. 5
Interest.............................. 6
Interest Payment Date................. 6
Maturity.............................. 6
Officers' Certificate................. 6
___________
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C>
Opinion of Counsel......................... 6
Original Issue Discount Security........... 6
Outstanding................................ 6
Paying Agent............................... 7
Person..................................... 7
Place of Payment........................... 7
Predecessor Security....................... 8
Principal Property......................... 8
Redemption Date............................ 8
Redemption Price........................... 8
Registered Security........................ 8
Regular Record Date........................ 8
Securities................................. 8
Security Register and Security
Registrar................................. 8
Special Record Date........................ 8
Stated Maturity............................ 9
Subsidiary................................. 9
Trustee.................................... 9
Trust Indenture Act........................ 9
United States.............................. 9
United States Alien........................ 9
U.S. Government Obligations................ 9
Vice President............................. 9
Section 102. Compliance Certificates and Opinions....... 10
Section 103. Form of Documents Delivered to Trustee..... 10
Section 104. Acts of Holders; Record Dates.............. 11
Section 105. Notices, Etc., to Trustee and Company...... 13
Section 106. Notice to Holders; Waiver.................. 14
Section 107. Conflict with Trust Indenture Act.......... 15
Section 108. Effect of Headings and
Table of Contents......................... 15
Section 109. Successors and Assigns..................... 15
Section 110. Separability Clause........................ 15
Section 111. Benefits of Indenture...................... 15
Section 112. Governing Law.............................. 16
Section 113. Legal Holidays............................. 16
</TABLE>
____________
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
ii
<PAGE>
<TABLE>
<CAPTION>
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ARTICLE TWO
-----------
SECURITY FORMS
<S> <C> <C>
Section 201. Forms Generally............................................ 16
Section 202. Form of Face of Security................................... 17
Section 203. Form of Reverse of Security................................ 19
Section 204. Form of Trustee's Certificate of Authentication............ 23
ARTICLE THREE
-------------
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series....................... 23
Section 302. Denominations.............................................. 26
Section 303. Execution, Authentication, Delivery and Dating............. 26
Section 304. Temporary Securities....................................... 30
Section 305. Registration, Registration of Transfer and Exchange........ 33
Section 306. Mutilated, Destroyed, Lost and Stolen Securities........... 37
Section 307. Payment of Interest; Interest Rights Preserved............. 38
Section 308. Persons Deemed Owners...................................... 40
Section 309. Cancellation............................................... 41
Section 310. Computation of Interest.................................... 41
Section 311. Certification by a Person Entitled to Delivery of Bearer
Security................................................. 41
Section 312. Judgments.................................................. 41
ARTICLE FOUR
------------
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.................... 42
Section 402. Application of Trust Money................................. 43
</TABLE>
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NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
iii
<PAGE>
<TABLE>
<CAPTION>
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ARTICLE FIVE
------------
REMEDIES
<S> <C> <C>
Section 501. Events of Default.......................................... 44
Section 502. Acceleration of Maturity; Rescission and Annulment......... 46
Section 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.................................................. 47
Section 504. Trustee May File Proofs of Claim........................... 48
Section 505. Trustee May Enforce Claims Without Possession of Securities 48
Section 506. Application of Money Collected............................. 49
Section 507. Limitation on Suits........................................ 50
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest..................................... 51
Section 509. Restoration of Rights and Remedies......................... 51
Section 510. Rights and Remedies Cumulative............................. 51
Section 511. Delay or Omission Not Waiver............................... 52
Section 512. Control by Holders......................................... 52
Section 513. Waiver of Past Defaults.................................... 53
Section 514. Undertaking for Costs...................................... 53
Section 515. Waiver of Stay or Extension Laws........................... 53
ARTICLE SIX
-----------
THE TRUSTEE
Section 601. Certain Duties and Responsibilities........................ 54
Section 602. Notice of Defaults......................................... 54
Section 603. Certain Rights of Trustee.................................. 54
Section 604. Not Responsible for Recitals or Issuance of Securities..... 56
Section 605. May Hold Securities........................................ 56
Section 606. Money Held in Trust........................................ 56
Section 607. Compensation and Reimbursement............................. 56
Section 608. Disqualification; Conflicting Interests.................... 57
Section 609. Corporate Trustee Required; Eligibility.................... 57
</TABLE>
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NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
iv
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 610. Resignation and Removal; Appointment of Successor.......... 57
Section 611. Acceptance of Appointment by Successor..................... 59
Section 612. Merger, Conversion, Consolidation or Succession to
Business................................................. 60
Section 613. Preferential Collection of Claims Against Company.......... 61
Section 614. Appointment of Authenticating Agent........................ 61
ARTICLE SEVEN
-------------
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders.. 63
Section 702. Preservation of Information; Communications to Holders..... 63
Section 703. Reports by Trustee......................................... 64
Section 704. Reports by Company......................................... 64
ARTICLE EIGHT
-------------
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 801. Company May Consolidate, Etc., Only on Certain Terms....... 65
Section 802. Successor Substituted...................................... 66
ARTICLE NINE
------------
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders......... 67
Section 902. Supplemental Indentures with Consent of Holders............ 68
Section 903. Execution of Supplemental Indentures....................... 70
Section 904. Effect of Supplemental Indentures.......................... 70
Section 905. Conformity with Trust Indenture Act........................ 70
</TABLE>
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NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
v
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 906. Reference in Securities to Supplemental Indentures......... 70
ARTICLE TEN
-----------
COVENANTS
Section 1001. Payment of Principal, Premium and Interest................. 70
Section 1002. Maintenance of Office or Agency............................ 71
Section 1003. Money for Securities Payments to Be Held in Trust.......... 72
Section 1004. Corporate Existence........................................ 74
Section 1005. Maintenance of Properties.................................. 74
Section 1006. Limitation on Liens........................................ 74
Section 1007. Limitation on Sale and Lease-Back.......................... 76
Section 1008. Statement by Officers as to Default........................ 77
Section 1009. Waiver of Certain Covenants................................ 77
Section 1010. Payment of Additional Amounts.............................. 77
ARTICLE ELEVEN
--------------
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article................................... 78
Section 1102. Election to Redeem; Notice to Trustee...................... 78
Section 1103. Selection by Trustee of Securities to Be Redeemed.......... 79
Section 1104. Notice of Redemption....................................... 79
Section 1105. Deposit of Redemption Price................................ 80
Section 1106. Securities Payable on Redemption Date...................... 80
Section 1107. Securities Redeemed in Part................................ 81
ARTICLE TWELVE
--------------
SINKING FUNDS
Section 1201. Applicability of Article................................... 82
</TABLE>
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NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
vi
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C>
Section 1202. Satisfaction of Sinking Fund Payments with Securities...... 82
Section 1203. Redemption of Securities for Sinking Fund.................. 83
ARTICLE THIRTEEN
----------------
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance........................ 83
Section 1302. Defeasance and Discharge................................... 83
Section 1303. Covenant Defeasance........................................ 84
Section 1304. Conditions to Defeasance and Covenant Defeasance........... 84
Section 1305. Deposited Money and U.S. Government Obligations to be Held
in Trust; Other Miscellaneous Provisions................. 87
ARTICLE FOURTEEN
----------------
MEETINGS OF HOLDERS
Section 1401. Purposes of Which Meetings May be Called................... 87
Section 1402. Call, Notice and Place of Meetings......................... 88
Section 1403. Persons Entitled to Vote at Meetings....................... 88
Section 1404. Quorum; Action............................................. 88
Section 1405. Determination of Voting Rights; Conduct and Adjournment of
Meetings................................................. 90
Section 1406. Counting Votes and Recording Action of Meetings............ 91
TESTIMONIUM............................................................... 92
SIGNATURES AND SEAL....................................................... 93
ACKNOWLEDGMENTS........................................................... 93
</TABLE>
- --------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
vii
<PAGE>
<TABLE>
<CAPTION>
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----
<S> <C>
EXHIBIT A................................................................. 94
EXHIBIT B................................................................. 96
</TABLE>
- -------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
viii
<PAGE>
THE MEAD CORPORATION
Certain Sections of this Indenture relating to
Sections 310 through 318, inclusive, of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
(S) 310(a)(1) 609
(a)(2) 609
(a)(3) Not Applicable
(a)(4) Not Applicable
(b) 608
610
(S) 311(a) 613
(b) 613
(S) 312(a) 701
702(a)
(b) 702(b)
(c) 702(c)
(S) 313(a) 703(a)
(b) 703(a)
(c) 703(a)
(d) 703(b)
(S) 314(a) 704
(a)(4) 101
1004
(b) Not Applicable
(c)(1) 102
(c)(2) 102
(c)(3) Not Applicable
(d) Not Applicable
(e) 102
(S) 315(a) 601
(b) 602
(c) 601
(d) 601
(e) 514
(S) 316(a) 101
(a)(1)(A) 502
512
(a)(1)(B) 513
(a)(2) Not Applicable
(b) 508
(c) 104(c)
(S) 317(a)(1) 503
(a)(2) 504
(b) 1003
(S) 318(a) 107
</TABLE>
- ---------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
INDENTURE, dated as of February 1, 1993, between THE MEAD CORPORATION, a
corporation duly organized and existing under the laws of the State of Ohio
(herein called the "Company"), having its principal office at Courthouse Plaza
Northeast, Dayton, Ohio 45463, and The First National Bank of Chicago, a
national banking association duly organized and existing under the laws of the
United States of America as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to
them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
<PAGE>
(4) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" means any Person, other than a Subsidiary, in which the Company
and/or any Subsidiary at any time owns, directly or indirectly, an aggregate of
at least 50% of the voting stock.
"Appraised Value" means the fair market value as determined on the
appraisal date or dates by an "expert" acceptable to the Trustee and the
Company. The term "Appraisal Date" as used in this paragraph shall mean: (a) the
date or dates on which the appraisals conducted during 1989 were completed,
which appraisals were finalized on November 2, 1989; and (b) thereafter, such
later date or dates, if any, which is five years after the last previous
appraisal date under this Indenture, provided that the Company may, at its
option by thirty days' written notice to the Trustee, fix any appraisal date at
any date which is not less than two and one-half years nor more than five years
after the last previous appraisal date under this Indenture.
"Attributable Debt" means, as to any particular lease entered into after
the date hereof under which any Person is at the time liable and at any date as
of which the amount thereof is to be determined, the total net amount of rent
required to be paid by such Person under such lease during the remaining term
thereof, discounted from the respective due dates thereof to such date at a rate
equal to the weighted average of the interest rates borne by the Securities. The
net amount of rent required to be paid under any such lease for any such period
shall be the aggregate amount of the rent payable by the lessee with respect to
such period after excluding amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water and utility rates
and similar charges. In the case of any lease which is terminable by the lessee
upon the payment of a penalty, such net amount shall also include the amount of
such penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated.
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper in an official language of the
country of publication or in the English language, in either case customarily
published on each Business Day, whether
2
<PAGE>
or not published on Saturdays, Sundays or holidays, and of general circulation
in the place in connection with which the term is used or in the financial
community of such place. Where successive publications are required to be made
in Authorized Newspapers, the successive publications may be made in the same or
in different newspapers in the same city meeting the foregoing requirements and
in each case on any Business Day.
"Bearer Security" means any Security in the form of bearer securities
established pursuant to Section 201 that is payable to bearer.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" when used with respect to any Place of Payment or any other
particular location referred to in the Indenture or in the Securities, means,
except as may otherwise be provided in the form of Securities of any particular
series pursuant to the provisions of this Indenture, each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in that Place of Payment are authorized or obligated by law to close.
"CEDEL S.A." means Centrale de Livraison de Valeurs Mobilieres S.A.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
3
<PAGE>
"Consolidated Shareholders' Equity" means the sum of the consolidated
shareholders' equity of the Company and its consolidated subsidiaries, as shown
on the most recent audited consolidated balance sheet of the Company plus 75% of
the excess of the "Appraised Value" (as herein defined) of all timberlands owned
by the Company and its Subsidiaries over the book value thereof.
"Corporate Trust Office" means the principal office of the Trustee in
Chicago, Illinois at which at any particular time its corporate trust business
shall be administered.
"Corporation" includes corporations, associations, companies, joint-stock
companies or business trusts.
The term "coupon" means any interest coupon appertaining to a Bearer
Security.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depositary by the Company pursuant to Section 301 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
such series shall mean the Depositary with respect to the Securities of that
series.
"Designated Currency" has the meaning specified in Section 312.
"Dollar" or "$" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
"ECU" means the European Currency Unit as defined and revised from time to
time by the Council of the European Communities.
"Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels
office, or its successor as operator of the Euro-clear System.
"European Communities" means the European Economic Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 501.
4
<PAGE>
"Exchange Rate" means the exchange rate set forth in the Officers'
Certificate or supplemental indenture establishing a series of Securities
pursuant to Section 301.
"Exempted Indebtedness" means, as of any particular time, the sum of (i)
the aggregate principal amount of all then outstanding indebtedness for money
borrowed of the Company and Subsidiaries issued, assumed or guaranteed directly
or indirectly after the date of this Indenture and secured by any mortgage,
security interest, pledge, lien or other encumbrance other than those permitted
by paragraph (a) of Section 1006 and (ii) all Attributable Debt in respect of
Sale and Lease-Back Transactions (as defined in Section 1007) incurred after the
date of this Indenture and at such time outstanding other than that permitted
pursuant to paragraph (a) of Section 1007.
"Experts," except as otherwise herein specifically provided, the engineer,
appraiser, accountant, counsel or other person giving any opinion, certificate,
audit or report provided for herein shall be selected by the Board of Directors
and shall not be disqualified by reason of his regular employment or retention
by the Company, but in all cases such selection of the Board of Directors must
be acceptable to the Trustee. In any case, more than one person of the
designated class may join in any such opinion, certificate, audit or report,
each certifying to a party of the required facts, opinions or conclusions. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for herein shall conform to the requirements of Section 102.
"Foreign Currency" means a currency issued by the government of any country
other than the United States of America.
"Global Security" means a Registered or Bearer Security evidencing all or
part of a series of Securities, issued to the Depositary for such series or its
nominee in accordance with Section 303, and bearing the legend prescribed in
Section 303.
"Holder," with respect to a Registered Security, means a Person in whose
name such Registered Security is registered in the Security Register and, with
respect to a Bearer Security or a coupon, means the bearer thereof.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument, and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular series of Securities
established as contemplated by Section 301.
5
<PAGE>
"Interest," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Maturity," when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
the Controller or an Assistant Controller, of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
------
(i) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities are to be
--------
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made;
(iii) Securities for whose payment or redemption money or U.S. Government
Obligations as contemplated by Section 1304 in the necessary amount have
been theretofore deposited with the Trustee (or another trustee satisfying
the requirements of Section 609) in trust for the Holders of such
Securities in accordance with Section 1305; and
6
<PAGE>
(iv) Securities which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
- -------- -------
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 502, (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units shall be the
U.S. dollar equivalent, determined in the manner provided as contemplated by
Section 301 on the date of original issuance of such Security, of the principal
amount (or, in the case of an Original Issue Discount Security, the U.S. dollar
equivalent on the date of original issuance of such Security of the amount
determined as provided in (i) above) of such Security, and (iii) Securities
owned by the Company or any other obligor upon the Securities or any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or with such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any such Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or with such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment," when used with respect to the Securities of any series
payable in Dollars, means the Corporate Trust Office of the Trustee, when used
with respect to the Securities of any series payable in a Foreign Currency,
means the place or places
7
<PAGE>
where such Foreign Currency is the legal tender, and, when used with respect to
the Securities of any series, means such other place or places, if any, where
the principal of (and premium, if any) and any interest on the Securities of
that series are payable as specified as contemplated by Section 301, in all
cases subject to the provisions of Section 1002.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Property" means (i) any paperboard, paper or pulp mill or any
paper converting plant or foundry or any other manufacturing plant or facility
located within the United States of America or Canada of the Company or any
Subsidiary except any such plant or facility which the Board of Directors by
resolution declares is not of material importance to the total business
conducted by the Company and its Subsidiaries as an entirety and (ii) any timber
or timberlands of the Company or any Subsidiary.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security in the form of registered
securities established pursuant to Section 201 that is registered in the
Security Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture. Where appropriate in the context of this Indenture, the term
"Securities" includes any coupon appertaining to any Bearer Securities.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
8
<PAGE>
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means any corporation at least a majority of the outstanding
securities of which having ordinary voting power to elect a majority of the
board of directors of such corporation (whether or not any other class of
securities has or might have voting power by reason of the happening of a
contingency) is at the time owned or controlled directly or indirectly by the
Company, or by one of more Subsidiaries, or by the Company and one or more
Subsidiaries.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder, and if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
-------- -------
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"United States" means the United States of America (including the States
thereof and the District of Columbia), and its possessions, which include Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
"United States Alien" means any Person who, for United States Federal
income tax purposes, is a foreign corporation, a non-resident alien individual,
a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States Federal
income tax purposes, a foreign corporation, a non-resident alien individual or a
non-resident alien fiduciary of a foreign estate or trust.
"U.S. Government Obligations" has the meaning specified in Section 1304.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
9
<PAGE>
Section 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the
10
<PAGE>
matters upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion of counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders; Record Dates.
-----------------------------
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. If Securities of a series
are issuable in whole or part as Bearer Securities, any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Holders may, alternatively, be embodied
in and evidenced by the record of Holders of Securities voting in favor thereof,
either in person or by proxies duly appointed in writing, at any meeting of
Holders of Securities duly called and held in accordance with the provisions of
Article Fourteen, or a combination of such instruments and any such record. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1406.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
11
<PAGE>
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the Security
Register.
(d) The principal amount and serial numbers of Bearer Securities held by
any Person, and the date of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any trust
company, bank, banker or other depositary, wherever situated, if such
certificate shall be deemed by the Trustee to be satisfactory, showing that at
the date therein mentioned such Person had on deposit with such depositary, or
exhibited to it, the Bearer Securities in the amount and with the serial numbers
therein described; or such facts may be proved by the certificate or affidavit
of the Person holding such Bearer Securities, if such certificate or affidavit
is deemed by the Trustee to be satisfactory. The Trustee and the Company may
assume that such ownership of any Bearer Security continues until (1) another
certificate or affidavit bearing a later date issued in respect of the same
Bearer Securities is produced, or (2) such Bearer Security is produced to the
Trustee by some other Person, or (3) such Bearer Security is surrendered in
exchange for a Registered Security, or (4) such Bearer Security is no longer
outstanding.
(e) The fact and date of execution of any such instrument or writing, the
authority of the Person executing the same and the principal amount and serial
numbers of Bearer Securities held by the Person so executing such instrument or
writing and the date of holding the same may also be proved in any other manner
which the Trustee deems sufficient; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this Section.
(f) If the Company shall solicit from the Holders of Securities of any
series any request, demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, by Board Resolution, fix in advance a
record date for the determination of Holders of Registered Securities entitled
to give such request, demand, authorization, direction, notice, consent, waiver
or other Act, but the Company shall have no obligation to do so. Any such record
date shall be fixed at the Company's discretion. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent and waiver or
other Act may be sought or given before or after the record date, but only the
Holders of Registered Securities of record at the close of business on such
record date shall be deemed to be Holders of Registered Securities for the
purpose of determining whether Holders of the requisite proportion of Securities
of such series Outstanding have authorized or agreed or consented to such
request, demand,
12
<PAGE>
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Registered Securities of such series outstanding shall be computed
as of such record date.
(g) For purposes of determining the principal amount of Outstanding
Securities of any series the Holders of which are required, requested or
permitted to give any request, demand, authorization, direction, notice,
consent, waiver or take any other Act under this Indenture and for purposes of
determining whether a quorum is present at a meeting of Holders of Securities
(i) each Original Issue Discount Security shall be deemed to have the principal
amount determined by the Trustee that would be due and payable upon acceleration
of the Maturity thereof pursuant to Section 502 and the terms of such Original
Issue Discount Security as of the date such Act is delivered to the Trustee and,
where it is hereby expressly required, the Company and (ii) each Security
denominated in a Foreign Currency or composite currency shall be deemed to have
the principal amount determined by the exchange rate agent specified pursuant to
Section 301 by converting the principal amount of such Security in the currency
in which such Security is denominated into Dollars at the Exchange Rate as of
the date such Act is delivered to the Trustee and, where it is hereby expressly
required, to the Company (or, if there is no such rate on such date, such rate
as determined by such exchange rate agent).
(h) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
Section 105. Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument or
13
<PAGE>
at any other address previously furnished in writing to the Trustee by the
Company.
Section 106. Notice to Holders; Waiver.
-------------------------
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of any event, (1) such notice shall be
sufficiently given to Holders of Registered Securities if in writing and mailed,
first-class postage prepaid, to each Holder of a Registered Security affected by
such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice; and (2) such notice shall be sufficiently given to
Holders of Bearer Securities if published in an Authorized Newspaper in The City
of New York and, if the Securities of such series are then listed on the London
Stock Exchange and such stock exchange shall so require, in London and, if the
Securities of such series are then listed on the Luxembourg Stock Exchange and
such stock exchange shall so require, in Luxembourg and, if the Securities of
such series are then listed on any other stock exchange outside the United
States and such stock exchange shall so require, in any other required city
outside the United States or, if not practicable, in Europe on a Business Day at
least twice, the first such publication to be not earlier than the earliest date
and not later than the latest date prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee, including
publication, if necessary, shall constitute a sufficient notification for every
purpose hereunder.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as provided
above, then such notification to Holders of Bearer Securities as shall be given
with the approval of the Trustee, including publication
14
<PAGE>
in any newspapers, shall constitute sufficient notice to such Holders for every
purpose hereunder. Neither failure to give notice by publication to Holders of
Bearer Securities as provided above, nor any defect in any notice so published,
shall affect the sufficiency of any notice so mailed to Holders of Registered
Securities as provided above.
Any request, demand, authorization, direction, notice, consent, election,
waiver or other Act required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
Section 107. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded as the case may be.
Section 108. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
15
<PAGE>
Section 112. Governing Law.
-------------
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 113. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, provided that no interest shall accrue for the period from and after
--------
such Interest Payment Date, Redemption Date or Stated Maturity, as the case may
be.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
---------------
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any
16
<PAGE>
other manner, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
------------------------
[Insert any legend required by the Internal Revenue Code and the
---------------------------------------------------------------
regulations thereunder.]
- ----------------------
THE MEAD CORPORATION
No. $
--------- --------
THE MEAD CORPORATION, a corporation duly organized and existing under the
laws of the State of Ohio (herein called the "Company," which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ..........................................,
or registered assigns, the principal sum of ..................
................... Dollars on ........................... [if the Security is
------------------
to bear interest prior to Maturity, insert --, and to pay interest thereon from
- ------------------------------------------
............ or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semi-annually on .......... and ............ in
each year, commencing ............, at the rate of ......% per annum, until the
principal hereof is paid or made available for Payment [if applicable,
-------------
insert-- , and (to the extent that the payment of such interest shall be legally
- ------
enforceable) at the rate of ......% per annum on any overdue principal and
premium and on any overdue installment of interest]. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the ............ or
........... (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture].
17
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[If the Security is not to bear interest prior to Maturity, insert--The
--------------------------------------------------------- ------
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of ....% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of .....% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable
-------------
insert -- any such] interest on this Security will be made at the office or
- ------
agency of the Company maintained for that purpose in .........., in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable, insert -- ;
------------- ------
provided, however, that at the option of the Company payment of interest may be
- -------- -------
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
THE MEAD CORPORATION
By _________________
Attest:
__________________
18
<PAGE>
Section 203. Form of Reverse of Security.
---------------------------
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of February , 1993 (herein called the
"Indenture"), between the Company and The First National Bank of Chicago, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof[, limited in aggregate principal amount to
$....... ].
[If applicable, insert -- The Securities of this series are subject to
------------- ------
redemption upon not less than 30 days' notice by mail, [if applicable, insert --
---------------------
(1) on ........ in any year commencing with the year ........ and ending with
the year ........ through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time [on
or after ......., 19..], as a whole or in part, at the election of the Company,
at the following Redemption Prices (expressed as percentages of the principal
amount): If redeemed [on or before ............, ___%, and if redeemed] during
the 12-month period beginning............. of the years indicated,
Redemption Redemption
Year Price Year Price
- ---- ----- ---- -----
and thereafter at a Redemption Price equal to .......% of the principal amount,
together in the case of any such redemption [if applicable, insert --(whether
------------- ------
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant
19
<PAGE>
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert -- The Securities of this series are subject to
---------------------
redemption upon not less than 30 days' notice by mail, (1) on ............. in
any year commencing with the year .... and ending with the year .... through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [on or
after .............], as a whole or in part, at the election of the Company, at
the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the
table below: If redeemed during the 12-month period beginning ............ of
the years indicated,
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
- ---- ----------------- ----------------------
and thereafter at a Redemption Price equal to ......% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to ...........,
redeem any Securities of this series as contemplated by [Clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding operation
by the application, directly or indirectly, of moneys borrowed having an
interest cost to the Company (calculated in accordance with generally accepted
financial practice) of less than .......% per annum.]
20
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[The sinking fund for this series provides for the redemption on ....... in
each year beginning with the year ....... and ending with the year ....... of
[not less than $ ....... ("mandatory sinking fund") and not more than ("optional
sinking fund")] $ ....... aggregate principal amount of Securities of this
series. Securities of this series acquired or redeemed by the Company otherwise
than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made [in
the inverse order in which they become due].]
[If the Security is subject to redemption, insert -- In the event of
------------------------------------------------
redemption of this Security in part only, a new Security or Securities of this
series and of like tenor for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.]
[The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Securities of this series and (b) certain restrictive
covenants and other provisions, in each case upon compliance by the Company with
certain conditions set forth therein, which provisions apply to the Securities
of this series.]
[If the Security is not an Original Issue Discount Security, insert -- If
------------------------------------------------------------------
an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert -- If an
--------------------------------------------------------------
Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- insert formula for determining the
----------------------------------
amount. Upon payment (i) of the amount of principal so declared due and payable
- ------
and (ii) of interest on any overdue principal and overdue interest (in each case
to the extent that the payment of such interest shall be legally enforceable),
all of the Company's obligations in respect of the payment of the principal of
and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of 66-2/3% in principal amount of the Securities at
the time Outstanding of each series to be
21
<PAGE>
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series,
to waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange therefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company in any place where the principal of (and premium, if any)
and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $..... and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for
22
<PAGE>
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Section 204. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
As Trustee
By
---------------------------------
Authorized Officer
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.
------------------------------------
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1107 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
23
<PAGE>
(3) the date or dates on which the principal of the Securities of the
series is payable;
(4) the rate or rates at which the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall accrue,
the Interest Payment Dates on which any such interest shall be payable and
the Regular Record Date for any interest payable on any Interest Payment
Date;
(5) the place or places where the principal of (and premium, if
any) and interest on Securities of the series shall be payable;
(6) the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the series may
be redeemed, in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(8) the denominations in which Registered Securities of the series, if
any, shall be issuable, if other than denominations of $1,000 and any
integral multiple thereof, and the denominations in which Bearer Securities
of the series, if any, shall be issuable if other than the denomination of
$5,000;
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
502;
(10) the application, if any, of either or both of Section 1302 and
Section 1303 to the Securities of the series;
(11) whether Bearer Securities of the series are to be issuable and,
if so, whether Registered Securities of the series are also to be issuable;
(12) if Bearer Securities of the series are to be issuable, (x)
whether interest in respect of any portion of a temporary Security in
global form (representing all
24
<PAGE>
of the Outstanding Bearer Securities of the series) payable in respect of
any Interest Payment Date prior to the exchange of such temporary Security
for definitive Securities of the series shall be paid to any clearing
organization with respect to the portion of such temporary Security held
for its account and, in such event, the terms and conditions (including any
certification requirements) upon which any such interest payment received
by a clearing organization will be credited to the Persons entitled to
interest payable on such Interest Payment Date, and (y) the terms upon
which interests in such temporary Security in global form may be exchanged
for interests in a permanent Global Security or for definitive Securities
of the series and the terms upon which interests in a permanent Global
Security, if any, may be exchanged for definitive Securities of the series;
(13) whether the Securities of the series shall be issued in whole or
in part in the form of one or more Global Securities and, in such case, the
Depositary for such Global Security or Securities;
(14) if other than Dollars, the currency of denomination of the
Securities of any series, which may be in Dollars, any Foreign Currency or
any composite currency, including but not limited to the ECU, and, if such
currency of denomination is a composite currency other than the ECU, the
agency or organization, if any, responsible for overseeing such composite
currency;
(15) if other than Dollars, the currency or currencies in which
payment of the principal of (and premium, if any) and interest on the
Securities of the series will be made, and the currency or currencies, if
any, in which payment of the principal of (and premium, if any) or the
interest on Registered Securities of the series, at the election of each of
the Holders thereof, may also be payable, and the periods within which and
the terms and conditions upon which such election is to be made, the manner
in which the exchange rate with respect to such payment shall be determined
and the agent appointed by the Company in connection with the determination
of the exchange rate, and whether Section 312 will be applicable to
Securities of the Series, and the manner of determining the equivalent
thereof in Dollars for purposes of the definition of "Outstanding" in
Section 101;
(16) if the amount of payments of principal of (and premium, if any)
or interest on the Securities of
25
<PAGE>
the series may be determined with reference to an index, the manner in
which such amounts shall be determined;
(17) whether and under what conditions additional amounts shall be
payable to Holders of Securities pursuant to or in a manner different from
Section 1010; and
(18) any other terms of the series or covenants for the benefit
thereof (which terms or covenants shall not be inconsistent with the
provisions of this Indenture, except as permitted by Section 901(5)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or
pursuant to the Board Resolution referred to above and (subject to Section
303) set forth, or determined in the manner provided, in the Officers'
Certificate referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of the series.
Securities of any particular series may be issued at various times,
with different dates on which the principal or any installment of principal
is payable, with different rates of interest, if any, or different methods
by which rates of interest may be determined, with different dates on which
such interest may be payable, with different Redemption Dates and may be
denominated in different currencies or payable in different currencies.
Section 302. Denominations.
-------------
Unless otherwise provided as contemplated by Section 301 with respect
to the Securities of any series, the Securities of such series shall be
issuable in denominations of $1,000 and any integral multiple thereof,
except that Bearer Securities of each series, if any, shall be issuable in
the denomination of $5,000.
Section 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one
of its Vice Presidents, under its corporate seal reproduced thereon
attested by its Secretary or one of its Assistant Secretaries. The
signature of any of
26
<PAGE>
these officers on the Securities may be manual or facsimile. Coupons shall bear
the facsimile signature of the Treasurer or any Assistant Treasurer of the
Company.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any Series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities; provided,
---------
however, that in connection with its original issuance, no Bearer Security
- -------
(including any Security in global form that is either a Bearer Security or
exchangeable for Bearer Securities) or Security delivered in exchange for an
interest in the temporary Global Security shall be mailed or otherwise delivered
to any location in the United States; and provided further that a Bearer
Security (other than a temporary Global Security) and any Security delivered in
exchange for an interest in the temporary Global Security may be delivered, in
connection with its original issuance, only if the Person entitled to receive
such Security shall have furnished a certificate in the form set forth in
Exhibit A to this Indenture, dated no earlier than 15 days prior to (i) any
Interest Payment Date that occurs prior to the Exchange Date (as defined in
Section 304) with respect to a temporary Global Security for such Security or
(ii) the earlier of the date on which such Security is delivered or the date on
which any temporary Global Security first becomes exchangeable for such
Securities in accordance with the terms of such temporary Security or this
Indenture. If any Security is represented by a permanent Global Security then,
for the purposes of this Section and Section 304, the notation of a beneficial
owner's interest therein upon original issuance of such Security or upon
exchange of a portion of a temporary Global Security shall be deemed to be
delivery in connection with its original issuance of such beneficial owner's
interest in such permanent Global Security. To the extent authorized in or
pursuant to a Board Resolution and set forth in an Officers' Certificate, or
established in one or more indentures supplemental hereto, such Company Order
may be given by any one officer of the Company, may be electronically
transmitted, and may provide instructions as to registration of holders,
principal amounts, rates of interest, maturity dates and other matters
contemplated by such Board Resolution and Officers' Certificate or supplemental
indenture to be so instructed in respect thereof. Before
27
<PAGE>
authorizing and delivering the first Securities of any series (and upon
reasonable request of the Trustee thereafter), the Company shall deliver to the
Trustee (i) the certificates called for under Sections 201 and 301 hereof and
(ii) an Opinion of Counsel described in the next sentence. If the form or terms
of the Securities of the series have been established in or pursuant to one or
more Board Resolutions as permitted by Sections 201 and 301, in authenticating
such Securities, and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating,
(a) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been established in conformity with the provisions of this Indenture;
and
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
If the Company shall establish pursuant to Section 301 that the
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall,
in accordance with this Section and the Company Order with respect to such
series, authenticate and deliver one or more Global Securities in temporary or
permanent form that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal
28
<PAGE>
amount of Outstanding Securities of such series to be represented by one or more
Global Securities; (ii) shall be registered, if in registered form, in the name
of the Depositary for such Global Security or Securities or the nominee of such
Depositary; (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions; and (iv) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for Securities in definitive form in accordance with the
provisions of the Indenture and the terms of the Securities, this Security may
not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
Each Depositary designated pursuant to Section 301 for a Global Security
in registered form must, at the time of its designation and at all times while
it serves as Depositary, be a clearing agency registered under the Securities
Exchange Act of 1934 and any other applicable statute or regulation.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
Each Registered Security shall be dated the date of its authentication.
Each Bearer Security shall be dated as of the date specified as contemplated by
Section 301.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Except as permitted by
Section 306 or 307, the Trustee shall not authenticate and deliver any Bearer
Security unless all appurtenant coupons for interest then matured have been
detached and cancelled. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by
the Company, and the Company shall deliver such Security to the Trustee for can-
29
<PAGE>
cellation as provided in Section 309, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Securities.
--------------------
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued, in
registered form or, if authorized, in bearer form with one or more coupons or
without coupons, and with such appropriate insertions, omissions, substitutions
and other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities. In the case of any series
issuable as Bearer Securities, such temporary Securities may be in global form
and shall be delivered only in compliance with the applicable conditions set
forth in Section 303.
Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of the following paragraphs), if
temporary Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. Except as
otherwise specified or contemplated in Section 301 with respect to a series of
Securities issuable as Bearer Securities, after the preparation of definitive
Securities of such series, the temporary Securities of such series shall be
exchangeable for definitive Securities of such series upon surrender of the
temporary Securities of such series at the office or agency of the Company
maintained pursuant to Section 1002 in a Place of Payment for such series for
the purpose of exchanges of Securities of such series, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Securities
of any series (accompanied by any unmatured coupons appertaining thereto) the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like aggregate principal amount of definitive Securities of the same
series and of like tenor of authorized denominations; provided, however, that no
-------- -------
definitive Bearer Security shall be issued in exchanged for a temporary
Registered Security.
If temporary Securities of any series are issued in global form, any such
temporary Global Security shall, unless otherwise provided therein, be delivered
to the London office of a depositary or common depositary (the "Common
Depositary"), for the benefit of Euro-clear and CEDEL S.A. for credit to the
30
<PAGE>
respective accounts of the beneficial owners of such Securities (or to such
other accounts as they may direct).
Without unnecessary delay but in any event not later than the date
specified in, or determined pursuant to the terms of, any such temporary Global
Security of a series (the "Exchange Date"), the Company shall deliver to the
Trustee definitive Securities of that series in aggregate principal amount equal
to the principal amount of such temporary Global Security, executed by the
Company. On or after the Exchange Date such temporary Global Security shall be
surrendered by the Common Depositary to the Trustee, as the Company's agent for
such purpose, to be exchanged, in whole or from time to time in part, for
definitive Securities of that series, without charge and the Trustee shall
authenticate and deliver, in exchange for each portion of such temporary Global
Security a like aggregate principal amount of definitive Securities of the same
series of authorized denominations and of like tenor as the portion of such
temporary Global Security to be exchanged; provided, however, that, unless
-------- -------
otherwise specified in such temporary Global Security, or unless interest is
payable on the temporary Global Security on an Interest Payment Date occurring
prior to the Exchange Date for Securities of such series and the certifications
described in the second succeeding paragraph hereafter is provided, upon such
presentation by the Common Depositary, such temporary Global Security is
accompanied by a certificate dated the Exchange Date or a subsequent date and
signed by Euro-clear as to the portion of such temporary Global Security held
for its account then to be exchanged and a certificate dated the Exchange Date
or a subsequent date and signed by CEDEL S.A. as to the portion of such
temporary Global Security held for its account then to be exchanged, each in the
form set forth in Exhibit B to this Indenture. The definitive Securities to be
delivered in exchange for any such temporary Global Security shall be in bearer
form, registered form, permanent global bearer form or permanent global
registered form, or any combination thereof, as specified as contemplated by
Section 301, and, if any combination thereof is so specified, as requested by
the beneficial owner thereof, provided, however that definitive Securities shall
-------- -------
be delivered ln exchange for a portion of a temporary Global Security only in
compliance with the requirements of Section 303.
Unless otherwise specified in such temporary Global Security, the interest
of a beneficial owner of Securities of a series in a temporary Global Security
shall be exchanged for definitive Securities of the same series and of like
tenor following the Exchange Date upon the receipt by Euro-clear or CEDEL S.A.,
as the case may be, of a certificate in the form set forth in Exhibit A to this
Indenture, dated no earlier than 15 days prior to (i) any Interest Payment Date
that occurs prior to the Exchange Date or (ii) the Exchange Date, copies of
31
<PAGE>
which certificate shall be available from the offices of Euro-clear and CEDEL
S.A., the Trustee, any Authenticating Agent appointed for such series of
Securities and each Paying Agent. Unless otherwise specified in such temporary
Global Security, any such exchange shall be made free of charge to the
beneficial owners of such temporary Global Security, except that a Person
receiving definitive Securities must bear the cost of insurance, postage,
transportation and the like in the event that such Person does not take delivery
of such definitive Securities in person at the offices of Euro-clear or CEDEL
S.A. Definitive Securities to be delivered in exchange for any portion of a
temporary Global Security shall be delivered only outside the United States.
Until exchanged in full as hereinabove provided, the temporary Securities of
any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series and of like tenor
authenticated and delivered hereunder, except that no interest shall be payable
on a temporary Global Security on any Interest Payment Date occurring after the
Exchange Date for Securities of such series. Unless otherwise specified as
contemplated by Section 301, interest payable on a temporary Global Security on
any Interest Payment Date prior to the Exchange Date for Securities of such
series shall be payable to Euro-clear and CEDEL S.A. on such Interest Payment
Date only upon delivery by Euro-clear and CEDEL S.A. to the Trustee of a
certificate or certificates in the form set forth in Exhibit B to this
Indenture, dated no earlier than 15 days prior to the Interest Payment Date, for
credit without further interest on or after such Interest Payment Date to the
respective accounts of the Persons for which Euro-clear or CEDEL S.A., as the
case may be, holds such temporary Global Security on such Interest Payment Date
and who have each delivered to Euro-clear and CEDEL S.A., as the case may be, a
certificate in the form set forth in Exhibit A to this Indenture.
Notwithstanding anything to the contrary herein contained, the certifications
made pursuant to this paragraph shall satisfy the certification requirements of
the preceding two paragraphs of this Section 304 and of the tenth paragraph of
Section 305. The delivery of such certification by Persons for whom Euro-clear
or CEDEL S.A., as the case may be, holds such temporary Global Security shall
constitute irrevocable instructions by such Person to Euro-clear or CEDEL S.A.
to exchange such Person's interest in the temporary Global Security for
definitive Securities of the same series and of like tenor on the Exchange Date.
Any interest so received by Euro-clear and CEDEL S.A. and not paid as herein
provided shall be returned to the Trustee immediately prior to the expiration of
two years after such Interest Payment Date in order to be repaid to the Company
in accordance with Section 1003.
32
<PAGE>
Section 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Registered Security of
any series at the office or agency of the Company maintained for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new Registered
Securities of the same series of any authorized denomination or denominations,
of like tenor and aggregate principal amount.
Notwithstanding any other provision of this Section, unless and until it is
exchanged in whole or in part for Securities in definitive form, a Global
Security representing all or a portion of the Securities of a series may not be
transferred except as a whole by a Depositary for such series to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor Depositary for such series or a nominee of such successor Depositary.
At the option of the Holder, Registered Securities of any series (except a
Global Security) may be exchanged for other Registered Securities of the same
series of any authorized denomination or denominations, of a like aggregate
principal amount, upon surrender of the Registered Securities to be exchanged at
such office or agency. Bearer Securities may not be delivered by the Trustee in
exchange for Registered Securities.
At the option of the Holder, except as otherwise specified as contemplated
by Section 301 with respect to a Global Security issued in bearer form, Bearer
Securities of any series may be exchanged for Registered Securities (if the
Securities of such series are issuable as Registered Securities) or Bearer
Securities (if Bearer Securities of such series are issuable in more than one
denomination) of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Bearer
33
<PAGE>
Securities to be exchanged at any such office or agency, with all unmatured
coupons and all matured coupons in default appertaining thereto; provided,
however, delivery of a Bearer Security shall occur only outside the United
States. If the Holder of a Bearer Security is unable to produce any such
unmatured coupon or coupons in default, such exchange may be effected if the
Bearer Securities are accompanied by payment in funds acceptable to the Company
and the Trustee in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons, may be waived by
the Company and the Trustee if there be furnished to them such security or
indemnity as they may required to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agency any such missing coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the amount of such
payment; provided, however, that, except as otherwise provided in Section 1002,
-------- -------
interest represented by coupons shall be payable only upon presentation and
surrender of those coupons at an office or agency located outside the United
States. Notwithstanding the foregoing, in case a Bearer Security of any series
is surrendered at such office or agency in exchange for a Registered Security of
the same series after the close of business at such office or agency on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related date for
payment of Defaulted Interest, such Bearer Security shall be surrendered without
the coupon relating to such Interest Payment Date or proposed date of payment,
as the case may be. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
If at any time the Depositary for the Securities of a series notifies the
Company that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for the Securities of
such series shall no longer be eligible under Section 303, the Company shall
appoint a successor Depositary with respect to the Securities of such series. If
a successor Depositary for the Securities of such series is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility, the Company's election pursuant to Section 301(13) shall
no longer be effective with respect to the Securities of such series and the
Company will execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive form in an
aggregate principal amount
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equal to the principal amount of the Global Security of Securities representing
such series in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more Global Security or
Securities shall no longer be represented by such Global Security or Securities.
In such event the Company will execute, and the Trustee, upon receipt of a
Company Order for the authentication and delivery of definitive Securities of
such series, will authenticate and deliver, Securities of such series in
definitive form and in an aggregate principal amount equal to the principal
amount of the Global Security or Securities representing such series in exchange
for such Global Security or Securities.
If (a) there shall have occurred and be continuing an Event of Default or
an event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to a series of Securities issued in
the form of one or more Global Securities, or (b) if specified by the Company
pursuant to Section 301 with respect to a series of Securities, the Depositary
for such series of Securities may surrender a Global Security for such series of
Securities in exchange in whole or in part for Securities of such series in
definitive form, then the Company shall execute, and the Trustee shall
authenticate and delivery, without service charge:
(i) to each Person specified by such Depositary a new Security or
Securities of the same series, of any authorized denomination as requested
by such Person in aggregate principal amount equal to and in exchange for
such Person's beneficial interest in the Global Security; and
(ii) to such Depositary a new Global Security in a denomination equal
to the difference, if any, between the principal amount of the surrendered
Global Security and the aggregate principal amount of Securities delivered
to Holders thereof.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Securities
(a) in definitive registered form in authorized denominations, if the Securities
of such series are issuable as Registered Securities, (b) in definitive bearer
form in authorized denominations, with coupons attached, if the Securities of
such series are issuable as Bearer Securities or (c) as either Registered or
Bearer Securities, if the Securities of such series are issuable in either form;
provided, however, that no definitive Bearer Security shall be delivered in
exchange for a temporary Global
35
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Security unless the Company or its agent shall have received from the person
entitled to receive the definitive Bearer Security a certificate substantially
in the form set forth in Exhibit A hereto in accordance with Section 303; and
provided further that delivery of a Bearer Security shall occur only outside the
United States; and provided further that no definitive Bearer Security will be
issued if the Company has reason to know that such certificate is false.
Upon the exchange of a Global Security for Securities in definitive form,
such Global Security shall be cancelled by the Trustee. Registered Securities
issued in exchange for a Global Security pursuant to this Section shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
Bearer Securities issued in exchange for a Global Security pursuant to this
Section to the persons, and in such authorized denominations, as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee; provided, however, that
no definitive Bearer Security shall be delivered in exchange for a temporary
Global Security except in accordance with the delivery of a certificate required
by Section 304; and provided further that delivery of a Bearer Security shall
occur only outside the United States; and provided further that no definitive
Bearer Security will be issued if the Company has reason to know that such
certificate is false.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
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<PAGE>
The Company shall not be required during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 1103 and ending
at the close of business on the day of such mailing, (i) to issue, register the
transfer of or exchange Securities of any series or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, or (iii) to exchange any Bearer Security so selected for redemption except
that such a Bearer Security may be exchanged for a Registered Security of that
series (if the Securities of such series are issuable as Registered Securities),
provided that such Registered Security shall be simultaneously surrendered for
redemption with written instruction for payment consistent with the provisions
of this Indenture.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security; provided, however, that
-------- -------
payment of principal of (and premium, if any) and any interest on Bearer
Securities shall, except as otherwise provided in Section 1002, be payable only
at an office or agency located outside the United States; and provided, further,
that, with respect to any such coupons, interest represented thereby (but not
any additional amounts payable as provided in Section 1010), shall be payable
only upon presentation and surrender of the coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed
37
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in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Riqhts Preserved.
----------------------------------------------
Interest on any Registered Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. In case a Bearer Security of any series is surrendered in exchange for
a Registered Security of such series after the close of business (at an office
or agency in a Place of Payment for such series) on any Regular Record Date and
before the opening of business (at such office or agency) on the next succeeding
Interest Payment Date, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date and interest will not be payable
on such Interest Payment Date in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Registered Securities of such series (or
their respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following
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<PAGE>
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of such series and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Registered Securities of such series at his address as it
appears in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Registered Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following Clause (2).
In case a Bearer Security of any series is surrendered at the office or
agency in a Place of Payment for such series in exchange for a Registered
Security of such series after the close of business at such office or
agency on any Special Record Date and before the opening of business at
such office or agency on the related proposed date for payment of Defaulted
Interest, such Bearer Security shall be surrendered without the coupon
relating to such proposed date of payment and Defaulted Interest will not
be payable on such proposed date of payment in respect of the Registered
Security issued in exchange for such Bearer Security, but will be payable
only to the Holder of such coupon when due in accordance with the
provisions of this Indenture.
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such
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exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
---------------------
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of (and premium,
if any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Title to any Bearer Security and any coupons appertaining thereto shall
pass by delivery. The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security and the bearer of any coupon
as the absolute owner of such Bearer Security or coupon for the purpose of
receiving payment thereof or on account thereof and for all other purposes
whatsoever, whether or not such Bearer Security or coupon be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Security, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by a Depositary or impair, as between a Depositary and
holders of beneficial interests in any Global Security, the operation of
customary practices governing the exercise of the rights of the Depositary as
Holder of such Global Security. None of the Company, the Trustee, any Paying
Agent or the Security Registrar will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests of a Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
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Section 309. Cancellation.
------------
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of as directed by a Company
Order.
Section 310. Computation of Interest.
-----------------------
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a year of twelve 30-day months.
Section 311. Certification by a Person Entitled to Delivery of Bearer Security.
-----------------------------------------------------------------
Whenever any provision of this Indenture or a Security contemplates that
certification be given by a Person entitled to delivery of a Bearer Security,
such certification shall be provided substantially in the form of Exhibit A
hereto, with only such changes as shall be approved by the Company.
Section 312. Judgments.
---------
The Company may provide, pursuant to Section 301, for the Securities of any
series that, to the fullest extent provided under applicable law, (a) the
obligation, if any, of the Company to pay the principal of (and premium, if
any) and interest on the Securities of such series and any appurtenant coupons
in a Foreign Currency, composite currency or Dollars (the "Designated Currency")
as may be specified pursuant to Section 301 is of the essence and agree that
judgments in respect of such Securities shall be given in the Designated
Currency; (b) the obligation of the Company to make payments in the Designated
Currency of the principal of (and premium, if any) and interest on such
Securities and any appurtenant coupons shall, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be
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discharged only to the extent of the amount in the Designated Currency that the
Holder receiving such payment may, in accordance with normal banking procedures,
purchase with the sum paid in such other currency (after any premium and cost of
exchange) in the country of issue of the Designated Currency in the case of
Foreign Currency or Dollars or in the international banking community in the
case of a composite currency on the Business Day immediately following the day
on which such Holder receives such payment; (c) if the amount in the Designated
Currency that may be so purchased for any reason falls short of the amount
originally due, the Company shall pay such additional amounts as may be
necessary to compensate for such shortfall; and (d) any obligation of the
Company not discharged by such payment shall be due as a separate and
independent obligation and, until discharged as provided herein, shall continue
in full force and effect.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and any right to receive additional
amounts as provided in Section 1010), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306, (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003, (iii) coupons
appertaining to Bearer Securities surrendered in exchange for Registered
Securities and maturing after such exchange, surrender of which is not
required or has been waived as provided in Section 305, and (iv) coupons
appertaining to Bearer Securities called for redemption and maturing after
the relevant Redemption Date, surrender of which has been waived as
provided in Section 1106) have been delivered to the Trustee for
cancellation; or
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(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust in an
amount sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such deposit
(in the case of Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
--------------------------
Subject to provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
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Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
-----------------
"Event of Default," wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section
specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of series of Securities other than that
series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(5) a default by the Company in the payment of any indebtedness for
borrowed money (including a default with respect to Securities of any
series other than that series), whether such indebtedness now exists or
shall hereafter be created, whether at maturity, by call for
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<PAGE>
redemption, by acceleration, declaration or otherwise, and any period of
grace with respect thereto shall have expired, unless the time for payment
shall have been effectively extended; provided, however, that, subject to
-----------------
the provisions of Sections 601 and 602, the Trustee shall not be charged
with knowledge of any such default unless written notice thereof shall have
been given to the Trustee at its Corporate Trust Office by the Company, by
the holder or an agent of a holder of any such indebtedness, or by the
trustee then acting under any indenture or other instrument under which
such default shall have occurred, or by the holders of not less than 25% in
principal amount of the Outstanding Securities of that series; provided,
--------
however, that if, prior to a declaration of acceleration of the maturity
-------
of the Securities of that series or the entry of judgment in favor of the
Trustee in a suit pursuant to Section 503, such default shall be remedied
or cured by the Company or waived by the holders of such indebtedness, then
the Event of Default hereunder by reason thereof shall be deemed likewise
to have been thereupon remedied, cured or waived without further action
upon the part of either the Trustee or any of the Securityholders; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60
consecutive days; or
(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or
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proceeding against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or
State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing
of its inability to pay its debts generally as they become due, or the
taking of corporate action by the Company in furtherance of any such
action; or
(8) any other Event of Default provided with respect to Securities of
that series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if any of the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount of such Securities as may be specified in the terms
thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of
46
<PAGE>
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such
47
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proceeding to judgment or final decree and may enforce the same against the
Company or any other obligor upon such Securities and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
--------------------------------
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
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such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section 506. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal and any premium and interest,
respectively. Except to the extent otherwise provided in Section 312 if
such Section is specified as applicable to Securities of a particular
series, the Holders of each series of Securities denominated in ECU, any
other composite currency or a Foreign Currency and any matured coupons
relating thereto shall be entitled to receive a ratable portion of the
amount determined by the exchange rate agent specified pursuant to Section
301 by converting the principal amount Outstanding of such series of
Securities and matured but unpaid interest on such series of Securities in
the currency in which such series of Securities is denominated into Dollars
at the Exchange Rate as of the date of declaration of acceleration of the
Maturity of the Securities (or, if there is no such rate on such date,
such rate as determined by such exchange rate agent).
Upon receipt by the Trustee of any declaration of acceleration, or
rescission and annulment thereof, with respect to Securities of a series all or
part of which is represented by a Global Security, the Trustee shall establish a
record date for determining Holders of Outstanding Securities of such
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series entitled to join in such declaration of acceleration, or rescission and
annulment, as the case may be, which record date shall be at the close of
business on the day the Trustee receives such declaration of acceleration, or
rescission and annulment, as the case may be. The Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
join in such declaration of acceleration, or rescission and annulment, as the
case may be, whether or not such Holders remain Holders after such record date;
provided, that unless such declaration of acceleration, or rescission and
- --------
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having been obtained prior to the day which is 90 days
after such record date, such declaration of acceleration, or rescission and
annulment, as the case may be shall automatically and without further action by
any Holder be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder, or a proxy of a Holder, from giving, after expiration of such
90-day period, a new declaration of acceleration, or rescission or annulment
thereof, as the case may be, that is identical to a declaration of acceleration,
or rescission or annulment thereof, which has been cancelled pursuant to the
proviso to the preceding sentence, in which event a new record date shall be
established pursuant to the provisions of this Section 502.
Section 507. Limitation on Suits.
-------------------
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(l) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
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(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 508. Unconditional Right of Holders to Receive Principal Premium and
---------------------------------------------------------------
Interest.
--------
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
any interest on such Security on the Stated Maturity or Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment
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of any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 512. Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities
of such series, provided that
--------
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Upon receipt by the Trustee of any such direction with respect to
Securities of a series all or part of which is represented by a Global Security,
the Trustee shall establish a record date for determining Holders of Outstanding
Securities of such series entitled to join in such direction, which record date
shall be at the close of business on the day the Trustee receives such
direction. The Holders on such record date, or their duly designated proxies,
and only such Persons, shall be entitled to join in such direction, whether or
not such Holders remain Holders after such record date; provided, that unless
--------
such majority in principal amount shall have been obtained prior to the day
which is 90 days after such record date, such direction shall automatically and
without further action by any Holder be cancelled and of no further effect.
Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from
giving, after expiration of such 90-day period, a new direction identical to a
direction which has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant to the
provisions of this Section 512.
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Section 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to waive any past default hereunder.
If a record date is fixed, the Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to waive any
default hereunder, whether or not such Holders remain Holders after such record
date; provided, that unless such majority in principal amount shall have been
--------
obtained prior to the date which is 90 days after such record date, any such
waiver previously given shall automatically and without further action by any
Holder be cancelled and of no further effect.
Section 514. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
--------
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company.
Section 515. Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or
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in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
-----------------------------------
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
Section 602. Notice of Defaults.
------------------
If a default occurs hereunder with respect to Securities of any series, the
Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
--------
however, that in the case of any default of the character specified in Section
- -------
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
Section 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report,
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notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
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negligence on the part of any agent or attorney appointed with due care by
it hereunder.
Section 604. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee or any
Authenticating Agent shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
Section 606. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.
Section 607. Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or
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advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
Section 608. Disqualification; Conflicting Interests.
----------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
Section 609. Corporate Trustee Required; Eligibility.
----------------------------------------
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000 and its Corporate Trust
Office in any State of the United States. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been
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<PAGE>
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to
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the Securities of any Series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee with respect
to the Securities of any Series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
---------------------------------------
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such
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<PAGE>
appointment and which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
as to which the retiring Trustee is not retiring shall continue to be vested in
the retiring Trustee, and (3) shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
paragraph (a) and (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
------------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the
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corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be otherwise qualified and eligible
under this Article, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.
Section 613. Preferential Collection of Claims Against Company.
--------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 614. Appointment of Authenticating Agent.
------------------------------------
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall
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cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
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This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
As Trustee
By ,
--------------------------------
As Authenticating Agent
By
--------------------------------
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
----------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than January 15 and July 15 in each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of the preceding January 1 or July 1, as the case
may be, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
excluding from any such list names and addresses received by the Trustee in its
- ---------
capacity as Security Registrar.
The Trustee shall preserve for at least two years the names and addresses
of Holders of Bearer Securities filed with the Trustee pursuant to Section
703(b).
Section 702. Preservation of Information; Communications to Holders.
-------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar.
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The Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 703. Reports by Trustee.
------------------
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) Reports pursuant to this Section shall be transmitted by mail:
(1) to all Holders of Registered Securities, as the names and
addresses of such Holders appear in the Security Register;
(2) to such Holders of Bearer Securities as have, within the two
years preceding such transmission, filed their names and
addresses with the Trustee for that purpose; and
(3) except in the case of reports pursuant to Subsection (b) of this
Section, to each Holder of a Security whose name and address is
preserved at the time by the Trustee, as provided in Section
702(a).
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
Section 704. Reports by Company.
------------------
The Company shall file with the Trustee and the Commission, and transmit to
Holders, such information,
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documents and other reports, and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act and, as applicable, Section 703(b); provided that any such
--------
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be
filed with the Trustee within 15 days after the same is so required to be filed
with the Commission.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not, and will not permit any Subsidiary to, consolidate
with or merge into any other corporation or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, and the
Company shall not permit any Person to consolidate with or merge into the
Company or any Subsidiary or convey, transfer or lease its properties and assets
substantially as an entirety to the Company or any Subsidiary, unless:
(1) in case the Company shall consolidate with or merge into another
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the corporation formed by
such consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities
(including all additional amounts, if any, payable pursuant to Section
1010) and the performance of every covenant of this Indenture on the part
of the Company to be performed or observed;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary
as a result of such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and
no event which,
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after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, any Principal Property of the Company or of
any Subsidiary, or any indebtedness of or equity securities of any
Subsidiary or Affiliate (but not including any such indebtedness and equity
securities or any other property not owned by the Company or a Subsidiary
immediately prior to any such consolidation, merger, conveyance, transfer
or lease) would become subject to a mortgage, pledge, lien, security
interest or other encumbrance which would not be permitted by this
Indenture, the Company or such successor corporation or Person, as the case
may be, shall take such steps as shall be necessary effectively to secure
the Securities equally and ratably with (or prior to) all indebtedness
secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transactions have been complied with.
Section 802. Successor Substituted.
---------------------
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.
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ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal (or
premium, if any) on Registered Securities or of principal (or premium, if
any) or any interest on Bearer Securities, to permit Registered Securities
to be exchanged for Bearer Securities, provided any such action shall not
adversely affect the interests of the Holders of Securities of any series
or any related coupons in any material respect; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided that any
--------
such addition, change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (B) modify the
rights of the Holder of any such Security with respect to such provision or
(ii) shall become effective only when there is no such Security
Outstanding; or
(6) to secure the Securities pursuant to the requirements of Section
1006 or otherwise; or
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(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 611(b); or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause (9)
--------
shall not adversely affect the interests of the Holders of Securities of
any series in any material respect.
Section 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than 66-2/3% in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
-----------------
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any instalment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or change any obligation of
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the Company to pay additional amounts pursuant to Section 1010 (except as
contemplated by Sections 301 or 801(1) or permitted by Section 901(1)), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or reduce the requirements of Section 1404 of quorum or voting,
or
(3) modify any of the provisions of this Section, Section 513 or
Section 1009, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, provided, however, that this clause shall not be deemed to require
-----------------
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1009, or the
deletion of this proviso, in accordance with the requirements of Sections
611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided, that unless such consent shall have
--------
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
cancelled and of no further effect.
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Section 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the
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principal of (and premium, if any) and interest on the Securities of that series
in accordance with the terms of the Securities and this Indenture. Any interest
due on Bearer Securities on or before Maturity, other than additional amounts,
if any, payable as provided in Section 1010 in respect of principal of (or
premium, if any, on) such a Security, shall be payable only upon presentation
and surrender of the several coupons for such interest installments as are
evidenced thereby as they severally mature.
Section 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. If Securities of a series are issuable as Bearer Securities, the
Company will maintain, subject to any laws or regulations applicable thereto,
(a) an office or agency in a Place of Payment for such series that is located
outside the United States where Securities of such series and the related
coupons may be presented and surrendered for payment (including payment of any
additional amounts payable on Securities of such series pursuant to Section
1010); provided, however, that if the Securities of such series are listed on
the London Stock Exchange or the Luxembourg Stock Exchange or any other stock
exchange located outside the United States and such stock exchange shall so
require, the Company will maintain a Paying Agent in London or Luxembourg or any
other required city located outside the United States, as the case may be, so
long as the Securities of such series are listed on such exchange, and (B) an
office or agency in a Place of Payment for such series that is located outside
the United States where any Registered Securities of such series may be
surrendered for registration of transfer, where securities of that series may be
surrendered for exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and the Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands; provided that Bearer
--------
Securities of that series and the related coupons may be presented and
surrendered for payment (including payment of any additional amounts payable on
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Bearer Securities of that series pursuant to Section 1010) at the place
specified for the purpose pursuant to Section 301 or, if no such place is
specified, at the main office of the Trustee in London.
No payment of principal of or premium or interest on Bearer Securities
shall be made at any office or agency of the Company in the United States or by
check mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States; provided, however, that, if
the Securities are denominated and payable in Dollars, payment of principal of
and any premium and interest (including any additional amounts payable in
respect thereof pursuant to Section 1010) on any Bearer Security shall be made
in Dollars at the Corporate Trust Office of the Trustee in Chicago, Illinois if
(but only if) payment of the full amount of such principal, premium, interest or
additional amounts at all offices outside the United States maintained for the
purpose by the Company in accordance with this Indenture is illegal or
effectively precluded by exchange controls or other similar restrictions.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
-----------------
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
--------------------------------------------------
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with a Paying Agent a
sum
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sufficient to pay such amount such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will (i) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, and upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or received by
the Trustee (or another trustee satisfying the requirements of Section 609) in
respect of U.S. Government Obligations deposited with the Trustee (or such other
trustee) pursuant to Section 1304, or then held by the Company, in trust for the
payment of the principal of (and premium, if any) or interest on any Security of
any series and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent,
-----------------
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in an Authorized Newspaper of general
circulation in the Borough of Manhattan, The City of New York, and each Place of
Payment, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any
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unclaimed balance of such money then remaining will be repaid to the Company.
Section 1004. Corporate Existence.
--------------------
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 1005. Maintenance of Properties.
--------------------------
The Company will cause all properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary and not disadvantageous in any material respect to
the Holders.
Section 1006. Limitation on Liens.
--------------------
(a) The Company will not, nor will it permit any Subsidiary to, issue,
assume or guarantee directly or indirectly any indebtedness for money borrowed
(hereinafter in this Article Ten referred to as "Debt"), if such Debt is secured
by a mortgage, pledge, security interest, lien or other encumbrance (any such
mortgage, pledge, security interest, lien or other encumbrance being hereinafter
in this Article Ten referred to as a "mortgage" or "mortgages") upon any
Principal Property or upon any indebtedness of or equity securities of any
Subsidiary or any Affiliate, now owned or hereafter acquired, without in any
such case effectively providing, concurrently with the issuance, assumption or
guarantee of such Debt, that the Securities then Outstanding (together with, if
the Company shall so determine, any other indebtedness of or guaranteed by the
Company or such Subsidiary ranking equally with the Securities and then existing
or thereafter created) shall be secured equally and ratably with (or prior to)
such
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Debt; provided, however, that the foregoing restriction shall not apply to
(1) mortgages on any property acquired, constructed or improved by the
Company or any Subsidiary after the date of this Indenture which are
created or incurred contemporaneously with or within one hundred twenty
days after such acquisition, construction or improvement to secure or
provide for the payment of any part of the purchase price of such property
or the cost of such construction or improvement (the date of such
construction or improvement being, for the purpose of this clause (1),
deemed to be the date of completion of such construction or improvement);
provided that any such mortgage shall not apply to any other property of
the Company or any Subsidiary except, in the case of any construction or
improvement, theretofore unimproved real property on which the property so
constructed, or the improvement, is located;
(2) mortgages on any property acquired from a corporation which is
merged with or into the Company or a Subsidiary or mortgages outstanding on
property at the time it is acquired by the Company or a Subsidiary or
mortgages outstanding on property of a corporation at the time it becomes a
Subsidiary;
(3) mortgages to secure Debt of a Subsidiary to the Company or to
another Subsidiary;
(4) mortgages or other restrictions relating to equity securities of
any Affiliate under any agreement or arrangement between the Company or any
Subsidiary and such Affiliate (or the other stockholder or stockholders of
such Affiliate) providing for the operations, financing or purchase of
products of such Affiliate or under any agreement among any such parties
imposing restrictions on the disposition of or granting options to purchase
the equity securities of such Affiliate;
(5) mortgages upon property or assets of the Company or any Subsidiary
in favor of any governmental agency or authority or guarantees given for
the purpose of financing, through industrial revenue bonds or notes the
interest on which is exempt from federal income taxation under Section 103
of the Internal Revenue Code of 1986, as amended, the construction,
acquisition or purchase of industrial plants, machinery, equipment or other
property or facilities; and
(6) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in
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whole or in part, of any mortgage referred to in the foregoing clauses (1)
to (5), inclusive; provided, however, that the principal amount of Debt
secured thereby shall not exceed the principal amount of Debt so secured at
the time of such extension, renewal or replacement, and that such
extension, renewal or replacement shall be limited to all or a part of the
property which secured the mortgage so extended, renewed or replaced (plus
improvements on such property).
(b) Notwithstanding the provisions of paragraph (a) of this Section 1006,
the Company or any Subsidiary may, without equally and ratably securing the
Securities, create or assume mortgages which would otherwise be subject to the
foregoing restrictions if, at the time of such creation or assumption, and after
giving effect thereto, Exempted Indebtedness does not exceed 5% of Consolidated
Shareholders' Equity.
Section 1007. Limitation on Sale and Lease-Back.
----------------------------------
(a) The Company will not, nor will it permit any Subsidiary to, enter into
any arrangement with any person providing for the leasing to the Company or
Subsidiary of any Principal Property (except for temporary leases for a term of
not more than three years), which property has been owned more than one hundred
twenty days by the Company or such Subsidiary and has been or is to be sold or
transferred by the Company or such Subsidiary to such person (herein referred to
as a "Sale and Lease-Back Transaction"), unless either (1) the Company or such
Subsidiary would be entitled to incur debt secured by a mortgage on the property
to be leased without equally and ratably securing the Securities pursuant to
clause (a) or (b) of Section 1006 or (2) the Company shall, and in any such case
the Company covenants that it will, apply an amount equal to the fair value (as
determined by the Board of Directors) of the property so leased to the
retirement, within one hundred twenty days of the effective date of any such
Sale and Lease-Back Transaction, of Securities (in the manner, subject to the
restrictions and at the redemption prices then applicable to redemption of
Securities at the option of the Company) or other indebtedness of the Company
with a maturity in excess of one year from the date of such Sale and Lease-Back
Transaction and which ranks on a parity with the Securities.
(b) Notwithstanding the provisions of paragraph (a) of this Section 1007,
the Company or any Subsidiary may enter into Sale and Lease-Back Transactions
which would otherwise be prohibited by the foregoing restrictions if, at the
time such transactions are entered into, and after giving effect thereto,
Exempted Indebtedness does not exceed 5% of Consolidated Shareholders' Equity.
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Section 1008. Statement by Officers as to Default.
------------------------------------
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of Sections 1004 to 1007, inclusive, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
Section 1009. Waiver of Certain Covenants.
----------------------------
The Company may omit in any particular instance to comply with term,
provision or condition set forth in Sections 1004 to 1007, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least 66 2/3% in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
Section 1010. Payment of Additional Amounts.
------------------------------
If the Securities of a series provide for the payment of additional
amounts, the Company will pay to the Holder of any Security of any series or any
coupon appertaining thereto additional amounts upon the terms and subject to the
conditions provided therein. Whenever in this Indenture there is mentioned, in
any context, the payment of the principal of (or premium, if any) or interest
on, or in respect of, any Security of any series or any related coupon or the
net proceeds received on the sale or exchange of any Security of any series,
such mention shall be deemed to include mention of the payment of additional
amounts provided for in the terms of such Securities and this Section to the
extent that, in such context, additional amounts are, were or would be payable
in respect thereof pursuant to the provisions of this Section and express
mention of the payment of additional amounts (if applicable) in any provisions
hereof shall not be construed as excluding additional amounts in those
provisions hereof where such express mention is not made.
If the Securities of a series provide for the payment of additional
amounts, at least 10 days prior to the first Interest Payment Date with respect
to that series of Securities
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(or if the Securities of that series will not bear interest prior to the
Maturity, the first day on which a payment of principal (and premium, if any) is
made), and at least 10 days prior to each date of payment of principal (and
premium, if any) or interest if there has been any change with respect to the
matters set forth in the below-mentioned Officers' Certificate, the Company will
furnish the Trustee and the Company's principal Paying Agent or Paying Agents,
if other than the Trustee, with an Officers' Certificate instructing the Trustee
and such Paying Agent or Paying Agents whether such payment of principal of (and
premium, if any) or interest on the Securities of that series shall be made to
Holders of Securities of that series or the related coupons who are United
States Aliens without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of that series. If any
such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such payments
to such Holders of Securities or coupons and the Company will pay to the Trustee
or such Paying Agent the additional amounts, if any, required by the terms of
such Securities and the first paragraph of this Section. The Company covenants
to indemnify the Trustee and any Paying Agent for, and to hold them harmless
against, any loss, liability or expense reasonably incurred without negligence
or bad faith on their part arising out of or in connection with Actions taken or
omitted by any of them in reliance on any Officers' Certificate furnished
pursuant to this Section 1010.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
-------------------------
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
--------------------------------------
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
less than all the Securities of any series, the Company shall, at least 60 days
prior to the Redemption Date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date, of
the principal amount of Securities of such series to be redeemed and, if
applicable, of
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the tenor of the Securities to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
--------------------------------------------------
If less than all the Securities of any series are to be redeemed (unless
all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series. If less than
all of the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
Section 1104. Notice of Redemption.
---------------------
Notice of redemption shall be given in the manner provided in Section 106,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption of
any Securities, the principal amounts) of the particular Securities to be
redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
----------------------------
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
--------------------------------------
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest, and the coupons for such
interest appertaining to any Bearer Securities so to be redeemed, except to the
extent provided below, shall be void. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that installments of interest on Bearer
------------------
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable only upon presentation and surrender of coupons for such
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interest (at an office or agency located outside the United States except as
otherwise provided in Section 1002), and provided that installments of interest
-------------
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the Redemption Date, such Bearer
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each of
them and any Paying Agent harmless. If thereafter the Holder of such Bearer
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that interest represented by coupons shall be payable only
upon presentation and surrender of those coupons at an office or agency located
outside of the United States except as otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 1107. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and of like tenor, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered, except that if a Global Security is so surrendered,
the Company shall execute, and the Trustee shall authenticate and deliver to the
Depositary for such Global Security, without service charge, a new Global
Security in a
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denomination equal to and in exchange for the unredeemed portion of the
principal of the Global Security so surrendered.
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
------------------------
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
-----------------------------------------------------
The Company (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and
(2) may apply as a credit Securities of a series which have been redeemed either
at the election of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund payments pursuant to
the terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to the Securities of such series required
to be made pursuant to the terms of such Securities as provided for by the terms
of such series; provided that such Securities have not been previously so
--------
credited. Such Securities shall be received and credited for such purpose by the
Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
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Section 1203. Redemption of Securities for Sinking Fund.
-----------------------------------------
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 31 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1104. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
----------------------------------
Section 1301. Applicability of Article; Company's Option
to Effect Defeasance or Covenant Defeasance.
-------------------------------------------
If pursuant to Section 301 provision is made for either or both of (a)
defeasance of the Securities of a series under Section 1302 or (b) covenant
defeasance of the Securities of a series under Section 1303, then the provisions
of such Section or Sections, as the case may be, together with the other
provisions of this Article Thirteen, shall be applicable to the Securities of
such series, and the Company may at its option by Board Resolution, at any time,
with respect to the Securities of such series, elect to have either Section 1302
(if applicable) or Section 1303 (if applicable) be applied to the Outstanding
Securities of such series upon compliance with the conditions set forth below in
this Article Thirteen.
Section 1302. Defeasance and Discharge.
------------------------
Upon the Company's exercise of the above option applicable to this Section,
the Company shall be deemed to have been discharged from its obligations with
respect to the Outstanding Securities of such series on the date the conditions
set forth below are satisfied (hereinafter, "defeasance"). For this purpose,
such defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Securities of
such series and to have satisfied all its other obligations
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under Securities and this Indenture insofar as such Securities are concerned
(and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities of such series to receive, solely from the
trust fund described in Section 1304 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any) and
interest on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304, 305, 306, 607,
1002, 1003 and 1010, (C) the rights, powers, trusts, duties, and immunities of
the Trustee hereunder and (D) this Article Thirteen. Subject to compliance with
this Article Thirteen, the Company may exercise its option under this Section
1302 notwithstanding the prior exercise of its option under Section 1303 with
respect to the Securities of such series.
Section 1303. Covenant Defeasance.
-------------------
Upon the Company's exercise of the above option applicable to this Section,
the Company shall be released from its obligations under Sections 801, 1005,
1006, 1007, 1008, 501(4) (as to Sections 801, 1005, 1006, 1007 and 1008),
501(5), 501(6), 501(7) and 501(8) (if Section 501(8) is specified as applicable
to the Securities of such series) with respect to the Outstanding Securities of
such series on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance
means that, with respect to the outstanding securities of such series, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such Section, whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or by
reason of any reference in any such Section to any other provision herein or in
any other document, but the remainder of this Indenture and such securities
shall be unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions to application of either Section 1302
or Section 1303 to the Outstanding Securities of such series:
(1) the Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 609
who shall agree to comply with the provisions of this Article Thirteen
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and
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dedicated solely to, the benefit of the Holders of such Securities, (A) money in
an amount, or (B) U.S. Government Obligations which through the scheduled
payment of principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, sufficient, in the opinion of
a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, (i) the principal of (and premium, if any, on) and each
installment of principal of (and premium, if any) and interest on the
Outstanding Securities of such series on the Stated Maturity of such principal
or installment of principal or interest and (ii) any mandatory sinking fund
payments or analogous payments applicable to the Outstanding Securities of such
series on the day on which such payments are due and payable in accordance with
the terms of this Indenture of such Securities. For this purpose, "U.S.
Government Obligations" means securities that are (x) direct obligations of the
United States of America for the payment of which its full faith and credit is
pledged or (y) obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or redeemable
at the option of the issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933,
as amended) as custodian with respect to any such U.S. Government Obligation or
a specific payment of principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depository receipt.
(2) No Event of Default or event with which notice or lapse of time or both
would become an Event of Default with respect to the Securities of such series
shall have occurred and be continuing on the date of such deposit or, insofar as
subsections 501(6) and (7) are concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such period).
(3) Such defeasance or covenant defeasance shall not cause the Trustee for
the Securities of such series to have a
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conflicting interest as defined in Section 608 and for purposes of the Trust
Indenture Act with respect to any securities of the Company.
(4) Such defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it is bound.
(5) Such defeasance or covenant defeasance shall not cause any Securities
of such series then listed on any registered national securities exchange under
the Securities Exchange Act of 1934, as amended, to be delisted.
(6) In the case of an election under Section 1302, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (x) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (y) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred.
(7) In the case of an election under Section 1303, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders of
the Outstanding Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred.
(8) Such defeasance or covenant defeasance shall be effected in compliance
with any additional terms, conditions or limitations which may be imposed on the
Company in connection therewith pursuant to Section 301.
(9) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for in the Indenture relating to either the defeasance under
Section 1302 or the covenant defeasance under Section 1303 (as the case may be)
have been complied with.
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Section 1305. Deposited Money and U.S. Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions.
------------------------------
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee -- collectively, for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Outstanding Securities of such series shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities of such series.
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance.
ARTICLE FOURTEEN
Meetings of Holders
Section 1401. Purposes of Which Meetings May be Called.
----------------------------------------
If Securities of a series are issuable in whole or in part as Bearer
Securities, a meeting of Holders of Securities of such series may be called at
any time and from time to time pursuant to this Article to make, give or take
any request, demand, authorization, notice, consent, waiver or other Act
provided by this Indenture to be made, given or taken by Holders of Securities
of such series.
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Section 1402. Call, Notice and Place of Meetings.
----------------------------------
(a) The Trustee may at any time call a meeting of Holders of Securities of
any series issuable in whole or in part as Bearer Securities for any purpose
specified in Section 1401, to be held at such time and at such place in the
Borough of Manhattan, The City of New York, or in London, as the Trustee shall
determine. Notice of every meeting of Holders of Securities of any series,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than 21 or more than 180 days prior to the
date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or the
Holders of at least 10% in principal amount of the Outstanding Securities of any
series shall have requested the Trustee to call a meeting of the Holders of
Securities of such series for any purpose specified in Section 1401, by written
request setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have made the first publication of the
notice of such meeting within 21 days after receipt of such request or shall not
thereafter proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Securities of such series in the amount above
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York, or in London for such meeting and
may call such meeting for such purposes by giving notice thereof as provided in
Subsection (a) of this Section.
Section 1403. Persons Entitled to Vote at Meetings.
------------------------------------
To be entitled to vote at any meeting of Holders of Securities of any
series, a person shall be (1) a Holder of one or more Outstanding Securities of
such series, or (2) a Person appointed by an instrument in writing as proxy for
a Holder or Holders of one or more Outstanding Securities of such series by such
Holder or Holders. The only Persons who shall be entitled to be present or to
speak at any meeting of Holders of Securities of any series shall be the Persons
entitled to vote at such meeting and their counsel, any representatives of the
Trustee and its counsel and any representatives of the Company and its counsel.
Section 1404. Quorum; Action.
--------------
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities of a series shall constitute a quorum for a meeting of
Holders of Securities of such series; provided, however, that if any action is
to be taken at such meeting with respect to a consent or waiver which
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this Indenture expressly provides may be given by the Holders of not less than
66 2/3% in principal amount of the Outstanding Securities of a series, the
Persons entitled to vote 66 2/3% in principal amount of the Outstanding
Securities of such series constitute a quorum. In the absence of a quorum within
30 minutes of the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In the absence of a quorum in any other case the meeting may be adjourned for a
period of not less than 10 days as determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the chairman of the meeting prior to
the adjournment of such adjourned meeting. Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 1402(a), except that
such notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series that shall
constitute a quorum.
Except as limited by the first proviso to Section 902, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted only by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Securities of that series;
provided, however, that, except as limited by such first proviso to Section 902,
any resolution with respect to any consent or waiver which this Indenture
expressly provides may be given by the Holders of not less than 66 2/3% in
principal amount of the Outstanding Securities of a series may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid only by the affirmative vote of the Holders of 66 2/3% in principal
amount of the Outstanding Securities of that series; and provided further that,
except as limited by such first proviso to Section 902, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other Act which this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of that
series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance
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with this Section shall be binding on all the Holders of Securities of such
series and the related coupons, whether or not present or represented at the
meeting.
Section 1405. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
--------
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities of such series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate.
Except as otherwise permitted or required by any such regulations, the holding
of Securities shall be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified in Section 104
or, in the case of Bearer Securities, by having the signature of the person
executing the proxy witnessed or guaranteed by any trust company, bank or banker
authorized by Section 104 to certify to holding of Bearer Securities. Such
regulations may provide that written instruments appointing proxies, regular on
their face, may be presumed valid and genuine without the proof specified in
Section 104 or other proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 1402(b), in which
case the Company or the Holders of Securities of the series calling the meeting,
as the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities of such series represented at the meeting.
(c) At any meeting each Holder of a Security of such series or proxy shall
be entitled to one vote for each $1,000 principal amount (or the equivalent in
ECU, any other composite currency or a Foreign Currency) of Securities of such
series held or represented by him; provided, however, that no vote shall be cast
or counted at any meeting in respect of any Security challenged as not
Outstanding and ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder of a
Security of such series or proxy.
90
<PAGE>
(d) Any meeting of Holders of Securities of any series duly pursuant to
Section 1402 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Securities of such series represented at the meeting; and the meeting may be
held as so adjourned without further notice.
Section 1406. Counting Votes and Recording Action
of Meetings.
-----------
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1402 and, if
applicable, Section 1404. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter of have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
91
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
THE MEAD CORPORATION
By /s/ William R. Graber
----------------------------
William R. Graber
Attest: Treasurer
CSR.
/s/ Tina M. Boyd
- ----------------------------
[SEAL]
THE FIRST NATIONAL BANK OF
CHICAGO
By /s/ R. D. Manella
----------------------------
Vice President
Attest:
/s/ Kaye Wright
- ----------------------------
[SEAL]
Assistant Vice President
92
<PAGE>
State of Ohio
County of Montgomery, ss:
On the 2nd day of February, 1993, before me personally came William R.
Graber, to me known, who, being by me duly sworn, did depose and say that he is
Treasurer of The Mead Corporation, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Jeffrey Hayman
_________________________
[NOTARY STAMP APPEARS HERE]
JEFFREY HAYMAN
ATTORNEY AT LAW
NOTARY PUBLIC-STATE OF OHIO
LIFETIME COMMISSION
SECTION 147.03 O.R.C.
State of Illinois
County of Cook, ss:
On the 3rd day of February, 1993, before me personally came R. D. Manella,
to me known, who, being by me duly sworn, did depose and say that he is Vice
President of The First National Bank of Chicago, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ Somsri Helmer
_________________________
[NOTARY STAMP APPEARS HERE]
OFFICIAL SEAL
SOMSRI HELMER
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES 1/14/95
93
<PAGE>
EXHIBIT A
[FORM OF CERTIFICATE TO BE GIVEN BY
PERSON ENTITLED TO RECEIVE BEARER SECURITY
OR TO OBTAIN INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE]
CERTIFICATE
_____________________________
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Securities held by you for our account (i) are owned
by persons(s) that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States federal income taxation regardless of its source
("United States person(s)"), (ii) are owned by United States person(s) that are
(a) foreign branches of United States financial institutions (as defined in
United States Treasury Regulations Section 1.165-12(c)(1)(v)) purchasing for
their own account or for resale, or (b) United States person(s) who acquired the
Securities through foreign branches of United States financial institutions and
who hold the Securities through such United States financial institutions on the
date hereof (and in either case (a) or (b), each such United States financial
institution hereby agrees, on its own behalf or through its agent, that you may
advise the Issuer or its agent that such financial institution will comply with
the requirements of Section 165(j)(3)(A), (B) or (C) of the United States
Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) are owned by United States or foreign financial institutions for purposes
of resale during the restricted period (as defined in United States Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and, in addition, if the owner is a
United States or foreign financial institution described in clause (iii) above
(whether or note also described in clause (i) or (ii)), this is to further
certify that such financial institution has not acquired the Securities for
purposes of resale directly or indirectly to a United States person or to a
person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and District of Columbia); and its "possessions" include
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the
Northern Mariana Islands.
94
<PAGE>
We undertake to advise you promptly by tested telex or by electronic
transmission on or prior to the date on which you intend to submit your
certification relating to the above-captioned Securities held by you for our
account in accordance with your Operating Procedures if any applicable statement
herein is not correct on such date, and in the absence of any such notification
it may be assumed that this certification applies as of such date.
This certificate excepts and does not relate to _______ of such interest in
the above-captioned Securities in respect of which we are not able to certify
and as to which we understand an exchange for an interest in a permanent Global
Security or an exchange for and delivery of definitive Securities (or, if
relevant, collection of any interest) cannot be made until we do so certify.
We understand that this certificate may be required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Date: _________________________, 19__
[To be dated no earlier
than the 15th day prior to
(i) the Exchange Date or (ii)
the relevant Interest Payment
Date occurring prior to the
Exchange Date, as applicable]
[Name of Person Making
Certification]
______________________
(Authorized Signatory)
Name:
Title:
95
<PAGE>
EXHIBIT B
[FORM OF CERTIFICATE TO BE GIVEN BY EURO-CLEAR
AND CEDEL S.A. IN CONNECTION WITH THE
EXCHANGE OF A PORTION OF A TEMPORARY
GLOBAL SECURITY OR TO OBTAIN
INTEREST PAYABLE PRIOR TO THE EXCHANGE DATE]
CERTIFICATE
_____________________________
[Insert title or sufficient description
of Securities to be delivered]
This is to certify that based solely on written certifications that we have
received in writing, by tested telex or by electronic transmission from each of
the persons appearing in our records as persons entitled to a portion of the
principal amount set forth below (our "Member Organizations") substantially in
the form attached hereto, as of the date hereof, ________ principal amount of
the above-captioned Securities (i) is owned by person(s) that are not citizens
or residents of the United States, domestic partnerships, domestic corporations
or any estate or trust the income of which is subject to United States Federal
income taxation regardless of its source ("United States person(s)"), (ii) is
owned by United States person(s) that are (a) foreign branches of United States
financial institutions (as defined in U.S. Treasury Regulations Section 1.165-
12(c)(1)(v)) purchasing for their own account or for resale, or (b) United
States person(s) who acquired the Securities through foreign branches of United
States financial institutions and who hold the Securities through such United
States financial institutions on the date hereof (and in each case (a) or (b),
each such financial institution has agreed, on its own behalf or through its
agent, that we may advise the Issuer or its agent that such financial
institution will comply with the requirements of Section 165(j)(3)(A), (B) or
(C) of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder), or (iii) is owned by United States or foreign financial
institutions(s) for purposes of resale during the restricted period (as defined
in United States Treasury Regulations (Section 1.163-5(c)(2)(i)(D)(7)), and to
the further effect, that financial institutions described in clause (iii) above
(whether or not also described in clause (i) and (ii)) have certified that they
have not acquired the Securities for purposes of resale directly or indirectly
to a United States person or to a person within the United States or its
possessions.
96
<PAGE>
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We further certify that (i) we are not making available herewith for
exchange (or, if relevant, collection of any interest) any portion of the
temporary Global Security representing the above-captioned Securities excepted
in the above-referenced certificates of Member Organizations and (ii) as of the
date hereof we have not received any notification from any of our Member
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certification is required in connection with
certain tax legislation in the United States. If administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.
Date: _______________, 19__
[To be dated no earlier
than the Exchange Date
or the relevant Interest
Payment Date occurring
prior to the Exchange
Date, as applicable)]
[MORGAN GUARANTY
TRUST COMPANY OF NEW
YORK, BRUSSELS
OFFICE, as Operator
of the Euro-clear
System] [CEDEL S.A.]
By _______________________
97
<PAGE>
THIS AGREEMENT made as of the 24th day of April, 1964
BETWEEN:
NORTHWOOD MILLS LTD., a company duly incorporated
--------------------
under the laws of the Province of British Columbia,
Canada, having an office at the City of Vancouver,
Province aforesaid,
(hereinafter called "Northwood")
OF THE FIRST PART
AND:
CANAMEAD, INC., a company duly incorporated under
--------------
the laws of the State of Ohio, one of the United
States of America, having an office at the City
of Dayton, State aforesaid,
(hereinafter called "Canamead")
OF THE SECOND PART
AND:
THE MEAD CORPORATION, a company duly incorporated
--------------------
under the laws of the State of Ohio, one of the
United States of America, having an office at the
City of Dayton, State aforesaid,
(hereinafter called "Mead")
OF THE THIRD PART
AND:
NORANDA MINES, LIMITED, a company duly incorporated
----------------------
under the laws of the Province of Ontario, Cananda,
having an office at the City of Toronto, Province
aforesaid,
(hereinafter called "Noranda")
OF THE FOURTH PART.
WHEREAS:
(A) Northwood and Canamead intend to incorporate a company under the
laws of the Province of British Columbia with the name of Northwood Pulp
Limited or such other name as may be agreed upon by the parties
(hereinafter referred to as the "Pulp Corporation"), the capital stock of
which shall be owned 50% by Northwood and 50% by Canamead for the purpose
inter alia of holding a pulpwood harvesting licence (hereinafter more
particularly defined) and for the optimum utilization of the fiber
obtainable under good forestry practices from the area committed under
such pulpwood harvesting licence in accordance with the terms and
conditions therein set forth, and for the construction and operation of a
pulp mill having an initial daily rated capacity of five hundred (500) tons
of paper grade bleached, semi-bleached and unbleached sulphate wood pulp
and for the operation of sawmills and such
<PAGE>
other endeavours as are within the objects and powers of the said Pulp
Corporation.
(B) Upper Fraser Spruce Mills Ltd. (hereinafter called "Upper Fraser") and
Sinclair Spruce Lumber Company Limited (hereinafter called "Sinclair") both of
which companies are wholly owned subsidiaries of Northwood, operate sawmills in
the area of the said pulpwood harvesting licence and Upper Fraser and Sinclair
hold timber sale contracts and tree farm licences in said area providing a
supply of saw logs for said sawmills.
(C) The Parties hereto have agreed that all the issued shares in the capital
stock of Upper Fraser and Sinclair shall be purchased by the Pulp Corporation
from Northwood on the terms and conditions herein set forth.
(D) Northwood has agreed to provide knowledge and experience for operation of
the sawmills in accordance with this Agreement.
(E) Northwood and Canamead have agreed that so long as each has an equal voice
in the election of directors of the Pulp Corporation and Upper Fraser and
Sinclair and other actions requiring the approval of the stockholders thereof,
they will cooperate with each other in good faith and to the best of their
ability to cause the affairs of the Pulp Corporation and Upper Fraser and
Sinclair to be managed efficiently and economically and for the best interests
of both parties.
(F) Mead and Northwood have agreed to secure operating personnel for employment
by the Pulp Corporation and to be paid by the Pulp Corporation, and that
Canamead and Northwood shall contribute cash to the capital of the Pulp
Corporation as herein provided.
(G) Mead has agreed to provide knowledge and experience for the engineering
design and operation of the said pulp mill in accordance with this Agreement.
-2-
<PAGE>
(H) Northwood has agreed to carry the application to secure from the Minister of
Lands, Forests and Water Resources of the Province of British Columbia the
said pulpwood harvesting license, and Northwood has agreed to assign said
license, if and when granted, to the Pulp Corporation.
(I) Canamead and Northwood have agreed to use their best efforts to secure a
lender for the lending of money to the Pulp Corporation as provided in this
Agreement.
(J) The Parties hereto have agreed that Mead Pulp Sales, Inc., a wholly-owned
subsidiary of Mead, shall be appointed as sales agent to sell the entire
output (exclusive of any portion of the output sold to Mead or its
subsidiaries or affiliates), of the said pulp mill on the terms and
conditions set forth in the Agreement attached as Exhibit "C."
(K) The Parties hereto have agreed that Northwood shall be appointed as sales
agent for Upper Fraser, Sinclair and all sawmills acquired by the Pulp
Corporation, Upper Fraser, and Sinclair, or any of them, to sell the entire
output of the said sawmills (excluding wood chips and other materials
purchased or used by the Pulp Corporation) on the terms and conditions set
forth in the Agreement attached hereto as Exhibit "D."
(L) Northwood is a wholly-owned subsidiary of Noranda, and Noranda is agreeable
and prepared to guarantee unto Canamead and Mead the full performance and
observance of each and every of Northwood's covenants herein contained.
(M) Canamead is a wholly-owned subsidiary of Mead and Mead is agreeable and
prepared to guarantee unto Northwood and Noranda the full performance and
observance of each and every of Canamead's covenants herein contained.
(N) The Parties hereto have agreed that the Pulp Corporation, Mead, Northwood
and Noranda will enter into an agreement in the form attached
hereto as Exhibit "E."
NOW, THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained the Parties hereto do hereby agree as follows:
1. Definition
"Pulpwood Harvesting Licence" - the words "pulpwood harvesting licence"
when used herein mean the rights granted pursuant to Section
-3-
<PAGE>
17 A of the Forest Act R.S.B.C. 1960 Chap. 153 and all amendments thereto and
pursuant to the agreement or agreements to be entered into pursuant to said
Section 17 A between Northwood and the Minister of Lands, Forests and Water
Resources for the Province of British Columbia, to purchase pulpwood from Her
Majesty the Queen in the right of the Province of British Columbia from within
the pulpwood harvesting area described in the letter dated March 3, 1964 from A.
H. Zimmerman to the said Minister, as modified by the reply from the said
Minister dated March 10, 1964, or such lesser area as may be described in said
agreement or agreements for a period of twenty-one years, and any renewal
period.
2. Assignment of Pulpwood Harvesting Licence
-----------------------------------------
Northwood hereby agrees to assign the pulpwood harvesting licence to the
Pulp Corporation forthwith upon obtaining same in form and with area
satisfactory to Northwood and Canamead, PROVIDED ALWAYS that in the event the
said pulpwood harvesting licence is not obtained and assigned as aforesaid on or
before October 31, 1964 this Agreement shall terminate and be null and void and
of no effect whatsoever, and all costs and expenses incurred by or for the
benefit of the Pulp Corporation shall be shared equally by Canamead and
Northwood.
3. Incorporation of the Pulp Corporation
-------------------------------------
(a) Northwood and Canamead shall jointly cause the Pulp Corporation to be
incorporated under the "Companies Act" R.S.B.C. 1960, Chap. 67, and all
amendments thereto of the Province of British Columbia, with an authorized
capital consisting of $8,000,000 (Canadian Funds) divided into 8,000,000
ordinary shares of the par value of $1.00 each with a Memorandum of Association
in the form as set forth in Exhibit A attached hereto, and having Articles of
Association in the form as set forth in Exhibit B attached hereto.
(b) The registered office of the Pulp Corporation shall be located within
the Province of British Columbia as required by said "Companies Act" and all
such books and records of the Pulp Corporation as the law may require shall be
kept
-4-
<PAGE>
at the said registered office.
(c) Northwood hereby agrees to subscribe for 4,000,000 A ordinary shares
and Canamead hereby agrees to subscribe for 4,000,000 B ordinary shares of the
authorized capital of the Pulp Corporation at the par value thereof forthwith
upon the incorporation thereof and each of Northwood and Canamead hereby agrees
to purchase one-half of $6,600,000 (U.S. funds) in principal amount of, and at
the option of the Pulp Corporation one-half of such additional amount not to
exceed $800,000 (U.S. funds) in principal amount of, 5% unsecured twenty year
debentures of the Pulp Corporation at the principal amount thereof, provided
always that such shares and debentures thus subscribed for or agreed to be
purchased shall be paid for in cash by Northwood and Canamead in equal portions
in such amounts and at such times as the directors of the Pulp Corporation shall
determine.
4. Management of the Pulp Corporation, and Upper Fraser and Sinclair
-----------------------------------------------------------------
(a) Northwood and Canamead agree that as long as each or its assigns as
permitted by this agreement holds 50% of the issued ordinary shares regardless
of class of the Pulp Corporation:
(i) Subject as hereinafter provided in subparagraph (iii) hereof, the
number of directors of each of the Pulp Corporation and Upper Fraser and
Sinclair shall be ten, of which five persons (one of which to be a resident
of the Province of British Columbia as required by law) selected by
Northwood (hereinafter called the "Northwood Directors") and five persons
selected by Canamead (hereinafter called the "Canamead Directors") shall be
elected directors of the Pulp Corporation and Upper Fraser and Sinclair
respectively at every meeting of the Pulp Corporation and Upper Fraser and
Sinclair respectively held for the purpose of electing the Board of ten
directors.
(ii) In the event of the resignation, death, dis-
-5-
<PAGE>
qualification or removal of any of the aforesaid ten directors, the parties
hereto shall elect or cause to be elected or appointed a person selected by
Northwood in the case of the resignation, death, disqualification or removal of
a Northwood Director or a person selected by Canamead in the case of the
resignation, death, disqualification or removal of a Canamead Director. A
director may be removed before the expiration of his period of office by the
party who elected or appointed such director.
(iii) In the event the number of directors of the Pulp Corporation or
Upper Fraser or Sinclair is increased to eleven as provided in the Articles of
Association attached hereto as Exhibit "B," the said eleventh director shall be
elected or appointed on the joint nomination of Canamead and Northwood. Provided
that in the event Canamead and Northwood do not within ten days of such
increase agree in writing on a person to be appointed as the eleventh director,
then and in that event the eleventh director shall be determined by arbitration
in accordance with Clause 17 hereof, and on the identity of the said eleventh
director being so determined he shall be appointed forthwith to the Board of
Directors of each of said companies.
(iv) At all times when there are not more than ten directors in office,
no action shall be taken at any meeting of the Board of Directors of the Pulp
Corporation, Upper Fraser or Sinclair, respectively, except with the affirmative
vote of a majority of the Northwood Directors present in person or by alternate
and a majority of the Canamead Directors present in person or by alternate.
(v) The quorum necessary for the transaction of the business of the
Directors shall be six Directors present in person or by alternate.
- 6 -
<PAGE>
(vi) Neither Northwood nor Canamead shall agree to or cause the
Memorandum and Articles of Association of the Pulp Corporation, Upper
Fraser or Sinclair to be amended, varied or modified in any way whatsoever
without the consent in writing of the other first had and obtained;
provided however the Articles of Association of Upper Fraser and Sinclair
shall be amended forthwith after the Closing Date (as herein defined) so as
to be as identical as practically possible with the Articles of Association
of the Pulp Corporation.
(vii) Unless otherwise mutually agreed in writing, each following
party shall be entitled to select the persons to be elected or appointed by
the Boards of Directors of the Pulp Corporation and Upper Fraser and
Sinclair to the offices indicated below under the name of such party.
Canamead Northwood
-------- ---------
Chairman of the Board President
Senior Vice President Vice President
Assistant Secretary Treasurer
Comptroller Secretary
General Manager of General Manager of
Pulp Corporation Upper Fraser and Sinclair
(b) Northwood and Canamead hereby agree to cause the directors of the Pulp
Corporation to constitute by resolution an Operating Committee of nine persons
(who may or may not be members of the Board of Directors of the Pulp
Corporation) and that such Operating Committee shall have the following duties,
rights and responsibilities in addition to any other duties, rights and
responsibilities as may be delegated or designated by the said directors:
(i) The said Operating Committee shall be advisory to the officers of
the Pulp Corporation and the operating management of the said pulp mill on
all matters and questions affecting operations of the Pulp Corporation
other than those arising in connection with the usual and normal day to day
conduct of its business or in
- 7 -
<PAGE>
connection with matters and questions upon which action or decision has
been taken by the said directors;
(ii) The General Manager of the Pulp Corporation shall be one of the
operating personnel members of the Operating Committee and shall preside as
Chairman at all meetings of the Operating Committee;
(iii) The Manager of the sawmills of Upper Fraser and Sinclair shall
be one of the operating personnel members of the Operating Committee;
(iv) Seven voting members of the Operating Committee shall
constitute a quorum and no action or motion shall be carried except by
unanimous vote of all voting members present, and in the event any action
or motion fails by reason of the lack of a unanimous vote, the matter or
question shall be referred to the next following meeting of the directors;
(v) The said Operating Committee shall have full power and right to
determine the time, place and frequency of its meetings and the method of
the conduct of its meetings; PROVIDED, however, written minutes of every
meeting shall be prepared.
(c) Northwood and Canamead hereby agree to cause the directors of the Pulp
Corporation to constitute by resolution a Construction Committee of six persons
(who may or may not be members of the Board of Directors of the Pulp
Corporation) and that such Construction Committee shall have the following
duties, rights and responsibilities in addition to any other duties, rights and
responsibilities as may be delegated or designated by the said directors:
(i) The Construction Committee shall be responsible for arranging
for and recommending to the Board of Directors all necessary designers,
engineers and contractors for
- 8 -
<PAGE>
the design, engineering and construction of the said pulp mill;
(ii) The Construction Committee shall be consulted by and be
advisory to the officers of the Pulp Corporation in respect to all matters
concerning the design, engineering and construction of the said pulp mill,
provided however that any action or decision taken and given by the
directors shall be final and conclusive;
(iii) The General Manager of the Pulp Corporation shall be one of
the operating personnel members of the Construction Committee, presiding as
Chairman;
(iv) Five voting members of the Construction Committee shall
constitute a quorum and no action or motion shall be carried except by
unanimous vote of all voting members present and in the event any action or
motion fails by reason or the lack of a unanimous vote, the matter or
question shall be referred to the next following meeting of the directors;
(v) Subject to the foregoing the said Construction Committee shall
have full power and right to determine the time, place and frequency of its
meetings and the method of the conduct of its meetings; PROVIDED however
written minutes of every meeting shall be prepared.
(d) Canamead and Northwood hereby agree that they shall cause the
directors of the Pulp Corporation in constituting the said Operating and
Construction Committees of the Pulp Corporation to elect thereto members as
follows:
Operating Committee
-------------------
3 voting members to be nominated by Canamead
3 voting members to be nominated by Northwood
3 voting members to be operating personnel (two from Pulp Corporation and
one from Upper Fraser and Sinclair as aforesaid)
- 9 -
<PAGE>
Construction Committee
----------------------
2 voting members to be nominated by Canamead
2 voting members to be nominated by Northwood
2 voting members to be operating personnel of the Pulp
Corporation
(e) Northwood and Canamead hereby agree that forthwith after the transfer
date they will cause the directors of Upper Fraser and Sinclair to constitute
jointly by resolution a Sawmill Operating Committee of six persons (who may or
may not be members of the Board of Directors of Upper Fraser or Sinclair) and
that such Sawmill Operating Committee shall have the following duties, rights
and responsibilities in addition to any other duties, rights and
responsibilities as may be delegated or designated by the said directors:
(i) The said Sawmill Operating Committee shall be advisory to the
officers of Upper Fraser and Sinclair and the operating management of the
sawmills of Upper Fraser and Sinclair on all matters and questions
affecting operations of Upper Fraser and Sinclair other than those arising
in connection with the usual and normal day to day conduct of their
business or in connection with matters and questions upon which action or
decision has been taken by the said directors;
(ii) The General Manager of Northwood shall be one of the Northwood
members of the Sawmill Operating Committee and shall preside as Chairman at
all meetings of the Operating Committee;
(iii) The Manager of the sawmills and the General Manager of the Pulp
Corporation shall be the operating personnel members of the Sawmill
Operating Committee;
(iv) Five voting members of the Sawmill Operating Committee shall
constitute a quorum and no action or motion shall be carried except by
unanimous vote of all voting members present, and in the event any action
or motion fails by reason of the lack of a unanimous vote, the matter or
question shall be referred to the next following meeting of the directors;
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<PAGE>
(v) The said Sawmill Operating Committee shall have full power and
right to determine the time, place and frequency of its meetings and the
method of the conduct of its meetings; PROVIDED, however, written minutes
of every meeting shall be prepared.
(f) Canamead and Northwood hereby agree that they shall cause the
directors of Upper Fraser and Sinclair in constituting the said Sawmill
Operating Committee to elect thereto members as follows:
2 voting members to be nominated by Canamead
2 voting members to be nominated by Northwood
2 voting members to be operating personnel as aforesaid
(g) Northwood and Canamead may each have any number of observers and
advisers present at meetings of the Operating Committee, Construction Committee
and Sawmill Operating Committee, but having no vote.
(h) The parties hereto hereby agree that the Pulp Corporation and Upper
Fraser and Sinclair shall not be obligated to pay any management fees whatsoever
to any of the parties hereto; PROVIDED that directors' fees, if any, shall not
be deemed to be a management fee within the meaning of this clause.
(i) Canamead and Northwood hereby agree that the Pulp Corporation shall
be managed and operated by the directors thereof, and the officers thereof and
a staff to be engaged and paid by the Pulp Corporation provided that parties
hereto shall cause Pulp Corporation to engage a person nominated by Canamead
for employment as General Manager with duties, powers and authority as set out
in the Articles of Association of the Pulp Corporation.
(j) Canamead and Northwood hereby agree that Upper Fraser and Sinclair
shall be managed and operated by the directors thereof, and the officers thereof
and a staff to be engaged and paid by Upper Fraser and Sinclair provided that
the parties hereto shall cause Upper Fraser and Sinclair to engage a person
nominated by Northwood for employment as General Manager of Upper Fraser and
Sinclair.
(k) Mead, upon request of the Pulp Corporation, shall
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furnish such technicians or personnel or services as the directors of Pulp
Corporation may require at such rates and charges as Mead and the Pulp
Corporation shall agree upon prior to the furnishing of such personnel or
services. Northwood, upon request of Upper Fraser or Sinclair shall furnish
such technicians or personnel or services as the directors of Upper Fraser
or Sinclair may require at such rates and charges as Northwood and Upper
Fraser or Sinclair shall agree upon prior to the furnishing of such
personnel or services.
5. Restrictions upon Corporate Action of the Pulp Corporation and Upper
--------------------------------------------------------------------
Fraser and Sinclair
-------------------
The Parties agree that so long as Canamead and Northwood or their
assigns as permitted by this agreement shall each own 50% of the issued ordinary
shares of the Pulp Corporation, the Pulp Corporation shall not, without the
written consent of Canamead and Northwood take any of the following corporate
action, except with the limitations, and in the manner indicated hereunder:
(a) Create or suffer to exist any capital stock other than that
provided in Exhibit "A" hereto or create or suffer to exist or guarantee
any funded indebtedness whatsoever other than an initial funded
indebtedness not in excess of $45,000,000 U.S. Funds. The term "funded
indebtedness" as used herein shall mean any indebtedness which, by its
terms, or at the option of the debtors, may mature more than twelve months
from the date of creation of same and shall include any indebtedness which
may be payable out of the proceeds of funded indebtedness (as defined)
payable more than twelve months from the date of creation of the original
indebtedness pursuant to the terms of such original indebtedness.
(b) Authorize, issue or sell any capital stock of the Pulp
Corporation, other than pursuant to exercise of the preemptive rights of
Canamead and Northwood to purchase shares as
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set forth in the Articles of Association.
(c) Reduce, retire, purchase, or otherwise redeem or extinguish any
capital stock of the Pulp Corporation held by Canamead and Northwood.
(d) Sell, pledge or otherwise encumber or alienate its assets out of
the ordinary course of business.
(e) Sell, pledge or otherwise encumber or alienate all or any part of
the capital stock of any subsidiary of the Pulp Corporation held by the
Pulp Corporation, or permit any subsidiary to sell, pledge, or otherwise
encumber or alienate its assets out of the ordinary course of business, or
create or suffer to exist any funded indebtedness.
(f) Make any capital expenditure except on (1) expenditures for the
construction, equipping and operation of the pulp mill and the
modernization, but not the expansion, thereof, and (2) expenditures
relating to timberlands.
6. Corporate Borrowings
--------------------
Canamead and Northwood hereby agree to cause the Pulp Corporation to secure
from lenders or underwriters acceptable to both, sufficient funds to enable the
Pulp Corporation to construct, equip and operate the said pulp mill on terms and
conditions agreeable to both Canamead and Northwood.
7. Assignment and Restrictions upon Corporate Action of the Parties
----------------------------------------------------------------
The parties hereto agree that the benefits or burdens granted or imposed by
this Agreement and the shares of the Pulp Corporation held by any of them shall
not be assigned, transferred, alienated or otherwise disposed of without the
written consent of all the other parties first had and obtained; PROVIDED that:
(a) Any of the parties hereto may assign this Agreement and its
shares in the Pulp Corporation to any corporation formed by consolidation
or amalgamation of such party with another corporation or corporations or
into which such party shall
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be merged, or to which substantially all the property of such party shall
be conveyed or transferred as an entirety (hereinafter referred to as the
"Successor Corporation") if the Successor Corporation enters into a written
undertaking to be bound by the terms of this Agreement, whereupon Successor
Corporation shall have all of the rights and benefits of such party under
this Agreement and shall be deemed substituted in place of such party under
all provisions of this Agreement.
(b) Any of the parties hereto may mortgage, charge or pledge its
interests in the capital stock of the Pulp Corporation subject always to
such mortgage, charge or pledge being expressly made subject to the rights
of the other parties pursuant to the terms and provisions of this
Agreement.
(c) Any of the parties may, after the termination of the Agreement in
the form attached hereto as Exhibit "E," sell or transfer the shares of the
Pulp Corporation held by any of them, subject always to the right of first
refusal to purchase said shares as set forth in the Articles of
Association.
8. Default
The following shall constitute Acts of Default under this Agreement:
(a) Default by Canamead or Mead, or Northwood or Noranda, in
observing or performing any covenant or condition herein contained and on
its part to be observed and performed, or default by Mead or Northwood or
Noranda under the provisions (other than Section 4) of the Agreement in the
form attached hereto as Exhibit "E," or default under the provisions (other
than Paragraph X and Paragraph XI insofar as it relates to Paragraph X) of
the Agreement in the form attached hereto as Exhibit "F" by any of the
parties thereto, may, if not cured or remedied as hereinafter set forth,
constitute an Act of Default. If Canamead gives notice in writing to
Northwood or Noranda, or Northwood gives notice in writing to Canamead or
Mead, alleging default by the party to whom notice is given in observing or
performing any such covenant or condition with particulars of the default
alleged, such party shall thereafter have such reasonable time as may be
necessary but in any event not more than sixty days or such longer period
as the party alleging the
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<PAGE>
default may allow in which to cure or remedy the default alleged or to give
notice in writing to the party alleging the default denying that any such
default has occurred. If within such period such alleged default has not
been cured or remedied or such notice denying that default has occurred has
not been given, then the alleged default shall on the expiry of the said
period constitute an Act of Default under this Agreement. If such alleged
default is cured or remedied within such period, the notice of the alleged
default shall be of no further force and effect. If notice denying that
default has occurred is given as aforesaid, the question of whether default
has occurred shall be determined by arbitration as provided in Section 17
hereof. In the event that the decision of the arbitrator or arbitrators is
in favour of the party alleging default then the other party shall have 30
days from the date of notice of such decision to cure or remedy such
default. If the defaulting party shall cure or remedy such default within
such period of 30 days the notice of alleged default shall be of no further
force and effect. If the defaulting party fails to cure or remedy such
default within such period of 30 days the alleged default shall on the
expiry of the said period constitute an Act of Default under this
Agreement.
(b) Default by Mead or Northwood under the provisions of Section 4 of
the Agreement in the form attached hereto as Exhibit "E" or by Noranda
under the provisions of Section 6 thereof so far as they relate to Section
4 thereof, or default under the provisions of Paragraph X or Paragraph XI
insofar as it relates to Paragraph X of the Agreement in the form attached
hereto as Exhibit "F" by any of the parties thereto.
(c) Voluntary application by Canamead or Mead for a receiver in equity,
trustee in bankruptcy, trustee in reorganization, or pursuant to federal
proceedings under the Bankruptcy Clause of the Constitution of the United
States of America; or the making of an assignment for the benefit of
creditors.
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<PAGE>
(d) Appointment for Canamead or Mead, upon an involuntary application, of
a receiver in equity, trustee in bankruptcy, trustee in reorganization, or
pursuant to federal proceedings under the Bankruptcy Clause of the
Constitution of the United States of America.
(e) In the case of Northwood or Noranda, an assignment for the benefit of
its creditors or, in becoming bankrupt or insolvent, the appointment of a
receiver by a court of competent jurisdiction or the taking of the benefit
of any Act, whether passed by the Parliament of Canada or any Province
thereof, that may be in force for bankrupt or insolvent debtors.
9. Remedies of Non-Defaulting Party
--------------------------------
(a) In the event of any act of Default, as defined by the provisions of
Section 8 of this Agreement, by or on the part of Northwood or Noranda,
Canamead and Mead shall have the four following remedies except that in the
case of default in any of the provisions of Clauses 13 and 16 or any
provision other than Section 4 of the Agreement in the form attached hereto
as Exhibit "E", the remedies set forth in (i) and (iv) below shall not be
available.
(i) The right for a period of 60 days after the occurrence of said
Act of Default by notice in writing given within such period to
require Northwood and to require Noranda to cause Northwood:
(A) To deliver to Canamead an irrevocable proxy authorizing the
Canamead directors (acting by a majority of them present at any
meeting of the members of the Pulp Corporation or if only one is
present then by that one), to vote all shares of the Pulp
Corporation owned by Northwood at all meetings of the members of
the Pulp Corporation for the election of directors, which may be
held within one year from the date of delivering the said proxy;
(B) To cause the Northwood directors and all officers of the Pulp
Corporation and Upper Fraser and Sinclair nominated by Northwood
to resign, effective immediately; and (C) To permit Canamead
thereupon to nominate and elect or appoint representatives of
Canamead in place of such
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resigning directors and officers of the Pulp Corporation and
Upper Fraser and Sinclair; and
(ii) The right to pursue all other rights and remedies available by
statute at law or in equity; and
(iii) The right to compel specific performance of this Agreement; or
(iv) The option to purchase all, but not less than all, of the shares
of the Pulp Corporation owned by Northwood, at a price equal to 85% of the
book value of such shares (excluding anything for goodwill or patents) as
of the last preceding 31st day of December if notice of intention to
exercise such option is given between January 1st and June 30th, both
inclusive, or as of the preceding June 30th, if notice of intention to
exercise such option is given between July 1st and December 31st, both
inclusive, such book value to be as determined by the chartered accountants
who were with respect to accounts at such date the independent auditors
appointed by the members of the Pulp Corporation, and such determination
shall be final and conclusive. Such option may be exercised by notice in
writing, given by Canamead to Northwood within 60 days after the occurrence
of an Act of Default, as defined in Section 8 of this Agreement, by
Northwood or Noranda; and upon exercise of such option, the purchase price
of such shares shall be payable, without interest, as follows:
25% thirty days after exercise of the option;
25% sixty days after the first payment is due;
25% one hundred and twenty days after the first payment is due; and
25% one hundred and eighty days after the first payment is due;
Provided, nevertheless that, in the event that the Act of Default by
Northwood or Noranda is fully cured and/or remedied within 180 days from and
after its occurrence, then Canamead shall forthwith after such Act of Default
has been so fully cured and/or remedied restore Northwood to all its rights
under this
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Agreement, and without limitation: If Canamead has exercised its right under
(i)(A) above, Canamead shall forthwith return to Northwood the said proxy; and
if Canamead has exercised its rights under (i)(B) and/or (i)(C) above, all
Northwood directors and officers of the Pulp Corporations Upper Fraser and
Sinclair having resigned under the provisions of (i)(B) above, shall forthwith
be reinstated; and if Canamead has exercised its rights under (iv) above,
Northwood shall be entitled to repurchase all shares of the Pulp Corporation
from Canamead, having been acquired by Canamead under (iv) above, for an amount
equal to the aggregate of the moneys paid by Canamead to Northwood for or on
account of the purchase price for such shares.
(b) In the event of any Act of Default, as defined by the provisions of
Section 8 of this Agreement, by or on the part of Canamead or Mead or the
corporation referred to as Canadian-Mead in the Agreement in the form attached
hereto as Exhibit "F," Northwood shall have the four following remedies, except
that in the case of default in any of the provisions of Clause 15, or any
provision other than Section 4 of the Agreement in the form attached hereto as
Exhibit "E," the remedies set forth in (i) and (iv) below shall not be
available:
(i) The right for a period of 60 days after the occurrence of the said
Act of Default by notice in writing given within such period to require
Canamead:
(A) To deliver to Northwood an irrevocable proxy authorizing the
Northwood Directors (acting by a majority of them present at any
meeting of the members of the Pulp Corporation or, if only one is
present, then by that one) to vote all shares of the Pulp Corporation
owned by Canamead at all meetings of the member of the Pulp
Corporation for the election of directors, which may be held within
18
<PAGE>
one year from the date of delivering the said proxy;
(B) To cause the Canamead Directors and all officers of the Pulp
Corporation and Upper Fraser and Sinclair nominated by Canamead to resign,
effective immediately; and
(C) To permit Northwood thereupon to nominate and elect or appoint
representatives of Northwood in place of such resigning directors and
officers of the Pulp Corporation and Upper Fraser and Sinclair; and
(ii) The right to pursue all other rights and remedies available by
statute, at law or in equity; and
(iii) The right to compel specific performance of this Agreement; or
(iv) The option to purchase all, but not less than all, of the shares of
the Pulp Corporation owned by Canamead at a price equal to 85% of the book value
of such shares (excluding anything for goodwill or patents) as of the last
preceding 31st day of December if notice of intention to exercise such option is
given between January 1st and June 30th, both inclusive, or as of the preceding
June 30th, if notice of intention to exercise such option is given between July
1st and December 31st, both inclusive, such book value to be as determined by
the chartered accountants who were with respect to the accounts at such date
independent auditors who have been appointed by the members of the Pulp
Corporation, and such determination shall be final and conclusive. Such option
may be exercised by notice in writing, given by Northwood to Canamead within 60
days after the occurrence of an Act of Default, as defined in Section 8 of this
Agreement, by Canamead or Mead; and upon exercise of such option, the purchase
price of such shares shall be payable, without interest as follows:
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<PAGE>
25% thirty days after the exercise of the Option;
25% sixty days after the first payment is due;
25% one hundred and twenty days after the first payment is due; and
25% one hundred and eighty days after the first payment is due;
Provided, nevertheless that, in the event that the Act of Default by
Canamead or Mead is fully cured and/or remedied within 180 days from and after
its occurrence, then Northwood and Noranda shall forthwith after such Act of
Default has been so fully cured and/or remedied restore Canamead to all its
rights under this Agreement, and without limitation: If Northwood has exercised
its rights under (i)(A) above, Northwood shall forthwith return to Canamead the
said proxy; and if Northwood has exercised its rights under (i)(B) and/or (i)(C)
above, all Canamead directors and all officers of the Pulp Corporation, Upper
Fraser and Sinclair having resigned under the provisions of (i)(B) above, shall
forthwith be reinstated; and if Northwood has exercised its rights under (iv)
above, Canamead shall be entitled to repurchase all shares of the Pulp
Corporation from Northwood, having been acquired by Northwood under (iv) above,
for an amount equal to the aggregate of the moneys paid by Northwood to Canamead
for or on account of the purchase price for such shares.
10. Effect of Receivership or Bankruptcy
------------------------------------
In the event that Canamead, Mead, Northwood or Noranda, through voluntary
or involuntary action, be placed in the hands of a receiver in equity, trustee
in bankruptcy, trustee in reorganization, liquidator, receiver, or other similar
statutory or judicial officer, then, and in that event, such officer shall have
no right to disaffirm the obligations of such party undertaken by it, either
directly or impliedly, pursuant to this Agreement, it being the intent hereof
that such trustee, liquidator, receiver or officer so appointed in
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<PAGE>
such proceedings shall be bound by the obligations hereof in the same manner as
the corporation he represents, subject always to the applicable provisions of
the laws of the United States of America or Canada, or any applicable political
subdivision thereof, as the case may be, to the contrary.
11. Non-waiver
----------
It is mutually agreed that the failure of any party to insist in any one or
more instances upon strict performance of any of the provisions of this
Agreement, or to take advantage of any of its rights hereunder, shall not be
construed as a waiver of any of such provisions or the relinquishment of such
rights, but the same shall continue and remain in full force and effect.
12. Sale of Shares of Upper Fraser and Sinclair, etc.
-------------------------------------------------
(a) Canamead and Northwood agree to cause the Pulp Corporation to
purchase, and Northwood hereby agrees to sell and transfer to the Pulp
Corporation, (i) all shares of whatsoever class or kind of Upper Fraser and
Sinclair which are issued and out standing on October 31, 1964 and (ii) all
receivables owing by Upper Fraser and Sinclair to Northwood on October 31,
1964. The purchase price or consideration to be paid by the Pulp
Corporation to Northwood for the said shares of Upper Fraser and Sinclair
shall be the sum of $757,000 (Canadian funds), and the purchase price or
consideration to be paid by the Pulp Corporation to Northwood for the said
receivables owing by Upper Fraser and Sinclair to Northwood shall be the
aggregate amount of said receivables in Canadian funds as shown by the
audited financial statements of Northwood as of October 31, 1964.
(b) The closing of the said purchase and sale shall take place at the
office of Northwood in Vancouver, British Columbia, Canada, at 11:00
o'clock a.m. (Vancouver time) on
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October 31, 1964 (which date is herein referred to as the "Closing Date") and,
at the closing, the aggregate of the aforesaid purchase prices and consideration
(based upon unaudited financial statements) shall be paid by the Pulp
Corporation to Northwood by certified cheque and Northwood shall deliver to the
Pulp Corporation certificates for the said shares duly endorsed in blank for
transfer and good and sufficient assignments or instruments of transfer to the
Pulp Corporation of the said receivables. On such date, not later than December
31, 1964, as may be agreed upon by Canamead and Northwood, said purchase prices
and considerations shall be adjusted in accordance with the audited financial
statements of Northwood as of October 31, 1964, and Northwood shall promptly
refund to the Pulp Corporation or the Pulp Corporation shall promptly make an
additional payment to Northwood of the amount by which the aggregate of the
estimated purchase prices and considerations is more or less than the actual
purchase prices and considerations as so determined.
(c) Subject to the aforesaid closing being duly completed as herein
provided, Northwood hereby agrees to execute and deliver to the Pulp Corporation
such further assurances or documents as may be reasonably required by the Pulp
Corporation to vest the said shares and receivables in the Pulp Corporation.
(d) The term "audited financial statements" as used in this Agreement
shall mean financial statements certified by chartered accountants who are at
the time of such certification the independent auditors appointed by the members
of the company whose financial statements are referred to, and the term "balance
sheet" shall mean the balance sheet forming part of such audited financial
statements.
(e) In the event of Northwood failing to cure or remedy a breach of any of
the representations and warranties contained
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in Clause 13 of this Agreement within 30 days after written notice by
Canamead so to do, Northwood covenants and agrees to pay to Canamead
one-half of any damages arising by reason of any uncured breach in any
of said representations and warranties, without, however, derogating in
any way whatsoever from the other rights and remedies, if any, available to
Canamead under this Agreement.
(f) The representations and warranties of Northwood contained in
Clause 13 of this Agreement shall survive the purchase by the Pulp
Corporation of said shares and receivables.
(g) Northwood agrees that it will cause Upper Fraser and Sinclair to
refrain from any borrowing after the date of this Agreement without the
written consent of Canamead.
13. Further Representations and Warranties of Northwood
---------------------------------------------------
Northwood represents and warrants to Canamead and Mead:
(a) That the authorized capital of Upper Fraser is at the date hereof
and will, on the Closing Date, be $150,000 (Canadian funds), made up of
750 redeemable preference shares having a nominal or par value of $100
each, and 750 ordinary shares having a nominal or par value of $100 each,
of which 347 redeemable preference shares and 480 ordinary shares are at
the date hereof and will be on the Closing date outstanding as validly
issued and fully-paid and non-assessable shares;
(b) That the authorized capital of Sinclair is, at the date hereof,
and will on the Closing Date be, $1 (Canadian funds), made up of one
unissued Class A share having a nominal or par value of $1 and, as at the
date hereof, Sinclair is and, as at the Closing date, Sinclair will be
authorized to issue 3,200 shares without nominal or par value, of which all
of the said 3,200 shares without nominal or par value are, at the date
hereof, and will be on the Closing Date outstanding as validly issued and
fully-paid and non-assessable shares;
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<PAGE>
(c) That the copies of the Memorandum of Association of Upper Fraser,
the Articles of Association of Upper Fraser, the Memorandum of Association
of Sinclair and the Articles of Association of Sinclair certified by the
Deputy Registrar of Companies of British Columbia as of April 6, 1964
(which have heretofore been delivered to Mead) are complete and correct
copies and there will have been no amendments to any of them, as of the
Closing Date, except any such amendments as may be made on or before the
Closing Date in accordance with the provisions of this Agreement;
(d) As of the date hereof and as of the Closing Date there has not
been any material adverse change in the business properties and condition,
financial or otherwise, of Upper Fraser or Sinclair as disclosed in the
audited balance sheets as of October 31, 1963 of Upper Fraser and
Sinclair, except changes occurring in the ordinary course of business of
such companies, respectively, and except changes as of the Closing Date
resulting from earthquake, requisition or taking of property by any
governmental authority, flood, embargo, forest fire, riot or Act of God or
of the public enemy, and except loss normally covered by use and occupancy
insurance, and except loss from accident and casualty other than liability
to any person, firm or corporation for personal and property damage.
(e) That as of the date hereto the business, properties and
condition, financial or otherwise, of Upper Fraser and Sinclair,
respectively, have not, since October 31, 1963, been materially adversely
affected in any way as the result of any fire, explosion, earthquake,
accidents, casualty, requisition or taking of property by any governmental
authority, flood, windstorm, embargo, riot or Act of God or of the public
enemy, and that as of the Closing Date the business, properties and
condition, financial or otherwise,
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<PAGE>
of said companies, respectively, will not have been since October 31, 1963
materially adversely affected (otherwise than by substitution of money or other
property to the extent of full insurable value) as the result of any fire,
explosion, public liability claim or windstorm; and except loss normally
covered by use and occupancy insurance;
(f) That the properties, plants and structures and the equipment thereon or
therein of Upper Fraser and Sinclair, of the date hereof, are as briefly
described in schedules, identified by the signature of an officer of Northwood,
which have heretofore been delivered to Mead; and that neither Upper Fraser nor
Sinclair is, at the date hereof, nor will it be, on the Closing Date in default
in respect to such properties plants and structures and equipment thereon or
therein as to any applicable existing statutes, ordinances, regulations or
rulings of governmental authorities having jurisdiction in relation thereto;
(g) That neither Upper Fraser nor Sinclair will, on the Closing Date, be a
party to any contract or agreement except for (1) items set forth in a schedule,
identified by the signature of an officer of Northwood, which has heretofore
been delivered to Mead, which are in effect on the date hereof and will be in
effect on the Closing Date, (2) contracts or agreements which may be cancelled
by Upper Fraser or Sinclair without penalty on notice of 90 days or less, (3)
contracts resulting from employment of individuals by Upper Fraser or Sinclair
without written agreement and without specific arrangements as to term, and (4)
contracts to which Canamead or Mead has consented writing; and that neither
Upper Fraser nor Sinclair is, at the date hereon nor will it be, on the Closing
Date, in default under any provision of any contract or agreement to which it is
a party or to which
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<PAGE>
it is bound, which default would materially adversely affect its business,
properties or condition, financial or otherwise, and no event has occurred, at
the date hereon or will have occurred at the Closing Date, which, but for the
passing of time or giving of notice, or both, would constitute such a default.
(h) Subject to the provisions of paragraph (n) hereinafter, that neither
Upper Fraser nor Sinclair is, at the date hereof, a party to or threatened by
any litigation, proceeding or controversy, or subject to any judgment, order,
writ, injunction or decree before any court or administrative agency, which
might result in any material adverse change in the business, properties or
condition, financial or otherwise, of Upper Fraser or Sinclair.
(i) That each of Upper Fraser and Sinclair has set up on its books adequate
reserves for, or has fully paid and discharged, all taxes of any kind whatsoever
which had accrued against it as of October 31, 1963.
(j) That neither Upper Fraser nor Sinclair has, as of the date hereof, nor
will it have, as of the Closing Date, knowingly failed to observe any laws,
rulings or orders applicable to it in a manner which would result in any
material adverse change in its business, properties or condition, financial or
otherwise.
(k) That Northwood owns as at the date hereof and will, as of the Closing
Date, own all of the issued and outstanding shares of whatsoever class or kind
of Upper Fraser and Sinclair; and that Northwood is at the date hereof, and
will, on the Closing Date, be fully entitled to sell, transfer and assign all
such shares to the Pulp Corporation in accordance with this Agreement; and that
such sale will not result in a breach or constitute a default under any contract
or agreement to which Northwood, Upper Fraser
-26-
<PAGE>
or Sinclair is subject; and that there are not, at the date hereof, and
there will not be, on the Closing Date, any outstanding options, whether in
the form of convertible debentures or otherwise, for the purchase of any
shares of Upper Fraser or Sinclair or any Agreement, written or oral,
relating to the issuance or transfer of any of such shares to which Upper
Fraser or Sinclair is a party;
(l) That each of Upper Fraser and Sinclair is a company duly
incorporated under the laws of the Province of British Columbia, Canada,
and is in good standing with the Registrar of Companies in the said
Province, and is duly organized and validly existing under the laws of the
said Province, and has, at the date hereof, and will, on the Closing Date,
have full power and authority to hold its properties (except to the extent
prevented by any act of any government) and to carry on the business being
conducted by it and will on the Closing Date be so validly existing and in
good standing;
(m) Subject to the provisions of paragraph (n) hereinafter, that the
balance sheet of Upper Fraser as of October 31, 1963 and the balance sheet
of Sinclair as of October 31, 1963 (both of which have heretofore been
delivered to Mead and both of which are certified by Messrs. Deloitte,
Plender, Haskins and Sells), fairly, truly and completely present in
accordance with generally accepted accounting principles, the financial
condition of Upper Fraser and Sinclair, respectively at the said date;
(n) That neither Upper Fraser nor Sinclair has, at the date hereof,
nor will it have, on the Closing Date, any liabilities, absolute or
contingent, in excess of $40,000 which are not reflected or referred to in
the aforesaid balance sheets as of October 31, 1963 of Upper Fraser or
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Sinclair or in the notes thereto (including, without limitation thereto,
liabilities which are not commonly required under generally accepted
accounting principles to be reflected or referred to in balance sheets or
the notes thereto) except liabilities incurred after October 31, 1963 in
the ordinary course of business;
(o) That neither Upper Fraser nor Sinclair has indebtedness for
borrowed funds as of the date of this Agreement other than (1) advances by
Northwood since October 31, 1963 in the amount of $1,300,000 and (2) the
amounts shown on the aforesaid balance sheets as of October 31, 1963;
(p) That as of the date hereof, no transfer or payment of the assets
of Upper Fraser or Sinclair has been made to Northwood, directly or
indirectly, since October 31, 1963 and, as of the Closing Date, no such
transfer or payment will have been made since October 31, 1963 except sums
paid in repayment of advances made between October 31, 1963 and the Closing
Date with the consent of Mead (if required under this Agreement) plus an
amount not greater than the excess, if any, of (A) the sums showing as due
by Upper Fraser and Sinclair, respectively, to Northwood on the audited
balance sheet of Northwood as of October 31, 1963 over (B) the sums showing
as due by Upper Fraser and Sinclair, respectively, to Northwood on the
aforesaid balance sheet of Northwood as of October 31, 1964;
(q) Each of Upper Fraser and Sinclair now has and will on the Closing
Date (except for property disposed of in the ordinary course of business)
have good, safeholding and marketable title to all of their properties and
assets as reflected in the aforesaid audited financial statements as of
October 31, 1963 (including, without limitation thereto, good, safeholding
and marketable title in fee simple or leasehold as stated on the schedule
referred
-28-
<PAGE>
to in paragraph (f) of this Clause 13 to all of its real properties, being
those properties set forth in the aforesaid audited financial statements as
of October 31, 1963), free and clear of all liens and encumbrances
whatsoever except for minor title defects not affecting use of the property
in the business and except taxes not then due and payable and except to the
extent prevented by any act of any government;
(r) The amount paid in cash by Northwood as advances to Sinclair and
Upper Fraser (remaining unpaid as of October 31, 1963) was $4,131,241
(Canadian funds) and the amount paid in cash by Northwood for all of the
outstanding stock of Sinclair and Upper Fraser was $757,000 (Canadian
funds).
14. Purchase of Pulp
----------------
(a) The parties hereto agree that the Pulp Corporation, Mead,
Northwood and Noranda shall execute and deliver an agreement in the form
attached hereto as Exhibit "E" on or before November 1, 1964 if this
Agreement is then in effect;
(b) The parties hereto agree that at any time after the earlier of
the following dates:
(i) the 1st day of January 1997, or
(ii) the date upon which the net cash flow
(as herein defined) exceeds $50,000,000 (U. S. funds), the entire
output of the pulp mill shall, if but only if either (A) Mead so elects in
its sole discretion and has previously at any time after the date of this
Agreement given notice in writing of at least one year of the date upon
which such election shall be effective, or (B)
-29-
<PAGE>
Northwood so elects in its sole discretion and has previously at any time after
the date of this Agreement given notice of at least two years of the date upon
which such election shall be effective, be purchased as provided in and there
shall be executed by the parties hereto an Agreement in the form attached hereto
as Exhibit "F" and Mead shall cause Canadian-Mead to be incorporated prior
thereto; provided, however, that the agreement in the form attached hereto as
Exhibit "E" shall continue until and terminate upon the effective date of the
agreement in the form attached hereto as Exhibit "F."
For the purposes of paragraph (iii) the phrase "net cash flow" shall mean
the total of (A) the net income, if any, of the Pulp Corporation plus, after
October 31, 1964, the net income, if any, of Sinclair and Upper Fraser (less the
net loss, if any, of any of such three companies) after provision for all income
and other taxes as shown in the audited financial statements of the Pulp
Corporation, Sinclair and Upper Fraser, and (B) all allowances made for
depreciation as shown in said audited financial statements.
15. Appointment of Sales Agent for Pulp
-----------------------------------
The parties hereto agree that on or before November 1, 1964, if this
Agreement is then in effect, the Pulp Corporation shall execute and deliver and
Mead shall cause Mead Pulp Sales, Inc. to execute and deliver an agreement in
the form of Exhibit "C" hereto, which provides for the appointment of Mead Pulp
Sales, Inc. as the exclusive sales agent of the Pulp Corporation to sell on the
terms and conditions set forth in said Exhibit "C" the entire output (exclusive
of any portion of the output sold directly to Mead or its affiliates as defined
in said Exhibit "C"), of said pulp mill.
-30-
<PAGE>
16. Appointment of Sales Agent for Forest Products
----------------------------------------------
The parties hereto agree that on or before November 1, 1964, if this
Agreement is then in effect, the Pulp Corporation and Northwood shall execute
and deliver an agreement in the form of Exhibit "D" hereto, which provides for
the appointment of Northwood as the exclusive Sales Agent of Upper Fraser and
Sinclair to sell on the terms and conditions set forth in said Exhibit "D" the
entire output of the sawmills (excluding wood chips and other materials
purchased or used by the Pulp Corporation) of Upper Fraser and Sinclair and any
sawmills hereafter acquired by the Pulp Corporation, and on the Closing Date the
Pulp Corporation shall cause Upper Fraser and Sinclair to become parties to said
agreement in the form of Exhibit "D" hereto.
17. Arbitration
-----------
Any matter of interpretation, application or effect of and any controversy
or controversies arising under, or in connection with the performance of this
Agreement, which the parties hereto cannot resolve by mutual agreement, shall be
submitted to the decision of a competent person to be agreed upon by Canamead
and Northwood as arbitrator, and his decision thereupon shall be final. In case
of failure to agree upon such arbitrator, Canamead shall name one arbitrator,
and Northwood shall name one arbitrator, and such two arbitrators shall
forthwith select a third arbitrator; provided, that if such two arbitrators fail
to select a third arbitrator within ten days after the demand for such
arbitration the third arbitrator shall be appointed by application made by
either party to the Chief Judge of the United States Court of Appeals for the
Sixth Circuit. To the extent necessary to appoint such arbitrator or arbitrators
the Arbitration Act of the Province of British Columbia shall apply. The
arbitrators so selected shall proceed promptly to investigate the controversy in
question in accordance
-31-
<PAGE>
with the Arbitration Act of the Province of British Columbia, and a decision of
any two of the three arbitrators shall be binding and conclusive upon the
parties hereto; PROVIDED that the cost of arbitration shall be divided equally
between Canamead and Northwood. Nothing in this Clause shall be construed to
derogate from the right of any party hereto to withhold consent where provision
is made for consent in this Agreement.
18. Trade Mark
----------
Northwood hereby agrees that on or before July 1, 1965 it will sell, assign
and transfer unto Pulp Corporation to the extent possible without affecting
adversely the validity thereof or the use thereof by Northwood in respect of
products other than Pulp or at the option of the Pulp Corporation, licence
Northwood's entire right, title and interest in and to the trademark and trade
name "NORTHWOOD" as applied to paper pulp, including any and all applications
for and registration thereof in all countries of the world, together with the
good will of the paper pulp business in connection with which said trademark is
used, and further including all rights of recovery and past infringement
thereof.
19. Term and Amendment of Agreement
-------------------------------
(a) Unless previously terminated in accordance with the provisions of
this Agreement, the parties hereto agree that this Agreement shall continue
in force so long as Canamead and Northwood each hold or are entitled under
this Agreement to repurchase one-half of the issued shares in the capital
stock of the Pulp Corporation;
(b) The parties hereto agree that any provision or term of the within
Agreement may be amended with the written consent of all the parties
hereto.
-32-
<PAGE>
20. Notices
-------
All notices to be given hereunder shall be deemed to be properly given
if, in the case of notices to Northwood or Noranda, they are addressed to:
Northwood Mills Ltd., or Noranda Mines, Limited.
(as the case may be)
1700 - 44 King Street West,
Toronto 1, Ontario,
Canada.,
or to such other address as is specified by Northwood or Noranda, as the case
may be, by like notice, and in the case of notices to Mead or Canamead, they are
addressed to:
The Mead Corporation or Canamead, Inc.
(as the case may be)
c/o The Mead Corporation
118 West First Street
Dayton 2, Ohio
U.S.A.
or to such other address as is specified by Mead or Canamead by like notice,
provided that all such notices shall be in writing and shall be mailed by
prepaid registered mail not later than the day upon which notice is required to
be given pursuant to the applicable term of this Agreement.
21. Severability
------------
If any provision or clause of this Agreement is held invalid for any
reason or for any purpose, such invalidity shall not affect other provisions or
clauses of this Agreement which can be given effect without the invalid
provision or clause, and to this end the provisions or clauses of this
Agreement are declared to be severable.
22. Governing Law
-------------
This Agreement shall be construed in accordance with the laws of the
Province of British Columbia.
23. Headings
--------
The headings to the clauses contained herein are inserted for
convenience of reference only and do not form part
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<PAGE>
of the within Agreement.
24. Covenant of Noranda
-------------------
In consideration of Canamead and Mead entering into the within
Agreement, Noranda doth hereby guarantee unto Canamead and Mead the full and
complete performance and observance by Northwood of each and every covenant of
Northwood herein contained.
25. Covenant of Mead
----------------
In consideration of Northwood and Noranda entering into the within
Agreement, Mead doth hereby guarantee unto Northwood and Noranda the full and
complete performance and observance by Canamead of each and every covenant of
Canamead herein contained.
26. This Agreement shall be binding upon and enure to the benefit of the
parties hereto, their respective successors and permitted assigns, as the case
may be.
IN WITNESS WHEREOF, the Parties have caused their seals to be affixed
in the presence of their respective proper officers duly authorized in that
behalf as of the day and in the year first above written.
The Common Seal of NORTHWOOD )
MILLS LTD. was hereunto affixed )
in the presence of: )
)
/s/ )
- ------------------------------- )
)
/s/ )
- ------------------------------- )
NORANDA MINES, LIMITED
By /s/
-----------------------
President
By /s/
-----------------------
Secretary
Attest: CANAMEAD, INC.
/s/ W. Walker Lewis Jr. By /s/ Geo. H. Pringle
- ----------------------- -----------------------
Secretary President
Attest: THE MEAD CORPORATION
/s/ W. Walker Lewis Jr. By /s/ Geo. H. Pringle
- ----------------------- -----------------------
Secretary President
-34-
<PAGE>
This is Exhibit "A" to the Agreement
made as of the 24th day of April, 1964,
between Northwood Mills Ltd., Canamead
Inc., The Mead Corporation and Noranda.
Mines, Limited.
"Companies Act"
MEMORANDUM OF ASSOCIATION
-------------------------
OF
NORTHWOOD PULP LIMITED
----------------------
(1) The name of the Company is Northwood Pulp Limited.
(2) The registered office of the Company will be situate in the City of
Vancouver, in the Province of British Columbia.
(3) The objects (in addition to the ancillary and incidental powers set forth
in Section 22, Subsection 1 of the "Companies Act") for which the Company
is incorporated are:
(a) To carry on the business of manufacturers of pulp, paper, and other
pulp products of every nature and kind, and of articles and things of
every nature and kind that can be fabricated or manufactured with
pulp, paper or other pulp products.
(b) To carry on the business of fabricators, manufacturers, converters,
importers and exporters of and merchants and dealers in products of
the forest of every description whatsoever, including pulp, paper, and
other pulp products, lumber, veneer, plywood, containerboard,
hardboard, shingles, shakes, logs, wood chips, packages and byproducts
of the foregoing and any materials or commodities that are used in
the fabrication, manufacture, conversion or treatment of the
foregoing.
(c) To carry on business as pulpwood harvesters, loggers, timber cruisers,
timber merchants, rafters, boomers and operators of logging camps of
all kinds and generally to deal in, buy, sell, import and export
timber and pulpwood whether standing or felled.
(d) To purchase, take on lease, or license, exchange or otherwise acquire
and to use or lease lands, timber,
<PAGE>
berths, leases, limits, licenses, mill properties, and sites, water
rights and water powers, rights to buildings, skid ways and roads,
foreshore rights and wharves, piers, booms and other works for the
collecting, holding, protecting, driving, rafting, towing, sorting,
delivering, safe keeping and transmission of logs, wood, lumber,
timber, wood chips, and forest products of every description.
(e) To carry on the business of trucking and a carrier by land or water.
(f) To carry on the business of wholesale and retail merchants.
(g) To acquire and take over as a going concern the whole or any part of
the business, property and liability of any person, persons or company
carrying on any business which the company is authorized to carry on
and to pay for the same either wholly or partly in cash, or wholly or
partly in shares or debentures of the company.
(h) To carry on the business of general contractors, builders and
engineers in the construction, engineering, design and planning of
works of whatsoever nature and kind.
(i) To purchase or otherwise acquire and hold shares, bonds or other
securities heretofore issued or which may hereafter be issued by any
company or companies.
(j) To guarantee and become surety for the performance of any contract,
obligation or undertaking made or to be made by any person, firm or
company whatsoever and to secure the performance thereof by mortgage
or charge on all or any of the property or assets of the company
including its unpaid or uncalled capital for the time being or in any
other manner whatsoever; provided that nothing herein contained shall
confer on the company the powers of any insurance company within the
meaning of the "Insurance Act" of the Province of British Columbia.
(k) To register or license the company in any of the Provinces of Canada
or elsewhere wheresoever to carry on business and
-2-
<PAGE>
to do all necessary things in that behalf.
(1) The word "company" in this Memorandum when applied otherwise than to this
company shall be deemed to include any partnership or other body of
persons, whether corporate or unincorporate, and whether domiciled in
British Columbia or elsewhere, and the objects specified in each of the
paragraphs hereof and the powers granted by Subsection 1 of Section 22 of
the "Companies Act" shall be regarded independently and accordingly shall
be in no wise limited or restricted (except when otherwise expressed in
such paragraph by reference to the object and powers indicated in any other
paragraph or the name of the company) that may be carried out in as full
and ample a manner and construed in as wide a sense as if each of the said
paragraphs defined the object and powers of a separate, distinct, and
independent company.
(4) The liability of the members is limited.
(5) The authorized capital of the Company is Eight Million Dollars ($8,000,000)
divided into four million (4,000,000) "A" ordinary shares and four million
(4,000,000) "B" ordinary shares all with a nominal or par value of one
dollar ($1.00) each, with the special rights set out in the Articles of
Association of the Company.
WE, the several persons whose names and addresses are subscribed hereto,
are desirous of being formed into a company in pursuance of this Memorandum of
Association, and we respectively agree to take the number and class of shares in
the capital of the company set opposite our respective names:
-3-
<PAGE>
- --------------------------------------------------------------------------------
NAME, ADDRESSES AND DESCRIPTION : NAME AND CLASS OF SHARES TAKEN
OF SUBSCRIBERS : BY EACH SUBSCRIBER
- --------------------------------------------------------------------------------
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
- --------------------------------------------------------------------------------
DATED at Vancouver, British Columbia, this day of April, A. D., 1964.
WITNESSES AS TO BOTH SIGNATURES:
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
-4-
<PAGE>
This is Exhibit "B" to the Agreement made
as of the 24th day of April, 1964, between
Northwood Mills Ltd., Canamead, Inc., The
Mead Corporation and Noranda Mines, Limited
"Companies Act"
ARTICLES OF ASSOCIATION
NORTHWOOD PULP LIMITED
The Provisions of Table "A" in the
First Schedule of the "Companies
Act" are hereby excluded.
--------------------
1. In these regulations, unless the context otherwise requires, expressions
defined in the "Companies Act," or any statutory modifications thereof in force
at the date at which these regulations become binding upon the Company, shall
have the meanings so defined; and words importing the singular shall include the
plural, and vice versa, and words importing the masculine gender shall also
include females, and words importing persons shall include bodies corporate, and
the expression "Companies Act" whenever it appears shall mean the British
Columbia "Companies Act" and any amendments for the time being in force.
PRIVATE COMPANY
---------------
2. (a) The Directors may refuse to register any transfer of shares.
(b) The number of members for the time being of the Company (exclusive of
persons who are for the time being in the employment of the Company)
is not to exceed fifty (50).
(c) Any invitation to the public to subscribe for any shares or debentures
or debenture stock of the Company is hereby prohibited.
3. The Directors shall, as regards any allotment of shares, duly comply with
such of the provisions of the "Companies Act" as may be applicable thereto.
<PAGE>
4. Every member, shall, without payment, be entitled to a certificate under
the common seal of the Company specifying the share or shares held by him and
the amount paid up thereon; PROVIDED that in respect of a share or shares held
jointly by several persons, the company shall not be bound to issue more than
one certificate. The delivery of a certificate for a share to one of several
joint holders shall be sufficient delivery to all.
5. If a share certificate is defaced, lost or destroyed, it may be renewed on
payment of such fee (if any) not exceeding fifty cents, and on such terms (if
any) as to evidence and indemnity as the Directors think fit.
6. No part of the funds of the Company shall be employed in the purchase of,
or in loans upon the security of the Company's share, save as provided in the
"Companies Act."
CALLS ON SHARES
---------------
7. The Directors may from time to time make calls upon the members in respect
of any moneys unpaid on the purchase price of their shares.
8. The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.
9. If a sum called in respect of shares is not paid before or on the day
appointed for payment thereof, the person from whom the sum is due shall pay
interest upon the sum at the rate of five per centum per annum from the day
appointed for the payment thereof to the time of the actual payment, but the
directors shall be at liberty to waive payment of that interest wholly or in
part.
10. The provisions of these regulations as to payment of interest shall apply
in the case of nonpayment of any sum which, by the terms of issue of a share,
become payable at a fixed time, whether on account of the share, or by way of
premium as if the same had become payable by virtue of a call duly made of which
notice has been given as herein provided.
-2-
<PAGE>
11. If by the conditions of allotment of any share, the whole or any part of the
amount thereof shall be payable by installments, every such installment, when
due, shall be paid to the Company by the holder of the share.
TRANSFER AND TRANSMISSION OF SHARES
-----------------------------------
12. The instrument of transfer of any shares in the Company shall be executed by
the Transferor, and the Transferor shall be deemed to remain the holder of the
shares until the name of the Transferee is entered in the register of members in
respect thereof.
13. Shares in the Company shall be transferred in any usual or common form or
any form which the Directors shall approve.
14. A person becoming entitled to a share by reason of the death or bankruptcy
of the holder shall be entitled to the same dividends and other advantages to
which he would be entitled if he were the registered holder of the share, except
that he shall not, before being registered as a member in respect of the share,
be entitled in respect of it to exercise any right conferred by membership in
relation to meetings of the Company.
15. No member shall be at liberty to sell and/or transfer any share or shares
until he has first received a bona fide offer to sell and/or transfer same
(hereinafter called the "outsiders offer") and until he shall have first offered
for sale such share or shares to such member or members, as at the date of the
offer, is or are entitled to receive notices from the Company to attend meetings
and to vote thereat. The offer to such member or members shall be made through
the Secretary of the Company by notice specifying the number of shares offered
and the price and the terms and limiting the time (which shall not be less than
sixty days) within which the offer, if not accepted, shall be deemed to be
declined and shall be accompanied by a copy of the outsiders offer. If more than
one such member shall accept such offer, the Secretary shall apportion the
shares offered for sale as nearly in proportion as the circumstances admit, to
the
-3-
<PAGE>
number of shares then carrying voting rights held by the respective members so
accepting. If after the expiration of the time specified for acceptance, the
offer to sell has not been accepted or on receipt of an intimation in writing
from the member or members to whom the offer is made, declining to accept the
shares offered, then the member so wishing to sell and/or transfer such shares
shall be at liberty to sell and/or transfer the same to any person, firm or
corporation whatsoever but shall not sell and/or transfer the same at a price
less or on terms and conditions less onerous than that at which the said share
or shares shall have been offered pursuant to the above provision in this
Article without first offering the said share or shares for sale at such reduced
price or on such less onerous terms and conditions to the member or members
entitled as hereinbefore provided, for a further period of sixty (60) days,
PROVIDED that a member desirous of selling or transferring his shares and who
has offered them as hereinbefore provided, shall not be required to sell his
shares to a member or members pursuant to such offer unless his offer shall have
been accepted in respect of all shares so offered by him for sale, and in the
event of his offer not having been accepted in respect of all shares so offered
by him for sale, then, at his option, such offer may be deemed, within the
meaning of this Article, to have been declined by the member of members entitled
as hereinbefore provided.
RIGHTS OF MEMBERS
-----------------
16. Save for the rights relating to the election and appointment and the
removal of Directors in these regulations set forth, the rights of the holders
of "A" ordinary shares and the rights of the holders of "B" ordinary shares
shall be identical, and wherever in these regulations the word "share" is used
it shall apply both to an "A" ordinary share and to a "B" ordinary share.
-4-
<PAGE>
INCREASE OF CAPITAL AND SHARES
------------------------------
17. The Directors may, with the sanction of a special resolution of the
members, increase the authorized capital by such sum, to be divided into shares
of such amount, as the resolution shall prescribe, or, if the Company is
authorized to issue shares without nominal or par value, the number of such
shares.
18. Subject to any direction to the contrary that may be given by the
resolution sanctioning the increase of share capital all new shares shall,
before issue, to be offered to such persons as at the date of the offer are
entitled to receive notices from the Company of general meetings in proportion,
as nearly as the circumstances admit, to the amount of the existing ordinary
shares to which they are entitled. The offer shall be made by notice specifying
the number of shares offered, and limiting a time within which the offer, if not
accepted by notice in writing, will be deemed to be declined, and after the
expiration of that time, or on the receipt of an intimation in writing from the
person to whom the offer is made that he declines to accept the shares offered,
the Directors may dispose of the same in such manner as they think most
beneficial to the Company.
19. The new shares shall be subject to the same provisions with reference to
the payment of calls, transfer, transmission, and otherwise as the shares in the
original share capital.
GENERAL MEETINGS
----------------
20. The first annual general meeting shall be held within eighteen months from
the date of incorporation, and thereafter an annual general meeting shall be
held once in every calendar year at such time (not being more than fifteen
months after the holding of the last preceding annual general meeting) and place
as may be prescribed by the Company in general meeting, or, in default, at such
time in the month following that in which the anniversary of the Company's
incorporation occurs, and at such place as the Directors
-5-
<PAGE>
shall appoint. In default of the meeting being so held, the meeting shall be
held in the month next following, and may be convened by any two members in the
same manner as nearly as possible as that in which meetings are to be convened
by the Directors.
21. The annual general meetings shall be called ordinary meetings; all other
general meetings shall be called extraordinary.
22. The Directors may, whenever they think fit, convene an extraordinary
general meeting, and extraordinary general meetings shall also be convened on
such requisition, or, in default, may be convened by such requisitionists, as
provided by the "Companies Act."
23. Not less than fourteen days' notice of a general meeting at which a special
resolution is to be proposed, and not less than seven days' notice of any other
general meeting (exclusive of the day on which the notice is given), specifying
the place, the day, and the hour of meeting, and, in case of special business,
the general nature of that business, shall be given in manner hereinafter
mentioned, or in such other manner (if any) as may be prescribed by ordinary
resolution, whether previous notice thereof has been given or not, to such
persons as are, under the regulations of the Company, entitled to receive such
notices from the Company; but the nonreceipt of the notice by any member shall
not invalidate the proceedings at any general meeting. PROVIDED, HOWEVER, that a
general meeting may, with the consent in writing of members holding not less
than three-fourths of the issued shares then carrying voting rights, be convened
on a shorter notice than that herein provided for or without written notice.
PROCEEDINGS AT GENERAL MEETING
------------------------------
24. All business shall be deemed special that is transacted at any
extraordinary meeting and all that is transacted at an ordinary meeting with the
exception of the consideration of the accounts, balance sheets, and ordinary
report of the Directors and Auditors, the election of Directors and other
officers, and the fixing of the remuneration of the auditors.
-6-
<PAGE>
25. No business shall be transacted at any general meeting unless a quorum of
members is present at the time when the meeting proceeds to business; persons
holding or representing by proxy a majority of the issued shares shall
constitute a quorum.
26. If within half an hour from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of members, shall be
dissolved; in any other case it shall stand adjourned to the same day in the
next week, at the same time and place, and, if at the adjourned meeting a quorum
is not present within half an hour from the time appointed for the meeting, the
members present shall be a quorum.
27. The chairman may, with the majority consent of any meeting at which a
quorum is present (and shall if so directed by the meeting), adjourn the meeting
from time to time and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place; and it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
meeting.
28. At any general meeting a resolution put to the vote of the meeting shall be
decided on a show of hands, unless a poll is (before or forthwith after the
declaration of the result of the show of hands) demanded by any member entitled
to vote, and unless a poll is so demanded, a declaration by the Chairman that a
resolution has, on a show of hands, been carried, or carried unanimously, or by
a particular majority, or lost, and an entry to that effect made in the book of
proceedings of the Company, shall be conclusive evidence of the fact, without
proof of the number or proportion of the votes recorded in favor of, or against,
that resolution.
29. If a poll is duly demanded, it shall be taken in such manner as the
Chairman directs, and the result of the poll shall be deemed to be the
resolution of the meeting at which the poll was demanded.
-7-
<PAGE>
30. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the meeting at which the show of hands takes place or at
which the poll is demanded, shall not be entitled to a second or casting vote.
31. A poll demanded on the election of a chairman, or on a question of
adjournment, shall be taken forthwith. A poll demanded on any other question
shall be taken at such time as the Chairman of the meeting directs.
VOTES OF MEMBERS
----------------
32. In a show of hands every member who is the holder of a share then carrying
voting rights and who is present in person shall have one vote; on a poll every
member present in person or by proxy shall have one vote for each share then
carrying voting rights of which he is the holder.
33. In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders; and for this purpose seniority shall be determined
by the order in which the names stand in the register of members.
34. A member of unsound mind, or in respect of whom an order has been made by
any Court having jurisdiction in lunacy, may vote, whether on a show of hands or
on a poll, by his committee, curator bonis, or other person in the nature of a
committee or curator bonis appointed by the Court, and any such committee,
curator bonis, or other person may on a poll, vote by proxy.
35. No member shall be entitled to vote at any general meeting unless all calls
and installments due from him have been paid.
36. On a poll votes may be given either personally or by proxy.
37. The instrument appointing a proxy shall be in writing under the hand of the
appointor or his attorney duly authorized in writing,
-8-
<PAGE>
or, if the appointor is a corporation, either under the common seal or under the
hand of an officer or attorney duly authorized. Any person whether a member or
not may act as a proxy if duly appointed as aforesaid.
38. Any member may appoint a proxy to represent such member and the shares held
by him for such period of time as may be designated in the instrument appointing
such proxy, as such proxy shall during such period as such instrument remains in
force be entitled, except as in these Articles otherwise provided, in respect of
all shares held by such member, to exercise all rights of membership in relation
to meetings of the Company.
39. The instrument appointing a proxy shall be produced at or before the
meeting at which the person named in the instrument proposes to vote; and in
default the instrument of proxy shall not be treated as valid.
40. An instrument appointing a proxy may be in any usual or common form or in
any form that the Directors shall approve.
41. Any corporation which is a member of the company may by resolution of its
directors or other governing body authorize such person as it thinks fit to act
as its representative at any meeting of the company or of any class of members
of the company, and the person so authorized shall be entitled to exercise the
same powers on behalf of the corporation which he represents as that corporation
could exercise if it were an individual member of the company.
DIRECTORS
---------
42. (a) The number of Directors shall be ten; of whom five shall be elected by
the holders of the "A" ordinary shares and five shall be elected by the holders
of the "B" ordinary shares, either at the annual general meeting, or at
separate meetings of the holders of the "A" ordinary shares and of the holders
of the "B" ordinary
-9-
<PAGE>
shares, at which separate meetings the regulations herein set forth shall apply
as though only "A" ordinary shares or "B" ordinary shares were outstanding. The
number of Directors shall not be increased or decreased, except as hereinafter
provided, without the sanction of a Special Resolution. The names of the first
Directors shall be determined in writing by the subscribers to the Memorandum of
Association.
(b) If the Directors are unable to decide or act upon any matter,
motion or question before the meeting because the same shall not have received
the approval of both a majority of the Directors elected by the holders of the
"A" ordinary shares and a majority of the directors elected by the holders of
the "B" ordinary shares or by reason of the lack of a quorum at any meeting,
then the number of Directors shall be and continue to be eleven until the next
annual general meeting of the members, whereupon the number of Directors shall
again be ten, provided that the number of Directors shall be subject to
increase to eleven as aforesaid, without limit to the number of times the
Directors has been so increased.
43. The additional Director, provided for in the preceding Article 42,
shall be appointed on the Joint nomination of the holders of the "A" ordinary
shares and the holders of the "B" ordinary shares. If the said holders do not,
within ten days of such increase, agree on the person to be the additional
Director, then the additional Director shall be appointed by a competent person
to be agreed upon as arbitrator by the holders of the "A" ordinary shares and
the holders of the "B" ordinary shares and the decision of such arbitrator shall
be final. In case of failure to agree upon such arbitrator the holders of the
"A" ordinary shares shall name one arbitrator and the holders of the "B"
ordinary shares shall name one arbitrator and such two arbitrators shall
forthwith select a third arbitrator; provided that if such two arbitrators fail
to select a third arbitrator within
-10-
<PAGE>
ten days after demand for such third arbitrator, the third arbitrator shall be
appointed by application made by either party to the Chief Judge of the United
States Court of Appeals for the Sixth Circuit. To the extent necessary to
appoint such additional arbitrator the Arbitration Act of the Province of
British Columbia shall apply. The three arbitrators so selected shall proceed
promptly in accordance with the Arbitration Act of the Province of
British Columbia to appoint the additional Director and a decision of any two of
the three arbitrators shall be binding and conclusive.
44. No Director shall require any share qualification.
45. The remuneration of the Directors shall from time to time be determined by
ordinary resolution, whether previous notice thereof has been given or not.
46. No contract or other transaction between this Company and any other
corporation, of which at least one-half of the shares thereof, having voting
power, is owned or controlled by this Company or which owns or controls at least
one-half of the voting shares of this Company, shall in any case be void or
voidable because of the fact that the directors of this Company or any of them
are directors or officers or shareholder, of such other corporation. Any
director may vote, either as a director or shareholders in respect of any such
contract or other transaction. A general notice that any director is a member of
any specified company or firm and is to be regarded as interested in any
subsequent transactions with any such company or firm, shall be sufficient
disclosure under this clause, and after such general notice it shall not be
necessary to give any special notice relating to any particular appointment,
contract, arrangement or transaction with such firm or company.
47. No director or officer for the time being of the Company shall be liable
for the acts, receipts, neglects or defaults of any other director or officer or
employee, or for joining in any receipt
-11-
<PAGE>
or act for conformity, or for any loss, damage, or expense happening to the
Company through the insufficiency or deficiency of title to any property
acquired by order of the board of directors for or on behalf of the Company, or
for the insufficiency or deficiency of any security in or upon which any of the
moneys of or belonging to the Company shall be placed out or invested or for any
loss or tortious act of any person, firm or corporation with whom or which any
moneys, securities or effects shall be lodged or deposited or for any loss
occasioned by any error of judgment or oversight on his part or for any other
loss, damage or misfortune whatever which may happen in the execution or the
duties of his respective office or trust or in relation thereto unless the same
shall happen by or through his own negligence, default, breach of duty or breach
of trust.
48. Every director or officer of the Company and his heirs, executors and
administrators, and estate and effects, respectively, shall, from time to time
and at all times, be indemnified and saved harmless out of the funds of the
Company from and against:
(a) all damages, costs, charges and expenses whatsoever which
such director or officer sustains or incurs in or about any
action, suit or proceeding which is brought, commenced or
prosecuted against him, for or in respect of any act, deed,
matter or thing what soever, made, done or permitted by him,
in or about the execution of the duties of his office;
(b) all other damages, costs, charges and expenses which he
sustains or incurs in or about or in relation to the affairs
thereof,
except such costs, charges or expenses as are occasioned by his own negligence,
default, breach of duty or breach of trust.
49. No act or proceeding of any director or board of directors shall be deemed
invalid or ineffective by reason of the subsequent
-12-
<PAGE>
ascertainment of any irregularity in regard to such act or proceeding or the
qualification of such director or directors.
50. Directors may rely upon the accuracy of any statement or report prepared by
the Company's auditors and shall not be responsible or held liable for any loss
or damage resulting from the paying of any dividends or otherwise acting upon
such statement or report.
POWERS AND DUTIES OF DIRECTORS AND OFFICERS
-------------------------------------------
51. The business of the Company shall be managed by the Directors, who may pay
all expenses incurred in getting up and registering the Company, and may
exercise all such powers of the Company as are not, by the "Companies Act," or
any statutory modification thereof for the time being in force, or by these
Articles, required to be exercised by the Company in general meeting, subject
nevertheless to any regulation of these Articles, to the provisions of the said
Act, and to such regulations, being not inconsistent with the aforesaid
regulations and provisions, as may be prescribed by the Company in general
meeting, but no regulations made by the Company in general meeting shall
invalidate any prior act of the Directors which would have been valid if that
regulation had not been made. Without departing in any way from the generality
of the foregoing the directors may authorize one or more employees, whether or
not Officers of the Company, to execute on behalf of the Company Contracts and
agreements of any kind.
The Directors at a meeting at which a quorum is present shall be competent
to exercise all or any of the authorities, powers and discretions by or under
the regulations of the Company for the time being exercisable by the Directors
generally.
52. (a) There shall each year be appointed to the following offices, persons
selected by the holders of the "A" ordinary shares:
President,
one Vice President,
Treasurer, and
Secretary
-13-
<PAGE>
(b) There shall each year be appointed to the following offices, persons
selected by the holders of the "B" ordinary shares:
Chairman of the Board,
Senior Vice President,
Comptroller,
Assistant Secretary, and
General Manager.
53. The officers shall have the following powers, rights, duties
and responsibllitles:
(a) Chairman of the Board - The Chairman of the Board shall preside at all
---------------------
meetings of the Directors and at all meetings of the shareholders of
the Company and shall have signing authority commensurate with the
signing authority of the President and shall have such other powers and
duties as the Directors may, from time to time, determine.
(b) President - In the absence of the Chairman of the Board, the President
---------
when present shall preside at all meetings of the members and of the
Directors. The President shall be fully empowered and authorized to
exercise the general supervision of the business and affairs of the
Company, subject only to the direction of the Directors and he shall
have such other powers and duties as the Directors may, from time to
time determine. The President shall have the power and right to sign on
behalf of the Company all contracts, notes, bonds, engagements and
other papers requiring his signature all of which not requiring the
seal of the Company.
-14-
<PAGE>
(c) Vice President or Vice Presidents - During the absence or inability to
---------------------------------
act of the President, his powers and duties shall devolve upon the
Vice President, and if there be more than one in that category, such
powers and duties shall devolve upon the senior one present and able
to act. Such Vice President or Vice Presidents, shall also perform
such duties and exercise such powers as the Directors may prescribe.
Every act done by a Vice President in purported exercise of the powers
and duties of the President, which if done by the President would bind
the Company, shall bind the Company when so done by such Vice
President, whose authority in such case shall not be impunged, and the
absence or inability of the President with reference thereto shall be
presumed. Vice Presidents shall have signing authority commensurate
with the signing authority of the President.
(d) General Manager - The General Manager shall have the active management
---------------
and general supervision of the business and affairs of the Company and
shall have the general duties and powers usually vested in the manager
of a corporation subject to the authority of the Directors and the
supervision of the President. He shall see that orders and resolutions
of the Directors are carried into effect. Employees of the Company
shall be under his superintendence and direction and he shall see that
their duties are properly performed. The Directors shall have power,
however, at any time and from time to time to divide the duties herein
cast upon the General Manager
-15-
<PAGE>
with any other officer or officers of the Company and to define the
specific duties to be performed by the General Manager and all other
officers.
(e) Secretary - The Secretary shall:
---------
(i) attend at and keep the minutes of the meetings of the shareholders
and of the directors in books provided for that purpose;
(ii) see that notices of such meetings are duly given in accordance
with the provisions of the Articles of Association of the Company; and
(iii) perform all duties incident to the office of Secretary and such
other duties as may be from time to time assigned to him by the
Directors or the President.
(f) Treasurer - The Treasurer shall, subject to the direction of the
---------
Directors and the President, have general charge of the finances of
the Company. He shall perform all duties incident to the office of
treasurer and such other duties as from time to time may be assigned
to him by the Directors or the President. He shall, subject to the
direction of the Directors and the President, have charge and custody
of and be responsible for all funds and securities and cause to be
deposited all such funds and securities in the name of the Company in
such depository or depositories as may be selected from time to time
by the Directors.
(g) Comptroller - The Comptroller shall, subject to the direction of the
-----------
Directors, and the President, have general charge of the financial
reports, accounting procedures and tax and statistical matters
(excepting
-16-
<PAGE>
the powers, rights, duties and responsibilities of the treasurer) of
the Company. He shall perform all duties incident to the office of
comptroller and such other duties as from time to time may be assigned
to him by the Director or the President. He shall cause books of
account to be kept in which shall be entered the receipts and
disbursements and assets and liabilities of the Company.
(h) Assistant Secretary - The Assistant Secretary shall assist the
-------------------
Secretary in the performance of his duties. Such Assistant Secretary
shall also perform such duties and exercise such powers as the
Directors or the President may prescribe.
54. The Directors may appoint the following officers with the following powers,
rights, duties and responsibilities:
(a) Assistant Treasurer - The Assistant Treasurer shall assist the
-------------------
Treasurer in the performance of his duties. Such Assistant Treasurer
shall also perform such duties and exercise such powers as the
Directors or the President may prescribe.
(b) Assistant Comptroller - The Assistant Comptroller shall assist the
---------------------
Comptroller in the performance of his duties. Such Assistant
Comptroller shall also perform such duties and exercise such powers as
the Directors or the President may prescribe.
55. The term of employment, duties and remuneration of the officers and the
security, if any, to be given by them to the Company shall be settled and
determined from time to time by the Directors, but in the absence of an
agreement to the contrary, the employment of all officers shall be during the
pleasure of the Directors. One person may hold more than one office at one time.
If more than one
-17-
<PAGE>
Vice President be appointed, the Directors shall determine their respective
seniorities. Any officer, employee or agent of the Company may be required to
give such bond for the faithful performance of his duties as the Directors in
their uncontrolled discretion may require any bond or for the insufficiency of
any bond or for any loss by reason of the failure of the Company to receive any
indemnity thereby provided.
56. The Directors shall duly comply with the provisions of the "Companies Act,"
or any statutory modification thereof for the time being in force, and in
particular with the provisions in regard to the registration of mortgages, and
to keeping registers of directors and members, and to filing with the Registrar
of Companies an annual report, and copies of special and other resolutions,
returns of allotments of shares, and of any change in the registered office or
of directors.
57. The Directors shall cause minutes to be made in books provided for the
purpose:
(i) of all appointments of officers made by the Directors;
(ii) of the names of all Directors present at each meeting of the
Directors and of any committee of the Directors;
(iii) of all resolutions and proceedings at all meetings of the Company
and of the Directors and of committees of Directors.
THE SEAL
--------
58. The Directors shall provide for the safe custody of the common seal of the
Company which shall not be affixed to any instrument except in the presence of:
(a) The Chairman of the Board of Directors or the President or any Vice
President, together with the Secretary or the Treasurer or the Assistant
Secretary; or
-18-
<PAGE>
(b) Such other officer or officers or Director or Directors
of the Company as may be prescribed from time to time
by resolution of the Board of Directors.
59. The Company may have an official seal for the transaction of business
without the Province of British Columbia for use in any other Province, State or
Country, subject to the provisions of the "Companies Act."
DISQUALIFICATION OF DIRECTORS
-----------------------------
60. The office of Director shall ipso facto be vacated if the Director:
(a) By notice in writing to the Company resigns his office; or
(b) Becomes bankrupt; or
(c) Is found lunatic, or becomes of unsound mind; or
(d) Is removed.
61. Any Director, either individually or as a member of a partnership, or a
shareholder or Director of a company or corporation may, notwithstanding any
rule of law or equity to the contrary, be appointed to any office under the
Directors with or without remuneration, or contract with the Company either as
vendor, purchaser or otherwise or act as agent for the Company or be interested
in any operations, undertakings or business undertaken or assisted by the
Company, or in which the Company is interested, and no such contract or
arrangement shall be avoided, nor shall any Director so contracting or being so
interested be liable to account to the Company for any profits realized by any
such contract or arrangement by reason of such Director holding that office or
of the fiduciary relation thereby established.
-19-
<PAGE>
ELECTION AND APPOINTMENT OF DIRECTORS
-------------------------------------
62. At each annual general meeting of the Company the whole of the Directors
shall retire from office; PROVIDED, HOWEVER, that if at any such meeting
the places of such Directors are not filled up the retiring Directors shall
continue to be Directors until their places shall be filled up at an adjournment
of the said meeting or at any new meeting called for the purpose of electing
Directors.
63. A retiring Director shall be eligible for re-election.
64. (a) The holders of the "A" ordinary shares may at any time remove any
director elected by such holders or appointed by the Directors elected
by such holders or appointed by the Directors elected by such holders.
(b) The holders of the "B" ordinary shares may at any time remove any
director elected by such holders or appointed by the Directors elected
by such holders.
65. The Directors elected by the holders of the "A" ordinary shares may appoint
any person to fill any vacancy however occurring in the office of a Director
elected by such holders or previously so appointed.
The Directors elected by the holders of the "B" ordinary shares may appoint
any person to fill any vacancy however occurring in the office of a Director
elected by such holders or previously so appointed.
PROCEEDINGS OF DIRECTORS
------------------------
66. No resolution of the Directors shall be passed unless it is approved by a
majority of the Directors elected by the holders of "A" ordinary shares and also
by a majority of the Directors elected by the holders of "B" ordinary shares
unless and until an additional Director has been appointed, as provided for in
Article 43. After the additional Director has been appointed, as provided in
Article 43, questions arising at a meeting of the Directors shall be decided by
a majority of votes, but the Chairman shall in no circumstances have a second or
casting vote.
67. A Director may, and the Secretary on the requisition of a Director shall,
at any time summon a meeting of Directors. At least seven days' notice in
writing specifying the place, day and time,
-20-
<PAGE>
shall be given to every Director of every Directors' meeting provided that any
Director may, before or after the meeting, waive such notice.
68. The quorum necessary for the transaction of the business of the Directors
shall be six Directors or alternate directors personally present.
69. The continuing Directors may act notwithstanding any vacancy in their body,
but, if and so long as their number is reduced below the number fixed by or
pursuant to these regulations of the Company as the necessary quorum of
Directors, the continuing Directors may act for the purpose of summoning a
general meeting of the Company, but for no other purpose.
70. The Directors may delegate any of their powers to committees as they think
fit; and the committee so formed shall in the exercise of the powers so
delegated conform to any regulations that may be imposed on them by the
Directors.
71. Each Director shall have power to nominate by writing under his hand any
person to act as alternate director in his place during such time as he shall,
on account of absence, illness or for any other reason whatsoever be unable to
act as a Director and/or attend a meeting or meetings of Directors, and at his
discretion to remove such alternate director, and on such appointment being made
the alternate director shall be subject in all respects to the terms and
conditions existing with reference to the other Directors, and each alternate
director shall act in the place of the Director who has so nominated him and
shall exercise and discharge all the powers and duties of the Director he
represents. Any instrument appointing an alternate director shall be delivered
to and retained by the Company. If the Director making any such appointment
shall cease to be a Director, the person appointed by him shall thereupon cease
to have any power or authority as an alternate director. No such alternate
director shall require any qualification.
-21-
<PAGE>
RESOLUTIONS OF DIRECTORS ADOPTED BY WRITING
-------------------------------------------
72. Notwithstanding anything to the contrary contained herein, a resolution
assented to and adopted by writing under the hands of all the Directors or their
alternates, though not passed at a Directors' meeting, shall be of the same
force as if it had been duly passed at a Directors' meeting.
DIVIDENDS AND RESERVE
---------------------
73. The Directors may from time to time pay to the members such cash dividends
and interim cash dividends as appear to the Directors to be justified by the
profits of the Company.
74. No dividend shall be paid otherwise than out of profits.
No dividends shall bear interest against the Company.
ACCOUNTS
--------
75. The Directors shall cause true accounts to be kept of all sums of money
received and expended by the Company and the matters in respect of which such
receipts and expenditures take place; and of sales and purchases of goods by the
Company and of the assets and liabilities of the Company.
76. The books of account shall be kept at the registered office of the Company,
or at such other place or places as the Directors may think fit, and shall
always be open to the inspection of any of the Directors and members or their
representatives.
77. Once at least in every year the Directors shall lay before the Company at
its annual general meeting an audited profit and loss account and statement of
earned surplus account for the period since the preceding account or (in case of
the first account) since the incorporation of the Company, made up to a date not
more than four (4) months before such meeting.
-22-
<PAGE>
78. A balance sheet shall be made out in every year and laid before the
Company at its annual general meeting made up to a date not more than six (6)
months before such meeting. The balance sheet shall be accompanied by a report
of the Directors and of the auditors as of the state of the Company's affairs,
and the amount which they recommend to be paid by way of dividend, and the
amounts (if any) which they propose to carry to a reserve fund.
AUDIT
-----
79. Auditors shall be appointed and their duties regulated in accordance
with the provisions of the "Companies Act."
NOTICES
-------
80. A notice may be given by the Company to any member either personally or
by sending it by post to him to his registered address or to the address (if
any) within the said Province supplied by him to the Company for the giving of
notices to him. Where a notice is sent by post, service of the notice shall be
deemed to be effected by properly addressing, prepaying and posting a letter
containing the notice, and to have been effected on the day following the date
of posting.
81. If a member has no registered address in the Province of British
Columbia, and has not supplied to the Company an address within the said
Province for the giving of notices to him, a notice addressed to him at his last
known address shall be deemed to be duly given to him on the day following the
date of posting.
82. A notice may be given by the Company to the joint holders of a share by
giving the notice to the joint holder named first in the register in respect of
the share.
-23-
<PAGE>
83. A notice may be given by the Company to the persons entitled to a share in
consequence of the death or bankruptcy of a member by sending it through the
post in a prepaid letter addressed to them by name, or by the title of
representatives of the deceased, or trustee of the bankrupt, or by any like
description, at the address (if any) in the Province of British Columbia
supplied for the purpose by the persons claiming to be so entitled or (until
such address has been so supplied) by giving the notice in any manner in which
the same might have been given if the death or bankruptcy had not occurred.
- ---------------------------------------|----------------------------------------
NAMES, ADDRESSES AND DESCRIPTIONS | NUMBER OF SHARES TAKEN BY EACH
OF SUBSCRIBERS | SUBSCRIBER
- ---------------------------------------|----------------------------------------
|
|
|
|
|
|
|
- --------------------------------------------------------------------------------
Dated at Vancouver, British Columbia this 24th day of April, 1964.
WITNESS TO THE ABOVE SIGNATURES:
- -------------------------------
- -------------------------------
- -------------------------------
- -------------------------------
-24-
<PAGE>
This is EXHIBIT "C" to the Agreement between
Northwood Mills Ltd., Canamead, Inc. The Mead
Corporation and Noranda Mines, Limited, made
as of the 24th day of April, 1964
THIS AGREEMENT made as of the day of 1964,
BETWEEN:
NORTHWOOD PULP LIMITED, a company duly
----------------------
incorporated under the laws of the Province
of British Columbia, having an office at the
City of Vancouver, Province aforesaid,
(hereinafter called "Pulp Corporation")
OF THE FIRST PART.
AND:
MEAD PULP SALES, INC., a company duly
---------------------
incorporated under the laws of the State
of Delaware, having an office at the City
of New York, State of New York
(hereinafter called "Mead-Pulp")
OF THE SECOND PART.
WHEREAS, Pulp Corporation intends to construct and operate at Prince
George, British Columbia, a pulp mill having an initial daily rated capacity of
five hundred (500) tons of paper grade bleached, semi-bleached and unbleached
sulphate wood pulp;
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in consideration of
the mutual covenants herein contained, the Parties hereto do hereby agree as
follows:
1. Agency: The Pulp Corporation hereby appoints Mead-Pulp its
-----------
exclusive agent for soliciting and servicing sales of Pulp in all countries,
territories, and possessions throughout the world, provided, however, that the
Pulp Corporation reserves the exclusive privilege of selling Pulp directly to
The Mead Corporation, an Ohio corporation (hereinafter referred to as "Mead") or
any specified affiliates of Mead for use by them and not for the purpose or
resale by them to others.
<PAGE>
Any sale of Pulp (other than to Mead for itself or for an affiliate of
Mead) by the Pulp Corporation independently of Mead-Pulp shall be deemed to have
been secured by Mead-Pulp as agent for all purposes of this Agreement.
It is understood and agreed that Mead-Pulp acts for unrelated persons
and also for Mead and its affiliates in a similar capacity in soliciting and
servicing sales of Pulp; and that Mead-Pulp may hereafter act in such capacity
for such persons, for Mead and its affiliates, and for any other person
whatsoever, irrespective of whether Mead-Pulp has in the past acted or is now
acting in such capacity for such person.
It is understood and agreed that the Pulp Corporation shall for each
calendar year, not less than three months before the beginning thereof, inform
Mead-Pulp of the quantity of Pulp which the Pulp Corporation is reserving for
direct sale to Mead and its specified affiliates and the approximate quantity
which will be available to Mead-Pulp for sale hereunder during such calendar
year. Sales to Mead for shipment to Mead and for shipment to its specified
affiliates are not covered by this Agreement.
2. Definitions: The term "person" as used herein shall include a
--------------
corporation, company, firm, partnership, association, individual, or any other
legal entity whatsoever.
The term "Pulp" as used herein shall mean paper grade bleached, semi-
bleached and unbleached sulphate wood pulp.
The term "specified affiliates" as used herein shall mean any
affiliate of Mead specified by Mead by prior notice in writing to Pulp
Corporation.
The term "affiliate" as used herein shall mean any corporation of
which Mead owns, directly or indirectly, stock possessing at least 20% of the
combined voting power of all classes of stock entitled to
-2-
<PAGE>
vote in the election of directors.
The term "Mill Net Selling Price" shall mean the net amount realized
by the Pulp Corporation f.o.b. car, Prince Georgia, British Columbia, though
sold on the basis of the delivered price of the Pulp Corporation less allowances
for freight and insurance and other charges from Prince George, British Columbia
to destination and discounts, if any.
3. Term: This Agreement shall continue until October 31, 1972 and
-------
thereafter from year to year with each party having the privilege of
termination of this Agreement after such date by giving six months written
notice to the other party. Such notice may be given, and may become effective,
at any time during any year.
4. Price: Mead-Pulp hereby agrees to use its best efforts to sell Pulp
--------
hereunder at the highest prices possible in light of the quantity and quality of
Pulp produced and prevailing market conditions at the time, provided that in no
event shall Mead-Pulp be deemed or considered to guarantee or warrant the sale
of the output of the Pulp Corporation or the prices therefor.
5. Compensation: The Pulp Corporation shall pay Mead-Pulp, as full
---------------
compensation for its services hereunder, the percentages set forth below of the
Mill Net Selling Price of all tonnage sold and delivered by the Pulp Corporation
on orders or contracts secured by Mead-Pulp:
Percentage of Mill
Customer Location Net Selling Price*
----------------- ------------------
United States and Canada 3%
Elsewhere throughout the 5%
world
*Based on the currency in which the sale is made provided, however,
that the above percentage applicable with respect to sales to customers located
elsewhere than the United States and
-3-
<PAGE>
Canada shall be reduced by 1/2 of 1% with respect to each shipment as to which
Mead-Pulp has received, in form satisfactory to Mead-Pulp, an irrevocable letter
of credit in Mead-Pulp's favor for the account of the customer from a bank
satisfactory to Mead-Pulp, provided further that Mead-Pulp shall have no
obligation hereunder to seek such letters of credit.
In the event of termination of this Agreement, the Pulp Corporation
shall continue to pay Mead-Pulp compensation, as hereinabove determined, with
respect to tonnage delivered after the effective date of termination, pursuant
to orders or contracts secured by Mead-Pulp and accepted by the Pulp Corporation
prior thereto.
6. Payment: Mead-Pulp shall assume all credit risks with respect to
----------
orders and contracts secured by Mead-Pulp, including orders and contracts
secured by Mead-Pulp prior to termination of this Agreement.
With respect to sales made pursuant to such orders and contracts with
customers located in the United States and Canada, Mead-Pulp shall remit to the
Pulp Corporation the invoice price, inclusive of freight and other charges, if
any, less Mead-Pulp's commission, as follows:
(a) Pulp invoiced from the 1st through the 10th of any month -
remittance on the 10th of the following month.
(b) Pulp invoiced from the 11th through the 20th of any month -
remittance on the 20th of the following month.
(c) Pulp invoiced from the 21st through the end of any month -
remittance on the last day of the following month.
With respect to sales made pursuant to such orders and contracts with customers
located elsewhere than the United States and Canada, Mead-Pulp shall remit to
the Pulp Corporation the invoice price, inclusive of freight and other charges,
if any, less Mead-Pulp's Commission, upon the same day that the customer's
payment is due under such order or contract.
-4-
<PAGE>
Remittances shall be in United States funds with respect to sales to
customers in the United States and in Canadian funds with respect to sales to
customers in Canada. With respect to customers located elsewhere than in the
United States or Canada, remittances shall be in such funds as shall be mutually
agreed upon at the time of acceptance by the Pulp Corporation of the order or
contract.
The Pulp Corporation shall invoice Mead-Pulp direct on all shipments
made pursuant to orders and contracts secured by Mead-Pulp, and Mead-Pulp, in
turn, will invoice the customers of the Pulp Corporation and assume full
responsibility for credit and collections.
Mead-Pulp shall be entitled to exercise any right which the Pulp
Corporation may have to hold up delivery or cancel the sale in the event of the
customer becoming an unsatisfactory credit risk prior to delivery or in the
event of the government of any foreign country cancelling or altering the import
license for Pulp or failing to provide the specified currency to pay for the
same.
7. Contracts: Mead-Pulp shall submit to the Pulp Corporation all
------------
orders and contracts obtained for account of the Pulp Corporation. Such orders
and contracts shall be between the customer and the Pulp Corporation, and
acceptance by the Pulp Corporation may be communicated orally or in writing by
Mead-Pulp on behalf of the Pulp Corporation; provided, however, that no such
order or contract shall be binding upon the Pulp Corporation until accepted by
the Pulp Corporation, such acceptance to be communicated by the Pulp Corporation
to Mead-Pulp either orally or in writing. Mead-Pulp shall have no authority to
maintain any stock of Pulp outside Canada on behalf of Pulp Corporation from
which orders may be filled.
8. Consultations and Servicing: Mead-Pulp shall use its best efforts
------------------------------
at all times to promote the sale of Pulp of the Pulp Corporation to customers of
satisfactory credit standing. Mead-Pulp and the Pulp Corporation mutually agree
to consult together frequently on all
-5-
<PAGE>
matters pertaining to sales policy, production, quality, service, sub-agencies
and customer relations, in order that a very close and mutually satisfactory
working arrangement may be carried on at all times, and Mead-Pulp agrees to
service orders and contracts secured by Mead-Pulp in the usual and customary
manner from time to time adopted by Mead-Pulp; provided, however, that all
adjustments for defective shipments shall be for the account of the Pulp
Corporation.
9. Warranties: No warranty of any kind whatsoever shall be made by
-------------
Mead-Pulp to customers or to prospective customers, and no warranties shall be
made by the Pulp Corporation other than those contained in orders and contracts
executed by the Pulp Corporation in accordance with Clause 7 hereof.
10. Arbitration: Any matter of interpretation, application or effect
---------------
of and any controversy or controversies arising under, or in connection with the
performance of this Agreement, which the parties hereto cannot resolve by mutual
agreement, shall be submitted to the decision of a competent person to be agreed
upon by Mead-Pulp and Pulp Corporation as arbitrator, and his decision thereupon
shall be final. In case of failure to agree upon such arbitrator, Mead-Pulp
shall name one arbitrator, and Pulp Corporation shall name one arbitrator, and
such two arbitrators shall forthwith select a third arbitrator; provided, that
if such two arbitrators fail to select a third arbitrator within ten days after
the demand for such arbitration the third arbitrator shall be appointed by
application made by either party to the Chief Judge of the United States Court
of Appeals for the Sixth Circuit. To the extent necessary to appoint such
arbitrator or arbitrators the Arbitration Act of the Province of British
Columbia shall apply. The arbitrators so selected shall proceed promptly to
investigate the controversy in question in accordance with the Arbitration Act
of the Province of British Columbia, and a decision
-6-
<PAGE>
of any two of the three arbitrators shall be binding and conclusive upon
the parties hereto; PROVIDED that the cost of arbitration shall be divided
equally between Mead-Pulp and Pulp Corporation.
11. Notices:
-----------
(a) Mead-Pulp shall open all letters addressed to the Pulp Corporation
in care of Mead-Pulp and communicate the contents thereof to the Pulp
Corporation and act thereon pursuant to the instructions of the Pulp
Corporation.
(b) For the purposes of this Agreement, unless either party notifies
the other in writing to the contrary, all notices or communications shall
be addressed, in the case of Pulp Corporation to:
Northwood Pulp Limited
Prince George, British Columbia, Canada
and in the case of Mead-Pulp to:
Mead Pulp Sales, Inc.
200 Park Avenue
New York, New York 10017 - U.S.A.
Any notice or communication required under the provisions of this Agreement
shall be deemed to have been given when deposited in the United States or
Canadian mail, postage prepaid and registered, addressed in accordance with the
preceding sentence to the party to whom such notice or communication is being
given.
12. Assignment: The burden or benefit of this Agreement may not be
--------------
assigned by either party without the written consent of the other party.
13. Governing Law: This Agreement shall be governed by
-----------------
-7-
<PAGE>
and construed in accordance with the laws of the Province of British Columbia.
IN WITNESS WHEREOF, the Parties hereto have caused their seals to be
hereunto affixed in the presence of their respective proper officers duly
authorized in that behalf as of the day and year first above written.
The Common Seal of NORTHWOOD PULP )
LIMITED was hereunto affixed in )
the presence of: )
)
)
)
- ------------------------------- )
)
)
- ------------------------------- )
)
)
MEAD PULP SALES, INC.
ATTEST: By
-------------------------
President
- ------------------------------
Secretary
-8-
<PAGE>
THIS IS EXHIBIT "D" TO THE AGREEMENT BETWEEN
NORTHWOOD MILLS LTD., CANAMEAD, INC.,
THE MEAD CORPORATION AND NORANDA MINES,
LIMITED, MADE AS OF THE 24th DAY OF
APRIL 1964
THIS AGREEMENT made as of the day of 1964
BETWEEN:
NORTHWOOD PULP LIMITED (hereinafter called the
----------------------
"Pulp Corporation"), UPPER FRASER SPRUCE MILLS LTD
-----------------------------
(hereinafter called "Upper Fraser") and SINCLAIR
--------
SPRUCE LUMBER COMPANY LIMITED (hereinafter called
-----------------------------
"Sinclair"), each a company duly incorporated
under the laws of the Province of British Columbia,
with registered office at the City of Vancouver,
Province aforesaid (each of which is hereafter
sometimes referred to as "Vendor")
OF THE FIRST PART
AND:
NORTHWOOD MILLS LTD., a company duly incorporated
-------------------
under the laws of the Province of British Columbia
having an office at the City of Vancouver, Province
aforesaid
(hereinafter called "Northwood")
OF THE SECOND PART
WHEREAS:
(A) Northwood has entered into an agreement made as of the 24th day of
April 1964 between Northwood, Canamead, Inc., The Mead Corporation and
Noranda Mines, Limited, providing inter alia, for the sale by
Northwood of all the issued shares in the capital stocks of Upper
Fraser and Sinclair to Pulp Corporation upon October 31, 1964
(hereinafter called the "transfer date").
(B) Upper Fraser and Sinclair own and operate sawmills in the vicinity of
Prince George, British Columbia, and Pulp Corporation, Upper Fraser
and Sinclair, or any of them, may during the term of this Agreement
acquire other sawmills (hereinafter collectively called "sawmills").
(C) The parties hereto have agreed that Northwood shall subsequent to the
transfer date sell the products hereinafter specified of the sawmills
on the terms and conditions herein set forth.
<PAGE>
NOW, THEREFORE, THIS AGREEMENT WITNESSETH in consideration of the mutual
covenants herein contained the Parties hereto do hereby agree as follows:
1. Agency: Pulp Corporation, Upper Fraser and Sinclair each hereby appoints
---------
Northwood as its exclusive agent for soliciting and servicing sales throughout
the world subsequent to the transfer date, of logs, lumber and other products of
the sawmills excluding wood chips and other materials purchased or used by the
Pulp Corporation (such logs, lumber and other products excluding wood chips and
other materials purchased or used by the Pulp Corporation being hereinafter
called the "forest products"). Any sales of forest products by Upper Fraser or
Sinclair or Pulp Corporation independently of Northwood shall be deemed to have
been secured by Northwood as agent for all purposes of this Agreement.
It is understood and agreed that Northwood acts for unrelated persons in a
similar capacity in soliciting and servicing sales of forest products; and that
Northwood may hereafter act in such capacity for such persons, and for any other
person whatsoever, irrespective of whether Northwood has in the past acted or is
now acting in such capacity for such person.
2. Term: This Agreement shall continue until October 31, 1972 and
-------
thereafter from year to year with each party having the privilege of termination
of this Agreement as to itself after such date by giving six months written
notice to the other parties. Such notice may be given and may become effective
at any time during any year.
3. Price: Northwood hereby agrees to use its best endeavours to sell as
--------
aforesaid the said forest products at the highest prices possible in light of
the quantity and quality produced and prevailing market conditions at the time;
provided that in no event shall Northwood be deemed or considered to guarantee
or warrant the sale of the output or the prices therefor.
-2-
<PAGE>
4. Contracts: Northwood hereby agrees to submit to each Vendor all orders
------------
and contracts obtained for acceptance or rejection by or on behalf of such
Vendor.
5. Payment:
----------
(a) The Parties agree that Northwood shall assume all credit risks with
respect to orders and contracts secured by Northwood, including orders and
contracts secured by Northwood prior to termination of this Agreement; and
Northwood shall invoice all customers in the name or names of the Vendor.
(b) Northwood agrees that it shall remit to each Vendor for the account of
such Vendor at the end of every forty-five (45) day period (commencing with the
transfer date) an amount equal to the aggregate of all invoices of such Vendor
which have stood unpaid for a period of forty-five (45) days; provided that such
Vendor shall assign to Northwood all its or their right, title and interest in
and to such unpaid invoices forthwith on the aforesaid payment being made by
Northwood.
(c) Northwood shall be entitled to exercise any right which its principal
may have to hold up delivery or cancel the sale in the event of the purchaser
becoming an unsatisfactory credit risk prior to delivery or in the event of the
government of any foreign country cancelling or altering the import license for
the forest products or failing to provide the specified currency to pay for the
same.
6. Compensation: The Parties hereto agree that Northwood shall, as full
---------------
compensation for the services provided hereunder, be paid an amount equal to
2-1/2% of the mill net selling price of the said forest products sold by
Northwood, and the same shall be paid by the respective Vendor to Northwood
every forty-five (45) days, commencing with the transfer date. Provided,
however, that the
-3-
<PAGE>
above percentage applicable to customers located elsewhere than the United
States and Canada shall be reduced by 1/2 of 1% when there has been received,
in form satisfactory to Northwood, an irrevocable letter of credit in Vendor's
favour for the account of the customer from a bank satisfactory to Northwood.
For the purpose of this paragraph "mill net selling price" shall mean the net
amount in Canadian Funds realized by the Vendor f.o.b. car at the sawmill though
sold on the basis of the delivered price of the Vendor less allowances for
freight and insurance and other charges to destination and discounts, if any. In
the event of termination of the aforesaid sales agency, Northwood shall be
entitled to compensation as hereinabove determined with respect to quantities
delivered after the effective date of termination of such sales agency, pursuant
to orders or contracts secured by Northwood and accepted by the Vendor prior
thereto.
7. Seaboard: The Parties hereto acknowledge and agree that during the term
-----------
of this Agreement, the Vendors shall (i) be subject to and comply with all
obligations as have been undertaken by Northwood under the agreement dated June
18, 1963 between Seaboard Lumber Sales Company Limited and Northwood, and (ii)
be entitled to share rateably (with others entitled to do so) in the benefits
accruing to Northwood under the said agreement dated June 18, 1963 and by virtue
of Northwood being a shareholder of each of Seaboard Lumber Sales Company
Limited and Seaboard Shipping Company Limited.
8. Warranties: No warranty of any kind whatsoever shall be made by
-------------
Northwood to customers or to prospective customers, and no warranties shall be
made by the Vendor or Vendors other than those contained in orders and contracts
executed in accordance with paragraph 4 hereof.
9. Trademarks: On termination of this Agreement, the Vendors shall
-------------
discontinue use of any trademarks of Northwood which they have been permitted to
use.
-4-
<PAGE>
10. Consultation and Servicing: Northwood shall use its best efforts at all
------------------------------
times to promote the sale of forest products. Northwood and Vendors shall
consult together frequently on all matters pertaining to sales policy,
production, quality, service, sub-agencies and customer relations, in order that
a very close and mutually satisfactory working arrangement may be carried on at
all times, and Northwood agrees to service orders and contracts secured by
Northwood in the usual and customary manner from time to time adopted by
Northwood; provided, however, that all adjustments for defective shipments shall
be for the account of Vendor or Vendors.
11. Notices: Any notice required to be given hereunder shall be in writing
-----------
and may be delivered by registered mail and posted in the Provinces of British
Columbia or Ontario, postage prepaid, addressed to the Parties as follows or to
such other address as is specified by like notice:
in the case of Northwood to:
1700 - 44 King Street West,
Toronto 1, Ontario
in the case of Pulp Corporation to:
Prince George, British Columbia.
in the case of Upper Fraser and Sinclair:
Upper Fraser, British Columbia
and any such notice sent by registered mail shall be deemed to have been
received the day following the date of posting.
12. Arbitration: Any matter of interpretation, application or effect of and
---------------
any controversy or controversies arising under, or in connection with the
performance of this Agreement, which the parties hereto cannot resolve by mutual
agreement, shall be submitted to the decision of a competent person to be agreed
upon by Pulp Corporation, Upper Fraser or Sinclair, as the case may be, and
Northwood as arbitrator, and his decision thereupon shall be final. In case of
failure to agree
-5-
<PAGE>
upon such arbitrator, Pulp Corporation, Upper Fraser or Sinclair, as the case
may be, shall name one arbitrator, and Northwood shall name one arbitrator, and
such two arbitrators shall forthwith select a third arbitrator; provided, that
if such two arbitrators fail to select a third arbitrator within ten days after
the demand for such arbitration the third arbitrator shall be appointed by
application made by either party to the Chief Judge of the United States Court
of Appeals for the Sixth Circuit. To the extent necessary to appoint such
arbitrator or arbitrators the Arbitration Act of the Province of British
Columbia shall apply. The arbitrators so selected shall proceed promptly to
investigate the controversy in question in accordance with the Arbitration Act
of the Province of British Columbia, and a decision of any two of the three
arbitrators shall be binding and conclusive upon the parties hereto; PROVIDED
that the cost of arbitration shall be divided equally between Pulp Corporation,
Upper Fraser or Sinclair, as the case may be, and Northwood.
13. Governing Law: This Agreement shall be governed by and construed in
-----------------
accordance with the laws of the Province of British Columbia.
14. Assignment: The burden or benefit of this Agreement shall not be
--------------
assigned without the written consent of the parties hereto first had and
obtained.
IN WITNESS WHEREOF, the Parties hereto having caused their seals to be
hereunto affixed in the presence of their duly authorized officers or directors
in that behalf as of the day and year first above written.
-6-
<PAGE>
The Common Seal of NORTHWOOD PULP LIMITED )
was hereunto affixed in the presence of: )
)
)
)
- ------------------------------- )
)
)
- ------------------------------- )
)
)
The Common Seal of UPPER FRASER SPRUCE MILLS )
LTD was hereunto affixed in the presence of: )
)
)
)
- ------------------------------- )
)
)
- ------------------------------- )
)
)
The Common Seal of SINCLAIR SPRUCE LUMBER )
COMPANY LIMITED was hereunto affixed in )
the presence of: )
)
)
)
- ------------------------------- )
)
)
- ------------------------------- )
)
)
The Common Seal of NORTHWOOD MILLS LTD )
was hereunto affixed in the presence of: )
)
)
)
- ------------------------------- )
)
)
- ------------------------------- )
)
)
-7-
<PAGE>
THIS IS EXHIBIT "E" TO THE AGREEMENT BETWEEN
NORTHWOOD MILLS LTD., CANAMEAD, INC., THE
MEAD CORPORATION AND NORANDA MINES,
LIMITED, MADE AS OF THE 24TH DAY OF
APRIL 1964
THIS AGREEMENT, made as of the _____ day of________________ , 1964, by and
among NORTHWOOD PULP LIMITED, a company duly incorporated under the laws of the
Province of British Columbia, Canada (hereinafter called "Pulp Corporation"),
THE MEAD CORPORATION, a corporation duly incorporated under the laws of the
State of Ohio, United States (hereinafter called "Mead"), NORTHWOOD MILLS LTD.,
a company duly incorporated under the laws of the Province of British Columbia,
Canada (hereinafter called "Northwood"), and NORANDA MINES, LIMITED, a company
duly incorporated under the laws of the Province of Ontario, Canada (hereinafter
called "Noranda"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Canamead, Inc., a corporation duly incorporated under the laws of
the State of Ohio, United States (hereinafter called "Canamead") and Northwood
are each the owners of fifty percent of the capital stock of Pulp Corporation;
WHEREAS, Canamead is a wholly-owned subsidiary of Mead;
WHEREAS, Northwood is a wholly-owned subsidiary of Noranda;
WHEREAS, Pulp Corporation will construct and operate at or near Prince
George, Province of British Columbia, a bleached sulphate wood pulp mill
having an initial daily rated capacity of five hundred tons;
WHEREAS, Pulp Corporation contemplates the execution and delivery of not in
excess of $25,000,000 in promissory notes (hereinafter called the "Notes-I") and
not in excess of $10,000,000 in promissory notes (thereinafter called the
"Notes-II") to evidence indebtedness incurred under a loan agreement or
agreements with Canadian Imperial Bank of Commerce and The Royal Bank of Canada,
as amended from time to time (hereinafter called the "Loan Agreement") for the
construction and equipping of said pulp mill;
WHEREAS, Pulp Corporation desires to sell Pulp to Mead, and Mead desires to
purchase Pulp from Pulp Corporation;
WHEREAS, Pulp Corporation also intends to sell Pulp on the world market;
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and
agreements herein contained, the parties hereto do agree as follows:
<PAGE>
Section 1. Term of Agreement. The term of this Agreement shall extend
----------------------------
from the date hereof until the execution and delivery of an agreement in the
form of the exhibit attached hereto marked and hereinafter called Exhibit "F",
provided that either this Agreement or an agreement in the form of Exhibit "F"
shall continue in effect so long as any principal or interest on Notes-I and
Notes-II shall remain unpaid.
Section 2. Sale of Pulp to Mead.
-------------------------------
(a) Pulp Corporation hereby agrees to manufacture and sell to Mead,
and Mead agrees to purchase from Pulp Corporation for use by it or an
affiliate as stated in Section 5 hereof and not for resale, such quantity
of pulp as is requisitioned by Mead as hereinafter set forth. Four months
before the beginning of each year of Pulp Corporation, Pulp Corporation
shall furnish to Mead a budget of the estimated total production of the
pulp mill for such year, distributing such estimated total production as
equally as possible over the Operating Periods of such year. Within thirty
days after receipt of such budget from Pulp Corporation, Mead shall furnish
to Pulp Corporation a written schedule of its estimated requirements from
the pulp mill for each Operating Period, but Mead shall not be obligated to
purchase such estimated requirements unless and until it requisitions the
same. Seven days before the beginning of any Operating Period, Mead shall
furnish Pulp Corporation with a written requisition, specifying the
quantities and grades and approximate dates of shipment, for Pulp to be
manufactured and shipped by Pulp Corporation and purchased by Mead during
such Operating Period, distributing the dates of shipment thereof as evenly
as possible over the calendar weeks of such Operating Period. Pulp
Corporation agrees to load and ship all Pulp requisitioned by Mead upon
the approximate date or dates set forth in such requisition, but not more
in the aggregate during any year than the amount set forth in such budget.
(b) Delivery of the Pulp sold by Pulp Corporation to Mead pursuant to
its requisitions shall occur, and title shall pass, at the time that Pulp
is placed f.o.b. carrier at the pulp mill of Pulp Corporation and shall be
at the risk of Mead from and after such time.
-2-
<PAGE>
(c) If, for any reason of force majeure Pulp production during any
Operating Period shall fall below the total amount required to meet the
commitments of Pulp Corporation to customers, including Mead, for such
Operating Period, such production shall be prorated among all such
customers on the basis of their commitments for such Pulp, but Pulp
Corporation shall use its best efforts at all times to produce high quality
Pulp in amounts sufficient to meet its commitments to customers therefor,
including Mead. Force majeure shall excuse Mead from taking delivery of,
and the Pulp Corporation from its obligation to deliver, any Pulp, but only
during the existence of, and to the extent of, such force majeure.
(d) (i) The price per ton for each grade of such Pulp so sold and
delivered by Pulp Corporation to Mead or any specified affiliate in any
Operating Period shall be an amount per ton equal to Pulp Corporation's
average mill net per ton with respect to such grade of Pulp shipped by it
in such Operating Period to all customers (excluding Mead and specified
affiliates). Pulp Corporation's average mill net per ton with respect to
any grade of Pulp shipped by it in any Operating Period shall be computed
in Canadian funds for each grade of Pulp by (A) subtracting from its total
billing for such grade of Pulp shipped by it during such Operating Period
to customers throughout the world (excluding Pulp sold to Mead and
specified affiliates) the sum of all applicable discounts, commissions and
sale expenses and all freight, insurance, and other charges paid or allowed
by Pulp Corporation for the transportation of such Pulp from its pulp mill
at Prince George, British Columbia, to the respective destination of such
Pulp and (B) dividing the remainder by the number of tons of such grade of
Pulp shipped to all of its customers other than Mead and specified
affiliates.
(ii) In the event that there are no sales of a particular grade
or grades to any customers except Mead and its specified affiliates in any
Operating Period, the price per ton for each such
-3-
<PAGE>
particular grade or grades of such Pulp so sold and delivered by Pulp
Corporation to Mead or any of its specified affiliates in such Operating Period
shall be the amount per ton equal to Pulp Corporation's average mill net per
ton with respect to the grade of Pulp shipped by it to customers other than Mead
or its specified affiliates in the immediately preceding Operating Period plus
the immediately succeeding Operating Period during which sales are made to
customers other than Mead and its specified affiliates, such average mill net
per ton to be computed on the foregoing basis, provided, however, that this
paragraph shall not apply if there have been no sales of such particular grades
to customers other than Mead and its specified affiliates in both such preceding
and succeeding Operating Periods.
(iii) In the event that there are no sales of a particular grade of
Pulp to any customers except Mead and its specified affiliates during any
Operating Period or during the preceding or succeeding Operating Periods, the
price per ton shall be determined by the Board of Directors of Pulp Corporation
for sales of such particular grades of Pulp to Mead and its specified affiliates
sold and delivered during the Operating Period first mentioned in this Paragraph
(iii).
(iv) Pulp shall be invoiced in Canadian funds by Pulp Corporation
to Mead at the time of shipment at the foregoing price estimated by Pulp
Corporation on the basis of the actual price determined for the previous
Operating Period or on such other basis as may be mutually agreed upon by the
parties hereto (hereinafter called the "Estimated Price") and the amounts
invoiced shall be payable as follows:
(A) Pulp invoiced from the first through the 10th of any month--
remittance on the 10th of the following month;
(B) Pulp invoiced from the 11th through the 20th of any month--
remittance on the 20th of the following month;
-4-
<PAGE>
(C) Pulp invoiced from the 21st through the end of any month--
remittance on the last day of the following month.
Any Pulp which Pulp Corporation may agree to store, for and at the
request of Mead, shall be invoiced on the foregoing basis by the Pulp
Corporation in advance of shipment at any time after such Pulp has been so
stored for ten days, and the amount payable upon any invoice shall be paid upon
the foregoing basis and shall constitute an advance payment (without interest)
on account of the price of such Pulp.
Within thirty days after the end of each Operating Period the actual
purchase price for such Operating Period shall be determined as stated in the
first sentence of this Subsection (d). If the Estimated Price for Pulp delivered
during such Operating Period shall exceed the amount of the actual purchase
price for such Pulp, such excess shall be applied by Pulp Corporation against
any amount owing by Mead for shipments of Pulp to Mead, but any such excess
remaining after the termination of this Agreement shall be refunded by Pulp
Corporation to Mead. If the actual purchase price of such Pulp exceeds the
Estimated Price for such Pulp, Mead shall, on demand, on or after the tenth day
following receipt of notice of such additional charge, pay to Pulp Corporation
the excess of such additional charge over the existing credits in its account.
Section 3. Definitions. The term "year" shall mean calendar year
----------------------
beginning January 1 and ending December 31.
The term "Operating Period" shall mean periods of 13 weeks each,
-5-
<PAGE>
with the first of such periods in any year beginning on January 1, and the last
of such periods in any year ending on December 31, extra days being added to one
or more periods.
The term "ton" shall mean two thousand pounds, air-dry weight,
including weight of usual packaging material. The pound referred to herein shall
mean the pound as defined in the Weights and Measures Act of Canada.
The term "Pulp" shall mean paper grade bleached, semi-bleached and
unbleached sulphate wood pulp.
The term "force majeure" shall mean any act of God, war, mobilization,
strike, lock-out, drought, flood, earth slides, total or partial fire,
obstruction of navigation by ice at port of shipment, or loss, damage, or
detention at sea or other contingency or cause beyond the control of Mead (or
any affiliate specified by Mead pursuant to Section 5 hereof) or Pulp
Corporation which interferes with or prevents the manufacture of paper or pulp,
respectively, or the shipment, delivery or receipt of Pulp hereunder.
The term "Cost of Production" shall include all costs, expenses and
charges for manufacturing, operating and administering the pulp mill, incurred
or accrued under generally accepted accounting principles and, without limiting
the generality thereof, shall include interest on Notes-I and Notes-II and all
other indebtedness of Pulp Corporation, proper charges for materials, salaries,
wages, overhead, supervision, repairs and maintenance, consulting fees, taxes
(including, without limitation thereto, income taxes), workmen's compensation,
unemployment compensation, and public utilities but shall not include
depreciation.
Section 4. Prepayments by Mead for Pulp and Loans by Northwood.
--------------------------------------------------------------
(a) On June 28 and December 29 of each year until all principal
-6-
<PAGE>
and interest of Notes-I and Notes-II have been paid in full, Pulp Corporation
shall make a computation of its aggregate cash balance, provided that, in
computing any such cash balance there shall be excluded cash allocated on the
books of Pulp Corporation for property additions or for the acquisition of
timber rights. In the event that such computation shows an aggregate cash
balance which is less than the total amount of (i) interest payments due upon
any indebtedness of Pulp Corporation on the next succeeding June 30 or December
31, as the case may be, including, without limitation thereto, Notes-I and
Notes-II, (ii) $1,250,000, and (iii) the principal payments due on the next
succeeding June 30 or December 31, as the case may be, on all indebtedness of
Pulp Corporation other than Notes-I and Notes-II (the difference between such
aggregate cash balance and such total amount due being hereinafter called the
"Cash Deficiency"), Pulp Corporation shall promptly notify Mead and Northwood
not later than the close of business on the next succeeding June 29 or December
30, as the case may be. Mead shall thereupon make a prepayment (without
interest) to Pulp Corporation upon the purchase price of Pulp to be purchased
thereafter hereunder, such prepayment to be equal to one-half of the Cash
Deficiency and Northwood shall thereupon make a loan, without interest, to Pulp
Corporation equal to one-half of the Cash Deficiency.
The prepayments of purchase price by Mead pursuant to the foregoing
paragraph shall be credited against subsequent purchases of Pulp by Mead from
Pulp Corporation and loans by Northwood made pursuant to the foregoing paragraph
shall be repaid in cash by Pulp Corporation to Northwood; such crediting against
purchases of Pulp by Mead and such repayment of loans to Northwood, if any,
shall not be made while there exists a Cost Deficiency on a cumulative basis for
all previous Operating Periods less amounts previously paid with respect
thereto.
-7-
<PAGE>
The term "cash balance" as used in this Subsection (a) shall be deemed
to include the market value of any property convertible into cash not later than
the second business day after the date upon which a computation is made pursuant
to this Subsection (a).
(b) In connection with Cost of Production: In the event that the amount
------------------------------------------
received by Pulp Corporation up to thirty days after the end of any Operating
Period on account of Pulp invoiced during the portion of the year prior to and
including such Operating Period is less than the Cost of Production for the
portion of the year prior to and including such Operating Period (the difference
between such amount received and such Cost of Production being hereinafter
called the "Cost Deficiency"), Pulp Corporation shall promptly notify Mead and
Northwood. Not later than forty-five days after the end of such Operating
Period, Mead shall thereupon make a prepayment (without interest) to Pulp
Corporation upon the purchase price of Pulp to be purchased thereafter
hereunder, such prepayment to be equal to one-half of the Cost Deficiency less
amounts previously paid by it under this Subclause (b) in respect of such year,
and Northwood shall thereupon make a loan, without interest, to Pulp Corporation
equal to one-half of the Cost Deficiency less amounts previously paid by it
under this Subclause (b) in respect of such year.
Prepayments of purchase price by Mead pursuant to the foregoing
paragraph shall be credited against subsequent purchases of Pulp by Mead, and
loans by Northwood made pursuant to the foregoing paragraph shall be repaid in
cash by Pulp Corporation to Northwood, such crediting against purchases of Pulp
by Mead from Pulp Corporation and such repayments by Pulp Corporation to
Northwood to be in equal amounts from time to time; provided that no such
crediting against purchases of Pulp by Mead nor repayment of loans to Northwood
shall be made at any time when there exists a Cost Deficiency on a cumulative
basis for all previous Operating Periods less amounts previously paid with
respect thereto.
-8-
<PAGE>
Section 5. Affiliates of Mead.
-----------------------------
(A) Mead may, at any time require that Pulp purchased hereunder by
Mead be shipped to and paid for directly by any affiliated corporation specified
by Mead (by prior notice in writing to Pulp Corporation) for use by them and not
for the purpose of resale. The term "affiliated corporation" means any
corporation of which Mead owns beneficially, directly or indirectly, stock
possessing at least 20% of the combined voting power of all classes of stock
entitled to vote in the election of directors.
(B) Providing, nevertheless, that, notwithstanding the provisions of
Paragraph (A) of this Section 5, no Pulp shall be purchased hereunder for any
such specified affiliated corporation in the case where Mead owns beneficially,
directly or indirectly, stock possessing less than 45% of the combined voting
power of all classes of stock entitled to vote in the election of directors,
without the consent of a majority of the directors of Pulp Corporation.
(C) If any affiliated corporation shall default in payment of the
purchase price due with respect to any shipment, Mead shall forthwith pay the
same upon notice from Pulp Corporation.
(D) For purposes of illustrating the meaning of this section, it is
understood and agreed that if Mead owns 60% of the combined voting power of all
classes of voting stock of Company A, which, in turn, owns 45% of the combined
voting power of all classes of the voting stock of Company B, Mead is deemed to
own 27% of Company B.
Section 6. Covenant of Noranda. In consideration of Pulp Corporation
------------------------------
and Mead entering into this Agreement, Noranda does hereby guarantee unto Pulp
Corporation and Mead the full and complete performance and observance by
Northwood of each and every covenant and agreement of Northwood herein
contained.
Section 7. Notices. For the purposes of this Agreement, unless either
------------------
party notifies the other in writing to the contrary, all notices and
communications shall be addressed, in the case of Mead, to Mead at 118 West
First Street, Dayton, Ohio 45402, in the case of Northwood, to Northwood at 44
King Street, West, Toronto 1, Ontario, Canada, in the case of Noranda to Noranda
at 44 King Street, West, Toronto 1, Ontario, Canada,
-9-
<PAGE>
and in the case of Pulp Corporation to it at Prince George, British Columbia.
Any notice or communication required under the provisions of this Agreement
shall be deemed to have been given when deposited in the United States or
Canadian mail, postage prepaid, and registered, addressed in accordance with the
preceding sentence to the party or parties to whom such notice or communication
is being given.
Section 8. Nonassignability. This Agreement shall not be assignable in
---------------------------
whole or in part by any party but the provisions hereof shall be binding upon
the successors of the parties hereto, provided that upon the consolidation,
amalgamation or merger of any party with or into another company or corporation
by the transfer of such party's undertaking and by the transfer of such
party's assets as an entirety or substantially as an entirety to, or the vesting
of the same in, such other company or corporation or in the company or
corporation resulting from such amalgamation (herein called a "successor
company") such successor company shall contemporaneously with, or substantially
contemporaneously with, any such transfer or vesting, enter into and execute an
agreement with the other parties hereto or their successors to observe and
perform all the obligations of the first mentioned party under this Agreement as
fully and completely as if such successor company had itself executed this
Agreement and had expressly agreed herein to observe and perform the same and
thereupon this Agreement shall be read as if such successor company were named
herein in the place of such first mentioned party. Any transfer or assignment of
this Agreement by either party contrary to the provisions hereof shall have no
effect upon the rights of the parties hereto.
Section 9. Governing Law. This Agreement shall be governed by and
------------------------
construed in accordance with the laws of the Province of British Columbia.
-10-
<PAGE>
Section 10. Arbitration. Any matter of interpretation, application or
-----------------------
effect of and any controversy or controversies arising under, or in connection
with the performance of this Agreement, which the parties hereto cannot resolve
by mutual agreement, shall be submitted to the decision of a competent person to
be agreed upon by Mead and Northwood as arbitrator, in accordance with the
Arbitration Act of the Province of British Columbia, and his decision thereupon
shall be final. In case of failure to agree upon such arbitrator, Mead shall
name one arbitrator, and Northwood shall name one arbitrator, and such two
arbitrators shall forthwith select a third arbitrator; provided, that if such
two arbitrators fail to select a third arbitrator within ten days after the
demand for such arbitration, the third arbitrator shall be appointed by
application made by either Mead or Ncrthwood to the Chief Judge of the United
States Court of Appeals for the Sixth Circuit. The arbitrators so selected shall
proceed promptly to investigate the controversy in question in accordance with
the Arbitration Act of the Province of British Columbia, and a decision of any
two of the three arbitrators shall be binding and Conclusive upon the parties
hereto; PROVIDED that the cost of arbitration shall be divided equally between
Mead and Northwood. Nothing in this Section shall derogate from the right of
Mead to refrain from requisitioning Pulp under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE MEAD CORPORATION
By
------------------------
President
ATTEST:
- ------------------------
Secretary
-11-
<PAGE>
The Common Seal of )
NORTHWOOD PULP LIMITED )
was hereunto affixed in )
the presence of: )
)
)
)
- -------------------------- )
)
)
- -------------------------- )
NORANDA MINES, LIMITED
By
-------------------------------
And
------------------------------
The Common Seal of )
NORTHWOOD MILLS LTD. )
was hereunto affixed in )
the presence of: )
)
)
)
- -------------------------- )
)
)
- -------------------------- )
-12-
<PAGE>
THIS IS EXHIBIT "F" TO THE AGREEMENT BETWEEN
NORTHWOOD MILLS LTD., CANAMEAD, INC., THE
MEAD CORPORATION AND NORANDA MINES,
LIMITED, MADE AS OF THE 24TH DAY
OF APRIL, 1964
PULP AGREEMENT
--------------
THIS AGREEMENT dated ________________________ among Northwood Pulp
Limited, a corporation Organized and existing under the laws of the Province of
British Columbia (hereinafter referred to as "Pulp Corporation"), _____________
_____________, a corporation organized and existing under the laws of the
Province of British Columbia (hereinafter referred to as "Canadian-Mead"), The
Mead Corporation, a corporation organized and existing under the laws of the
State of Ohio (hereinafter referred to as "Mead" or "Purchaser"), Northwood
Mills Ltd., a corporation organized and existing under the laws of the Province
of British Columbia (hereinafter referred to as "Northwood" or "Purchaser"),
and Noranda Mines, Limited, a corporation organized and existing under the laws
of the Province of Ontario (hereinafter referred to as "Noranda"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, a wholly-owned subsidiary of Mead owns 50%, and Northwood
owns 50% of the outstanding capital stock of Pulp Corporation, which operates a
sulphate pulp mill near Prince George, British Columbia;
WHEREAS, Mead owns all of the issued and outstanding capital stock of
Canadian-Mead; and
WHEREAS, Noranda owns all of the issued and outstanding capital stock
of Northwood;
NOW, THEREFORE, it is mutually agreed as follows:
I. DEFINITIONS:
-----------
A. The term "Operating Period" shall mean periods of 13 weeks each
with the first of such periods in any year beginning on January 1 and the last
of such periods in any year ending on December 31, extra days to be included in
such Operating Period or Periods as may be agreed upon from time to time by the
parties hereto.
<PAGE>
B. The term "Production Cost" shall mean with respect to each ton
produced the total of that portion of each of the following items applicable
thereto under generally accepted accounting practices:
All costs, expenses and charges of manufacturing and operating
(without reduction by any income not normally connected with manufacturing
operations), such costs, expenses and charges to include, without limiting the
generality of the foregoing, accruing interest on and amortization of premium
and expense with respect to bonds, notes and all other indebtedness, proper
charges for overhead, supervision, repairs maintenance, depletion and
depreciation, taxes (except taxes on or measured by income) and workmen's
compensation, unemployment, fire and other insurance of all kinds, and in
addition a per diem charge for each day (excluding days when the mill is shut
down, but such exclusion shall not exceed a total of 40 days in any year) in the
amount of $1 or such other amount as may be agreed upon by the parties to this
Agreement.
C. The term "year" shall mean the calendar year beginning January 1
and ending December 31.
II. PURCHASE OF ENTIRE OUTPUT OF THE PULP MILL BY CANADIAN-MEAD AND
---------------------------------------------------------------
NORTHWOOD
---------
A. Pulp Corporation hereby agrees to sell, during the term of this
Agreement, the entire annual output of its sulphate pulp mill (hereinafter
called the "mill") to Canadian-Mead and Northwood, each of whom agrees to
purchase and accept such entire output during one-half of each year and during
one-half of the period between the termination date of this Agreement and the
end of the last year preceding such date, and it is hereby agreed that each
Purchaser shall be entitled to the production of the mill during one-half of
each year and during one-half of said period on such basis and method of
apportionment as may be agreed upon by the two Purchasers; and Pulp Corporation,
immediately upon receipt by it of written advice from the two Purchasers
specifying the basis and method of apportionment, shall allocate the production
of the mill accordingly.
-2-
<PAGE>
In the absence of such agreement or upon notice in writing by either Purchaser
to Pulp Corporation that the basis or method of apportionment theretofore agreed
upon is not satisfactory to such Purchaser, each Purchaser will thereupon become
entitled to the production of the mill during alternate periods of four
consecutive calendar weeks, the first of such periods to be allocated by Pulp
Corporation by lot, unless one Purchaser has theretofore received such
production during less than one-half of the time, in which event such Purchaser
shall automatically be entitled to the production of the mill during the first
period of four calendar weeks thereafter.
B. Northwood and Canadian-Mead shall for the term of this Agreement
have equal right to use by license (or similar terms) or otherwise of any
trademark or trade name held or enjoyed by Pulp Corporation at any time during
the term of this Agreement.
III. DELIVERY AND PAYMENT:
--------------------
A. Pulp shall be invoiced by Pulp Corporation to each Purchaser at
the time of shipment at the estimated Production Cost as herein defined on the
basis of Pulp Corporation's budget in effect on the date of such invoice, or on
such other basis as may be mutually agreed upon by the Pulp Corporation and
Purchasers and the amounts invoiced shall be payable on demand on or after the
tenth day following such date, provided that any pulp stored by Pulp Corporation
for and at the request of a Purchaser may be invoiced on the foregoing basis to
such Purchaser by Pulp Corporation in advance of shipment at any time after such
pulp has been so stored for ten days; and the amount paid upon any invoice shall
constitute an advance payment of the price, or on account of the price, of such
pulp. Each Purchaser shall be credited with all amounts so paid, and within ten
days after the end of each Operating Period shall be charged with actual
Production Cost of all pulp delivered to it during such Operating Period. If the
amounts paid by a Purchaser for pulp delivered to it during any Operating Period
shall exceed the amount of the charge for such pulp on
-3-
<PAGE>
the basis of actual Production Cost, such excess shall be applied by Pulp
Corporation against future shipments of pulp to such Purchaser, but any such
excess remaining after the termination of this Agreement shall be refunded by
Pulp Corporation to such Purchaser. If at any time the amount of the charge on
the basis of actual Production Cost exceeds the amount credited to either
Purchaser, such Purchaser shall on demand on or after the tenth day following
receipt of notice of such charge pay to Pulp Corporation the excess of such
charge over then existing credits on its account.
B. All items of cost specified in Paragraph I B and the daily charge as
specified therein, accruing during any shut-down of the mill shall be paid by
the Purchasers as follows:
(1) By the purchaser at whose request or through whose fault (whether
by reason of unusual specifications or otherwise) the mill shall be so shut
down;
(2) By both Purchasers equally in the event that such shut-down shall
be with the consent, at the request or attributable to the fault of both
Purchasers or to the fault of neither;
and in any such case such costs shall be invoiced at intervals of not more than
one week, provided that such costs may be used by such Purchaser as a credit
against amounts invoiced for deliveries of pulp only by treating such costs as
additional cost of pulp shipped previously or subsequently in the same fiscal
year.
C. All deliveries shall be f.o.b. cars at the mill near Prince George,
British Columbia.
D. All payments shall be made in Canadian funds.
IV. NOTICES CONCERNING PURCHASES OF PULP:
------------------------------------
A. At least seven days prior to the commencement of each Operating Period,
each Purchaser which is entitled to production of the mill during such Period
may notify Pulp Corporation in writing of the
-4-
<PAGE>
amount and type of pulp which it will require during such period, and Pulp
Corporation shall use its best efforts to meet such requirements, provided they
do not conflict with the provisions of Paragraph II hereof. In the absence of
such notice, Pulp Corporation may manufacture and deliver to such Purchaser such
types and amounts of pulp as may be mutually agreed upon between Pulp
Corporation and such Purchaser, and in the absence of such agreement Pulp
Corporation may manufacture and deliver to such Purchaser pulp made pursuant to
such specifications as were last agreed upon by the Pulp Corporation and the
Purchasers.
V. DISPOSITION OF PULP ON DEFAULT BY EITHER PURCHASER:
--------------------------------------------------
A. In the event that either of the Purchasers shall be in default with
respect to any payment required under Paragraph III or under this Paragraph and
such default shall continue for more than thirty days, then the Pulp Corporation
shall not be obligated to make pulp for or deliver pulp to such Purchaser until
the end of the Operating Period in which all defaults with respect to payment
have been made good. In such case or in case a Purchaser (whether or not it is
in default as to payments) fails or refuses to accept any pulp properly allotted
to it, the Pulp Corporation shall offer such pulp to the other Purchaser, if it
is not then in default. The said Purchaser not so in default may, within ten
days after receipt of such offer, agree to take such pulp to the extent it may
designate, at the price and according to the terms, conditions and provisions
set forth in Paragraph III hereof; and to the extent that such Purchaser does
not agree to take such pulp the Pulp Corporation may sell the pulp to any buyer
not a party to this Agreement upon such terms and at such prices as it may deem
advisable. Any pulp thus taken by said Purchaser not in default or sold pursuant
to the foregoing provision shall nevertheless be included in the pulp allotted
to the Purchaser in default for the purposes of Paragraph II hereof.
-5-
<PAGE>
B. Each Purchaser shall be liable for all payments to which it is committed
under this Agreement, notwithstanding that the pulp made during any Operating
Period is not delivered to it by reason of the foregoing provisions of this
Paragraph V; but the proceeds received from the sale of pulp made for such
Purchaser shall be applied in reduction or extinguishment of the amounts payable
by such Purchaser with respect thereto.
VI. AUDITS: The accounting records of Pulp Corporation shall be audited annually
------
or at shorter periods by independent chartered accountants (who may be the
auditors of the accounts of Pulp Corporation) selected and approved by Pulp
Corporation, Canadian-Mead and Northwood. Any party hereto may at any time on
written notice object to the independent chartered accountants previously
selected and approved, and in such case other independent chartered accountants
shall be selected by mutual agreement; but any such objection shall become
effective only after completion of any audit or other action in charge of such
accountants then in progress. Any audit shall be conclusive binding on the
Purchasers and Pulp Corporation unless objected to by written notice to the
independent chartered accountants within thirty days from the date a copy of
such audit was mailed or delivered to the Purchasers and Pulp Corporation.
VII. ARBITRATION: Any matter of interpretation, application or effect of and any
-----------
controversy or controversies arising under, or in connection with the
performance of this Agreement, which the parties hereto cannot resolve by
mutual agreement, shall be submitted to the decision of a competent person to be
agreed upon by Canadian-Mead and Northwood as arbitrator, in accordance with the
Arbitration Act of the Province of British Columbia, and his decision thereupon
shall be final. In case of failure to agree upon such arbitrator, Canadian-Mead
shall name one arbitrator, and Northwood shall name one arbitrator, and such two
arbitrators shall forthwith select a third arbitrator; provided, that if such
two arbitrators fail to select a third arbitrator within ten days after the
demand for such arbitration, the third arbitrator shall be
-6-
<PAGE>
appointed by application made by either Canadian-Mead or Northwood to the Chief
Judge of the United States Court of Appeals for the Sixth Circuit. The
arbitrators so selected shall proceed promptly to investigate the controversy in
question in accordance with the Arbitration Act of the Province of British
Columbia, and a decision of any two of the three arbitrators shall be binding
and conclusive upon the parties hereto; PROVIDED that the cost of arbitration
shall be divided equally between Canadian-Mead and Northwood.
VIII. DEFAULT IN PAYMENT: In the event that either of the Purchasers shall be in
------------------
default with respect to any payment required under Paragraphs III or V hereof
and such default shall continue for more than thirty days, the Pulp Corporation
may, and upon the written request of the other Purchaser, if such other
Purchaser is not then in default, shall notify the Purchaser in default that all
rights of such Purchaser under this Agreement shall terminate at the expiration
of a further period of thirty days; but said Purchaser in default shall remain
liable thereafter during the remainder of the term of this Agreement for all
payments which would otherwise have been required under the provisions of this
Agreement less all amounts obtained by Pulp Corporation through the sale of pulp
made during the Operating Periods which would otherwise have been allotted to
such Purchaser in default, provided, however, that if before the expiration of
the period specified in such notice all sums in arrears owing by such Purchaser
shall be paid in full, this Agreement shall remain in full force and effect.
IX. TERM: This Agreement shall remain in full force and effect for twenty years
----
from the date hereof and thereafter if and so long as any funded indebtedness of
Pulp Corporation is outstanding. The term "funded indebtedness" as used in this
Agreement shall mean any indebtedness of Pulp Corporation under the Loan
Agreement with Canadian Imperial Bank of Commerce and the Royal Bank of Canada
dated ________________, 1964 and any other indebtedness which, by its terms, or
at the option of the debtor, may mature more than twelve months from the date of
creation of same and shall include
-7-
<PAGE>
any indebtedness which may be payable out of the proceeds of funded
indebtedness (as defined) payable more than twelve months from the date of
creation of the original indebtedness pursuant to the terms of such original
indebtedness.
X. PREPAYMENTS FOR PULP: On June 28 and December 29 of each year until the
--------------------
principal and interest of all funded indebtedness of Pulp Corporation has been
paid in full, Pulp Corporation shall make a computation of its aggregate cash
balance at such dates, provided that, in computing any such cash balance there
shall be excluded cash allocated on the books of Pulp Corporation for property
additions or for the acquisition of timber rights. In the event that such
computation shows an aggregate cash balance which is less than the total amount
of the interest payments, and principal payments or the sinking fund payments
due on such next succeeding June 30 or December 31, as the case may be, on any
funded indebtedness of Pulp Corporation then outstanding (the difference between
such aggregate cash balance and such total amount due being hereinafter called
the "Cash Deficiency"), Pulp Corporation shall promptly notify Canadian-Mead and
Northwood not later than the close of business on the next succeeding
June 29 or December 30, as the case may be. Canadian-Mead and Northwood shall
thereupon each make a prepayment (without interest) to Pulp Corporation upon the
purchase price of Pulp to be purchased thereafter hereunder, such prepayments
each to be equal to one-half of the Cash Deficiency.
Prepayments of purchase price by Canadian-Mead and Northwood pursuant to
the foregoing paragraph shall be credited against subsequent purchases of pulp
by Canadian-Mead and Northwood from Pulp Corporation; provided that, if at any
time an event of default shall occur and be continuing with respect to any
funded indebtedness of Pulp Corporation then outstanding, such crediting against
purchases of Pulp shall not be made while any principal or interest on such
funded indebtedness is due and unpaid.
-8-
<PAGE>
As used in this Paragraph X the term "cash balance" shall be deemed to
include the market value of any property convertible into cash not later than
the second business day after the date upon which a computation is made pursuant
thereto.
XI. COVENANTS OF NORANDA AND MEAD:
-----------------------------
A. In consideration of Canadian-Mead and Mead entering into the within
agreement, Noranda does hereby guarantee unto Canadian-Mead and Mead the full
and complete performance and observation by Northwood of each and every covenant
of Northwood herein contained.
B. In consideration of Northwood and Noranda entering into the within
agreements, Mead does hereby guarantee unto Northwood and Noranda the full and
complete performance and observation by Canadian-Mead of each and every covenant
of Canadian-Mead herein contained.
XII. NONASSIGNABILITY: This Agreement shall not be assignable in whole or
----------------
in part by any party but the provisions hereof shall be binding upon the
successors of the parties hereto, provided that upon the consolidation,
amalgamation or merger of any party with or into another company or corporation
by the transfer of such party's undertaking and by the transfer of such party's
undertaking and assets as an entirety or substantially as an entirety to, or the
vesting of the same in, such other company or corporation or in the company or
corporation resulting from such amalgamation (herein called a "successor
company") such successor company shall contemporaneously with, or substantially
contemporaneously with, any such transfer or vesting, enter into and execute an
agreement with the other parties hereto or their successors to observe and
perform all the obligations of the first mentioned party under this Agreement as
fully and completely as if such successor company had itself executed this
Agreement and had expressly agreed herein to observe and perform the same and
thereupon this Agreement shall be read as if such successor
-9-
<PAGE>
were named herein in the place of such first mentioned party. Any transfer or
assignment of this Agreement by either party contrary to the provisions hereof
shall have no effect upon the rights of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year aforesaid.
The Common Seal of )
NORTHWOOD PULP LIMITED )
was hereunto affixed in the )
presence of: )
)
)
- ---------------------------- )
)
)
)
- ---------------------------- )
THE MEAD CORPORATION
Attest: By
-----------------------------
President
- -----------------------------
Secretary
The Common Seal of )
NORTHWOOD MILLS LTD. was )
hereunto affixed in the )
presence of: )
)
)
- ---------------------------- )
)
)
)
- ---------------------------- )
NORANDA MINES, LIMITED
By
-----------------------------
And
----------------------------
-10-
<PAGE>
FIRST SUPPLEMENTAL AGREEMENT made as of
the 2nd day of July, 1964.
BETWEEN:
NORTHWOOD MILLS LTD., a company duly incorporated under the laws of
---------------------
the Province of British Columbia, Canada, having an office at the City
of Vancouver, Province aforesaid,
(hereinafter called "Northwood")
OF THE FIRST PART
AND:
CANAMEAD, INC., a company duly incorporated under the laws of the
---------------
State of Ohio, one of the United States of America, having an office
at the City of Dayton, State aforesaid,
(hereinafter called "Canamead")
OF THE SECOND PART
AND: THE MEAD CORPORATION, a company duly incorporated under the laws of
---------------------
the State of Ohio, one of the United States of America, having an
office at the City of Dayton, State aforesaid,
(hereinafter called "Mead")
OF THE THIRD PART
AND:
NORANDA MINES, LIMITED, a Company duly incorporated under the laws of
-----------------------
the Province of Ontario, Canada, having an office at the City of
Toronto, Province aforesaid,
(hereinafter called "Noranda")
OF THE FOURTH PART
WHEREAS:
(A) The Parties hereto have heretofore entered into an agreement made as
of the 24th day of April, 1964, (hereinafter called the "Basic Agreement")
providing inter alia for the construction and operation of a pulp mill
having an initial daily rated capacity of five hundred (500) tons of paper
grade bleached, semi-bleached and unbleached sulphate wood pulp, and for
the sale and purchase of said wood pulp.
(B) The Parties hereto have now agreed that the initial daily rated
capacity of the said pulp mill shall be six hundred and twenty-five (625)
tons of paper grade bleached, semi-bleached and unbleached sulphate wood
pulp.
<PAGE>
-2-
(C) Northwood has negotiated for and has obtained a Pulpwood Harvesting
Licence (as defined in the said Basic Agreement) in the form attached hereto
and marked Schedule "A" hereto.
(D) The Parties hereto have agreed that the said Basic Agreement and
Exhibits thereto shall be amended and modified as hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of
the mutual covenants herein contained, the Parties hereto do hereby agree as
follows:
1. That Recital A of the Basic Agreement shall be and is hereby amended
by deleting the words "five hundred" and the figures "(500)" in the eleventh and
twelfth lines thereof and substituting therefor respectively the words "six
hundred and twenty-five" and the figures "(625)".
2. Northwood and Canamead hereby agree that the form of the said Pulpwood
Harvesting Licence attached hereto as Schedule "A" and the area to which the
same relates are mutually satisfactory.
3. That the fact that the said Pulpwood Harvesting Licence will be
granted in the initial instance to the Pulp Corporation shall be and is hereby
deemed to be the assignment thereof required under Clause 2 of the Basic
Agreement.
4. That paragraph (c) of Clause 3 of the Basic Agreement shall be and is
hereby amended by deleting the whole of the said paragraph (c) and substituting
therefor the following:
"(c) Northwood hereby agrees to subscribe for 4,000,000 Class A ordinary
shares and Canamead hereby agrees to subscribe for 4,000,000 Class B
ordinary shares of the authorized capital of the Pulp Corporation at the
par value thereof forthwith upon
<PAGE>
-3-
the incorporation thereof and each of Northwood and Canamead hereby
agrees to purchase one-half of $10,800,000 (U.S. funds) in principal
amount of, and one-half of such additional amount (in U.S. funds)
as may be agreed upon by Northwood, Canamead and the Pulp Corporation
in principal amount of 5% debentures of the Pulp Corporation at the
principal amount thereof, provided always that such shares and
debentures thus subscribed for or agreed to be purchased shall be paid
for in cash by Northwood and Canamead in equal portions in such
amounts and at such times as the directors of the Pulp Corporation
shall determine. For all purposes of this paragraph Canadian Funds
shall be deemed to be convertible into U.S. funds at the rate of
92-1/2%."
5. That Clause 4 of the Basic Agreement shall be and is hereby amended by
deleting the words "General Manager of Pulp Corporation" wherever the same occur
and substituting therefor in each case the words Vice-President and General
Manager of Pulp Corporation."
6. That sub-paragraphs (i) to (v) of paragraph (a) of Clause 4 of the
Basic Agreement shall be and is hereby amended by deleting the whole of the said
sub-paragraphs (i) to (v) of paragraph (a) of Clause 4 and substituting therefor
the following:
"(i) Subject as hereinafter provided in sub-paragraph (iii) hereof,
the number of directors of the Pulp Corporation shall be ten, of which
five persons (one of which to be a resident of the Province of British
Columbia as required by law) selected by Northwood (hereinafter called
the "Northwood Directors") and five persons selected by Canamead
(hereinafter called the "Canamead Directors") shall be elected
directors of the Pulp Corporation at every meeting of the Pulp
Corporation held for the purpose of electing the Board of ten
directors.
Subject as hereinafter provided in sub-paragraph (iii) hereof,
the number of directors of each of Upper Fraser and Sinclair shall be
four, of which two persons (one of which to be a resident of the
Province of British Columbia as required by law) selected by Northwood
(hereinafter called the "Northwood Directors") and two persons
selected by Canamead (hereinafter called the
<PAGE>
-4-
"Canamead Directors") shall be elected directors of Upper Fraser and Sinclair
respectively at every meeting of Upper Fraser and Sinclair respectively held for
the purpose of electing the Board of four directors.
(ii) In the event of the resignation, death, disqualification or removal
of any of the aforesaid directors, the parties hereto shall elect or cause to be
elected or appointed a person selected by Northwood in the case of the
resignation, death, disqualification or removal of a Northwood Director or a
person selected by Canamead in the case of the resignation, death,
disqualification or removal of a Canamead Director. A director may be removed
before the expiration of his period of office by the party who elected or
appointed such director.
(iii) In the event the number of Directors of the Pulp Corporation is
increased to eleven as provided in the Articles of Association attached hereto
as Exhibit "B", the said eleventh director shall be elected or appointed on the
joint nomination of Canamead and Northwood. Provided that in the event Canamead
and Northwood do not within ten days of such increase agree in writing on a
person to be appointed as the eleventh director, then and in that event the
eleventh director shall be determined by arbitration in accordance with Clause
17 hereof, and on the identity of the said eleventh director being so determined
he shall be appointed forthwith to the Board of Directors of the Pulp
Corporation.
In the event the number of Directors of Upper Fraser or Sinclair is
increased to five, as provided in the Articles of Association of Upper Fraser or
Sinclair, the said fifth director shall be elected or appointed on the joint
nomination of Canamead and Northwood. Provided that in the event Canamead and
Northwood do not within ten days of such increase agree in writing on a person
to be appointed as the fifth director, then and in that event the fifth
director shall be determined by arbitration in accordance with Clause 17
hereof, and on the identity
<PAGE>
-5-
of the said fifth director being so determined he shall be appointed
forthwith to the Board of Directors of each of Upper Fraser and
Sinclair.
(iv) At all times when there are not more than ten directors
in office, no action shall be taken at any meeting of the Board of
Directors of the Pulp Corporation, except with the affirmative vote of
a majority of the Northwood Directors present in person or by
alternate and a majority of the Canamead Directors present in person
or by alternate.
At all times when there are not more than four directors in
office, no action shall be taken at any meeting of the Board of
Directors of Upper Fraser or Sinclair, respectively, except with the
affirmative vote of a majority of the Northwood Directors present in
person or by alternate and a majority of the Canamead Directors
present in person or by alternate.
(v) The quorum necessary for the transaction of the business
of the Directors of the Pulp Corporation shall be six Directors
present in person or by alternate.
The quorum necessary for the transaction of the business of
the Directors of Upper Fraser or Sinclair shall be three directors
present in person or by alternate.
7. That paragraph (a) of Clause 5 of the Basic Agreement shall be and is
hereby amended by deleting the figures "$45,000,000" in the fourth line thereof
and substituting thereof the figures "$70,000,000."
8. That paragraph (a) of Clause 14 of the Basic Agreement shall be and is
hereby amended by deleting the words and figures "November 1, 1964" in the
fourth line thereof and substituting therefor the words and figures "April 15,
1965".
9. That paragraph (b) of Clause 14 of the Basic Agreement shall be and is
hereby amended by deleting the figures "$50,000,000" in the fifth line thereof
and substituting therefor the figures "$56,500,000".
<PAGE>
-6-
10. Northwood and Canamead hereby agree that they shall cause Exhibit "B" to
the Basic Agreement and the Articles of Association of the Pulp Corporation to
be amended as follows:
(A) Article 52 (b) - by deleting the words "General Manager" and
substituting therefor the words "Vice-President and General Manager."
(B) Article 53 (d) - by deleting the words "General Manager" wherever the
same occur and substituting therefor the words "Vice-President and General
Manager" in each case.
11. That the recital of Exhibit "C" to the Basic Agreement shall be and is
hereby amended by deleting the words "five hundred" and the figures "(500)"
therefrom and substituting therefor the words "six hundred and twenty-five" and
the figures "(625)".
12. That the fourth recital of Exhibit "E" to the Basic Agreement shall be and
is hereby amended by deleting the words "five hundred" therefrom and
substituting therefor the words "six hundred and twenty-five".
13. That the fifth recital of Exhibit "E" to the Basic Agreement shall be and is
hereby amended by deleting the figures "$25,000,000", in the second line thereof
and substituting therefor the figures "$31,300,000", and that the said recital
shall be and is further amended by deleting the figures "$10,000,000" in the
third line thereof and substituting therefor the figures "$11,000,000."
14. That paragraph (a) of Section 4 of Exhibit "E" to the Basic Agreement shall
be and is hereby amended by deleting therefrom the figures "$1,250,000" in the
eleventh line thereof and substituting therefor the figures "$1,565,000."
15. If any provision or clause of this Agreement is held invalid for any reason
or for any purpose, such
<PAGE>
-7-
invalidity shall not effect other provisions or clauses of this Agreement which
can be given effect without the invalid provision or clause and to this end
the provisions or clauses of this Agreement are declared to be severable.
16. This Agreement shall be construed in accordance with the laws of the
Province of British Columbia.
17. The Parties hereto do hereby jointly and severally confirm each and every
covenant and provision of the Basic Agreement and all the Exhibits thereto,
except to the extent the same have been specifically modified or amended hereby.
18. This Agreement shall be binding upon and enure to the benefit of the Parties
hereto, their respective successors and permitted assigns as the case may be.
IN WITNESS WHEREOF the Parties have caused their seals to be affixed in the
presence of their respective proper officers duly authorized in that behalf
as of the day and in the year first above written.
The Common Seal of NORTHWOOD
MILLS LTD. was hereunto affixed
in the presence of:
/s/ Adam H. Zimmerman
- --------------------------------
Director
/s/ J. O. Hinds
- --------------------------------
Director
NORANDA MINES, LIMITED
By /s/ R. V. Porritt
-------------------------------
President
/s/ R. C. Ashenhurst
-------------------------------
Secretary
CANAMEAD, INC.
By /s/ Geo. H. Pringle
-------------------------------
President
Attest
/s/ Albert H. Sealy, Jr.
- --------------------------
Assistant Secretary
Attest THE MEAD CORPORATION
/s/ Albert H. Sealy, Jr. By /s/ Geo. H. Pringle
- -------------------------- ----------------------------
Secretary President
<PAGE>
SECOND SUPPLEMENTAL AGREEMENT made as of the 5th day of April, 1965.
BETWEEN:
NORTHWOOD MILLS LTD., a company duly
---------------------
incorporated under the laws of the
Province of British Columbia, Canada,
having an office at the City of
Vancouver, Province aforesaid,
(hereinafter called "Northwood")
OF THE FIRST PART
AND:
FOREST KRAFT COMPANY, a company duly
---------------------
incorporated under the laws of the
State of Delaware, one of the United
States of America, having an office at
the City of Wilmington, State aforesaid,
(hereinafter called "Forest Kraft")
OF THE SECOND PART
AND:
THE MEAD CORPORATION, a company duly
---------------------
incorporated under the laws of the State
of Ohio, one of the United States of
America, having an office at the City
of Dayton, State aforesaid,
(hereinafter called "Mead")
OF THE THIRD PART
AND:
NORANDA MINES LIMITED, a company duly
----------------------
incorporated under the laws of the Province
of Ontario, Canada, having an office at the
City of Toronto, Province aforesaid,
(hereinafter called "Noranda")
OF THE FOURTH PART
W H E R E A S :
A. Canamead, Inc. a company duly incorporated under the laws of the State of
Ohio, one of the United States of America (hereinafter called "Canamead"
entered into an Agreement dated as of the 24th day of April, 1964, with
Northwood, Mead and Noranda (hereinafter referred to as the "Basic
Agreement") providing for, inter alia, the incorporation of a company with
the name of Northwood Pulp Limited to construct and operate a pulp mill
having an initial daily rated capacity of five hundred (500)
<PAGE>
-2-
tons of paper grade bleached, semi-bleached and unbleached sulphate
wood pulp, and
B. Canamead, Northwood, Mead and Noranda have entered into an Agreement made as
of the 2nd day of July, 1964 (hereinafter referred to as the "First
Supplemental Agreement") providing for, inter alia, an increase in the
aforesaid initial daily rated capacity to six hundred and twenty-five (625)
tons of paper grade bleached, semi-bleached and unbleached sulphate wood
pulp, and
C. The said Northwood Pulp Limited was duly incorporated under the laws of the
Province of British Columbia, Canada, and is proceeding to construct the said
pulp mill near the City of Prince George, Province of British Columbia,
Canada, pursuant to the said Basic Agreement and the First Supplemental
Agreement, and
D. On the 5th day of April, 1965, Canamead pursuant to the laws of the States of
Ohio and Delaware was duly merged into Forest Kraft, and Forest Kraft has
thereby succeeded to all the rights and privileges of Canamead under the said
Basic Agreement and First Supplemental Agreement and to all the shares held
by Canamead in the capital stock of Northwood Pulp Limited and all debentures
of Northwood Pulp Limited held by Canamead, and has assumed all the
covenants, promises, responsibilities and obligations of Canamead pursuant to
the said Basic Agreement, the First Supplemental Agreement and as a member or
shareholder of Northwood Pulp Limited.
E. Forest Kraft is a wholly owned subsidiary of Mead.
NOW THEREFORE THIS INDENTURE WITNESSETH that in consideration of the mutual
covenants herein contained the Parties hereto do hereby agree as follows:
1. Forest Kraft and Mead do hereby, jointly and severally, represent and
warrant unto Northwood and Noranda that each and every of the facts set out in
Recitals D and E hereof are true and accurate.
2. Forest Kraft doth hereby undertake and assume each and every covenant,
promise, responsibility and obligation of Canamead pursuant to the said Basic
Agreement, the First Supplemental Agreement and as a member or shareholder of
Northwood Pulp Limited.
<PAGE>
-3-
3. Northwood, Mead and Noranda do hereby acknowledge and declare that Forest
Kraft is a "Successor Corporation" to Canamead within the meaning of Clause 7(a)
of the said Basic Agreement and is therefore entitled to all of the rights and
benefits of Canamead under the said Basic Agreement and the First Supplemental
Agreement and shall be substituted in the place of Canamead under all
provisions of the said Basic Agreement and the First Supplemental Agreement.
4. Mead doth hereby guarantee unto Northwood and Noranda the full and complete
performance and observance by Forest Kraft of each and every covenant of Forest
Kraft herein contained and each and every covenant, promise, responsibility and
obligation of Forest Kraft under and pursuant to the said Basic Agreement, the
First Supplemental Agreement and as a member or shareholder of Northwood Pulp
Limited.
5. The Parties hereto do hereby jointly and severally confirm each and every
covenant and provision of the Basic Agreement and the First Supplemental
Agreement except to the extent the same have been specifically modified or
amended hereby.
6. The Parties hereto agree that this Agreement shall be interpreted and
construed in accordance with the laws of the Province of British Columbia.
7. This Agreement shall be binding upon and enure to the benefit of the Parties
hereto, their respective successors and permitted assigns, as the case may be.
IN WITNESS WHEREOF the Parties have caused their seals to be affixed in
the presence of their respective proper officers duly authorized in that
behalf as of the day and in the year first above written.
The Common Seal of NORTHWOOD MILLS
LTD. was hereunto affixed in the
presence of:
/s/ Alfred Powers
- ---------------------------------
Director
/s/ Adam H. Zimmerman
- ---------------------------------
Director
<PAGE>
-4-
NORANDA MINES LIMITED
By /s/ R.V. Porritt
-------------------
President
/s/ R.C. Ashenhurst
-------------------
Secretary
FOREST KRAFT COMPANY
Attest By /s/ Geo. H. Pringle
-------------------
President
/s/ W. Walker Lewis, Jr.
- ------------------------
Secretary
THE MEAD CORPORATION
Attest
/s/ Albert H. Sealy, Jr. By /s/ Geo. H. Pringle
- ------------------------ -------------------
Secretary President
<PAGE>
DATED April 5, 1965.
- --------------------------------------------------------------------------------
BETWEEN:
NORTHWOOD MILLS LTD.
FOREST KRAFT COMPANY
THE MEAD CORPORATION
NORANDA MINES LIMITED
- --------------------------------------------------------------------------------
SECOND SUPPLEMENTAL AGREEMENT
- --------------------------------------------------------------------------------
Messrs. Bourne, Lyall, Shier, Davenport
& Spencer
Barristers and Solicitors
309 - 675 West Hastings Street
Vancouver 2, B.C.
<PAGE>
THIRD SUPPLEMENTAL AGREEMENT made as of the 15th day of
March, A.D. 1966.
BETWEEN:
NORTHWOOD MILLS LTD., a Company duly
---------------------
incorporated under the laws of the
Province of British Columbia, Canada,
having an office at the City of
Vancouver, Province aforesaid,
(hereinafter called "NORTHWOOD")
OF THE FIRST PART
A N D :
FOREST KRAFT COMPANY, a Company duly
---------------------
incorporated under the laws of the
State of Delaware, one of the United
States of America, having an office
at the City of Dayton, State of Ohio,
one of the United States of America,
(hereinafter called "FOREST KRAFT")
OF THE SECOND PART
A N D :
THE MEAD CORPORATION, a Company duly
---------------------
incorporated under the laws of the
State of Ohio, one of the United States
of America, having an office at the
City of Dayton, State aforesaid,
(hereinafter called "MEAD")
OF THE THIRD PART
A N D :
NORANDA MINES LIMITED, a Company duly
----------------------
incorporated under the laws of the
Province of Ontario, Canada, having
an office at the City of Toronto,
Province aforesaid,
(hereinafter called "NORANDA")
OF THE FOURTH PART
A N D :
NORTHWOOD PULP LIMITED, a Company duly
-----------------------
incorporated under the laws of the
Province of British Columbia, Canada,
having an office at the City of Prince
George, Province aforesaid,
(hereinafter called "PULP CORPORATION")
OF THE FIFTH PART
WHEREAS:
A. Canamead, Inc., a Company duly incorporated under the laws of the State of
Ohio, one of the United States of America (hereinafter
<PAGE>
called "Canamead") entered into an Agreement dated as of the 24th day of
April, 1964, with Northwood, Mead and Noranda (hereinafter referred to as
the "Basic Agreement") providing for, inter alia, the incorporation of Pulp
Corporation to construct and operate a pulp mill having an initial daily
rated capacity of five hundred (500) tons of paper grade bleached, semi-
bleached and unbleached sulphate wood pulp, and
B. Canamead, Northwood, Mead and Noranda have entered into an Agreement made
as of the 2nd day of July, 1964 (hereinafter referred to as the "First
Supplemental Agreement") providing for, inter alia, an increase in the
aforesaid initial daily rated capacity to six hundred and twenty-five (625)
tons of paper grade bleached, semi-bleached and unbleached sulphate wood
pulp, and
C. Northwood, Forest Kraft, Mead and Noranda have entered into an Agreement
made as of the 5th day of April, 1965 (hereinafter referred to as the
"Second Supplemental Agreement") providing for, inter alia, the succession
by Forest Kraft to all the rights and privileges of Canamead under the said
Basic Agreement and the First Supplemental Agreement.
D. Pulp Corporation, Upper Fraser Spruce Mills Limited, Sinclair Spruce Lumber
Company Limited and Northwood have entered into an Agreement dated as of
October 31, 1964 (hereinafter called the "Lumber Sales Agreement") in the
form of the Agreement attached to the said Basic Agreement as Exhibit "D".
E. Subsequent to the 31st day of October, 1964, Pulp Corporation has acquired
either directly or indirectly all the beneficial interest in the issued
outstanding capital stock of:
Fichtner Lumber Co. Ltd.,
Hansard Lumber Co. Ltd.,
Fichtner Rentals Ltd.,
Church Sawmills Ltd.,
Eagle Lake Sawmills Ltd.,
Penny Forest Products Ltd.,
Giscome Water Works Ltd.,
Shelley Development Ltd.
(all of which being hereafter called the "Other Sawmill Companies")
which said Other Sawmill Companies, or some of them, now do or will
in the future operate sawmills.
F. Pulp Corporation, Mead, Northwood and Noranda, have entered into an
<PAGE>
Agreement dated as of April 1, 1965 (hereafter called the "Pulp Purchase
Agreement") in the form of the agreement attached to the said Basic
Agreement as Exhibit "E".
G. The Parties hereto have agreed that the said Basic Agreement and the
exhibits thereto, as amended by the First Supplemental Agreement, and
Second Supplemental Agreement, and the said Lumber Sales Agreement, and the
said Pulp Purchase Agreement shall be amended and modified as hereinafter
set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of
the mutual covenants herein contained the Parties hereto do hereby agree as
follows:
1. That Northwood and Forest Kraft do each purchase from Pulp
Corporation additional 5% subordinated debentures to be issued by Pulp
Corporation in the principal amount of $1,100,000.00 (U.S. Funds) at par
pursuant to the provisions of Paragraph (C) of Clause 3 of the said Basic
Agreement as amended by Clause 4 of the First Supplemental Agreement.
2. The Parties hereto agree that Pulp Corporation, the Other Sawmill
Companies and Northwood shall forthwith on the execution of the within Agreement
execute and deliver an agreement in the same form, mutatis mutandis, as that
attached to the said Basic Agreement as Exhibit "D", which provides for the
appointment of Northwood as the exclusive sales agent of the Other Sawmill
Companies to sell on the terms and conditions set forth therein the forest
products therein described.
3. That the fifth recital of the said Pulp Purchase Agreement shall
be and is hereby amended by deleting the entirety of the said fifth recital and
substituting the following therefor:
"Whereas, Pulp Corporation contemplates the execution
"and delivery of not in excess of $31,300,000.00 (U.S.
"Funds) in promissory notes (hereinafter called "Notes-I")
"and not in excess of $11,000,000.00 (U.S. Funds) in
"promissory notes (hereinafter called the "Notes-II")
"and not in excess of $3,300,000.00 (U.S. Funds) in
"promissory notes (hereinafter called the "Notes-III")
<PAGE>
-4-
"to evidence indebtedness incurred under a loan agreement or
"agreements with the Canadian Imperial Bank of Commerce and The
"Royal Bank of Canada, as amended from time to time (hereinafter
"called the "Loan Agreement") for the construction and equipping
"of said pulp mill."
4. That Section 1 of the said Pulp Purchase Agreement shall be and
is hereby amended by deleting the sixth line of the said Section 1 and
substituting therefor the following:
"or interest on Notes-I, Notes-II and Notes-III shall remain
"unpaid."
5. That Section 3 of the said Pulp Purchase Agreement shall be and
is hereby amended by deleting therefrom the definition of the words "cost of
production" and substituting the following therefor:
"the term "cost of production" shall include all costs, expenses
"and charges for manufacturing, operating and administering the
"pulp mill, incurred or accrued under generally accepted
"accounting principles and, without limiting the generality
"thereof, shall include interest on Notes-I, Notes-II and
"Notes-III and all other indebtedness of Pulp Corporation, proper
"charges for materials, salaries, wages, overhead, supervision,
"repairs and maintenance, consulting fees, taxes (including,
"without limitation thereto, income taxes), Workmen's
"Compensation, Unemployment Compensation, and public utilities but
"shall not include depreciation."
6. That the first subparagraph of Paragraph (a) of Section 4 of the
said Pulp Purchase Agreement shall be and is hereby amended by deleting in its
entirety the whole of the said first subparagraph of Paragraph (a) and
substituting the following therefor:
"On June 28 and December 29 of each year until all principal and
"interest of Notes-I, Notes-II and Notes-III, have been paid in
"full, Pulp Corporation shall make a computation of its aggregate
"cash balance, provided that, in computing any such cash balance
"there shall
<PAGE>
-5-
"be excluded cash allocated on the books of Pulp Corporation for
"property additions or for the acquisition of timber rights. In
"the event that such computations show an aggregate cash balance
"which is less than the total of
"(i) interest payment due upon any indebtedness of
"Pulp Corporation on the next succeeding June 30
"or December 31, as the case may be, including,
"without limitation thereto, Notes-I, Notes-II
"and Notes-III, plus
"(ii) $1,565,000.00, plus
"(iii) the principal payments due on the next succeeding June
"30 or December 31, as the case may be, on all
"indebtedness of Pulp Corporation other than Notes-I,
"Notes-II and Notes-III,
"(the difference between such aggregate cash balance and such
"total amount due being hereinafter called the "cash
"deficiency"), Pulp Corporation shall promptly notify Mead and
"Northwood not later than the close of business on the next
"succeeding June 29 or December 30, as the case may be. Mead
"shall thereupon make a prepayment (without interest) to Pulp
"Corporation upon the purchase price of pulp to be purchased
"thereafter hereunder, such prepayment to be equal to one-half of
"the cash deficiency, and Northwood shall thereupon make a loan,
"without interest, to Pulp Corporation equal to one-half of the
"cash deficiency."
7. That Exhibit "F" to the said Basic Agreement shall be and is
hereby amended by deleting Section IX in its entirety therefrom and substituting
the following therefor:
"IX Term: This Agreement shall remain in full force and effect
-----
"for twenty years from the date hereof and thereafter if and so
"long as any funded indebtedness of Pulp Corporation is
"outstanding. The term "funded indebtedness" as used in this
"Agreement shall mean any indebtedness of Pulp Corporation under
"the Loan Agreement
<PAGE>
"with Canadian Imperial Bank of Commerce and the Royal
"Bank of Canada dated July 2, 1964, as amended from time
"to time, and any other indebtedness which, by its terms,
"or at the option of the debtor, may mature more than
"twelve months from the date of creation of same and
"shall include indebtedness which may be payable out of
"the proceeds of funded indebtedness (as defined) payable
"more than twelve months from the date of creation of the
"original indebtedness pursuant to the terms of such
"original indebtedness."
8. That if any provision or clause of this Agreement is held invalid
for any reason or for any purpose, such invalidity shall not affect other
provisions or clauses of this Agreement which can be given effect without the
invalid provision or clause and to this end the provisions and clauses of this
Agreement are declared to be severable.
9. This Agreement shall be construed in accordance with the laws of
the Province of British Columbia.
10. The Parties hereto do hereby jointly and severally confirm each
and every covenant and provision of the said Basic Agreement and all exhibits
thereto, the said First Supplemental Agreement, and the said Second Supplemental
Agreement, and the said Pulp Purchase Agreement, except to the extent the same
have been specifically modified or amended hereby.
11. This Agreement shall be binding upon and enure to the benefit of
the Parties hereto, their respective successors and permitted assigns, as the
case may be.
IN WITNESS WHEREOF the Parties have caused their seals to be
affixed in the presence of their respective proper officers duly authorized in
that behalf as of the day and year first above written.
The Common Seal of NORTHWOOD MILLS)
LTD. was hereunto affixed in the )
presence of: )
)
)
Alfred Powis )
- ----------------------------------)
Director )
)
)
Adam H. Zimmerman )
- ----------------------------------)
Director )
<PAGE>
ATTEST: FOREST KRAFT COMPANY
Albert H. Sealy, Jr. By Geo. H. Pringle
- ------------------------ ---------------------
Assistant Secretary President
ATTEST: THE MEAD CORPORATION
Albert H. Sealy, Jr. By Geo. H. Pringle
- ------------------------ ---------------------
Secretary President
NORANDA MINES LIMITED
By R. V. Porritt
---------------------
President
By R. C. Ashenhurst
---------------------
Secretary
The Common Seal of NORTHWOOD PULP)
LIMITED was hereunto affixed in )
the presence of: )
)
Adam H. Zimmerman )
- ---------------------------------)
President )
)
)
R. C. Ashenhurst )
- ---------------------------------)
Secretary )
<PAGE>
Fourth Supplemental Agreement made as of the 1st day of February,
A.D. 1967.
BETWEEN:
NORTHWOOD MILLS LTD., a company duly
--------------------
incorporated under the laws of the
Province of British Columbia, Canada,
having an office at the City of
Vancouver, Province aforesaid,
(hereinafter called "Northwood")
OF THE FIRST PART
AND:
FOREST KRAFT COMPANY, a company duly
--------------------
incorporated under the laws of the State of
Delaware, one of the United States of
America, having an office at the City of
Dayton, State of Ohio, one of the United
States of America,
(hereinafter called "Forest Kraft")
OF THE SECOND PART
AND:
THE MEAD CORPORATION, a company duly
--------------------
incorporated under the laws of the State
of Ohio, one of the United States of
America, having an office at the City of
Dayton, State aforesaid,
(hereinafter called "Mead")
OF THE THIRD PART
AND:
NORANDA MINES LIMITED, a company duly
---------------------
incorporated under the laws of the Province
of Ontario, Canada, having an office at the
City of Toronto, Province aforesaid,
(hereinafter called "Noranda")
OF THE FOURTH PART
AND:
NORTHWOOD PULP LIMITED, a company duly
----------------------
incorporated under the laws of the
Province of British Columbia, Canada,
having an office at the City of Prince
George, Province aforesaid,
(hereinafter called "Pulp Corporation")
OF THE FIFTH PART
<PAGE>
-2-
W H E R E A S :
A. Canamead, Inc., a company duly incorporated under the laws of the State of
Ohio, one of the United States of America (hereinafter called "Canamead")
entered into an Agreement dated as of the 24th day of April, 1964 with
Northwood, Mead and Noranada (hereinafter referred to as the "Basic
Agreement") providing for, inter alia, the incorporation of "Pulp
Corporation" and for Pulp Corporation to construct and operate a pulp mill
having an initial daily rated capacity of five hundred (500) tons of paper
grade bleached, semi-bleached and unbleached sulphate wood pulp, and
B. Canamead, Northwood, Mead and Noranda have entered into an Agreement made
as of the 2nd day of July, 1964 (hereinafter referred to as the "First
Supplemental Agreement") providing for, inter alia, an increase in the
aforesaid initial daily rated capacity to six hundred and twenty-five (625)
tons of paper grade bleached, semi-bleached and unbleached sulphate wood
pulp, and
C. Northwood, Forest Kraft, Mead and Noranda have entered into an Agreement
made as of the 5th day of April, 1965 (hereinafter referred to as the
"Second Supplemental Agreement") providing for, inter alia, the succession
by Forest Kraft to all the rights and privileges of Canamead under the said
Basic Agreement and the First Supplemental Agreement.
D. Northwood, Forest Kraft, Mead, Noranda and Pulp Corporation have entered
into an Agreement made as of the 15th day of March, 1966 (hereinafter
referred to as the "Third Supplemental Agreement") providing for, inter
alia, amendments to the said Basic Agreement and certain other agreements,
arising out of additional borrowing by Pulp Corporation, and
E. Subsequent to the 31st day of October, 1964 Pulp Corporation has acquired
either directly or indirectly all the beneficial interest in the issued
outstanding capital stock of:
<PAGE>
-3-
Fichtner Lumber Co. Ltd.
Hansard Lumber Co. Ltd.
Fichtner Rentals Ltd.
Church Sawmills Ltd.
Eagle Lake Sawmills Ltd.
Penny Forest Products Ltd.
Giscome Water Works Ltd.
Shelley Development Ltd.
(all of which being hereafter called the "Other Sawmill Companies") which
said Other Sawmill Companies, or some of them, now do or will in the future
operate sawmills, and
F. The Parties hereto have agreed that the said Basic Agreement and the
Exhibits thereto, as amended by the First Supplemental Agreement, the
Second Supplemental Agreement, and the Third Supplemental Agreement, shall
be amended and modified as hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained the parties hereto do hereby agree as follows:
1. That Clause 4 of the said Basic Agreement as amended by the said First
Supplemental Agreement, be further amended by deleting therefrom Paragraph (b)
in its entirety and substituting the following therefor:
"(b) Northwood and Forest Kraft hereby agree to cause the Directors of the
Pulp Corporation and Upper Fraser and Sinclair to jointly constitute by
resolution an Operating Committee of nine persons (who may or may not be
members of the Board of Directors of the Pulp Corporation or Upper Fraser
and/or Sinclair) and that such Operating Committee shall have the following
duties, rights and responsibilities in addition to any other rights, duties
and responsibilities as may be delegated or designated by any of the said
Boards of Directors:
(i) The said Operating Committee shall be advisory to the officers of the
Pulp Corporation and the operating management of the said pulp mill on
all matters and questions affecting operations of the Pulp Corporation
other than those arising in
<PAGE>
-4-
connection with the usual and normal day to day conduct of its
business or in connection with matters and questions upon which
action or decision has been taken by the Board of Directors of the
Pulp Corporation;
(ii) The said Operating Committee shall also be advisory to the officers
of Upper Fraser and Sinclair and the operating management of the
sawmills of Upper Fraser and Sinclair upon all matters and questions
affecting operations of Upper Fraser and Sinclair other than those
arising from the usual and normal day to day conduct of their
business or in connection with matters and questions upon which
action or decision has been taken by the Boards of Directors of Upper
Fraser and Sinclair, and in order to carry out and discharge the
aforesaid duties and responsibilities in respect of the said matters
and questions affecting operations of Upper Fraser and Sinclair, the
said Operating Committee shall constitute a sub-committee (to be
known as the "Sawmill Committee") of nine persons (who may or may not
be members of the said Operating Committee) and that such Sawmill
Committee shall have such duties, rights and responsibilities as may
be delegated or designated from time to time by the said Operating
Committee.
(iii) The Vice President and General Manager of the Pulp Corporation shall
be one of the Operating Committee and shall preside as Chairman at
all meetings of the Operating Committee, and the General Manager of
the Sawmill Division of the Pulp Corporation shall be one of the
operating personnel members of the Sawmill Committee and shall
preside as Chairman at all meetings of the Sawmill Committee.
(iv) The General Manager of the Sawmill Division of the Pulp Corporation
shall be one of the operating
<PAGE>
-5-
personnel members of the said Operating Committee, and the Vice
President and General Manager of the Pulp Corporation shall be one of
the operating personnel members of the said Sawmill Committee.
(v) Seven (7) voting members of the Operating Committee or the Sawmill
Committee, as the case may be, shall constitute a quorum and no
action or motion shall be carried except by unanimous vote of all
voting members present, and in the event that any action or motion
fails by reason of the lack of an unanimous vote, the matter or
question in the case of the Operating Committee shall be referred to
the next following meeting of the Directors of the Pulp Corporation,
and in the case of the Sawmill Committee shall be referred to the
next following meeting of the Operating Committee.
(vi) The said Operating Committee shall have full power and right to
determine the time, place and frequency of its meetings and the
meetings of the Sawmill Committee, and the method of the conduct of
the Sawmill Committee meetings; provided, however, written minutes of
every meeting shall be prepared."
2. That Clause 4 of the said Basic Agreement as amended by the said First
Supplemental Agreement, be and is hereby further amended by deleting therefrom
Paragraph (e) and (f) in their entirety and substituting therefor the following
as Paragraph (e):
"(e) Forest Kraft and Northwood hereby agree that they shall cause the said
Operating Committee in constituting the said Sawmill Committee to elect
thereto members as follows:
Three voting members to be nominated by Forest Kraft
Three voting members to be nominated by Northwood
Three voting members to be operating personnel."
<PAGE>
-6-
3. That Clause 4 of the said Basic Agreement as amended by the First
Supplemental Agreement, be further amended by deleting Paragraph (g) therefrom
and substituting the following therefor as Paragraph (f):
"(f) Northwood and Forest Kraft may each have any number of observers and
advisers present at meetings of the Operating Committee, Construction
Committee, and Sawmill Committee, but having no vote."
4. That Clause 4 of the said Basic Agreement as amended by the said First
Supplemental Agreement, be further amended by re-lettering Paragraph (h), (i),
(j) and (k) successively as Paragraphs (g), (h), (i) and (j).
5. That each and every provision (excepting always Clauses 12 and 13 thereof)
of the said Basic Agreement, as amended by the First Supplemental Agreement, the
Second Supplemental Agreement, the Third Supplemental Agreement, and this
Agreement, referring and relating to Upper Fraser and Sinclair be deemed to
refer and relate to and be applicable to, mutatis mutandis,each and every of the
Other Sawmill Companies to the same extent as the same would have referred or
related to or been applicable to each and every of the Other Sawmill Companies
had the same been specifically named along with Upper Fraser and Sinclair in the
said Basic Agreement as amended as aforesaid.
6. That if any provision or clause of this Agreement is held invalid or for
any purpose such invalidity shall not affect other provisions or clauses of this
Agreement which can be given effect without the invalid provision or clause and
to this end the provisions and clauses of this Agreement are declared to be
severable.
7. This Agreement shall be construed in accordance with the laws of the
Province of British Columbia.
8. The parties hereto do hereby jointly and severally confirm each and every
covenant and provision of the said Basic Agreement and all Exhibits
thereto, the said First Supplemental
<PAGE>
-7-
Agreement, and the said Second Supplemental Agreement, and the said Third
Supplemental Agreement, except to the extent the same may have been specifically
modified or amended hereby.
9. This Agreement shall be binding upon and enure to the benefit of the
parties hereto, their respective successors and permitted assigns, as the case
may be.
IN WITNESS WHEREOF the parties have caused their seals to be affixed in the
presence of their respective proper officers duly authorized in that behalf as
of the day and year first above written.
The common seal of NORTHWOOD )
MILLS LTD. was hereunto affixed )
in the presence of: )
)
Adam H. Zimmerman )
- --------------------------------)
Director )
)
David C. Davenport )
- --------------------------------)
Director )
Attest: FOREST KRAFT COMPANY
/s/ Albert H. Sealy,
- -------------------------------- By /s/ Geo. H. Pringle
Assistant Secretary -------------------------------
President
Attest: THE MEAD CORPORATION
/s/ Albert H. Sealy,
- -------------------------------- By /s/ Geo. H. Pringle
Secretary -------------------------------
President
NORANDA MINES LIMITED
By /s/ R. V. Porritt
-------------------------------
President
/s/ R. C. Ashenhurst
-------------------------------
Secretary
The common seal of NORTHWOOD )
PULP LIMITED was hereunto )
affixed in the presence of: )
)
/s/ Adam H. Zimmerman )
- -----------------------------)
President )
)
/s/ R. C. Ashenhurst )
- -----------------------------)
Secretary )
<PAGE>
Fifth Supplemental Agreement made as of the 15th day of December, A.D.
1970,
BETWEEN:
NORTHWOOD MILLS LTD., a company duly incorporated
---------------------
under the laws of the Province of Britsh Columbia,
Canada, having an office at the City of Vancouver,
Province aforesaid;
(hereinafter called "Northwood")
OF THE FIRST PART
AND:
FOREST KRAFT COMPANY, a company duly incorporated
---------------------
under the laws of the State of Delaware, one of
the United States of America, having an office at
the City of Dayton, State of Ohio, one of the
United States of America;
(hereinafter called "Forest Kraft")
OF THE SECOND PART
AND:
THE MEAD CORPORATION, a company duly incorporated
---------------------
under the laws of the State of Ohio, one of the
United States of America, having an office at the
City of Dayton, State aforesaid;
(hereinafter called "Mead")
OF THE THIRD PART
AND:
NORANDA MINES LIMITED, a company duly
----------------------
incorporated under the laws of the Province of
Ontario, Canada, having an office at the City of
Toronto, Province aforesaid;
(hereinafter called "Noranda")
OF THE FOURTH PART
AND:
NORTHWOOD PULP LIMITED, a company duly
-----------------------
incorporated under the laws of the Province of
Britsh Columbia, Canada, having an office at the
City of Prince George, Province aforesaid;
(hereinafter called "Pulp Corporation")
OF THE FIFTH PART
<PAGE>
-2-
W H E R E A S :
A. Canamead, Inc., a company duly incorporated under the laws of the State of
Ohio, one of the United States of America (hereinafter called "Canamead")
entered into an Agreement dated as of the 24th day of April, 1964 with
Northwood, Mead and Noranda (hereinafter referred to as the "Basic Agreement")
providing for, inter alia, the incorporation of "Pulp Corporation" and for Pulp
Corporation to construct and operate a pulp mill having an initial daily rated
capacity of five hundred (500) tons of paper grade bleached, semi-bleached and
unbleached sulphate wood pulp, and
B. Canamead, Northwood, Mead and Noranda have entered into an Agreement made
as of the 2nd day of July, 1964 (hereinafter referred to as the "First
Supplemental Agreement") providing for, inter alia, an increase in the aforesaid
initial daily rated capacity to six hundred and twenty-five (625) tons of paper
grade bleached, semi-bleached and unbleached sulphate wood pulp, and
C. Northwood, Forest Kraft, Mead and Noranda have entered into an Agreement
made as of the 5th day of April, 1965 (hereinafter referred to as the "Second
Supplemental Agreement") providing for, inter alia, the succession by Forest
Kraft to all the rights and privileges of Canamead under the said Basic
Agreement and the First Supplemental Agreement, and
D. Northwood, Forest Kraft, Mead, Noranda and Pulp Corporation have entered
into an Agreement made as of the 15th day of March, 1966 (hereinafter referred
to as the "Third Supplemental Agreement") providing for, inter alia, amendments
to the said Basic Agreement and certain other agreements, arising out of
additional borrowing by Pulp Corporation, and
E. Northwood, Forest Kraft, Mead, Noranda and Pulp Corporation have entered
into an Agreement made as of the 1st day of February, 1967 (hereinafter referred
to as the "Fourth Supplemental Agreement") providing for, inter alia, amendments
to Clause 4 of the Basic Agreement, and
<PAGE>
- 3 -
F. The parties hereto have agreed that the said Basic Agreement and the
Exhibits thereto, as amended by the First Supplemental Agreement, the Second
Supplemental Agreement, the Third Supplemental Agreement, and the Fourth
Supplemental Agreement, shall be amended and modified as hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained the parties hereto do hereby agree as follows:
1. That Clause 4 of the said Basic Agreement as amended by the said First
Supplemental Agreement and the Fourth Supplemental Agreement, be further amended
by deleting therefrom Paragraph (b) in its entirety and substituting the
following therefor:
"(b) Northwood and Forest Kraft hereby agree to cause the Directors of the
Pulp Corporation and Upper Fraser and Sinclair and the Other Sawmill
Companies (as defined in said Fourth Supplemental Agreement) to
jointly constitute by resolution an Operating Committee of ten persons
(who may or may not be members of the Board of Directors of the Pulp
Corporation or Upper Fraser and/or Sinclair and/or the said Other
Sawmill Companies) and that such Operating Committee shall have the
following duties, rights and responsibilities in addition to any other
rights, duties and responsibilities as may be delegated or designated
by any of the said Boards of Directors:
(i) The said Operating Committee shall be advisory to the officers of
the Pulp Corporation and the operating management of the said
pulp mill on all matters and questions affecting operations of
the Pulp Corporation other than those arising in connection with
the usual and normal day to day conduct of its business or in
connection with matters and questions upon which action or
decision has been taken by the Board
<PAGE>
- 4 -
of Directors of the Pulp Corporation;
(ii) The said Operating Committee shall also be advisory to the
officers and operating management of Upper Fraser and Sinclair and
the said Other Sawmill Companies upon all matters and questions
affecting operations of Upper Fraser and Sinclair and the said
Other Sawmill Companies other than those arising from the usual
and normal day to day conduct of their business or in connection
with matters and questions upon which action or decision has been
taken by the Boards of Directors of Upper Fraser and Sinclair and
the said Other Sawmill Companies, and in order to carry out and
discharge the aforesaid duties and responsibilities in respect of
the said matters and questions affecting operations of Upper
Fraser and Sinclair and the said Other Sawmill Companies, the said
Operating Committee shall constitute a sub-committee (to be known
as the "Sawmill Committee") of nine persons (who may or may not be
members of the said Operating Committee) and that such Sawmill
Committee shall have such duties, rights and responsibilities as
may be delegated or designated from time to time by the said
Operating Committee;
(iii) The Vice President and General Manager of the Pulp Corporation
shall be one of the members of the Operating Committee and shall
preside as Chairman at all meetings of the Operating Committee,
and shall be entitled to vote thereat, and the Vice President and
General Manager of the Sawmill Division of the Pulp Corporation
shall be one of the operating personnel members of the Sawmill
Committee and shall preside as Chairman at all meetings of the
Sawmill Committee;
<PAGE>
- 5 -
(iv) The Vice President and General Manager of the Sawmill Division of
the Pulp Corporation shall be one of the operating personnel
members of the said Operating Committee, and the Vice President
and General Manager of the Pulp Corporation shall be one of the
operating personnel members of the said Sawmill Committee;
(v) Seven (7) voting members of the Operating Committee or the Sawmill
Committee, as the case may be, shall constitute a quorum and no
action or motion shall be carried except by unanimous vote of all
voting members present, and in the event that any action or motion
fails by reason of the lack of a unanimous vote, the matter or
question in the case of the Operating Committee shall be referred
to the next following meeting of the Directors of the Pulp
Corporation, and in the case of the Sawmill Committee shall be
referred to the next following meeting of the Operating Committee;
(vi) The said Operating Committee shall have full power and right to
determine the time, place and frequency of its meetings and the
meetings of the Sawmill Committee, and the method of the conduct
of the Sawmill Committee meetings; provided, however, written
minutes of every meeting shall be prepared."
2. That Noranda and Mead will, in equal amounts, each advance up to a
maximum of Five Million Dollars ($5,000,000) (Canadian funds) in such amounts
and at such days and times as may be required by Pulp Corporation; the principal
of such advances to be repaid by Pulp Corporation in five (5) equal yearly
aggregate payments to be made on the 31st day of December of each year
commencing with the year 1972 and that such loans and advances will be evidenced
and secured as provided in the Financing Agreement as set out in
<PAGE>
- 6 -
the letter of the Canadian Imperial Bank of Commerce dated November 12th, 1970
and addressed to Mead, the Pulp Corporation, Noranda and Northwood.
3. That Northwood and Mead hereby consent to the creation by Pulp
Corporation of funded indebtedness (as defined in Clause 5 of the said Basic
Agreement) provided that such funded indebtedness in the aggregate does not
exceed the sum of Eighty-Five Million Dollars ($85,000,000) (Canadian funds).
4. Northwood and Forest Kraft hereby confirm their respective consents to
the authorization and issuance by Pulp Corporation of Fourteen Million
(14,000,000) five percent (5%) Preference Shares each having a nominal or par
value of One Dollar ($1.00).
5. That if any provision or clause of this Agreement is held invalid or for
any purpose such invalidity shall not affect other provisions or clauses of this
Agreement which can be given effect without the invalid provision or clause and
to this end the provisions and clauses of this Agreement are declared to be
severable.
6. This Agreement shall be construed in accordance with the laws of the
Province of British Columbia.
7. The parties hereto do hereby jointly and severally confirm each and
every covenant and provision of the said Basic Agreement and all Exhibits
thereto, the said First Supplemental Agreement, and the said Second Supplemental
Agreement, and the said Third Supplemental Agreement, and the said Fourth
Supplemental Agreement, except to the extent the same may have been specifically
modified or amended hereby.
8. This Agreement shall be binding upon and enure to the benefit of the
parties hereto, their respective successors and permitted assigns, as the case
may be.
IN WITNESS WHEREOF the parties have caused their seals to be affixed in
the presence of their respective proper officers
<PAGE>
- 7 -
duly authorized in that behalf as of the day and year first above written.
The Common Seal of NORTHWOOD MILLS)
LTD. was hereunto affixed in the )
presence of: )
)
)
/s/ Adam H. Zimmerman )
- --------------------------------- )
Director )
)
)
/s/ Alfred Powis )
- --------------------------------- )
Director )
FOREST KRAFT COMPANY
Attest: By:/s/ J. W. McSwiney
---------------------------
President
/s/ Albert H. Sealy
- ---------------------------------
Secretary
THE MEAD CORPORATION
Attest:
By:/s/ J. W. McSwiney
---------------------------
President
/s/ Albert H. Sealy
- --------------------------------
Secretary
NORANDA MINES LIMITED
By:/s/ Alfred Powis
---------------------------
President
/s/ R. C. Ashenhurst
---------------------------
Secretary
The Common Seal of NORTHWOOD PULP
LIMITED was hereunto affixed in
the presence of:
/s/ Adam H. Zimmerman
- --------------------------------
President
/s/ B. H. Grose
- --------------------------------
Secretary
<PAGE>
DATED: 15th December, 1970.
- -------------------------------------------
===========================================
BETWEEN:
NORTHWOOD MILLS LTD.
--------------------
AND:
FOREST KRAFT COMPANY
---------------------
AND:
THE MEAD CORPORATION
--------------------
AND:
NORANDA MINES LIMITED
--------------------
AND:
NORTHWOOD PULP LIMITED
----------------------
===========================================
FIFTH SUPPLEMENTAL AGREEMENT
- ----------------------------
===========================================
DCD:jrw
===========================================
BOURNE, LYALL, SHIER, DAVENPORT & SPENCER
Barristers & Solicitors
1180 - 505 Burrard Street
Vancouver 1, B.C.
<PAGE>
Sixth Supplemental Agreement made as of the 1st day of April, 1974,
BETWEEN:
NORTHWOOD MILLS LTD., a company duly
--------------------
incorporated under the laws of the
Province of British Columbia, Canada,
having an office at the City of
Vancouver, Province aforesaid;
(hereinafter called "Northwood")
OF THE FIRST PART
AND:
FOREST KRAFT COMPANY, a company duly
--------------------
incorporated under the laws of the
State of Delaware, one of the United
States of America, having an office
at the City of Dayton, State of Ohio,
one of the United States of America;
(hereinafter called "Forest Kraft")
OF THE SECOND PART
AND:
THE MEAD CORPORATION, a company duly
--------------------
incorporated under the laws of the
State of Ohio, one of the United
States of America, having an office
at the City of Dayton, State
aforesaid;
(hereinafter called "Mead")
OF THE THIRD PART
AND:
NORANDA MINES LIMITED, a company duly
---------------------
incorporated under the laws of the
Province of Ontario, Canada, having
an office at the City of Toronto,
Province aforesaid;
(hereinafter called "Noranda")
OF THE FOURTH PART
<PAGE>
-2-
AND:
NORTHWOOD PULP AND TIMBER LIMITED, a company
---------------------------------
duly incorporated under the laws of the
Province of British Columbia, Canada, having
an office at the City of Prince George,
Province aforesaid;
(hereinafter called "Pulp Corporation")
OF THE FIFTH PART
W H E R E A S:
A. Canamead, Inc., a company duly incorporated under the laws of the State of
Ohio, one of the United States of America, entered into an Agreement dated as of
April 24th, 1964 with Northwood, Mead and Noranda providing for, inter alia, the
incorporation of "Pulp Corporation" and for the said Pulp Corporation to
construct and operate a pulp mill at or near Prince George, B.C., which said
Agreement being amended by subsequent Agreements dated respectively July 2nd,
1964, April 5th, 1965, March 15th, 1966, February 1st, 1967 and December 15th,
1970 (such Agreement, together with all the aforesaid amendments being
hereinafter referred to as the "Basic Agreement"); and
B. The parties hereto have agreed that the said Basic Agreement and the
Exhibits thereto shall be amended and modified as hereinafter set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants herein contained the parties hereto do hereby agree as follows:
1. The said Basic Agreement is hereby amended by deleting
<PAGE>
- 3 -
therefrom Clause 4 in its entirety and substituting the following therefor:
"4. Management of the Pulp Corporation and Bulkley Valley Forest
------------------------------------------------------------
Industries Limited
------------------
(a) Northwood and Mead agree that as long as each or its respective
subsidiaries or assigns as permitted by this agreement holds 50% of
the issued ordinary shares regardless of class of the Pulp
Corporation:
(i) Subject as hereinafter provided in subparagraph (iii) hereof, the
number of directors of each of the Pulp Corporation and Bulkley
Valley Forest Industries Limited (herein called "B.V.F.I.") shall
be eleven (11) of which six (6) persons (all of which to be
ordinarily resident in Canada and one (1) of which to be
ordinarily resident in the Province of British Columbia) selected
by Northwood (hereinafter called the "Northwood Directors"), and
five (5) persons selected by Mead (hereinafter called the "Mead
Directors") shall be elected directors of the Pulp Corporation
and B.V.F.I. respectively at every meeting of the Pulp
Corporation and B.V.F.I. respectively held for the purpose of
electing the Board of eleven (11) directors.
(ii) In the event of the resignation, death, disqualification or
removal of any of the aforesaid eleven (11) directors, the
parties hereto shall
<PAGE>
-4-
elect or cause to be elected or appointed a person selected by
Northwood in the case of the resignation, death, disqualification
or removal of a Northwood Director or a person selected by Mead
in the case of the resignation, death, disqualification or
removal of a Mead Director. A director may be removed before the
expiration of his period of office by the party who elected or
appointed such director.
(iii) In the event the number of directors of the Pulp Corporation or
B.V.F.I. is increased to twelve (12) as provided in the Articles
of Association attached hereto as Exhibit "B", the said twelfth
director shall be elected or appointed on the joint nomination of
Mead and Northwood. Provided that in the event Mead and Northwood
do not within ten (10) days of such increase agree in writing on
a person to be appointed as the twelfth director, then and in
that event the twelfth director shall be determined by
arbitration in accordance with Clause 17 hereof, and on the
identity of the said twelfth director being so determined he
shall be appointed forthwith to the Board of Directors of each of
the said companies.
(iv) At all times when there are not more than eleven (11) directors
in office, no action shall be taken at any meeting of the Board
of Directors of the Pulp Corporation or B.V.F.I. respectively
except with the affirmative vote of a majority of the Northwood
<PAGE>
- 5 -
Directors present in person or by alternate and a majority of the
Mead Directors present in person or by alternate.
(v) The quorum necessary for the transaction of the business of the
directors shall be six (6) directors present in person or by
alternate.
(vi) Neither Northwood nor Mead shall agree to or cause the Memorandum
and Articles of the Pulp Corporation or B.V.F.I. to be amended,
varied or modified in any way whatsoever without the consent in
writing of the other first had and obtained; provided however the
Articles of B.V.F.I. shall be amended forthwith after the date
hereof so as to be identical as practically possible with the
Articles of the Pulp Corporation.
(vii) Unless otherwise mutually agreed in writing, each following party
shall be entitled to select the persons to be elected or
appointed by the Boards of Directors of the Pulp Corporation and
B.V.F.I. to the offices indicated below under the name of such
party:
Mead Northwood
---- ---------
Chairman of the Board President
Senior Vice President Vice President
Assistant Secretary Secretary
Comptroller Treasurer
Vice President and Vice President and
General Manager - Pulp General Manager -
Assistant Treasurer Timber
Assistant Comptroller
<PAGE>
- 6 -
(b) Northwood and Forest Kraft hereby agree to cause the directors of the Pulp
Corporation and B.V.F.I. to jointly constitute by resolution an Operating
Committee of ten (10) persons (who may or may not be members of the Board
of Directors of the Pulp Corporation or B.V.F.I.) and that such Operating
Committee shall have the following duties, rights and responsibilities in
addition to any other duties, rights and responsibilities as may be
delegated or designated by any of the said Boards of Directors:
(i) The said Operating Committee shall be advisory to the officers of the
Pulp Corporation and the operating management of the said pulp mill on
all matters and questions affecting operations of the Pulp Corporation
other than those arising in connection with the usual and normal day
to day conduct of its business or in connection with the matters and
questions upon which action or decision has been taken by the Board of
Directors of the Pulp Corporation;
(ii) The said Operating Committee shall also be advisory to the officers
and operating management of B.V.F.I. and the sawmills owned and
operated by the Pulp Corporation itself, upon all matters and
questions affecting operations of B.V.F.I. and the said sawmills other
than those arising from the usual and
<PAGE>
-7-
normal day to day conduct of their business or in connection with matters
and questions upon which action or decision has been taken by the Boards
of Directors of the Pulp Corporation or B.V.F.I. and in order to carry
out and discharge the aforesaid duties and responsibilities in respect of
the said matters and questions affecting operations of B.V.F.I. and the
said sawmills, the said Operating Committee shall constitute a
sub-committee (to be known as the "Sawmill Committee") of nine (9)
persons (who may or may not be members of the said Operating Committee
and that such Sawmill Committee shall have such duties, rights and
responsibilities as may be delegated or designated from time to time by
the said Operating Committee;
(iii) The Vice President and General Manager - Pulp of the Pulp Corporation
shall be one of the members of the Operating Committee and shall preside
as Chairman at all meetings of the Operating Committee and shall be
entitled to vote thereat and the Vice President and General Manager -
Timber of the Pulp Corporation shall be one of the operating personnel
members of the Sawmill Committee and shall preside as Chairman at all
meetings of the Sawmill Committee;
(iv) The Vice President and General Manager - Timber of the Pulp Corporation
shall be one of the operating
<PAGE>
-8-
personnel members of the said Operating Committee and the Vice
President and General Manager - Pulp of the Pulp Corporation shall be
one of the operating personnel members of the said Sawmill Committee;
(v) Seven (7) voting members of the Operating Committee or the Sawmill
Committee, as the case may be, shall constitute a quorum and no
action or motion shall be carried except by unanimous vote of all
voting members present, and in the event that any action or motion
fails by reason of the lack of a unanimous vote, the matter or
question in case of the Operating Committee or the Sawmill Committee
shall be referred to the next following meeting of the directors of
the Pulp Corporation or B.V.F.I., as the case may be.
(vi) The said Operating Committee shall have full power and right to
determine the time, place and frequency of its meetings and the
meetings of the Sawmill Committee and the method and conduct of the
Sawmill Committee meetings; provided however written minutes of every
meeting shall be prepared.
(c) Northwood and Mead may each have any number of observers or advisors
present at meetings of the Operating Committee and the Sawmill Committee,
but having no vote in either case.
(d) The parties hereto hereby agree that the Pulp Corporation and B.V.F.I.
shall not be obligated to pay any management
<PAGE>
-9-
fees whatsoever to any of the parties hereto; provided that directors'
fees, if any, shall not be deemed to be a management fee within the meaning
of this clause.
(e) Forest Kraft and Northwood hereby agree that the Pulp Corporation shall be
managed and operated by the directors thereof and the officers thereof and
a staff to be engaged and paid by the Pulp Corporation provided that the
parties hereto shall cause Pulp Corporation to engage a person nominated by
Mead for employment as Vice President and General Manager - Pulp with
duties, powers and authorities determined from time to time by the
Directors of the Pulp Corporation and that the parties hereto shall cause
Pulp Corporation to engage a person nominated by Northwood for employment
as Vice President and General Manager - Timber with duties, powers and
authorities as determined from time to time by the Directors of the Pulp
Corporation.
(f) Forest Kraft and Northwood hereby agree that B.V.F.I. shall be managed and
operated by the directors thereof and the officers thereof and a staff to
be engaged and paid by B.V.F.I. provided that the parties hereto shall
cause the Vice President and General Manager - Timber of the Pulp
Corporation to be elected as a Vice President in charge of the operations
of B.V.F.I.
(g) Mead, upon the request of the Pulp Corporation, shall furnish such
technicians or personnel or services as the directors of Pulp Corporation
may require at such rates
<PAGE>
- 10 -
and charges as Mead and the Pulp Corporation shall agree upon prior to
the furnishing of such personnel or services. Northwood, upon request
of the Pulp Corporation or B.V.F.I. shall furnish such technicians or
personnel or services as the directors of Pulp Corporation or B.V.F.I.
may require at such rates and charges as Northwood and the Pulp
Corporation or B.V.F.I. shall agree upon prior to the furnishing of
such personnel or services."
2. Exhibit "B" to the said Basic Agreement shall be and is hereby amended
by deleting therefrom in its entirety Article 42 and substituting the following
therefor:
"42. Directors
---------
(a) The number of Directors shall be eleven (11) of whom six (6) shall be
elected by the holders of the "A" ordinary shares and five (5) shall
be elected by the holders of the "B" ordinary shares, either at the
annual general meeting, or at separate meetings of the holders of the
"A" ordinary shares and of the holders of the "B" ordinary shares, at
which separate meetings the regulations herein set forth shall apply
as though only "A" ordinary shares or "B" ordinary shares were
outstanding. The number of Directors shall not be increased or
decreased, except as hereinafter provided, without the sanction of a
Special Resolution. The names of the first Directors shall be
determined in writing by the subscribers to the Memorandum of
Association.
<PAGE>
-11-
(b) If the Directors are unable to decide or act upon any matter, motion
or question before the meeting because the same shall not have
received the approval of both a majority of the Directors elected by
the holders of the "A" ordinary shares and a majority of the Directors
elected by the holders of the "B" ordinary shares or by reason of the
lack of a quorum at any meeting, then the number of Directors shall be
and continue to be twelve (12) until the next annual general meeting
of the members whereupon the number of Directors shall again be eleven
(11), provided that the number of Directors shall be subject to
increase to twelve (12) as aforesaid, without limit to the number of
times the Directors have been so increased."
3. Exhibit "B" to the said Basic Agreement shall be and is hereby further
amended by deleting in its entirety Article 66 and substituting the following
therefor:
"66. Proceedings of Directors
------------------------
No resolution of the Directors shall be passed unless it is approved
by a majority of the Directors elected by the holders of the "A" ordinary
shares and also by a majority of Directors elected by the holders of the
"B" ordinary shares unless and until an additional Director has been
appointed, as provided for in Article 43. After the additional Director has
been appointed, as provided in Article 43, questions arising at a meeting
of the Directors shall be decided by a
<PAGE>
-12-
majority of votes, but the Chairman of the meeting shall in no
circumstances have a second or casting vote but, in the event of a tie or
deadlock the said additional Director appointed, as provided for in Article
43 hereof, shall have a second or casting vote."
4. Exhibit "B" to the said Basic Agreement shall be and is hereby amended by
deleting the words "General Manager" from paragraph (b) of Article 52, and
deleting in its entirety paragraph (d) of Article 53 and relettering the
succeeding paragraphs (d), (e), (f) and (g) respectively.
5. That if any provision or clause of this Agreement is held invalid, such
invalidity shall not affect other provisions or clauses of this Agreement which
can be given effect without the invalid provision or clause and to this end the
provisions and clauses of this Agreement are declared to be severable.
6. This Agreement shall be construed in accordance with the laws of the
Province of British Columbia.
7. The parties do hereby jointly and severally confirm each and every covenant
and provision of the said Basic Agreement and all Exhibits thereto (as amended
as aforesaid) except to the extent the same may have been specifically modified
or amended hereby.
8. This Agreement shall be binding upon and enure to the benefit of the parties
hereto, their respective successors and
<PAGE>
-13-
permitted assigns, as the case may be.
IN WITNESS WHEREOF the parties have caused their seals to be affixed in
the presence of their respective proper officers duly authorized in that behalf
as of the day and year first above written.
The Common Seal of NORTHWOOD )
MILLS LTD. was hereunto affixed )
in the presence of: )
)
/s/ Adam H. Zimmerman )
- -------------------------------- )
President )
)
/s/ B.H. Grose )
- -------------------------------- )
Secretary )
FOREST KRAFT COMPANY
Attest: By: /s/ J.W. Mc Swiney
/s/ W. Walker Lewis ----------------------------
- ------------------------------- President
Secretary
Attest: THE MEAD CORPORATION
/s/ Albert H. Sealy
- ------------------------------- By: /s/ Warren L. Batts
Secretary ---------------------------
President
<PAGE>
-14-
NORANDA MINES LIMITED
By: /s/ Alfred Powis
------------------------
President
/s/ R.C. Ashenhurst
------------------------
Secretary
The Common Seal of NORTHWOOD )
PULP AND TIMBER LIMITED as )
hereunto affixed in the )
presence of: )
)
/s/ Adam H. Zimmerman )
- ---------------------------- )
President )
)
/s/ B.H. Grose )
- ---------------------------- )
Secretary )
<PAGE>
THIS AGREEMENT, made as of the 1st day of April, 1965, by and among
NORTHWOOD PULP LIMITED, a company duly incorporated under the laws of the
Province of British Columbia, Canada (hereinafter called "Pulp Corporation"),
THE MEAD CORPORATION, a corporation duly incorporated under the laws of the
State of Ohio, United States (hereinafter called "Mead"), NORTHWOOD MILLS LTD.,
a company duly incorporated under the laws of the Province of British Columbia,
Canada (hereinafter called "Northwood"), and NORANDA MINES, LIMITED, a company
duly incorporated under the laws of the Province of Ontario, Canada (hereinafter
called "Noranda"),
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Canamead, Inc., a corporation duly incorporated under the
laws of the State of Ohio, United States (hereinafter called "Canamead") and
Northwood are each the owners of fifty percent of the capital stock of Pulp
Corporation;
WHEREAS, Canamead is a wholly-owned subsidiary of Mead;
WHEREAS, Northwood is a wholly-owned subsidiary of Noranda;
WHEREAS, Pulp Corporation will construct and operate at or near Prince
George, Province of British Columbia, a bleached sulphate wood pulp mill having
an initial daily rated capacity of six hundred and twenty-five tons;
WHEREAS, Pulp Corporation contemplates the execution and delivery of
not in excess of $31,300,000 in promissory notes (hereinafter called the
"Notes-I") and not in excess of $11,000,000 in promissory notes (hereinafter
called the "Notes-II") to evidence indebtedness incurred under a loan agreement
or agreements with Canadian Imperial Bank of Commerce and The Royal Bank of
Canada, as amended from time to time (hereinafter called the "Loan Agreement")
for the construction and equipping of said pulp mill;
WHEREAS, Pulp Corporation desires to sell Pulp to Mead, and Mead
desires to purchase Pulp from Pulp Corporation;
WHEREAS, Pulp Corporation also intends to sell Pulp on the world
market;
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and
agreements herein contained, the parties hereto do agree as follows:
<PAGE>
Section 1. Term of Agreement. The term of this Agreement shall extend from
-----------------------------
the date hereof until the execution and delivery of an agreement in the form of
the exhibit attached hereto marked and hereinafter called Exhibit "F", provided
that either this Agreement or an agreement in the form of Exhibit "F" shall
continue in effect so long as any principal or interest on Notes-I and Notes-II
shall remain unpaid.
Section 2. Sale of Pulp to Mead.
---------------------------------
(a) Pulp Corporation hereby agrees to manufacture and sell to Mead, and
Mead agrees to purchase from Pulp Corporation for use by it or an affiliate as
stated in Section 5 hereof and not for resale, such quantity of pulp as is
requisitioned by Mead as hereinafter set forth. Four months before the beginning
of each year of Pulp Corporation, Pulp Corporation shall furnish to Mead a
budget of the estimated total production of the pulp mill for such year,
distributing such estimated total production as equally as possible over the
Operating Periods of such year. Within thirty days after receipt of such budget
from Pulp Corporation, Mead shall furnish to Pulp Corporation a written schedule
of its estimated requirements from the pulp mill for each Operating Period, but
Mead shall not be obligated to purchase such estimated requirements unless and
until it requisitions the same. Seven days before the beginning of any Operating
Period, Mead shall furnish Pulp Corporation with a written requisition,
specifying the quantities and grades and approximate dates of shipment, for Pulp
to be manufactured and shipped by Pulp Corporation and purchased by Mead during
such Operating Period, distributing the dates of shipment thereof as evenly as
possible over the calendar weeks of such Operating Period. Pulp Corporation
agrees to load and ship all Pulp requisitioned by Mead upon the approximate date
or dates set forth in such requisition, but not more in the aggregate during any
year than the amount set forth in such budget.
(b) Delivery of the Pulp sold by Pulp Corporation to Mead pursuant to its
requisitions shall occur, and title shall pass, at the time that Pulp is placed
f.o.b. carrier at the pulp mill of Pulp Corporation and shall be at the risk of
Mead from and after such time.
-2-
<PAGE>
(c) If, for any reason of force majeure Pulp production during any
Operating Period shall fall below the total amount required to meet the
commitments of Pulp Corporation to customers, including Mead, for such Operating
Period, such production shall be prorated among all such customers on the basis
of their commitments for such Pulp, but Pulp Corporation shall use its best
efforts at all times to produce high quality Pulp in amounts sufficient to meet
its commitments to customers therefor, including Mead. Force majeure shall
excuse Mead from taking delivery of, and the Pulp Corporation from its
obligation to deliver, any Pulp, but only during the existence of, and to the
extent of, such force majeure.
(d) (i) The price per ton for each grade of such Pulp so sold and delivered
by Pulp Corporation to Mead or any specified affiliate in any Operating Period
shall be an amount per ton equal to Pulp Corporation's average mill net per ton
with respect to such grade of Pulp shipped by it in such Operating Period to all
customers (excluding Mead and specified affiliates). Pulp Corporation's average
mill net per ton with respect to any grade of Pulp shipped by it in any
Operating Period shall be computed in Canadian funds for each grade of Pulp by
(A) subtracting from its total billing for such grade of Pulp shipped by it
during such Operating Period to customers throughout the world (excluding Pulp
sold to Mead and specified affiliates) the sum of all applicable discounts,
commissions and sale expenses and all freight, insurance, and other charges paid
or allowed by Pulp Corporation for the transportation of such Pulp from its pulp
mill at Prince George, British Columbia, to the respective destination of such
Pulp and (B) dividing the remainder by the number of tons of such grade of Pulp
shipped to all of its customers other than Mead and specified affiliates.
(ii) In the event that there are no sales of a particular grade or grades
to any customers except Mead and its specified affiliates in any Operating
Period, the price per ton for each such
-3-
<PAGE>
particular grade or grades of such Pulp so sold and delivered by Pulp
Corporation to Mead or any of its specified affiliates in such Operating Period
shall be the amount per ton equal to Pulp Corporation's average mill net per ton
with respect to the grade of Pulp shipped by it to customers other than Mead or
its specified affiliates in the immediately preceding Operating Period plus the
immediately succeeding Operating Period during which sales are made to customers
other than Mead and its specified affiliates, such average mill net per ton to
be computed on the foregoing basis, provided, however, that this paragraph shall
not apply if there have been no sales of such particular grades to customers
other than Mead and its specified affiliates in both such preceding and
succeeding Operating Periods.
(iii) In the event that there are no sales of a particular grade of Pulp
to any customers except Mead and its specified affiliates during any Operating
Period or during the preceding or succeeding Operating Periods, the price per
ton shall be determined by the Board of Directors of Pulp Corporation for sales
of such particular grades of Pulp to Mead and its specified affiliates sold and
delivered during the Operating Period first mentioned in this Paragraph (iii).
(iv) Pulp shall be invoiced in Canadian funds by Pulp Corporation to Mead
at the time of shipment at the foregoing price estimated by Pulp Corporation on
the basis of the actual price determined for the previous Operating Period or on
such other basis as may be mutually agreed upon by the parties hereto
(hereinafter called the "Estimated Price") and the amounts invoiced shall be
payable as follows:
(A) Pulp invoiced from the first through the 10th of any
month--remittance on the 10th of the following month;
(B) Pulp invoiced from the 11th through the 20th of any
month--remittance on the 20th of the following month;
-4-
<PAGE>
(C) Pulp invoiced from the 21st through the end of any month--remittance
on the last day of the following month.
Any Pulp which Pulp Corporation may agree to store, for and at the request
of Mead, shall be invoiced on the foregoing basis by the Pulp Corporation in
advance of shipment at any time after such Pulp has been so stored for ten days,
and the amount payable upon any invoice shall be paid upon the foregoing basis
and shall constitute an advance payment (without interest) on account of the
price of such Pulp.
Within thirty days after the end of each Operating Period the actual
purchase price for such Operating Period shall be determined as stated in the
first sentence of this Subsection (d). If the Estimated Price for Pulp
delivered during such Operating Period shall exceed the amount of the actual
purchase price for such Pulp, such excess shall be applied by Pulp Corporation
against any amount owing by Mead for shipments of Pulp to Mead, but any such
excess remaining after the termination of this Agreement shall be refunded by
Pulp Corporation to Mead. If the actual purchase price of such Pulp exceeds the
Estimated Price for such Pulp, Mead shall, on demand, on or after the tenth day
following receipt of notice of such additional charge, pay to Pulp Corporation
the excess of such additional charge over the existing credits
in its account.
Section 3. Definitions. The term "year" shall mean calendar year
------------------------
beginning January 1 and ending December 31.
The term "Operating Period" shall mean periods of 13 weeks each,
-5-
<PAGE>
with the first of such periods in any year beginning on January 1, and the last
of such periods in any year ending on December 31, extra days being added to one
or more periods.
The term "ton" shall mean two thousand pounds, air-dry weight, including
weight of usual packaging material. The pound referred to herein shall mean the
pound as defined in the Weights and Measures Act of Canada.
The term "Pulp" shall mean paper grade bleached, semi-bleached and
unbleached sulphate wood pulp.
The term "force majeure" shall mean any act of God, war, mobilization,
strike, lock-out, drought, flood, earth slides, total or partial fire,
obstruction of navigation by ice at port of shipment, or loss, damage, or
detention at sea or other contingency or cause beyond the control of Mead (or
any affiliate specified by Mead pursuant to Section 5 hereof) or Pulp
Corporation which interferes with or prevents the manufacture of paper or pulp,
respectively, or the shipment, delivery or receipt of Pulp hereunder.
The term "Cost of Production" shall include all costs, expenses and charges
for manufacturing, operating and administering the pulp mill, incurred or
accrued under generally accepted accounting principles and, without limiting the
generality thereof, shall include interest on Notes-I and Notes-II and all other
indebtedness of Pulp Corporation, proper charges for materials, salaries, wages,
overhead, supervision, repairs and maintenance, consulting fees, taxes
(including, without limitation thereto, income taxes), workmen's compensation,
unemployment compensation, and public utilities but shall not include
depreciation.
Section 4. Prepayments by Mead for Pulp and Loans by Northwood.
----------------------------------------------------------------
(a) On June 28 and December 29 of each year until all principal
-6-
<PAGE>
and interest of Notes-I and Notes-II have been paid in full, Pulp Corporation
shall make a computation of its aggregate cash balance, provided that, in
computing any such cash balance there shall be excluded cash allocated on the
books of Pulp Corporation for property additions or for the acquisition of
timber rights. In the event that such computation shows an aggregate cash
balance which is less than the total amount of (i) interest payments due upon
any indebtedness of Pulp Corporation on the next succeeding June 30 or December
31, as the case may be, including, without limitation thereto, Notes-I and
Notes-II, (ii) $1,565,000, and (iii) the principal payments due on the next
succeeding June 30 or December 31, as the case may be, on all indebtedness of
Pulp Corporation other than Notes-I and Notes-II (the difference between such
aggregate cash balance and such total amount due being hereinafter called the
"Cash Deficiency"), Pulp Corporation shall promptly notify Mead and Northwood
not later than the close of business on the next succeeding June 29 or December
30, as the case may be. Mead shall thereupon make a prepayment (without
interest) to Pulp Corporation upon the purchase price of Pulp to be purchased
thereafter hereunder, such prepayment to be equal to one-half of the Cash
Deficiency and Northwood shall thereupon make a loan, without interest, to Pulp
Corporation equal to one-half of the Cash Deficiency.
The prepayments of purchase price by Mead pursuant to the foregoing
paragraph shall be credited against subsequent purchases of Pulp by Mead from
Pulp Corporation and loans by Northwood made pursuant to the foregoing paragraph
shall be repaid in cash by Pulp Corporation to Northwood; such crediting against
purchases of Pulp by Mead and such repayment of loans to Northwood, if any,
shall not be made while there exists a Cost Deficiency on a cumulative basis for
all previous Operating Periods less amounts previously paid with respect
thereto.
- 7 -
<PAGE>
The term "cash balance" as used in this Subsection (a) shall be deemed to
include the market value of any property convertible into cash not later than
the second business day after the date upon which a computation is made pursuant
to this Subsection (a).
(b) In connection with Cost of Production: In the event that the amount
--------------------------------------
received by Pulp Corporation up to thirty days after the end of any Operating
Period on account of Pulp invoiced during the portion of the year prior to and
including such Operating Period is less than the Cost of Production for the
portion of the year prior to and including such Operating Period (the difference
between such amount received and such Cost of Production being hereinafter
called the "Cost Deficiency"), Pulp Corporation shall promptly notify Mead and
Northwood. Not later than forty-five days after the end of such Operating
Period, Mead shall thereupon make a prepayment (without interest) to Pulp
Corporation upon the purchase price of Pulp to be purchased thereafter
hereunder, such prepayment to be equal to one-half of the Cost Deficiency less
amounts previously paid by it under this Subclause (b) in respect of such year,
and Northwood shall thereupon make a loan, without interest, to Pulp Corporation
equal to one-half of the Cost Deficiency less amounts previously paid by it
under this Subclause (b) in respect of such year.
Prepayments of purchase price by Mead pursuant to the foregoing paragraph
shall be credited against subsequent purchases of Pulp by Mead, and loans by
Northwood made pursuant to the foregoing paragraph shall be repaid in cash by
Pulp Corporation to Northwood, such crediting against purchases of Pulp by Mead
from Pulp Corporation and such repayments by Pulp Corporation to Northwood to be
in equal amounts from time to time; provided that no such crediting against
purchases of Pulp by Mead nor repayment of loans to Northwood shall be made at
any time when there exists a Cost Deficiency on a cumulative basis for all
previous Operating Periods less amounts previously paid with respect thereto.
-8-
<PAGE>
Section 5. Affiliates of Mead.
-----------------------------
(A) Mead may, at any time require that Pulp purchased hereunder by Mead be
shipped to and paid for directly by any affiliated corporation specified by Mead
(by prior notice in writing to Pulp Corporation) for use by them and not for the
purpose of resale. The term "affiliated corporation" means any corporation of
which Mead owns beneficially, directly or indirectly, stock possessing at least
20% of the combined voting power of all classes of stock entitled to vote in the
election of directors.
(B) Providing, nevertheless, that, notwithstanding the provisions of
Paragraph (A) of this Section 5, no Pulp shall be purchased hereunder for any
such specified affiliated corporation in the case where Mead owns beneficially,
directly or indirectly, stock possessing less than 45% of the combined voting
power of all classes of stock entitled to vote in the election of directors,
without the consent or a majority of the directors of Pulp Corporation.
(C) If any affiliated corporation shall default in payment of the purchase
price due with respect to any shipment, Mead shall forthwith pay the same upon
notice from Pulp Corporation.
(D) For purposes of illustrating the meaning of this section, it is
understood and agreed that if Mead owns 60% of the combined voting power of all
classes of voting stock of Company A, which, in turn, owns 45% of the combined
voting power of all classes of the voting stock of Company B, Mead is deemed to
own 27% of Company B.
Section 6. Covenant of Noranda. In consideration of Pulp Corporation and
------------------------------
Mead entering into this Agreement, Noranda does hereby guarantee unto Pulp
Corporation and Mead the full and complete performance and observance by
Northwood of each and every covenant and agreement of Northwood herein
contained.
Section 7. Notices. For the purposes of this Agreement, unless either party
------------------
notifies the other in writing to the contrary, all notices and communications
shall be addressed, in the case of Mead, to Mead at 118 West First Street,
Dayton, Ohio 45402, in the case of Northwood, to Northwood at 44 King Street,
West, Toronto 1, Ontario, Canada, in the case of Noranda to Noranda at 44 King
Street, West, Toronto 1, Ontario, Canada,
-9-
<PAGE>
and in the case of Pulp Corporation to it at Prince George, British Columbia.
Any notice or communication required under the provisions of this Agreement
shall be deemed to have been given when deposited in the United States or
Canadian mail, postage prepaid, and registered, addressed in accordance with the
preceding sentence to the party or parties to whom such notice or communication
is being given.
Section 8. Nonassignability. This Agreement shall not be assignable in
---------------------------
whole or in part by any party but the provisions hereof shall be binding upon
the successors of the parties hereto, provided that upon the consolidation,
amalgamation or merger of any party with or into another company or corporation
by the transfer of such party's undertaking and by the transfer of such party's
assets as an entirety or substantially as an entirety to, or the vesting of the
same in, such other company or corporation or in the company or corporation
resulting from such amalgamation (herein called a "successor company") such
successor company shall contemporaneously with, or substantially
contemporaneously with, any such transfer or vesting, enter into and execute an
agreement with the other parties hereto or their successors to observe and
perform all the obligations of the first mentioned party under this Agreement as
fully and completely as if such successor company had itself executed this
Agreement and had expressly agreed herein to observe and perform the same and
thereupon this Agreement shall be read as if such successor company were named
herein in the place of such first mentioned party. Any transfer or assignment of
this Agreement by either party contrary to the provisions hereof shall have no
effect upon the rights of the parties hereto.
Section 9. Governing Law. This Agreement shall be governed by and construed
------------------------
in accordance with the laws of the Province of British Columbia.
-10-
<PAGE>
The Common Seal of
NORTHWOOD PULP LIMITED
was hereunto affixed in
the presence of:
/s/ Adam H. Zimmerman
- -----------------------------
/s/ J. O. Hinds
- -----------------------------
NORANDA MINES, LIMITED
/s/ R. V. Porritt
By---------------------------
/s/ R. C. Ashenhurst
And--------------------------
The Common Seal of
NORTHWOOD MILLS LTD.
was hereunto affixed in
the presence of:
/s/ Adam H. Zimmerman
- -----------------------------
/s/ David C. Davenport
- -----------------------------
<PAGE>
AMENDED BOARD PURCHASE AGREEMENT
THIS AMENDED BOARD PURCHASE AGREEMENT (the "Agreement") is made as of
January 4, 1988 by and among GEORGIA KRAFT COMPANY, a Delaware corporation (the
"Company"), THE MEAD CORPORATION, an Ohio corporation ("Mead"), and INLAND
CONTAINER CORPORATION, a Delaware corporation ("Inland"), being the successor in
interest to the Indiana corporation of the same name, under the following
circumstances:
A. Temple-Inland Inc., a Delaware corporation ("Temple-Inland"), owns
all of the issued and outstanding capital stock of Inland Container
Corporation I, a Delaware corporation ("Inland I").
B. Inland I owns all of the issued and outstanding capital stock of
Inland.
C. Inland owns all of the issued and outstanding capital stock of GK
Texas Holding Company, a Delaware corporation ("Texas Holding").
D. Concurrently, the closing under the Agreement dated as of December
31, 1987 (the "Split-up Agreement") among the Company, Mead, Temple-Inland,
Inland I, Inland, Texas Holding and Mead Coated Board, Inc. ("Coated
Board"), a wholly-owned subsidiary of the Company, is occurring pursuant to
which the Company is transferring all of the shares of capital stock of
Coated Board to Mead in exchange for all of the shares of capital stock of
the Company owned by Mead. As a result of the transactions provided for in
the Split-up Agreement, the Company will be an indirect wholly-owned
subsidiary of Temple-Inland and Coated Board will be a wholly-owned
subsidiary of Mead.
E. The Company, in connection with various industrial development
revenue bond financings, has entered into the various financing agreements,
including agreements of sale, lease agreements, loan agreements and other
agreements, listed on Appendix A (such agreements are hereinafter referred
to collectively as the "IDR Bond Documents").
F. The parties hereto entered into the Amended Board Purchase
Agreement dated as of December 15, 1971, as heretofore amended and restated
from time to time (the "Prior Agreement").
<PAGE>
G. The parties hereto desire to enter into this Agreement to modify
the Prior Agreement to reflect the transactions described in paragraph E
above as required by the Split-up Agreement.
NOW, THEREFORE, the Company, Mead and Inland agree as follows:
ARTICLE ONE
-----------
Amended Board Purchase Agreement
--------------------------------
The Amended Board Purchase Agreement among the parties hereto dated as
of November 21, 1986, as amended by an Amendment dated as of September 1, 1987,
is amended and restated in its entirety by this Agreement.
ARTICLE TWO
-----------
Term of Agreement
-----------------
The term of this Agreement shall extend from the date hereof until the
earlier of (a) December 1, 2015 or (b) the expiration of all of the Company's
obligations in connection with the IDR Bond Documents.
ARTICLE THREE
-------------
Cash Deficiency Payments
--------------- --------
Until all rentals, loan and installment payments and other payments payable
under the IDR Bond Documents have been paid in full, a computation of the
Company's aggregate Cash Balance (as defined herein) shall be made two days
prior to each payment date (or, if not practical prior thereto, prior to the
close of business on the actual payment date) required under each of the IDR
Bond Documents, provided that in computing any such Cash Balance there shall be
excluded cash allocated on the books of the Company for property additions or
for the acquisition of timber rights. In the event that such computation shows
an aggregate Cash Balance which is less than the total amount of interest and
principal payments due upon any debt of the Company on the next succeeding
payment date, including without limitation thereto, the rental, loan and
installment payments and other payments due under the IDR Bond Documents, on the
next succeeding payment date (the difference between such aggregate Cash Balance
and such total amount due being hereinafter called the "Cash Deficiency"), Mead
and Inland shall, not later than the close of
-2-
<PAGE>
business on the date prior to the next succeeding payment date (or, if not
practical prior thereto, as soon as possible, but in no event later than the
close of business on the actual payment date), each make a payment to the
Company, such payment by each of Mead and Inland to be equal to one-half of the
Cash Deficiency.
The term "Cash Balance" as used in this Article Three shall be deemed to
include, except when the calculation of a Cash Deficiency is made on an actual
payment date, the market value of any property convertible into cash not later
than the second business date after the date upon which a computation is made
pursuant to the foregoing portion of this Article Three.
ARTICLE FOUR
------------
Non-Waiver
----------
It is mutually agreed that the failure of any parties to this Agreement to
insist in any one or more instances upon strict performance of any of the
provisions of this Agreement, or to take advantage of any of its rights
hereunder, shall not be construed as a waiver of any such provision or the
relinquishment of any such rights, but the same shall continue and remain in
full force and effect.
ARTICLE FIVE
------------
Effect of Receivership or Bankruptcy
------------------------------------
In the event either Inland, Mead or the Company shall, through voluntary or
involuntary action, be placed in the hands of a receiver in equity, trustee in
bankruptcy, trustee in reorganization, or other similar statutory or judicial
officer, then, and in that event, such officer shall have no right to disaffirm
the obligations undertaken by such party herein; it being the intent hereof that
such officer so appointed in such proceeding shall be bound by the obligations
of this Agreement in the same manner as the party he represents.
ARTICLE SIX
-----------
Obligations of Mead and Inland
------------------------------
The obligations of Mead and Inland hereunder shall be several and not
joint, and nothing herein shall obligate either Mead or Inland to be responsible
for the default of the other.
-3-
<PAGE>
ARTICLE SEVEN
Assignment
----------
Either Mead or Inland may assign this Agreement to any corporation
formed by consolidation of such party with another corporation or corporations,
or into which such party shall be merged, or to which substantially all the
property of such party shall be conveyed or transferred as an entirety (the
"Successor Corporation"), or to a trustee under any deed of trust mortgaging
and/or pledging all, or substantially all, of such party's plants and real
property. Upon any such transfer, all the terms and provisions of this Agreement
binding upon, or inuring to the benefit of, the party transferring the same
shall be binding upon, and inure to the benefit of, the Successor Corporation or
trustee, and their respective assigns, whether so expressed or not. Except as
above provided, this Agreement shall not be assignable or transferable by any
party without the consent in writing of the other parties hereto.
ARTICLE EIGHT
-------------
Notices
-------
All notices to be given hereunder shall be deemed to be properly given
if, in the case of notices by one party they are addressed to the other two
parties at the following addresses:
<TABLE>
<CAPTION>
Addressee Address
--------- -------
<S> <C>
"Company" Georgia Kraft Company
c/o Temple-Inland Inc.
303 South Temple Drive
Drawer N
Diboll, Texas 75941
Attention: Secretary, Georgia Kraft Company
"Inland" Inland Container Corporation
151 North Delaware
P. O. Box 925
Indianapolis, Indiana 46206
Attention: General Counsel
"Mead" The Mead Corporation
Mead World Headquarters
Courthouse Plaza Northeast
Dayton, Ohio 45463
Attention: Secretary
</TABLE>
-4-
<PAGE>
provided that all such notices shall be in writing and shall be mailed by
registered mail not later than the day upon which notice is required to be
given pursuant to the applicable term of this Agreement.
ARTICLE NINE
------------
Severability
------------
If any article, or lesser provision or clause, of this Agreement is
held invalid for any reason or for any purpose, such invalidity shall not affect
other articles, or lesser provisions or clauses of this Agreement, which can be
given effect without the invalid article or lesser provision and to this end the
article and lesser provisions or clauses, of this Agreement are declared to be
severable.
ARTICLE TEN
-----------
Governing Law
-------------
This Agreement shall be construed in accordance with the laws of the
State of Ohio.
EXECUTED by the parties hereto as of the day and year first above
written.
GEORGIA KRAFT COMPANY
/s/ Ben J. Lancashire
By: ____________________________________
Title: Chairman
INLAND CONTAINER CORPORATION
/s/ R. D. Ericson
By: ____________________________________
Title: Vice President
THE MEAD CORPORATION
/s/ E. M. Karter
By: ____________________________________
Title:
-5-
<PAGE>
GUARANTY
--------
The undersigned hereby irrevocably and unconditionally guaranties to
Georgia Kraft Company and to The Mead Corporation and to their respective
successors and assigns the due and prompt performance by Inland Container
Corporation of all of its obligations and duties imposed under the foregoing
Amended Board Purchase Agreement.
TEMPLE-INLAND INC.
/s/ Clifford J. Grum
By: _____________________________________
Title: PRESIDENT
Dated as of
January 4, 1988
GUARANTY
--------
The undersigned hereby irrevocably and unconditionally guaranties to
Georgia Kraft Company and to The Mead Corporation and to their respective
successors and assigns the due and prompt performance by Inland Container
Corporation of all of its obligations and duties imposed under the foregoing
Amended Board Purchase Agreement.
INLAND CONTAINER CORPORATION I
/s/ R. D. Ericson
By: _____________________________________
Title: SECRETARY
Dated as of
January 4, 1988
GUARANTY
--------
The undersigned hereby irrevocably and unconditionally guaranties to
Georgia Kraft Company and to The Mead Corporation and to their respective
successors and assigns the due and prompt performance by Inland Container
Corporation of all of its obligations and duties imposed under the foregoing
Amended Board Purchase Agreement.
GK TEXAS HOLDING COMPANY
/s/ M. Richard Warner
By: _____________________________________
Title: TREASURER
Dated as of
January 4, 1988
-6-
<PAGE>
APPENDIX A
----------
TAX-EXEMPT FINANCINGS
---------------------
A. $5,300,000 Development Authority of Floyd County Pollution Control Revenue
Bonds (Georgia Kraft Project), Series 1975
B. $3,000,000 The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Refunding Bonds (Georgia Kraft
Project), Series 1977
C. $1,000,000 Development Authority of Morgan County Industrial Revenue Bonds
(Georgia Kraft Company Project), Series 1978
D. $3,500,000 Development Authority of Morgan County Environmental Improvement
Revenue Bonds (Georgia Kraft Company Project), Series 1979
E. $14,000,000 Development Authority of Bibb County Environmental Improvement
Revenue Bonds (Georgia Kraft Company Project), Series 1979
<PAGE>
INDEMNIFICATION AGREEMENT
-------------------------
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is made as of January 4,
1988, by and among GEORGIA KRAFT COMPANY, a Delaware corporation ("Georgia
Kraft"), THE MEAD CORPORATION, an Ohio corporation ("Mead"), MEAD COATED BOARD,
INC., a Delaware corporation ("Coated Board"), TEMPLE-INLAND INC., a Delaware
corporation ("Temple"), INLAND CONTAINER CORPORATION, a Delaware corporation
("Inland"), INLAND CONTAINER CORPORATION I, a Delaware corporation ("Inland I"),
and GK TEXAS HOLDING COMPANY, a Delaware corporation ("Texas Holding"), under
the following circumstances:
A. Temple has owned all of the issued and outstanding capital stock of
Inland I. Inland I has owned all of the issued and outstanding capital stock of
Inland. Inland has owned all of the issued and outstanding capital stock of
Texas Holding.
B. Prior to closing under an Agreement dated as of December 31, 1987 (the
"Split-up Agreement") among Georgia Kraft, Mead, Coated Board, Temple, Inland I,
Inland and Texas Holding, Georgia Kraft was owned 50% by Mead and 50% by Texas
Holding. Pursuant to the Split-up Agreement, Georgia Kraft is transferring
certain assets to its wholly-owned subsidiary, Coated Board, and Georgia Kraft
is transferring its shares of the capital stock of Coated Board to Mead in
exchange for all of Mead's shares of the capital stock of Georgia Kraft (the
"Georgia Kraft Transfer"). As a result of the Georgia Kraft Transfer, Coated
Board will be a wholly-owned subsidiary of Mead and Georgia Kraft will be an
indirect wholly-owned subsidiary of Temple.
C. Georgia Kraft has entered into various industrial development revenue
bond financings listed on the attached Exhibit A (the "Bonds"). The Bonds listed
---------
on Exhibit A are further identified (i) as those Bonds to accrue to the benefit
---------
of and be the responsibility of Temple, Inland I, Inland, Texas Holding and
Georgia Kraft (collectively, the "Temple Companies") after the completion of the
Georgia Kraft Transfer (the "Temple Bonds") and (ii) those Bonds to accrue to
the benefit of and be the responsibility of Mead and Coated Board (collectively,
the "Mead Companies") after the completion of the Georgia Kraft Transfer (the
"Mead Bonds").
D. Payment of some of the Bonds will be supported by an Amended Board
Purchase Agreement of even date (the "Board Agreement") among Georgia Kraft,
Inland and Mead and by guaranties of even date by Mead and Temple (the
"Guaranties").
<PAGE>
E. The Mead Companies and the Temple Companies now desire to provide for
cross-indemnification relating to events occurring subsequent to the Georgia
Kraft Transfer.
NOW, THEREFORE, Mead, Coated Board, Temple, Inland I, Inland, Texas Holding
and Georgia Kraft agree as follows:
Section 1. Payment of the Mead Bonds. Notwithstanding anything to the
------------------------------------
contrary in the Board Agreement, the Guaranties or the documentation relating to
the Mead Bonds, the Mead Companies shall be solely responsible for providing for
the payment of debt service (including, without limitation, payment of
principal, interest and premium) and other amounts due in connection with the
Mead Bonds and the Mead Companies shall provide for the payment of debt service
and other amounts due in connection with the Mead Bonds. Furthermore, the Mead
Companies hereby agree to indemnify and hold the Temple Companies harmless from
and against any and all losses, claims, damages and liabilities (including,
without limitation, court costs, expenses and attorneys' fees and expenses)
arising under, or in connection with, the Mead Bonds (including without
limitation under the Board Agreement) subsequent to the Georgia Kraft Transfer.
This indemnification shall not be construed as a limitation on any other
liability which the Mead Companies (singly or in the aggregate) may otherwise
have to the Temple Companies (singly or in the aggregate), provided, however,
that in no event shall the Mead Companies be obligated for double
indemnification. The Temple Companies, as they are entitled to indemnification
pursuant to this Section 1, are hereinafter referred to as the "Indemnified
Party."
Section 2. Payment of the Temple Bonds. Notwithstanding anything to the
--------------------------------------
contrary in the Board Agreement, the Guaranties or the documentation relating to
the Temple Bonds, the Temple Companies shall be solely responsible for providing
for the payment of debt service (including, without limitation, payment of
principal, interest and premium) and other amounts due in connection with the
Temple Bonds and the Temple Companies shall provide for the payment of debt
service and other amounts due in connection with the Temple Bonds. Furthermore,
the Temple Companies hereby agree to indemnify and hold the Mead Companies
harmless from and against any and all losses, claims, damages and liabilities
(including, without limitation, court costs, expenses and attorneys' fees and
expenses) arising under, or in connection with, the Temple Bonds (including
without limitation under the Board Agreement) subsequent to the Georgia Kraft
Transfer. This indemnification shall not be construed as a limitation on any
other liability which the Temple Companies (singly or in the aggregate) may
otherwise have to the Mead Companies (singly or in the aggregate), provided,
however, that in no event shall the Temple Companies be obligated for double
indemnification. The Mead Companies, as they are entitled to indemnification
pursuant to this Section 2, are hereinafter referred to as the "Indemnified
Party."
-2-
<PAGE>
Section 3. Indemnification Procedure. An Indemnified Party (as defined in
------------------------------------
Sections 1 and 2) shall, promptly after the receipt of notice of a claim or the
commencement of any action against the Indemnified Party in respect of which
indemnification may be sought against the Mead Companies or Temple Companies, as
the case may be (in any case the "Indemnifying Party"), notify the Indemnifying
Party in writing of such claim or action. In case any such action shall be
brought against an Indemnified Party and the Indemnified Party shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party may, or
if so requested by the Indemnified Party shall, participate therein or assume
the defense thereof, with counsel reasonably satisfactory to the Indemnified
Party. After notice from the Indemnifying Party to the Indemnified Party of an
election to assume the defense thereof, the Indemnified Party shall reasonably
cooperate in the defense thereof, including without limitation, the settlement
of outstanding claims. The Indemnifying Party will not be liable to the
Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation incurred with the consent
of the Indemnifying Party, which consent shall not be unreasonably withheld;
provided, however, that unless and until the Indemnifying Party assumes the
defense of any such action at the request of the Indemnified Party, the
Indemnifying Party shall have the right to participate at its own expense in the
defense of any such action. If the Indemnifying Party shall not have employed
counsel to have charge of the defense of any such action or if any Indemnified
Party shall have reasonably concluded that there may be defenses available to it
or them which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to direct the defense of such action on behalf of the Indemnified Party),
legal and other expenses incurred by the Indemnified Party shall be borne by the
Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall
not be liable for any settlement of any action or claim without its consent,
which consent shall not be unreasonably withheld.
Section 4. Miscellaneous.
------------------------
(a) Any notice, payment, demand or communication required or permitted
under this Agreement shall be in writing and shall be deemed to have been
sufficiently given or served on the date such communication is sent for all
purposes if telexed, telecopied, or delivered by hand or by recognized overnight
courier service addressed as follows:
If to the Temple Companies: 303 South Temple Drive
Drawer N
Diboll, Texas 75941
Attn: Secretary
-3-
<PAGE>
If to the Mead Companies: Mead World Headquarters
Courthouse Plaza Northeast
Dayton, Ohio 45463
Attention: Secretary, The Mead Corporation
Any party may from time to time change its address for purposes hereof by giving
notice of such change to the other party, but no such change shall be deemed to
be effective until notice thereof is actually received by the party to whom it
is directed.
(b) No failure on the part of any party hereto to exercise and no delay in
exercising any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.
(c) The parties hereto shall execute and deliver all documents, provide all
information and take or forbear from all such action as may be necessary or
appropriate to achieve the purposes of this Agreement.
(d) This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof. This Agreement may be executed
simultaneously in several counterparts, each of which shall be regarded as an
original, and all of which together shall constitute but one and the same
instrument.
(e) The rights and remedies provided by this Agreement are cumulative and
the enforcement, use or waiver of any one right or remedy by any party shall not
preclude the subsequent use, enforcement or waiver of said right or remedy
thereafter.
(f) The Agreement and all rights and liabilities hereunder shall inure to
the benefit of the parties hereto and their respective successors and assigns.
(g) The invalidity or unenforceability of any provision of this Agreement
in a particular respect shall not affect the validity and enforceability of any
other provision of this Agreement or of the same provision in any other respect.
(h) This Agreement shall be construed in accordance with and the legal
relations between the parties shall be
-4-
<PAGE>
governed by the laws as applicable to agreements executed and fully performed in
the State of Ohio.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the day and year first above written.
GEORGIA KRAFT COMPANY
By: /s/ Ben J. Lancashire
-------------------------------------
Chairman
TEMPLE-INLAND INC.
By: /s/ Clifford J. Grum
-------------------------------------
PRESIDENT
INLAND CONTAINER CORPORATION I
By: /s/ R. D. Erickson
-------------------------------------
SECRETARY
INLAND CONTAINER CORPORATION
By: /s/ R. D. Erickson
-------------------------------------
VICE PRESIDENT
GK TEXAS HOLDING COMPANY
By: /s/ M. Richard Warner
-------------------------------------
Treasurer
MEAD COATED BOARD, INC.
By: /s/ Gregory S. DeWolfe
-------------------------------------
THE MEAD CORPORATION
By: /s/ E. M. Karter
-------------------------------------
-5-
<PAGE>
EXHIBIT A
---------
A. Mead Bonds
----------
1. $3,000,000 Industrial Development Board of the City of Phenix City,
Alabama, Industrial Development Revenue Refunding Bonds (Georgia Kraft
Project), Series 1977
2. $18,500,000 Industrial Development Board of the City of Phenix City,
Alabama, Solid Waste Disposal Revenue Bonds (Georgia Kraft Company
Project), Series 1980
3. $1,000,000 Industrial Development Board of the City of Phenix City,
Alabama, Industrial Development Revenue Bonds (Georgia Kraft Company
Project), Series 1983
4. $500,000 Industrial Development Board of the City of Phenix City,
Alabama, Environmental Improvement Revenue Bonds (Georgia Kraft
Company Project), Series 1983
5. $6,850,000 Industrial Development Board of the City of Phenix City,
Alabama, Environmental Improvement Revenue Bonds (Georgia Kraft
Company Project), Series 1985
6. $15,370,000 Industrial Development Board of the City of Phenix City,
Alabama, Industrial Development Revenue Bonds, Series 1986A (Georgia
Kraft Company Project)
B. Temple Bonds
------------
1. $5,300,000 Development Authority of Floyd County Pollution Control
Revenue Bonds (Georgia Kraft Project), Series 1975
2. $1,000,000 Development Authority of Morgan County Industrial Revenue
Bonds (Georgia Kraft Company Project), Series 1978
3. $3,500,000 Development Authority of Morgan County Environmental
Improvement Revenue Bonds (Georgia Kraft Company Project), Series 1979
4. $14,000,000 Development Authority of Bibb County Environmental
Improvement Revenue Bonds (Georgia Kraft Company Project), Series 1979
5. $5,250,000 Development Authority of Floyd County Environmental
Improvement Revenue Bonds (Georgia Kraft Company Project), Series 1985
<PAGE>
================================================================================
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
-----------------------
Lease Agreement
-----------------------
Dated as of December 1, 1988
Relating to $44,000,000 The Industrial Development Board of the City of Phenix
City, Alabama Environmental Improvement Revenue Bonds (Mead Coated Board
Project), Series 1988
================================================================================
<PAGE>
LEASE AGREEMENT
TABLE OF CONTENTS
(The Table of Contents for this Lease Agreement is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Lease Agreement.)
Page
----
ARTICLE I DEFINITIONS
Section 1.1 Definitions
Section 1.2 Certain Rules of Interpretation
ARTICLE II REPRESENTATIONS
Section 2.1 Representations by the Issuer
Section 2.2 Representations by the Company
ARTICLE III LEASING CLAUSES AND TITLE PROJECT
Section 3.1 Lease of the Project
Section 3.2 Title to Project
Section 3.3 Quiet Enjoyment
ARTICLE IV ACQUISITION, CONSTRUCTION,
INSTALLATION, EQUIPPING AND
COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
Section 4.1 Acquisition, Construction,
Installation, Equipping and
Completion of the Project
Section 4.2 Issuance of Bonds; Disbursements from the
Project Fund
Section 4.3 Establishment of Completion Date;
Excess Proceeds
Section 4.4 Insufficiency of Project Fund
Section 4.5 Issuer to Pursue Remedies Against
Suppliers, Contractors and
Subcontractors and their Sureties
-i-
<PAGE>
ARTICLE V EFFECTIVE DATE OF THIS
AGREEMENT; DURATION; OF LEASE
TERM; RENTAL PROVISIONS
Section 5.1 Effective Date of This
Agreement; Duration of
Lease Term
Section 5.2 Delivery of Acceptance of Possession
Section 5.3 Rental Payments
Section 5.4 Obligation of the Company Unconditional
Section 5.5 Assignment and Pledge of Rental
Payments and the Agreement
Section 5.6 Agreement to Supply Letter of Credit
Section 5.7 Purchase of Bonds
Section 5.8 Optional Purchase of Bonds
Section 5.9 Determination of Interest Rate Periods
ARTICLE VI SPECIAL COVENANTS
Section 6.1 Use of Project
Section 6.2 Use of Proceeds
Section 6.3 Indemnity Against Claims
Section 6.4 Inspection of the Project
Section 6.5 Company to Maintain Its Corporate
Existence; Conditions Under Which
Exceptions Permitted
Section 6.6 Ownership; Further Assurances and
Corrective Instruments
Section 6.7 Maintenance of Project by Company
Section 6.8 Redemption or Purchase of Bonds
Section 6.9 Investment of Bond Fund and
Project Fund Moneys Permitted
Section 6.10 Non-Arbitrage Covenant
Section 6.11 Removal and Substitution of
Portions of Project
Section 6.12 Taxes, Other Governmental Charges
and Utility Charges
Section 6.13 Insurance Required
Section 6.14 Application of Net Proceeds of
Insurance
Section 6.15 Additional Provisions
Respecting Insurance
Section 6.16 Investment Credit
Section 6.17 Granting of Easements
Section 6.18 Release of Certain Land
-ii-
<PAGE>
ARTICLE VII DAMAGE, DESTRUCTION AND
CONDEMNATION
Section 7.1 Damage and Destruction
Section 7.2 Condemnation
Section 7.3 Condemnation of
Company-Owned Property
ARTICLE VII: ASSIGNMENT; SUBLEASING,
PLEDGING AND SELLING;
REDEMPTION; RENT PREPAYMENT
AND ABATEMENT; OPTION AND
OBLIGATION TO PURCHASE PROJECT;
OPTION TO EXTEND TERM OF AGREEMENT
Section 8.1 Assignment and Subleasing
Section 8.2 Pledge Under Indenture
Section 8.3 Restrictions on Sale of
Project by Issuer
Section 8.4 Prepayment of Rents; Option to
Purchase Project; Obligation
to Purchase Project
Section 8.5 Rent Abatements If Bonds Paid
Prior to Maturity
Section 8.6 Reference to Bonds Ineffective
After Bonds Paid
Section 8.7 Option to Extend
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Events of Default
Section 9.2 Remedies on Default
Section 9.3 Agreement to Pay Attorneys' Fees
and Expenses
Section 9.4 No Additional Waiver Implied by
One Waiver
Section 9.5 Notice of Default
ARTICLE X MISCELLANEOUS
Section 10.1 Notices
Section 10.2 Binding Effect
Section 10.3 Severability
Section 10.4 Amounts Remaining
in the Bond Fund
Section 10.5 Amendments
Section 10.6 Execution in Counterparts
Section 10.7 Applicable Law
Section 10.8 Captions
Section 10.9 Recording of Agreement
Section 10.10 Net Lease
-iii-
<PAGE>
EXHIBITS
Exhibit "A" Project Land A-1
Exhibit "B" Description of Project B-1
Exhibit "C" Form of Requisition C-1
-iv-
<PAGE>
THIS LEASE AGREEMENT, dated as of December 1, 1988 between THE
INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY, ALABAMA, a public
corporation duly organized and existing under the laws of the State of Alabama,
as lessor (the "Issuer"), and MEAD COATED BOARD, INC., a corporation organized
and existing under the laws of the State of Delaware (the "Company"), evidencing
the agreement of the parties hereto.
W I T N E S S E T H:
-------------------
In consideration of the respective representations and agreements
hereinafter contained, the parties hereto agree as follows (provided that in the
performance of the agreements of the Issuer herein contained, any obligation the
Issuer may thereby incur for the payment of money shall not be a general debt,
liability or obligation of the Issuer, or of the State of Alabama or any
political subdivision thereof, but shall be payable solely out of the rents,
revenues and proceeds derived from this Agreement (hereinafter defined) and the
sale of the Bonds referred to herein:
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions. In addition to the words and terms elsewhere
-----------
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings as assigned to them in the Indenture when
used herein unless the context or use clearly indicates another or different
meaning or intent:
"Act" means the statutes codified as Code of Alabama 1975, Title 11,
---
Chapter 54, Article 4, as amended and supplemented and at the time in force and
effect.
"Agreement" means this Lease Agreement and any amendments and
---------
supplements hereto.
"Authorized Company Representative" means any person or persons
---------------------------------
designated to act on behalf of the Company by a certificate filed with the
Issuer and the Trustee containing the specimen signature of each such person and
signed by the President, and Vice President or the Treasurer of the Company.
<PAGE>
"Authorized Issuer Representative" means any person or persons
--------------------------------
designated to act on behalf of the Issuer by a certificate filed with the Issuer
and the Trustee containing the specimen signature of each such person and signed
by the Chairman or Secretary of the Issuer.
"Bond Counsel" means an attorney-at-law or a firm of attorneys of
------------
nationally recognized standing in matters pertaining to the tax-exempt nature of
interest on bonds issued by states and their political subdivisions, duly
admitted to the practice of law before the highest court of any state of the
United States of America, selected by the Company and acceptable to the Trustee.
"Bond Fund" means the Bond principal and interest payment fund created
---------
by Section 5.02 of the Indenture.
"Business Day" means any day other than (i) a Saturday or Sunday or
------------
legal holiday or a day on which banking institutions in the city or cities (A)
in which the principal offices of the Trustee, the Tender Agent or the
Remarketing Agent are located or (B) in which drawings under the Credit Facility
are required to be made, are authorized by law to close or (ii) a day on which
the New York Stock Exchange is closed.
"Code" means the United States Internal Revenue Code of 1986, as
----
amended. References to the Code and to Sections of the Code shall include
relevant final, temporary or proposed regulations thereunder.
"Company Guarantee" means the Guarantee Agreement, dated as of
-----------------
December 1, 1988 by and between the Company and the Trustee.
"Completion Date" means the date of completion of the acquisition,
---------------
construction, installation and equipping of the Project (hereinafter defined) as
such date shall be certified as provided in Section 4.3 hereof.
"Cost of Construction" with respect to the Project means the
--------------------
following:
(a) obligations incurred for labor and materials (including
reimbursements payable to the Company or the Issuer and payments on
contracts in the name of the Company or the Issuer) in connection with the
acquisition, construction, installation and equipping of the Project;
-2-
<PAGE>
(b) the cost of contract bonds and of insurance of all kinds that may
be required or necessary during the course of construction of the Project;
(c) all costs of engineering services, including the costs for test
borings, surveys, estimates, plans and specifications and preliminary
investigation therefor, and for supervising construction, as well as for
the performance of all other duties required by or consequent upon the
proper construction of the Project;
(d) overhead of the Company, to the extent not included in
subparagraph (c) above, allocable to the Project by the Company in
accordance with generally accepted accounting principles;
(e) interest to accrue in respect of the Bonds to the Completion Date;
(f) amounts paid to the United States Treasury pursuant to (S) 1.103-
15AT(d) and (e) of Temporary Treasury Regulations or any regulations
promulgated pursuant to Section 148(f) of the Code;
(g) subject to the limitations of Section 147(g) of the Code, all
expenses incurred in connection with the issuance of the Bonds, including
without limitation initial compensation and expenses of the Trustee, legal
expenses and fees, costs of printing and engraving, recording and filing
fees, compensation of the underwriters, if any, rating agency fees and
costs of the Letter of Credit;
(h) all other costs which may properly be paid or accrued for the
acquisition, construction, installation, equipping or financing of the
Project; and
(i) any sums required to reimburse the Company for advances made for
any of the above items or for any other costs incurred or for work done
which are properly chargeable to the Project.
"Event of Default" means any of the occurrences enumerated in Section
----------------
9.1 of this Agreement.
"Exempt Costs" means Cost of Construction of the Project to the extent
------------
that the payment thereof would constitute, within the meaning of Sections
142(a)(5) and (6) of the Code, the payment of costs to provide facilities that
are sewage facilities
-3-
<PAGE>
or solid waste disposal facilities within the meaning of said Code section or
facilities functionally related and subordinate thereto, excluding amounts paid
as costs of issuance of the Bonds but including fees paid to the issuer of the
Letter of Credit during the construction of the Project.
"Extraordinary Services" and "Extraordinary Expenses" means all
---------------------- ----------------------
services rendered and all expenses incurred by the Trustee under the Indenture
other than Ordinary Services and Ordinary Expenses.
"Government Obligations" shall have the meaning set forth in Article I
----------------------
of the Indenture.
"Guarantee Agreements" means collectively the Company Guarantee and
--------------------
the Mead Guarantee.
"Indenture" means the Trust Indenture, dated as of December 1, 1988,
---------
between the Issuer and the Trustee, pursuant to which the Bonds are authorized
to be issued, and including any Indenture supplemental thereto.
"Issuer" means The Industrial Development Board of the City of Phoenix
------
City, Alabama, a public corporation of the State created and existing pursuant
to the Act, a resolution of the Board of Commissioners of Phenix City adopted on
June 14, 1960 and a Certificate of Incorporation duly filed for record on July
17, 1960 in the office of the Judge of Probate of Russell County, Alabama, and
its successors and assigns.
"Lease Term" means the duration of the leasehold interest created
----------
hereby as specified in Section 5.1.
"Mead" means The Mead Corporation, an Ohio corporation, and its
----
successors and assigns.
"Mead Guarantee" means the Guarantee Agreement, dated as of December
--------------
1, 1988 by and between Mead and the Trustee.
"Net Proceeds" means, with respect to the Bonds, the amount of the
------------
proceeds of the sale of the Bonds deposited into the Project Fund less the
amount paid or to be paid out from such proceeds for the payment of costs of
issuance of the Bonds plus any investment income earned on moneys in the Project
Fund.
"Net Proceeds" means, with respect to any insurance or condemnation
------------
awards, the gross proceeds from the insurance or condemnation award with respect
to which that term is used
-4-
<PAGE>
remaining after the payment of all expenses (including, without limitation,
attorneys' fees and any Extraordinary Expenses of the Trustee) incurred in the
collection of such gross proceeds.
"Ordinary Services" and "Ordinary Expenses" mean those services
----------------- -----------------
normally rendered and those expenses normally incurred by a trustee under
instruments comparable to the Indenture, including but not limited to fees of
its counsel.
"Permitted Investments" shall have the meaning set forth in Article I
---------------------
of the Indenture;
"Plans" means the plans and specifications prepared by or on behalf of
-----
the Company for the Project, as the same may be revised from time to time by the
Company in accordance with the second paragraph of Section 4.1 hereof, which are
on file with the Company and accessible to the Issuer.
"Project" means the sewage and solid waste disposal facilities
-------
described in the Plans and, as designated on the date hereof, described
generally in Exhibit "B" hereto.
"Project Fund" means the fund created pursuant to Section 5.04 of the
------------
Indenture.
"Project Land" means the real property described in Exhibit "A" hereto
------------
less such real property as may be released from this Agreement pursuant to
Section 6.18 or taken by the exercise of the power of eminent domain as provided
in Section 7.2.
"Project Site" shall mean the facility operated by the Company located
------------
near Phenix City, Alabama, which the Project is designed to serve.
"State" means the State of Alabama.
-----
"Trustee" means Citibank, N.A., New York, New York, and its successors
-------
and assigns and any other entity who may be serving as successor trustee or co-
trustee under the Indenture.
"Trust Estate" shall mean the property described in the granting
------------
clauses of the Indenture.
Section 1.2 Certain Rules of Interpretation. The definitions set
-------------------------------
forth in Section 1.1 shall be equally applicable to both the singular and plural
forms of the words and terms therein defined and shall cover all genders.
-5-
<PAGE>
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement and not solely
to the particular Article, Section or subdivision in which such word is used.
Reference herein to an Article number (e.g., Article IV) or a Section
----
number (e.g., Section 3.2) shall be construed to be a reference to the
----
designated Article number or Section number hereof unless the context or use
clearly indicates another or different meaning or intent.
Any terms defined in Article I of the Indenture and not defined herein
are incorporated by reference.
ARTICLE II
REPRESENTATIONS
---------------
Section 2.1 Representations by the Issuer. The Issuer makes the
-----------------------------
following representations as the basis for the undertakings on its part herein
contained:
(a) Organization and Authority. The Issuer is a public corporation
--------------------------
duly organized and validly existing under the provisions of the Act by
authority of a resolution adopted by the Board of Commissioners of Phoenix
City of June 14, 1960 and a Certificate of Incorporation duly filed for
record on July 17, 1960, in the office of the Judge of Probate of Russell
County, Alabama, which Certificate of Incorporation has not been amended or
revoked and is of full force and effect. The Issuer has all requisite power
and authority under the Act to (i) issue the Bonds, (ii) use the proceeds
thereof to acquire, construct, install and equip the Project, (iii) own,
lease and dispose of the Project, and (iv) enter into, and perform its
obligations under this Agreement and the Indenture. This Agreement and the
Indenture have been duly authorized, executed and delivered by the Issuer
and are legal, valid and binding agreements enforceable against the Issuer
in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
------------------
inquiries or investigations pending, or, to the knowledge of the Issuer,
threatened against or affecting the Issuer in any court or before any
governmental authority or arbitration board or tribunal, which involve the
possibility of materially and adversely affecting the transactions
contemplated by this Agreement or the Indenture or which, in any way, would
adversely affect the validity or
-6-
<PAGE>
enforceability of the Bonds, the Indenture, this Agreement or any agreement
or instrument to which the Issuer is a party and which is used or
contemplated for use in the consummation of the transactions contemplated
hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
-----------------------------------------------------------
issuance and sale of the Bonds and the execution and delivery by the Issuer
of this Agreement and the Indenture, and the compliance by the Issuer with
all of the provisions of each thereof and of the Bonds (i) are within the
purposes, powers and authority of the Issuer, (ii) to the best of the
knowledge of the Issuer, have been done in full compliance with the
provisions of the Act, are legal and will not conflict with or constitute
on the part of the Issuer a violation of or a breach of or default under,
or result in the creation of any lien, charge or encumbrance upon any
property of the Issuer (other than as contemplated by this Agreement or the
Indenture) under the provisions of, any charter instrument, by-law,
indenture, mortgage, deed of trust, note agreement or other agreement or
instrument to which the Issuer is a party or by which the Issuer is bound,
or any license, judgment, decree, law, statute, order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Issuer or any of its activities or properties, and (iii) have been duly
authorized by all necessary corporate action on the part of the Issuer;
(d) Governmental Consents. Neither the nature of the Issuer nor any
---------------------
of its activities or properties, nor any relationship between the Issuer
and any other person, nor any circumstance in connection with the offer,
issue, sale or delivery of any of the Bonds is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Issuer in
connection with the execution, delivery and performance of this Agreement
and the Indenture or the offer, issue, sale or delivery of the Bonds, other
than those already obtained. The Issuer has filed with the Alabama
Securities Commission notification of the Issuer's intention to issue the
Bonds as required by Code of Alabama, Section 8-6-110 et seq., as amended,
-------
and the Director of the Alabama Securities Commission has issued a
Certificate of Notification with respect to the Bonds pursuant to the
aforesaid act and said Certificate of Notification has not been revoked or
rescinded and is in full force and effect;
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<PAGE>
(e) No Defaults. To the best of the Issuer's knowledge, no event has
-----------
occurred and no condition exists with respect to the Issuer which would
constitute an "Event of Default" as defined in this Agreement or the
Indenture or which, with the lapse of time or with the giving of notice or
both, would become such an "Event of Default". The Issuer is not in default
under the Act or under any charter instrument, by-law or other agreement or
instrument to which it is a party or by which is it bound;
(f) No Prior Pledge. Neither the Project, this Agreement nor any of
---------------
the payments to be received pursuant to this Agreement have been pledged or
hypothecated in any manner or for any purpose other than as provided in the
Indenture as security for the payment of the Bonds; and
(g) Nature and Location of Project. The Project will constitute a
------------------------------
"project" within the meaning of the Act, and the acquisition, construction
and installation of the Project is in furtherance of the public purpose of
the Act. The Project will be located within 25 miles of the corporate
limits of Phoenix City, and no part thereof is located within the corporate
limits or the police jurisdiction of any other incorporated municipality or
any county of any state other than Russell County, Alabama.
Section 2.2 Representations by the Company. The Company makes the
------------------------------
following representations as the basis for the undertakings on its part herein
contained:
(a) Corporate Organization and Power. The Company (i) is a
--------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) is duly qualified to transact business
as a foreign corporation in the State of Alabama, and (iii) has all
requisite corporate power and authority and all necessary licenses and
permits to own and operate its properties and to carry on its business as
now being conducted and as presently proposed to be conducted;
(b) Pending Litigation. There is no proceeding pending, or to the
------------------
knowledge of the Company threatened, against or affecting the Company in
any court or before any governmental authority, arbitration board or
tribunal which is likely to materially and adversely affect the ability of
the Company to perform its obligations under this Agreement;
-8-
<PAGE>
(c) Agreements Are Legal and Authorized. The execution and delivery by
-----------------------------------
the Company of this Agreement and the compliance by the Company with all of
the provisions hereof and thereof (i) are within the corporate power of the
Company, (ii) will not conflict with or result in any breach of any of the
provisions of, or constitute a default under or result in the creation of
any lien, charge or encumbrance upon any property of the Company (other
than as contemplated by this Agreement and the Indenture) under the
provisions of the Company's Certificate of Incorporation or Bylaws or any
agreement or other instrument to which the Company is a party or by which
it may be bound, or any license, judgment, decree, law, statute, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its activities or properties, and
(iii) have been duly authorized by all necessary action on the part of the
Company;
(d) Governmental Consent. To the knowledge of the Company, neither the
--------------------
Company nor any of its business or properties, nor any relationship
between the Company and any other person, nor any circumstances in
connection with the execution, delivery and performance by the Company of
this Agreement is such as to require the consent, approval or authorization
of, or the filing, registration or qualification with, any governmental
authority on the part of the Company other than those already obtained;
(e) No Defaults. To the knowledge of the Company, no event has
-----------
occurred and no condition exists with respect to the Company that would
constitute an Event of Default under this Agreement or which, with the
lapse of time or with the giving of notice or both, would become such an
Event of Default;
(f) Compliance with Law. To the knowledge of the Company, the Company
-------------------
is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject and has not failed to obtain any
licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
business, which violation or failure to obtain is likely to materially and
adversely affect the ability of the Company to perform its obligations
hereunder;
(g) Commencement of Construction. The acquisition, construction,
----------------------------
installation and equipping of the Project commenced after November 3, 1987,
and no obligation relating
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<PAGE>
to the acquisition, construction, installation or equipping of the Project
was paid or incurred prior to such date.
ARTICLE III
LEASING CLAUSES AND TITLE TO PROJECT
------------------------------------
Section 3.1 Lease of the Project. The Issuer hereby leases to the
--------------------
Company, and the Company hereby leases from the Issuer, the Project at the rent
set forth in Section 5.3 and in accordance with the provisions hereof.
Section 3.2 Title to Project. Upon the execution and delivery hereof,
----------------
the Issuer agrees that it will furnish to the Company and the Trustee an opinion
of the Issuer's Counsel or other Counsel satisfactory to the Company and the
Trustee stating that the Issuer has good title in and to the Project.
Section 3.3 Quiet Enjoyment. The Issuer warrants and agrees that it
---------------
will defend the Company in the quiet enjoyment and peaceable possession of the
Project, free from all claims of all persons claiming by, through or under the
Issuer, throughout the Lease Term, so long as the Company shall perform the
agreements to be performed by it hereunder, or so long as the period for
remedying any failure in such performance shall not have expired.
ARTICLE IV
ACQUISITION, CONSTRUCTION, INSTALLATION,
EQUIPPING AND COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
----------------------------------------
Section 4.1 Acquisition, Construction, Installation, Equipping and
------------------------------------------------------
Completion of the Project. Not later than the delivery hereof the Issuer will
- -------------------------
have acquired title in and to the Project, and subject to the provisions of
Section 4.4, the Issuer agrees that:
(a) It will acquire, construct, equip and install facilities necessary
for the Project. The aforesaid acquisition, construction, equipping and
installation shall be substantially in accordance with the Plans. The
Project shall be the property of the Issuer and subject to the terms
hereof.
(b) Subject to the provisions of the following paragraphs, it will
cause to be acquired, constructed, equipped and installed such additional
machinery, equipment
-10-
<PAGE>
and related property described in the list attached hereto as Exhibit "B"
and such other items of machinery, equipment and related property as in the
Company's judgment may be necessary for the operation of the Project. Such
additional machinery, equipment and related property shall become a part of
the Project and shall be the property of the Issuer and subject to the
terms hereof.
The Issuer and the Company agree that the Company from time to time
may supplement or amend the Plans (including additions thereto or omissions
therefrom), provided that no such amendment shall provide for a material
addition to, deletion from or modification of the Plans unless there shall have
been filed with the Issuer and the Trustee (i) a revised Exhibit "B" containing
a description of the Project as revised by such amendment or modification, the
accuracy of which shall have been certified by an Authorized Company
Representative, and (ii) the written opinion of a firm of nationally recognized
Bond Counsel experienced in the financing of solid waste disposal facilities
stating that (a) the Project as provided for in such modified or amended Plans
will constitute a "project" within the meaning of the Act, and (b) the
expenditure of moneys from the Project Fund to pay the Cost of Construction in
accordance with such amended or modified Plans will not impair the exemption of
interest on Bonds from federal income taxation.
The Issuer hereby makes, constitutes and appoints the Company as its
true, lawful and exclusive agent for the acquisition, construction, equipping
and installation of the Project, and the Company hereby accepts such agency to
act and do all things on behalf of the Issuer, to perform all acts and
agreements of the Issuer hereinabove provided in this Section, and to bring any
actions or proceedings against any person which the Issuer might bring with
respect thereto as the Company shall deem proper. The Issuer hereby ratifies and
confirms all actions of, and assumes and adopts all contracts entered into by,
the Company with respect to the Project prior to the date hereof. This
appointment of the Company to act as agent and all authority hereby conferred or
granted is conferred and granted irrevocably until all activities in connection
with the acquisition, construction, equipping and installation of the Project
shall have been completed, and shall not be terminated prior thereto by act of
the Issuer or of the Company. So long as the Company is not in default
hereunder, upon the Completion Date (or at any time prior thereto upon the
request of the company) the Issuer will assign to the Company all warranties and
guarantees of all contractors, subcontractors, suppliers, architects and
engineers for the furnishing of labor, materials or equipment or
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<PAGE>
supervision or design in connection with the Project and any rights or causes of
action arising from or against any of the foregoing.
The Issuer agrees to complete the acquisition, construction, equipping
and installation of the Project as promptly as practicable after receipt of the
proceeds from the sale of the Bonds, to continue said acquisition, construction,
equipping and installation with all reasonable dispatch and to use its best
efforts to cause said acquisition, construction, equipping and installation to
be completed as soon as practicable, delays incident to strikes, riots, acts of
God or the public enemy beyond the reasonable control of the Issuer only
excepted, but if said acquisition, construction and installation is not
completed within the time herein contemplated there shall be no resulting
liability on the part of the Issuer and no diminution in or postponement or
abatement of the rents and other payments required by Section 5.3 to be paid by
the Company.
Section 4.2 Issuance of Bonds; Disbursements from the Project Fund.
-------------------------------------------------------
In order to provide funds to finance the Cost of Construction, the Issuer agrees
that it will initially issue and deliver the Bonds to the purchasers thereof and
apply and deposit the proceeds thereof in accordance with the terms of the
Indenture. The Company has approved the Indenture in form and substance,
approves the issuance of the Bonds in accordance with the Indenture and approves
the manner and purposes for which proceeds of the Bonds may be used and invested
pursuant to the Indenture.
The Issuer has authorized and directed the Trustee to disburse moneys
from the Project Fund for payment or reimbursement of the Cost of Construction.
Each disbursement from the Project Fund shall be made only upon receipt by the
Trustee of a written requisition signed by the Authorized Company Representative
in substantially the form of Exhibit "C" attached hereto, stating with respect
to each payment to be made: (a) the requisition number, (b) the name and address
(or wire transfer instructions) of the person, firm or corporation to whom
payment is due, (c) the amount to be paid, (d) certifying that each obligation
mentioned therein has been properly incurred and is a proper charge against the
Project Fund, specifying in reasonable detail the purpose and circumstances of
such obligation and certifying that such obligation has not been the basis of
any previous withdrawal from the Project Fund, and (e) certifying that payment
of such requisition will not result in less than 97% of the total proceeds of
the sale of the Bonds (excluding amounts applied to pay costs of issuance of the
Bonds) expended at that time having been used to pay Exempt Costs.
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<PAGE>
In approving or certifying any requisition under this Section the
Issuer and the Trustee may rely as to the completeness and accuracy of all
statements in such requisition upon the approval of or certification to such
requisition by the Authorized Company Representative, and the Company hereby
agrees to indemnify and save harmless the Issuer and the Trustee, and each of
their directors, officers, members, agents and employees from any liability
incurred in connection with any requisition so approved or certified.
Section 4.3 Establishment of Completion Date; Excess Proceeds. The
-------------------------------------------------
Completion Date shall be evidenced to the Trustee by a certificate of the
Authorized Company Representative: (i) stating that the Project has been
completed substantially in accordance with the Plans, (ii) stating that, except
for amounts retained by the Trustee at the Company's direction for any Cost of
Construction of the Project not then due and payable or which is in dispute, the
entire Cost of Construction of the Project has been paid, and (iii) stating that
not less than 95% of the total proceeds of the sale of the Bonds have been used
to pay Exempt Costs. Notwithstanding the foregoing, such certificate may state
that it is given without prejudice to any rights against third parties which
exist at the date of such certificates or which may subsequently come into
being.
In the event that moneys shall remain in the Project Fund after
payment of all Cost of Construction of the Project, such moneys shall, at the
direction of the Company, be used (i) for the redemption of Bonds in the largest
amount possible at the earliest date permitted by the Indenture at which the
redemption price for such Bonds to be redeemed is 100% of the principal amount
thereof plus accrued interest to the redemption date or for the purchase of
Bonds pursuant to Article IV of the Indenture or otherwise for the purpose of
cancellation at any time prior to the earliest date permitted by the Indenture
for the redemption of Bonds, (ii) paid into the Bond Fund to pay interest on the
Bonds, or (iii) a combination of (i) and (ii) above; provided, however, that
such moneys shall not be used as described in (ii) or (iii) above unless the
Company supplies the Trustee with an opinion of Bond Counsel to the effect that
such use will not adversely affect the tax-exempt status of the interest on the
Bonds. The Company agrees that any investments which it may direct of such
amounts shall result in a yield on such investments, computed in accordance with
the applicable provisions of (S)(S) 1.103-13 and 1.103-14 of the Treasury
Regulations, not in excess of the yield (computed in the same manner) on the
Bonds.
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<PAGE>
Section 4.4 Insufficiency of Project Fund. The Issuer does not make
-----------------------------
any warranty, either express or implied, that the amounts in the Project Fund
and available for payment of the Cost of Construction of the Project will be
sufficient to pay all of the Cost of Construction. The Company agrees that in
the event that moneys in the Project Fund are insufficient to pay all of the
Cost of Construction, the Company shall complete the acquisition, construction,
installation and equipping of the Project, and shall pay or make funds available
to the Issuer to pay that portion of the Cost of Construction in excess of the
moneys available therefor in the Project Fund. The Company agrees that, if after
exhaustion of the amounts of the Project Fund, it should pay any portion of the
Cost of Construction, it shall not be entitled to any diminution of the amounts
payable under as provided in Section 5.2 hereof.
Section 4.5 Issuer to Pursue Remedies Against Suppliers, Contractors
--------------------------------------------------------
and Subcontractors and Their Sureties. At the direction and sole cost of the
- -------------------------------------
Company (to the extent that such cost is not payable and actually paid from the
Project Fund), the Issuer will promptly proceed, either separately or in
conjunction with others, to exhaust the remedies of the Issuer against any
defaulting supplier, contractor or subcontractor and against any surety
therefor, for the performance of any contract made in connection with the
Project. If the Company shall so notify the Issuer, the Company may, in its own
name or in the name of the Issuer, prosecute or defend any action or proceeding
or take any other action involving any such supplier, contractor, subcontractor
or surety which the Company deems reasonably necessary, and in such event the
Issuer agrees to cooperate fully with the Company and to take all action
necessary, to the extent it might lawfully do so, to effect the substitution of
the Company for the Issuer in any such action or proceeding. Any moneys
recovered by way of damages, refunds, adjustments or otherwise in connection
with the foregoing prior to the Completion Date shall be paid into the Project
Fund and after the Completion Date shall be used as authorized by Section 4.3.
ARTICLE V
EFFECTIVE DATE OF THIS AGREEMENT;
DURATION OF LEASE TERM; RENTAL PROVISIONS
-----------------------------------------
Section 5.1 Effective Date of This Agreement; Duration of Lease Term.
--------------------------------------------------------
This Agreement shall become effective upon its execution and delivery and the
leasehold interest created hereby shall then begin, and, subject to the other
provisions hereof, shall expire at midnight, December 1, 2023, or sooner upon
payment or redemption of the Bonds as hereinafter provided subject to extension
as provided in Section 8.7.
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<PAGE>
Section 5.2 Delivery and Acceptance of Possession. The Issuer agrees to
-------------------------------------
deliver to the Company sole and exclusive possession of the Project (subject to
the right of the Issuer and the Trustee to inspect the same pursuant to Section
6.4) on the Completion Date and the Company agrees to accept possession of the
Project upon such delivery; provided, however, that the Company shall be
permitted such possession of the Project prior to the Completion Date as shall
not interfere with the acquisition, construction, installation and equipping of
the Project.
Section 5.3 Rental Payments.
---------------
(a) As rent for the Project, the Company agrees to pay to the Trustee, as
assignee and pledgee of and for the account of the Issuer, for deposit in the
Bond Fund, amounts sufficient, together with other moneys held by the Trustee
under the Indenture and available therefor, to pay the principal of, and the
redemption premium (if any) and the interest on, the Bonds as the same become
due pursuant to the terms of the Indenture, as follows:
(i) On or prior to each date upon which interest on the Bonds
is payable under the Indenture, a sum which will be equal to the
interest on the Bonds coming due on such dates;
(ii) On or prior to any redemption date for the Bonds, a sum
equal to the principal of, and the redemption premium (if any) and
the interest on, the Bonds which are to be redeemed on such date; and
(iii) On or prior to December 1, 2023, a sum which will be equal
to the principal amount of the Bonds coming due on such date.
If the Company defaults in any payment required by this paragraph (a), the
Company will pay interest (to the extent allowed by law) on such amount until
paid at the rate provided for in the Bonds.
(b) In furtherance of the foregoing, so long as any Bonds are
outstanding the Company will pay all amounts required to prevent any deficiency
by an act or failure to act by the Trustee, the Company, the Issuer, the Tender
Agent or any other person.
(c) The Company will also pay: (i) the fees of the Trustee for
rendering Ordinary Services and the Ordinary Expenses
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<PAGE>
of the Trustee and any Paying Agents under the Indenture, such fees and
expenses to be paid directly to the Trustee or Paying Agents for their
respective accounts as and when such fees and expenses become due and payable,
(ii) any fees for Extraordinary Services and the Extraordinary Expenses of the
Trustee and (iii) any expenses in connection with any redemption of the Bonds.
The Company may, without constituting grounds for an Event of Default
hereunder, withhold payment of any fees for Ordinary Services and
Extraordinary Services and Ordinary Expenses and Extraordinary Expenses to
contest in good faith the necessity of the same or to contest in good faith
the necessity for any services performed and expenses paid or incurred by any
Paying Agent.
(d) In addition to the payments required to be made by the Company
pursuant to paragraph (a) above, the Company shall have the option to pay to the
Trustee amounts sufficient to pay the purchase price of any Bonds which the
Company has the option to purchase in lieu of redemption pursuant to Section
8.07 of the Indenture. All such payments shall be made to the Trustee at its
principal corporate trust office or to the Tender Agent at its principal office,
as the case may be, in lawful money of the United States of America.
(e) The Company will also pay, on or prior to each day on which a
payment of purchase price of a Bond which has been tendered shall become due, an
amount which will enable the Trustee or the Tender Agent, as the case may be, to
make such payment in full in a timely manner.
(f) The Company need not pay any amount paid to Bondholders from the
proceeds of a draw on the Letter of Credit or any Alternate Credit Facility.
(g) The Company need not pay any amount required to be paid by
paragraphs (d) and (e) above to the extent of any amount paid to Bondholders
from the proceeds of a remarketing of Bonds in accordance with Section 3.02 of
the Indenture.
Section 5.4 Obligation of the Company Unconditional.
The obligation of the Company to make the rental payments as provided in Section
5.3 and to perform and observe the other agreements on its part contained herein
shall be absolute and unconditional notwithstanding any change in the tax or
other laws of the United States of America or of the State of Alabama or any
political subdivision of either thereof or any failure of the Issuer to perform
and observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement. Nothing contained in
this Section
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<PAGE>
5.4 shall be construed to release the Issuer from the performance of any of the
agreements on its part herein contained; and, in the event the Issuer should
fail to perform any such agreement on its part, the Company may institute such
action against the Issuer as the Company may deem necessary to compel
performance or recover its damages for nonperformance so long as such action
shall not violate the agreements on the part of the Company contained in the
preceding sentence, but in no event shall the Company be entitled to any
diminution of the amounts payable as provided in Section 5.3 hereof.
Section 5.5 Assignment and Pledge of Rental Payments and the Agreement. The
----------------------------------------------------------
Issuer shall assign to the Trustee as security for the Bonds under the Indenture
all rights, title and interest of the Issuer in and to (i) the "Revenues"
(defined in the Indenture), (ii) this Agreement insofar as they relate to all
Bonds issued and outstanding under the Indenture (except for the Issuer's rights
providing that notices, approvals, consent, requests and other communications be
given to the Issuer and the Issuer's rights under Sections 6.3, 6.4 and 9.3
hereof) and (iii) all amounts on deposit from time to time in the Project Fund
and the Bond Fund. The Company assents to such assignment and hereby agrees
that, as to the Trustee, its obligations to make such payments shall be absolute
and shall not be subject to any defense or any right of set-off, counterclaim or
recoupment arising out of any breach by the Issuer or the Trustee of any
obligation to the Company, whether hereunder or otherwise, or out of any
indebtedness or liability at any time owing to the Company by the Issuer or the
Trustee.
Section 5.6 Aqreement to Supply Letter of Credit. The Company shall provide
------------------------------------
for the delivery of a Letter of Credit meeting the requirements of Section 6.01
of the Indenture to the Trustee simultaneously with the original issuance and
delivery of the Bonds.
Section 5.7 Purchase of Bonds. The Issuer, with the consent of the Company,
-----------------
has set forth in Section 3.01 of the Indenture the terms and conditions relating
to such purchases and has set forth in Article XII of the Indenture the duties
and responsibilities of the Tender Agent with respect to the purchase of Bonds
and of the Remarketing Agent with respect to the remarketing of Bonds. The
Company approves the appointment by the Issuer of Smith Barney, Harris Upham &
Co. Incorporated as the initial Remarketing Agent and Citibank, N.A. as the
initial Tender Agent and hereby authorizes and directs the Tender Agent and the
Remarketing Agent to purchase, offer, sell and deliver Bonds in accordance with
the provisions of Section 3.01 and
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<PAGE>
Article XII of the Indenture. The Issuer acknowledges that the Remarketing
Agent, in undertaking its duties set forth in the Indenture with respect to the
determination of the interest rates borne by the Bonds, will be acting as agent
for and on behalf of the Issuer. The Issuer shall have no obligation or
responsibility, financial or otherwise, with respect to the purchase or
remarketing of Bonds or the making or continuation of arrangements therefor,
except that the Issuer shall generally cooperate with the Company, the Trustee,
the Tender Agent and the Remarketing Agent as contemplated in Article XII of the
Indenture.
Section 5.8 Optional Purchase of Bonds. The Company, at any time and
--------------------------
from time to time, may furnish moneys to the Tender Agent accompanied by a
notice directing that such moneys be applied to the purchase of Bonds to be
purchased pursuant to Section 8.07 of the Indenture. Bonds so purchased shall be
delivered in accordance with Section 3.04 or 3.05 of the Indenture.
Section 5.9 Determination of Interest Rate Periods. The Company may
--------------------------------------
determine the duration and type of the Interest Rate Periods (as defined in the
Indenture) as, and to the extent, set forth in Section 2.02 of the Indenture.
ARTICLE VI
SPECIAL COVENANTS
-----------------
Section 6.1 Use of Project. The Issuer hereby acknowledges that the
--------------
Company shall have singular and exclusive right to the use of the Project. The
Company hereby agrees that so long as the Project is operated, it shall be
operated as sewage or solid waste disposal facilities within the meaning of
Sections 142(a)(5) and 142(a)(6) of the Code. The Issuer makes no warranty,
either express or implied, as to the Project or that the Project will be
suitable for the Company's purposes.
Section 6.2 Use of Proceeds. The Company hereby covenants that at
---------------
least 95% of the total proceeds of the sale of the Bonds will be used to pay
Costs of Construction of the Project which constitute Exempt Costs and that all
of the Net Proceeds of the Bonds deposited within the Project Fund pursuant to
the Indenture will be used to pay the Cost of Construction of the Project.
In addition, the Company covenants with the Issuer, for the benefit of
the Bondholders, that the proceeds of the Bonds
-18-
<PAGE>
will not be used in any manner which would result in the loss of the exemption
from federal income taxation of the interest on the Bonds.
Section 6.3 Indemnity Against Claims. The Company will also pay and
------------------------
discharge and will indemnify and hold harmless the Issuer and the members,
officers, agents and employees of the Issuer from (a) any condition of the
Project caused by the Company, (b) any liens, taxes, assessments, impositions
and other charges upon payments by the Company to the Issuer hereunder, (c) any
breach or default on the part of the Company in the performance of any of its
obligations hereunder, (d) any act of negligence of the Company or of its
agents, contractors, servants, employees or licensees, (e) any act of negligence
of any assignee or sublessee of the Company, or of any agents, contractors,
servants, employees or licensees of any assignee or sublessee of the Company and
(f) any and all liability, damages, costs and expenses arising out of or
resulting from the acquisition, construction and installation of the Project or
the use or operation of the Project or any other activity carried out thereon or
in connection therewith or the transactions contemplated by this Agreement and
the Indenture, including the reasonable fees and expenses of counsel, except as
the same may arise out of the negligence or misconduct on the part of the
Issuer. If any such lien or charge is sought to be imposed upon payments, or any
such taxes, assessments, impositions or other charges are sought to be imposed,
or any such liability, damages, costs and expenses are sought to be imposed, the
Issuer will give prompt notice to the Company, and the Company shall have the
sole right and duty to assume, and will assume, the defense thereof, with full
power to litigate, compromise or settle the same in its sole discretion. The
indemnification provided by the Section shall survive the termination of this
Agreement.
The Company agrees to indemnify the Trustee, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the Indenture, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties thereunder or hereunder.
Section 6.4 Inspection of the Project. The Company agrees that the
-------------------------
Issuer and its duly authorized agents at reasonable times, and with the written
consent of the Company which shall not be unreasonably withheld, may enter upon
the Project Site and examine and inspect the Project and the books and records
of the Company with respect to the Project.
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Section 6.5 Company to Maintain Its Corporate Existence; Conditions Under
-------------------------------------------------------------
Which Exceptions Permitted. The Company will maintain its corporate existence,
- --------------------------
will continue to be a corporation in good standing under the laws of the State,
will not dissolve or otherwise dispose of all or substantially all of its assets
and will consolidate with or merge into another legal entity or permit one or
more other legal entities (other than one or more subsidiaries of the Company)
to consolidate with or merge into it, or sell or otherwise transfer to another
legal entity all or substantially all its assets as an entirety and dissolve,
only if (a) the surviving, resulting or transferee legal entity is organized and
existing under the laws of the United States, a state thereof or the District of
Columbia, is solvent, is qualified to do business in the State as a foreign
corporation and (if not the Company) assumes in writing all the obligations of
the Company under this Agreement and (b) the Company or the surviving entity is
not immediately after such merger, consolidation or transfer in default in any
material respect under this Agreement.
Section 6.6 Ownership; Further Assurances and Corrective Instruments. The
--------------------------------------------------------
Issuer covenants that it lawfully owns and is lawfully possessed of the Project
Land, that it has good and marketable fee simple title therein and thereto and
that it has or will acquire good and marketable title to the Project and that it
will defend said title and ownership therein and thereto and every part thereof
against the claims of all persons whomsoever. The Issuer and the Company agree
that they will, from time to time execute, acknowledge and deliver, or cause to
be executed, acknowledged and delivered, such supplements hereto and such
further instruments as may reasonably be required for correcting any inadequate
or incorrect description of the Project and for carrying out the intention or
facilitating the performance of this Agreement.
Section 6.7 Maintenance of Project by Company.
---------------------------------
(a) The Company agrees that during the Lease Term, it will pay all costs of
operating, maintaining and repairing the Project; provided, that nothing in this
Section shall require the Company to maintain, operate or repair the Project if,
in the sole judgment of the Company, the Company shall determine that operation
of the Project or the manufacturing facilities the Project is designed to serve
is impossible, impracticable or uneconomic.
(b) The Company may, from time to time, in its sole discretion and at its
own expense, make any additions,
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modifications or improvements to the Project, including installation of
additional machinery, equipment, and related property, which it may deem
desirable for its business purposes; provided that all such additions,
modifications and improvements do not adversely affect the use of the Project as
solid waste disposal facilities. All machinery, equipment and related personal
property so installed by the Company shall not be subject to this Agreement or
the lien of the Indenture but shall be subject to the landlord's lien created
under the Code of Alabama, 1975, Section 35-9-60. A11 such machinery, equipment
and related property so installed by the Company may be modified or removed at
any time while there exists no Event of Default hereunder; provided, that any
damage to the Project occasioned by such modification or removal shall be
repaired by the Company at its own expense.
(c) The Company shall not permit any mechanics', materialmen's, suppliers',
vendors' or other similar lien to be established or remain against the Project
for labor or materials furnished or services rendered in connection with any
additions, modifications, improvements, repairs, renewals or replacements so
made by it; provided, that if the Company shall first notify the Trustee of its
intention so to do, the Company may in good faith contest any mechanics',
materialmen's, suppliers', vendors' or other similar lien filed or established
against the Project, and in such event may permit the items so contested to
remain undischarged and unsatisfied during the period of such contest and any
appeal therefrom unless the Issuer or the Trustee shall notify the Company that
by nonpayment of any such items, the lien or security interests afforded by this
Agreement or as to any part of the Project or the payments to be made pursuant
to the Agreement or the Revenues will be materially endangered or the Project or
any part thereof or the payments to be made pursuant to the Agreement or the
Revenues will be subject to loss or forfeiture, in which event the Company shall
promptly pay and cause to be satisfied and discharged all such unpaid items. The
Issuer will cooperate fully with the Company in any such contest.
Section 6.8 Redemption or Purchase of Bonds. The Issuer shall take all
--------------------------------
steps then necessary under the applicable provisions of the Indenture for the
redemption or purchase of Bonds upon receipt by the Issuer and the Trustee from
the Company of a written notice specifying:
(a) the principal amount of Bonds to be redeemed or purchased;
(b) the date of such redemption or purchase; and
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(c) in the case of a redemption of Bonds, directions to mail a notice of
redemption in accordance with Section 8.04 of the Indenture.
Section 6.9 Investment of Bond Fund and Project Fund Moneys Permitted. Any
----------------------------------------------------------
moneys held in the Bond Fund or the Project Fund shall be invested or reinvested
by the Trustee upon the request and direction of the Company in Government
Obligations and Permitted Investments, respectively. All such directions by the
Company shall be in compliance with applicable laws of the State. Such
investments shall be made upon telephonic direction of an Authorized Company
Representative which shall be promptly confirmed in writing and shall mature in
such amounts and at such times as may be necessary to provide funds when needed
to make payments from the Bond Fund or the Project Fund. The Trustee may make
any and all such investments through its own bond department. Any interest or
gain received from such investments shall be credited to and held in the Bond
Fund or the Project Fund, respectively, and any loss from such investments shall
be charged against the Bond Fund or the Project Fund, respectively.
Section 6.10 Non-Arbitrage Covenant.
-----------------------
(a) The Company and the Issuer each covenants that it shall take no action,
nor shall the Company direct the Trustee to take or approve the Trustee's taking
any action or direct the Trustee to make or approve the Trustee's making any
investment or use of proceeds of the Bonds or any other moneys which may arise
out of or in connection with, this Agreement, the Indenture or the Project,
which would cause the Bonds to be treated as "arbitrage bonds" within the
meaning of Section 148 of the Code. In addition, the Company covenants and
agrees to comply with the requirements of Section 148(f) of the Code as it may
be applicable to the Bonds or the proceeds derived from the sale of the Bonds or
any other moneys which may arise out of or in connection with, this Agreement,
the Indenture or the Project.
(b) Unless the Company shall supply the Trustee and the Issuer with an
opinion of Bond Counsel to the effect that failure to comply with all or any
portion of this subsection (b) will not, by itself adversely affect the
exclusion of the interest payable on the Bonds from gross income for purposes of
federal income taxation, the Company hereby further covenants and agrees with
the Issuer, as follows:
(1) If any part of the "gross proceeds" (hereinafter defined) of the Bonds
has not been expended on Cost of
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Construction within six (6) months of the date of issuance and delivery of the
Bonds, the Company shall invest or cause such gross proceeds to be invested in
the manner described in subparagraph (A) below and shall pay or cause to be paid
to the United States the amounts described in subparagraph (B) below in
accordance with the terms and conditions set forth therein.
(A) Except during any "temporary period" (hereinafter described, the
aggregate amount of gross proceeds of the Bonds which are invested in
"nonpurpose obligations" (hereinafter defined) having a "yield"
(hereinafter defined) higher than the yield on the Bonds shall at no time
during any "bond year" (hereinafter defined) exceed one hundred fifty
percent (150%) of the "debt service" (hereinafter defined) on the Bonds for
such bond year. In addition, the aggregate amount of gross proceeds of the
Bonds invested in nonpurpose obligations having a yield higher than the
yield on the Bonds shall be promptly and appropriately reduced as the
amount of outstanding Bonds is reduced (whether by payment at maturity,
mandatory sinking fund redemption, redemption prior to maturity, or
otherwise). The Company shall not be required to sell or dispose of
nonpurpose obligations if such sale or disposition would result in the
realization of a loss, for federal income tax purposes, that exceeds the
amount that would be rebated to the United States pursuant to the
provisions of subparagraph (b)(l)(B) below (but for such sale or
disposition), at the time of such sale or disposition if a rebate were due
at such time. The provisions of the foregoing sentence shall not apply to
the extent that other nonpurpose obligations acquired with the gross
proceeds of the Bonds may be sold or disposed of without incurring the loss
described above, and in any event the provisions of the foregoing sentence
shall cease to apply thirty (30) days after the last day of the first
"computation period" (defined in subparagraph (b)(l)(B)) ending thereafter
on which such nonpurpose obligations can be sold or disposed of without
incurring the loss described hereinabove. The provisions of this
subparagraph (A) shall not apply to gross proceeds of the Bonds while such
amounts are invested for the temporary periods described in Treasury
Regulations (S) 1.103-15AT(c)(2).
(B) At the time or times hereinafter set forth, the Company shall pay
or shall cause the Trustee to pay
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to the United States an amount (the "Rebate Amount") which is equal to the
sum of:
(i) the excess of --
(a) the aggregate amounts earned from the date of issuance and
delivery of the Bonds on all nonpurpose obligations in which gross
proceeds of the Bonds have been invested (other than nonpurpose
obligations attributable to an excess described herein) over
(b) the aggregate amounts which would have been earned if the
yield on such nonpurpose obligations (other than nonpurpose
obligations attributable to an excess described herein) had been equal
to the yield on the Bonds, plus
----
(ii) any income attributable to the excess described in clause (i)
above.
The Rebate Amount payable to the United States shall be determined annually by
the Company for each bond year during which Bonds remain outstanding and upon
retirement of the last of the Bonds (each such period is hereinafter referred to
as a "computation period"). Such Rebate Amounts shall be deposited annually in
the Excess Investment Earnings Account created pursuant to the provisions of the
Indenture. The Rebate Amount shall be paid to the United States in installments,
as follows:
(I) subject to clause (III) below, the first such installment shall be
paid no later than thirty (30) days after the end of the fifth (5th) bond
year of the Bonds;
(II) subject to clause (III) below, an additional installment shall be
paid on or prior to the last day of each additional installment payment
period during which any of the Bonds remain outstanding. For purposes of
this clause (II), an installment payment period shall commence on the last
day on which a preceding installment of the Rebate Amount was required to
be paid, and shall end on the day preceding the fifth (5th) anniversary of
such payment date;
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(III) anything herein to the contrary notwithstanding, the
last installment shall be paid no later than sixty (60) days
after the last of the Bonds has been retired; and
(IV) each installment shall be in an amount which, when
aggregated with the amount of any prior installments paid to the
United States hereunder, will equal at least ninety percent (90%)
of the total Rebate Amount payable to the United States hereunder
as of the date such installment is paid; provided, however, that
the last installment shall be in an amount equal to the entire
remaining balance of the Rebate Amount payable to the United
States hereunder.
Each such payment to the United States shall be made to the Internal
Revenue Service, Philadelphia, Pennsylvania 19255, or to such other
address as shall be specified by the Department of Treasury and shall
be accompanied by (i) a copy of the Information Return for Private
Activity Bond Issues (Internal Revenue Service Form 8038) filed by the
Issuer upon the issuance of the Bonds and (ii) a statement summarizing
the determination of the Rebate Amount required to be paid to the
United States. The Company shall maintain or cause to be maintained
records of such determinations for each computation period until six
years after payment in full of the Bonds and shall make such records
available to the Issuer, the Trustee and their representatives upon
reasonable request therefor. The Issuer hereby agrees to cooperate
with the Company in making the determinations for each computation
period required pursuant to this subparagraph. The Trustee agrees to
cooperate with the Company in respect of the Company's obligations
under this Section 6.10 by providing information to the Company
regarding the investment of funds pursuant to the Indenture. The
Trustee shall have no responsibility or obligation to make any
computations or determinations under this Section 6.10 or to monitor
or investigate compliance by the Company with the provisions hereof.
(3) For purposes of clause (a) of subparagraph (b)(l)(B) of this
Section, the Company, in determining the aggregate amounts earned on all
nonpurpose obligations acquired with gross proceeds of the Bonds --
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<PAGE>
(A) will take into account any gain or loss incurred on the
disposition of any such nonpurpose obligation, and
(B) unless the Issuer otherwise elects, will not take into
account any amounts earned on nonpurpose obligations held in a "bona
fide debt service fund" (hereinafter defined) for the Bonds during
any bond year in which the gross earnings on such fund do not exceed
$100,000.
(4) Except as provided in (S) 1.103-15AT(d)(6) of the Treasury
Regulations with respect to the purchase of obligations of the United
States Treasury, at no time shall any of the gross proceeds of the Bonds
be invested in (A) nonpurpose obligations having a purchase price which is
not equal to the fair market value of comparable obligations or producing
a yield which is not equal to the fair market yield of comparable
obligations, or (B) in any other manner resulting in a "prohibited payment"
(within the meaning of (S) 1.103-15AT(d)(6) of the Treasury Regulations) of
any portion of the Rebate Amount, directly or indirectly, to a party other
than the United States.
(c) The terms "bond year", "debt service", "gross proceeds", "nonpurpose
obligations", and "yield" shall have the meanings set forth in Section 148 of
the Code and Treasury Regulation (S) 1.103-15AT(b), and the term "bona fide debt
service fund" shall have the meaning set forth in Treasury Regulation
(S) 1.103-13(b)(12).
(d) No provision of this Agreement shall be construed to impose upon the
Trustee any obligation or responsibility for compliance with arbitrage
regulations.
Section 6.11 Removal and Substitution of Portions of Project. The Issuer
------------------------------------------------
shall not be under any obligation to renew, repair or replace any inadequate,
obsolete, worn out, unsuitable, undesirable, inappropriate or unnecessary items
comprising the Project. If the Company, in its sole discretion, determines that
any such items have become inadequate, obsolete, worn out, unsuitable,
undesirable, inappropriate or unnecessary for its purposes at such time, the
Company may, without any responsibility or accountability to the Issuer or the
Trustee therefor, remove such items from the Project Site and (on behalf of the
Issuer) sell, trade in, or otherwise dispose of them (as a whole or in part)
provided that the Company shall either:
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<PAGE>
(a) substitute (either by direct payment of the costs thereof or by
advancing to the Issuer the moneys necessary therefor) and install other
machinery, equipment or related property having equal or greater utility
(but not necessarily having the same function or value) in the operation of
the Project as a solid waste disposal or pollution control facilities
(provided such removal and substitution shall not impair operating unity),
all of which substituted machinery, equipment or related property shall
become a part of the Project; or
(b) not make any such substitution and installation, provided (i)
that in the case of the sale of any such machinery, equipment or related
property to anyone other than itself or in the case of the scrapping
thereof, the Company shall pay into the Bond Fund the greater of the
proceeds from such sale, the scrap value thereof or the original cost
thereof less depreciation in accordance with generally accepted accounting
principles, as the case may be, (ii) that in the case of the trade-in of
such machinery, equipment or related property for other machinery,
equipment or related property not to be installed as a part of the
Project, the Company shall pay into the Bond Fund the amount of the greater
of the credit received by it in such trade-in or the original cost thereof
less depreciation in accordance with generally accepted accounting
principles, and (iii) that in the case of the sale of any such machinery,
equipment or related property to the Company or in the case of any other
disposition thereof, the Company shall pay into the Bond Fund an amount
equal to the original cost thereof less depreciation at rates calculated in
accordance with generally accepted accounting principles.
The removal of any portion of the Project pursuant to the provisions of this
Section shall not entitle the Company to any diminution in or postponement or
abatement of the rents payable under Section 5.3.
The Company shall promptly report to the Trustee each such removal,
substitution, sale, trade-in or other disposition which, together with other
prior unreported dispositions, in the aggregate results in proceeds under this
Section of $100,000 or more and shall pay to the Trustee such amounts as are
required by the provisions of the preceding subsection (b) of this Section to be
paid into the Bond Fund promptly after the sale, trade-in or other disposition
requiring such payment. The Company shall not remove or permit the removal of
any item constituting the Project except in accordance with the provisions of
this Section.
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<PAGE>
The Company shall deliver to the Issuer appropriate documents conveying to
the Issuer title to any machinery, equipment or related property installed or
placed at the Project Site pursuant to this Section, and upon the request of the
Company, the Issuer shall deliver, and cause or direct the Trustee to deliver,
to the Company appropriate documents conveying to the Company title to any
property removed from the Project Site pursuant to this Section.
Section 6.12 Taxes, Other Governmental Charges and Utility Charges. The
-----------------------------------------------------
Company agrees to pay and discharge all lawful real estate taxes, personal
property taxes, water charges, sewer charges, assessments (including, but not
limited to, special assessments for public improvements or benefits for which
the Company would have otherwise have been liable had it in fact been the owner
of the Project) and all other lawful governmental taxes, impositions and charges
of every kind and nature, ordinary and extraordinary, general or special,
foreseen or unforeseen, whether similar or dissimilar to any of the foregoing,
and all applicable interest and penalties thereon, if any, which at any time
during the term of this Agreement shall be or become due and payable by the
Issuer or the Company and which shall be lawfully levied, assessed or imposed
(a) upon or with respect to, or shall be or become liens upon, the
Project or any portion thereof or any interest of the Issuer or the Company
therein or under this Agreement;
(b) upon or with respect to the income or profits of the Issuer from
the Project or under this Agreement;
(c) upon or with respect to the possession, operation, management,
maintenance, alterations, repair, rebuilding, use or occupancy of the
Project or any portion thereof; or
(d) upon this transaction or any document to which the Issuer or the
Company is a party creating or transferring an interest or an estate in the
Project;
under or by virtue of any present or future law, statute, ordinance, regulation
or other requirement of any governmental authority, whether federal, state,
county, city, municipal, school or otherwise.
The Company shall, at its sole cost and expense, procure or cause to be
procured any and all necessary building permits, other permits, licenses and
other authorizations required for the
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lawful and proper construction, use, occupation, operation and management of the
Project. The Company also agrees to pay or cause to be paid all lawful charges
for gas, water, sewer, electricity, light, heat, power, telephone and other
utility and service used, rendered or supplied to, upon or in connection with
the Project and the Issuer will cooperate with the Company in securing such
permits, licenses and authorizations.
The Company may, at its own expense and in its own name and behalf or in
the name and behalf of the Issuer, in good faith contest any such taxes,
assessments and other charges and, in the event of any such contest, may permit
the taxes, assessments and other charges so contested to remain unpaid during
the period of such contest and any appeal therefrom. The Issuer shall cooperate
fully with the Company in any such contest. If the Company shall fail to pay any
of the foregoing items required by this Section to be paid by the Company, the
Issuer or the Trustee may (but shall be under no obligation to) pay the same,
and any amounts so advanced therefor by the Issuer or the Trustee shall become
an additional obligation of the Company to the one making the advancement, which
amounts, together with interest thereon at the rate of interest borne by the
Bonds from the date thereof, the Company agrees to pay.
Section 6.13 Insurance Required. Throughout the Lease Term the Company
------------------
shall keep the Project continuously insured against such risks as are
customarily insured against by business of like size and type (other than
business interruption insurance), paying as the same become due all premiums in
respect thereto. Notwithstanding the foregoing, the Company may elect to self-
insure.
Section 6.14 Application of Net Proceeds of Insurance. The Net Proceeds
----------------------------------------
of the insurance carried pursuant to the provisions of Section 6.13 shall be
applied as follows: (i) Net Proceeds of property and casualty insurance shall be
applied as provided in Section 7.1, and (ii) Net Proceeds of liability insurance
shall be applied toward extinguishment or satisfaction of the liability with
respect to which such insurance proceeds may be paid.
Section 6.15 Additional Provisions Respecting Insurance. All insurance,
------------------------------------------
if any, required in Section 6.13 shall be taken out and maintained in insurance
companies selected by the Company and may be written with deductible amounts
comparable to those on similar policies carried by other companies engaged in
businesses similar in size and type and other respects as the Company. The
insurance hereby required, if any, may be contained in blanket policies now or
hereafter maintained by the Company.
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Section 6.16 Investment Credit. The Issuer agrees that any investment
-----------------
tax credit with respect to the Project or any part thereof shall be made
available to the Company, and the Issuer will fully cooperate with the Company
in any effort by the Company to avail itself of any such investment tax credit,
but neither the Issuer nor the Trustee shall have any responsibility or
liability for the Company's failure to receive any such investment tax credit.
The Issuer agrees to cause the Trustee to cooperate in making any investment tax
credit available to the Company.
Section 6.17 Granting of Easements. If no Event of Default shall have
---------------------
happened and be continuing, the Company may at any time or times cause to be
granted easements (including party wall agreements), licenses, rights-of-way
(temporary or perpetual and including the dedication of public highways) and
other rights or privileges in the nature of easements with respect to any
property included in the Project and such grant will be free from any lien or
security interest created by this Agreement, or the Company may cause to be
released existing easements, licenses, rights-of-way and other rights or
privileges in the nature of easements, held with respect to any property
included in the Project with or without consideration and the Issuer agrees that
it shall execute and deliver and will cause and direct the Trustee to execute
and deliver any instrument necessary or appropriate to confirm and grant or
release any such easement, license, right-of-way or other right or privilege
upon receipt of:
(a) a copy of the instrument of grant or release, and
(b) a written application signed by the president or any vice
president of the Company requesting the execution and delivery of such
instrument and stating
(i) that such grant or release is not detrimental to the proper
conduct of the business of the Company, and
(ii) that such grant or release will not impair the effective use
or interfere with the operation of the Project.
Section 6.18 Release of Certain Land. Notwithstanding any other
-----------------------
provision hereof, the parties hereto reserve the right to amend this Agreement
at any time and from time to time by mutual agreement for the purpose of
effecting the release of and removal of
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(a) any unimproved part of the Project Land (on which none of the
components comprising the Project is located but on which parking,
transportation or utility facilities may be located) on which the Issuer
proposes to construct improvements for lease or sale to another person or
persons under another and different agreement, or
(b) any part of the Project land with respect to which the Issuer
proposes to grant an easement or convey a fee, interest or other title to
a railroad or other public or private carrier or to any public utility or
public body in order that transportation facilities or services by rail,
water, road or other means or utility services for the Project may be
provided, increased or improved; provided, that if at the time any such
amendment is made any of the Bonds are outstanding, there shall be
deposited with the Trustee the following:
(i) a copy of such amendment as executed;
(ii) a resolution of the Issuer (A) stating that the Issuer is
not in default under any of the provisions hereof or of the Indenture
and that the Company is not to the knowledge of the Issuer in default
under any of the provisions hereof, (B) giving an adequate legal
description of that portion of the Project Land to be released, (C)
stating the purpose for which the Issuer desires the release, (D)
stating that the improvements which will be constructed or the
facilities and services which will be provided, increased or improved
will be such as will promote at least one of the public purposes of
the Issuer and (E) requesting such release;
(iii) a certificate of an officer of the Company approving such
amendment together with an officer's certificate stating that the
Company is not in default under any of the provisions hereof;
(iv) a copy of the agreement between the Issuer and such other
person wherein the Issuer agrees to construct improvements on the
portion of the Project Land so requested to be released and agrees to
lease or sell the same to such other person, and wherein such other
person agrees to lease or purchase the same from the Issuer, or a copy
of the instrument granting the easement or conveying the title or
other interest to a railroad, public utility or public body; and
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(v) a certificate of an Authorized Company Representative dated
more than sixty (60) days prior to the date of such amendment and
stating that, in the opinion of the person signing such certificate,
(A) the portion of the Project Land so proposed to be released is
necessary or desirable for railroad, utility services or roads to
benefit the Project or is not otherwise needed for the operation of
the Project for the purposes hereinabove stated, and (B) the release
so proposed to be made will not impair the usefulness of the Project
as a facility of a type which the Issuer is authorized to acquire
under the laws pursuant to which the Issuer then exists, and will
not destroy the means of ingress thereto and egress therefrom.
No release effected under this Section shall entitle the Company to any
diminution in or postponement or abatement of the rents payable under Section
5.3.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
------------------------------------
Section 7.1 Damage and Destruction. Unless the Company shall have
----------------------
elected to exercise its option to prepay all rentals or purchase the Project
pursuant to the provisions of Section 8.4, if prior to payment in full of the
Bonds the Project is destroyed (in whole or in part) or is damaged by fire or
other casualty, the Company, or the Issuer at the Company's direction, (i) shall
promptly replace, repair, rebuild or restore the property damaged or destroyed
in a manner which provides facilities generally comparable to the facilities as
existed prior to the event causing such damage or destruction, with such
changes, alterations and modifications (including the substitution and addition
of other property) as may be desired by the Company and as will not impair the
operation of the Project as solid waste disposal facilities, and (ii) shall
apply for such purpose so much as may be necessary of any Net Proceeds of
insurance resulting from claims for such losses, as well as any additional
moneys of the Company necessary therefor. All Net Proceeds of insurance
resulting from claims for such losses shall be paid to the Company. If said Net
Proceeds are not sufficient to pay in full the costs of such replacement,
repair, rebuilding or restoration, the Company shall nonetheless complete the
work thereof and shall pay that portion of the costs thereof in excess of the
amount of said Net Proceeds. The Company shall not, by reason of the payment of
such excess costs, be entitled to any reimbursement from the Issuer or any
abatement, diminution or postponement of the amounts payable under Section 5.3.
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Section 7.2 Condemnation. Unless the Company shall exercise its
option to prepay all rentals or purchase the Project pursuant to the provisions
of Section 8.4, if the title in and to, or the temporary use of, the Project or
any part thereof shall be taken under the exercise of the power of eminent
domain by any governmental body or by any other person acting under governmental
authority, the Company shall be obligated to continue to pay the rents specified
in Section 5.3. The Issuer and the Company shall cause the Net Proceeds received
by them or any of them, from any award made in such eminent domain proceeding,
to be paid to and held by the Company and applied in one or more of the
following ways:
(a) the restoration of the Project to substantially the same condition
as existed prior to the exercise of such power of eminent domain;
(b) the acquisition, by construction or otherwise, of other solid
waste disposal facilities suitable for the Company's operations at the
Project Site (which solid waste disposal facilities will be deemed a part
of the Project and available for use by the Company and will be leased to
the Company hereunder without the payment of any rents other than herein
provided to the same extent as if such other improvements were specifically
described herein); provided, that such solid waste disposal facilities will
be acquired subject to no liens, security interests or encumbrances prior
to the lien or security interest afforded by this Agreement and the
Indenture, other than Permitted Encumbrances;
(c) redemption of the Bonds in accordance with the provisions of
Article VIII of the Indenture; provided, that no part of any such
condemnation award may be applied for such redemption unless (1) all of the
Bonds are to be redeemed in accordance with the Indenture upon exercise of
the option to purchase the Project pursuant to the provisions of Section
8.01(a) of the Indenture, or (2) if less than all of the Bonds are to be
redeemed, the Company shall furnish to the Issuer and the Trustee a
certificate of the Authorized Company Representative stating (i) that the
property forming a part of the Project that was taken in such eminent
domain proceeding is not essential to the Company's use or occupancy of the
Project, (ii) that the Project has been restored to a condition
substantially equivalent to its condition prior to the taking in such
eminent domain proceeding, or (iii) that solid waste disposal facilities
have been acquired which are suitable for the Company's operations at the
Project as contemplated by the foregoing subsection (b) of this Section; or
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(d) payment into the Bond Fund of an amount sufficient to provide for
payment in full of the Bonds.
The Issuer shall cooperate fully with the Company in the handling and
conduct of any prospective or pending eminent domain proceeding with respect to
the Project or any part thereof and shall, to the extent it may lawfully do so,
permit the Company to litigate in any such proceeding in the name and on behalf
of the Issuer. In no event will the Issuer voluntarily settle, or consent to the
settlement of, any prospective or pending eminent domain proceeding with respect
to the Project or any part thereof without the written consent of the Company.
Section 7.3 Condemnation of Company-Owned Property. The Company shall be
--------------------------------------
entitled to the proceeds of any condemnation award or portion thereof made for
damages to or taking of its own property or for damages on account of the taking
of or interference with the Company's rights to possession, use or occupancy of
the Project.
ARTICLE VIII
ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING;
REDEMPTION; RENT PREPAYMENT AND ABATEMENT;
OPTION AND OBLIGATION TO PURCHASE PROJECT;
OPTION TO EXTEND TERM OF AGREEMENT
---------------------------------------------
Section 8.1 Assignment and Subleasing. This Agreement may be assigned by
-------------------------
the Company and the Project may be subleased by the Company without the
necessity of obtaining the consent of the Issuer or the Trustee, subject,
however, to the following conditions:
(a) no assignment (other than pursuant to Section 6.5) or sublease shall
relieve the Company from primary liability for any of its obligations hereunder,
and if any such assignment occurs, the Company shall continue to remain
primarily liable for the payment of the rents specified in Section 5.3 and for
performance and observance of the other agreements on its part herein provided
to be performed and observed by it; and
(b) the Company shall, within 30 days after the delivery thereof, furnish
or cause to be furnished to the Issuer and to the Trustee a true and complete
copy of each such assignment or sublease, as the case may be, together with any
instrument of assumption.
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Section 8.2 Pledge Under Indenture. Under the terms of the Indenture, the
----------------------
Issuer shall assign and create a security interest with respect to its interest
in, and pledge all rents, revenues and receipts arising out of or in connection
with its ownership of, the Project to the Trustee, all as security for the
payment of the principal of and interest on the Bonds, but the Indenture and
said assignment and pledge shall be subject and subordinate to this Agreement.
Section 8.3 Restrictions on Sale of Project by Issuer. The Issuer agrees
-----------------------------------------
that, except as set forth in Section 8.2, it shall not (a) sell, assign,
transfer or convey the Project during the Lease Term, (b) create or suffer to be
created any assignment, pledge, charge, lien or encumbrance on the Trust Estate,
or (c) take any other action which might reasonably be construed as tending to
cause or induce the levy or assessment of ad valorem taxes on the Project or on
its title in and to the Project. If the laws of the State at the time permit
such action to be taken, nothing contained in this Section shall prevent the
consolidation of the Issuer with, or the merger of the Issuer into, or the
transfer of the Project as an entirety to, any public corporation whose property
and income are not subject to taxation and which has corporate authority to
carry on the business of owning and leasing the Project; provided (i) that no
such action shall be taken without the prior written consent of the Company,
unless such action shall be required by law, and (ii) that upon any such
consolidation, merger or transfer, the due and punctual payment of the principal
of and the interest on the Bonds, and the due and punctual performance and
observance of all the agreements hereof to be kept and performed by the Issuer,
shall be expressly assumed in writing by the corporation resulting from such
consolidation or surviving such merger or to which the Project shall be
transferred as an entirety.
Section 8.4 Prepayment of Rents; Option to Purchase Project; Obligation to
--------------------------------------------------------------
Purchase Project.
- ----------------
(a) The Company shall have the option to prepay any part of the rents
payable under Section 5.3, and the Issuer agrees that the Trustee may
accept such prepayment when the same is tendered by the Company, upon
giving written notice to the Trustee at least four Business Days prior to
the thirtieth day before the date set for redemption, to the extent that
the Bonds are subject to optional redemption in part pursuant to Section
8.01(a) of the Indenture.
(b) The Company shall have the option to purchase the Project by
prepaying all of the rents payable under Section
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5.3, and the Issuer agrees that the Trustee may accept such prepayment when
the same is tendered by the Company, upon giving written notice to the
Trustee at least four Business Days prior to the thirtieth day before the
date set for redemption, to the extent that the Bonds are subject to
optional redemption in whole pursuant to Section 8.01(a) of the Indenture.
(c) The Company shall be obligated to prepay a portion of the rentals
payable under Section 5.3, and the Issuer agrees that the Trustee may
accept such prepayment when the same is tendered by the Company, to the
extent that the bonds are subject to mandatory redemption in part pursuant
to Section 8.01(b) of the Indenture.
(d) The Company shall be obligated to purchase the Project by
prepaying all of the rents payable under Section 5.3, or to prepay all of
the rents payable under Section 5.3 without purchasing the Project, and the
Issuer agrees that the Trustee may accept such prepayment when the same is
tendered by the Company, to the extent that Bonds are subject to mandatory
redemption in whole pursuant to Section 8.01(b) of the Indenture.
(e) The Company shall have the option to purchase the Project by
providing for payment of the Bonds pursuant to Article XV of the Indenture.
(f) The Company shall be obligated to purchase, and the Issuer agrees
to sell, the Project for ten dollars ($10.00) at the expiration of the
Lease Term, following payment in full of the Bonds.
All prepaid rents shall be used for the redemption or purchase of Bonds in the
manner and to the extent provided in the Indenture. The options granted to the
Company pursuant to this Section shall be and remain prior and superior to the
Indenture and may be exercised whether or not there exists an Event of Default
hereunder, provided that the existence of such Event of Default will not result
in nonfulfillment of any condition to the exercise of any such option. Upon the
expiration of the Lease Term, or the sooner termination of the Lease Term, the
Issuer will, upon receipt of evidence provided by the Trustee satisfactory to it
that none of the Bonds remain outstanding under the Indenture, deliver to the
Company documents conveying to the Company good and marketable fee simple title
in and to the Project, as the Project then exists, subject to the following: (a)
those liens, security interests and encumbrances (if any) to
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which said title in and to the Project was subject when conveyed to the Issuer,
(b) those liens, security interests and encumbrances created by the Company or
to the creation or suffering to which the Company consented, (c) those liens,
security interests and encumbrances resulting from the failure of the Company to
perform or observe any of its agreements contained herein, (d) Permitted
Encumbrances other than the Indenture, and (e) any right and title of any
condemning authority.
Section 8.5 Rent Abatements If Bonds Paid Prior to Maturity. If at
-----------------------------------------------
any time the moneys in the Bond Fund are sufficient to retire, in accordance
with the terms of the Indenture, all of the outstanding Bonds and to pay all
fees and charges of the Trustee due or to become due through the date on which
the last of the Bonds is to be retired, under circumstances not resulting in
termination of the Lease Term, and if the Company is not at the time otherwise
in default hereunder, the Company shall be entitled to use and occupy the
Project from the date on which such moneys are in the Bond Fund to and including
midnight on December 1, 2023, without the payment of rent during that interval
(but otherwise on the terms and conditions hereof).
Section 8.6 References to Bonds Ineffective After Bonds Paid. Upon
------------------------------------------------
payment in full of the Bonds and all fees and charges of the Trustee, all
references herein to the Bonds and the Trustee shall be ineffective and neither
the Trustee nor the holders of any of the Bonds shall thereafter have any rights
hereunder saving and excepting those that shall have theretofore vested.
Reference is hereby made to Section 15.01 of the Indenture which sets forth the
conditions upon the existence or occurrence of which payment in full of the
Bonds shall be deemed to have been made.
Section 8.7 Option to Extend. The Company shall have, and is hereby
----------------
granted, the option to extend the term of this Agreement for an additional term
ending on December 1, 2028; provided, however, that such option shall not be
exercisable at any time an Event of Default shall have occurred and be
continuing. If at the end of the Lease Term provided for in Section 5.1 hereof,
no Event of Default shall have occurred and be continuing, the Company shall be
deemed to have exercised such option to extend the term of this Agreement unless
it notifies the Board and the Trustee in writing to the contrary at least 30
days prior to the end of such Lease Term. For and during such additional term,
the Company will pay to the Board an annual rent of $100, payable in advance on
December 1, 2023 and on each December 1 thereafter (except December 1, 2028, on
which date such additional term shall end as aforesaid, but otherwise all
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the terms and conditions of this Agreement shall apply during such additional
term; except that the provisions of Sections 7.1 and 7.2 shall not apply and
except further that the Company shall not be required to carry any insurance for
the benefit of the Trustee, but shall be required to carry insurance under
Section 6.13 for the benefit of the Board as its interest may appear. In the
event the Company exercises the option to extend the Lease Term granted in this
Section 8.7, it shall, at any time after commencement of such additional term,
have the right to terminate this Agreement upon giving to the Board notice in
writing not less than 10 days prior to the date of termination. At any time
during, or at the end of, the extended Lease Term provided for in this Section
8.7, the Company may purchase the Project for $100.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
------------------------------
Section 9.1 Events of Default. Each of the following shall be an
-----------------
"Event of Default" under this Agreement:
(a) An "Event of Default" occurs and is continuing under the
Indenture or under either of the Guarantee Agreements.
(b) Failure by the Company to observe and perform any covenant,
condition or agreement on its part to be observed or performed hereunder,
for a period of ninety (90) days after written notice, specifying such
failure and requesting that it be remedied, is given to the Company by the
Issuer or the Trustee; provided, however, if the failure stated in the
notice cannot be remedied within such period, it shall not constitute an
"Event of Default" if corrective action is instituted by the Company within
the applicable period and diligently pursued until the default is
corrected.
(c) Either Mead or the Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of it or of all or a substantial part of its
property; (ii) admit in writing its inability, or be generally unable, to
pay its debts as such debts become due, (iii) make a general assignment for
the benefit of its creditors, (iv) commence a voluntary case under the
Federal Bankruptcy Code (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, (vi) fail to controvert in a timely or appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under said Federal Bankruptcy Code, or (vii) take any action for the
purpose of effecting any of the foregoing.
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<PAGE>
(d) A proceeding or case shall be commenced, without the application
or consent of either Mead or the Company, in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution,
winding-up, or composition or adjustment of debts, of either Mead or the
Company, (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of either Mead or the Company or of all or any substantial part
of any of their assets, or (iii) similar relief in respect of the Company
under any law relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or any order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and
in effect, for a period of sixty (60) days from commencement of such
proceeding or case or the date of such order, judgment or decree, or an
order the Company shall be entered in an involuntary case under said
Federal Bankruptcy Code.
(e) The dissolution or liquidation of the Company except as may be
permitted by the terms of Section 6.5.
The foregoing provisions of Section 9.1(b) are subject to the limitation that,
if by reason of force majeure the Company is unable in whole or in part to carry
-------------
out its agreements herein contained other than those set forth in Section 5.3
hereof, an Event of Default shall not be deemed to have occurred during the
continuance of such inability. The term "force majeure" as used herein shall
mean the following: acts of God; strikes; lockouts or other industrial
disturbances; acts of public enemies; orders of any kind of the government of
the United States or of the State of Alabama or any of their departments,
agencies or officials or of any civil or military authority; insurrections;
riots; epidemics; landslides; lightning; earthquakes; fire; hurricanes;
tornadoes; storms; floods; washouts; droughts; arrests; restraints of government
and people; civil disturbances; explosions; breakage or accident to machinery,
transmission lines, pipes or canals; partial or entire failure of utilities; or
any other cause or event not reasonably within the control of the Company. The
Company agrees, however, to remedy to the extent practicable with all reasonable
dispatch the effects of any force majeure preventing the Company from carrying
out its agreements; provided that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of the Company,
and the Company shall not be required to make settlement of strikes, lockouts
and other industrial disturbances by acceding to the demands of the opposing
party or parties when such course is in the judgment of the Company unfavorable
to the Company.
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<PAGE>
Section 9.2 Remedies on Default. Whenever any Event of Default shall
-------------------
have occurred and be continuing, the Issuer may, in addition to any other remedy
now or hereafter existing at law, in equity or by statute, take either or both
of the following remedial steps:
(a) By written notice to the Company, the Issuer may declare a11
amounts payable hereunder to be immediately due and payable, whereupon
the same shall become immediately due and payable;
(b) The Issuer may take whatever action at law or in equity may appear
necessary or desirable to collect the amounts referred to in (a) above then
due and thereafter to become due, or to enforce performance and observance
of any obligation, agreement or covenant of the Company under this
Agreement.
Any amounts collected pursuant to action taken under this Section 9.2 shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if the Bonds have been fully paid (or provision for payment
thereof has been made in accordance with the provisions of the Indenture) and
the fees and expenses of the Trustee and the Paying Agents and all other amounts
required to be paid under the Indenture shall have been paid, to the Company.
Section 9.3 Agreement to Pay Attorneys' Fees and Expenses. In the
---------------------------------------------
event the Company should breach any of the provisions of this Agreement and the
Issuer or the Trustee should employ attorneys or incur other expenses for the
collection of amounts payable hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Company herein
contained, the Company agrees that on demand therefor it will pay to the Issuer
or the Trustee (as the case may be) the reasonable fees of such attorneys and
such other reasonable expenses so incurred by the Issuer.
Section 9.4 No Additional Waiver Implied by One Waiver. In the event
------------------------------------------
any agreement contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 9.5 Notice of Default. The Company shall notify the Trustee
-----------------
and the Issuer of any Event of Default hereunder or under the Indenture or
either of the Guarantee Agreements promptly upon its acquiring knowledge
thereof.
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ARTICLE X
MISCELLANEOUS
-------------
Section 10.1 Notices. All notices, certificates or communications
-------
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by registered or certified mail, postage prepaid, addressed as
follows: if to the Issuer, c/o Smith & Smith, 1503 Broad Street, Phenix City,
Alabama 36867, Attention: Chairman; if to the Company, at Mead World
Headquarters, Courthouse Plaza Northeast, Dayton, Ohio 45463, Attention:
Treasurer; and if to the Trustee, at 5 Hanover Square, 14th Floor, New York,
New York, 10043, Attention: Corporate Trust Department. A duplicate copy of each
notice, certificate or other communication given hereunder by either the Issuer
or the Company to the other shall also be given to the Trustee. The Issuer, the
Company and the Trustee may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.
Section 10.2 Binding Effect. This Agreement shall inure to the benefit
--------------
of and shall be binding upon the Issuer, the Company and their respective
successors and assigns, subject, however, to the limitations contained in
Section 6.5 hereof.
Section 10.3 Severability. In the event any provision of this
------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 10.4 Amounts Remaining in the Bond Fund. Any amounts remaining
----------------------------------
in the Bond Fund upon termination of this Agreement shall, to the extent
provided in the Indenture, belong to and be paid to the Company by the Trustee.
Section 10.5 Amendments. This Agreement may not be terminated except
----------
in accordance with the provisions hereof and may not be amended or supplemented
except by a written agreement in accordance with Article XIV of the Indenture
and signed by the parties hereto. In any event, prior notice of any proposed
amendment or supplement must be given to the Trustee.
Section 10.6 Execution in Counterparts. This Agreement may be executed
-------------------------
in several counterparts, each of which shall be an original and all of which
shall constitute but one and same instrument.
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<PAGE>
Section 10.7 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with laws of the State, except that the rights,
limitations of rights, immunities, duties and obligations of the Trustee shall
be governed by and construed in accordance with the laws of the State of New
York.
Section 10.8 Captions. The captions or headings in this Agreement are
--------
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Agreement.
Section 10.9 Recordinq of Aqreement. This Agreement and every
----------------------
assignment and modification hereof shall be recorded in the Office of the Judge
of Probate of Russell County, Alabama, or in such other office as may be at the
time provided by law as the proper place for such recordation.
Section 10.10 Net Lease. This Agreement shall be deemed a "net lease,"
---------
and the Company shall pay absolutely net during the Lease Term the rents
specified herein, without abatement, deduction or set-off other than those
herein expressly provided.
IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed in their respective corporate names and their
respective corporate seals to be hereunto affixed and attested by their duly
authorized officers, all as of the date first above written.
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX
CITY, ALABAMA
(Corporate Seal)
By: /s/ Kenneth A. Roberts
----------------------
Chairman
Attest:
/s/ Carlotta Waldrop
- --------------------
Secretary
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<PAGE>
MEAD COATED BOARD, INC.
(Corporate Seal)
By: /s/ W. D. BLOEBAUM, JR.
-----------------------
Title: TREASURER
Attest:
/s/ JEFFREY L. HAYMAN
- ---------------------
Title: ASSISTANT SECRETARY
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<PAGE>
STATE OF ALABAMA :
: ss.
COUNTY OF RUSSELL :
On this 20th day of December, 1988, before me appeared Kenneth
Roberts, to me personally known, who being by me duly sworn, did say that he is
Chairman of The Industrial Development Board of the City of Phenix City, Alabama
and that the seal affixed to the foregoing Lease Agreement is the sale of The
Industrial Development Board of the City of Phenix City, Alabama and that the
foregoing Lease Agreement was signed and sealed on behalf of The Industrial
Development Board of the City of Phenix City, Alabama, and the said Chairman
acknowledges the execution of the foregoing Lease Agreement as the free act and
deed of The Industrial Development Board of the City of Phenix City, Alabama.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/
--------------------------------
Notary Public
[NOTARIAL SEAL] My Commission Expires: 2/25/92
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<PAGE>
STATE OF OHIO
COUNTY OF MONTGOMERY
On this 22nd day of December, 1988, before me appeared W.D. Bloebaum,
Jr. to me personally known, who, being by me duly sworn, did say that he is
Treasurer of Mead Coated Board, Inc., a Delaware corporation, qualified to do
business in the State of Alabama, and that the seal affixed to the foregoing
Lease Agreement is the seal of Mead Coated Board, Inc., and that the foregoing
Lease Agreement was signed and sealed on behalf of Mead Coated Board, Inc. by
authority of its board of directors, and the said Treasurer acknowledges the
execution of the foregoing Lease Agreement as the free act and deed of Mead
Coated Board, Inc.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Robert A. Selak
------------------------------
Notary Public
[NOTARIAL SEAL] My Commission Expires:
ROBERT A. SELAK, Attorney at Law
Notary Public State of Ohio
My Commission has no Expiration Date
Section 147.03 O. R. C.
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<PAGE>
EXHIBIT A
PROJECT LAND
The Project Land includes the following property:
WASTE WOOD CONVEYOR TO SCALPER (C-28506) AREA AND
-------------------------------------------------
TRUCK DUMPER (C-28505) AREA
---------------------------
All that portion of land and structures lying 9' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00,
E 234,500.00, of the West Zone of the State of Georgia Coordinate System;
and lying in Section 28, T 14 N, R 30 E, County of Russell, State of
Alabama; thence N 31(degrees) 59' 52" E, 291.25' to the point of beginning;
thence S 0(degrees) 00' W, 231.00' to a point on the north side of a
rectangular area (Truck Dumper) bounded by a N 792,366.0, N 792,326.5, and
E 234,642.0, and E 234,765.5, said rectangular area being the point of
ending; said land being 0.21 (plus or minus) acres;
NO. 1 BARK TRANSFER CONVEYOR (C-28503) AREA,
--------------------------------------------
NO. 2 BARK TRANSFER CONVEYOR (C-28504) AREA,
--------------------------------------------
BARK HOG STRUCTURE (C-28534) AREA
---------------------------------
AND REFUSE CONVEYOR SCALPER (C-28533) AREA
------------------------------------------
All that portion of land and structures lying 9' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00,
E 234,500.00, of the West Zone of the State of Georgia Coordinate System;
and lying in Section 28, T 14, N, R 30 E, County of Russell, State of
Alabama; thence N 31(degrees) 59' 52" E, 291.25' to the point of beginning;
thence S 8(degrees) 20' 17" W, 284.46' to the center of a rectangular area
which is
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<PAGE>
parallel to last said course 22' north to south by 15' east to west;
thence S 81(degrees) 39' 40" E, 843.58' to a parallel rectangular area
(Bark Hog Structure) 26.00' north to south (10.00' lying south of last
said course) by 37.50'; thence continue along last said course 27.00';
thence N 45(degrees) 07' 38" E, 350.71' to the point of ending; said land
being 0.63 + acres;
NO. 2 TURBINE AREA
------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19,
E 233,250.02 of the West Zone of the State of Georgia Coordinate System;
thence S 25(degrees) 19' 16" E, 663.98' to the point of beginning
(N 792,550.0 E 233,534.0); thence S 0(degrees) 00' W, 50.00'; thence
N 90(degrees) 00' E, 121.00'; thence N 0(degrees) 00' W, 50.00'; thence
N 90(degrees) 00' W, 121.00' to the point of beginning; said land being
0.14 (plus or minus) acres;
SANITARY PACKAGE TREATMENT PLANT AREA
-------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00,
E 234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48(degrees) 35' 13" W, 1186.73' to the point of beginning
(N 791,565.0. E 233,610.0); thence S 0' 00" W, 12.00'; thence
N 90(degrees) 00' W, 64.00'; thence N 0' 00" W, 12.00'; thence N 90' 00"
E, 64.00' to the point of beginning; said land being 0.02 (plus or minus)
acres; and
NO. 3 BARK BOILER AREA
----------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19,
E 233,250.02 of the West Zone of the State of Georgia Coordinate System;
thence S 29(degrees) 39' 25" E, 461.76' to the point of beginning
(N 792,748.92, E 233,478.50); thence N 90(degrees) 00' E, 73.57'; thence
S 0(degrees) 00' W, 34.50'; thence N 90(degrees)
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<PAGE>
00' W, 11.82'; thence S 0(degrees) 00' W, 143.17'; thence N 90(degrees)
00' W, 90.62'; thence N 0(degrees) 00" W, 83.08'; thence N 90(degrees)
00" E, 28.87'; thence N 0(degrees) 00' W, 94.59' to the point of beginning;
said land being 0.32 (plus or minus) acres;
(collectively, the "Unimproved Land"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (the 1977 Land less and except the 1988 Land) in order
to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications,
A-48
<PAGE>
instrumentation and control, and other similar facilities to the Unimproved
Land and the Project including, without limitation, the right to make
connections with machinery, equipment, pipes, conduits and wires,
structures and other improvements and appurtenances thereto, on the Board
Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
A-49
<PAGE>
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the
Unimproved Land in respect of any additional improvements constructed
adjacent to the Unimproved Land, as long as any such additional
improvements remain standing, including without limitation the rights of
lateral or party wall support, and to connect such additional improvements
to any structure or any improvements on the Unimproved Land.
A-50
<PAGE>
EXHIBIT "B"
to
Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of December 1, 1988
PROJECT SUMMARY
Mead Coated Board, Inc. (the "Company") presently operates a linerboard
mill (the "Mill") in Russell County, Alabama, near the City of Phenix City,
Alabama. In connection with an expansion of the Mill, the Company is undertaking
the acquisition, construction and installation of a wood refuse burning boiler
which will burn bark, sawdust, fines and other waste, including fuel wood chips,
derived from the cutting and processing of trees ("wood waste") to produce
steam for use in the manufacturing process at the Mill and certain other sewage
facilities and solid waste disposal facilities.
The "Project" will consist of six major subsystems -- a wood waste
receiving, storing and handling system; a wood waste fired boiler (the "Boiler")
and auxiliary equipment, including facilities to control air pollution in
connection with the operation of the Boiler; modifications to two existing wood
waste boilers; an ash disposal system to dispose of bottom ash from the Boiler;
a system to dispose of sludge and other solid waste generated at the Mill; and a
sanitary sewage treatment system.
The Boiler will dispose of wood waste material generated by the Company in
its operations and wood waste which the Company will obtain from sawmills and
other wood users in the area surrounding the Mill which generate the wood waste
in the course of processing wood products. The wood waste will be brought to the
Mill by the outside suppliers and unloaded by means of an hydraulic truck dumper
which is included as part of the Project. The truck dumper will discharge the
wood waste into a live bottom hopper from which it will be delivered onto a
transfer conveyor. The transfer conveyor discharges the wood waste to a rotary
disc screen for the removal of oversized particles. All oversized material
rejected by the rotary disc screen will pass through a bark hog for size
reduction and rejoin the wood waste which
B-51
<PAGE>
passes through said screen on a storage conveyor which will discharge such
material into a wood waste storage area. An electromagnet will be installed
ahead of the bark shredder to remove tramp metal from the wood waste in order
to prevent damage to the bark hog.
Wood waste will be reclaimed from the storage area and placed on a reclaim
conveyor which will discharge it onto a transfer conveyor. The transfer conveyor
will be equipped with an electromagnet to again remove tramp metal and prevent
damage to the boiler fuel feed system and will also be equipped with a
weightometer to measure fuel usage.
From the transfer conveyor, the wood waste will be discharged onto an
existing reclaim conveyor to transfer the wood waste to the Boiler. The conveyor
will discharge the wood waste into a live bottom surge bin which will supply
fuel to the Boiler.
The wood waste Boiler will consist of a two drum bent tube type boiler with
necessary boiler fittings and trim, steel supporting structure, tile and
refractory, insulated steel casing, accessories, tubular air heater, pneumatic
wood refuse fuel burners, variable speed fuel feeders, forced draft fan, induced
draft fan, ductwork, combustion controls with a flame safety system,
instrumentation, enclosure building, and the necessary foundations, electrical
systems and insulation.
The Boiler will be specially designed and equipped to burn wood waste as
fuel. Special design features will include a stoker on which the wood waste will
be burned and by which the resulting ash will be discharged. In addition, the
Boiler will be designed to withstand the highly abrasive internal atmosphere
created by sand contained in wood waste.
The wood waste will be injected into the Boiler by means of airswept fuel
feeders through the wall of the Boiler. A portion of the wood waste will be
burned in suspension and the remainder and some of the ashes from the combustion
will fall onto the grate at the bottom of the boiler furnace. The grate is
equipped with a large number of small holes through which preheated air is
forced to aid combustion. Energy released through the combustion of the wood
waste will be used to generate steam for process use. Boiler exhaust gases are
used to preheat combustion air for improved fuel efficiency.
Electrical power generation (turbine generator) and distribution for the
solid waste disposal facilities is included in the Project.
B-52
<PAGE>
In order to meet air pollution control requirements, the Boiler will be
equipped with a multiple cyclone mechanical separator for removal of relatively
large particles entrained in the exhaust gases and an adjustable throat wet
venturi scrubber whereby water is injected into the boiler exhaust gas train to
wash entrained particulates from the gases.
Certain modifications will be made to two existing wood waste boilers,
including an upgrade of the existing boiler feedwater treatment system and an
upgrade of the distributed control system for the existing wood waste boilers.
Bottom ashes from the combustion process in the Boiler will accumulate on
the grate and will be discharged into an ash hopper for disposal by means of an
ash handling system. This system is a sluice system in which the ash will be
mixed with water and pumped to three ash ponds.
The sludge disposal system will dispose of sludge created in the treatment
of Mill effluent. The sludge from the primary effluent treatment system will
be pumped to a sludge mix tank before passing through a macerator to break up
oversized solid pieces. This primary sludge will then be combined with sludge
from the secondary effluent treatment system and pumped to two rotary thickeners
and two sludge presses to remove water. Chemicals will be added to the sludge
prior to the thickeners to aid in dewatering. After this treatment, the sludge
is then transported in specially-designed trucks to an existing landfill for
final disposal.
Sanitary waste will be collected and processed in a sanitary waste
treatment plant before discharge into the effluent treatment system.
B-53
<PAGE>
The estimated costs of the construction of the Project are as follows:
<TABLE>
<S> <C>
Wood waste handling system $ 3,621,270
Bark conveyors
Fines pneumatic conveyor system
Truck dumper and conveyor
Hog and screen system
Wood waste reclaimers
Reclaimed wood waste conveyors 1,133,753
New wood waste boiler
Boiler feedwater treatment system 1,322,546*
Boiler feedwater pumping system 637,493*
Removal and demolitional of
existing facilities 79,532
Distributed control system 712,000*
Boiler, including auxiliary equipment 21,220,250
Turbine generator 598,200*
Power distribution system 178,932*
Modifications to existing wood waste boilers
Upgrade boiler feedwater treatment system 182,150*
Upgrade existing wood waste boilers'
distributed control system 1,424,000
Ash handling system 200,000
Sludge disposal system (including sludge trucks) 2,969,417
Sanitary treatment system 427,524
Miscellaneous
Vendor representatives assisting in
installation 10,000
Indirect costs relating to turnkey contracts 3,652,123
Indirect costs relating to conventional contracts 2,197,687
Interest during construction
(net of anticipated investment earnings
of $1,400,000) 1,600,000
-----------
TOTAL QUALIFYING COSTS $42,166,877
Non-qualifying costs
Gas supply system and gas burners for
new wood waste boiler $ 520,005
New boiler feedwater treatment system 1,013,118
-----------
TOTAL COSTS $43,700,000
</TABLE>
* Allocated between qualifying and non-qualifying functions based on use.
B-54
<PAGE>
EXHIBIT "C"
REQUISITION AND CERTIFICATION
Request No._____ Date: __________
TO: Citibank, N. A., as Trustee
5 Hanover Square, 14th Floor
New York, New York 10043
Attention: Corporate Trust Department
The undersigned Authorized Company Representative designated pursuant
to the terms of a Lease Agreement, dated as of December 1, 1988 (the
"Agreement"), between and among The Industrial Development Board of the City of
Phenix City, Alabama, a public corporation created and existing under the laws
of the State of Alabama (the "Issuer"), and Mead Coated Board, Inc., a Delaware
corporation (the "Company"), hereby requests that there be paid from the
"Project Fund" (herein below described) the sum of $__________ and in that
connection, DOES HEREBY CERTIFY, as follows:
1. The requested payment has been properly incurred and is a proper
charge against The Industrial Development Board of the City of Phenix City,
Alabama Project Fund -- Mead Coated Board Project, 1988 and has not been
the basis of any previous withdrawal from said Project Fund.
2. Payment should be made to:
Name:
Address or Wire Instructions:
3. The purpose and circumstances of such obligation are as follows:
C-1
<PAGE>
4. Payment of such obligation will not result in less than 97% of
the total proceeds of the sale of the "Bonds" (defined in the Agreement)
(excluding amounts applied to pay costs of issuance of the Bonds) deposited
with the Project Fund expended as of the date hereof having been used to
pay "Exempt Costs" (as defined in the Agreement).
This______ day of _________, 19__.
MEAD COATED BOARD, INC.
By:
---------------------------------
Authorized Company Representative
C-2
<PAGE>
LEASE AGREEMENT
between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
Dated as of December 1, 1988
This Lease Agreement and all right, title and interest of The Industrial
Development Board of the City of Phenix City, Alabama in any rental payments and
other receipts and revenues derived under this Lease Agreement have been
assigned to AmSouth Bank N.A., as Trustee under the Trust Indenture, dated as of
even date herewith, from The Industrial Development Board of the City of Phenix
City, Alabama, which secures $85,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1988A.
This instrument prepared by:
Smith & Schnacke
A Legal Professional Association
2900 DuBois Tower
511 Walnut Street
Cincinnati, Ohio 45202
<PAGE>
LEASE AGREEMENT
---------------
TABLE OF CONTENTS
-----------------
(The Table of Contents for this Lease Agreement is for
convenience of reference only and is not intended to define,
limit or describe the scope or intent of any provisions of this
Lease Agreement.)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PARTIES
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION.................. 1
Section 1.1 Definitions............................................ 1
Section 1.2 Rules of Construction.................................. 5
ARTICLE II REPRESENTATIONS AND WARRANTIES......................... 6
Section 2.1 Representations and Warranties
by the Board........................................... 6
Section 2.2 Representations and Warranties
by the Company......................................... 8
ARTICLE III LEASING CLAUSES AND TITLE.............................. 10
Section 3.1 Lease of the Project................................... 10
Section 3.2 Warranty of Title...................................... 10
Section 3.3 Quiet Enjoyment........................................ 10
ARTICLE IV COMPLETION OF THE PROJECT FACILITIES;
ISSUANCE OF THE BONDS.................................. 11
Section 4.1 Agreement to Acquire, Construct and
Install the Project Facilities......................... 11
Section 4.2 Agreement to Issue Bonds; Application
of Bond Proceeds....................................... 12
Section 4.3 Company Required to Pay Notes
If Project Fund Insufficient........................... 12
Section 4.4 Board to Pursue Remedies
Against Suppliers, Contractors
and Subcontractors and Their
Sureties............................................... 12
Section 4.5 Issuance of Additional Bonds........................... 13
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE V EFFECTIVE DATE OF THIS AGREEMENT;
DURATION OF LEASE TERM; RENTAL
PROVISIONS................................................... 13
Section 5.1 Effective Date of This Agreement;
Duration of Lease Term....................................... 13
Section 5.2 Delivery and Acceptance of
Possession................................................... 13
Section 5.3 Rents and Other Amounts Payable.............................. 14
Section 5.4 Place of Rental Payments..................................... 15
Section 5.5 Obligations of Company Hereunder
Absolute and Unconditional................................... 15
Section 5.6 Company's Performance Under
Indenture.................................................... 16
ARTICLE VI MAINTENANCE, MODIFICATION, TAXES
AND INSURANCE................................................ 16
Section 6.1 Maintenance and Modification of
Project Facilities by Company................................ 16
Section 6.2 Removal of Portions of Project............................... 17
Section 6.3 Taxes, Other Governmental Charges
and Utility Charges.......................................... 18
Section 6.4 Insurance Required........................................... 19
Section 6.5 Application of Net Proceeds of Insurance..................... 20
Section 6.6 Additional Provisions Respecting
Insurance.................................................... 20
Section 6.7 Other Board Expenses......................................... 20
Section 6.8 Advances by Board or Trustee................................. 20
Section 6.9 Indemnification of Board and Trustee......................... 20
Section 6.10 Investment Credit............................................ 21
ARTICLE VII DAMAGE, DESTRUCTION AND CONDEMNATION......................... 22
Section 7.1 Damage and Destruction....................................... 22
Section 7.2 Condemnation................................................. 22
Section 7.3 Condemnation of Company-Owned Property....................... 23
Section 7.4 Further Assurances and Corrective Instruments................ 23
ARTICLE VIII SPECIAL AGREEMENTS........................................... 23
Section 8.1 No warranty of Condition or Suitability by the Board......... 23
Section 8.2 Inspection of the Project.................................... 24
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 8.3 Company to Maintain Its Corporate Existence; Exceptions
Permitted................................................. 24
Section 8.4 Qualification in the State................................ 24
Section 8.5 Granting of Easements..................................... 25
Section 8.6 Release of Certain Land................................... 25
ARTICLE IX ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING; REDEMPTION;
RENT PREPAYMENT AND ABATEMENT............................. 27
Section 9.1 Assignment and Subleasing ................................ 27
Section 9.2 Pledge Under Indenture.................................... 27
Section 9.3 Restrictions on Sale of Project by Board.................. 27
Section 9.4 Redemption of Bonds....................................... 28
Section 9.5 Prepayment of Rents....................................... 28
Section 9.6 Rent Abatements if Bonds Paid Prior to Maturity........... 28
Section 9.7 Reference to Bonds Ineffective After Bonds Paid........... 29
ARTICLE X EVENTS OF DEFAULT AND REMEDIES............................ 29
Section 10.1 Events of Default Defined................................. 29
Section 10.2 Remedies.................................................. 30
Section 10.3 No Remedy Exclusive....................................... 31
Section 10.4 Agreement to Pay Attorneys' Fees and Expenses............. 31
Section 10.5 No Additional Waiver Implied by One Waiver................ 32
Section 10.6 Waiver of Appraisement, Valuation, etc.................... 32
Section 10.7 Waiver of Events of Default............................... 32
ARTICLE XI OPTIONS IN FAVOR OF COMPANY; OBLIGATION TO PURCHASE
PROJECT................................................... 32
Section 11.1 General Option to Prepay Rent and Purchase Project........ 32
Section 11.2 Conveyance on Purchase.................................... 33
Section 11.3 Relative Positions of Options and Indenture............... 33
ARTICLE XII MISCELLANEOUS............................................. 34
Section 12.1 Notices................................................... 34
Section 12.2 Binding Effect............................................ 34
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 12.3 Severability............................................ 35
Section 12.4 Amounts Remaining in Bond Fund.......................... 35
Section 12.5 Amendments, Changes and Modifications................... 35
Section 12.6 Execution Counterparts.................................. 35
Section 12.7 Captions................................................ 35
Section 12.8 Recording of Agreement.................................. 35
Section 12.9 Law Governing Construction of Agreement................. 35
Section 12.10 Net Lease............................................... 35
SIGNATURES AND SEALS..................................................... 36
ACKNOWLEDGMENTS.......................................................... 37,38
EXHIBIT "A" - DESCRIPTION OF PROJECT LAND................................ 39
EXHIBIT "B" - PROJECT SUMMARY............................................ 47
</TABLE>
-iv-
<PAGE>
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT, made and entered into as of December 1, 1988, by
and between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY, ALABAMA
(the "Board"), a public corporation organized and existing under the laws of the
State of Alabama, as lessor, and MEAD COATED BOARD, INC. (the "Company"), a
corporation organized and existing under the laws of the State of Delaware and
qualified to do business in the State of Alabama, as lessee;
WITNESSETH:
----------
In consideration of the respective representations and agreements
hereinafter contained, the Board and the Company agree as follows (provided,
that in the performance of the agreements of the Board herein contained, any
obligation it may thereby incur for the payment of money shall not be a general
debt on its part but shall be payable solely out of the rents, payments and
revenues derived from this Lease Agreement, the sale of the "Bonds" as
hereinafter defined, the insurance and condemnation awards herein described and
any other revenues arising out of or in connection with its ownership of the
"Project" as hereinafter defined):
ARTICLE I
---------
DEFINITIONS AND RULES OF CONSTRUCTION
-------------------------------------
Section 1.1. Definitions. In addition to the words and terms elsewhere
------------------------
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent:
"Act" means the statutes codified as Code of Alabama 1975, Title 11,
Chapter 54, Article 4, as amended and supplemented and at the time in force and
effect;
"Additional Bonds" means the bonds of any series, other than the
Bonds, authorized under the Indenture and authenticated and delivered in
accordance with Section 401 of the Indenture.
"Agreement" means this Lease Agreement as it now exists and as it may
hereafter be amended pursuant to Section 12.5 of this Lease Agreement and
Article XV of the Indenture;
<PAGE>
"Authorized Board Representative" means the person at the time
designated to act on behalf of the Board by written certificate furnished to the
Company and the Trustee containing the specimen signature of such person and
signed on behalf of the Board by its Chairman or Vice Chairman. Such certificate
may designate an alternate or alternates;
"Authorized Company Representative" means the person at the time
designated to act on behalf of the Company by written certificate furnished to
the Board and the Trustee containing the specimen signature of such person and
signed on behalf of the Company by the President or any Vice President of the
Company. Such certificate may designate an alternate or alternates;
"Board" means The Industrial Development Board of the City of Phenix
City, Alabama, a public corporation of the State, and its successors and
assigns;
"Bond Fund" means the Bond principal and interest payment fund created
pursuant to Section 702 of the Indenture and within which have been established
a general account and a special account. Any reference herein to the "Bond Fund"
without further limitation or explanation shall be deemed to be a reference to
the general account in the Bond Fund;
The term "bondholder" or "holder of the Bonds" means the registered
owner of any Bond;
"Bonds" means the $85,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1988A, issued
pursuant to the Indenture;
"City" means the City of Phenix City, Alabama, a municipal corporation
of the State;
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable Regulations thereunder;
"Company" means the corporation designated as such in the first
paragraph hereof and its successors and assigns, including any surviving,
resulting or transferee corporation as provided in Section 8.3;
The term "default" means an event or condition the occurrence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default;
-2-
<PAGE>
"Event of Default" means one of the events so denominated and
described in Section 10.1;
"Government Obligations" means (a) direct obligations of the United
States of America, (b) obligations unconditionally guaranteed by the United
States of America and (c) securities or receipts evidencing ownership interests
in obligations or specified portions (such as principal or interest) of
obligations described in (a) or (b).
"Indenture" means the Trust Indenture, of even date herewith, between
the Board and the Trustee, including any indenture supplemental thereto;
"Lease Term" means the duration of the leasehold interest created
hereby as specified in Section 5.1;
"Net Proceeds", when used with respect to any insurance or
condemnation award, means the gross proceeds from the insurance or condemnation
award with respect to which that term is used remaining after payment of all
expenses (including attorneys' fees and any Extraordinary Expenses of the
Trustee as defined in the Indenture) incurred in the collection of such gross
proceeds;
"Notes" means those unpaid and outstanding industrial development
notes issued by the Board, pursuant to resolutions of the Board to finance the
costs of the Project;
The term "payment in full of the Bonds" specifically encompasses the
situations described in Article X of the Indenture;
"Permitted Encumbrances" means, as of any particular time,
(a) liens for ad valorem taxes, special assessments or other
governmental charges not then delinquent or permitted to exist as provided
in Section 6.3;
(b) this Agreement and the security interests created herein;
(c) such utility, access or other easements and rights-of-way,
restrictions, reservations, reversions and exceptions as the Authorized
Company Representative certifies will not materially interfere with or
impair the operation of the Project (or, if it is not being
-3-
<PAGE>
operated, the operations for which it was designed or last modified);
(d) unfiled and inchoate mechanics' and materialmen's liens for
construction work in progress;
(e) mechanics', materialmen's, suppliers' and vendors' liens or other
similar liens not then payable, and those permitted to exist as provided in
Section 6.1;
(f) such minor defects, irregularities, encumbrances, easements,
rights-of-ways and clouds on title as the Authorized Company Representative
certifies do not, in the aggregate, materially impair the property affected
thereby for the purpose for which it was acquired or is held by the Board
or the Company;
(g) that certain Lease Agreement dated as of July 1, 1977 between the
Board and Georgia Kraft Company, as amended in an Agreement of Assignment
of Lease dated as of January 4, 1988 among the Board, Georgia Kraft Company
and the Company;
(h) that certain Mortgage and Indenture of Trust dated as of July 1,
1977 between the Board and The First National Bank of Chicago, as trustee,
as the same may be amended and supplemented from time to time;
(i) that certain Lease Agreement dated as of July 1, 1980 between
Georgia Kraft Company and the Board, as amended in an Assignment,
Assumption and Amendatory Lease Agreement dated as of January 4, 1988 among
the Board, Georgia Kraft Company and the Company;
(j) that certain Lease Agreement dated as of November 1, 1983 between
Georgia Kraft Company and the Board, as amended in an Assignment,
Assumption and Amendatory Lease Agreement dated as of January 4, 1988 among
the Board, Georgia Kraft Company and the Company;
(k) that certain Lease Agreement dated as of December 1, 1983 between
Georgia Kraft Company and the Board, as amended in an Assignment,
Assumption and Amendatory Lease Agreement dated as of January 4, 1988 among
the Board, Georgia Kraft and the Company; and
(l) that certain Lease Agreement dated as of December 1, 1988 between
the Company and the Board
-4-
<PAGE>
executed in connection with certain Environmental Improvement Revenue Bonds
of the Board, Series 1988;
The term "person" means natural persons, firms, associations,
corporations and public bodies;
"Project" means the Project Land and the Project Facilities, as they
may at any time exist;
"Project Facilities" means the facilities acquired, constructed and
installed with proceeds from the sale of the Notes, to the extent such
Notes are refunded from the proceeds of the sale of the Bonds, as they may
at any time exist. The Project Facilities are more fully described in the
Project Summary;
"Project Fund" means the fund created pursuant to Section 601 of the
Indenture;
"Project Land" means the real property described in Exhibit "A"
attached hereto and by this reference made a part hereof, less such real
property as may be released from this Agreement pursuant to Section 8.6 or
taken by the exercise of the power of eminent domain as provided in Section
7.2;
"Project Summary" means the Project Summary prepared by the Company,
entitled "PROJECT SUMMARY - INDUSTRIAL FACILITIES - MEAD COATED BOARD, INC.
COATED LINERBOARD MILL", a copy of which is attached hereto as "Exhibit "B" and
by this reference made a part hereof, including any amendments thereto made
pursuant to the terms thereof;
The term "security interest" or "security interests" shall refer to
the security interests created herein and in the Indenture and shall have the
meaning set forth in the Uniform Commercial Code of the State;
"State" means the State of Alabama;
"Trustee" means AmSouth Bank N.A., or any co-trustee or any successor
trustee under the Indenture.
Section 1.2. Rules of Construction. Unless the context clearly
---------------------
indicates to the contrary:
(a) "Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words
-5-
<PAGE>
refer to this Agreement and not solely to the particular Article, Section
or subdivision hereof in which such word is used.
(b) Words importing the singular number shall include the plural
number and vice versa, and any pronoun used herein shall be deemed to cover
all genders.
(c) All references herein to particular Articles or Sections are
references to Articles or Sections of this Agreement.
ARTICLE II
------------
REPRESENTATIONS AND WARRANTIES
--------------------------------
Section 2.1. Representations and Warranties by the Board. The Board
--------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Orqanization and Authority. The Board is a public corporation
---------------------------
duly organized and validly existing under the provisions of the Act by
authority of a resolution adopted by the Board of Commissioners of the City
on June 14, 1960 and a Certificate of Incorporation duly filed for record
on October 17, 1960, in the office of the Judge of Probate of Russell
County, Alabama, which Certificate of Incorporation has not been amended or
been revoked and is of full force and effect. The Board has all requisite
power and authority under the Act (1) to issue the Bonds, (2) to use the
proceeds thereof to refund the Notes issued to pay the cost to acquire,
construct and install the Project Facilities, (3) to own, lease, encumber
and dispose of the Project, and (4) to enter into, and perform its
obligations under, the Indenture and this Agreement. This Agreement and the
Indenture have been duly authorized, executed and delivered by the Board
and are legal, valid and binding agreements enforceable against the Board
in accordance with their respective terms.
(b) Pendinq Litigation. There are no actions, suits, proceedings,
-------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal,
-6-
<PAGE>
which adversely affect the validity or enforceability of the Bonds, the
Indenture, this Agreement, or any agreement or instrument to which the
Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are legal and Authorized. The
------------------------------------------------------------
issue and sale of the Bonds and the execution and delivery by the Board of
the Indenture and this Agreement and the compliance by the Board with all
of the provisions of each thereof and of the Bonds (i) are within the
purposes, powers and authority of the Board, (ii) to the best of the
knowledge of the Board, have been done in full compliance with the
provisions of the Act, are legal and will not conflict with or constitute
on the part of the Board a violation of or a breach of or default under, or
result in the creation of any lien or encumbrance (other than Permitted
Encumbrances) upon any property of the Board under the provisions of, its
certificate of incorporation or Bylaws, or any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which the Board
is a party or by which the Board is bound, or any license, judgment,
decree, law, statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Board or any of
its activities or properties, and (iii) have been duly authorized by all
necessary corporate action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor any of
----------------------
its activities or properties, nor any relationship between the Board and
any other person, nor any circumstance in connection with the offer, issue,
sale or delivery of any of the Bonds is such as to require the consent,
approval or authorization of, or the filing, registration or qualification
with, any governmental authority on the part of the Board in connection
with the execution, delivery and performance of the Indenture and this
Agreement, or the offer, issue, sale or delivery of the Bonds, other than
(i) the filing with the Alabama Securities Commission of the notification
of the Board's intention to issue the Bonds required by Act No. 586 enacted
at the 1978 Regular Session of the Legislature of the State and the
issuance by the Director of the Alabama Securities Commission of such
Certificate of Notification as may be required by said Act, and (ii) the
due filing and recording of this
-7-
<PAGE>
Agreement, the Indenture and the financing statements covering the security
interests created hereunder and under the Indenture. The Board has filed
the notification referred to in (i) of the preceding sentence and the
Director of the Alabama Securities Commission has issued a Certificate of
Notification applicable to the Bonds, which Certificate of notification
has not been revoked or rescinded and is in full force and effect.
(e) No Defaults. The Board is not in default under the Act or under
------------
its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which is bound.
(f) No Prior Pledge. Neither the Project, this Agreement nor any of
----------------
the payments to be received by the Board under this Agreement have been
mortgaged, pledged or hypothecated in any manner or for any purpose other
than as provided in the Indenture as security of the payment of the Bonds.
(g) Nature and Location of Project. The Project will constitute a
-------------------------------
"project" within the meaning of the Act, and the acquisition, construction
and installation of the Project Facilities is in furtherance of the public
purpose of the Act. The Project will be located within 25 miles of the
corporate limits of the City, and no part thereof is located within the
corporate limits or the police jurisdiction of any other incorporated
municipality or any county of any state other than Russell County,
Alabama.
(h) Official Action. By resolution duly adopted on November 3, 1987,
----------------
the Board took official action providing for the acquisition, construction
and installation of the Project Facilities and the financing of the Project
Facilities through the issuance of the Bonds.
Section 2.2. Representations and Warranties by the Company. The
----------------------------------------------
Company makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) The Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has all
requisite corporate
-8-
<PAGE>
power and authority to carry on its business as now being conducted and as
presently proposed to be conducted, and (ii) has duly qualified and is
authorized to do business and is in good standing as a foreign corporation
in the State.
(b) The Company has the corporate power and has been duly authorized
to enter into this Agreement and to perform all of its obligations
hereunder and thereunder.
(c) The willingness of the Board to issue the Bonds for purposes of
financing costs of acquiring, constructing, and installing the Project, and
to lease the Project to the Company, has induced the Company to locate the
Project within the State of Alabama and, more particularly, within 25 miles
of the City.
(d) The Project will create or preserve jobs and employment
opportunities within the boundaries of the State of Alabama, thereby
improving the economic welfare of the State of Alabama and the City.
(e) The acquisition, construction, and installation of the Project
was not commenced, and no item which constitutes a part of the Project was
ordered, prior to November 3, 1987.
(f) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Agreement, or
performing any of its obligations hereunder; and the execution and delivery
of this Agreement, the consummation of the transactions contemplated
hereby, and the fulfillment of or compliance with the terms and conditions
of this Agreement will not conflict with or result in a breach of the
terms, conditions or provisions of any restriction, agreement or instrument
to which the Company is a party or by which it is bound, or constitute a
default under any of the foregoing.
(g) The acquisition, construction, and installation of the Project
will comply in all material respects with all applicable zoning, planning,
building, environmental and other regulations of the governmental
authorities having jurisdiction of the Project, and all necessary permits,
licenses, consents and permissions necessary for the Project have been or
will be obtained.
-9-
<PAGE>
(h) The acquisition, construction, and installation of the Project as
well as its intended use and operation are in complete conformance with the
purposes and provisions of the Act.
(i) No event has occurred and no condition exists that would
constitute an "Event of Default" under this Agreement which, with the lapse
of time or with the giving of notice or both, would become an "Event of
Default" under this Agreement.
(j) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to
which it is subject and has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership
of its properties or to the conduct of its business, which violation or
failure to obtain would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement.
ARTICLE III
-----------
LEASING CLAUSES AND TITLE
-------------------------
Section 3.1. Lease of the Project. The Board hereby leases to the
---------------------
Company, and the Company hereby leases from the Board, the Project at the rent
set forth in Section 5.3 and in accordance with the provisions hereof.
Section 3.2. Warranty of Title. The Board for itself, its successors
------------------
and assigns, warrants to the Company, its successors and assigns, that it has
good and marketable fee simple title in and to the Project Land free from all
encumbrances except Permitted Encumbrances. Upon the execution and delivery of
this Agreement, the Board agrees that it will furnish to the Company an opinion
of the Board's counsel stating that the Board holds such title in and to the
Project Land.
Section 3.3. Quiet Enjoyment. The Board warrants and covenants that it
----------------
will defend the Company in the quiet enjoyment and peaceable possession of the
Project, and all appurtenances thereto belonging, free from all claims of all
persons whomsoever, throughout the Lease Term, so long as the Company shall
perform the covenants, conditions and agreements to be performed by it
hereunder, or so long as the period for remedying any default in such
performance shall not have expired.
-10-
<PAGE>
ARTICLE IV
----------
COMPLETION OF THE PROJECT FACILTIES;
------------------------------------
ISSUANCE OF THE BONDS
---------------------
Section 4.1. Aqreement to Acquire, Construct and Install the Project
-------------------------------------------------------
Facilities. The Board agrees that it will cause the Project Facilities to be
- -----------
acquired, constructed and installed on the Project Land, wholly within the
boundary lines thereof. The acquisition, construction and installation of the
Project Facilities will be in accordance with the Project Summary, a copy of
which is on file with the Board and the Trustee.
The Board agrees that it will enter into, or accept the assignment of,
such contracts as the Company may request in order to effectuate the purposes of
this Section but that it will not execute any other contract or give any order
for construction or for the acquisition and installation of any equipment
relating to the Project Facilities, unless and until the Authorized Company
Representative shall have approved the same in writing.
The Board hereby makes, constitutes and appoints the Company, The Mead
Corporation and Rust International Corporation as its true, lawful and agents
for the acquisition, construction and installation of the Project Facilities,
and the Company, The Mead Corporation and Rust International Corporation have
accepted such agency to act and do all things on behalf of the Board, to perform
all acts and agreements of the Board hereinbefore provided in this Section, and
to bring any actions or proceedings against any person which the Board might
bring with respect thereto as the Company, The Mead Corporation and Rust
International Corporation shall deem proper. The Board hereby ratifies and
confirms all actions of, and assumes and adopts all contracts entered into by,
the Company, The Mead Corporation and Rust International Corporation with
respect to the Project Facilities prior to the date hereof. This appointment of
the Company, The Mead Corporation and Rust International Corporation to act as
agents and all authority hereby conferred or granted is conferred and granted
irrevocably until all activities in connection with the acquisition,
construction and installation of the Project Facilities shall have been
completed, and shall not be terminated prior thereto by act of the Board or of
the Company, The Mead Corporation and Rust International Corporation. So long as
the Company is not in default hereunder, upon the completion of the Project (or
at any time prior or subsequent thereto upon the request of the Company) the
Board will assign to the Company all warranties and guarantees of all
contractors, subcontractors, suppliers, architects and engineers for the
-11-
<PAGE>
furnishing of labor, materials or equipment or supervision or design in
connection with the Project Facilities and any rights or causes of action
arising from or against any of the foregoing.
Section 4.2. Agreement to Issue Bonds; Application of Bond Proceeds.
-------------------------------------------------------
In order to provide funds for the payment of the cost of the acquisition,
construction and installation of the Project Facilities through the refunding of
the Notes, the Board agrees that it will authorize, sell and deliver the Bonds
to the initial purchasers thereof. Upon receipt of the proceeds from the sale of
the Bonds, the Board will deposit all accrued interest (if any) received upon
the sale of the Bonds in the Bond Fund and will deposit the balance of the
proceeds from said sale to the Project Fund, to be applied to the payment of the
Notes upon receipt by the Trustee of Notes tendered for cancellation.
Section 4.3. Company Required to Pay Costs if Project Fund
---------------------------------------------
Insufficient. If the moneys in the Project Fund available for payment of the
- -------------
costs of the Project Facilities should not be sufficient to pay the costs
thereof in full, and if Additional Bonds are not issued to finance the
completion of the Project Facilities, the Company agrees to complete the Project
Facilities and to pay all that portion of the costs of the Project Facilities as
may be in excess of the moneys available therefor in the Project Fund. The Board
does not make any warranty, either express or implied, that the moneys which
will be paid into the Project Fund and which, under the provisions hereof, will
be available for payment of the costs of refunding the Notes, will be sufficient
to pay all the costs which will be incurred in that connection. The Company
agrees that if after exhaustion of the moneys in the Project Fund the Company
should pay any portion of the costs of refunding the Notes pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Board or from the Trustee or from the holders or owners of any
of the bonds, nor shall it be entitled to any diminution in or postponement or
abatement of the rents payable under Section 5.3.
Section 4.4. Board to Pursue Remedies Against Suppliers, Contractors
-------------------------------------------------------
and Subcontractors and Their Sureties. At the direction and sole cost of the
- --------------------------------------
Company, the Board will promptly proceed, either separately or in conjunction
with others, to exhaust the remedies of the Board against any defaulting
supplier, contractor or subcontractor and against any surety therefor, for the
performance of any contract made in connection with the Project Facilities. If
the Company shall so notify the Board, the Company may, in its own name or in
the name of the Board, prosecute or defend any action or proceeding or take any
other action involving any such supplier, contractor,
-12-
<PAGE>
subcontractor or surety which the Company deems reasonably necessary, and in
such event the Board agrees to cooperate fully with the Company and to take all
action necessary, to the extent it might lawfully do so, to effect the
substitution of the Company for the Board in any such action or proceeding. Any
moneys recovered by way of damages, refunds, adjustments or otherwise in
connection with the foregoing shall be paid to the Bond Fund.
Section 4.5. Issuance of Additional Bonds. So long as there shall not
-----------------------------
have occurred and be continuing an event of default hereunder or under the
Indenture, the Board shall, from time to time at the request of the Company, use
its best efforts to issue Additional Bonds in aggregate principal amounts as
requested by the Company under the terms and conditions provided herein and in
the Indenture, but in no event shall the Board be liable for not issuing
Additional Bonds. Additional Bonds may be issued to finance the (a) payment of
outstanding Notes, (b) refunding all of the Bonds of any one or more series then
outstanding, (c) payment of costs of the Project or (d) any combination of the
foregoing; provided, in any case, that either prior to or contemporaneously with
the issuance of Additional Bonds (i) the terms, conditions, manner of issuance,
purchase price, delivery and contemplated disposition of the proceeds of the
sale of such Additional Bonds shall have been approved in writing by the
President or any Vice President of the Company, and (ii) the conditions
specified in Article IV of the Indenture with respect to the issuance of such
Additional Bonds shall have been satisfied.
ARTICLE V
-----------
EFFECTIVE DATE OF THIS AGREEMENT;
------------------------------------
DURATION OF LEASE TERM; RENTAL PROVISIONS
-------------------------------------------
Section 5.1. Effective Date of This Aqreement; Duration of Lease Term.
---------------------------------------------------------
This Agreement shall become effective upon its execution and delivery and the
leasehold interest created hereby shall then begin, and, unless sooner
terminated or extended under the provisions hereof (including particularly
Articles X and XI), shall expire upon the latter to occur of the following
events: (i) midnight, December 1, 2028, or (ii) payment in full of all Bonds and
any Additional Bonds.
Section 5.2. Delivery and Acceptance of Possession. The Board agrees
--------------------------------------
to deliver to the Company sole and exclusive possession of the Project (subject
to the right of the Trustee to enter thereon for inspection purposes and to the
other provisions
-13-
<PAGE>
of Section 8.2) on the Completion Date and the Company agrees to accept
possession of the Project upon such delivery; provided, however, that the
Company shall be permitted such possession of the Project prior to the
Completion Date as shall not interfere with the acquisition, construction and
installation of the Project Facilities.
Section 5.3. Rents and Other Amounts Payable. On June 1, 1989, and
--------------------------------
June 1 and December 1 in each year thereafter until payment in full of the
Bonds, the Company shall pay to the Trustee, for the account of the Board, as
rent for the Project, a sum of money equal to the amount payable on such date as
principal of and interest on the Bonds, as provided in the Indenture. In any
event, on each date on which a payment of principal or interest is payable on
the Bonds, if at any such date the amount of money available in the Bond Fund
is insufficient to make required payments of principal and interest on such
date, the Company shall forthwith pay to the Trustee, in immediately available
funds, the amount of any such deficiency.
Anything herein to the contrary notwithstanding, any amount of money
at any time held by the Trustee in the Bond Fund shall be credited against the
next succeeding payment of rent and shall reduce the payment to be then made by
the Company; and further, if, and for so long as, the amount held by the Trustee
in the Bond Fund should be sufficient to pay at the times required the principal
of and the interest on all Bonds then remaining unpaid, the Company shall not be
obligated to make any further rental payments under the provisions of this
Section.
The Company agrees to pay to the Trustee until the principal of and
the interest on the Bonds shall have been paid in full (i) an amount equal to
the annual fee of the Trustee for the Ordinary Services of the Trustee rendered
and its Ordinary Expenses incurred under the Indenture, (ii) the reasonable fees
and charges of the Trustee and any other paying agent for acting as paying agent
and as bond registrar and the reasonable fees of Trustee's counsel as provided
in the Indenture, as and when the same become due, and (iii) the reasonable fees
and charges of the Trustee for Extraordinary Services rendered by it and
Extraordinary Expenses incurred by it, as such terms are defined in the
Indenture, as and when the same become due; provided, that the Company may,
without precipitating an Event of Default hereunder, withhold such payment to
contest in good faith the necessity for any such Extraordinary Services and
Extraordinary Expenses and the reasonableness of any such fees, charges or
expenses.
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<PAGE>
If the Company should fail to make any of the payments required in
this Section, the item or installment which the Company has failed to make shall
continue as an obligation of the Company until the same shall have been fully
paid, and the Company agrees to pay the same (in the case of interest, to the
extent permitted by law) with interest thereon at the rate per annum equal to
one percent per annum over the applicable interest rate borne by the Bonds,
calculated as described in the Indenture. The provisions of this Section shall
be subject to the provisions of Section 9.6.
Section 5.4. Place of Rental Payments. The rents provided for in
-------------------------
Section 5.3 and the interest on delinquent rents shall be paid directly to the
Trustee for the account of the Board and will be deposited in the Bond Fund. The
other payments provided for in Section 5.3 shall be paid directly to the Trustee
for its own use or for disbursement to any other paying agent, as the case may
be.
Section 5.5. Obligations of Company Hereunder Absolute and
---------------------------------------------
Unconditional. Subject to the provisions of Section 9.6, the obligations of the
- --------------
Company to make the payments required in Section 5.3 and to perform and observe
the other agreements on its part contained herein shall be absolute and
unconditional. Until such time as payment in full of the Bonds shall have been
made, the Company (i) will not suspend or discontinue any payments provided for
in Section 5.3 except to the extent the same have been prepaid, (ii) will
perform and observe all of its other agreements contained herein, (iii) will not
suspend or discontinue any payments provided for in Section 5.3 because of any
right of set off which the Company may have against the Board, the Trustee or
the holder of any Bond (provided that nothing herein shall prevent the assertion
of any claim by the Company by separate suit or compulsory counterclaim) and
(iv) except as provided in Section 11.1 will not terminate the Lease Term for
any cause, including, without limiting the generality of the foregoing, failure
of the Board to complete the Project Facilities, failure of the Board's title in
and to the Project or any part thereof, any acts or circumstances that may
constitute failure of consideration, eviction or constructive eviction,
destruction of or damage to the Project, commercial frustration of purpose, any
change in the tax or other laws of the United States of America or of the State
or any political subdivision of either or any failure of the Board to perform
and observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or in connection herewith or with the Indenture.
Nothing contained in this Section shall be construed to release the Board from
the performance of any of the agreements on its part herein contained; and if
the Board should
-15-
<PAGE>
fail to perform any such agreement, the Company may institute such action
against the Board as the Company may deem necessary to compel performance or
recover its damages for nonperformance so long as such action shall not do
violence to the agreements on the part of the Company contained in the preceding
sentence. The Company may, however, at its own cost and expense and in its own
name or in the name of the Board, prosecute or defend any action or proceeding
or take any other action involving third persons which the Company deems
reasonably necessary in order to insure the completion of the acquisition,
construction and installation of the Project Facilities or to secure or protect
its right of possession, occupancy and use of the Project hereunder, and in such
event the Board hereby agrees to cooperate fully with the Company and to take
all lawful action which is required to effect the substitution of the Company
for the Board in any such action or proceeding if the Company shall so request.
Nothing contained herein shall be construed to be a waiver of any
rights which the Company may have against the Board under this Agreement, or
against other persons under this Agreement, the Indenture, or otherwise, or
under any provision of law.
Section 5.6. Company's Performance Under Indenture. The Company
--------------------------------------
agrees, for the benefit of the holders from time to time of the Bonds, to do and
perform all acts and things contemplated in the Indenture to be done or
performed by it.
ARTICLE VI
----------
MAINTENANCE, MODIFICATION,
--------------------------
TAXES AND INSURANCE
-------------------
Section 6.1. Maintenance and Modification of Project Facilities by
-----------------------------------------------------
Company.
- --------
(a) Throughout the Lease Term, the Company shall at its own expense
(i) keep the Project Facilities in as reasonably safe condition as the
operation thereof will permit, and (ii) keep the Project Facilities in good
repair and in good operating condition, making from time to time all
necessary repairs thereto and renewals and replacements thereof.
(b) The Company may from time to time, in its sole discretion and at
its own expense, make any additions, modifications or improvements to the
Project Facilities, including installation of additional machinery,
equipment, and related property that do not impair the
-16-
<PAGE>
effective use of the Project Facilities. All machinery, equipment and
related personal property so installed by the Company shall not be subject
to this Agreement but shall be subject to the Landlord's Lien created under
the Code of Alabama 1975, Section 35-9-60. All such machinery, equipment
and related personal property may be modified or removed at any time while
there exists no event of default hereunder; provided, that any damage to
the Project Facilities occasioned by such modification or removal shall be
repaired by the Company at its own expense.
(c) The Company shall not permit any mechanics', materialmen's,
suppliers', vendors' or other similar liens to be established or remain
against the Project for labor or materials furnished or services rendered
in connection with any additions, modifications, improvements, repairs,
renewals or replacements so made by it; provided, that if the Company shall
first notify the Trustee of its intention so to do, the Company may in good
faith contest any mechanics', materialmen's, suppliers', vendors' or other
similar liens filed or established against the Project, and in such event
may permit the items so contested to remain undischarged and unsatisfied
during the period of such contest and any appeal therefrom unless the Board
of the Trustee shall notify the Company that by nonpayment of any such
items the lien or security interests afforded by this Agreement or the
Indenture as to any part of the Project or the rents, payments and revenues
from the Project will be materially endangered or the Project or any part
thereof or the rents, payments and revenues from the Project will be
subject to loss or forfeiture, in which event the Company shall promptly
pay and cause to be satisfied and discharged all such unpaid items. The
Board will cooperate fully with the Company in any such contest.
Section 6.2. Removal of Portions of Project. The Board shall not be
-------------------------------
under any obligation to renew, repair or replace any inadequate, obsolete, worn
out, unsuitable, undesirable, inappropriate or unnecessary items of machinery or
equipment comprising the Project Facilities. If the Company in its sole
discretion determines that any such items have become inadequate, obsolete, worn
out, unsuitable, undesirable, inappropriate or unnecessary for its purposes at
such time, the Company may remove such items from the Project and (on behalf of
the Board) sell, trade in, or otherwise dispose of them (as a whole or in part)
without any responsibility or accountability to the Board or the
-17-
<PAGE>
Trustee therefor, provided that such removal does not impair the operation of
the Project Facilities.
The removal of any portion of the Project Facilities pursuant to the
provisions of this Section shall not entitle the Company to any diminution in or
postponement or abatement of the rents payable under Section 5.3.
The Company shall promptly report to the Trustee each such removal,
substitution, sale, trade-in or other disposition.
Section 6.3. Taxes, Other Governmental Charges and Utility Charges.
------------------------------------------------------
The Company agrees to pay promptly as and when the same shall become due and
payable, each and every lawful cost, expense and obligation of every kind and
nature, foreseen or unforeseen, for the payment of which the Board or the
Company is or shall become liable by reason of its estate or interest in the
Project or any portion thereof, by reason of any right or interest of the Board
or the Company in or under this Agreement, or by reason of or in any manner
connected with or arising out of the possession, operation, maintenance,
alteration, repair, rebuilding or use of the Project or any part thereof. The
Company also agrees to pay and discharge all lawful real estate taxes, personal
property taxes, water charges, sewer charges, assessments and all other lawful
governmental taxes, impositions and charges of every kind and nature, ordinary
and extraordinary, general or special, foreseen or unforeseen, whether similar
or dissimilar to any of the foregoing, and all applicable interest and penalties
thereon, if any, which at any time during the term of this Agreement shall be or
become due and payable by the Board or the Company and which shall be lawfully
levied, assessed or imposed
(a) upon or with respect to, or shall be or become liens upon, the
Project or any portion thereof or any interest of the Board or the Company
therein or under this Agreement;
(b) upon or with respect to the income or profits of the Board from
the Project or under this Agreement;
(c) upon or with respect to the possession, operation, management,
maintenance, alterations, repair, rebuilding, use or occupancy of the
Project or any portion thereof; or
(d) upon this transaction or any document to which the Board or the
Company is a party creating or transferring an interest or an estate in the
Project;
-18-
<PAGE>
under or by virtue of any present or future law, statute, ordinance, regulation
or other requirement of any governmental authority, whether federal, state,
county, city, municipal, school or otherwise.
The Company also agrees to pay any special assessments for public
improvements or benefits for which the Company would have otherwise have been
liable had it in fact been the owner of the Project.
The Company shall, at its sole cost and expense, procure or cause to
be procured any and all necessary building permits, other permits, licenses and
other authorizations required for the lawful and proper construction, use,
occupation, operation and management of the Project. The Company also agrees to
pay or cause to be paid all lawful charges for gas, water, sewer, electricity,
light, heat, power, telephone and other utility and service used, rendered or
supplied to, upon or in connection with the Project and the Board will cooperate
with the Company in securing such permits, licenses and authorizations.
The Company may, at its own expense and in its own name and behalf or
in the name and behalf of the Board, in good faith contest any such taxes,
assessments and other charges and, in the event of any such contest, may permit
the taxes, assessments and other charges so contested to remain unpaid during
the period of such contest and any appeal therefrom unless the Board or the
Trustee shall notify the Company that by nonpayment of any such items the lien
or security interests afforded by this Agreement or the Indenture as to any part
of the Project or the rents, payments and revenues derived from the Project will
be materially endangered or the Project or any part thereof will be subject to
loss or forfeiture, in which event such taxes, assessments or charges shall be
paid promptly. The Board shall cooperate fully with the Company in any such
contest. If the Company shall fail to pay any of the foregoing items required by
this Section to be paid by the Company and shall not cure any failure within any
applicable curative provisions provided herein, the Board or the Trustee may
(but shall be under no obligation to) pay the same, and any amounts so advanced
therefor by the Board or the Trustee shall become an additional obligation of
the Company to the one making the advancement, which amounts, together with
interest thereon at the rate of interest borne by the Bonds from the date
thereof, the Company agrees to pay.
Section 6.4. Insurance Required. Throughout the Lease Term the Company
-------------------
shall keep the Project continuously insured (or maintain programs of self-
insurance) against such risks as are customarily insured against by businesses
of like size and type.
-19-
<PAGE>
Section 6.5. Application of Net Proceeds of Insurance. The insurance
-----------------------------------------
carried pursuant to the provisions of Section 6.4 shall be applied as follows:
(i) the Net Proceeds of casualty insurance shall be applied as provided in
Section 7.1, and (ii) the Net Proceeds of public liability insurance shall be
applied toward extinguishment or satisfaction of the liability with respect to
which such insurance proceeds may be paid.
Section 6.6. Additional Provisions Respecting Insurance. All
-------------------------------------------
insurance, if any, required in Section 6.4 may be taken out and maintained in
insurance companies selected by the Company and may be written with deductible
amounts comparable to those on similar policies carried by other companies
engaged in businesses similar in size and type and other respects as the
Company. The insurance hereby required may be contained in blanket policies or
self-insurance programs now or hereafter maintained by the Company.
Section 6.7. Other Board Expenses. Anything to the contrary herein
---------------------
notwithstanding, the Company shall pay any reasonable and necessary expenses not
specifically mentioned herein which are incurred by the Board in connection with
the Project, this Agreement, the Indenture, any financing statements or the
Bonds, and which are not payable from the Project Fund pursuant to Section 4.2.
Section 6.8. Advances by Board or Trustee. If the Company fails to
-----------------------------
maintain the insurance coverage required hereby or fails to keep the Project
Facilities in as reasonably safe condition as its operating conditions will
permit, or fails to keep the Project Facilities in good repair and good
operating condition and shall not cure any failure within any applicable
curative provisions provided herein, the Board or the Trustee may (but unless
satisfactorily indemnified shall be under no obligation to) take out policies of
insurance and pay the premiums on the same or make the required repairs,
renewals and replacements; and all amounts so advanced therefor by the Board or
the Trustee will become an additional obligation of the Company to the one
making the advancement, which amounts, together with interest thereon at the
rate of interest borne by the Bonds from the date thereof, the Company agrees to
pay.
Section 6.9. Indemnification of Board and Trustee. The Company will
-------------------------------------
also pay and discharge and will indemnify and hold harmless the Issuer and the
members, officers, agents and employees of the Issuer from (a) any condition of
the Project caused by the Company, (b) any liens, taxes, assessments,
impositions and other charges upon payments by the Company to the
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Issuer hereunder, (c) any breach or default on the part of the Company in the
performance of any of its obligations hereunder, (d) any act of negligence of
the Company or of its agents, contractors, servants, employees or licensees, (e)
any act of negligence of any assignee or sublessee of the Company, or of any
agents, contractors, servants, employees or licensees of any assignee or
sublessee of the Company and (f) any and all liability, damages, costs and
expenses arising out of or resulting from the acquisition, construction and
installation of the Project or the use or operation of the Project or any other
activity carried out thereon or in connection therewith or the transactions
contemplated by this Agreement and the Indenture, including the reasonable fees
and expenses of counsel, except as the same may arise out of the negligence or
misconduct on the part of the Issuer. If any such lien or charge is sought to be
imposed upon payments, or any such taxes, assessments, impositions or other
charges are sought to be imposed, or any such liability, damages, costs and
expenses are sought to be imposed, the Issuer will give prompt notice to the
Company, and the Company shall have the sole right and duty to assume, and will
assume, the defense thereof, with full power to litigate, compromise or settle
the same in its sole discretion. The indemnification provided by the Section
shall survive the termination of this Agreement.
The Company agrees to indemnify the Trustee, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the Indenture, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties thereunder or hereunder.
Section 6.10. Investment Credit. The Board agrees that any investment
------------------
tax credit with respect to the Project or any part thereof shall be made
available to the Company, and the Board will fully cooperate with the Company in
any effort by the Company to avail itself of any such investment tax credit, but
neither the Board nor the Trustee shall have any responsibility or liability for
the Company's failure to receive any such investment tax credit. The Board
agrees to cause the Trustee to cooperate in making any investment tax credit
available to the Company.
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<PAGE>
ARTICLE VII
-----------
DAMAGE, DESTRUCTION AND CONDEMNATION
------------------------------------
Section 7.1. Damage and Destruction. If prior to payment in full of
-----------------------
the Bonds the Project Facilities are destroyed (in whole or in part) or are
damaged by fire or other casualty, the Company, or the Board at the Company's
direction, (i) shall promptly replace, repair, rebuild or restore the property
damaged or destroyed to substantially the same condition as existed prior to
the event causing such damage or destruction, with such changes, alterations and
modifications (including the substitution and addition of other property) as may
be desired by the Company and as will not impair the operation of the Project
Facilities, and (ii) shall apply for such purpose so much as may be necessary of
any Net Proceeds of insurance resulting from claims for such losses, as well as
any additional moneys of the Company necessary therefor. A11 Net Proceeds of
insurance resulting from claims for such losses shall be paid to the Company. If
said Net Proceeds are not sufficient to pay in full the costs of such
replacement, repair, rebuilding or restoration, the Company shall nonetheless
complete the work thereof and shall pay that portion of the costs thereof in
excess of the amount of said Net Proceeds. The Company shall not, by reason of
the payment of such excess costs be entitled to any reimbursement from the Board
or any abatement, diminution or postponement of the amounts payable under
Section 5.3.
Section 7.2. Condemnation. If the title in and to, or the temporary
-------------
use of, the Project or any part thereof shall be taken under the exercise of the
power of eminent domain by any governmental body or by any other person acting
under governmental authority, the Company shall be obligated to continue to pay
the rents specified in Section 5.3. The Board, the Company and the Trustee shall
cause the Net Proceeds received by them or any of them, from any award made in
such eminent domain proceeding, to be paid to and held by the Company and
applied in one or more of the following ways at the election of the Company:
(a) the restoration of the Project to substantially the same condition
as existed prior to the exercise of such power of eminent domain;
(b) the acquisition, by construction or otherwise, of other industrial
facilities suitable for the Company's operations at the Project (which
facilities will be deemed a part of the Project and available for
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use and occupancy by the Company and will be leased to the Company
hereunder without the payment of any rents other than herein provided to
the same extent as if such other improvements were specifically described
herein); provided, that such facilities will be acquired subject to no
liens, security interests or encumbrances prior to the lien afforded by
this Agreement and the Indenture, other than Permitted Encumbrances; or
(c) payment into the Bond Fund to provide for payment in full of the
Bonds at the earliest date that the Bonds may be called for redemption.
The Board shall cooperate fully with the Company in the handling and
conduct of any prospective or pending eminent domain proceeding with respect to
the Project or any part thereof and shall, to the extent it may lawfully do so,
permit the Company to litigate in any such proceeding in the name and on behalf
of the Board. In no event will the Board voluntarily settle, or consent to the
settlement of, any prospective or pending eminent domain proceeding with respect
to the Project or any part thereof without the written consent of the Company.
Section 7.3. Condemnation of Company-Owned Property. The Company shall
---------------------------------------
be entitled to the proceeds of any condemnation award or portion thereof made
for damages to or taking of its own property or for damages on account of the
taking of or interference with the Company's rights to possession, use or
occupancy of the Project.
Section 7.4. Further Assurances and Corrective Instruments. The Board
----------------------------------------------
and the Company agree that they will, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as may reasonably be required
for correcting any inadequate or incorrect description of the Project herein
described or intended so to be or for carrying out the intention of or
facilitating the performance of this Agreement.
ARTICLE VIII
------------
SPECIAL AGREEMENTS
------------------
Section 8.1. No Warranty of Condition or Suitability by the Board. THE
-----------------------------------------------------
BOARD MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE
PROJECT OR THAT IT WILL BE SUITABLE FOR THE COMPANY'S PURPOSES OR NEEDS. The
Company releases the Board from, agrees that the Board shall not be
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liable for and agrees to hold the Board harmless against, any loss that may be
occasioned by any cause whatsoever pertaining to the Project or the use thereof.
Section 8.2. Inspection of the Project. The Company agrees that the
--------------------------
Authorized Board Representative and any duly authorized agent of the Trustee
shall have the right at all reasonable times to enter upon, examine and inspect
the Project without interference or prejudice to the operations of the Company.
The Company further agrees that any authorized agent of the Board or the Trustee
shall have such rights of access to the Project as may be reasonable and
necessary for the proper maintenance of the Project in the event of the failure
by the Company to perform its obligations under Section 6.1.
Section 8.3. Company to Maintain Its Corporate Existence; Exceptions
-------------------------------------------------------
Permitted. The Company agrees that it will maintain its corporate existence,
- ----------
will not dissolve or otherwise dispose of all or substantially all of its assets
and will not consolidate with or merge into another corporation or permit one or
more other corporations to consolidate with or merge into it; provided that the
Company may, without violating the agreement contained in this Section 8.3,
consolidate with or merge into another corporation incorporated and existing
under the laws of one of the states of the United States of America or the
District of Columbia (a "domestic corporation"), or permit one or more other
domestic corporations to consolidate with or merge into it, or sell or otherwise
transfer to another domestic corporation all or substantially all of its assets
as an entirety and thereafter dissolve, provided, if the Company is not the
surviving, resulting or transferee corporation, as the case may be, such
surviving, resulting or transferee corporation assumes in writing all of the
obligations of the Company under the Agreement and qualifies to do business in
the State. Notwithstanding the foregoing, the Company shall not dissolve or
otherwise dispose of all or substantially all of its assets and shall not
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it if, after giving effect to
such action, a default would result under this Agreement or the Indenture.
Section 8.4. Qualification in the State. The Company agrees (except as
---------------------------
may be otherwise permitted pursuant to the provisions of Section 8.3) that
throughout the Lease Term it will continue to be a corporation either organized
under the laws of the State or duly qualified to do business in the State as a
foreign corporation.
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<PAGE>
Section 8.5. Granting of Easements. If no Event of Default shall have
----------------------
happened and be continuing, the Company may at any time or times cause to be
granted easements (including party wall agreements), licenses, rights-of-way
(temporary or perpetual and including the dedication of public highways) and
other rights or privileges in the nature of easements with respect to any
property included in the Project Land and such grant will be free from any lien
or security interest created by this Agreement and the Indenture, or the Company
may cause to be released existing easements, licenses, rights-of-way and other
rights or privileges in the nature of easements, held with respect to any
property included in the Project Land with or without consideration and the
Board agrees that it shall execute and deliver and will cause and direct the
Trustee to execute and deliver any instrument necessary or appropriate to
confirm and grant or release any such easement, license, right-of-way or other
right or privilege upon receipt of: (i) a copy of the instrument of grant or
release, and (ii) a written application signed by the president or any vice
president of the Company requesting the execution and delivery of such
instrument and stating that such grant or release is not detrimental to the
proper conduct of the business of the Company, and that such grant or release
will not impair the effective use or interfere with the operations of the
Project Facilities and will not materially weaken, diminish or impair the
security intended to be given by or under this Agreement and the Indenture.
Section 8.6. Release of Certain Land. Notwithstanding any other
------------------------
provision hereof, the parties hereto reserve the right to amend this Agreement
at any time and from time to time by mutual agreement for the purpose of
effecting the release of and removal of (i) any unimproved part of the Project
Land (on which no component of the Project Facilities is located but on which
parking, transportation or utility facilities may be located) on which the Board
proposes to construct improvements for lease or sale to another person or
persons under another and different agreement, or (ii) any part of the Project
Land with respect to which the Board proposes to grant an easement or convey a
fee interest or other title to a railroad or other public or private carrier or
to any public utility or public body in order that transportation facilities or
services by rail, water, road or other means or utility services for the Project
may be provided, increased or improved; provided, that if at the time any such
amendment is made any of the Bonds are outstanding, there shall be deposited
with the Trustee the following:
(a) a copy of such amendment as executed;
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<PAGE>
(b) a resolution of the Board (i) stating that the Board is not in
default under any of the provisions hereof or of the Indenture and that the
Company is not to the knowledge of the Board in default under any of the
provisions hereof, (ii) giving an adequate legal description of that
portion of the Project Land to be released, (iii) stating the purpose for
which the Board desires the release, (iv) stating that the improvements
which will be constructed or the facilities and services which will be
provided, increased or improved will be such as will promote at least one
of the public purposes of the Board, and (v) requesting such release;
(c) a certificate of the president or any vice president of the
Company indicating approval of such amendment and stating that the Company
is not in default under any of the provisions hereof;
(d) a copy of the agreement between the Board and such other person
wherein the Board agrees to construct improvements on the portion of the
Project Land so requested to be released and agrees to lease or sell the
same to such other person, and wherein such other person agrees to lease or
purchase the same from the Board, or a copy of the instrument granting the
easement or conveying the title or other interest to a railroad, public
utility or public body; and
(e) a certificate of the Authorized Company Representative, dated not
more than 60 days prior to the date of such amendment and stating that (i)
the portion of the Project Land so proposed to be released is necessary or
desirable for railroad, utility services or roads to benefit the Project or
is not otherwise needed for the operation of the Project Facilities for the
purposes hereinabove stated, and (ii) the release so proposed to be made
will not impair the usefulness of the Project Facilities and will not
destroy the means of ingress thereto and egress therefrom.
No release effected under this Section shall entitle the Company to any
diminution in or postponement or abatement of the rents payable under Section
5.3.
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<PAGE>
ARTICLE IX
----------
ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING;
---------------------------------------------
REDEMPTION; RENT PREPAYMENT AND ABATEMENT
-----------------------------------------
Section 9.1. Assignment and Subleasing. This Agreement may be
--------------------------
assigned by the Company without the necessity of obtaining the consent of the
Board or the Trustee, subject, however, to the following conditions:
(a) no assignment (other than pursuant to Section 8.3) or sublease
shall relieve the Company from primary liability for any of its obligations
hereunder, and if any such assignment occurs, the Company shall continue to
remain primarily liable for payment of the rents specified in Section 5.3
and for performance and observance of the other agreements on its part
herein provided to be performed and observed by it; and
(b) the Company shall, within 30 days after the delivery thereof,
furnish or cause to be furnished to the Board and to the Trustee a true and
complete copy of each such assignment or sublease, as the case may be,
together with any instrument of assumption.
Section 9.2. Pledge under Indenture. Under the terms of the
-----------------------
Indenture, the Board shall assign and create a security interest with respect to
its interest in, and pledge all rents, revenues and receipts arising out of or
in connection with its ownership of, the Project to the Trustee, as security for
the payment of the principal of and interest on the Bonds, but the Indenture and
said assignment and pledge shall be subject and subordinate to this Agreement.
Section 9.3. Restrictions on Sale of Project by Board. The Board
-----------------------------------------
agrees that, except as set forth in Section 9.2 or as otherwise provided in the
Agreement and Indenture, it shall not (i) sell (other than as contemplated
herein), assign, transfer or convey the Project during the Lease Term, (ii)
create or suffer to be created any debt, lien or charge on the rents, payments
and revenues arising out of or in connection with its ownership of the Project,
or (iii) take any other action which might reasonably be construed as tending to
cause or induce the levy or assessment of ad valorem taxes on the Project or on
its title in and to the Project. If the laws of the State at the time permit
such action to be taken, nothing contained in this Section shall prevent the
consolidation of the Board with, or the merger of the Board into, or the
transfer of the Project as an entirety to, any
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<PAGE>
public corporation whose property and income are not subject to taxation and
which has corporate authority to carry on the business of owning and leasing the
Project; provided (a) that no such action shall be taken without the prior
written consent of the Company, unless such action shall be required by law, and
(b) that upon any such consolidation, merger or transfer, the due and punctual
payment of the principal of and the interest on the Bonds, and the due and
punctual performance and observance of all the agreements hereof to be kept and
performed by the Board, shall be expressly assumed in writing by the corporation
resulting from such consolidation or surviving such merger or to which the
Project shall be transferred as an entirety.
Section 9.4. Redemption of Bonds. The Board, at the request at any
--------------------
time of the Company and if the same are then redeemable, shall forthwith take
all steps that may be necessary under the applicable redemption provisions of
the Indenture to effect redemption of all or any portion of the Bonds, as may be
specified by the Company, on the earliest applicable redemption date on which
such redemption may be made under such applicable provisions or upon the date
set for the redemption by the Company pursuant to Sections 7.2 or 11.1. As long
as the Company is not in default hereunder and the Board is not obligated to
call Bonds pursuant to the terms of the Indenture, the Board shall not redeem
any Bond prior to its respective stated maturity unless requested to do so in
writing by the Company.
Section 9.5. Prepayment of Rents. There is expressly reserved to the
--------------------
Company the right, and the Company is authorized and permitted, at any time it
may choose, so long as it is not in default hereunder, to prepay all or any part
of the rents and other payments payable under Section 5.3, and the Board agrees
that the Trustee may accept such prepayment when the same is tendered by the
Company. All prepaid rents shall be credited on the rents specified in Section
5.3, and at the election of the Company shall be used for the redemption or
purchase of Bonds in the manner and to the extent provided in the Indenture.
Section 9.6. Rent Abatements if Bonds Paid Prior to Maturity. If at
------------------------------------------------
any time the Indenture is discharged in accordance with Article X of the
Indenture, and if the Company is not at the time otherwise in default hereunder,
the Company shall be entitled to use and occupy the Project, without the
payment of rent during the interval (but otherwise on the terms and conditions
hereof), from the date on which such moneys are in the Bond Fund to and
including the later to occur of either (i) midnight, December 1, 2028 or (ii)
payment in full of all Bonds and any Additional Bonds.
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<PAGE>
Section 9.7. Reference to Bonds Ineffective After Bonds Paid. Upon
------------------------------------------------
payment in full of the Bonds and all fees and charges of the Trustee, all
references herein to the Bonds and the Trustee shall be ineffective and neither
the Trustee nor the holders of any of the Bonds shall thereafter have any rights
hereunder, saving and excepting those that shall have theretofore vested.
Reference is hereby made to Section 1002 of the Indenture which sets forth the
conditions upon the existence or occurrence of which payment in full of the
Bonds shall be deemed to have been made.
ARTICLE X
---------
EVENTS OF DEFAULT AND REMEDIES
------------------------------
Section 10.1. Events of Default Defined. The following shall be
--------------------------
Events of Default hereunder and the term Event of Default shall mean, whenever
it is used herein, any one or more of the following events:
(a) Failure by the Company to make any payment required under Section
5.3 on or before the date that the payment is due and continuance of such
failure for ten Business Days after receipt of notice of such failure from
the Trustee.
(b) Failure by the Company to observe and perform any other covenant,
condition or agreement on its part under this Agreement (other than as
referred to in subsection (a) of this Section), for a period of ninety (90)
days after written notice, specifying such failure and requesting that it
be remedied, shall be given to the Company by the Trustee, unless the
Trustee shall agree in writing to an extension of such time prior to its
expiration; provided, however, if the failure stated in the notice cannot
be remedied within the applicable period, the Board and the Trustee will
not unreasonably withhold their consent to an extension of such time if it
is possible to correct such failure and corrective action is instituted by
the Company within the applicable period and diligently pursued until the
default is corrected;
(c) Any warranty, representation or other statement by or on behalf of
the Company contained in this Agreement, or any instrument furnished in
compliance with or in reference to this Agreement or the Indenture, is
false or misleading in any material respect; or
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<PAGE>
(d) The dissolution or liquidation of the Company or the filing by the
Company of a voluntary petition in bankruptcy, or the commission by the
Company of any act of bankruptcy, or adjudication of the Company as a
bankrupt, or assignment by the Company for the benefit of its creditors, or
the entry by the Company into an agreement of composition with its
creditors, or the approval by a court of competent jurisdiction of a
petition applicable to the Company in any proceeding for its reorganization
instituted under the provisions of the Federal bankruptcy statutes, as
amended, or under any similar act which may hereafter be enacted. The term
"dissolution or liquidation of the Company", as used in this subsection,
shall not be construed to include the cessation of the corporate existence
of the Company resulting from a merger or consolidation of the Company into
or with another corporation or a dissolution or liquidation of the Company
following a transfer of all or substantially all of its assets as an
entirety.
Section 10.2. Remedies. Whenever any Event of Default shall have
---------
happened and be continuing, the Trustee, as the assignee of the Board under the
Indenture, shall have the following rights and remedies:
(a) The Trustee may, and upon the written request of the holders of
not less than twenty-five percent (25%) in outstanding principal amount of
the Bonds, shall by notice in writing delivered to the Company, declare all
installments of rent payable under Section 5.3 for the remainder of the
Lease Term to be immediately due and payable. Upon such acceleration, the
amount then due and payable by the Company as accelerated rent shall be the
sum required to provide for payment in full of the Bonds on the earliest
possible date on which such payment can be made. Such sums as may then
become payable shall be paid into the Bond Fund and after payment in full
of the Bonds and payment of any cost occasioned by such Event of Default,
any excess moneys in the Bond Fund shall be returned to the Company as an
overpayment of rent. Notwithstanding the foregoing, upon the occurrence of
an Event of Default by reason of the occurrence of any event specified for
Section 10.1(d), all installments of rent payable under Section 5.3 for the
remainder of the Lease Term shall automatically become and be immediately
due and payable
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<PAGE>
without any action by the Trustee or the Board being necessary.
(b) The Trustee may take whatever action at law or in equity may
appear necessary or desirable to collect the rents and any other payments
then due and thereafter to become due, or to enforce performance and
observance of any covenant, condition or agreement of the Company
hereunder;
(c) The Trustee may exercise any remedies provided for in the
Indenture and, with respect to any security interest, the rights of a
secured party under the Uniform Commercial Code of the State.
Any amounts collected pursuant to action taken under this Section shall be paid
into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if payment in full of the Bonds has been made, shall be paid to
the Company.
Section 10.3. No Remedy Exclusive. No remedy herein conferred upon
--------------------
or reserved to the Board or the Trustee is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the Board or the Trustee
to exercise any remedy reserved to it in this Article, it shall not be necessary
to give any notice, other than such notice or notices as may be herein expressly
required. Such remedies as are reserved to the Board in this Article shall also
extend to the Trustee, and the Trustee and the holders of the Bonds shall be
deemed third-party beneficiaries of all agreements herein contained.
Section 10.4. Agreement to Pay Attorneys' Fees and Expenses. If
----------------------------------------------
there should occur an Event of Default hereunder and the Board or the Trustee
should employ attorneys or incur other expenses for the collection of rents or
the enforcement of performance or observance of any agreement on the part of the
Company herein contained, the Company agrees that it will on demand therefor pay
to the Board or the Trustee the reasonable fee of such attorneys and such other
reasonable expenses so incurred by the Board or the Trustee.
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<PAGE>
Section 10.5. No Additional Waiver Implied by One Waiver. If any
-------------------------------------------
agreement contained herein should be breached by either party and thereafter
waived by the other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder.
Section 10.6. Waiver of Appraisement, Valuation, etc. If there should
---------------------------------------
occur an Event of Default hereunder, the Company agrees to waive, to the extent
it may lawfully do so, the benefit of all appraisement, valuation, stay,
extension or redemption laws now or hereafter in force, and all right of
appraisement and redemption to which it may be entitled.
Section 10.7. Waiver of Events of Default. Notwithstanding anything
----------------------------
herein to the contrary, the Trustee shall be deemed to have waived any Event of
Default hereunder and its consequences and to have rescinded any acceleration of
the rents and other amounts payable under this Agreement whenever the Trustee
has waived such Event of Default pursuant to the Indenture.
ARTICLE XI
----------
OPTIONS IN FAVOR OF COMPANY;
-----------------------------
OBLIGATION TO PURCHASE PROJECT
------------------------------
Section 11.1. General Option to Prepay Rent and Purchase Project. At
---------------------------------------------------
any time, the Company shall have, and is hereby granted, the option to prepay
the rent payable under Section 5.3, in whole or in part. To exercise the option
granted in this paragraph, the Company shall, on or before the 20th day next
preceding the date set for redemption of the Bonds (which shall be an interest
payment date if less than all the Bonds are to be redeemed), give written notice
to the Board and the Trustee of its intention to exercise the option granted in
this section on such date and shall specify therein the principal amount of
Bonds to be redeemed with the moneys received upon such prepayment. Upon the
exercise of such option, the Company shall direct the Trustee to redeem Bonds in
the principal amount and on the date specified in the notice referred to in the
preceding sentence and shall make arrangements satisfactory to the trustee for
the giving of the required notice of redemption of Bonds. The purchase price
which shall be paid to the trustee by the Company in the event of its exercise
of the option granted in this paragraph shall be the sum of the principal amount
of the Bonds to be redeemed plus accrued interest thereon to the redemption date
plus all fees and expenses of the trustee and the paying agent accrued and to
accrue through such redemption date.
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<PAGE>
The Company shall have the option to purchase the Project at any time,
in the event that the Indenture is discharged pursuant to Article IX of the
Indenture, by the Company (i) depositing irrevocably with the Trustee either
moneys in an amount which shall be sufficient, or Government Obligations the
principal of and interest on which when due will provide moneys which, together
with the moneys, if any, deposited with or held by the Trustee at the same time
and available for such purpose shall be sufficient pursuant to the Indenture, to
pay the principal of and interest on all of the Bonds due and to become due on
or prior to the redemption date (if the Bonds are to be redeemed) or maturity
thereof; (ii) paying to the trustee all Trustee's fees and expenses due in
connection with the payment or redemption of any such Bonds, and, (iii) if any
Bonds are to be redeemed on any date prior to their maturity, giving the Trustee
irrevocable instructions to redeem such Bonds on such date and either evidence
satisfactory to the Trustee that all redemption notices required by the
Indenture have been given or irrevocable power authorizing the Trustee to give
such redemption notices.
Section 11.2. Conveyance on Purchase. At the closing of any purchase
----------------------
of the Project as provided hereunder, the Board shall upon receipt of the
purchase price deliver to the Company documents conveying to the Company good
and marketable fee simple title in and to the Project, subject to the following:
(a) those liens, security interests and encumbrances (if any) to which such
title in and to said property was subject at the effective date of this
Agreement but excluding this Agreement and the Indenture; (b) those liens and
encumbrances created by the Company or to the creation or suffering of which the
Company consented; (c) those liens and encumbrances resulting from the failure
of the Company to perform or observe any of its agreements contained herein; and
(d) Permitted Encumbrances other than this Agreement and the Indenture.
Section 11.3. Relative Positions of Options and Indenture. The
-------------------------------------------
options granted to the Company in this Article shall be and remain prior and
superior to the Indenture and may be exercised whether or not there exists an
Event of Default hereunder, provided that the existence of such Event of Default
will not result in nonfulfillment of any condition to the exercise of any such
option.
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ARTICLE XII
-----------
MISCELLANEOUS
-------------
Section 12.1. Notices. All notices, certificates or other
-------
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to the Board - The Industrial Development
Board of the City of
Phenix City, Alabama
c/o Smith & Smith
1503 Broad Street
Phenix City, Alabama 36867
Attention: Sydney S. Smith, Esq.
(b) If to the Company - Mead Coated Board, Inc.
Mead World Headquarters
Dayton, Ohio 45463
Attention: Treasurer
with a copy to:
Smith & Schnacke
A Legal Professional Association
2900 DuBois Tower
Cincinnati, Ohio 45202
Attention: Robert A. Selak
(c) If to the Trustee - AmSouth Bank N.A.
1900 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Corporate Trust
Department
A duplicate copy of each notice, certificate or other communication given
hereunder by either the Board, the Company or the Trustee to any one of the
others shall also be given to all of the others. The Board, the Company and the
Trustee may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.
Section 12.2. Binding Effect. This Agreement shall inure to the
--------------
benefit of and shall be binding upon the Board, the
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<PAGE>
Company and their respective successors and assigns. To the extent provided
herein and in the Indenture, the Trustee and the holders of the Bonds shall be
deemed to be third party beneficiaries hereof, but nothing herein contained
shall be deemed to create any right in, or to be for the benefit of, any other
person not a party hereto.
Section 12.3. Severability. If any provision hereof shall be held
------------
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
Section 12.4. Amounts Remaining in Bond Fund. Subject to and in
------------------------------
accordance with the terms and conditions of Section 709 of the Indenture,
certain surplus moneys remaining in the two accounts in the Bond Fund shall
belong to and be paid to the Company by the Trustee as an overpayment of rents.
Section 12.5. Amendments, Changes and Modifications. Except as
-------------------------------------
otherwise provided herein or in the Indenture, subsequent to the date of
issuance and delivery of the Bonds and prior to their payment in full, this
Agreement may not be effectively amended or terminated without the written
consent of the Trustee.
Section 12.6. Execution Counterparts. This Agreement may be executed
----------------------
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 12.7. Captions. The captions and headings herein are for
--------
convenience only and in no way define, limit or describe the scope or intent of
any provisions hereof.
Section 12.8. Recording of Agreement. This Agreement and every
----------------------
assignment and modification hereof shall be recorded in the Office of the Judge
of Probate of Russell County, Alabama, or in such other office as may be at the
time provided by law as the proper place for such recordation.
Section 12.9. Law Governing Construction of Agreement. This Agreement
---------------------------------------
shall be governed by, and construed in accordance with, the laws of the State.
Section 12.10. Net Lease. This Agreement shall be deemed a "net
---------
lease", and the Company shall pay absolutely net during the Lease Term the rents
specified herein, without
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<PAGE>
abatement, deduction or set-off other than those herein expressly provided.
IN WITNESS WHEREOF, the Board and the Company have caused this
Agreement to be executed in their respective corporate names as of the date
first above written.
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF PHENIX CITY, ALABAMA
By: /s/ Kenneth A. Roberts
------------------------------------
Title: Chairman
MEAD COATED BOARD, INC.
By: /s/ W. D. Bloebaum, Jr.
------------------------------------
Title: Treasurer
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<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 20th day of December,
1988.
/s/ Sydney S. Smith
------------------------------------
Notary Public
(SEAL)
My commission expires: 2/25/92
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<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Robert A. Selak, A Notary Public in and for said County in said
State, hereby certify that W. D. Bloebaum, Jr., whose name as Treasurer of MEAD
COATED BOARD, INC., a corporation organized and existing under the laws of the
State of Delaware, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he or she, as such officer and with full authority, executed
the same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 22nd day of December,
1988.
/s/ Robert A. Selak
---------------------------------
Notary Public
(SEAL)
My commission expires:__________
ROBERT A. SELAK, Attorney at Law
Notary Public, State of Ohio
My Commission has no expiration date.
Section 147.03 O. R. C.
-38-
<PAGE>
EXHIBIT "A"
to
Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of December 1, 1988
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
---------------------------------------------------
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
----------------------------------------------
AND CHIPS SCREEN HOUSE AREA (C-28515)
-------------------------------------
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted areas
which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State Georgia Coordinate System; and lying in Section
28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N 63(degree) 51'
31" E, 790.90' to the point of beginning; thence N 90(degree) 00' W, 82.00;
thence S 0' 00" W, 8.75'; thence N 90(degree) 00' W, 232.22'; thence S
15(degree) 17' 15" E, 479.72' to a point on the northmost side of a rectangular
area (Chip Screen House) which parallels last said course and is 75.0' north to
south (7.00' of which is west of last said course) by 49.0' east to west; said
rectangular area being the point of ending; said land being 0.56 + acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
---------------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline:
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<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in Section
28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N 45(degree) 24'
34" E, 692.79' to the point of beginning; thence S 36(degree) 51' 02" E, 454.94'
to the point of ending; said land being 0.29 (plus or minus) acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
------------------------------------------------------
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
----------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted areas
which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in Section
28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N 71(degree) 34'
06" E, 600.24' to the point of beginning; thence S 71(degree) 04' 32" E,
640.91'; thence N 50(degree) 08' 32" E, 61.59' to the point of ending; said land
being 0.45 (plus or minus) acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
-----------------------------------------
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
------------------------------------------
AND CHIP SILO AREA (C-28520)
----------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted areas
which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in Section
28, T 14 N, R 30 E, County of Russell, State of Alabama; thence S 48(degree) 21'
59" W, 84.29' to the point of beginning; thence S 56(degree) 07' 32" E, 319.22'
to the center of a circular area (Chip Silo) with a radius of 15.00' and a
central angle of 360(degree) 00' bounded by a rectangular structure 32' -6"
(plus or minus) East-West and 32' -6" (plus or minus) North-South; thence N 82
(degree) 51' 32" E, 355.48' to the point of ending; said land being 0.45 (plus
or minus) acres;
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<PAGE>
NEW WASHER FACILITY AND BATCH DIGESTER AREA
-------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 48(degree) 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0(degree) 00' W, 133.50'; thence N
90(degree) 00' W, 103.39'; thence S 0(degree) 00' W, 103.50'; thence
90(degree) 00' W, 48.00'; thence N 0(degree) 00' W, 55.75'; thence N
90(degree) 00' W, 80.00'; thence S 0(degree) 00' W, 42.75'; thence N
90(degree) 00' W, 63.00'; thence N 0(degree) 00' W, 110.00'; thence N
45(degree) 00' E, 55.00'; thence N 0(degree) 00' W, 23.11'; thence N
90(degree) 00' E, 23.00'; thence N 0(degree) 00' W, 23.25'; thence N
90(degree) 00' E, 170.00'; thence N 0(degree) 00' W, 28.75'; thence N
90(degree) 00' E, 62.50' to the point of beginning; said area being 1.01
(plus or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
-------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48(degree) 46' 07" W, 591.71' to the point of beginning (N
791,960.0 E 234,055.0); thence S 0(degree) 00' W, 170.00'; thence N
90(degree) 00' W, 111.00; thence N 0(degree) 00' W, 170.00'; thence N
90(degree) 00' E, 111.00' to the point of beginning; said land being 0.43
(plus or minus) acres;
TURPENTINE RECOVERY FACILITY AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 63(degree) 26' 06" W, 11.18' to the point of beginning (N
792,345.0, E 234,490.0); thence N 0' 00" W, 30.00'; thence N 90(degree)
00" E, 20.00'; thence S 0(degree) 00' W, 30.00'; thence N 90(degree) 00'
W, 20.00' to the point of beginning; said land being 0.01 (plus or minus)
acres;
-41-
<PAGE>
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
----------------------------------------------------------
DRUM AREA (C-28525), VIBRATING CONVEYORS AREA (C-28532),
---------------------------------------------------------
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
---------------------------------------------------
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
------------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28, T 14
N, R 30 E, County of Russell, State of Alabama, more particularly described as
follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence N 80(degrees)
22' 54" E, 879.79' to the point of beginning; thence N 0(degrees) 00' W,
326.00'; thence N 90(degrees) 00' E, 711.08'; thence S 0(degrees) 00' W,
326.00'; thence N 90(degrees) 00' W, 328.00'; thence S 0(degrees) 00' W,
188.00'; thence N 90(degrees) 00' W, 50.00'; thence N 0(degrees) 00' W, 188.00';
thence N 90(degrees) 00' W, 333.08' to the point of beginning; said land being
5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
------------------------------
All that portion of land, and structures lying thereon, in Section 28, T 14
N, R 30 E, County of Russell, State of Alabama, more particularly described as
follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S 11(degrees)
04' 57" W, 197.69' to the point of beginning (N 792,156.0, E 234,462.0); thence
S 0(degrees) 00" W, 82.00'; thence N 90(degrees) 00" W, 52.00'; thence N
0(degrees) 00' W, 82.00'; thence N 90(degrees) 00' E, 52.00 to the point of
beginning; said land being 0.10 (plus or minus) acres;
NEW LIM KILN/RECAUSTICIZING AREA
--------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly described
as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02,
of the West Zone of the State of Georgia Coordinate System; thence N
70(degrees) 51' 29" E, 267.79' to the point of beginning (793,238.0 E 233,503.
0); thence N 90(degrees)
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<PAGE>
00' E, 399.23'; thence S 0(degrees) 00' W, 50.00'; thence N 90(degrees) 00' E,
45.00'; thence S 0(degrees) 00' W, 78.00'; thence N 90(degrees) 00' W, 444.23';
thence N 0(degrees) 00' W, 128.00' to the point of beginning; said land being
1.25 (plus or minus) acres;
NO. 2 RECOVERY BOILER AREA
--------------------------
All that portion of land, and structures lying thereon, in Section 28, T 14
N, R 30 E, County of Russell, State of Alabama, more particularly described as
follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02,
of the West Zone of the State of Georgia Coordinate System; thence S 40(degrees)
16' 34" E, 439.77' to the point of beginning (N 792,814.67, E 233,534.32');
thence N 90(degrees) 00' E, 36.30'; thence N 0(degrees) 00' W, 20.50'; thence N
90(degrees) 00' E, 72.26'; thence N 0(degrees) 00' W, 14.83'; thence N
90(degrees) 00' E, 110.50'; thence S 0(degrees) 00' W, 42.58'; thence N
90(degrees) 00' E, 26.00'; thence S 0(degrees) 00' W, 81.00'; thence N
90(degrees) 00' W, 51.00'; thence N 0(degrees) 00' W, 25.12'; thence N
90(degrees) 00' W, 85.50'; thence N 00(degrees) 00' W, 8.63'; thence N
90(degrees) 00' W, 72.26'; thence N 90(degrees) 00' W, 20.50'; thence N
0(degrees) 00' W, 36.30'; thence N 0(degrees) 00' W, 34.00' to the point of
beginning; said land being 0.47 (plus or minus) acres;
NEW EVAPORATORS AND NEW TANKS AREA
----------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly described
as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02,
of the West Zone of the State of Georgia Coordinate System; thence S 62(degrees)
01' 33" E, 637.83' to the point of beginning (N 792,851.0, E 233,813.33); thence
N 90(degrees) 00' E, 246.67'; thence along an arc South and East 53.41' having a
radius of 34.00' with a central angle of 90(degrees) 00'; thence S 0(degrees)
00' W, 135.33'; thence along an arc South and West 53.41' having a radius of
34.00' with a central angle of 90(degrees) 00'; thence N 90(degrees) 00' W,
34.00'; thence N 0(degrees) 00' W, 99.79'; thence N 90(degrees) 00' W, 69.00';
thence N 59(degrees) 47' 19" W, 91.42'; thence N 90(degrees) 00' W, 64.67';
thence N 0(degrees) 00' W, 57.54' to the point of beginning; said land being
0.72 (plus or minus) acres;
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<PAGE>
(collectively, the "Unimproved Land"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (the 1977 Land less and except the 1988 Land) in order
to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Unimproved Land and the
Project including, without limitation, the right to make connections with
machinery,
-44-
<PAGE>
equipment, pipes, conduits and wires, structures and other improvements and
appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
-45-
<PAGE>
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the
Unimproved Land in respect of any additional improvements constructed
adjacent to the Unimproved Land, as long as any such additional
improvements remain standing, including without limitation the rights of
lateral or party wall support, and to connect such additional improvements
to any structure or any improvements on the Unimproved Land.
-46-
<PAGE>
EXHIBIT "B"
to
Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of December 1, 1988
PROJECT SUMMARY - INDUSTRIAL FACILITIES
RUSSELL COUNTY, ALABAMA
The Project in an expansion of an existing coated linerboard mill (the "Mill")
in Russell County, Alabama owned by the Board and leased to the Company. The
Project consists primarily of a paper machine to product coated linerboard, such
machine having an annual production capacity of approximately 400,000 tons of
coated linerboard. The Project also includes other related facilities, including
an expansion of and additions to the existing wood yard and wood handling
equipment; a new bleach plant; a new recovery boiler; and a substantial
expansion of the Mill's existing effluent treatment system.
-47-
<PAGE>
FIRST AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS FIRST AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of March 1, 1989, by and between THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate
and politic duly organized and existing under the Constitution and laws of the
State of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the
"Company").
R E C I T A L S
- - - - - - - -
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"), pursuant to a Trust Indenture, dated as of
December 1, 1988 (the "Original Indenture"), from the Board to AmSouth Bank
N.A., as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds
for use in the payment of outstanding industrial development temporary borrowing
notes (the "Notes") issued by the Board for the purpose of funding the
acquisition, construction and installation of a coated natural kraft mill and
related facilities (the "Project") in connection with certain industrial
facilities located near Phenix City, Alabama. The Project is owned by the Board
and leased to the Company pursuant to a Lease Agreement dated as of December 1,
1988 (the "Agreement"). The Agreement obligates the Company to make rental
payments in such amounts and at such times as will provide for the payment of
the principal and interest on the Series 1988A Bonds as the same becomes due and
payable.
Under Article IV of the Original Indenture, the Board is permitted to
issue Additional Bonds (as defined in the Original Indenture) in order to pay
additional Notes issued by the Board in connection with the Project. In that
connection, the Board is issuing $43,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989A
(the "Series 1989A Bonds"), pursuant to the Indenture as supplemented by a First
Supplemental Trust Indenture dated as of March 1, 1989 (the "Supplemental
Indenture") from the Board to the Trustee. The Original Indenture as
supplemented by the Supplemental Indenture is hereinafter referred to as the
"Indenture".
<PAGE>
NOW, THEREFORE, as contemplated by Section 4.5 of the Agreement and in
accordance with Section 1501 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
ARTICLE I
PROVISIONS FOR AMENDING THE AGREEMENT
-------------------------------------
Section 1.1 Amendment of Section 5.3 of the Agreement. The term
----------- -----------------------------------------
"Bonds" as used in Section 5.3 of the Agreement shall include the Series 1989A
Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1989A Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1988A Bonds and not specifically otherwise provided for
in the Indenture, any supplements thereto or the Agreement, shall apply with
full force and effect to the Series 1989A Bonds. Without limiting the foregoing,
all references in the Agreement to the "Bonds" shall be deemed to mean the
Series 1988A Bonds and the Series 1989A Bonds, including without limitation the
provisions of Section 5.3 of the Agreement relating to the payment of rents.
Section 1.3 Representations and Warranties by the Board. The Board
----------- -------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public corporation duly
--------------------------
organized and validly existing under the provisions of the Act by authority
of a resolution adopted by the Board of Commissioners of the City on June
14, 1960 and a Certificate of Incorporation duly filed for record on
October 17, 1960, in the office of the Judge of Probate of Russell County,
Alabama, which Certificate of Incorporation has not been amended or been
revoked and is of full force and effect. The Board has all requisite power
and authority under the Act (1) to issue the Series 1989A Bonds, (2) to use
the proceeds thereof to refund the Notes issued to pay the cost to acquire,
construct and install the Project, (3) to own, lease, encumber and dispose
of the Project, and (4) to enter into, and perform its obligations under,
the Indenture, the Agreement and this Amendment. This Amendment and the
Supplemental Indenture have been duly authorized, executed and delivered by
the Board and are legal, valid and binding agreements enforceable against
the Board in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or
-2-
<PAGE>
affecting the Board in any court or before any governmental authority or
arbitration board or tribunal, which adversely affect the validity or
enforceability of the Series 1989A Bonds, the Indenture, the Agreement,
this Amendment, or any agreement or instrument to which the Board is a
party and which is used or contemplated for use in the consummation of the
transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
-----------------------------------------------------------
issue and sale or the Series 1989A Bonds and the execution and delivery by
the Board of the Supplemental Indenture and this Amendment and the
compliance by the Board with all of the provisions of each thereof and of
the Series 1989A Bonds (i) are within the purposes, powers and authority of
the Board, (ii) to the best of the knowledge of the Board, have been done
in full compliance with the provisions of the Act, are legal and will not
conflict with or constitute on the part of the Board a violation of or a
breach of or default under, or result in the creation of any lien or
encumbrance (other than Permitted Encumbrances under the Agreement) upon
any property of the Board under the provisions of, its certificate of
incorporation or Bylaws, or any indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Board is a party or
by which the Board is bound, or any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Board or any of its activities or
properties, and (iii) have been duly authorized by all necessary corporate
action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor any of
---------------------
its activities or properties, nor any relationship between the Board and
any other person, nor any circumstance in connection with the offer, issue,
sale or delivery of any of the Series 1989A Bonds is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Board in
connection with the execution, delivery and performance of the Supplemental
Indenture and this Amendment, or the offer, issue, sale or delivery of the
Series 1989A Bonds, other than (i) the filing with the Alabama Securities
Commission of the notification of the Board's intention to issue the Series
1989A Bonds required by Act No. 586 enacted at the 1978 Regular Session of
the Legislature of the State and the issuance by the Director of the
Alabama Securities Commission of such Certificate of
-3-
<PAGE>
Notification as may be required by said Act, and (ii) the due filing and
recording of this Amendment, the Supplemental Indenture and the financing
statements covering the security interests created hereunder and under the
Indenture. The Board has filed the notification referred to in (i) of the
preceding sentence and the Director of the Alabama Securities Commission
has issued a Certificate of Notification applicable to the Series 1989A
Bonds, which Certificate of notification has not been revoked or rescinded
and is in full force and effect.
(e) No Defaults. The Board is not in default under the Act or under
-----------
its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which is bound.
Section 1.4 Representations and Warranties by the Company. The
----------- ---------------------------------------------
Company makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) The Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has all
requisite corporate power and authority to carry on its business as now
being conducted and as presently proposed to be conducted, and (ii) has
duly qualified and is authorized to do business and is in good standing as
a foreign corporation in the State.
(b) The Company has the corporate power and has been duly authorized
to enter into this Amendment and to perform all of its obligations
hereunder.
(c) The willingness of the Board to issue the Series 1989A Bonds for
purposes of financing costs of acquiring, constructing, and installing the
Project, and to lease the Project to the Company, has induced the Company
to locate the Project within the State of Alabama and, more particularly,
within 25 miles of the City.
(d) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Amendment, or
performing any of its obligations hereunder; and the execution and delivery
of this Amendment, the consummation of the transactions contemplated
hereby, and the fulfillment of or compliance with the terms and conditions
of this
-4-
<PAGE>
Amendment will not conflict with or result in a breach of the terms,
conditions or provisions of any restriction, agreement or instrument to
which the Company is a party or by which it is bound, or constitute a
default under any of the foregoing.
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment
which, with the lapse of time or with the giving of notice or both, would
become an "Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to
which it is subject and has no failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership
of its properties or to the conduct of its business, which violation or
failure to obtain would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations under this
Amendment.
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document. As amended by
----------- ---------------------------------------
this Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to
----------- ----------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously
----------- ------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are
----------- --------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
-----------
accordance with the laws of the State of Alabama.
-5-
<PAGE>
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: Kenneth A. Roberts
-------------------------------------
Chairman
MEAD COATED BOARD, INC.
By: W. D. Bloebaum, Jr.
-------------------------------------
Title: Treasurer
-6-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of
the Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 24th day of February,
1989.
/s/ Sydney S Smith
-------------------
Notary Public
(SEAL)
My commission expires: 2/25/92
-7-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, ____________________, A Notary Public in and for said County in
said State, hereby certify that William D. Bloebaum, Jr., whose name as
Treasurer of MEAD COATED BOARD, INC., a corporation organized and existing under
the laws of the State of Delaware, is signed to the foregoing instrument and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the said instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 1st day of March, 1989.
/s/ Charity K. Burgess
-------------------------
Notary Public
(SEAL)
My commission expires: July 29, 1989
-8-
<PAGE>
EXHIBIT "A"
to
First Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of March 1, 1989
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
---------------------------------------------------
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
----------------------------------------------
AND CHIPS SCREEN HOUSE AREA (C-28515)
-------------------------------------
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted areas
which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State Georgia Coordinate System; and lying
in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N 63
degrees 51' 31" E, 790.90' to the point of beginning; thence N 90 degrees 00'
W, 82.00; thence S 0' 00" W, 8.75'; thence N 90 degrees 00' W, 232.22'; thence S
15 degrees 17' 15" E, 479.72' to a point on the northmost side of a rectangular
area (Chip Screen House) which parallels last said course and is 75.0' north to
south (7.00' of which is west of last said course) by 49.0' east to west; said
rectangular area being the point of ending; said land being 0.56+ acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
---------------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline:
-9-
<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, plus 14 N, R 30 E, County of Russell, State of
Alabama; thence N 45 degrees 24' 34" E, 692.79' to the point of beginning;
thence S 36 degrees 51' 02" E, 454.94' to the point of ending; said land
being 0.29 (plus or minus) acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
------------------------------------------------------
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
----------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 71 degrees 34' 06" E, 600.24' to the point of beginning; thence S
71 degrees 04' 32" E, 640.91'; thence N 50 degrees 08' 32" E, 61.59' to the
point of ending; said land being 0.45 (plus or minus) acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
-----------------------------------------
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
------------------------------------------
AND CHIP SILO AREA (C-28520)
----------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence S 48 degrees 21' 59" W, 84.29' to the point of beginning; thence S
56 degrees 07' 32" E, 319.22' to the center of a circular area (Chip Silo)
with a radius of 15.00' and a central angle of 360 degrees 00' bounded by a
rectangular structure 32' -6" (plus or minus) East-West and 32' -6" (plus
or minus) North-South; thence N 82 degrees 51' 32" E, 355.48' to the point
of ending; said land being 0.45 (plus or minus) acres;
-10-
<PAGE>
NEW WASHER FACILITY AND BATCH DIGESTER AREA
-------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00,
E 234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 48 degrees 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0 degrees 00' W, 133.50'; thence N 90
degrees 00' W, 103.39'; thence S 0 degrees 00' W, 103.50'; thence 90
degrees 00' W, 48.00'; thence N 0 degrees 00' W, 55.75'; thence N, 90
degrees 00' W, 80.00'; thence S 0 degrees 00' W, 42.75'; thence, N 90
degrees 00' W, 63.00'; thence N 0 degrees 00' W, 110.00'; thence N 45
degrees 00' E, 55.00'; thence N 0 degrees 00' W, 23.11'; thence N 90
degrees 00' E, 23.00'; thence N 0 degrees 00' W, 23.25'; thence N 90
degrees 00' E, 170.00'; thence N 0 degrees 00' W, 28.75'; thence N 90
degrees 00' E, 62.50' to the point of beginning; said area being 1.01 (plus
or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
-------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48 degrees 46' 07" W, 591.71' to the point of beginning (N
791,960.0 E 234,055.0); thence S 0 degrees 00' W, 170.00'; thence N 90
degrees 00' W, 111.00; thence N 0 degrees 00' W, 170.00'; thence N 90
degrees 00' E, 111.00' to the point of beginning; said land being 0.43
(plus or minus) acres;
TURPENTINE RECOVERY FACILITY AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 63 degrees 26' 06" W, 11.18' to the point of beginning
(N 792,345.0, E 234,490.0); thence N 0' 00" W, 30.00'; thence N 90 degrees
00" E, 20.00'; thence S 0 degrees 00' W, 30.00'; thence N 90 degrees 00' W,
20.00' to the point of beginning; said land being 0.01 (plus or minus)
acres;
-11-
<PAGE>
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
----------------------------------------------------------
DRUM AREA (C-28525), VIBRATING CONVEYORS AREA (C-28532),
--------------------------------------------------------
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
---------------------------------------------------
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
-----------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00 of the West Zone of the State of Georgia Coordinate System;
thence N 80(degrees) 22' 54" E, 879.79' to the point of beginning; thence N
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' E, 711.08'; thence S
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' W, 328.00'; thence S
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 50.00'; thence N
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 333.08' to the point
of beginning; said land being 5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 11(degrees) 04' 57" W, 197.69' to the point of beginning (N
792,156.0, E 234,462.0); thence S 0(degrees) 00" W, 82.00'; thence N
90(degrees) 00" W, 52.00'; thence N 0(degrees) 00' W, 82.00'; thence N
90(degrees) 00' E, 52.00 to the point of beginning; said land being 0.10
(plus or minus) acres;
NEW LIM KILN/RECAUSTICIZING AREA
--------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence N 70(degrees) 51' 29" E, 267.79' to the point of beginning
(793,238.0 E 233,503.0); thence N 90(degrees)
-12-
<PAGE>
00' E, 399.23'; thence S 0' 00' W, 50.00'; thence N 90 degrees 00' E,
45.00'; thence S 0 degrees 00' W, 78.00'; thence N 90 degrees 00' W,
444.23'; thence N 0 degrees 00' W, 128.00' to the point of beginning; said
land being 1.25 (plus or minus) acres;
NO. 2 RECOVERY BOILER AREA
--------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 40 degrees 16' 34" E, 439.77' to the point of beginning (N
792,814.67, E 233,534.32'); thence N 90 degrees 00' E, 36.30'; thence N 0
degrees 00' W, 20.50'; thence N 90 degrees 00' E, 72.26'; thence N 0
degrees 00' W, 14.83'; thence N 90 degrees 00' E, 110.50'; thence S 0
degrees 00' W, 42.58'; thence N 90 degrees 00' E, 26.00'; thence S 0' 00'
W, 81.00'; thence N 90 degrees 00' W, 51.00'; thence N 0 degrees 00" W,
25.12'; thence N 90 degrees 00' W, 85.50'; thence N 00 degrees 00' W,
8.63'; thence N 90 degrees 00' W, 72.26'; thence N 90 degrees 00' W,
20.50'; thence N 0 degrees 00' W, 36.30'; thence N 0 degrees 00' W, 34.00'
to the point of beginning; said land being 0.47 (plus or minus) acres;
NEW EVAPORATORS AND NEW TANKS AREA
----------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 62 degrees 01' 33" E, 637.83' to the point of beginning (N
792,851.0, E 233,813.33); thence N 90 degrees 00' E, 246.67'; thence along
an arc South and East 53.41' having a radius of 34.00' with a central angle
of 90 degrees 00'; thence S 0 degrees 00' W, 135.33'; thence along an arc
South and West 53.41' having a radius of 34.00' with a central angle of 90
degrees 00'; thence N 90 degrees 00' W, 34.00'; thence N 0 degrees 00' W,
99.79'; thence N 90 degrees 00' W, 69.00'; thence N 59 degrees 47' 19" W,
91.42'; thence N 90 degrees 00' W, 64.67'; thence N 0 degrees 00' W, 57.54'
to the point of beginning; said land being 0.72 (plus or minus) acres;
-13-
<PAGE>
(collectively, the "Unimproved Land"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (the 1977 Land less and except the 1988 Land) in order
to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Unimproved Land and the
Project including, without limitation, the right to make connections with
machinery,
-14-
<PAGE>
equipment, pipes, conduits and wires, structures and other improvements and
appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
-15-
<PAGE>
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved
Land, such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the
Unimproved Land in respect of any additional improvements constructed
adjacent to the Unimproved Land, as long as any such additional
improvements remain standing, including without limitation the rights of
lateral or party wall support, and to connect such additional improvements
to any structure or any improvements on the Unimproved Land.
-16-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
MEAD COATED BOARD, INC., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1988A
of the Industrial Board of the City of Phenix City, Alabama (the "Board"),
hereby consents to the execution and delivery of the foregoing First Amendment
to Lease Agreement, dated as of March 1, 1989, between the Board and Mead Coated
Board, Inc., amending the Lease Agreement, dated as of December 1, 1988, between
the Board and Mead Coated Board, Inc. and directs AmSouth Bank N.A., as trustee,
to consent to the execution and delivery of the same.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of March 1, 1989.
MEAD COATED BOARD, INC.
By: /s/ W. D. Bloebaum, Jr.
------------------------------
Title:
-17-
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK N.A., as Trustee under the Trust Indenture, dated as of
December 1, 1988, from the Industrial Development Board of the City of Phenix
City, Alabama (the "Board"), hereby consents to the execution and delivery of
the foregoing First Amendment to Lease Agreement, dated as of March 1, 1989,
between the Board and Mead Coated Board, Inc., amending the Lease Agreement,
dated as of December 1, 1988, between the Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of March 1, 1989.
AMSOUTH BANK N.A., as Trustee
By: /s/ T. Franklin Caley
------------------------------
Title: Vice President and
Corporate Trust Officer
-18-
<PAGE>
SECOND AMENDMENT
----------------
TO
--
LEASE AGREEMENT
---------------
THIS SECOND AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of April 1, 1989, by and between THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate
and politic duly organized and existing under the Constitution and laws of the
State of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the
"Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"), and $43,000,000 in aggregate principal amount
of The Industrial Development Board of the City of Phenix City, Alabama
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989A
(the "Series 1989A Bonds") pursuant to a Trust Indenture, dated as of December
1, 1988 (the "Original Indenture"), as supplemented by a First Supplemental
Trust Indenture dated as of March 1, 1989 (collectively, the "Indenture") from
the Board to AmSouth Bank N.A., as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds
and the Series 1989A Bonds for the payment of outstanding industrial development
temporary borrowing notes (the "Notes") issued by the Board for the purpose of
funding the acquisition, construction and installation of a coated natural kraft
mill and related facilities (the "Project") in connection with certain
industrial facilities located near Phenix City, Alabama. The Project is owned by
the Board and leased to the Company pursuant to a Lease Agreement dated as of
December 1, 1988, as amended by the First Amendment To Lease Agreement dated as
of March 1, 1989 (collectively, the "Agreement"). The Agreement obligates the
Company to make rental payments in such amounts and at such times as will
provide for the payment of the principal and interest on the Series 1988A Bonds
and the Series 1989A Bonds as the same becomes due and payable.
<PAGE>
Under Article IV of the Original Indenture, the Board is permitted to
issue Additional Bonds (as defined in the Original Indenture) in order to pay
additional Notes issued by the Board in connection with the Project. In that
connection, the Board is issuing $45,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989B
(the "Series 1989B Bonds"), pursuant to the Indenture as supplemented by a
Second Supplemental Trust Indenture dated as of April 1, 1989 (the "Second
Supplemental Indenture") from the Board to the Trustee. The Indenture as
supplemented by the Second Supplemental Indenture is hereinafter referred to as
the "Indenture".
NOW, THEREFORE, as contemplated by Section 4.5 of the Agreement and in
accordance with Section 1501 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
ARTICLE I
PROVISIONS FOR AMENDING THE AGREEMENT
-------------------------------------
Section 1.1 Amendment of Section 5.3 of the Agreement. The term
----------- -----------------------------------------
"Bonds" as used in Section 5.3 of the Agreement shall include the Series 1989B
Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1989B Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1988A Bonds and not specifically otherwise provided for
in the Indenture, any supplements thereto or the Agreement, shall apply with
full force and effect to the Series 1989B Bonds. Without limiting the foregoing,
all references in the Agreement to the "Bonds" shall be deemed to mean the
Series 1988A Bonds, the Series 1989A Bonds and the Series 1989B Bonds, including
without limitation the provisions of Section 5.3 of the Agreement relating to
the payment of rents.
Section 1.3 Representations and Warranties by the Board. The Board
----------- -------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public corporation duly
--------------------------
organized and validly existing under the provisions of the Act by authority of a
resolution adopted by the Board of Commissioners of the City on June 14, 1960
and a Certificate of Incorporation duly filed for record on October 17, 1960, in
the office of the Judge of Probate of Russell County, Alabama,
-2-
<PAGE>
which Certificate of Incorporation has not been amended or been revoked and
is of full force and effect. The Board has all requisite power and
authority under the Act (1) to issue the Series 1989B Bonds, (2) to use the
proceeds thereof to refund the Notes issued to pay the cost to acquire,
construct and install the Project, (3) to own, lease, encumber and dispose
of the Project, and (4) to enter into, and perform its obligations under,
the Indenture, the Agreement and this Amendment. This Amendment and the
Second Supplemental Indenture have been duly authorized, executed and
delivered by the Board and are legal, valid and binding agreements
enforceable against the Board in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal, which adversely
affect the validity or enforceability of the Series 1989B Bonds, the
Indenture, the Agreement, this Amendment, or any agreement or instrument to
which the Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
-----------------------------------------------------------
issue and sale of the Series 1989B Bonds and the execution and delivery by
the Board of the Second Supplemental Indenture and this Amendment and the
compliance by the Board with all of the provisions of each thereof and of
the Series 1989B Bonds (i) are within the purposes, powers and authority of
the Board, (ii) to the best of the knowledge of the Board, have been done
in full compliance with the provisions of the Act, are legal and will not
conflict with or constitute on the part of the Board a violation of or a
breach of or default under, or result in the creation of any lien or
encumbrance (other than Permitted Encumbrances under the Agreement) upon
any property of the Board under the provisions of, its certificate of
incorporation or Bylaws, or any indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Board is a party or
by which the Board is bound, or any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Board or any of its activities or
properties, and (iii) have been duly authorized by all necessary corporate
action on the part of the Board.
-3-
<PAGE>
(d) Governmental Consents. Neither the nature of the Board nor any
---------------------
of its activities or properties, nor any relationship between the Board and
any other person, nor any circumstance in connection with the offer, issue,
sale or delivery of any of the Series 1989B Bonds is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Board in
connection with the execution, delivery and performance of the Second
Supplemental Indenture and this Amendment, or the offer, issue, sale or
delivery of the Series 1989B Bonds, other than (i) the filing with the
Alabama Securities Commission of the notification of the Board's intention
to issue the Series 1989B Bonds required by Act No. 586 enacted at the 1978
Regular Session of the Legislature of the State and the issuance by the
Director of the Alabama Securities Commission of such Certificate of
Notification as may be required by said Act, and (ii) the due filing and
recording of this Amendment, the Second Supplemental Indenture and the
financing statements covering the security interests created hereunder and
under the Indenture. The Board has filed the notification referred to in
(i) of the preceding sentence and the Director of the Alabama Securities
Commission has issued a Certificate of Notification applicable to the
Series 1989B Bonds, which Certificate of notification has not been revoked
or rescinded and is in full force and effect.
(e) No Defaults. The Board is not in default under the Act or under
-----------
its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which is bound.
Section 1.4 Representations and Warranties by the Company. The Company
----------- ---------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) The Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has
all requisite corporate power and authority to carry on its business as now
being conducted and as presently proposed to be conducted, and (ii) has
duly qualified and is authorized to do business and is in good standing as
a foreign corporation in the State.
-4-
<PAGE>
(b) The Company has the corporate power and has been duly authorized
to enter into this Amendment and to perform all of its obligations
hereunder.
(c) The willingness of the Board to issue the Series 1989B Bonds for
purposes of financing costs of acquiring, constructing, and installing the
Project, and to lease the Project to the Company, has induced the Company
to locate the Project within the State of Alabama and, more particularly,
within 25 miles of the City.
(d) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Amendment, or
performing any of its obligations hereunder; and the execution and delivery
of this Amendment, the consummation of the transactions contemplated
hereby, and the fulfillment of or compliance with the terms and conditions
of this Amendment will not conflict with or result in a breach of the
terms, conditions or provisions of any restriction, agreement or instrument
to which the Company is a party or by which it is bound, or constitute a
default under any of the foregoing.
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment
which, with the lapse of time or with the giving of notice or both, would
become an "Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to
which it is subject and has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership
of its properties or to the conduct of its business, which violation or
failure to obtain would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations under this
Amendment.
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document.
----------- ---------------------------------------
As amended by this Amendment, the Agreement is in all respects ratified and
confirmed and the Agreement and this Amendment shall be read, taken and
construed as one and the same instrument.
-5-
<PAGE>
Section 2.2 References. All references herein or in the Agreement to
----------- ----------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously
----------- ------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are
----------- --------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
----------- --------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: /s/ Kenneth A. Roberts
----------------------------------
Chairman
MEAD COATED BOARD, INC.
By: /s/ W. D. Bloebaum, Jr.
----------------------------------
Title: Treasurer
-6-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 5th day of April, 1989.
-----
/s/ Sydney S. Smith
-----------------------------------
Notary Public
(SEAL)
My commission expires: 2/25/92
------------
-7-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Jeffrey L. Hayman, Notary Public in and for said County in said
State, hereby certify that William D. Bloebaum, Jr., whose name as Treasurer of
MEAD COATED BOARD, INC., a corporation organized and existing under the laws of
the State of Delaware, is signed to the foregoing instrument and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the said instrument, he, as such officer and with full authority, executed the
same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this ______ day of April ___,
1989.
/s/ Jeffrey L. Hayman
---------------------
Notary Public
My commission expires:_____
(SEAL)
-8-
<PAGE>
EXHIBIT "A"
to
Second Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of April 1, 1989
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
---------------------------------------------------
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513)
---------------------------------------------,
AND CHIPS SCREEN HOUSE AREA (C-28515)
-------------------------------------
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 63 degrees 51' 31" E, 790.90' to the point of beginning; thence N
90 degrees 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90 degrees 00'
W, 232.22'; thence S 15 degrees 17' 15" E, 479.72' to a point on the
northmost side of a rectangular area (Chip Screen House) which parallels
last said course and is 75.0' north to south (7.00' of which is west of
last said course) by 49.0' east to west; said rectangular area being the
point of ending; said land being 0.56+ acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
---------------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline:
-9-
<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 45 degrees 24' 34" E, 692.79' to the point of beginning; thence S
36(degrees) 51' 02" E, 454.94' to the point of ending; said land being
0.29(plus or minus) acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
------------------------------------------------------
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
----------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 71(degrees) 34' 06" E, 600.24' to the point of beginning; thence S
71(degrees) 04' 32" E, 640.91' thence N 50(degrees) 08' 32" E, 61.59' to
the point of ending; said land being 0.45 (plus or minus) acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
-----------------------------------------
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
-----------------------------------------
AND CHIP SILO AREA (C-28520)
----------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence S 48(degrees) 21' 59" W, 84.29' to the point of beginning; thence S
56(degrees) 07' 32" E, 319.22' to the center of a circular area (Chip Silo)
with a radius of 15.00' and a central angle of 360(degrees) 00' bounded by
a rectangular structure 32' -6" (plus or minus) East-West and 32' -6" (plus
or minus) North-South; thence N 82(degrees) 51' 32" E, 355.48' to the point
of ending; said land being 0.45 (plus or minus) acres;
-10-
<PAGE>
NEW WASHER FACILITY AND BATCH DIGESTER AREA
-------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 48(degrees) 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0(degrees) 00' W, 133.50'; thence N
90(degrees) 00' W, 103.39'; thence S 0(degrees) 00' W, 103.50'; thence
90(degrees) 00' W, 48.00'; thence N 0(degrees) 00' W, 55.75'; thence N
90(degrees) 00' W, 80.00'; thence S 0(degrees) 00' W, 42.75'; thence N
90(degrees) 00' W. 63.00'; thence N 0(degrees) 00' W, 110.00'; thence N
45(degrees) 00' E, 55.00'; thence N 0(degrees) 00' W, 23.11'; thence N
90(degrees) 00' E, 23.00'; thence N 0(degrees) 00' W, 23.25'; thence N
90(degrees) 00' E, 170.00'; thence N 0(degrees) 00' W, 28.75'; thence N
90(degrees) 00' E, 62.50' to the point of beginning; said area being 1.01
(plus or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
-------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48(degrees) 46' 07" W, 591.71' to the point of beginning (N
791,960.0 E 234,055.0); thence S 0(degrees) 00' W, 170.00'; thence N
90(degrees) 00' W, 111.00; thence N 0(degrees) 00' W, 170.00'; thence N
90(degrees) 00' E, 111.00' to the point of beginning; said land being 0.43
(plus or minus) acres;
TURPENTINE RECOVERY FACILITY AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 63(degrees) 26' 06" W, 11.18' to the point of beginning (N
792,345.0, E 234,490.0); thence N 0' 00" W, 30.00'; thence N 90(degrees)
00" E, 20.00'; thence S 0(degrees) 00' W, 30.00'; thence N 90(degrees) 00'
W, 20.00' to the point of beginning; said land being 0.01 (plus or minus)
acres;
-11-
<PAGE>
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
----------------------------------------------------------
DRUM AREA (C-28525), VIBRATING CONVEYORS AREA (C-28532),
--------------------------------------------------------
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
---------------------------------------------------
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
-----------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 80 degrees 22' 54" E, 879.79' to the point of beginning; thence N
0 degrees 00' W, 326.00'; thence N 90 degrees 00' E, 711.08'; thence S 0
degrees 00' W, 326.00'; thence N 90 degrees 00' W, 328.00'; thence S 0
degrees 00' W, 188.00'; thence N 90 degrees 00' W, 50.00'; thence N 0
degrees 00' W, 188.00'; thence N 90 degrees 00' W, 333.08' to the point of
beginning; said land being 5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 11 degrees 04' 57" W, 197.69' to the point of beginning (N
792,156.0, E 234,462.0); thence S 0 degrees 00" W, 82.00'; thence N 90
degrees 00" W, 52.00'; thence N 0 degrees 00' W, 82.00'; thence N 90
degrees 00' E, 52.00 to the point of beginning; said land being 0.10 (plus
or minus) acres;
NEW LIM KILN/RECAUSTICIZING AREA
--------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence N 70 degrees 51' 29" E, 267.79' to the point of beginning (793,238.0
E 233,503.0); thence N 90 degrees
-12-
<PAGE>
00' E, 399.23'; thence S 0(degrees) 00' W, 50.00'; thence N 90(degrees) 00'
E, 45.00'; thence S 0(degrees) 00' W, 78.00'; thence N 90(degrees) 00' W,
444.23'; thence N 0(degrees) 00' W, 128.00' to the point of beginning; said
land being 1.25 (plus or minus) acres;
No. 2 RECOVERY BOILER AREA
--------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 40(degrees) 16' 34" E, 439.77' to the point of beginning (N
792,814.67, E 233,534.32'); thence N 90(degrees) 00' E, 36.30'; thence N
0(degrees) 00' W, 20.50'; thence N 90(degrees) 00' E, 72.26'; thence N
0(degrees) 00' W, 14.83'; thence N 90(degrees) 00' E, 110.50'; thence S
0(degrees) 00' W, 42.58'; thence N 90(degrees) 00' E, 26.00'; thence S
0(degrees) 00' W, 81.00'; thence N 90(degrees) 00' W, 51.00'; thence N
0(degrees) 00" W, 25.12'; thence N 90(degrees) 00' W, 85.50'; thence N
00(degrees) 00' W, 8.63'; thence N 90(degrees) 00' W, 72.26'; thence N
90(degrees) 00' W, 20.50'; thence N 0(degrees) 00' W, 36.30'; thence N
0(degrees) 00' W, 34.00' to the point of beginning; said land being 0.47
(plus or minus) acres;
NEW EVAPORATORS AND NEW TANKS AREA
----------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 62(degrees) 01' 33" E, 637.83' to the point of beginning (N
792,851.0, E 233,813.33); thence N 90(degrees) 00' E, 246.67'; thence along
an arc South and East 53.41' having a radius of 34.00' with a central angle
of 90(degrees) 00'; thence S 0(degrees) 00' W, 135.33'; thence along an arc
South and West 53.41' having a radius of 34.00' with a central angle of
90(degrees) 00'; thence N 90(degrees) 00' W, 34.00'; thence N 0(degrees)
00' W, 99.79'; thence N 90(degrees) 00' W, 69.00'; thence N 59(degrees) 47'
19" W, 91.42'; thence N 90(degrees) 00' W, 64.67'; thence N 0(degrees) 00'
W, 57.54' to the point of beginning; said land being 0.72 (plus or minus)
acres;
-13-
<PAGE>
(collectively, the "Unimproved Land"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (the 1977 Land less and except the 1988 Land) in order
to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Unimproved Land and the
Project including, without limitation, the right to make connections with
machinery,
-14-
<PAGE>
equipment, pipes, conduits and wires, structures and other improvements and
appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and faci1itate the
operation of any facilities located on the Board Premises;
-15-
<PAGE>
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the
Unimproved Land in respect of any additional improvements constructed
adjacent to the Unimproved Land, as long as any such additional
improvements remain standing, including without limitation the rights of
lateral or party wall support, and to connect such additional improvements
to any structure or any improvements on the Unimproved Land.
-16-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
MEAD COATED BOARD, INC., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project) Series 1988A of
the Industrial Board of the City of Phenix City, Alabama (the "Board"), hereby
consents to the execution and delivery of the foregoing Second Amendment To
Lease Agreement dated as of April 1, 1989, between the Board and Mead Coated
Board, Inc., amending the Lease Agreement, dated as of December 1, 1988, as
amended by a First Amendment To Lease Agreement dated as of March 1, 1989,
between the Board and Mead Coated Board, Inc. and directs AmSouth Bank N.A., as
Trustee, to consent to the execution and delivery of the same.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of April 1, 1989.
MEAD COATED BOARD, INC.
By: W.D. Bloebaum, Jr.
---------------------------------
Title:
-17-
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK N.A., as Trustee under the Trust Indenture dated as of
December 1, 1988, as supplemented by a First Supplemental Trust Indenture dated
as of March 1, 1989, from the Industrial Development Board of the City of Phenix
City, Alabama (the "Board"), hereby consents to the execution and delivery of
the foregoing Second Amendment To Lease Agreement, dated as of March 1, 1989,
between the Board and Mead Coated Board, Inc., amending the Lease Agreement,
dated as of December 1, 1988, as amended by a First Amendment To Lease Agreement
dated as of March 1, 1989, between the Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of April 1, 1989.
AMSOUTH BANK N.A., as Trustee
By: /s/ David E. White
--------------------------------
Title:
-18-
<PAGE>
THIRD AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS THIRD AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of June 1, 1989, by and between THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate and
politic duly organized and existing under the Constitution and laws of the State
of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the "Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"); $43,000,000 in aggregate principal amount of
The Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989A (the "Series
1989A Bonds"); and $45,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1989B (the "Series 1989B
Bonds") pursuant to a Trust Indenture, dated as of December 1, 1988 (the
"Original Indenture"), as supplemented by a First Supplemental Trust Indenture
dated as of March 1, 1989 and a Second Supplemental Trust Indenture dated as of
April 1, 1989 (collectively, the "Indenture") from the Board to AmSouth Bank
N.A., as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds,
the Series 1989A Bonds and the Series 1989B Bonds for the payment of outstanding
industrial development temporary borrowing notes (the "Notes") issued by the
Board for the purpose of funding the acquisition, construction and installation
of a coated natural kraft mill and related facilities (the "Project") in
connection with certain industrial facilities located near Phenix City,
Alabama. The Project is owned by the Board and leased to the Company pursuant to
a Lease Agreement dated as of December 1, 1988, as amended by the First
Amendment To Lease Agreement dated as of March 1, 1989 and the Second Amendment
To Lease Agreement dated as of April 1, 1989 (collectively, the "Agreement").
The Agreement obligates the
<PAGE>
Company to make rental payments in such amounts and at such times as will
provide for the payment of the principal and interest on the Series 1988A Bonds,
the Series 1989A Bonds and the Series 1989B Bonds as the same becomes due and
payable.
Under Article IV of the Original Indenture, the Board is permitted to
issue Additional Bonds (as defined in the Original Indenture) in order to pay
additional Notes issued by the Board in connection with the Project. In that
connection, the Board is issuing $37,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989C
(the "Series 1989C Bonds"), pursuant to the Indenture as supplemented by a Third
Supplemental Trust Indenture dated as of June 1, 1989 (the "Third Supplemental
Indenture") from the Board to the Trustee. The Indenture as supplemented by the
Third Supplemental Indenture is hereinafter referred to as the "Indenture".
NOW, THEREFORE, as contemplated by Section 4.5 of the Agreement and in
accordance with Section 1501 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
ARTICLE I
PROVISIONS FOR AMENDING THE AGREEMENT
-------------------------------------
Section 1.1 Amendment of Section 5.3 of the Agreement. The term
----------- -----------------------------------------
"Bonds" as used in Section 5.3 of the Agreement shall include the Series 1989C
Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1989C Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1988A Bonds and not specifically otherwise provided for
in the Indenture, any supplements thereto or the Agreement, shall apply with
full force and effect to the Series 1989C Bonds. Without limiting the foregoing,
all references in the Agreement to the "Bonds" shall be deemed to mean the
Series 1988A Bonds, the Series 1989A Bonds, the Series 1989B Bonds and the
Series 1989C Bonds including without limitation the provisions of Section 5.3 of
the Agreement relating to the payment of rents.
Section 1.3 Representations and Warranties by the Board. The Board
----------- -------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public corporation
--------------------------
duly organized and validly existing under the provisions of the Act by
authority of a
-2-
<PAGE>
resolution adopted by the Board of Commissioners of the City on June 14,
1960 and a Certificate of Incorporation duly filed for record on October
17, 1960, in the office of the Judge of Probate of Russell County, Alabama,
which Certificate of Incorporation has not been amended or been revoked and
is of full force and effect. The Board has all requisite power and
authority under the Act (1) to issue the Series 1989C Bonds, (2) to use the
proceeds thereof to refund the Notes issued to pay the cost to acquire,
construct and install the Project, (3) to own, lease, encumber and dispose
of the Project, and (4) to enter into, and perform its obligations under,
the Indenture, the Agreement and this Amendment. This Amendment and the
Third Supplemental Indenture have been duly authorized, executed and
delivered by the Board and are legal, valid and binding agreements
enforceable against the Board in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal, which adversely
affect the validity or enforceability of the Series 1989C Bonds, the
Indenture, the Agreement, this Amendment, or any agreement or instrument to
which the Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
-----------------------------------------------------------
issue and sale of the Series 1989C Bonds and the execution and delivery by
the Board of the Third Supplemental Indenture and this Amendment and the
compliance by the Board with all of the provisions of each thereof and of
the Series 1989C Bonds (i) are within the purposes, powers and authority of
the Board, (ii) to the best of the knowledge of the Board, have been done
in full compliance with the provisions of the Act, are legal and will not
conflict with or constitute on the part of the Board a violation of or a
breach of or default under, or result in the creation of any lien or
encumbrance (other than Permitted Encumbrances under the Agreement) upon
any property of the Board under the provisions of, its certificate of
incorporation or Bylaws, or any indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Board is a party or
by which the Board is bound, or any license, judgment, decree, law,
-3-
<PAGE>
statute, order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Board or any of its activities or
properties, and (iii) have been duly authorized by all necessary corporate
action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor any of
---------------------
its activities or properties, nor any relationship between the Board and
any other person, nor any circumstance in connection with the offer, issue,
sale or delivery of any of the Series 1989C Bonds is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Board in
connection with the execution, delivery and performance of the Third
Supplemental Indenture and this Amendment, or the offer, issue, sale or
delivery of the Series 1989C Bonds, other than (i) the filing with the
Alabama Securities Commission of the notification of the Board's intention
to issue the Series 1989C Bonds required by Act No. 586 enacted at the 1978
Regular Session of the Legislature of the State and the issuance by the
Director of the Alabama Securities Commission of such Certificate of
Notification as may be required by said Act, and (ii) the due filing and
recording of this Amendment, the Third Supplemental Indenture and the
financing statements covering the security interests created hereunder and
under the Indenture. The Board has filed the notification referred to in
(i) of the preceding sentence and the Director of the Alabama Securities
Commission has issued a Certificate of Notification applicable to the
Series 1989C Bonds, which Certificate of notification has not been revoked
or rescinded and is in full force and effect.
(e) No Defaults. The Board is not in default under the Act or under
-----------
its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which is bound.
Section 1.4 Representations and Warranties by the Company. The
----------- ---------------------------------------------
Company makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) The Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has all
requisite corporate power and authority to carry on its
-4-
<PAGE>
business as now being conducted and as presently proposed to be conducted,
and (iii) has duly qualified and is authorized to do business and is in
good standing as a foreign corporation in the State.
(b) The Company has the corporate power and has been duly authorized
to enter into this Amendment and to perform all of its obligations
hereunder.
(c) The willingness of the Board to issue the Series 1989C Bonds for
purposes of financing costs of acquiring, constructing, and installing the
Project, and to lease the Project to the Company, has induced the Company
to locate the Project within the State of Alabama and, more particularly,
within 25 miles of the City.
(d) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Amendment, or
performing any of its obligations hereunder; and the execution and delivery
of this Amendment, the consummation of the transactions contemplated
hereby, and the fulfillment of or compliance with the terms and conditions
of this Amendment will not conflict with or result in a breach of the
terms, conditions or provisions of any restriction, agreement or instrument
to which the Company is a party or by which it is bound, or constitute a
default under any of the foregoing.
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment
which, with the lapse of time or with the giving of notice or both, would
become an "Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to
which it is subject and has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership
of its properties or to the conduct of its business, which violation or
failure to obtain would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations under this
Amendment.
-5-
<PAGE>
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document. As amended by
----------- ----------------------------------------
this Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to
----------- -----------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously
----------- -------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are
----------- ---------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
----------- ---------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: /s/ Kenneth A. Roberts
-----------------------------------
Chairman
MEAD COATED BOARD, INC.
By:__________________________________
Title: Treasurer
-6-
<PAGE>
FOURTH AMENDMENT
----------------
TO
--
LEASE AGREEMENT
---------------
THIS FOURTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made
and entered into as of July 1, 1989, by and between THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body
corporate and politic duly organized and existing under the Constitution and
laws of the State of Alabama, and MEAD COATED BOARD, INC., a Delaware
corporation (the "Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"); $43,000,000 in aggregate principal amount of
The Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989A (the "Series
1989A Bonds"); $45,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1989B (the "Series 1989B
Bonds"); and $37,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project) Series 1989C (the "Series 1989C
Bonds"), pursuant to a Trust Indenture, dated as of December 1, 1988 (the
"Original Indenture"), as supplemented by a First Supplemental Trust Indenture
dated as of March 1, 1989, a Second Supplemental Trust Indenture dated as of
April 1, 1989 and a Third Supplemental Trust Indenture dated as of June 1, 1989
(collectively, the "Indenture"), from the Board to AmSouth Bank N.A., as Trustee
(the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds,
the Series 1989A Bonds, the Series 1989B Bonds and the Series 1989C Bonds for
the payment of outstanding industrial development temporary borrowing notes (the
"Notes") issued by the Board for the purpose of funding the acquisition,
construction and installation of a coated natural kraft mill and related
facilities (the "Project") in connection with certain industrial facilities
located near Phenix City, Alabama. The Project is owned by the Board and leased
to the Company pursuant
<PAGE>
to a Lease Agreement dated as of December 1, 1988, as amended by the First
Amendment To Lease Agreement dated as of March 1, 1989, the Second Amendment To
Lease Agreement dated as of April 1, 1989 and the Third Amendment To Lease
Agreement dated as of June 1, 1989 (collectively the "Agreement"). The Agreement
obligates the Company to make rental payments in such amounts and at such times
as will provide for the payment of the principal and interest on the Series
1988A Bonds, the Series 1989A Bonds, the Series 1989B Bonds and the Series 1989C
Bonds as the same becomes due and payable.
Under Article IV of the Original Indenture, the Board is permitted to
issue Additional Bonds (as defined in the Original Indenture) in order to pay
additional Notes issued by the Board in connection with the Project. In that
connection, the Board is issuing $40,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989D
(the "Series 1989D Bonds"), pursuant to the Indenture as supplemented by a
Fourth Supplemental Trust Indenture dated as of July 1, 1989 (the "Fourth
Supplemental Indenture") from the Board to the Trustee. The Indenture as
supplemented by the Fourth Supplemental Indenture is hereinafter referred to as
the "Indenture".
NOW, THEREFORE, as contemplated by Section 4.5 of the Agreement and in
accordance with Section 1501 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
ARTICLE I
PROVISIONS FOR AMENDING THE AGREEMENT
-------------------------------------
Section 1.1 Amendment of Section 5.3 of the Agreement. The term
------------------------------------------------------
"Bonds" as used in Section 5.3 of the Agreement shall include the Series 1989D
Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1989D Bonds. All
----------------------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1988A Bonds and not specifically otherwise provided for
in the Indenture, any supplements thereto or the Agreement, shall apply with
full force and effect to the Series 1989D Bonds. Without limiting the
foregoing, all references in the Agreement to the "Bonds" shall be deemed to
mean the Series 1988A Bonds, the Series 1989A Bonds, the Series 1989B Bonds, the
Series 1989C Bonds and the Series 1989D Bonds, including without limitation the
provisions of Section 5.3 of the Agreement relating to the payment of rents.
-2-
<PAGE>
Section 1.3 Representations and Warranties by the Board. The Board
--------------------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public corporation duly
---------------------------
organized and validly existing under the provisions of the Act by authority
of a resolution adopted by the Board of Commissioners of the City on June
14, 1960 and a Certificate of Incorporation duly filed for record on
October 17, 1960, in the office of the Judge of Probate of Russell County,
Alabama, which Certificate of Incorporation has not been amended or been
revoked and is of full force and effect. The Board has all requisite power
and authority under the Act (1) to issue the Series 1989D Bonds, (2) to use
the proceeds thereof to refund the Notes issued to pay the cost to acquire,
construct and install the Project, (3) to own, lease, encumber and dispose
of the Project, and (4) to enter into, and perform its obligations under,
the Indenture, the Agreement and this Amendment. This Amendment and the
Fourth Supplemental Indenture have been duly authorized, executed and
delivered by the Board and are legal, valid and binding agreements
enforceable against the Board in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
-------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal, which adversely
affect the validity or enforceability of the Series 1989D Bonds, the
Indenture, the Agreement, this Amendment, or any agreement or instrument to
which the Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
------------------------------------------------------------
issue and sale of the Series 1989D Bonds and the execution and delivery by
the Board of the Fourth Supplemental Indenture and this Amendment and the
compliance by the Board with all of the provisions of each thereof and of
the Series 1989D Bonds (i) are within the purposes, powers and authority of
the Board, (ii) to the best of the knowledge of the Board, have been done
in full compliance with the provisions of the Act, are legal and will not
conflict with or constitute on the part of the Board a violation of or a
breach of or default under, or result in the creation of any lien or
encumbrance (other than Permitted
-3-
<PAGE>
Encumbrances under the Agreement) upon any property of the Board under the
provisions of, its certificate of incorporation or Bylaws, or any indenture,
mortgage, deed of trust, note agreement or other agreement or instrument to
which the Board is a party or by which the Board is bound, or any license,
judgment, decree, law, statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Board or any of its
activities or properties, and (iii) have been duly authorized by all necessary
corporate action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor any of its
----------------------
activities or properties, nor any relationship between the Board and any other
person, nor any circumstance in connection with the offer, issue, sale or
delivery of any of the Series 1989D Bonds is such as to require the consent,
approval or authorization of, or the filing, registration or qualification with,
any governmental authority on the part of the Board in connection with the
execution, delivery and performance of the Fourth Supplemental Indenture and
this Amendment, or the offer, issue, sale or delivery of the Series 1989D Bonds,
other than (i) the filing with the Alabama Securities Commission of the
notification of the Board's intention to issue the Series 1989D Bonds required
by Act No. 586 enacted at the 1978 Regular Session of the Legislature of the
State and the issuance by the Director of the Alabama Securities Commission of
such Certificate of Notification as may be required by said Act, and (ii) the
due filing and recording of this Amendment, the Fourth Supplemental Indenture
and the financing statements covering the security interests created hereunder
and under the Indenture. The Board has filed the notification referred to in (i)
of the preceding sentence and the Director of the Alabama Securities Commission
has issued a Certificate of Notification applicable to the Series 1989D Bonds,
which Certificate of notification has not been revoked or rescinded and is in
full force and effect.
(e) No Defaults. The Board is not in default under the Act or under
------------
its Certificate of Incorporation or Bylaws or any other agreement or instrument
to which it is a party or by which is bound.
Section 1.4 Representations and Warranties by the Company. The Company
----------------------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
-4-
<PAGE>
(a) The Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has all
requisite corporate power and authority to carry on its business as now being
conducted and as presently proposed to be conducted, and (iii) has duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in the State.
(b) The Company has the corporate power and has been duly authorized
to enter into this Amendment and to perform all of its obligations hereunder.
(c) The willingness of the Board to issue the Series 1989D Bonds for
purposes of financing costs of acquiring, constructing, and installing the
Project, and to lease the Project to the Company, has induced the Company to
locate the Project within the State of Alabama and, more particularly, within 25
miles of the City.
(d) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Amendment, or
performing any of its obligations hereunder; and the execution and delivery of
this Amendment, the consummation of the transactions contemplated hereby, and
the fulfillment of or compliance with the terms and conditions of this Amendment
will not conflict with or result in a breach of the terms, conditions or
provisions of any restriction, agreement or instrument to which the Company is a
party or by which it is bound, or constitute a default under any of the
foregoing.
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment which,
with the lapse of time or with the giving of notice or both, would become an
"Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to which it
is subject and has not failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its properties
or to the conduct of its business, which violation or failure to obtain would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations under this Amendment.
-5-
<PAGE>
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Aqreement and Amendment as One Document. As amended by
---------------------------------------------------
this Amendment, the Agreement is in al1 respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to
----------------------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously
------------------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are
--------------------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
--------------------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By:/s/ Kenneth A. Roberts
-------------------------------------
Chairman
MEAD COATED BOARD, INC.
By: /s/ W. D. Bloebaum, Jr.
-------------------------------------
Title: Treasurer
-6-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents
of the said instrument, he, as such officer and with full authority, executed
the same voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 24th day of July, 1989.
/s/ Sydney S. Smith
--------------------
Notary Public
(SEAL)
My commission expires: 2/25/92
-7-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Charity K. Burgess, Notary Public in and for said County in said
State, hereby certify that William D. Bloebaum, Jr., whose name as Treasurer of
MEAD COATED BOARD, INC., a corporation organized and existing under the laws of
the State of Delaware, is signed to the foregoing instrument and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the said instrument, he, as such officer and with full authority, executed the
same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 24th day of July, 1989.
/s/ Charity K. Burgess
----------------------
Notary Public
(SEAL)
My commission expires: 7/29/89
-8-
<PAGE>
EXHIBIT "A"
to
Fourth Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of July 1, 1989
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
---------------------------------------------------
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
----------------------------------------------
AND CHIPS SCREEN HOUSE AREA (C-28515)
-------------------------------------
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 63(degrees) 51' 31" E, 790.90' to the point of beginning; thence N
90(degrees) 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90(degrees)
00' W, 232.22'; thence S 15(degrees) 17' 15" E, 479.72' to a point on the
northmost side of a rectangular area (Chip Screen House) which parallels
last said course and is 75.0' north to south (7.00' of which is west of
last said course) by 49.0' east to west; said rectangular area being the
point of ending; said land being 0.56+ acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
---------------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R
-9-
<PAGE>
30 E, County of Russell, State of Alabama; thence N 45(degrees) 24' 34" E,
692.79' to the point of beginning; thence S 36(degrees) 51' 02" E, 454.94'
to the point of ending; said land being 0.29+/- acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
------------------------------------------------------
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
----------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 71(degrees) 34' 06" E, 600.24' to the point of beginning; thence S
71(degrees) 04' 32" E, 640.91'; thence N 50(degrees) 08' 32" E, 61.59' to
the point of ending; said land being 0.45+/- acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
-----------------------------------------
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
------------------------------------------
AND CHIP SILO AREA (C-28520)
----------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence S 48(degrees) 21' 59" W, 84.29' to the point of beginning; thence S
56(degrees) 07' 32" E, 319.22' to the center of a circular area (Chip Silo)
with a radius of 15.00' and a central angle of 360(degrees) 00' bounded by
a rectangular structure 32' -6"+/- East-West and 32' -6"+/- North-South;
thence N 82(degrees) 51' 32" E, 355.48' to the point of ending; said land
being 0.45+/- acres;
NEW WASHER FACILITY AND BATCH DIGESTER AREA
-------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
-10-
<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 48(degrees) 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0(degrees) 00' W, 133.50'; thence N
90(degrees) 00' W, 103.39'; thence S 0(degrees) 00' W, 103.50'; thence
90(degrees) 00' W, 48.00'; thence N 0(degrees) 00' W, 55.75'; thence N
90(degrees) 00' W, 80.00'; thence S 0(degrees) 00' W, 42.75'; thence N
90(degrees) 00' W, 63.00'; thence N 0(degrees) 00' W, 110.00'; thence N
45(degrees) 00' E, 55.00'; thence N 0(degrees) 00' W, 23.11'; thence N
90(degrees) 00' E, 23.00'; thence N 0(degrees) 00' W, 23.25'; thence N
90(degrees) 00' E, 170.00'; thence N 0(degrees) 00' W, 28.75'; thence N
90(degrees) 00' E, 62.50' to the point of beginning; said area being
1.01 (plus or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
-------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48(degrees) 46' 07" W, 591.71' to the point of beginning (N
791,960.0 E 234,055.0); thence S 0(degrees) 00' W, 170.00'; thence N
90(degrees) 00' W, 111.00; thence N 0(degrees) 00' W, 170.00'; thence N
90(degrees) 00' E, 111.00' to the point of beginning; said land being
0.43 (plus or minus) acres;
TURPENTINE RECOVERY FACILITY AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 63(degrees) 26' 06" W, 11.18' to the point of beginning (N
792,345.0, E 234,490.0); thence N 0' 00" W, 30.00'; thence N 90(degrees)
00" E, 20.00'; thence S 0(degrees) 00' W, 30.00'; thence N 90(degrees) 00'
W, 20.00' to the point of beginning; said land being 0.01 (plus or minus)
acres;
-11-
<PAGE>
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
----------------------------------------------------------
DRUM AREA (C-28525), VIBRATING CONVEYORS AREA (C-28532),
--------------------------------------------------------
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
---------------------------------------------------
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
-----------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 80(degrees) 22' 54" E, 879.79' to the point of beginning; thence N
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' E, 711.08'; thence S
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' W, 328.00'; thence S
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 50.00'; thence N
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 333.08' to the point
of beginning; said land being 5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 11(degrees) 04' 57" W, 197.69' to the point of beginning (N
792,156.0, E 234,462.0); thence S 0(degrees) 00" W, 82.00'; thence N
90(degrees) 00" W, 52.00'; thence N 0(degrees) 00' W, 82.00'; thence N
90(degrees) 00' E, 52.00 to the point of beginning; said land being 0.10
(plus or minus) acres;
NEW LIM KILN/RECAUSTICIZING AREA
--------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence N 70(degrees) 51' 29" E, 267.79' to the point of beginning
(793,238.0 E 233,503.0); thence N 90(degrees) 00' E, 399.23'; thence S
0(degrees) 00' W, 50.00'; thence N 90(degrees) 00' E, 45.00'; thence S
0(degrees) 00' W, 78.00'; thence N 90(degrees) 00' W, 444.23'; thence N
0(degrees) 00' W, 128.00' to the point of beginning; said land being 1.25
(plus or minus) acres;
-12-
<PAGE>
NO. 2 RECOVERY BOILER AREA
--------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 40(degrees) 16' 34" E, 439.77' to the point of beginning (N
792,814.67, E 233,534.32'); thence N 90(degrees) 00' E, 36.30'; thence N
0(degrees) 00' W, 20.50'; thence N 90(degrees) 00' E, 72.26'; thence N
0(degrees) 00' W, 14.83'; thence N 90(degrees) 00' E, 110.50'; thence S
0(degrees) 00' W, 42.58'; thence N 90(degrees) 00' E, 26.00'; thence S
0(degrees) 00' W, 81.00'; thence N 90(degrees) 00' W, 51.00'; thence N
0(degrees) 00" W, 25.12'; thence N 90(degrees) 00' W, 85.50'; thence N
00(degrees) 00' W, 8.63'; thence N 90(degrees) 00' W, 72.26'; thence N
90(degrees) 00' W, 20.50'; thence N 0(degrees) 00' W, 36.30'; thence N
0(degrees) 00' W, 34.00' to the point of beginning; said land being 0.47
(plus or minus) acres;
NEW EVAPORATORS AND NEW TANKS AREA
----------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 62(degrees) 01' 33" E, 637.83' to the point of beginning (N
792,851.0, E 233,813.33); thence N 90(degrees) 00' E, 246.67'; thence along
an arc South and East 53.41' having a radius of 34.00' with a central angle
of 90(degrees) 00'; thence S 0(degrees) 00' W, 135.33'; thence along an arc
South and West 53.41' having a radius of 34.00' with a central angle of
90(degrees) 00'; thence N 90(degrees) 00' W, 34.00'; thence N 0(degrees)
00' W, 99.79'; thence N 90(degrees) 00' W, 69.00'; thence N 59(degrees) 47'
19" W, 91.42'; thence N 90(degrees) 00' W, 64.67'; thence N 0(degrees) 00'
W, 57.54' to the point of beginning; said land being 0.72 (plus or minus)
acres;
(collectively, the "Unimproved Land"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
-13-
<PAGE>
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (the 1977 Land less and except the 1988 Land) in order
to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Unimproved Land and the
Project including, without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
-14-
<PAGE>
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing,
-15-
<PAGE>
and to construct and maintain similar encroachments on the Unimproved Land
in respect of any additional improvements constructed adjacent to the
Unimproved Land, as long as any such additional improvements remain
standing, including without limitation the rights of lateral or party wall
support, and to connect such additional improvements to any structure or
any improvements on the Unimproved Land.
-16-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
MEAD COATED BOARD, INC., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1988A
of the Industrial Board of the City of Phenix City, Alabama (the "Board"),
hereby consents to the execution and delivery of the foregoing Fourth Amendment
To Lease Agreement dated as of July 1, 1989, between the Board and Mead Coated
Board, Inc., amending the Lease Agreement, dated as of December 1, 1988, as
amended by a First Amendment To Lease Agreement dated as of March 1, 1989, a
Second Amendment to Lease Agreement dated as of April 1, 1989 and a Third
Amendment To Lease Agreement dated as of June 1, 1989, between the Board and
Mead Coated Board, Inc. and directs AmSouth Bank N.A., as Trustee, to consent to
the execution and delivery of the same.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent
of Bondholder to be executed in its name and behalf as of July 1, 1989.
MEAD COATED BOARD, INC.
By: /s/ W. D. Bloebaum, Jr.
----------------------------
Title:
-17-
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK N.A., as Trustee under the Trust Indenture dated as of
December 1, 1988, as supplemented by a First Supplemental Trust Indenture dated
as of March 1, 1989, a Second Supplemental Trust Indenture dated as of April 1,
1989 and a Third Supplemental Trust Indenture dated as of June 1, 1989, from the
Industrial Development Board of the City of Phenix City, Alabama (the "Board"),
hereby consents to the execution and delivery of the foregoing Fourth Amendment
To Lease Agreement, dated as of July 1, 1989, between the Board and Mead Coated
Board, Inc., amending the Lease Agreement, dated as of December 1, 1988, as
amended by a First Amendment To Lease Agreement dated as of March 1, 1989, a
Second Amendment To Lease Agreement dated as of April 1, 1989 and a Third
Amendment To Lease Agreement dated as of June 1, 1989, between the Board and
Mead Coated Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of July 1, 1989.
AMSOUTH BANK N.A., as Trustee
By: /s/ T. Franklin Caley
--------------------------
Title:
-18-
<PAGE>
FIFTH AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS FIFTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of December 1, 1989, by and between THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate
and politic duly organized and existing under the Constitution and laws of the
State of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the
"Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"); $43,000,000 in aggregate principal amount of
The Industrial Development Board of the City of Phenix City, Alabama
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989A
(the "Series 1989A Bonds"); $45,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989B (the
"Series 1989B Bonds"); $37,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project) Series 1989C (the "Series
1989C Bonds"); and $40,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project) Series 1989D (the "Series 1989D
Bonds"), pursuant to a Trust Indenture, dated as of December 1, 1988 (the
"Original Indenture"), as supplemented by a First Supplemental Trust Indenture
dated as of March 1, 1989, a Second Supplemental Trust Indenture dated as of
April 1, 1989, a Third Supplemental Trust Indenture dated as of June 1, 1989 and
a Fourth Supplemental Trust Indenture dated as of July 1, 1989 (collectively,
the "Indenture"), from the Board to AmSouth Bank N.A., as Trustee (the
"Trustee").
<PAGE>
"Issuer" means the Board.
"Sodra Leases" means the Lease Agreement dated as of December 8,
1989 between Sodra Skogsagarna Leasing AB, as lessor, and the Board,
as lessee, relating to a recovery boiler and certain related
equipment; the Lease Agreement dated as of December 8, 1989 between
Sodra Skogsagarna Leasing AB, as lessor, and the Board, as lessee,
relating to a recausticizing system and certain related equipment; and
other agreements, instruments or documents entered into or delivered
by the Board in connection with or pursuant to said Lease Agreements.
"Sodra Leased Equipment" means the equipment that is the subject
of the Sodra Lease.
and by adding to the definition of "Permitted Encumbrances" the following
paragraph (m):
and (m) the Sodra Leases.
and by amending the definition of "Project Facilities" in its entirety
by deleting said definition and substituting therefor the following:
"Project Facilities" means the facilities acquired, constructed,
installed and financed with proceeds of the sale of the Notes and/or
bonds issued under this Indenture (including any Additional Bonds);
such facilities are more fully described in the Project Summary, as it
may be amended from time to time;
Section 3.2 of the Agreement is amended by adding the following provision of the
end of Section 3.2:
Notwithstanding the foregoing, the Board, for itself, its successors
and assigns, warrants to the Company, its successors and assigns, that
it has a leasehold
-3-
<PAGE>
interest in the Sodra Leased Equipment under the Sodra Leases, subject
only to Permitted Encumbrances and rights of the lessor under the
Sodra Leases.
Section 5.1 of The Agreement is hereby amended by adding the following provision
of the end of Section 5.1:
Notwithstanding and in addition to the foregoing, the Agreement and
the leasehold interest created by the Agreement shall terminate as to
the Sodra Leased Equipment or any part thereof (and only as to the
Sodra Leased Equipment) on the earliest of (i) midnight, December 1,
2028, (ii) payment in full of all Bonds and any Additional Bonds and
(iii) as to any portion of the Sodra Leased Equipment, termination of
the applicable Sodra Lease without the exercise by the Board of the
purchase option provided by such Sodra Lease.
Article V of the Agreement is hereby amended by adding the following new Section
5.7:
Section 5.7. Equipment Leases. The Board agrees to fully and
-----------------
promptly perform all its obligations under the Sodra Leases. The Board
further agrees that it will take all actions under the Sodra Leases
directed by the Company, including without limitation the exercise of
any purchase, renewal and termination options, and will not exercise
any such purchase, renewal or termination options except as so
directed by the Company. The Company agrees to comply with all terms
and conditions of, and to perform all obligations of the Board under,
the Sodra Leases regarding the use and maintenance of the Sodra Leased
Equipment. The Company further agrees to pay, on behalf of the Board,
all amounts payable from time to time by the Board under the Sodra
Leases.
Section 6.9 of the Agreement is hereby amended by adding the following paragraph
at the end of Section 6.9:
-4-
<PAGE>
The Company shall indemnify and hold harmless the Issuer, and the
members, officers, agents and employees of the Issuer, from any
liability, damages, costs and expenses arising out of or resulting
from the lease of the Sodra Leased Equipment under the Sodra Lease,
except as the same may arise from the negligence or misconduct of the
Issuer.
Article VIII of the Agreement is hereby amended by adding the following new
Section 8.7:
Section 8.7. Special Release Provisions. Notwithstanding any other
---------------------------
provision of this Agreement, the parties hereto reserve the right to
amend this Agreement at any time and from time to time by mutual
agreement for the purpose of effecting the release of any portion of
the equipment that is the subject of the leases referred to in Section
5.7 (and the portions of the Project Land, or interests therein, on
which such equipment is located); provided that no release effected
under this Section shall entitle the Company to any diminution in or
postponement or abatement of the rents payable under Section 5.3 or
the obligations under Section 5.7.
Exhibit B to the Agreement is hereby amended by adding the following provision
at the end of Exhibit B:
The Project includes the Sodra Leased Equipment.
The term "Bonds" as used in Section 5.3 of the Agreement shall include
the Series 1989E Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1989E Bonds. All
----------- ----------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1988A Bonds and not specifically otherwise provided for
in the Indenture, any supplements thereto or the Agreement, shall apply
-5-
<PAGE>
with full force and effect to the Series 1989E Bonds. Without limiting the
foregoing, all references in the Agreement to the "Bonds" shall be deemed to
mean the Series 1988A Bonds, the Series 1989A Bonds, the Series 1989B Bonds, the
Series 1989C Bonds, the Series 1989D Bonds and the Series 1989E Bonds, including
without limitation the provisions of Section 5.3 of the Agreement relating to
the payment of rents.
Section 1.3 Representations and Warranties by the Board. The Board
----------- --------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public corporation
---------------------------
duly organized and validly existing under the provisions of the Act by
authority of a resolution adopted by the Board of Commissioners of the City
on June 14, 1960 and a Certificate of Incorporation duly filed for record
on October 17, 1960, in the office of the Judge of Probate of Russell
County, Alabama, which Certificate of Incorporation has not been amended or
been revoked and is of full force and effect. The Board has all requisite
power and authority under the Act (1) to issue the Series 1989E Bonds, (2)
to use the proceeds thereof to refund the Notes and to pay the cost to
acquire, construct and install the Project, (3) to own, lease, encumber and
dispose of the Project, and (4) to enter into, and perform its obligations
under, the Sodra Leases, the Indenture, the Agreement and this Amendment.
The Sodra Leases, this Amendment and the Fifth Supplemental Indenture have
been duly authorized, executed and delivered by the Board and are legal,
valid and binding agreements enforceable against the Board in accordance
with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
-------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal, which adversely
affect the validity or enforceability of the Series 1989E Bonds, the
Indenture, the Agreement, the Sodra Leases, this Amendment, or any
agreement or instrument to which the Board is a party and which is used or
contemplated for use in the consummation of the transactions contemplated
hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized.
------------------------------------------------------------
The issue and sale of the Series 1989E Bonds and the execution and delivery
by the Board
-6-
<PAGE>
of the Fifth Supplemental Indenture, this Amendment and the Sodra Leases
and the compliance by the Board with all of the provisions of each thereof
and of the Series 1989E Bonds (i) are within the purposes, powers and
authority of the Board, (ii) to the best of the knowledge of the Board,
have been done in full compliance with the provisions of the Act, are legal
and will not conflict with or constitute on the part of the Board a
violation of or a breach of or default under, or result in the creation of
any lien or encumbrance (other than Permitted Encumbrances under the
Agreement) upon any property of the Board under the provisions of, its
certificate of incorporation or bylaws, or any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which the Board
is a party or by which the Board is bound, or any license, judgment,
decree, law, statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Board or any of
its activities or properties, and (iii) have been duly authorized by all
necessary corporate action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor
----------------------
any of its activities or properties, nor any relationship between the Board
and any other person, nor any circumstance in connection with the offer,
issue, sale or delivery of any of the Series 1989E Bonds is such as to
require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on the part
of the Board in connection with the execution, delivery and performance of
the Sodra Leases, the Fifth Supplemental Indenture and this Amendment, or
the offer, issue, sale or delivery of the Series 1989E Bonds, other than
(i) the filing with the Alabama Securities Commission of the notification
of the Board's intention to issue the Series 1989E Bonds and to deliver the
Sodra Leases required by Act No. 586 enacted at the 1978 Regular Session of
the Legislature of the State and the issuance by the Director of the
Alabama Securities Commission of such Certificate of Notification as may be
required by said Act, and (ii) the due filing and recording of this
Amendment, the Fifth Supplemental Indenture and the financing statements
covering the security interests created hereunder and under the Indenture.
The Board has filed the notification referred to in (i) of the preceding
sentence and the Director of the Alabama Securities Commission has issued
Certificate(s) of Notification applicable to the Series
-7-
<PAGE>
1989E Bonds and the Sodra Leases, which Certificates of Notification has
not been revoked or rescinded and is in full force and effect.
(e) No Defaults. The Board is not in default under the Act or
------------
under its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which is bound.
Section 1.4 Representations and Warranties by the Company. The
----------- ----------------------------------------------
Company makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, (ii)
has all requisite corporate power and authority to carry on its business as
now being conducted and as presently proposed to be conducted, and (iii)
has duly qualified and is authorized to do business and is in good standing
as a foreign corporation in the State.
(b) The Company has the corporate power and has been duly
authorized to enter into this Amendment and to perform all of its
obligations hereunder.
(c) The willingness of the Board to issue the Series 1989E Bonds
for purposes of financing costs of acquiring, constructing, and installing
the Project, and to lease the Project to the Company, has induced the
Company to locate the Project within the State of Alabama and, more
particularly, within 25 miles of the City.
(d) The Company is not subject to any contractual or other
limitation or provision of any nature whatsoever which in any material way
limits, restricts or prevents the Company from entering into this
Amendment, or performing any of its obligations hereunder; and the
execution and delivery of this Amendment, the consummation of the
transactions contemplated hereby, and the fulfillment of or compliance with
the terms and conditions of this Amendment will not conflict with or result
in a breach of the terms, conditions or provisions of any restriction,
agreement or instrument to which the Company is a party or by which it is
bound, or constitute a default under any of the foregoing.
-8-
<PAGE>
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment
which, with the lapse of time or with the giving of notice or both, would
become an "Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not
in violation of any laws, ordinances, governmental rules or regulations to
which it is subject and has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership
of its properties or to the conduct of its business, which violation or
failure to obtain would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations under this
Amendment.
Section 1.5 Agreement Regarding Sodra Leased Equipment. The Board
----------- -------------------------------------------
and the Company acknowledge and agree that (a) during the term of the Sodra
Leases, title to the Sodra Leased Equipment will be held by Sodra Skogsagarna
Leasing AB and (b) the Sodra Leased Equipment is to be and remain personal
property for the term of the Sodra Leases and it is not the intent of the Board
and the Company that the Sodra Leased Equipment be deemed to be real property or
affixed to real property.
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document. As amended by
----------- ----------------------------------------
this Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to
----------- -----------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously
----------- -------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
-9-
<PAGE>
Section 2.4 Captions. The captions or headings in this Amendment are
----------- ---------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
----------- ---------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
ATTEST: THE CITY OF PHENIX CITY, ALABAMA
By: /s/ Carlotta Waldrop By: /s/ Kenneth A. Roberts
-------------------------- -----------------------------
Secretary Chairman
MEAD COATED BOARD, INC.
By: /s/ Jeffery M. O'Connell
-----------------------------
Vice President
-10-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 14th day of December,
1989.
/s/ Sydney S. Smith
--------------------------
Notary Public
(SEAL)
My commission expires: 2/25/92
--------
-11-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Janet M. Cocuzzi, Notary Public in an for said County in said
County in said State, hereby certify that Jeffrey M. O'Connell, whose name as
VP. Admin. of MEAD COATED BOARD, INC., a corporation organized and existing
under the laws of the State of Delaware, is signed to the foregoing instrument
and who is known to me, acknowledged before me on this day that, being informed
of the contents of the said instrument, he, as such officer and with full
authority, executed the same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 8th day of December,
1989.
/s/ Janet M. Cocuzzi
---------------------------
Notary Public
(SEAL) Notary Public, DeKalb County, Georgia
My Commission Expires: May 14, 1990
My Commission expires: __________
-12-
<PAGE>
EXHIBIT "A"
to
Fifth Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of December 1, 1989
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
---------------------------------------------------
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
----------------------------------------------
AND CHIPS SCREEN HOUSE AREA (C-28515)
-------------------------------------
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 63(degrees) 51' 31" E, 790.90' to the point of beginning; thence N
90(degrees) 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90(degrees)
00' W, 232.22'; thence S 15(degrees) 17' 15" E, 479.72' to a point on the
northmost side of a rectangular area (Chip Screen House) which parallels
last said course and is 75.0' north to south (7.00' of which is west of
last said course) by 49.0' east to west; said rectangular area being the
point of ending; said land being 0.56 (plus or minus) acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
---------------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline:
-13-
<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 45(degrees) 24' 34" E, 692.79' to the point of beginning; thence S
36(degrees) 51' 02" E, 454.94' to the point of ending; said land being 0.29
(plus or minus) acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
------------------------------------------------------
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
----------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 71(degrees) 34' 06" E, 600.24 ' to the point of beginning; thence
S 71(degrees) 04' 32" E, 640.91'; thence N 50(degrees) 08' 32" E, 61.59' to
the point of ending; said land being 0.45 (plus or minus) acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
-----------------------------------------
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
------------------------------------------
AND CHIP SILO AREA (C-28520)
----------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence S 48(degrees) 21' 59" W, 84.29' to the point of beginning; thence S
56(degrees) 07' 32" E, 319.22' to the center of a circular area (Chip Silo)
with a radius of 15.00' and a central angle of 360(degrees) 00' bounded by
a rectangular structure 32' -6" (plus or minus) East-West and 32' -6" (plus
or minus) North-South; thence N 82(degrees) 51' 32" E, 355.48' to the point
of ending; said land being 0.45 (plus or minus) acres;
-14-
<PAGE>
NEW WASHER FACILITY AND BATCH DIGESTER AREA
--------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 48 degrees 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0 degrees 00' W, 133.50'; thence N 90
degrees 00' W, 103.39'; thence S 0 degrees 00' W, 103.50'; thence 90
degrees 00' W, 48.00'; thence N 0 degrees 00' W, 55.75'; thence N 90
degrees 00' W, 80.00'; thence S 0 degrees 00' W, 42.75'; thence N 90
degrees 00' W, 63.00'; thence N 0 degrees 00' W, 110.00'; thence N 45
degrees 00' E, 55.00'; thence N 0 degrees 00' W, 23.11'; thence N 90
degrees 00' E, 23.00'; thence N 0 degrees 00' W, 23.25'; thence N 90
degrees 00' E, 170.00'; thence N 0 degrees 00' W, 28.75'; thence N 90
degrees 00' E, 62.50' to the point of beginning; said area being 1.01 (plus
or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
-------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48 degrees 46' 07" W, 591.71' to the point of beginning (N
791,960.0 E 234,055.0); thence S 0' 00' W, 170.00'; thence N 90 degrees 00'
W, 111.00; thence N 0 degrees 00' W, 170.00'; thence N 90 degrees 00' E,
111.00' to the point of beginning; said land being 0.43 (plus or minus)
acres;
TURPENTINE RECOVERY FACILITY AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 63 degrees 26' 06" W, 11.18' to the point of beginning (N
792,345.0, E 234,490.0); thence N 0 degrees 00' W, 30.00'; thence N 90
degrees 00" E, 20.00'; thence S 0 degrees 00' W, 30.00'; thence N 90
degrees 00' W, 20.00' to the point of beginning; said land being 0.01 (plus
or minus) acres;
-15-
<PAGE>
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
----------------------------------------------------------
DRUM AREA (C-28525), VIBRATING CONVEYORS AREA (C-28532),
--------------------------------------------------------
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
---------------------------------------------------
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
-----------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 80 degrees 22' 54" E, 879.79' to the point of beginning; thence N
0 degrees 00' W, 326.00'; thence N 90 degrees 00' E, 711.08'; thence S 0
degrees 00' W, 326.00'; thence N 90 degrees 00' W, 328.00'; thence S 0
degrees 00' W, 188.00'; thence N 90 degrees 00' W, 50.00'; thence N 0
degrees 00' W, 188.00'; thence N 90 degrees 00' W, 333.08' to the point of
beginning; said land being 5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 11 degrees 04' 57" W, 197.69' to the point of beginning (N
792,156.0, E 234,462.0); thence S 0 degrees 00" W, 82.00'; thence N 90
degrees 00" W, 52.00'; thence N 0 degrees 00' W, 82.00'; thence N 90
degrees 00' E, 52.00 to the point of beginning; said land being 0.10 (plus
or minus) acres;
NEW LIME KILN/RECAUSTICIZING AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence N 70 degrees 51' 29" E, 267.79' to the point of beginning (793,238.0
E 233,503.0); thence N 90 degrees 00' E, 399.23'; thence S 0 degrees 00' W,
50.00'; thence N 90 degrees 00' E, 45.00'; thence S 0 degrees 00' W,
78.00'; thence N 90 degrees 00' W, 444.23'; thence N 0 degrees 00' W,
128.00' to the point of beginning; said land being 1.25 (plus or minus)
acres;
-16-
<PAGE>
NO. 2 RECOVERY BOILER AREA
--------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 40(degrees) 16' 34" E, 439.77' to the point of beginning (N
792,814.67, E 233,534.32'); thence N 90(degrees) 00' E, 36.30'; thence N
0(degrees) 00' W, 20.50'; thence N 90(degrees) 00' E, 72.26'; thence N
0(degrees) 00' W, 14.83'; thence N 90(degrees) 00' E, 110.50'; thence S
0(degrees) 00' W, 42.58'; thence N 90(degrees) 00' E, 26.00'; thence S
0(degrees) 00' W, 81.00'; thence N 90(degrees) 00' W, 51.00'; thence N
0(degrees) 00" W, 25.12'; thence N 90(degrees) 00' W, 85.50'; thence N
00(degrees) 00' W, 8.63'; thence N 90(degrees) 00' W, 72.26'; thence N
90(degrees) 00' W, 20.50'; thence N 0(degrees) 00' W, 36.30'; thence N
0(degrees) 00' W, 34.00' to the point of beginning; said land being 0.47
(plus or minus) acres;
NEW EVAPORATORS AND NEW TANKS AREA
----------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 62(degrees) 01' 33" E, 637.83' to the point of beginning (N
792,851.0, E 233,813.33); thence N 90(degrees) 00' E, 246.67'; thence along
an arc South and East 53.41' having a radius of 34.00' with a central angle
of 90(degrees) 00'; thence S 0(degrees) 00' W, 135.33'; thence along an arc
South and West 53.41' having a radius of 34.00' with a central angle of
90(degrees) 00'; thence N 90(degrees) 00' W, 34.00'; thence N 0(degrees)
00' W, 99.79'; thence N 90(degrees) 00' W, 69.00'; thence N 59(degrees) 47'
19" W, 91.42'; thence N 90(degrees) 00' W, 64.67'; thence N 0(degrees) 00'
W, 57.54' to the point of beginning; said land being 0.72 (plus or minus)
acres;
(collectively, the "Unimproved Land"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
-17-
<PAGE>
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (the 1977 Land less and except the 1988 Land) in order
to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Unimproved Land and the
Project including, without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
-18-
<PAGE>
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing,
-19-
<PAGE>
and to construct and maintain similar encroachments on the Unimproved Land
in respect of any additional improvements constructed adjacent to the
Unimproved Land, as long as any such additional improvements remain
standing, including without limitation the rights of lateral or party wall
support, and to connect such additional improvements to any structure or
any improvements on the Unimproved Land.
-20-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
MEAD COATED BOARD, INC., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1988A
of the Industrial Board of the City of Phenix City, Alabama (the "Board"),
hereby consents to the execution and delivery of the foregoing Fifth Amendment
To Lease Agreement dated as of October 1, 1989, between the Board and Mead
Coated Board, Inc., amending the Lease Agreement, dated as of December 1, 1988,
as amended by a First Amendment To Lease Agreement dated as of March 1, 1989, a
Second Amendment to Lease Agreement dated as of April 1, 1989, a Third Amendment
To Lease Agreement dated as of June 1, 1989 and a Fourth Amendment To Lease
Agreement dated as of July 1, 1989, between the Board and Mead Coated Board,
Inc. and directs AmSouth Bank N.A., as Trustee, to consent to the execution
and delivery of the same.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of December 1, 1989.
MEAD COATED BOARD, INC.
By: /s/
-------------------------------
Vice President
-21-
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK N.A., as Trustee under the Trust Indenture dated as of
December 1, 1988, as supplemented by a First Supplemental Trust Indenture dated
as of March 1, 1989, a Second Supplemental Trust Indenture dated as of April 1,
1989, a Third Supplemental Trust Indenture dated as of June 1, 1989 and a Fourth
Supplemental Trust Indenture dated as of July 1, 1989, from the Industrial
Development Board of the City of Phenix City, Alabama (the "Board"), hereby
consents to the execution and delivery of the foregoing Fifth Amendment To Lease
Agreement, dated as of October 1, 1989, between the Board and Mead Coated Board,
Inc., amending the Lease Agreement, dated as of December 1, 1988, as amended by
a First Amendment To Lease Agreement dated as of March 1, 1989, a Second
Amendment To Lease Agreement dated as of April 1, 1989, a Third Amendment To
Lease Agreement dated as of June 1, 1989 and a Fourth Amendment To Lease
Agreement dated as or July 1, 1989, between the Board and Mead Coated Board,
Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of December l, 1989.
AMSOUTH BANK N.A., as Trustee
By: /s/
----------------------------------
Title: Assistant Vice President
and Corporate Trust Officer
-22-
<PAGE>
SIXTH AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS SIXTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of May 1, 1990, by and between THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate and
politic duly organized and existing under the Constitution and laws of the State
of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the
"Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"); $43,000,000 in aggregate principal amount of
The Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989A (the "Series
1989A Bonds"); $45,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1989B (the "Series 1989B
Bonds"); $37,000,000 in aggregate principal amount of The Industrial Development
Board of the City of Phenix City, Alabama Industrial Development Revenue Bonds
(Mead Coated Board Project), Series 1989C (the "Series 1989C Bonds");
$40,000,000 in aggregate principal amount of The Industrial Development Board of
the City of Phenix City, Alabama Industrial Development Revenue Bonds (Mead
Coated Board Project), Series 1989D (the "Series 1989D Bonds") and $49,667,074
of The Industrial Development Board of the City of Phenix City, Alabama
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989E
(the "Series 1989E Bonds") pursuant to a Trust Indenture dated as of December 1,
1988 (the "Original Indenture"), as supplemented by a First Supplemental Trust
Indenture dated as of March 1, 1989, a Second Supplemental Trust Indenture dated
as of April 1, 1989, a Third Supplemental Trust Indenture dated as of June 1,
1989, a Fourth Supplemental Trust Indenture dated as of July 1, 1989 and a Fifth
Supplemental Trust Indenture dated as of December 1, 1989 (collectively, the
"Indenture"), from the Board to AmSouth Bank N.A., as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds,
the Series 1989A Bonds, the Series 1989B Bonds, the Series 1989C Bonds, the
Series 1989D Bonds and the Series 1989E Bonds for the payment of outstanding
industrial
<PAGE>
development temporary borrowing notes (the "Notes") issued by the Board for the
purpose of funding the acquisition, construction and installation of a coated
natural kraft mill and related facilities (the "Project") in connection with
certain industrial facilities located near Phenix City, Alabama. The Project is
owned by the Board and leased to the Company pursuant to a Lease Agreement dated
as of December 1, 1988, as amended by the First Amendment To Lease Agreement
dated as of March 1, 1989, the Second Amendment To Lease Agreement dated as of
April 1, 1989, the Third Amendment To Lease Agreement dated as of June 1, 1989,
the Fourth Amendment To Lease Agreement dated as of July 1, 1989 and the Fifth
Amendment To Lease Agreement dated as of December 1, 1989 (collectively, the
"Agreement"). The Agreement obligates the Company to make rental payments in
such amounts and at such times as will provide for the payment of the principal
and interest on the Series 1988A Bonds, the Series 1989A Bonds, the Series 1989B
Bonds, the Series 1989C Bonds, the Series 1989D Bonds and the Series 1989E Bonds
as the same becomes due and payable.
Under Article IV of the Original Indenture, the Board is permitted to
issue Additional Bonds (as defined in the Original Indenture) in order to pay
additional Notes issued by the Board in connection with the Project. In that
connection, the Board is issuing $170,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1990A
(the "Series 1990A Bonds"), pursuant to the Indenture as supplemented by a Sixth
Supplemental Trust Indenture dated as of May 1, 1990 (the "Sixth Supplemental
Indenture") from the Board to the Trustee. The Indenture as supplemented by the
Sixth Supplemental Indenture is hereinafter referred to as the "Indenture".
NOW, THEREFORE, as contemplated by Section 4.5 of the Agreement and in
accordance with Section 1501 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
ARTICLE I
PROVISIONS FOR AMENDING THE AGREEMENT
-------------------------------------
Section 1.1 Amendment of Section 5.3 of the Aqreement. The term
----------- -----------------------------------------
"Bonds" as used in Section 5.3 of the Agreement shall include the Series 1990A
Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1990A Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1988A Bonds and not specifically otherwise provided for
in the Indenture, any supplements thereto or the Agreement, shall apply with
full force and effect to the Series 1990A Bonds. Without
-2-
<PAGE>
limiting the foregoing, all references in the Agreement to the "Bonds" shall be
deemed to mean the Series 1988A Bonds, the Series 1989A Bonds, the Series 1989B
Bonds, the Series 1989C Bonds, the Series 1989D Bonds, the Series 1989E Bonds
and the Series 1990A Bonds, including without limitation the provisions of
Section 5.3 of the Agreement relating to the payment of rents.
Section 1.3 Representations and Warranties by the Board. The Board
----------- -------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public corporation
--------------------------
duly organized and validly existing under the provisions of the Act by
authority of a resolution adopted by the Board of Commissioners of the
City on June 14, 1960 and a Certificate of Incorporation duly filed for
record on October 17, 1960, in the office of the Judge of Probate of
Russell County, Alabama, which Certificate of Incorporation has not been
amended or been revoked and is of full force and effect. The Board has all
requisite power and authority under the Act (1) to issue the Series 1990A
Bonds, (2) to use the proceeds thereof to refund the Notes issued to pay
the cost to acquire, construct and install the Project, (3) to own, lease,
encumber and dispose of the Project, and (4) to enter into, and perform its
obligations under, the Indenture, the Agreement and this Amendment. This
Amendment and the Sixth Supplemental Indenture have been duly authorized,
executed and delivered by the Board and are legal, valid and binding
agreements enforceable against the Board in accordance with their
respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal, which adversely
affect the validity or enforceability of the Series 1990A Bonds, the
Indenture, the Agreement, this Amendment, or any agreement or instrument to
which the Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
-----------------------------------------------------------
issue and sale of the Series 1990A Bonds and the execution and delivery by
the Board of the Sixth Supplemental Indenture and this Amendment and the
compliance by the Board with all of the provisions of each thereof and of
the Series 1990A Bonds (i) are within the purposes, powers and
authority of the
-3-
<PAGE>
Board, (ii) to the best of the knowledge of the Board, have been done in
full compliance with the provisions of the Act, are legal and will not
conflict with or constitute on the part of the Board a violation of or a
breach of or default under, or result in the creation of any lien or
encumbrance (other than Permitted Encumbrances under the Agreement) upon
any property of the Board under the provisions of, its certificate of
incorporation or Bylaws, or any indenture, mortgage, deed of trust, note
agreement or other agreement or instrument to which the Board is a party or
by which the Board is bound, or any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Board or any of its activities or
properties, and (iii) have been duly authorized by all necessary corporate
action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor any of
---------------------
its activities or properties, nor any relationship between the Board and
any other person, nor any circumstance in connection with the offer, issue,
sale or delivery of any of the Series 1990A Bonds is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Board in
connection with the execution, delivery and performance of the Sixth
Supplemental Indenture and this Amendment, or the offer, issue, sale or
delivery of the Series 1990A Bonds, other than (i) the filing with the
Alabama Securities Commission of the notification of the Board's intention
to issue the Series 1990A Bonds required by Act No. 586 enacted at the 1978
Regular Session of the Legislature of the State and the issuance by the
Director of the Alabama Securities Commission of such Certificate of
Notification as may be required by said Act, and (ii) the due filing and
recording of this Amendment, the Sixth Supplemental Indenture and the
financing statements covering the security interests created hereunder and
under the Indenture. The Board has filed the notification referred to in
(i) of the preceding sentence and the Director of the Alabama Securities
Commission has issued a Certificate of Notification applicable to the
Series 1990A Bonds, which Certificate of notification has not been revoked
or rescinded and is in full force and effect.
(e) No Defaults. The Board is not in default under the Act or under
-----------
its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which is bound.
-4-
<PAGE>
Section 1.4 Representations and Warranties by the Company. The Company
----------- ---------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) The Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has all
requisite corporate power and authority to carry on its business as now
being conducted and as presently proposed to be conducted, and (iii) has
duly qualified and is authorized to do business and is in good standing as
a foreign corporation in the State.
(b) The Company has the corporate power and has been duly authorized
to enter into this Amendment and to perform all of its obligations
hereunder.
(c) The willingness of the Board to issue the Series 1990A Bonds for
purposes of financing costs of acquiring, constructing, and installing the
Project, and to lease the Project to the Company, has induced the Company
to locate the Project within the State of Alabama and, more particularly,
within 25 miles of the City.
(d) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Amendment, or
performing any of its obligations hereunder; and the execution and delivery
of this Amendment, the consummation of the transactions contemplated
hereby, and the fulfillment of or compliance with the terms and conditions
of this Amendment will not conflict with or result in a breach of the
terms, conditions or provisions of any restriction, agreement or instrument
to which the Company is a party or by which it is bound, or constitute a
default under any of the foregoing.
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment
which, with the lapse of time or with the giving of notice or both, would
become an "Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to
which it is subject and has not failed to obtain any licenses, permits,
-5-
<PAGE>
franchises or other governmental authorizations necessary to the ownership
of its properties or to the conduct of its business, which violation or
failure to obtain would reasonably be expected to materially and adversely
affect the abililty of the Company to perform its obligations under this
Amendment.
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document. As amended by
----------- ---------------------------------------
this Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to
----------- ----------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously
----------- ------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are
----------- --------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
----------- --------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: /s/ Kenneth A. Roberts
------------------------------------
Chairman
MEAD COATED BOARD, INC.
By: /s/ W. D. Bloebaum, Jr.
-----------------------------------
Title: Treasurer
-6-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this _____ day of June, 1990.
/s/ Sydney S. Smith
----------------------------------
Notary Public
(SEAL)
My commission expires: 2-25-92
------------
-7-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Charity K. Burgess, Notary Public in and for said County in said
State, hereby certify that William D. Bloebaum, Jr., whose name as Treasurer of
MEAD COATED BOARD, INC., a corporation organized and existing under the laws of
the State of Delaware, is signed to the foregoing instrument and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the said instrument, he, as such officer and with full authority, executed the
same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 24th day of May, 1990.
/s/ Charity K. Burgess
-------------------------------
Notary Public
(SEAL) My commission expires: 8-15-94
--------
-8-
<PAGE>
EXHIBIT "A"
to
Sixth Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of May 1, 1990
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
---------------------------------------------------
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
----------------------------------------------
AND CHIPS SCREEN HOUSE AREA (C-28515)
-------------------------------------
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 63(degrees) 51' 31" E, 790.90' to the point of beginning; thence N
90(degrees) 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90(degrees)
00' W, 232.22'; thence S 15(degrees) 17' 15" E, 479.72' to a point on the
northmost side of a rectangular area (Chip Screen House) which parallels
last said course and is 75.0' north to south (7.00' of which is west of
last said course) by 49.0' east to west; said rectangular area being the
point of ending; said land being 0.56+ acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
---------------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R
-9-
<PAGE>
30 E, County of Russell, State of Alabama; thence N 45(degrees) 24' 34" E,
692.79' to the point of beginning; thence S 36(degrees) 51' 02" E, 454.94'
to the point of ending; said land being 0.29 (plus or minus) acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
------------------------------------------------------
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
----------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence N 71(degrees)34' 06" E, 600.24' to the point of beginning; thence S
71(degrees) 04' 32" E, 640.91'; thence N 50(degrees) 08' 32" E, 61.59' to
the point of ending; said land being 0.45 (plus or minus) acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
-----------------------------------------
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
------------------------------------------
AND CHIP SILO AREA (C-28520)
----------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence S 48(degrees) 21' 59" W, 84.29' to the point of beginning; thence S
56(degrees) 07' 32" E, 319.22' to the center of a circular area (Chip Silo)
with a radius of 15.00' and a central angle of 360(degrees) 00' bounded by
a rectangular structure 32' -6" (plus or minus) East-West and 32' -6" (plus
or minus) North-South; thence N 82(degrees) 51' 32" E, 355.48' to the point
of ending; said land being 0.45 (plus or minus) acres;
NEW WASHER FACILITY AND BATCH DIGESTER AREA
-------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
-10-
<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 48(degrees) 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0(degrees) 00' W, 133.50'; thence N
90(degrees) 00' W, 103.39'; thence S 0(degrees) 00' W, 103.50'; thence
90(degrees) 00' W, 48.00'; thence N 0(degrees) 00' W, 55.75'; thence N
90(degrees) 00' W, 80.00'; thence S 0(degrees) 00' W, 42.75'; thence N
90(degrees) 00' W, 63.00'; thence N 0(degrees) 00' W, 110.00'; thence N
45(degrees) 00' E, 55.00'; thence N 0(degrees) 00' W, 23.11'; thence N
90(degrees) 00' E, 23.00'; thence N 0(degrees) 00' W, 23.25'; thence N
90(degrees) 00' E, 170.00'; thence N 0(degrees) 00' W, 28.75'; thence N
90(degrees) 00' E, 62.50' to the point of beginning; said area being 1.01
(plus or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
-------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48(degrees) 46' 07" W, 591.71' to the point of beginning (N
791,960.0 E 234,055.0); thence S 0(degrees) 00' W, 170.00'; thence N
90(degrees) 00' W, 111.00; thence N 0(degrees) 00' W, 170.00'; thence N
90(degrees) 00' E, 111.00' to the point of beginning; said land being 0.43
(plus or minus) acres;
TURPENTINE RECOVERY FACILITY AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 63(degrees) 26' 06" W, 11.18' to the point of beginning (N
792,345.0, E 234,490.0); thence N 0(degrees) 00" W, 30.00'; thence N
90(degrees) 00" E, 20.00'; thence S 0(degrees) 00' W, 30.00'; thence N
90(degrees) 00' W, 20.00' to the point of beginning; said land being 0.01
(plus or minus) acres;
-11-
<PAGE>
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
---------------------------------------------------------
DRUM AREA (C-28525), VIBRATING CONVEYORS AREA (C-28532),
--------------------------------------------------------
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
---------------------------------------------------
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
-----------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 80(degrees) 22' 54" E, 879.79' to the point of beginning; thence N
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' E, 711.08'; thence S
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' W, 328.00'; thence S
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 50.00'; thence N
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 333.08' to the point
of beginning; said land being 5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 11(degrees) 04' 57" W, 197.69' to the point of beginning (N
792,156.0, E 234,462.0); thence S 0(degrees) 00" W, 82.00'; thence N
90(degrees) 00" W, 52.00'; thence N 0(degrees) 00' W, 82.00'; thence N
90(degrees) 00' E, 52.00 to the point of beginning; said land being 0.10
(plus or minus) acres;
NEW LIM KILN/RECAUSTICIZING AREA
--------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence N 70(degrees) 51' 29" E, 267.79' to the point of beginning
(793,238.0 E 233,503.0); thence N 90(degrees) 00' E, 399.23'; thence S
0(degrees) 00' W, 50.00'; thence N 90(degrees) 00' E, 45.00'; thence S
0(degrees) 00' W, 78.00'; thence N 90(degrees) 00' W, 444.23'; thence N
0(degrees) 00' W, 128.00' to the point of beginning; said land being 1.25
(plus or minus) acres;
-12-
<PAGE>
NO. 2 RECOVERY BOILER AREA
--------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 40(degrees) 16' 34" E, 439.77' to the point of beginning (N
792,814.67, E 233,534.32'); thence N 90(degrees) 00' E, 36.30'; thence N
0(degrees) 00' W, 20.50'; thence N 90(degrees) 00' E, 72.26'; thence N
0(degrees) 00' W, 14.83'; thence N 90(degrees) 00' E, 110.50'; thence S
0(degrees) 00' W, 42.58'; thence N 90(degrees) 00' E, 26.00'; thence S
0(degrees) 00' W, 81.00'; thence N 90(degrees) 00' W, 51.00'; thence N
0(degrees) 00" W, 25.12'; thence N 90(degrees) 00' W, 85.50'; thence N
00(degrees) 00' W, 8.63'; thence N 90(degrees) 00' W, 72.26'; thence N
90(degrees) 00' W, 20.50'; thence N 0(degrees) 00' W, 36.30'; thence N
0(degrees) 00' W, 34.00' to the point of beginning; said land being 0.47
(plus or minus) acres;
NEW EVAPORATORS AND NEW TANKS AREA
----------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 62(degrees) 01' 33" E, 637.83' to the point of beginning (N
792,851.0, E 233,813.33); thence N 90(degrees) 00' E, 246.67'; thence along
an arc South and East 53.41' having a radius of 34.00' with a central angle
of 90(degrees) 00'; thence S 0(degrees) 00' W, 135.33'; thence along an arc
South and West 53.41' having a radius of 34.00' with a central angle of
90(degrees) 00'; thence N 90(degrees) 00' W, 34.00'; thence N 0(degrees)
00' W, 99.79'; thence N 90(degrees) 00' W, 69.00'; thence N 59(degrees) 47'
19" W, 91.42'; thence N 90(degrees) 00' W, 64.67'; thence N 0(degrees) 00'
W, 57.54' to the point of beginning; said land being 0.72 (plus or minus)
acres;
(collectively, the "Unimproved Land"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
-13-
<PAGE>
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to
use all present and future walks, railroads, roads, driveways and docks
upon the Board Premises (the 1977 Land less and except the 1988 Land) in
order to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Unimproved Land and the
Project including, without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
-14-
<PAGE>
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing,
-15-
<PAGE>
and to construct and maintain similar encroachments on the Unimproved Land in
respect of any additional improvements constructed adjacent to the Unimproved
Land, as long as any such additional improvements remain standing, including
without limitation the rights of lateral or party wall support, and to connect
such additional improvements to any structure or any improvements on the
Unimproved Land.
-16-
<PAGE>
CONSENT OF BONDHOLDER
----------------------
MEAD COATED BOARD, INC., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1988A
of the Industrial Board of the City of Phenix City, Alabama (the "Board"),
hereby consents to the execution and delivery of the foregoing Sixth Amendment
To Lease Agreement dated as of May 1, 1990, between the Board and Mead Coated
Board, Inc., amending the Lease Agreement, dated as of December 1, 1988, as
amended by a First Amendment To Lease Agreement dated as of March 1, 1989, a
Second Amendment To Lease Agreement dated as of April 1, 1989, a Third Amendment
To Lease Agreement dated as of June 1, 1989, a Fourth Amendment To Lease dated
as of July 1, 1989 and a Fifth Amendment To Lease Agreement dated as of December
1, 1989 between the Board and Mead Coated Board, Inc. and directs AmSouth Bank
N.A., as Trustee, to consent to the execution and delivery of the same.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of May 1, 1990.
MEAD COATED BOARD, INC.
By: /s/ W.D. Bloebaum, Jr.
-------------------------------
Title:
-17-
<PAGE>
CONSENT OF TRUSTEE
AMSOUTH BANK N.A., as Trustee under the Trust Indenture dated as of
December 1, 1988, as supplemented by a First Supplemental Trust Indenture dated
as of March 1, 1989, a Second Supplemental Trust Indenture dated as of April 1,
1989, a Third Supplemental Trust Indenture dated as of June 1, 1989, a Fourth
Supplemental Trust Indenture dated as of July 1, 1989 and a Fifth Supplemental
Trust Indenture dated as of December 1, 1989 from the Industrial Development
Board of the City of Phenix City, Alabama (the "Board"), hereby consents to the
execution and delivery of the foregoing Sixth Amendment To Lease Agreement,
dated as of May 1, 1990, between the Board and Mead Coated Board, Inc., amending
the Lease Agreement, dated as of December 1, 1988, as amended by a First
Amendment To Lease Agreement dated as of March 1, 1989, a Second Amendment To
Lease Agreement dated as of April 1, 1989, a Third Amendment To Lease Agreement
dated as of June 1, 1989, a Fourth Amendment To Lease Agreement dated as of July
1, 1989 and a Fifth Amendment To Lease Agreement dated as of December 1, 1989
between the Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of May 1, 1990.
AMSOUTH BANK N.A., as Trustee
By: /s/ Jeff Fink
--------------------------------
Title: CORPORATE TRUST OFFICER
-18-
<PAGE>
SEVENTH AMENDMENT
-----------------
TO
--
LEASE AGREEMENT
---------------
THIS SEVENTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made
and entered into as of June 1, 1990, by and between THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate
and politic duly organized and existing under the Constitution and laws of the
State of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the
"Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"); $43,000,000 in aggregate principal amount of
The Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board project) Series 1989A (the "Series
1989A Bonds"); $45,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1989B (the "Series 1989B
Bonds"); $37,000,000 in aggregate principal amount of The Industrial Development
Board of the City of Phenix City, Alabama Industrial Development Revenue Bonds
(Mead Coated Board project) Series 1989C (the "Series 1989C Bonds"); $40,000,000
in aggregate principal amount of The Industrial Development Board of the City of
Phenix City, Alabama Industrial Development Revenue Bonds (Mead Coated Board
Project), Series 1989D (the "Series 1989D Bonds"); $49,667,074 of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1989E (the "Series 1989E
Bonds") and $170,000,000 of The Industrial Development Board of the City of
Phenix City, Alabama Industrial Development Revenue Bonds (Mead Coated Board
Project), Series 1990A (the "Series 1990A Bonds" ) pursuant to a Trust Indenture
dated as of December 1, 1988 (the "Original Indenture"), as supplemented by a
First Supplemental Trust Indenture dated as of March 1, 1989, a Second
Supplemental Trust Indenture dated as of April 1, 1989, a Third Supplemental
Trust Indenture dated as of June 1, 1989, a Fourth Supplemental Trust Indenture
dated as of July 1, 1989, a Fifth Supplemental Trust Indenture dated as of
December 1, 1989 and a
1
<PAGE>
Sixth Supplemental Trust Indenture dated as of May 1, 1990 (collectively the
"Indenture"), from the Board to AmSouth Bank N.A., as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds,
the Series 1989A Bonds, the Series 1989B Bonds, the Series 1989C Bonds, the
Series 1989D Bonds, the Series 1989E Bonds and the Series 1990A Bonds for the
payment of outstanding industrial development temporary borrowing notes (the
"Notes") issued by the Board for the purpose of funding the acquisition,
construction and installation of a coated natural kraft mill and related
facilities (the "Project") in connection with certain industrial facilities
located near Phenix City, Alabama. The Project is owned by the Board and leased
to the Company pursuant to a Lease Agreement dated as of December 1, 1988, as
amended by the First Amendment To Lease Agreement dated as of March 1, 1989 the
Second Amendment To Lease Agreement dated as of April 1, 1989, the Third
Amendment To Lease Agreement dated as of June 1, 1989, the Fourth Amendment To
Lease Agreement dated as of July 1, 1989, the Fifth Amendment To Lease Agreement
dated as December 1, 1989, and the Sixth Amendment To Lease Agreement dated as
of May 1, 1990 (collectively the "Agreement"). The Agreement obligates the
Company to make rental payments in such amounts and at such times as will
provide for the payment of the principal and interest on the Series 1988A Bonds,
the Series 1989A Bonds, the Series 1989B Bonds, the Series 1989C Bonds, the
Series 1989D Bonds, the Series 1989E Bonds and the Series 1990A Bonds as the
same becomes due and payable.
The Project is located on the real property described in Exhibit A to
the Agreement (the "Project Land"). The Company desires to amend the Agreement
to modify the description of Project Land in order to more accurately include
that land which constitutes the site of the Project. Pursuant to Section 12.5 of
the Agreement and Section 1502 of the Original Indenture, the Board is permitted
to amend the Agreement upon the mailing of notice to, and obtaining the written
consent of, the holders of not less than 2/3 in principal amount of the
outstanding Bonds.
NOW, THEREFORE, as contemplated by Section 12.5 of the Agreement and
in accordance with Section 1502 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
Section 1.1 Amendment of Agreement.
----------- ----------------------
(a) Exhibit A, attached to the Agreement and describing the Project
Land, is hereby amended by inserting, subsequent to the description designated
"NEW EVAPORATORS AND NEW TANKS AREA", the following:
-2-
<PAGE>
"LEASED LAND
------------
A parcel of land being situated in the Northwest Quarter of
Section 28 and the Northeast Quarter of Section 29, Township 14 North,
Range 30 East, Russell County, Alabama and being more particularly
described as follows:
From the Northeast corner of Section 28, Township 14 North, Range
30 East, run thence South 75 degrees 41 minutes West for a distance of
5256.69 feet to the centerline intersection of Seaboard Railroad and the
South construction road and the Point of Beginning; thence South 01 degree
24 minutes West a distance of 294.46 feet along the centerline of said
railroad; thence along a curve to the right having a radius of 786.50 feet
and an arc length of 674.79 feet, being subtended by a chord of South 25
degrees 40 minutes West for a distance of 654.28 feet along said railroad;
thence South 52 degrees 00 minutes West for a distance of 695.08 feet along
said railroad; thence North 00 degrees 07 minutes East for a distance of
1313.66 feet to the centerline of the South construction road; thence South
89 degrees 53 minutes East for a distance of 835.68 feet along said
centerline to the Point of Beginning.
Said property contains 18.362 acres, more or less."
(b) Exhibit B. attached to the Agreement and summarizing the Project,
is hereby amended by inserting, subsequent to the last sentence thereof, the
following:
"The Project may also include the acquisition of land which may
be used by a third party for warehousing or other purposes in connection
with the Project."
Section 1.2. Waiver of Notice. The Company, being the holder of all of
----------- ----------------
the outstanding Bonds, hereby waives any notices which may be required to be
given to it pursuant to Section 1502 of the Original Indenture in connection
with this Amendment.
Section 1.3. Aqreement and Amendment as One Document. As amended by
----------- ---------------------------------------
this Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
-3-
<PAGE>
Section 1.4. References. All references herein or in the Agreement to
----------- ----------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 1.5. Counterparts. This Amendment may be simultaneously
----------- ------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 1.6. Captions. The captions or headings in this Amendment are
----------- --------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 1.7. Applicable Law. This Amendment shall be construed in
----------- --------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: /s/ Kenneth A. Roberts
------------------------------------
Title: Chairman
MEAD COATED BOARD, INC.
By: /s/ W. D. Bloebaum, Jr.
------------------------------------
Title: Treasurer
-4-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 27th day of June, 1990.
/s/ Sydney S. Smith
---------------------------------
Notary Public
(SEAL) My commission expires: 2/25/92
--------
-5-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, David L. Santez, Notary Public in and for said County in said
State, hereby certify that William D. Bloebaum, Jr., whose name as Treasurer of
MEAD COATED BOARD, INC., a corporation organized and existing under the laws of
the State of Delaware, is signed to the foregoing instrument and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the said instrument, he, as such officer and with full authority, executed the
same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 21st day of June, 1990.
David L. Santez
-----------------------------
Notary Public
(SEAL) My commission expires:
-------
DAVID L. SANTEZ, Attorney at Law
Notary Public, State of Ohio
My Commission has no Expiration Date.
Section 147.03 O.R.C.
-6-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
MEAD COATED BOARD, INC., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1988A,
1989A-E and 1990A of The Industrial Board of the City of Phenix City, Alabama
(the "Board"), hereby consents to the execution and delivery of the foregoing
Seventh Amendment To Lease Agreement dated as of June 1, 1990, between the Board
and Mead Coated Board, Inc., amending the Lease Agreement, dated as of December
1, 1988, as amended by a First Amendment To Lease Agreement dated as of March 1,
1989, a Second Amendment to Lease Agreement dated as of April 1, 1989, a Third
Amendment To Lease Agreement dated as of June 1, 1989, a Fourth Amendment To
Lease dated as of July 1, 1989, a Fifth Amendment To Lease Agreement dated as of
December 1, 1989 and a Sixth Amendment To Lease Agreement dated as of May 1,
1990 between the Board and Mead Coated Board, Inc. and directs AmSouth Bank
N.A., as Trustee, to consent to the execution and delivery of the same.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of June 1, 1990.
MEAD COATED BOARD, INC.
By: W. D. Bloebaum, Jr.
-------------------------
Title: Treasurer
-7-
<PAGE>
CONSENT OF TRUSTEE
AMSOUTH BANK N.A., as Trustee under the Trust Indenture dated as of
December 1, 1988, as supplemented by a First Supplemental Trust Indenture dated
as of March 1, 1989, a Second Supplemental Trust Indenture dated as of April 1,
1989, a Third Supplemental Trust Indenture dated as of June 1, 1989, a Fourth
Supplemental Trust Indenture dated as of July 1, 1989, a Fifth Supplemental
Trust Indenture dated as of December 1, 1989, and a Sixth Supplemental Trust
Indenture dated as of May 1, 1990 from the Industrial Development Board of the
City of Phenix City, Alabama (the "Board"), hereby consents to the execution and
delivery of the foregoing Seventh Amendment To Lease Agreement, dated as of May
1, 1990, between the Board and Mead Coated Board, Inc., amending the Lease
Agreement, dated as of December 1, 1988, as amended by a First Amendment To
Lease Agreement dated as of March 1, 1989, a Second Amendment To Lease Agreement
dated as of April 1, 1989, a Third Amendment To Lease Agreement dated as of June
1, 1989, a Fourth Amendment To Lease Agreement dated as of July 1, 1989, a Fifth
Amendment To Lease Agreement dated as of December 1, 1989, and a Sixth Amendment
To Lease Agreement dated as of May 1, 1990 between the Board and Mead Coated
Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of June 1, 1990.
AMSOUTH BANK N.A., as Trustee
By: /s/ Jeff Fink
-----------------------------
Title: Trust Officer
DMY/FNO
-8-
<PAGE>
EIGHTH AMENDMENT
----------------
TO
--
LEASE AGREEMENT
---------------
THIS EIGHTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is
made and entered into as of August 1, 1990, by and between THE INDUSTRIAL
DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public
body corporate and politic duly organized and existing under the Constitution
and laws of the State of Alabama, and MEAD COATED BOARD, INC., a Delaware
corporation (the "Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project),
Series 1988A (the "Series 1988A Bonds"); $43,000,000 in aggregate principal
amount of The Industrial Development Board of the City of Phenix City, Alabama
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1989A
(the "Series 1989A Bonds"); $45,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989B (the
"Series 1989B Bonds"); $37,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989C (the "Series
1989C Bonds"); $40,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1989D (the "Series 1989D
Bonds"); $49,667,074 of The Industrial Development Board of the City of Phenix
City, Alabama Industrial Development Revenue Bonds (Mead Coated Board Project),
Series 1989E (the "Series 1989E Bonds") and $170,000,000 of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project) Series 1990A (the "Series 1990A
Bonds") pursuant to a Trust Indenture dated as of December 1, 1988 (the
"Original Indenture"), as supplemented by a First Supplemental Trust Indenture
dated as of March 1, 1989, a Second Supplemental Trust Indenture dated as of
April 1, 1989, a Third Supplemental Trust Indenture dated as of June 1, 1989, a
Fourth Supplemental Trust Indenture dated as of July 1, 1989, a Fifth
Supplemental Trust Indenture dated as of December 1, 1989,
<PAGE>
a Sixth Supplemental Trust Indenture dated as of May 1, 1990 and a Seventh
Supplemental Trust Indenture dated as of June 1, 1990 (collectively, the
"Indenture"), from the Board to AmSouth Bank N.A., as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds,
the Series 1989A Bonds, the Series 1989B Bonds, the Series 1989C Bonds, the
Series 1989D Bonds, the Series 1989E Bonds and the Series 1990A Bonds for the
payment of outstanding industrial development temporary borrowing notes (the
"Notes") issued by the Board for the purpose of funding the acquisition,
construction and installation of a coated natural kraft mill and related
facilities (the "Project") in connection with certain industrial facilities
located near Phenix City, Alabama. The Project is owned by the Board and leased
to the Company pursuant to a Lease Agreement dated as of December 1, 1988, as
amended by the First Amendment To Lease Agreement dated as of March 1, 1989, the
Second Amendment To Lease Agreement dated as of April 1, 1989, the Third
Amendment To Lease Agreement dated as of June 1, 1989, the Fourth Amendment To
Lease Agreement dated as of July 1, 1989, the Fifth Amendment To Lease Agreement
dated as December 1, 1989, the Sixth Amendment To Lease Agreement dated as of
May 1, 1990 and the Seventh Amendment to Lease Agreement dated as of June 1,
1990 (collectively the "Agreement"). The Agreement obligates the Company to make
rental payments in such amounts and at such times as will provide for the
payment of the principal and interest on the Series 1988A Bonds, the Series
1989A Bonds, the Series 1989B Bonds, the Series 1989C Bonds, the Series 1989D
Bonds, the Series 1989E Bonds and the Series 1990A Bonds as the same becomes due
and payable.
The Project is located on the real property described in Exhibit A to
the Agreement (the "Project Land"). The Company desires to amend the Agreement
to modify the description of Project Land in order to more accurately include
that land which constitutes the site of the Project. Pursuant to Article 1502 of
the Original Indenture, the Board is permitted to amend the Agreement upon the
mailing of notice to, and obtaining the written consent of, the holders of not
less than 2/3 in principal amount of the outstanding Bonds.
NOW, THEREFORE, as contemplated by Section 12.5 of the Agreement and
in accordance with Section 1502 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
Section 1.1 Amendment of Agreement. Exhibit A, attached to the
----------- ----------------------
Agreement and describing the Project Land, is hereby amended by deleting the
description designated "NEW LIME KILN/RECAUSTICIZING" in its entirety, and by
inserting, in lieu thereof, the following:
-2-
<PAGE>
"NEW LIME KILN/RECAUSTICIZING
-----------------------------
All that portion of land, and structures lying thereon, in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama, more
particularly described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02 of the West Zone of the State of Georgia Coordinate System;
thence N 70(degrees) 51' 29" E, 267.79' to the point of beginning (N
793,238.0 E 233,503.0); thence N 90(degrees) 00' E, 399.23'; thence S
0(degrees) 00' W, 50.00'; thence N 90(degrees) 00' W, 10.00'; thence S
0(degrees) 00' W, 40.00'; thence N 90(degrees) 00' W, 136.23'; thence N
0(degrees) 00' W, 80.00'; thence N 90(degrees) 00' W, 50.00'; thence S
0(degrees) 00' W, 10.00'; thence N 90(degrees) 00' W, 54.00'; thence S
0(degrees) 00' W, 40.00'; thence N 90(degrees) 00' E, 65.00'; thence S
0(degrees) 00' W, 30.00'; thence N 90(degrees) 00' W, 150.00'; thence N
0(degrees) 00' W, 17.00'; thence N 90(degrees) 00' W, 64.00'; thence N
0(degrees) 00' W, 73.00' to the point of beginning; said land being 0.657,
more or less acres, less than and except all structures not included in the
Mead Corporation Contract No. 21-3097A."
Section 1.2. Waiver of Notice. The Company, as the owner of all of the
----------- -----------------
outstanding Bonds, hereby waives any notices required to be given to it pursuant
to Sections 1402 or 1502 of the Original Indenture in connection with this
Amendment.
Section 1.3. Agreement and Amendment as One Document. As amended by
----------- ---------------------------------------
this Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 1.4. References. All references herein or in the Agreement
----------- ----------
to any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 1.5. Counterparts. This Amendment may be simultaneously
----------- ------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 1.6. Captions. The captions or headings in this Amendment are
----------- --------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
-3-
<PAGE>
Section 1.7. Applicable Law. This Amendment shall be construed in
----------- --------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: Kenneth A. Roberts
-----------------------------
Chairman
MEAD COATED BOARD, INC.
By: W. D. Bloebaum, Jr.
----------------------------
Title: Treasurer
-4-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 20th day of August, 1990.
/s/ Sydney S. Smith
----------------------------
Notary Public
(SEAL)
My commission expires: 2/25/92
-------
-5-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Robert A. Selak, Notary Public in and for said County in said
State, hereby certify that William D. Bloebaum, Jr., whose name as Treasurer of
MEAD COATED BOARD, INC., a corporation organized and existing under the laws of
the State of Delaware, is signed to the foregoing instrument and who is known to
me, acknowledged before me on this day that, being informed of the contents of
the said instrument, he, as such officer and with full authority, executed the
same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 29th day of August, 1990.
/s/ Robert A. Selak
-------------------------------
Notary Public
(SEAL),
My commission expires:_________
ROBERT A. SELAK, Attorney at Law
Notary Public, State of Ohio
My Commission has no expiration date.
Section 147.03 0. R. C.
-6-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
MEAD COATED BOARD, INC., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1988A,
Series 1989A, Series 1989B, Series 1989C, Series 1989E and Series 1990A of the
Industrial Board of the City of Phenix City, Alabama (the "Board"), hereby
consents to the execution and delivery of the foregoing Eighth Amendment To
Lease Agreement dated as of August 1, 1990, between the Board and Mead Coated
Board, Inc., amending the Lease Agreement, dated as of December 1, 1988, as
amended by a First Amendment To Lease Agreement dated as of March 1, 1989, a
Second Amendment to Lease Agreement dated as of April 1, 1989, a Third Amendment
To Lease Agreement dated as of June 1, 1989, a Fourth Amendment To Lease dated
as of July 1, 1989, a Fifth Amendment To Lease Agreement dated as of December 1,
1989, a Sixth Amendment To Lease Agreement dated as of May 1, 1990 and a Seventh
Amendment to Lease Agreement dated as of June 1, 1990 between the Board and Mead
Coated Board, Inc. and directs AmSouth Bank N.A., as Trustee, to consent to the
execution and delivery of the same.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of August 1, 1990.
MEAD COATED BOARD, INC.
By: W. D. Bloebaum, Jr.
----------------------------
Title:
-7-
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK N.A., as Trustee under the Trust Indenture dated as of
December 1, 1988, as supplemented by a First Supplemental Trust Indenture dated
as of March 1, 1989, a Second Supplemental Trust Indenture dated as of April 1,
1989, a Third Supplemental Trust Indenture dated as of June 1, 1989, a Fourth
Supplemental Trust Indenture dated as of July 1, 1989, a Fifth Supplemental
Trust Indenture dated as of December 1, 1989, a Sixth Supplemental Trust
Indenture dated as of May 1, 1990 and a Seventh Supplemental Trust Indenture
dated as of June 1, 1990 from the Industrial Development Board of the City of
Phenix City, Alabama (the "Board"), hereby consents to the execution and
delivery of the foregoing Eighth Amendment To Lease Agreement, dated as of
August 1, 1990, between the Board and Mead Coated Board, Inc., amending the
Lease Agreement, dated as of December 1, 1988, as amended by a First Amendment
To Lease Agreement dated as of March 1, 1989, a Second Amendment to Lease
Agreement dated as of April 1, 1989, a Third Amendment To Lease Agreement dated
as of June 1, 1989, a Fourth Amendment To Lease Agreement dated as of July 1,
1989, a Fifth Amendment To Lease Agreement dated as of December 1, 1989, a Sixth
Amendment To Lease Agreement dated as of May 1, 1990 and a Seventh Amendment to
Lease Agreement dated as of June 1, 1990 between the Board and Mead Coated
Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of August 1, 1990.
AMSOUTH BANK N.A., as Trustee
By: Jeff Fink
-------------------------
Title: Trust Officer
-8-
<PAGE>
NINTH AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS NINTH AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of March 1, 1991, by and between THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate
and politic duly organized and existing under the Constitution and laws of the
State of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the
"Company").
R E C I T A L S
---------------
The Board has previously issued and sold $85,000,000 in aggregate
principal amount of The Industrial Development Board of the City of Phenix City,
Alabama Industrial Development Revenue Bonds (Mead Coated Board Project), Series
1988A (the "Series 1988A Bonds"); $43,000,000 in aggregate principal amount of
The Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989A (the "Series
1989A Bonds"); $45,000,000 in aggregate principal amount of The Industrial
Development Board of the City of Phenix City, Alabama Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1989B (the "Series 1989B
Bonds"); $37,000,000 in aggregate principal amount of The Industrial Development
Board of the City of Phenix City, Alabama Industrial Development Revenue Bonds
(Mead Coated Board Project), Series 1989C (the "Series 1989C Bonds");
$40,000,000 in aggregate principal amount of The Industrial Development Board of
the City of Phenix City, Alabama Industrial Development Revenue Bonds (Mead
Coated Board Project), Series 1989D (the "Series 1989D Bonds"); $49,667,074 of
The Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1989E (the "Series
1989E Bonds"); and $170,000,000 of The Industrial Development Board of the City
of Phenix City, Alabama Industrial Development Revenue Bonds (Mead Coated Board
Project), Series 1991A (the "Series 1991A Bonds") pursuant to a Trust Indenture
dated as of December 1, 1988 (the "Original Indenture"), as supplemented by a
First Supplemental Trust Indenture dated as of March 1, 1989, a Second
Supplemental Trust Indenture dated as of April 1, 1989, a Third Supplemental
Trust Indenture dated as of June 1, 1989, a Fourth Supplemental Trust Indenture
dated as of July 1, 1989, a Fifth Supplemental Trust Indenture dated as of
December 1, 1989, a Sixth Supplemental Trust Indenture dated as of May 1, 1990,
a Seventh Supplemental Trust Indenture dated as of June 1, 1990 and an Eighth
Supplemental Trust Indenture dated as of August 1, 1990 (collectively, the
"Indenture"), from the Board to AmSouth Bank N.A., as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1988A Bonds,
the Series 1989A Bonds, the Series 1989B Bonds, the Series 1989C Bonds, the
Series 1989D Bonds, the Series
<PAGE>
1989E Bonds and the Series 1990A Bonds for the payment of outstanding industrial
development temporary borrowing notes (the "Notes") issued by the Board and for
the payment of certain obligations of the Board in connection with various
Equipment Leases (as defined in the Indenture) for the purpose of funding the
acquisition, construction and installation of a coated natural kraft mill and
related facilities (the "Project") in connection with certain industrial
facilities located near Phenix City, Alabama. The Project is owned by the Board
and leased to the Company pursuant to a Lease Agreement dated as of December 1,
1988, as amended by the First Amendment To Lease Agreement dated as of March 1,
1989, the Second Amendment To Lease Agreement dated as of April 1, 1989, the
Third Amendment To Lease Agreement dated as of June 1, 1989, the Fourth
Amendment To Lease Agreement dated as of July 1, 1989, the Fifth Amendment To
Lease Agreement dated as of December 1, 1989, the Sixth Amendment To Lease
Agreement dated as of May 1, 1990, the Seventh Amendment To Lease Agreement
dated as of June 1, 1990 and the Eighth Amendment To Lease Agreement dated as of
August 1, 1990 (collectively, the "Agreement"). The Agreement obligates the
Company to make rental payments in such amounts and at such times as will
provide for the payment of the principal and interest on the Series 1988A Bonds,
the Series 1989A Bonds, the Series 1989B Bonds, the Series 1989C Bonds, the
Series 1989D Bonds, the Series 1989E Bonds and the Series 1990A Bonds as the
same becomes due and payable.
Under Article IV of the Original Indenture, the Board is permitted to
issue Additional Bonds (as defined in the Original Indenture) in order to pay
additional Notes issued by the Board in connection with the Project. In that
connection, the Board is issuing $81,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1991A
(the "Series 1991A Bonds"), pursuant to the Indenture as supplemented by a Ninth
Supplemental Trust Indenture dated as of March 1, 1991 (the "Ninth Supplemental
Indenture") from the Board to the Trustee. The Indenture as supplemented by the
Ninth Supplemental Indenture is hereinafter referred to as the "Indenture".
NOW, THEREFORE, as contemplated by Section 4.5 of the Agreement and in
accordance with Section 1501 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
ARTICLE I
PROVISIONS FOR AMENDING THE AGREEMENT
-------------------------------------
Section 1.1 Amendment of Section 5.3 of the Agreement. The term
----------- -----------------------------------------
"Bonds" as used in Section 5.3 of the Agreement shall include the Series 1991A
Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1991A Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1988A Bonds and not specifically otherwise provided
for in the
-2-
<PAGE>
Indenture, any supplements thereto or the Agreement, shall apply with full force
and effect to the Series 199lA Bonds. Without limiting the foregoing, all
references in the Agreement to the "Bonds" shall be deemed to mean the Series
1988A Bonds, the Series 1989A Bonds, the Series 1989B Bonds, the Series 1989C
Bonds, the Series 1989D Bonds, the Series 1989E Bonds, the Series 1990A Bonds
and the Series 1991A Bonds, including without limitation the provisions of
Section 5.3 of the Agreement relating to the payment of rents.
Section 1.3 Representations and Warranties by the Board. The Board
----------- -------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public corporation
--------------------------
duly organized and validly existing under the provisions of the Act by
authority of a resolution adopted by the Board of Commissioners of the City
on June 14, 1960 and a Certificate of Incorporation duly filed for record
on October 17, 1960, in the office of the Judge of Probate of Russell
County, Alabama, which Certificate of Incorporation has not been amended or
been revoked and is of full force and effect. The Board has all requisite
power and authority under the Act (1) to issue the Series 1991A Bonds, (2)
to use the proceeds thereof to refund the Notes issued to pay the cost to
acquire, construct and install the Project, (3) to own, lease, encumber and
dispose of the Project, and (4) to enter into, and perform its obligations
under, the Indenture, the Agreement and this Amendment. This Amendment and
the Ninth Supplemental Indenture have been duly authorized, executed and
delivered by the Board and are legal, valid and binding agreements
enforceable against the Board in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal, which adversely
affect the validity or enforceability of the Series 1991A Bonds, the
Indenture, the Agreement, this Amendment, or any agreement or instrument to
which the Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized.
-----------------------------------------------------------
The issue and sale of the Series 1991A Bonds and the execution and delivery
by the Board of the Ninth Supplemental Indenture and this Amendment and the
compliance by the Board with all of the provisions of each thereof and of
the Series 1991A Bonds (i) are within the purposes, powers and authority of
the Board, (ii) to the best of the knowledge of the Board,
-3-
<PAGE>
have been done in fall compliance with the provisions of the Act, are legal
and will not conflict with or constitute on the part of the Board a
violation of or a breach of or default under, or result in the creation of
any lien or encumbrance (other than Permitted Encumbrances under the
Agreement) upon any property of the Board under the provisions of, its
certificate of incorporation or Bylaws, or any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument to which the Board
is a party or by which the Board is bound, or any license, judgment,
decree, law, statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Board or any of
its activities or properties, and (iii) have been duly authorized by all
necessary corporate action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor
---------------------
any of its activities or properties, nor any relationship between the Board
and any other person, nor any circumstance in connection with the offer,
issue, sale or delivery of any of the Series l991A Bonds is such as to
require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on the part
of the Board in connection with the execution, delivery and performance of
the Ninth Supplemental Indenture and this Amendment, or the offer, issue,
sale or delivery of the Series 1991A Bonds, other than (i) the filing with
the Alabama Securities Commission of the notification of the Board's
intention to issue the Series 1991A Bonds required by Act No. 586 enacted
at the 1978 Regular Session of the Legislature of the State and the
issuance by the Director of the Alabama Securities Commission of such
Certificate of Notification as may be required by said Act, and (ii) the
due filing and recording of this Amendment, the Ninth Supplemental
Indenture and the financing statements covering the security interests
created hereunder and under the Indenture. The Board has filed the
notification referred to in (i) of the preceding sentence and the Director
of the Alabama Securities Commission has issued a Certificate of
Notification applicable to the Series l991A Bonds, which Certificate of
notification has not been revoked or rescinded and is in full force and
effect.
(e) No Defaults. The Board is not in default under the Act or
-----------
under its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which it is bound.
Section 1.4 Representations and Warranties by the Company. The
----------- ---------------------------------------------
Company makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
-4-
<PAGE>
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, (ii) has
all requisite corporate power and authority to carry on its business as now
being conducted and as presently proposed to be conducted, and (iii) has duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in the State.
(b) The Company has the corporate power and has been duly authorized
to enter into this Amendment and to perform all of its obligations hereunder.
(c) The willingness of the Board to issue the Series l991A Bonds for
purposes of financing costs of acquiring, constructing, and installing the
Project, and to lease the Project to the Company, has induced the Company to
locate the Project within the State of Alabama and, more particularly, within 25
miles of the City.
(d) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Amendment, or
performing any of its obligations hereunder; and the execution and delivery of
this Amendment, the consummation of the transactions contemplated hereby, and
the fulfillment of or compliance with the terms and conditions of this Amendment
will not conflict with or result in a breach of the terms, conditions or
provisions of any restriction, agreement or instrument to which the Company is a
party or by which it is bound, or constitute a default under any of the
foregoing.
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment which,
with the lapse of time or with the giving of notice or both, would become an
"Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to which it
is subject and has not failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its properties
or to the conduct of its business, which violation or failure to obtain would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations under this Amendment.
-5-
<PAGE>
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document. As amended by
----------- ---------------------------------------
this Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to
----------- ----------
any Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously
----------- ------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are
----------- --------
for convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
----------- --------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this
Amendment to be executed in their respective corporate names as of the date
first written above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: /s/ Kenneth A. Roberts
----------------------
Chairman
MEAD COATED BOARD, INC.
By: /s/ E.M. Karter
----------------------
Vice President
-6-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Sydney S. Smith, a Notary Public in and for said County in said
State, hereby certify that Kenneth A. Roberts, whose name as Chairman of the
Board of Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX
CITY, ALABAMA, a public corporation and instrumentality under the laws of the
State of Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 27th day of February,
1991.
/s/ Sydney S. Smith
________________________________
Notary Public
(SEAL) My commission expires: 2/25/92
-7-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Eva L. Miller, Notary Public in and for said County in said State,
hereby certify that E.M. Karter, whose name as Vice President of MEAD COATED
BOARD, INC., a corporation organized and existing under the laws of the State of
Delaware, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the Same
voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 1st day of March, 1991.
/s/ Eva L. Miller
--------------------------------------
Notary Public
My commission expires: _______________
EVA L. MILLER, Notary Public
In and for the State of Ohio
My Commission Expires June 29, 1992
(SEAL)
-8-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
Mead Coated Board, Inc., as holder of all of the outstanding
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1988A,
Series 1989A, Series 1989B, Series 1989C, Series 1989D, Series 1989E and Series
l990A of The Industrial Development Board of the City of Phenix City, Alabama
(the "Board"), hereby consents to the execution and delivery of the foregoing
Ninth Amendment To Lease Agreement, dated as of March 1, 1991, between the Board
and Mead Coated Board, Inc., amending the Lease Agreement, dated as of December
1, 1988, as amended by a First Amendment To Lease Agreement dated as of March 1,
1989, a Second Amendment To Lease Agreement dated as of April 1, 1989, a Third
Amendment To Lease Agreement dated as of June 1, 1989, a Fourth Amendment To
Lease Agreement dated as of July 1, 1989, a Fifth Amendment To Lease Agreement
dated as of December 1, 1989 a Sixth Amendment To Lease Agreement dated as of
May 1, 1990, a Seventh Amendment To Lease Agreement dated as of June 1, 1990 and
an Eighth Amendment To Lease Agreement dated as of August 1, 1990 between the
Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of March 1, 1991.
MEAD COATED BOARD, INC.
By: /s/ E.M. Karter
-----------------------------
Vice President
-9-
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK N.A., as Trustee under the Trust Indenture dated as of
December 1, 1988, as supplemented by a First Supplemental Trust Indenture dated
as of March 1, 1989, a Second Supplemental Trust Indenture dated as of April 1,
1989, a Third Supplemental Trust Indenture dated as of June 1, 1989, a Fourth
Supplemental Trust Indenture dated as of July 1, 1989, a Fifth Supplemental
Trust Indenture dated as of December 1, 1989, a Sixth Supplemental Trust
Indenture dated as of May 1, 1990, a Seventh Supplemental Trust Indenture dated
as of June 1, 1990, and an Eighth Supplemental Trust Indenture dated as of
August 1, 1990 from the Industrial Development Board of the City of Phenix City,
Alabama (the "Board"), hereby consents to the execution and delivery of the
foregoing Ninth Amendment To Lease Agreement, dated as of March 1, 199l, between
the Board and Mead Coated Board, Inc., amending the Lease Agreement, dated as of
December 1, 1988, as amended by a First Amendment To Lease Agreement dated as of
March 1, 1989, a Second Amendment To Lease Agreement dated as of April 1, 1989,
a Third Amendment To Lease Agreement dated as of June 1, 1989, a Fourth
Amendment To Lease Agreement dated as of July 1, 1989, a Fifth Amendment To
Lease Agreement dated as of December 1, 1989 a Sixth Amendment To Lease
Agreement dated as of May 1, 1990, a Seventh Amendment To Lease Agreement dated
as of June 1, 1990 and an Eighth Amendment To Lease Agreement dated as of August
1, 1990 between the Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank N.A. has caused this Consent of
Trustee to be executed in its name and behalf as of March 1, 1991.
AMSOUTH BANK N.A., as Trustee
By: Jeff Fink
-------------------------------
Title: Corporate Trust Officer
-10-
<PAGE>
EXHIBIT "A"
to
Ninth Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of March 1, 1991
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
---------------------------------------------------
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
----------------------------------------------
AND CHIPS SCREEN HOUSE AREA (C-28515)
-------------------------------------
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State Georgia Coordinate System; and
lying in Section 28, T 14 N , R 30 E, County of Russell, State of Alabama;
thence N 63 degrees 51' 31" E, 790.90' to the point of beginning; thence N
90 degrees 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90 degrees 00'
W, 232.22'; thence S 15 degrees 17' 15" E, 479.72' to a point on the
northmost side of a rectangular area (Chip Screen House) which parallels
last said course and is 75.0' north to south (7.00' of which is west of
last said course) by 49.0' east to west; said rectangular area being the
point of ending; said land being 0.56+ acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
---------------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N. R 30 E, County of Russell, State of Alabama;
thence N 45 degrees 24' 34" E, 692.79' to the point of beginning; thence S
36 degrees 51' 02" E, 454.94' to the point of ending; said land being 0.29
(plus or minus) acres;
<PAGE>
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
------------------------------------------------------
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
----------------------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N. R 30 E, County of Russell, State of Alabama;
thence N 71 degrees 34' 06" E, 600.241 to the point of beginning; thence S
71 degrees 04' 32" E, 640.91'; thence N 50 degrees 08' 32" E, 61.59' to the
point of ending; said land being 0.45 (plus or minus) acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
-----------------------------------------
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
------------------------------------------
AND CHIP SILO AREA (C-28520)
----------------------------
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N. R 30 E, County of Russell, State of Alabama;
thence S 48 degrees 21' 59" W, 84.29' to the point of beginning; thence S
56 degrees 07' 32" E, 319.22' to the center of a circular area (Chip Silo)
with a radius of 15.00' and a central angle of 360 degrees 00' bounded by a
rectangular structure 32' -6" (plus or minus) East-West and 32' -6" (plus
or minus) North-South; thence N 82 degrees 51' 32" E, 355.48' to the point
of ending; said land being 0.45 (plus or minus) acres;
NEW WASHER FACILITY AND BATCH DIGESTER AREA
-------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 48 degrees 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0 degrees 00' W, 133.50'; thence N 90
degrees 00' W, 103.39'; thence S 0 degrees 00' W, 103.50'; thence 90
degrees 00' W, 48.00'; thence N 0 degrees 00' W, 55.75'; thence N 90
degrees 00' W, 80.00'; thence S 0 degrees 00' W, 42.75'; thence N 90
degrees 00' W, 63.00'; thence N 0 degrees 00' W, 110.00'; thence N 45
degrees 00' E, 55.00'; thence N 0 degrees 00' W, 23.11'; thence N 90
degrees 00' E, 23.00; thence N 00 degrees W,
A-2
<PAGE>
23.75'; thence N 90 00' E, 170.00'; thence N 0 00' W, 28.75'; thence N 90
00' E, 62.50' to the point of beginning; said area being 1.01 (plus or
minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
-------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 48 46' 07" W. 591.71' to the point of beginning (N 791,960.0 E
234,055.0); thence S 0 degrees 00' W, 170.00'; thence N 90 degrees 00' W,
111.00; thence N 0 degrees 00' W, 170.00'; thence N 90 degrees 00' E,
111.00' to the point of beginning; said land being 0.43 (plus or minus)
acres;
TURPENTINE RECOVERY FACILITY AREA
---------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 63 degrees 26' 06" W, 11.18' to the point of beginning (N
792,345.0, E 234,490.0); thence N 0' 00" W, 30.00'; thence N 90 degrees 00"
E, 20.00'; thence S 0 degrees 00' W, 30.00'; thence N 90 degrees 00' W,
20.00' to the point of beginning; said land being 0.01 (plus or minus)
acres;
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
----------------------------------------------------------
DRUM AREA (C-28525), VIBRATING CONVEYORS AREA (C-28532),
--------------------------------------------------------
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
---------------------------------------------------
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
-----------------------------------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence N 80 degrees 22' 54" E, 879.79' to the point of beginning; thence N
0 degrees 00' W, 326.00'; thence N 90 degrees 00' E, 711.08'; thence S 0
degrees 00' W, 326.00'; thence N 90 degrees 00' W, 328.00'; thence S 0
degrees 00' W, 188.00'; thence N 90 degrees 00' W, 50.00'; thence N 0
degrees 00' W, 188.00'; thence N 90 degrees 00' 333.08' to the point of
beginning; said land being 5.54 (plus or minus) acres;
A-3
<PAGE>
AREA "B" MAINTENANCE SHOP AREA
------------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System;
thence S 11 degrees 04' 57" W, 197.69' to the point of beginning
(N792,156.0, E 234,462.0); thence S 0 degrees 00" W, 82.00'; thence N 90
degrees 00" W, 52.00'; thence N 0 degrees 00' W, 82.00'; thence N 90
degrees 00' E, 52.00 to the point of beginning; said land being 0.10
(plus or minus) acres;
NEW LIME KILN/RECAUSTICIZING
----------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02 of the West Zone of the State of Georgia Coordinate System;
thence N 70 degrees 51' 29" E, 267.79' to the point of beginning (N
793,238.0 E 233,503.0); thence N 90 degrees 00' E, 399.23'; thence S 0
degrees 00' W, 50.00'; thence N 90 degrees 00' W, 10.00'; thence S 0
degrees 00' W, 40.00'; thence N 90 degrees 00' W, 136.23'; thence N 0
degrees 00' W, 80.00'; thence N 90 degrees 00' W, 50.00'; thence S 0
degrees 00' W, 10.00'; thence N 00' W, 54.00'; thence S 0 degrees 00' W,
40.00'; thence N 90 degrees 00' E, 65.00'; thence S 0 degrees 00' W,
30.00'; thence N 90 degrees 00' W, 150.00'; thence N 0 degrees 00' W,
17.00'; thence N 90 degrees 00' W, 64.00'; thence N 0 degrees 00' W, 73.00'
to the point of beginning; said land being 0.657, more or less acres, less
than and except all structures not included in the Mead Corporation
Contract No. 21-3097A.
NO. 2 RECOVERY BOILER AREA
--------------------------
All that portion of land, and structures lying thereon, in Section 28,
T 14 N. R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 40 degrees 16' 34" E, 439.77' to the point of beginning (N
792,814.67, E 233,534.32'); thence N 90 degrees 00' E, 36.30'; thence N 0
degrees 00' W, 20.50'; thence N 90 degrees 00' E, 72.26'; thence N 0
degrees 00' W, 14.83'; thence N 90 degrees 00' E, 110.50'; thence S 0
degrees 00' W, 42.58'; thence N 90 degrees 00' E, 26.00'; thence S 0
degrees, 81.00'; thence N 90 degrees 00' W. 51.00'; thence N 0 degrees 00"
W, 25.12'; thence N 90 degrees 00' W. 85.50'; thence N 00 degrees 00' W,
8.63'; thence N 90 degrees 00' W, 72.26'; thence N 90 degrees 00' W.
20.50'; thence N 0 degrees 00' W, 36.30'; thence N 0 degrees 00' W. 34.00'
to the point of beginning; said land being 0.47 (plus or minus) acres;
A-4
<PAGE>
NEW EVAPORATORS AND NEW TANKS AREA
All that portion of land, and structures lying thereon, in section 28,
T 14 N. R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E
233,250.02, of the West Zone of the State of Georgia Coordinate System;
thence S 62 degrees 01' 33" E, 637.83' to the point of beginning (N
792,851.0, E 233,813.33); thence N 90 degrees 00' E, 246.67'; thence along
an arc South and East 53.41' having a radius of 34.00' with a central angle
of 90 degrees 00'; thence S 0 degrees 00' W. 135.33'; thence along an arc
South and West 53.41' having a radius of 34.00' with a central angle of 90
degrees 00'; thence N 90 degrees 00' W; 34.00'; thence N 0 degrees 00' W.
99.79'; thence N 90 degrees 00' W. 69.00'; thence N 59 degrees 47' 19" W.
91.42'; thence N 90 degrees 00' W. 64.67'; thence N 0 degrees 00' W. 57.54'
to the point of beginning; said land being 0.72 (plus or minus) acres;
(collectively, the "Unimproved Lands"); less, in each case, any structures
constructed and leased pursuant to a Lease Agreement dated July 1, 1977,
and recorded in Deed Book 550 at Pages 51-94 (as amended to date, the "1977
Lease") under which Lessor leased to Georgia Kraft Company ("Georgia
Kraft") a parcel of land in Russell County, Alabama as more particularly
described in Exhibit A to the Lease (the "1977 Land"), together with
certain items of equipment described in Exhibit B to the 1977 Lease
(Georgia Kraft has assigned its interest in the 1977 Lease to Mead Coated
Board, Inc.);
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (the 1977 Land less and except the 1988 Land) in order
to provide all necessary or convenient ingress or egress between the
Unimproved Land and railroads, public roads and highways and the
Chattahoochee River and to permit passage between the Unimproved Land and
the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Unimproved Land to the Board Premises, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of the Project;
A-5
<PAGE>
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Unimproved Land and the
Project including, without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other;
improvements and appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Unimproved Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
but subject to the following easements over the Unimproved Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Unimproved Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Unimproved Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Unimproved Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Unimproved Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Promises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
A-6
<PAGE>
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Unimproved Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Unimproved Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Unimproved Land as
long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the
Unimproved Land in respect of any additional improvements constructed
adjacent to the Unimproved Land, as long as any such additional
improvements remain standing, including without limitation the rights of
lateral or party wall support, and to connect such additional improvements
to any structure or any improvements on the Unimproved Land.
DMY/BOND/AW1
A-7
<PAGE>
===============================================================================
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
--------------------
Lease Agreement
--------------------
Dated as of June 1, 1993
Relating to $24,000,000 The Industrial Development Board of the City of Phenix
City, Alabama Environmental Improvement Revenue Bonds (Mead Coated Board
Project), Series 1993A
===============================================================================
<PAGE>
LEASE AGREEMENT
TABLE OF CONTENTS
(The Table of Contents for this Lease Agreement is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Lease Agreement.)
Page
----
ARTICLE I DEFINITIONS
Section 1.1 Definitions 1
Section 1.2 Certain Rules of Interpretation 6
ARTICLE II REPRESENTATIONS
Section 2.1 Representations by the Issuer 6
Section 2.2 Representations by the Company 8
ARTICLE III LEASING CLAUSES AND TITLE PROJECT
Section 3.1 Lease of the Project 10
Section 3.2 Title to Project 10
Section 3.3 Quiet Enjoyment 10
ARTICLE IV ACQUISITION, CONSTRUCTION,
INSTALLATION, EQUIPPING AND
COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
Section 4.1 Acquisition, Construction,
Installation, Equipping and
Completion of the Project 10
Section 4.2 Issuance of Bonds; Disbursements
from the Project Fund 12
Section 4.3 Establishment of Completion Date;
Excess Proceeds 13
Section 4.4 Insufficiency of Project Fund 14
Section 4.5 Issuer to Pursue Remedies Against
Suppliers, Contractors and
Subcontractors and their Sureties 14
ARTICLE V EFFECTIVE DATE OF THIS
AGREEMENT; DURATION; OF LEASE
TERM; RENTAL PROVISIONS
<PAGE>
Section 5.1 Effective Date of This
Agreement; Duration of
Lease Term 15
Section 5.2 Delivery of Acceptance of Possession 15
Section 5.3 Rental Payments 15
Section 5.4 Obligation of the Company Unconditional 17
Section 5.5 Assignment and Pledge of Rental
Payments and the Agreement 17
Section 5.6 Agreement to Supply Letter of Credit 17
Section 5.7 Purchase of Bonds 17
Section 5.8 Optional Purchase of Bonds 18
Section 5.9 Determination of Interest Rate Periods 18
ARTICLE VI SPECIAL COVENANTS
Section 6.1 Use of Project 18
Section 6.2 Use of Proceeds 19
Section 6.3 Indemnity Against Claims 19
Section 6.4 Inspection of the Project 20
Section 6.5 Company to Maintain Its Corporate
Existence; Conditions Under Which
Exceptions Permitted 20
Section 6.6 Ownership; Further Assurances and
Corrective Instruments 20
Section 6.7 Maintenance of Project by Company 21
Section 6.8 Redemption or Purchase of Bonds 22
Section 6.9 Investment of Bond Fund and
Project Fund Moneys Permitted 22
Section 6.10 Non-Arbitrage Covenant 22
Section 6.11 Removal and Substitution of
Portions of Project 23
Section 6.12 Taxes, Other Governmental Charges
and Utility Charges 25
Section 6.13 Insurance Required 26
Section 6.14 Application of Net Proceeds of
Insurance 26
Section 6.15 Additional Provisions
Respecting Insurance 26
Section 6.16 Investment Credit 26
Section 6.17 Granting of Easements 27
Section 6.18 Release of Certain Land 27
ARTICLE VII DAMAGE, DESTRUCTION AND
CONDEMNATION
Section 7.1 Damage and Destruction 29
Section 7.2 Condemnation 30
Section 7.3 Condemnation of
Company-Owned Property 31
<PAGE>
ARTICLE VIII ASSIGNMENT; SUBLEASING,
PLEDGING AND SELLING;
REDEMPTION; RENT PREPAYMENT
AND ABATEMENT; OPTION AND
OBLIGATION TO PURCHASE PROJECT;
OPTION TO EXTEND TERM OF AGREEMENT
Section 8.1 Assignment and Subleasing 31
Section 8.2 Pledge Under Indenture 32
Section 8.3 Restrictions on Sale of
Project by Issuer 32
Section 8.4 Prepayment of Rents; Option to
Purchase Project; Obligation
to Purchase Project 32
Section 8.5 Rent Abatements If Bonds Paid
Prior to Maturity 34
Section 8.6 Reference to Bonds Ineffective
After Bonds Paid 34
Section 8.7 Option to Extend 34
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Events of Default 35
Section 9.2 Remedies on Default 37
Section 9.3 Agreement to Pay Attorneys' Fees
and Expenses 37
Section 9.4 No Additional Waiver Implied by
One Waiver 38
Section 9.5 Notice of Default 38
ARTICLE X MISCELLANEOUS
Section 10.1 Notices 38
Section 10.2 Binding Effect 38
Section 10.3 Severability 38
Section 10.4 Amounts Remaining
in the Bond Fund 38
Section 10.5 Amendments 39
Section 10.6 Execution in Counterparts 39
Section 10.7 Applicable Law 39
Section 10.8 Captions 39
Section 10.9 Recording of Agreement 39
Section 10.10 Net Lease 39
EXHIBITS
Exhibit "A" Project Land A-1
Exhibit "B" Description of Project B-1
Exhibit "C" Form of Requisition C-1
<PAGE>
THIS LEASE AGREEMENT, dated as of June 1, 1993 between THE INDUSTRIAL
DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY, ALABAMA, a public corporation duly
organized and existing under the laws of the State of Alabama, as lessor (the
"Issuer"), and MEAD COATED BOARD, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Company"), evidencing the
agreement of the parties hereto.
W I T N E S S E T H:
-------------------
In consideration of the respective representations and agreements
hereinafter contained, the parties hereto agree as follows (provided that in the
performance of the agreements of the Issuer herein contained, any obligation the
Issuer may thereby incur for the payment of money shall not be a general debt,
liability or obligation of the Issuer, or of the State of Alabama or any
political subdivision thereof, but shall be payable solely out of the rents,
revenues and proceeds derived from this Agreement (hereinafter defined) and the
sale of the Bonds referred to herein:
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions. In addition to the words and terms elsewhere
-----------
defined herein, the following words and terms as used herein shall have the
following meanings unless the context or use clearly indicates another or
different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings as assigned to them in the Indenture
when used herein unless the context or use clearly indicates another or
different meaning or intent:
"Act" means the statutes codified as Code of Alabama 1975, Title 11,
-----
Chapter 54, Article 4, as amended and supplemented and at the time in force and
effect.
"Agreement" means this Lease Agreement and any amendments and
-----------
supplements hereto.
"Authorized Company Representative" means any person or persons
-----------------------------------
designated to act on behalf of the Company by a certificate filed with the
Issuer and the Trustee containing the specimen signature of each such person and
signed by the President, Vice President or the Treasurer of the Company.
"Authorized Issuer Representative" means any person or persons
----------------------------------
designated to act on behalf of the Issuer by a certificate filed with the Issuer
and the Trustee containing the specimen signature of each such person and signed
by the Chairman or Secretary of the Issuer.
<PAGE>
"Bond Counsel" means an attorney-at-law or a firm of attorneys of
--------------
nationally recognized standing in matters pertaining to the tax-exempt nature of
interest on bonds issued by states and their political subdivisions, duly
admitted to the practice of law before the highest court of any state of the
United States of America, selected by the Company and acceptable to the Trustee.
"Bond Fund" means the Bond principal and interest payment fund created
-----------
by Section 5.02 of the Indenture.
"Bonds" means The Industrial Development Board of the City of Phenix
-------
City, Alabama Environmental Improvement Revenue Bonds (Mead Coated Board
Project), Series 1993A issued in the aggregate principal amount of $24,000,000.
"Business Day" means any day other than (i) a Saturday or Sunday or
--------------
legal holiday or a day on which banking institutions in the city or cities (A)
in which the principal offices of the Trustee, the Tender Agent or the
Remarketing Agent are located or (B) in which drawings under the Credit Facility
are required to be made, are authorized by law to close or (ii) a day on which
the New York Stock Exchange is closed.
"Code" means the United States Internal Revenue Code of 1986, as
------
amended. References to the Code and to Sections of the Code shall include
relevant final, temporary or proposed regulations thereunder.
"Company Guarantee" means the Guarantee Agreement, dated as of June 1,
-------------------
1993 by and between the Company and the Trustee.
"Completion Date" means the date of completion of the acquisition,
-----------------
construction, installation and equipping of the Project (hereinafter defined) as
such date shall be certified as provided in Section 4.3 hereof.
"Cost of Construction" with respect to the Project means the
----------------------
following:
(a) obligations incurred for labor and materials (including
reimbursements payable to the Company or the Issuer and payments on
contracts in the name of the Company or the Issuer) in connection with the
acquisition, construction, installation and equipping of the Project;
-2-
<PAGE>
(b) the cost of contract bonds and of insurance of all kinds that may
be required or necessary during the course of construction of the Project;
(c) all costs of engineering services, including the costs for test
borings, surveys, estimates, plans and specifications and preliminary
investigation therefor, and for supervising construction, as well as for
the performance of all other duties required by or consequent upon the
proper construction of the Project;
(d) overhead of the Company, to the extent not included in
subparagraph (c) above, allocable to the Project by the Company in
accordance with generally accepted accounting principles;
(e) interest to accrue in respect of the Bonds to the Completion
Date;
(f) amounts paid to the United States Treasury pursuant to
(S)1.103-15AT(d) and (e) of Temporary Treasury Regulations or any
regulations promulgated pursuant to Section 148(f) of the Code;
(g) subject to the limitations of Section 147(g) of the Code, all
expenses incurred in connection with the issuance of the Bonds, including
without limitation initial compensation and expenses of the Trustee, legal
expenses and fees, costs of printing and engraving, recording and filing
fees, compensation of the underwriters, if any, rating agency fees and
costs of the Letter of Credit;
(h) all other costs which may properly be paid or accrued for the
acquisition, construction, installation, equipping or financing of the
Project; and
(i) any sums required to reimburse the Company for advances made for
any of the above items or for any other costs incurred or for work done
which are properly chargeable to the Project.
"Event of Default" means any of the occurrences enumerated in Section
------------------
9.1 of this Agreement.
"Exempt Costs" means Cost of Construction of the Project to the extent
--------------
that the payment thereof would constitute, within the meaning of Sections
142(a)(6) of the Code, the payment of costs to provide facilities that are solid
waste disposal
-3-
<PAGE>
facilities within the meaning of said Code section or facilities functionally
related and subordinate thereto, excluding amounts paid as costs of issuance of
the Bonds but including fees paid to the issuer of the Letter of Credit during
the construction of the Project.
"Extraordinary Services" and "Extraordinary Expenses" means all
------------------------ ------------------------
services rendered and all expenses incurred by the Trustee under the Indenture
other than Ordinary Services and Ordinary Expenses.
"Government Obligations" shall have the meaning set forth in Article I
------------------------
of the Indenture.
"Guarantee Agreements" means collectively the Company Guarantee and
----------------------
the Mead Guarantee.
"Indenture" means the Trust Indenture, dated as of June 1, 1993,
-----------
between the Issuer and the Trustee, pursuant to which the Bonds are authorized
to be issued, and including any Indenture supplemental thereto.
"Issuer" means The Industrial Development Board of the City of Phenix
--------
City, Alabama, a public corporation of the State created and existing pursuant
to the Act, a resolution of the Board of Commissioners of Phenix City adopted on
June 14, 1960 and a Certificate of Incorporation duly filed for record on July
17, 1960 in the office of the Judge of Probate of Russell County, Alabama, and
its successors and assigns.
"Lease Term" means the duration of the leasehold interest created
------------
hereby as specified in Section 5.1.
"Mead" means The Mead Corporation, an Ohio corporation, and its
------
successors and assigns.
"Mead Guarantee" means the Guarantee Agreement, dated as of June 1,
----------------
1993 by and between Mead and the Trustee.
"Mill" means the coated natural kraft paperboard mill operated by the
------
Company and located near Phenix City, Alabama.
"Net Proceeds" means, with respect to the Bonds, the amount of the
--------------
proceeds of the sale of the Bonds deposited into the Project Fund less the
amount paid or to be paid out from such proceeds for the payment of costs of
issuance of the Bonds plus any investment income earned on moneys in the Project
Fund.
-4-
<PAGE>
"Net Proceeds" means, with respect to any insurance or condemnation
--------------
awards, the gross proceeds from the insurance or condemnation award with respect
to which that term is used remaining after the payment of all expenses
(including, without limitation, attorneys' fees and any Extraordinary Expenses
of the Trustee) incurred in the collection of such gross proceeds.
"Ordinary Services" and "Ordinary Expenses" mean those services
------------------- -------------------
normally rendered and those expenses normally incurred by a trustee under
instruments comparable to the Indenture, including but not limited to fees of
its counsel.
"Permitted Investments" shall have the meaning set forth in Article I
-----------------------
of the Indenture.
"Plans" means the plans and specifications prepared by or on behalf of
-------
the Company for the Project, as the same may be revised from time to time by the
Company in accordance with the second paragraph of Section 4.1 hereof, which are
on file with the Company and accessible to the Issuer.
"Project" means the acquisition, construction, installation and
---------
equipping of a project for the recycling of waste paper, including old
corrugated containers, for use in the production of coated natural kraft
paperboard, as described in the Plans and, as designated on the date hereof,
described generally in Exhibit "B" hereto.
"Project Fund" means the fund created pursuant to Section 5.04 of the
--------------
Indenture.
"Project Land" means the real property described in Exhibit "A" hereto
--------------
less such real property as may be released from this Agreement pursuant to
Section 6.18 or taken by the exercise of the power of eminent domain as provided
in Section 7.2.
"Project Site" shall mean the site of the facility operated by the
--------------
Company located near Phenix City, Alabama, which the Project is designed to
serve.
"State" means the State of Alabama.
-------
"Trustee" means Citibank, N.A., New York, New York, and its successors
---------
and assigns and any other entity who may be serving as successor trustee or co-
trustee under the Indenture.
-5-
<PAGE>
"Trust Estate" shall mean the property described in the granting
--------------
clauses of the Indenture.
Section 1.2 Certain Rules of Interpretation. The definitions set
--------------------------------
forth in Section 1.1 shall be equally applicable to both the singular and plural
forms of the words and terms therein defined and shall cover all genders.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement and not solely
to the particular Article, Section or subdivision in which such word is used.
Reference herein to an Article number (e.g., Article IV) or a Section
----
number (e.g., Section 3.2) shall be construed to be a reference to the
----
designated Article number or Section number hereof unless the context or use
clearly indicates another or different meaning or intent.
Any terms defined in Article I of the Indenture and not defined herein
are incorporated by reference.
ARTICLE II
REPRESENTATIONS
---------------
Section 2.1 Representations by the Issuer. The Issuer makes the
------------------------------
following representations as the basis for the undertakings on its part herein
contained:
(a) Organization and Authority. The Issuer is a public corporation
---------------------------
duly organized and validly existing under the provisions of the Act by
authority of a resolution adopted by the Board of Commissioners of Phenix
City of June 14, 1960 and a Certificate of Incorporation duly filed for
record on June 17, 1960, in the office of the Judge of Probate of Russell
County, Alabama, which Certificate of Incorporation has not been amended or
revoked and is of full force and effect. The Issuer has all requisite power
and authority under the Act to (i) issue the Bonds, (ii) use the proceeds
thereof to acquire, construct, install and equip the Project, (iii) own,
lease and dispose of the Project, and (iv) enter into, and perform its
obligations under this Agreement and the Indenture. This Agreement and the
Indenture have been duly authorized, executed and delivered by the Issuer
and are legal, valid and binding agreements enforceable against the Issuer
in accordance with their respective terms.
-6-
<PAGE>
(b) Pendinq Litigation. There are no actions, suits, proceedings,
-------------------
inquiries or investigations pending, or, to the knowledge of the Issuer,
threatened against or affecting the Issuer in any court or before any
governmental authority or arbitration board or tribunal, which involve the
possibility of materially and adversely affecting the transactions
contemplated by this Agreement or the Indenture or which, in any way, would
adversely affect the validity or enforceability of the Bonds, the
Indenture, this Agreement or any agreement or instrument to which the
Issuer is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
------------------------------------------------------------
issuance and sale of the Bonds and the execution and delivery by the Issuer
of this Agreement and the Indenture, and the compliance by the Issuer with
all of the provisions of each thereof and of the Bonds (i) are within the
purposes, powers and authority of the Issuer, (ii) to the best of the
knowledge of the Issuer, have been done in full compliance with the
provisions of the Act, are legal and will not conflict with or constitute
on the part of the Issuer a violation of or a breach of or default under,
or result in the creation of any lien, charge or encumbrance upon any
property of the Issuer (other than as contemplated by this Agreement or the
Indenture) under the provisions of, any charter instrument, by-law,
indenture, mortgage, deed of trust, note agreement or other agreement or
instrument to which the Issuer is a party or by which the Issuer is bound,
or any license, judgment, decree, law, statute, order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Issuer or any of its activities or properties, and (iii) have been duly
authorized by all necessary corporate action on the part of the Issuer;
(d) Governmental Consents. Neither the nature of the Issuer nor any
----------------------
of its activities or properties, nor any relationship between the Issuer
and any other person, nor any circumstance in connection with the offer,
issue, sale or delivery of any of the Bonds is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Issuer in
connection with the execution, delivery and performance of this Agreement
and the Indenture or the offer, issue, sale or delivery of the Bonds, other
than those already obtained. The Issuer has filed with the Alabama
Securities Commission notification of the Issuer's intention to issue the
Bonds as required by Code of
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<PAGE>
Alabama, Section 8-6-110 et seq., as amended, and the Director of the
--------
Alabama Securities Commission has issued a Certificate of Notification with
respect to the Bonds pursuant to the aforesaid act and said Certificate of
Notification has not been revoked or rescinded and is in full force and
effect;
(e) No Defaults. To the best of the Issuer's knowledge, no event has
-----------
occurred and no condition exists with respect to the Issuer which would
constitute an "Event of Default" as defined in this Agreement or the
Indenture or which, with the lapse of time or with the giving of notice or
both, would become such an "Event of Default". The Issuer is not in default
under the Act or under any charter instrument, by-law or other agreement or
instrument to which it is a party or by which is it bound;
(f) No Prior Pledge. Neither the Project, this Agreement nor any of
---------------
the payments to be received pursuant to this Agreement have been pledged or
hypothecated in any manner or for any purpose other than as provided in the
Indenture as security for the payment of the Bonds; and
(g) Nature and Location of Project. The Project will constitute a
------------------------------
"project" within the meaning of the Act, and the acquisition, construction
and installation of the Project is in furtherance of the public purpose of
the Act. The Project will be located within 25 miles of the corporate
limits of Phenix City, and no part thereof is located within the corporate
limits or the police jurisdiction of any other incorporated municipality or
any county of any state other than Russell County, Alabama.
Section 2.2 Representations by the Company. The Company makes the
------------------------------
following representations as the basis for the undertakings on its part herein
contained:
(a) Corporate Organization and Power. The Company (i) is a
--------------------------------
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) is duly qualified to transact business
as a foreign corporation in the State of Alabama, and (iii) has all
requisite corporate power and authority and all necessary licenses and
permits to own and operate its properties and to carry on its business as
now being conducted and as presently proposed to be conducted;
-8-
<PAGE>
(b) Pending Litigation. There is no proceeding pending, or to the
------------------
knowledge of the Company threatened, against or affecting the Company in
any court or before any governmental authority, arbitration board or
tribunal which is likely to materially and adversely affect the ability of
the Company to perform its obligations under this Agreement;
(c) Agreements Are Legal and Authorized. The execution and delivery
-----------------------------------
by the Company of this Agreement and the compliance by the Company with all
of the provisions hereof and thereof (i) are within the corporate power of
the Company, (ii) will not conflict with or result in any breach of any of
the provisions of, or constitute a default under or result in the creation
of any lien, charge or encumbrance upon any property of the Company (other
than as contemplated by this Agreement and the Indenture) under the
provisions of the Company's Certificate of Incorporation or Bylaws or any
agreement or other instrument to which the Company is a party or by which
it may be bound, or any license, judgment, decree, law, statute, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its activities or properties, and
(iii) have been duly authorized by all necessary action on the part of the
Company;
(d) Governmental Consent. To the knowledge of the Company, neither
--------------------
the Company nor any of its business or properties, nor any relationship
between the Company and any other person, nor any circumstances in
connection with the execution, delivery and performance by the Company of
this Agreement is such as to require the consent, approval or authorization
of, or the filing, registration or qualification with, any governmental
authority on the part of the Company other than those already obtained;
(e) No Defaults. To the knowledge of the Company, no event has
-----------
occurred and no condition exists with respect to the Company that would
constitute an Event of Default under this Agreement or which, with the
lapse of time or with the giving of notice or both, would become such an
Event of Default;
(f) Compliance with Law. To the knowledge of the Company, the
-------------------
Company is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject and has not failed to obtain any
licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
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business, which violation or failure to obtain is likely to materially and
adversely affect the ability of the Company to perform its obligations
hereunder;
(g) Commencement of Construction. The acquisition, construction,
----------------------------
installation and equipping of the Project commenced after October 19, 1991,
and no obligation relating to the acquisition, construction, installation
or equipping of the Project was paid or incurred prior to such date.
ARTICLE III
LEASING CLAUSES AND TITLE TO PROJECT
------------------------------------
Section 3.1 Lease of the Project. The Issuer hereby leases to the
--------------------
Company, and the Company hereby leases from the Issuer, the Project at the rent
set forth in Section 5.3 and in accordance with the provisions hereof.
Section 3.2 Title to Project. Upon the execution and delivery hereof,
----------------
the Issuer agrees that it will furnish to the Company and the Trustee an opinion
of the Issuer's Counsel or other Counsel satisfactory to the Company and the
Trustee stating that the Issuer has good fee simple title and/or a leasehold
interest in and to the Project.
Section 3.3 Quiet Enjoyment. The Issuer warrants and agrees that it
---------------
will defend the Company in the quiet enjoyment and peaceable possession of the
Project, free from all claims of all persons claiming by, through or under the
Issuer, throughout the Lease Term, so long as the Company shall perform the
agreements to be performed by it hereunder, or so long as the period for
remedying any failure in such performance shall not have expired.
ARTICLE IV
ACQUISITION, CONSTRUCTION, INSTALLATION,
EQUIPPING AND COMPLETION OF THE PROJECT;
ISSUANCE OF THE BONDS
----------------------------------------
Section 4.1 Acquisition, Construction, Installation, Equipping and
------------------------------------------------------
Completion of the Project. Not later than the delivery hereof the Issuer will
- -------------------------
have acquired fee simple title and/or a leasehold interest in and to the
Project, and subject to the provisions of Section 4.4, the Issuer agrees that:
(a) It will acquire, construct, equip and install facilities
necessary for the Project. The aforesaid
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<PAGE>
acquisition, construction, equipping and installation shall be
substantially in accordance with the Plans. The Project shall be the
property of the Issuer and subject to the terms hereof.
(b) Subject to the provisions of the following paragraphs, it will
cause to be acquired, constructed, equipped and installed such additional
machinery, equipment and related property described in the list attached
hereto as Exhibit "B" and such other items of machinery, equipment and
related property as in the Company's judgment may be necessary for the
operation of the Project. Such additional machinery, equipment and related
property shall become a part of the Project and shall be the property of
the Issuer and subject to the terms hereof.
The Issuer and the Company agree that the Company from time to time
may supplement or amend the Plans (including additions thereto or omissions
therefrom), provided that no such amendment shall provide for a material
addition to, deletion from or modification of the Plans unless there shall have
been filed with the Issuer and the Trustee (i) a revised Exhibit "B" containing
a description of the Project as revised by such amendment or modification, the
accuracy of which shall have been certified by an Authorized Company
Representative, and (ii) the written opinion of a firm of nationally recognized
Bond Counsel experienced in the financing of solid waste disposal facilities
stating that (a) the Project as provided for in such modified or amended Plans
will constitute a "project" within the meaning of the Act, and (b) the
expenditure of moneys from the Project Fund to pay the Cost of Construction in
accordance with such amended or modified Plans will not impair the exemption of
interest on Bonds from federal income taxation.
The Issuer hereby makes, constitutes and appoints the Company as its
true, lawful and exclusive agent for the acquisition, construction, equipping
and installation of the Project, and the Company hereby accepts such agency to
act and do all things on behalf of the Issuer, to perform all acts and
agreements of the Issuer hereinabove provided in this Section, and to bring any
actions or proceedings against any person which the Issuer might bring with
respect thereto as the Company shall deem proper. The Issuer hereby ratifies and
confirms all actions of, and assumes and adopts all contracts entered into by,
the Company with respect to the Project prior to the date hereof. This
appointment of the Company to act as agent and all authority hereby conferred or
granted is conferred and granted irrevocably until all activities in connection
with the acquisition,
-11-
<PAGE>
construction, equipping and installation of the Project shall have been
completed, and shall not be terminated prior thereto by act of the Issuer or of
the Company. So long as the Company is not in default hereunder, upon the
Completion Date (or at any time prior thereto upon the request of the Company)
the Issuer will assign to the Company all warranties and guarantees of all
contractors, subcontractors, suppliers, architects and engineers for the
furnishing of labor, materials or equipment or supervision or design in
connection with the Project and any rights or causes of action arising from or
against any of the foregoing.
The Issuer agrees to complete the acquisition, construction, equipping
and installation of the Project as promptly as practicable after receipt of the
proceeds from the sale of the Bonds, to continue said acquisition, construction,
equipping and installation with all reasonable dispatch and to use its best
efforts to cause said acquisition, construction, equipping and installation to
be completed as soon as practicable, delays incident to strikes, riots, acts of
God or the public enemy beyond the reasonable control of the Issuer only
excepted, but if said acquisition, construction and installation is not
completed within the time herein contemplated there shall be no resulting
liability on the part of the Issuer and no diminution in or postponement or
abatement of the rents and other payments required by Section 5.3 to be paid by
the Company.
Section 4.2 Issuance of Bonds; Disbursements from the Project Fund.
------------------------------------------------------
In order to provide funds to finance the Cost of Construction, the Issuer agrees
that it will initially issue and deliver the Bonds to the purchasers thereof and
apply and deposit the proceeds thereof in accordance with the terms of the
Indenture. The Company has approved the Indenture in form and substance,
approves the issuance of the Bonds in accordance with the Indenture and approves
the manner and purposes for which proceeds of the Bonds may be used and invested
pursuant to the Indenture.
The Issuer has authorized and directed the Trustee to disburse moneys
from the Project Fund for payment or reimbursement of the Cost of Construction.
Each disbursement from the Project Fund shall be made only upon receipt by the
Trustee of a written requisition signed by the Authorized Company Representative
in substantially the form of Exhibit "C" attached hereto, stating with respect
to each payment to be made: (a) the requisition number, (b) the name and address
(or wire transfer instructions) of the person, firm or corporation to whom
payment is due, (c) the amount to be paid, (d) certifying that
-12-
<PAGE>
each obligation mentioned therein has been properly incurred and is a proper
charge against the Project Fund, specifying in reasonable detail the purpose and
circumstances of such obligation and certifying that such obligation has not
been the basis of any previous withdrawal from the Project Fund, and (e)
certifying that payment of such requisition will not result in less than 95% of
the total proceeds of the sale of the Bonds expended at that time having been
used to pay Exempt Costs.
In approving or certifying any requisition under this Section the
Issuer and the Trustee may rely as to the completeness and accuracy of all
statements in such requisition upon the approval of or certification to such
requisition by the Authorized Company Representative, and the Company hereby
agrees to indemnify and save harmless the Issuer and the Trustee, and each of
their directors, officers, members, agents and employees from any liability
incurred in connection with any requisition so approved or certified.
Section 4.3 Establishment of Completion Date; Excess Proceeds. The
-------------------------------------------------
Completion Date shall be evidenced to the Trustee by a certificate of the
Authorized Company Representative: (i) stating that the Project has been
completed substantially in accordance with the Plans, (ii) stating that, except
for amounts retained by the Trustee at the Company's direction for any Cost of
Construction of the Project not then due and payable or which is in dispute, the
entire Cost of Construction of the Project has been paid, and (iii) stating that
not less than 95% of the total proceeds of the sale of the Bonds have been used
to pay Exempt Costs. Notwithstanding the foregoing, such certificate may state
that it is given without prejudice to any rights against third parties which
exist at the date of such certificates or which may subsequently come into
being.
In the event that moneys shall remain in the Project Fund after
payment of all Cost of Construction of the Project, such moneys shall, at the
direction of the Company, be used (i) for the redemption of Bonds in the largest
amount possible at the earliest date permitted by the Indenture at which the
redemption price for such Bonds to be redeemed is 100% of the principal amount
thereof plus accrued interest to the redemption date or for the purchase of
Bonds pursuant to Article V of the Indenture or otherwise for the purpose of
cancellation at any time prior to the earliest date permitted by the Indenture
for the redemption of Bonds, (ii) paid into the Bond Fund to pay interest on the
Bonds, or (iii) a combination of (i) and (ii) above; provided, however, that
such moneys shall not be used as described in (i), (ii) or (iii) above unless
the Company supplies the Trustee with
-13-
<PAGE>
an opinion of Bond Counsel to the effect that such use will not adversely affect
the exclusion from gross income of the interest on the Bonds for federal income
tax purposes. The Company agrees that any investments which it may direct of
such amounts shall result in a yield on such investments, computed in accordance
with the applicable provisions of (S)(S) 1.103-13 and 1.103-14 of the Treasury
Regulations, not in excess of the yield (computed in the same manner) on the
Bonds.
Section 4.4 Insufficiency of Project Fund. The Issuer does not make
-----------------------------
any warranty, either express or implied, that the amounts in the Project Fund
and available for payment of the Cost of Construction of the Project will be
sufficient to pay all of the Cost of Construction. The Company agrees that in
the event that moneys in the Project Fund are insufficient to pay all of the
Cost of Construction, the Company shall complete the acquisition, construction,
installation and equipping of the Project, and shall pay or make funds available
to the Issuer to pay that portion of the Cost of Construction in excess of the
moneys available therefor in the Project Fund. The Company agrees that, if after
exhaustion of the amounts of the Project Fund, it should pay any portion of the
Cost of Construction, it shall not be entitled to any diminution of the amounts
payable under as provided in Section 5.2 hereof.
Section 4.5 Issuer to Pursue Remedies Against Suppliers, Contractors
--------------------------------------------------------
and Subcontractors and Their Sureties. At the direction and sole cost of the
- -------------------------------------
Company (to the extent that such cost is not payable and actually paid from the
Project Fund), the Issuer will promptly proceed, either separately or in
conjunction with others, to exhaust the remedies of the Issuer against any
defaulting supplier, contractor or subcontractor and against any surety
therefor, for the performance of any contract made in connection with the
Project. If the Company shall so notify the Issuer, the Company may, in its own
name or in the name of the Issuer, prosecute or defend any action or proceeding
or take any other action involving any such supplier, contractor, subcontractor
or surety which the Company deems reasonably necessary, and in such event the
Issuer agrees to cooperate fully with the Company and to take all action
necessary, to the extent it might lawfully do so, to effect the substitution of
the Company for the Issuer in any such action or proceeding. Any moneys
recovered by way of damages, refunds, adjustments or otherwise in connection
with the foregoing prior to the Completion Date shall be paid into the Project
Fund and after the Completion Date shall be used as authorized by Section 4.3.
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<PAGE>
ARTICLE V
EFFECTIVE DATE OF THIS AGREEMENT;
DURATION OF LEASE TERM; RENTAL PROVISIONS
-----------------------------------------
Section 5.1 Effective Date of This Agreement; Duration of Lease Term.
--------------------------------------------------------
This Agreement shall become effective upon its execution and delivery and the
leasehold interest created hereby with respect to the Project shall then begin,
and, subject to the other provisions hereof, shall expire at midnight, June 1,
2028, or sooner upon payment or redemption of the Bonds as hereinafter provided
subject to extension as provided in Section 8.7.
Section 5.2 Delivery and Acceptance of Possession. The Issuer agrees
-------------------------------------
to deliver to the Company sole and exclusive possession of the Project (subject
to the right of the Issuer and the Trustee to inspect the same pursuant to
Section 6.4) on the Completion Date and the Company agrees to accept possession
of the Project upon such delivery; provided, however, that the Company shall be
permitted much possession of the Project prior to the Completion Date as shall
not interfere with the acquisition, construction, installation and equipping of
the Project.
Section 5.3 Rental Payments.
---------------
(a) As rent for the Project, the Company agrees to pay to the
Trustee, as assignee and pledgee of and for the account of the Issuer, for
deposit in the Bond Fund, amounts sufficient, together with other moneys held by
the Trustee under the Indenture and available therefor, to pay the principal of,
and the redemption premium (if any) and the interest on, the Bonds as the same
become due pursuant to the terms of the Indenture, as follows:
(i) On or prior to each date upon which interest on the Bonds
is payable under the Indenture, a sum which will be equal to the interest
on the Bonds coming due on such dates;
(ii) On or prior to any redemption date for the Bonds, a sum
equal to the principal of, and the redemption premium (if any) and the
interest on, the Bonds which are to be redeemed on such date; and
(iii) On or prior to June 1, 2028, a sum which will be equal to
the principal amount of the Bonds coming due on such date.
-15-
<PAGE>
If the Company defaults in any payment required by this paragraph (a), the
Company will pay interest (to the extent allowed by law) on such amount until
paid at the rate provided for in the Bonds.
(b) In furtherance of the foregoing, so long as any Bonds are
outstanding the Company will pay all amounts required to prevent any deficiency
by an act or failure to act by the Trustee, the Company, the Issuer, the Tender
Agent or any other person.
(c) The Company will also pay: (i) the fees of the Trustee for
rendering Ordinary Services and the Ordinary Expenses of the Trustee and any
Paying Agents under the Indenture, such fees and expenses to be paid directly to
the Trustee or Paying Agents for their respective accounts as and when such
fees and expenses become due and payable, (ii) any fees for Extraordinary
Services and the Extraordinary Expenses of the Trustee and (iii) any expenses in
connection with any redemption of the Bonds. The Company may, without
constituting grounds for an Event of Default hereunder, withhold payment of any
fees for Ordinary Services and Extraordinary Services and Ordinary Expenses and
Extraordinary Expenses to contest in good faith the necessity of the same or to
contest in good faith the necessity for any services performed and expenses paid
or incurred by any Paying Agent.
(d) In addition to the payments required to be made by the Company
pursuant to paragraph (a) above, the Company shall pay to the Trustee amounts
sufficient to pay the purchase price of any Bonds which the Company purchases
pursuant to Section 3.03 of the Indenture. All such payments shall be made to
the Trustee at its principal corporate trust office or to the Tender Agent at
its principal office, as the case may be, in lawful money of the United States
of America.
(e) The Company will also pay, on or prior to each day on which a
payment of purchase price of a Bond which has been tendered shall become due, an
amount which will enable the Trustee or the Tender Agent, as the case may be, to
make such payment in full in a timely manner.
(f) The Company need not pay any amount paid to Bondholders from the
proceeds of a draw on the Letter of Credit or any Alternate Credit Facility.
(g) The Company need not pay any amount required to be paid by
paragraphs (d) and (e) above to the extent of any amount paid to Bondholders
from the proceeds of a remarketing of Bonds in accordance with Section 3.04 of
the Indenture.
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<PAGE>
Section 5.4 Obligation of the Company Unconditional. The obligation
----------------------------------------
of the Company to make the rental payments as provided in Section 5.3 and to
perform and observe the other agreements on its part contained herein shall be
absolute and unconditional notwithstanding any change in the tax or other laws
of the United States of America or of the State of Alabama or any political
subdivision of either thereof or any failure of the Issuer to perform and
observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement. Nothing contained in
this Section 5.4 shall be construed to release the Issuer from the performance
of any of the agreements on its part herein contained; and, in the event the
Issuer should fail to perform any such agreement on its part, the Company may
institute such action against the Issuer as the Company may deem necessary to
compel performance or recover its damages for nonperformance so long as such
action shall not violate the agreements on the part of the Company contained in
the preceding sentence, but in no event shall the Company be entitled to any
diminution of the amounts payable as provided in Section 5.3 hereof.
Section 5.5 Assignment and Pledge of Rental Payments and the
------------------------------------------------
Agreement. The Issuer shall assign to the Trustee as security for the Bonds
- ----------
under the Indenture all rights, title and interest of the Issuer in and to (i)
the "Revenues" (defined in the Indenture), (ii) this Agreement insofar as they
relate to all Bonds Issued and outstanding under the Indenture (except for the
Issuer's rights providing that notices, approvals, consent, requests and other
communications be given to the Issuer and the Issuer's rights under Sections
6.3, 6.4 and 9.3 hereof) and (iii) all amounts on deposit from time to time in
the Project Fund and the Bond Fund. The Company assents to such assignment and
hereby agrees that, as to the Trustee, its obligations to make such payments
shall be absolute and shall not be subject to any defense or any right of set-
off, counterclaim or recoupment arising out of any breach by the Issuer or the
Trustee of any obligation to the Company, whether hereunder or otherwise, or out
of any indebtedness or liability at any time owing to the Company by the Issuer
or the Trustee.
Section 5.6 Agreement to Supply Letter of Credit. The Company shall
-------------------------------------
provide for the delivery of a Letter of Credit meeting the requirements of
Section 6.01 of the Indenture to the Trustee simultaneously with the original
issuance and delivery of the Bonds.
Section 5.7 Purchase of Bonds. The Issuer, with the consent of the
------------------
Company, has set forth in Section 3.01 of the
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Indenture the terms and conditions relating to such purchases and has set forth
in Article XII of the Indenture the duties and responsibilities of the Tender
Agent with respect to the purchase of Bonds and of the Remarketing Agent with
respect to the remarketing of Bonds. The Company approves the appointment by the
Issuer of Merrill Lynch, Pierce, Fenner & Smith Incorporated as the initial
Remarketing Agent and Citibank, N.A. as the initial Tender Agent and hereby
authorizes and directs the Tender Agent and the Remarketing Agent to purchase,
offer, sell and deliver Bonds in accordance with the provisions of Section 3.01
and Article XII of the Indenture. The Issuer acknowledges that the Remarketing
Agent, in undertaking its duties set forth in the Indenture with respect to the
determination of the interest rates borne by the Bonds, will be acting as agent
for and on behalf of the Issuer. The Issuer shall have no obligation or
responsibility, financial or otherwise, with respect to the purchase or
remarketing of Bonds or the making or continuation of arrangements therefor,
except that the Issuer shall generally cooperate with the Company, the Trustee,
the Tender Agent and the Remarketing Agent as contemplated in Article XII of the
Indenture.
Section 5.8 Mandatory Purchase of Bonds. The Company, at any time
----------------------------
and from time to time, shall furnish moneys to the Tender Agent accompanied by a
notice directing that such moneys be applied to the purchase of Bonds to be
purchased pursuant to Section 3.03 of the Indenture. Bonds so purchased shall be
delivered in accordance with Section 3.06 of the Indenture.
Section 5.9 Determination of Interest Rate Periods. The Company may
---------------------------------------
determine the duration and type of the Interest Rate Periods (as defined in the
Indenture) as, and to the extent, set forth in Section 2.02 of the Indenture.
ARTICLE VI
SPECIAL COVENANTS
-----------------
Section 6.1 Use of Project. The Issuer hereby acknowledges that the
---------------
Company shall have singular and exclusive right to the use of the Project. The
Company hereby agrees that so long as the Project is operated, it shall be
operated as solid waste disposal facilities within the meaning of Section
142(a)(6) of the Code. The Issuer makes no warranty, either express or implied,
as to the Project or that the Project will be suitable for the Company's
purposes.
-18-
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Section 6.2 Use of Proceeds. The Company hereby covenants that at
----------------
least 95% of the total proceeds of the sale of the Bonds will be used to pay
Costs of Construction of the Project which constitute Exempt Costs and that all
of the Net Proceeds of the Bonds deposited within the Project Fund pursuant to
the Indenture will be used to pay the Cost of Construction of the Project.
In addition, the Company covenants with the Issuer, for the benefit of
the Bondholders, that the proceeds of the Bonds will not be used in any manner
which would result in the loss of the exclusion from gross income of the
interest on the Bonds for federal income tax purposes.
Section 6.3 Idemnity Against Claims. The Company will also pay and
------------------------
discharge and will indemnify and hold harmless the Issuer and the members,
officers, agents and employees of the Issuer from (a) any condition of the
Project caused by the Company, (b) any liens, taxes, assessments, impositions
and other charges upon payments by the Company to the Issuer hereunder, (c) any
breach or default on the part of the Company in the performance of any of its
obligations hereunder, (d) any act of negligence of the Company or of its
agents, contractors, servants, employees or licensees, (e) any act of negligence
of any assignee or sublessee of the Company, or of any agents, contractors,
servants, employees or licensees of any assignee or sublessee of the Company and
(f) any and all liability, damages, costs and expenses arising out of or
resulting from the acquisition, construction and installation of the Project or
the use or operation of the Project or any other activity carried out thereon or
in connection therewith or the transactions contemplated by this Agreement and
the Indenture, including the reasonable fees and expenses of counsel, except as
the same may arise out of the negligence or misconduct on the part of the
Issuer. If any such lien or charge is sought to be imposed upon payments, or any
such taxes, assessments, impositions or other charges are sought to be imposed,
or any such liability, damages, costs and expenses are sought to be imposed, the
Issuer will give prompt notice to the Company, and the Company shall have the
sole right and duty to assume, and will assume, the defense thereof, with full
power to litigate, compromise or settle the same in its sole discretion. The
indemnification provided by the Section shall survive the termination of this
Agreement.
The Company agrees to indemnify the Trustee, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the
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<PAGE>
Indenture, including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties thereunder or hereunder.
Section 6.4 Inspection of the Project. The Company agrees that the
--------------------------
Issuer and its duly authorized agents at reasonable times, and with the written
consent of the Company which shall not be unreasonably withheld, may enter upon
the Project Site and examine and inspect the Project and the books and records
of the Company with respect to the Project.
Section 6.5 Company to Maintain Its Corporate Existence; Conditions
-------------------------------------------------------
Under Which Exceptions Permitted. The Company will maintain its corporate
- ---------------------------------
existence, will continue to be a corporation in good standing under the laws of
the State, will not dissolve or otherwise dispose of all or substantially all of
its assets and will consolidate with or merge into another legal entity or
permit one or more other legal entities (other than one or more subsidiaries of
the Company) to consolidate with or merge into it, or sell or otherwise transfer
to another legal entity all or substantially all its assets as an entirety and
dissolve, only if (a) the surviving, resulting or transferee legal entity is
organized and existing under the laws of the United States, a state thereof or
the District of Columbia, is solvent, is qualified to do business in the State
as a foreign corporation and (if not the Company) assumes in writing all the
obligations of the Company under this Agreement and (b) the Company or the
surviving entity is not immediately after such merger, consolidation or transfer
in default in any material respect under this Agreement.
Section 6.6 Ownership; Further Assurances and Corrective Instruments.
---------------------------------------------------------
The Issuer covenants that it lawfully owns and is lawfully possessed of the
Project Land, that it has good and marketable fee simple title therein and
thereto and that it has or will acquire good and marketable fee simple title
and/or a leasehold interest to the Project and that it will defend said title
and/or leasehold interest therein and thereto and every part thereof against the
claims of all persons whomsoever. The Issuer and the Company agree that they
will, from time to time execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further
instruments as may reasonably be required for correcting any inadequate or
incorrect description of the Project and for carrying out the intention or
facilitating the performance of this Agreement.
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Section 6.7 Maintenance of Project by Company.
----------------------------------
(a) The Company agrees that during the Lease Term, it will pay all
costs of operating, maintaining and repairing the Project; provided, that
nothing in this Section shall require the Company to maintain, operate or repair
the Project if, in the sole judgment of the Company, the Company shall determine
that operation of the Project or the manufacturing facilities the Project is
designed to serve is impossible, impracticable or uneconomic.
(b) The Company may, from time to time, in its sole discretion and at
its own expense, make any additions, modifications or improvements to the
Project, including installation of additional machinery equipment, and related
property, which it may deem desirable for its business purposes; provided that
all such additions, modifications and improvements do not adversely affect the
use of the Project as solid waste disposal facilities. All machinery, equipment
and related personal property so installed by the Company shall not be subject
to this Agreement or the lien of the Indenture but shall be subject to the
landlord's lien created under the Code of Alabama, 1975, Section 35-9-60. All
such machinery, equipment and related property so installed by the Company may
be modified or removed at any time while there exists no Event of Default
hereunder; provided, that any damage to the Project occasioned by such
modification or removal shall be repaired by the Company at its own expense.
(c) The Company shall not permit any mechanics', materialmen's,
suppliers', vendors' or other similar lien to be established or remain against
the Project for labor or materials furnished or services rendered in connection
with any additions, modifications, improvements, repairs, renewals or
replacements so made by it; provided, that if the Company shall first notify the
Trustee of its intention so to do, the Company may in good faith contest any
mechanics', materialmen's, suppliers', vendors' or other similar lien filed or
established against the Project, and in such event may permit the items so
contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom unless the Issuer or the Trustee shall notify
the Company that by nonpayment of any such items, the lien or security interests
afforded by this Agreement or as to any part of the Project or the payments to
be made pursuant to the Agreement or the Revenues will be materially endangered
or the Project or any part thereof or the payments to be made pursuant to the
Agreement or the Revenues will be subject to loss or forfeiture, in which event
the Company shall promptly pay and
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cause to be satisfied and discharged all such unpaid items. The Issuer will
cooperate fully with the Company in any such contest.
Section 6.8 Redemption or Purchase of Bonds. The Issuer shall not
--------------------------------
cause the redemption or purchase of the Bonds except upon the direction of the
Company. The Issuer shall take all steps then necessary under the applicable
provisions of the Indenture for the redemption or purchase of Bonds upon receipt
by the Issuer and the Trustee from the Company of a written notice specifying:
(a) the principal amount of Bonds to be redeemed or purchased;
(b) the date of such redemption or purchase; and
(c) in the case of a redemption of Bonds, directions to mail a notice
of redemption in accordance with Section 8.04 of the Indenture or in the
case of a purchase of Bonds, directions to mail a notice of mandatory
tender for purchase in accordance with Section 3.03(g) of the Indenture.
Section 6.9 Investment of Bond Fund and Project Fund Moneys Permitted.
----------------------------------------------------------
Any moneys held in the Bond Fund or the Project Fund shall be invested or
reinvested by the Trustee upon the request and direction of the Company in
Government Obligations and Permitted Investments, respectively. All such
directions by the Company shall be in compliance with applicable laws of the
State. Such investments shall be made upon telephonic direction of an Authorized
Company Representative which shall be promptly confirmed in writing and shall
mature in such amounts and at such times as may be necessary to provide funds
when needed to make payments from the Bond Fund or the Project Fund. The Trustee
may make any and all such investments through its own bond department. Any
interest or gain received from such investments shall be credited to and held in
the Bond Fund or the Project Fund, respectively, and any loss from such
investments shall be charged against the Bond Fund or the Project Fund,
respectively.
Section 6.10 Non-Arbitrage Covenant.
-----------------------
(a) The Company and the Issuer each covenants to the owners of the
Bonds that, notwithstanding any other provision of this Agreement or any other
instruments, it shall take no action, nor shall the Company direct the Trustee
to take or approve the Trustee's taking any action or direct the Trustee to make
or approve the Trustee's making any investment or use of proceeds of
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the Bonds or any other moneys which may arise out of or in connection with, this
Agreement, the Indenture or the Project, which would cause the Bonds to be
treated as "arbitrage bonds" within the meaning of Section 148 of the Code. In
addition, the Company covenants and agrees to comply with the requirements of
Section 148(f) of the Code as it may be applicable to the Bonds or the proceeds
derived from the sale of the Bonds or any other moneys which may arise out of or
in connection with, this Agreement, the Indenture or the Project throughout the
term of the Bonds.
(b) The Company will determine the amount of the required arbitrage
rebate, if any, payable to the United States Government under Section 148 of the
Code should gross proceeds (within the meaning of Section 148(f) of the Code)
arise and will make any required payment, in the amounts and at the times
required by Section 148(f) of the Code and applicable Treasury Regulations,
regardless of whether there are any remaining proceeds or other funds
attributable to the Bonds that are available for the purpose of the Bonds. The
Company will not permit the amount of gross proceeds invested in any Bond year
at a yield materially higher than the Bond yield to exceed the limits set forth
in Section 148 of the Code.
(c) No provision of this Agreement shall be construed to impose upon
the Trustee any obligation or responsibility for compliance with arbitrage
regulations.
Section 6.11 Removal and Substitution of Portions of Project. The
-----------------------------------------------
Issuer shall not be under any obligation to renew, repair or replace any
inadequate, obsolete, worn out, unsuitable, undesirable, inappropriate or
unnecessary items comprising the Project. If the Company, in its sole
discretion, determines that any such items have become inadequate, obsolete,
worn out, unsuitable, undesirable, inappropriate or unnecessary for its purposes
at such time, the Company may, without any responsibility or accountability to
the Issuer or the Trustee therefor, remove such items from the Project Site and
(on behalf of the Issuer) sell, trade in, or otherwise dispose of them (as a
whole or in part) provided that the Company shall either:
(a) substitute (either by direct payment of the costs thereof or by
advancing to the Issuer the moneys necessary therefor) and install other
machinery, equipment or related property having equal or greater utility
(but not necessarily having the same function or value) in the operation of
the Project as a solid waste disposal facility (provided such removal and
substitution shall not impair operating unity),
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all of which substituted machinery, equipment or related property shall
become a part of the Project; or
(b) not make any such substitution and installation, provided (i) that
in the case of the sale of any such machinery, equipment or related
property to anyone other than itself or in the case of the scrapping
thereof, the Company shall pay into the Bond Fund the greater of the
proceeds from such sale, the scrap value thereof or the original cost
thereof less depreciation in accordance with generally accepted accounting
principles, as the case may be, (ii) that in the case of the trade-in of
such machinery, equipment or related property for other machinery,
equipment or related property not to be installed as a part of the Project,
the Company shall pay into the Bond Fund the amount of the greater of the
credit received by it in such trade-in or the original cost thereof less
depreciation in accordance with generally accepted accounting principles,
and (iii) that in the case of the sale of any such machinery, equipment or
related property to the Company or in the case of any other disposition
thereof, the Company shall pay into the Bond Fund an amount equal to the
original cost thereof less depreciation at rates calculated in accordance
with generally accepted accounting principles.
The removal of any portion of the Project pursuant to the provisions of this
Section shall not entitle the Company to any diminution in or postponement or
abatement of the rents payable under Section 5.3.
The Company shall promptly report to the Trustee each such removal,
substitution, sale, trade-in or other disposition which, together with other
prior unreported dispositions, in the aggregate results in proceeds under this
Section of $100,000 or more and shall pay to the Trustee such amounts as are
required by the provisions of the preceding subsection (b) of this Section to be
paid into the Bond Fund promptly after the sale, trade-in or other disposition
requiring such payment. The Company shall not remove or permit the removal of
any item constituting the Project except in accordance with the provisions of
this Section.
The Company shall deliver to the Issuer appropriate documents
conveying to the Issuer title to any machinery, equipment or related property
installed or placed at the Project Site pursuant to this Section, and upon the
request of the Company, the Issuer shall deliver, and cause or direct the
Trustee to deliver, to the Company appropriate documents
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conveying to the Company title to any property removed from the Project Site
pursuant to this Section.
Section 6.12 Taxes, Other Governmental Charges and Utility Charges.
-----------------------------------------------------
The Company agrees to pay and discharge all lawful real estate taxes, personal
property taxes, water charges, sewer charges, assessments (including, but not
limited to, special assessments for public improvements or benefits for which
the Company would have otherwise have been liable had it in fact been the owner
of the Project) and all other lawful governmental taxes, impositions and charges
of every kind and nature, ordinary and extraordinary, general or special,
foreseen or unforeseen, whether similar or dissimilar to any of the foregoing,
and all applicable interest and penalties thereon, if any, which at any time
during the term of this Agreement shall be or become due and payable by the
Issuer or the Company and which shall be lawfully levied, assessed or imposed
(a) upon or with respect to, or shall be or become liens upon, the
Project or any portion thereof or any interest of the Issuer or the Company
therein or under this Agreement;
(b) upon or with respect to the income or profits of the Issuer from
the Project or under this Agreement;
(c) upon or with respect to the possession, operation, management,
maintenance, alterations, repair, rebuilding, use or occupancy of the
Project or any portion thereof; or
(d) upon this transaction or any document to which the Issuer or the
Company is a party creating or transferring an interest or an estate in the
Project;
under or by virtue of any present or future law, statute, ordinance, regulation
or other requirement of any governmental authority, whether federal, state,
county, city, municipal, school or otherwise.
The Company shall, at its sole cost and expense, procure or cause to
be procured any and all necessary building permits, other permits, licenses and
other authorizations required for the lawful and proper construction, use,
occupation, operation and management of the Project. The Company also agrees to
pay or cause to be paid all lawful charges (subject to the right of the Company
to contest any such charges) for gas, water, sewer, electricity, light, heat,
power, telephone and other utility and service used, rendered or supplied to,
upon or in connection with
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the Project and the Issuer will cooperate with the Company in securing such
permits, licenses and authorizations.
The Company may, at its own expense and in its own name and behalf or
in the name and behalf of the Issuer, in good faith contest any such taxes,
assessments and other charges and, in the event of any such contest, may permit
the taxes, assessments and other charges so contested to remain unpaid during
the period of such contest and any appeal therefrom. The Issuer shall cooperate
fully with the Company in any such contest. If the Company shall fail to pay any
of the foregoing items required by this Section to be paid by the Company, the
Issuer or the Trustee may (but shall be under no obligation to) pay the same,
and any amounts so advanced therefor by the Issuer or the Trustee shall become
an additional obligation of the Company to the one making the advancement, which
amounts, together with interest thereon at the rate of interest borne by the
Bonds from the date thereof, the Company agrees to pay.
Section 6.13 Insurance Required. Throughout the Lease Term the
------------------
Company shall keep the Project continuously insured against such risks as are
customarily insured against by businesses of like size and type (other than
business interruption insurance), paying as the same become due all premiums in
respect thereto. Notwithstanding the foregoing, the Company may elect to self-
insure.
Section 6.14 Application of Net Proceeds of Insurance. The Net
----------------------------------------
Proceeds of the insurance carried pursuant to the provisions of Section 6.13
shall be applied as follows: (i) Net Proceeds of property and casualty
insurance shall be applied as provided in Section 7.1, and (ii) Net Proceeds of
liability insurance shall be applied toward extinguishment or satisfaction of
the liability with respect to which such insurance proceeds may be paid.
Section 6.15 Additional Provisions Respecting Insurance. All
------------------------------------------
insurance, if any, required in Section 6.13 shall be taken out and maintained in
insurance companies selected by the Company and may be written with deductible
amounts comparable to those on similar policies carried by other companies
engaged in businesses similar in size and type and other respects as the
Company. The insurance hereby required, if any, may be contained in blanket
policies now or hereafter maintained by the Company.
Section 6.16 Investment Credit. The Issuer agrees that any investment
-----------------
tax credit with respect to the Project or any part thereof shall be made
available to the Company, and the Issuer
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will fully cooperate with the Company in any effort by the Company to avail
itself of any such investment tax credit, but neither the Issuer nor the Trustee
shall have any responsibility or liability for the Company's failure to receive
any such investment tax credit. The Issuer agrees to cause the Trustee to
cooperate in making any investment tax credit available to the Company.
Section 6.17 Granting of Easements. If no Event of Default shall have
---------------------
happened and be continuing, the Company may at any time or times cause to be
granted easements (including party wall agreements), licenses, rights-of-way
(temporary or perpetual and including the dedication of public highways) and
other rights or privileges in the nature of easements with respect to any
property included in the Project and such grant will be free from any lien or
security interest created by this Agreement, or the Company may cause to be
released existing easements, licenses, rights-of-way and other rights or
privileges in the nature of easements, held with respect to any property
included in the Project with or without consideration and the Issuer agrees that
it shall execute and deliver and will cause and direct the Trustee to execute
and deliver any instrument necessary or appropriate to confirm and grant or
release any such easement, license, right-of-way or other right or privilege
upon receipt of:
(a) a copy of the instrument of grant or release, and
(b) a written application signed by the president or any vice
president of the Company requesting the execution and delivery of such
instrument and stating
(i) that such grant or release is not detrimental to the proper
conduct of the business of the Company, and
(ii) that such grant or release will not impair the effective use
or interfere with the operation of the Project.
Section 6.18 Release of Certain Land. Notwithstanding any other
-----------------------
provision hereof, the parties hereto reserve the right to amend this Agreement
at any time and from time to time by mutual agreement for the purpose of
effecting the release of and removal of:
(a) any unimproved part of the Project Land (on which none of the
components comprising the Project is located but
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on which parking, transportation or utility facilities may be located) on
which the Issuer proposes to construct improvements for lease or sale under
another and different agreement, or
(b) any part of the Project Land with respect to which the Issuer
proposes to grant an easement or convey a fee, interest or other title to a
railroad or other public or private carrier or to any public utility or
public body in order that transportation facilities or services by rail,
water, road or other means or utility services for the Project may be
provided, increased or improved;
provided, that if at the time any such amendment is made any of the Bonds are
outstanding, there shall be deposited with the Trustee the following:
(i) a copy of such amendment as executed;
(ii) a resolution of the Issuer (A) stating that the Issuer is
not in default under any of the provisions hereof or of the Indenture
and that the Company is not to the knowledge of the Issuer in default
under any of the provisions hereof, (B) giving an adequate legal
description of that portion of the Project Land to be released, (C)
stating the purpose for which the Issuer desires the release, (D)
stating that the improvements which will be constructed or the
facilities and services which will be provided, increased or improved
will be such as will promote at least one of the public purposes of
the Issuer and (E) requesting such release;
(iii) a certificate of an officer of the Company approving such
amendment together with an officer's certificate stating that the
Company is not in default under any of the provisions hereof;
(iv) a copy of the agreement between the Issuer and such person
wherein the Issuer agrees to construct improvements on the portion of
the Project Land so requested to be released and agrees to lease or
sell the same to such person, and wherein such person agrees to lease
or purchase the same from the Issuer, or a copy of the instrument
granting the easement or conveying the title or other interest to a
railroad, public utility or public body; and
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(v) a certificate of an Authorized Company Representative dated
more than sixty (60) days prior to the date of such amendment and
stating that, in the opinion of the person signing such certificate,
(A) the portion of the Project Land so proposed to be released is
necessary or desirable for railroad, utility services or roads to
benefit the Project or is not otherwise needed for the operation of
the Project for the purposes hereinabove stated, and (B) the release
so proposed to be made will not impair the usefulness of the Project
as a facility of a type which the Issuer is authorized to acquire
under the laws pursuant to which the Issuer then exists, and will not
destroy the means of ingress thereto and egress therefrom.
No release effected under this Section shall entitle the Company to any
diminution in or postponement or abatement of the rents payable under Section
5.3.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
------------------------------------
Section 7.1 Damage and Destruction. Unless the Company shall have
----------------------
elected to exercise its option to prepay all rentals or purchase the Project
pursuant to the provisions of Section 8.4, if prior to payment in full of the
Bonds the Project is destroyed (in whole or in part) or is damaged by fire or
other casualty, the Company, or the Issuer at the Company's direction, (i) shall
promptly replace, repair, rebuild or restore the property damaged or destroyed
in a manner which provides facilities generally comparable to the facilities as
existed prior to the event causing such damage or destruction, with such
changes, alterations and modifications (including the substitution and addition
of other property) as may be desired by the Company and as will not impair the
operation of the Project as solid waste disposal facilities, and (ii) shall
apply for such purpose so much as may be necessary of any Net Proceeds of
insurance resulting from claims for such losses, as well as any additional
moneys of the Company necessary therefor. All Net Proceeds of insurance
resulting from claims for such losses shall be paid to the Company. If said Net
Proceeds are not sufficient to pay in full the costs of such replacement,
repair, rebuilding or restoration, the Company shall nonetheless complete the
work thereof and shall pay that portion of the costs thereof in excess of the
amount of said Net Proceeds. The Company shall not, by reason of the payment of
such excess costs, be entitled to any
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reimbursement from the Issuer or any abatement, diminution or postponement of
the amounts payable under Section 5.3.
Section 7.2 Condemnation. Unless the Company shall exercise its option
------------
to prepay all rentals or purchase the Project pursuant to the provisions of
Section 8.4, if the title in and to, or the temporary use of, the Project or any
part thereof shall be taken under the exercise of the power of eminent domain by
any governmental body or by any other person acting under governmental
authority, the Company shall be obligated to continue to pay the rents specified
in Section 5.3. The Issuer and the Company shall cause the Net Proceeds received
by them or any of them, from any award made in such eminent domain proceeding,
to be paid to and held by the Company and applied in one or more of the
following ways:
(a) the restoration of the Project to substantially the same condition
as existed prior to the exercise of such power of eminent domain;
(b) the acquisition, by construction or otherwise, of other solid
waste disposal facilities suitable for the Company's operations at the
Project Site (which solid waste disposal facilities will be deemed a part
of the Project and available for use by the Company and will be leased to
the Company hereunder without the payment of any rents other than herein
provided to the same extent as if such other improvements were specifically
described herein); provided, that such solid waste disposal facilities will
be acquired subject to no liens, security interests or encumbrances prior
to the lien or security interest afforded by this Agreement and the
Indenture, other than Permitted Encumbrances;
(c) redemption of the Bonds in accordance with the provisions of
Article VIII of the Indenture; provided, that no part of any such
condemnation award may be applied for such redemption unless (1) all of the
Bonds are to be redeemed in accordance with the Indenture upon exercise of
the option to purchase the Project pursuant to the provisions of Section
8.01(a) of the Indenture, or (2) if less than all of the Bonds are to be
redeemed, the Company shall furnish to the Issuer and the Trustee a
certificate of the Authorized Company Representative stating (i) that the
property forming a part of the Project that was taken in such eminent
domain proceeding is not essential to the Company's use or occupancy of the
Project, (ii) that the Project has been restored to a condition
substantially equivalent to its condition prior to the taking in such
eminent domain proceeding, or (iii) that
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solid waste disposal facilities have been acquired which are suitable for
the Company's operations at the Project as contemplated by the foregoing
subsection (b) of this Section; or
(d) payment into the Bond Fund of an amount sufficient to provide for
payment in full of the Bonds.
The Issuer shall cooperate fully with the Company in the handling and
conduct of any prospective or pending eminent domain proceeding with respect to
the Project or any part thereof and shall, to the extent it may lawfully do so,
permit the Company to litigate in any such proceeding in the name and on behalf
of the Issuer. In no event will the Issuer voluntarily settle, or consent to the
settlement of, any prospective or pending eminent domain proceeding with respect
to the Project or any part thereof without the written consent of the Company.
Section 7.3 Condemnation of Company-Owned Property. The Company shall
--------------------------------------
be entitled to the proceeds of any condemnation award or portion thereof made
for damages to or taking of its own property or for damages on account of the
taking of or interference with the Company's rights to possession, use or
occupancy of the Project.
ARTICLE VIII
ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING;
REDEMPTION; RENT PREPAYMENT AND ABATEMENT;
OPTION AND OBLIGATION TO PURCHASE PROJECT;
OPTION TO EXTEND TERM OF AGREEMENT
---------------------------------------------
Section 8.1 Assignment and Subleasing. This Agreement may be assigned
-------------------------
by the Company and the Project may be subleased by the Company without the
necessity of obtaining the consent of the Issuer or the Trustee, subject,
however, to the following conditions:
(a) no assignment (other than pursuant to Section 6.5) or sublease
shall relieve the Company from primary liability for any of its obligations
hereunder, and if any such assignment occurs, the Company shall continue to
remain primarily liable for the payment of the rents specified in Section 5.3
and for performance and observance of the other agreements on its part herein
provided to be performed and observed by it; and
(b) the Company shall, within 30 days after the delivery thereof,
furnish or cause to be furnished to the Issuer
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and to the Trustee a true and complete copy of each such assignment or sublease,
as the case may be, together with any instrument of assumption.
Section 8.2 Pledge Under Indenture. Under the terms of the Indenture,
----------------------
the Issuer shall assign and create a security interest with respect to its
interest in, and pledge all rents, revenues and receipts arising out of or in
connection with its ownership of, the Project to the Trustee, all as security
for the payment of the principal of and interest on the Bonds, but the
Indenture and said assignment and pledge shall be subject and subordinate to
this Agreement.
Section 8.3 Restrictions on Sale of Project by Issuer. The Issuer
-----------------------------------------
agrees that, except as set forth in Section 8.2, it shall not (a) sell, assign,
transfer or convey the Project during the Lease Term, (b) create or suffer to be
created any assignment, pledge, charge, lien or encumbrance on the Trust Estate,
or (c) take any other action which might reasonably be construed as tending to
cause or induce the levy or assessment of ad valorem taxes on the Project or on
its title in and to the Project. If the laws of the State at the time permit
such action to be taken, nothing contained in this Section shall prevent the
consolidation of the Issuer with, or the merger of the Issuer into, or the
transfer of the Project as an entirety to, any public corporation whose property
and income are not subject to taxation and which has corporate authority to
carry on the business of owning and leasing the Project; provided (i) that no
such action shall be taken without the prior written consent of the Company,
unless such action shall be required by law, and (ii) that upon any such
consolidation, merger or transfer, the due and punctual payment of the principal
of and the interest on the Bonds, and the due and punctual performance and
observance of all the agreements hereof to be kept and performed by the Issuer,
shall be expressly assumed in writing by the corporation resulting from such
consolidation or surviving such merger or to which the Project shall be
transferred as an entirety.
Section 8.4 Prepayment of Rents; Option to Purchase Project;
------------------------------------------------
Obligation to Purchase Project.
- ------------------------------
(a) The Company shall have the option to prepay any part of the rents
payable under Section 5.3, and the Issuer agrees that the Trustee may accept
such prepayment when the same is tendered by the Company, upon giving written
notice to the Trustee at least four Business Days prior to the thirtieth day
before the date set for redemption, to the
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extent that the Bonds are subject to optional redemption in part pursuant
to Section 8.01(a) of the Indenture.
(b) The Company shall have the option to purchase the Project by
prepaying all of the rents payable under Section 5.3, and the Issuer agrees
that the Trustee may accept such prepayment when the same is tendered by
the Company, upon giving written notice to the Trustee at least four
Business Days prior to the thirtieth day before the date set for
redemption, to the extent that the Bonds are subject to optional redemption
in whole pursuant to Section 8.01(a) of the Indenture.
(c) The Company shall be obligated to prepay a portion of the rentals
payable under Section 5.3, and the Issuer agrees that the Trustee may
accept such prepayment when the same is tendered by the Company, to the
extent that the bonds are subject to mandatory redemption in part pursuant
to Section 8.01(b) of the Indenture.
(d) The Company shall be obligated to purchase the Project by
prepaying all of the rents payable under Section 5.3, or to prepay all of
the rents payable under Section 5.3 without purchasing the Project, and the
Issuer agrees that the Trustee may accept such prepayment when the same is
tendered by the Company, to the extent that Bonds are subject to mandatory
redemption in whole pursuant to Section 8.01(b) of the Indenture.
(e) The Company shall have the option to purchase the Project by
providing for payment of the Bonds pursuant to Article XV of the Indenture.
(f) The Company shall be obligated to purchase, and the Issuer agrees
to sell, the Project for ten dollars ($10.00) at the expiration of the
Lease Term, following payment in full of the Bonds.
All prepaid rents shall be used for the redemption or purchase of Bonds in the
manner and to the extent provided in the Indenture. The options granted to the
Company pursuant to this Section shall be and remain prior and superior to the
Indenture and may be exercised whether or not there exists an Event of Default
hereunder, provided that the existence of such Event of Default will not result
in nonfulfillment of any condition to the exercise of any such option. Upon the
expiration of the Lease Term, or the sooner termination of the Lease Term, the
Issuer will, upon receipt of evidence provided by the Trustee
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satisfactory to it that none of the Bonds remain outstanding under the
Indenture, deliver to the Company documents conveying to the Company good and
marketable fee simple title in and to the Project, as the Project then exists,
subject to the following: (a) those liens, security interests and encumbrances
(if any) to which said title in and to the Project was subject when conveyed to
the Issuer, (b) those liens, security interests and encumbrances created by the
Company or to the creation or suffering to which the Company consented, (c)
those liens, security interests and encumbrances resulting from the failure of
the Company to perform or observe any of its agreements contained herein, and
(d) any right and title of any condemning authority.
Section 8.5 Rent Abatements If Bonds Paid Prior to Maturity. If at any
-----------------------------------------------
time the moneys in the Bond Fund are sufficient to retire, in accordance with
the terms of the Indenture, all of the outstanding Bonds and to pay all fees and
charges of the Trustee due or to become due through the date on which the last
of the Bonds is to be retired, under circumstances not resulting in termination
of the Lease Term, and if the Company is not at the time otherwise in default
hereunder, the Company shall be entitled to use and occupy the Project from the
date on which such moneys are in the Bond Fund to and including midnight on June
1, 2028, without the payment of rent during that interval (but otherwise on the
terms and conditions hereof).
Section 8.6 References to Bonds Ineffective After Bonds Paid. Upon
------------------------------------------------
payment in full of the Bonds and all fees and charges of the Trustee, all
references herein to the Bonds and the Trustee shall be ineffective and neither
the Trustee nor the holders of any of the Bonds shall thereafter have any rights
hereunder saving and excepting those that shall have theretofore vested.
Reference is hereby made to Section 15.01 of the Indenture which sets forth the
conditions upon the existence or occurrence of which payment in full of the
Bonds shall be deemed to have been made.
Section 8.7 Option to Extend. The Company shall have, and is hereby
----------------
granted, the option to extend the term of this Agreement for an additional term
ending on June 1, 2033; provided, however, that such option shall not be
exercisable at any time an Event of Default shall have occurred and be
continuing. If at the end of the Lease Term provided for in Section 5.1 hereof,
no Event of Default shall have occurred and be continuing, the Company shall be
deemed to have exercised such option to extend the term of this Agreement unless
it notifies the Board and the Trustee in writing to the contrary at least 30
days prior to the end of such Lease Term. For and during such
-34-
<PAGE>
additional term, the Company will pay to the Board an annual rent of $100,
payable in advance on June 1, 2028 and on each June 1 thereafter (except June 1,
2033 on which date such additional term shall end as aforesaid), but otherwise
all the terms and conditions of this Agreement shall apply during such
additional term; except that the provisions of Sections 7.1 and 7.2 shall not
apply and except further that the Company shall not be required to carry any
insurance for the benefit of the Trustee, but shall be required to carry
insurance under Section 6.13 for the benefit of the Board as its interest may
appear. In the event the Company exercises the option to extend the Lease Term
granted in this Section 8.7, it shall, at any time after commencement of such
additional term, have the right to terminate this Agreement upon giving to the
Board notice in writing not less than 10 days prior to the date of termination.
At any time during, or at the end of, the extended Lease Term provided for in
this Section 8.7, the Company may purchase the Project for $100.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
------------------------------
Section 9.1 Events of Default. Each of the following shall be an
-----------------
"Event of Default" under this Agreement:
(a) An "Event of Default" occurs and is continuing under the
Indenture or under either of the Guarantee Agreements.
(b) Failure by the Company to observe and perform any covenant,
condition or agreement on its part to be observed or performed hereunder,
for a period of ninety (90) days after written notice, specifying such
failure and requesting that it be remedied, is given to the Company by the
Issuer or the Trustee; provided, however, if the failure stated in the
notice cannot be remedied within such period, it shall not constitute an
"Event of Default" if corrective action is instituted by the Company within
the applicable period and diligently pursued until the default is
corrected.
(c) Either Mead or the Company shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of it or of all or a substantial part of its
property; (ii) admit in writing its inability, or be generally unable, to
pay its debts as such debts become due, (iii) make a general assignment for
the benefit of its creditors, (iv) commence a voluntary case under the
Federal Bankruptcy Code (as now or
-35-
<PAGE>
hereafter in effect), (v) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts, (vi) fail to controvert in a timely
or appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under said Federal Bankruptcy Code, or
(vii) take any action for the purpose of effecting any of the foregoing.
(d) A proceeding or case shall be commenced, without the application
or consent of either Mead or the Company, in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution,
winding-up, or composition or adjustment of debts, of either Mead or the
Company, (ii) the appointment of a trustee, receiver, custodian, liquidator
or the like of either Mead or the Company or of all or any substantial part
of any of their assets, or (iii) similar relief in respect of the Company
under any law relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or any order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) days from commencement of such
proceeding or case or the date of such order, judgment or decree, or an
order the Company shall be entered in an involuntary case under said
Federal Bankruptcy Code.
(e) The dissolution or liquidation of the Company except as may be
permitted by the terms of Section 6.5.
The foregoing provisions of Section 9.1(b) are subject to the limitation that,
if by reason of force majeure the Company is unable in whole or in part to carry
----- -------
out its agreements herein contained other than those set forth in Section 5.3
hereof, an Event of Default shall not be deemed to have occurred during the
continuance of such inability. The term "force majeure" as used herein shall
mean the following: acts of God; strikes; lockouts or other industrial
disturbances; acts of public enemies; orders of any kind of the government of
the United States or of the State of Alabama or any of their departments,
agencies or officials or of any civil or military authority; insurrections;
riots; epidemics; landslides; lightning; earthquakes; fire; hurricanes;
tornadoes; storms; floods; washouts; droughts; arrests; restraints of government
and people; civil disturbances; explosions; breakage or accident to machinery,
transmission lines, pipes or canals; partial or entire failure of utilities;
-36-
<PAGE>
or any other cause or event not reasonably within the control of the Company.
The Company agrees, however, to remedy to the extent practicable with all
reasonable dispatch the effects of any force majeure preventing the Company from
carrying out its agreements; provided that the settlement of strikes, lockouts
and other industrial disturbances shall be entirely within the discretion of the
Company, and the Company shall not be required to make settlement of strikes,
lockouts and other industrial disturbances by acceding to the demands of the
opposing party or parties when such course is in the judgment of the Company
unfavorable to the Company.
Section 9.2 Remedies on Default. Whenever any Event of Default shall
-------------------
have occurred and be continuing, the Issuer may, in addition to any other
remedy now or hereafter existing at law, in equity or by statute, take either or
both of the following remedial steps:
(a) By written notice to the Company, the Issuer may declare all
amounts payable hereunder to be immediately due and payable, whereupon the
same shall become immediately due and payable;
(b) The Issuer may take whatever action at law or in equity may appear
necessary or desirable to collect the amounts referred to in (a) above then
due and thereafter to become due, or to enforce performance and observance
of any obligation, agreement or covenant of the Company under this
Agreement.
Any amounts collected pursuant to action taken under this Section 9.2 shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if the Bonds have been fully paid (or provision for payment
thereof has been made in accordance with the provisions of the Indenture) and
the fees and expenses of the Trustee and the Paying Agents and all other
amounts required to be paid under the Indenture shall have been paid, to the
Company.
Section 9.3 Agreement to Pay Attorneys' Fees and Expenses. In the
---------------------------------------------
event the Company should breach any of the provisions of this Agreement and the
Issuer or the Trustee should employ attorneys or incur other expenses for the
collection of amounts payable hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Company herein
contained, the Company agrees that on demand therefor it will pay to the Issuer
or the Trustee (as the case
-37-
<PAGE>
may be) the reasonable fees of such attorneys and such other reasonable expenses
so incurred by the Issuer.
Section 9.4 No Additional Waiver Implied by One Waiver. In the event
-------------------------------------------
any agreement contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 9.5 Notice of Default. The Company shall notify the Trustee
------------------
and the Issuer of any Event of Default hereunder or under the Indenture or
either of the Guarantee Agreements promptly upon its acquiring knowledge
thereof.
ARTICLE X
MISCELLANEOUS
-------------
Section 10.1 Notices. All notices, certificates or communications
--------
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by registered or certified mail, postage prepaid, addressed as
follows: if to the Issuer, c/o Floyd & Floyd, 1000 14th Street, P.O. Box 759,
Phenix City, Alabama 36868, Attention: Chairman; if to the Company, c/o The Mead
Corporation, Mead World Headquarters, Courthouse Plaza Northeast, Dayton, Ohio
45463, Attention: Treasurer; and if to the Trustee, at 120 Wall Street, 13th
Floor, New York, New York, 10043, Attention: Corporate Trust Department. A
duplicate copy of each notice, certificate or other communication given
hereunder by either the Issuer or the Company to the other shall also be given
to the Trustee. The Issuer, the Company and the Trustee may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, certificates or other communications shall be sent.
Section 10.2 Bindinq Effect. This Agreement shall inure to the benefit
---------------
of and shall be binding upon the Issuer, the Company and their respective
successors and assigns, subject, however, to the limitations contained in
Section 6.5 hereof.
Section 10.3 Severability. In the event any provision of this
-------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 10.4 Amounts Remaining in the Bond Fund. Any amounts remaining
-----------------------------------
in the Bond Fund upon termination of this
-38-
<PAGE>
Agreement shall, to the extent provided in the Indenture, belong to and be paid
to the Company by the Trustee.
Section 10.5 Amendments. This Agreement may not be terminated except
-----------
in accordance with the provisions hereof and may not be amended or supplemented
except by a written agreement in accordance with Article XIV of the Indenture
and signed by the parties hereto. In any event, prior notice of any proposed
amendment or supplement must be given to the Trustee.
Section 10.6 Execution in Counterparts. This Agreement may be executed
--------------------------
in several counterparts, each of which shall be an original and all of which
shall constitute but one and same instrument.
Section 10.7 Applicable Law. This Agreement shall be governed by and
---------------
construed in accordance with laws of the State, except that the standard of care
to which the Trustee shall be held in the performance of its duties and
obligations shall be governed by and construed in accordance with the laws of
the State of New York.
Section 10.8 Captions. The captions or headings in this Agreement are
---------
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Agreement.
Section 10.9 Recording of Agreement. This Agreement and every
-----------------------
assignment and modification hereof shall be recorded in the Office of the Judge
of Probate of Russell County, Alabama, or in such other office as may be at the
time provided by law as the proper place for such recordation.
Section 10.10 Net Lease. This Agreement shall be deemed a "net lease,"
----------
and the Company shall pay absolutely net during the Lease Term the rents
specified herein, without abatement, deduction or set-off other than those
herein expressly provided.
-39-
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed in their respective corporate names and their
respective corporate seals to be hereunto affixed and attested by their duly
authorized officers, all as of the date first above written.
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX
CITY, ALABAMA
(Seal)
By: /S/ Kenneth A. Roberts
-------------------------------------
Chairman
Attest:
/S/ Sonny Dyson
- ----------------------------------
Secretary
MEAD COATED BOARD, INC.
(Seal)
By: /S/ William R. Graber
-------------------------------------
Title: Treasurer
Attest:
/S/ Jeffrey L. Hayman
- ----------------------------------
Title: Secretary
-40-
<PAGE>
STATE OF GEORGIA:
: SS.
COUNTY OF MUSCOGEE:
On this 2nd day of June, 1993, before me appeared Kenneth A. Roberts,
to me personally known, who being by me duly sworn, did say that he is Chairman
of The Industrial Development Board of the City of Phenix City, Alabama and that
the seal affixed to the foregoing Lease Agreement is the sale of The Industrial
Development Board of the City of Phenix City, Alabama and that the foregoing
Lease Agreement was signed and sealed on behalf of The Industrial Development
Board of the City of Phenix City, Alabama, and the said Chairman acknowledges
the execution of the foregoing Lease Agreement as the free act and deed of The
Industrial Development Board of the City of Phenix City, Alabama.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Linda Boyd
-----------------------------------
Notary Public
[NOTARIAL SEAL] My Commission Expires:
My Commission Expires Dec. 17, 1996
-41-
<PAGE>
STATE OF OHIO :
: SS
COUNTY OF MONTGOMERY:
On this 8th day of June, 1993, before me appeared William R. Graber,
to me personally known, who, being by me duly sworn, did say that he is
Treasurer of Mead Coated Board, Inc., a Delaware corporation, qualified to do
business in the State of Alabama, and that the seal affixed to the foregoing
Lease Agreement is the seal of Mead Coated Board, Inc., and that the foregoing
Lease Agreement was signed and sealed on behalf of Mead Coated Board, Inc. by
authority of its board of directors, and the said Treasurer acknowledges the
execution of the foregoing Lease Agreement as the free act and deed of Mead
Coated Board, Inc.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jeffrey L. Hayman
-----------------------------------
Notary Public
My Commission Expires:
[NOTARIAL SEAL] JEFFREY L. HAYMAN
ATTORNEY-AT-LAW
NOTARY PUBLIC - STATE OF OHIO
LIFETIME COMMISSION
SECTION 147.03 R. C.
-42-
<PAGE>
EXHIBIT A
PROJECT LAND
The Project Land includes the following property:
All that portion of land, and structures lying thereon, in Section 28,
T14N, R 30 E, County of Russell, State of Alabama, more particularly described
as follows:
Commence at a monument having grid coordinates N 794,023.97, E
232,940.10 of the West Zone of the State of Georgia Coordinate System; thence S
52(degrees) 11' 16" E 381.63' to the point of beginning (N 793,790.00 E
233,241.60); thence N 90(degrees) 00' 00" E 760.00'; thence S 0(degrees) 00' 00"
E 102.00'; thence N 90(degrees) 00' 00" E 128.04'; thence S 0(degrees) 00' 00" E
960.48' (at existing utility bridge); the N 90(degrees) 00' 00" W 13.00'; thence
N 0(degrees) 00' 00" W 672.48'; thence N 90(degrees) 00' 00 W 875.04'; thence N
0(degrees) 00' 00" E 390.00' to the point of beginning; said land being
7.85(plus or minus) acres; less than and except any structures not included in
the Mead Corporation Contract No. 21-4162;
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Board Premises (such part of the land leased to Georgia Kraft Company
by the Issuer pursuant to a Lease Agreement dated as of July 1, 1977 (the
"1977 Lease"), which is more specifically described in Exhibit A to the
1977 Lease, less and except the Project Land, is hereinafter referred to as
the "Board Premises") in order to provide all necessary or convenient
ingress or egress between the Project Land and railroads, public roads and
highways and the Chattahoochee River and to permit passage between the
Project Land and the Board Premises;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Board Premises
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the Project Land to the Board Premises,
A-1
<PAGE>
including without limitation such rights and easements as are necessary for
the movement of personnel, vehicles and materials among and between the
various parcels of land comprising the Board Premises in order to permit
and facilitate the operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Board Premises,
such pipes, conduits, and wires as are necessary or convenient to insure
access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the Project Land and the Project
including, without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Board Premises; and
(d) An easement and right to create and maintain upon the Board
Premises encroachments of equipment, structures or other improvements which
will be included on the Project Land and within the Project as presently
planned, and any similar replacements or substitutions of portions of the
Project for as long as any such equipment, structures or other improvements
remain standing, including without limitation the rights of lateral or
party wall support, and to connect any such equipment, structure or other
improvements to any structure or improvement on the Board Premises;
but subject to the following easements over the Project Land in favor of the
Board Premises:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Project Land in order to provide all necessary or convenient ingress
and egress among and between all portions of the Board Premises and between
the Board Premises and the Project Land, including without limitation
portions on which additional improvements may be erected, and railroads,
public works and highways and the Chattahoochee River and to permit passage
among and between the various parcels of land comprising the Board
Premises;
A-2
<PAGE>
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the Project Land necessary or
convenient in order to assure the passage of equipment, and finished
products from one portion of the Board Premises to another or between the
Board Premises and the Project Land, including, without limitation such
rights and easements as are necessary for the movement of personnel,
vehicles and material among and between the various parcels of land
comprising the Board Premises in order to permit and facilitate the
operation of any facilities located on the Board Premises;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Project Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Board
Premises, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Project Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Board Premises as encroachments upon the Project Land as
long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the
Project Land in respect of any additional improvements constructed adjacent
to the Project Land, as long as any such additional improvements remain
standing, including without limitation the rights of lateral or party wall
support, and to connect such additional improvements to any structure or
any improvements on the Project Land.
A-3
<PAGE>
EXHIBIT "B"
to
Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of June 1, 1993
PROJECT SUMMARY
Mead Coated Board, Inc. presently operates a coated natural kraft paperboard
mill (the "Mill") in Russell County, Alabama, near the City of Phenix City,
Alabama.
The Project consists of the acquisition, construction and installation of
the No. 2 Recycle Plant (the "Recycle Plant") at the Mill and certain related
facilities. The Recycle Plant is a 350 ton per day ("TPD") recycled fiber
facility. The material to be recycled is waste paper and consists of old
corrugated containers (made from kraft liner and corrugated medium) and other
similar waste paper.
The major components of the Project are as follows:
covered bale storage building with rail and truck
unloading docks;
open bale storage slab;
clamp trucks and forklifts;
process building with maintenance crane;
pulper feed conveyor and pulper;
junk tower with clam shell hoist;
ragger with tail cutter;
detrashing unit;
screen;
high density cleaners;
primary coarse screen;
light rejects separator;
tailings screen;
medium density cleaners;
primary fine screens;
secondary fine screen;
tertiary fine screen;
primary cleaners;
B-1
<PAGE>
secondary cleaners;
thickener;
high density storage tank;
clarifying system;
sludge pre-thickener;
separator;
reject press;
sludge press;
self-cleaning bar screen;
rejects conveyor;
dump trucks;
process pumps, tanks, and tile chests;
recycled stock chest (allocated portion);
piping;
water supply systems;
waste water treatment systems;
distributed control system; and
electrical control system.
B-2
<PAGE>
EXHIBIT "C"
REQUISITION AND CERTIFICATION
Request No. ______ Date: ____________
TO: Citibank, N.A., as Trustee
120 Wall Street, 13th Floor
New York, New York 10043
Attention: Corporate Trust Department
The undersigned Authorized Company Representative designated pursuant
to the terms of a Lease Agreement, dated as of June 1, 1993 (the "Agreement"),
between and among The Industrial Development Board of the City of Phenix City,
Alabama, a public corporation created and existing under the laws of the State
of Alabama (the "Issuer"), and Mead Coated Board, Inc., a Delaware corporation
(the "Company"), hereby requests that there be paid from the "Project Fund"
(herein below described) the sum of $___________ and in that connection, DOES
HEREBY CERTIFY, as follows:
1. The requested payment has been properly incurred and is a proper
charge against The Industrial Development Board of the City of Phenix City,
Alabama Project Fund -- Mead Coated Board Project, Series 1993A and has not
been the basis of any previous withdrawal from said Project Fund.
2. Payment should be made to:
Name:
Address or Wire Instructions:
3. The purpose and circumstances of such obligation are as follows:
4. Payment of such obligation will not result in less than 95% of the
total proceeds of the sale of the "Bonds" (defined in the Agreement)
deposited with the Project Fund
C-1
<PAGE>
expended as of the date hereof having been used to pay "Exempt Costs" (as
defined in the Agreement).
This ____ day of ________, 19__.
MEAD COATED BOARD, INC.
By: _________________________________
Authorized Company Representative
C-2
<PAGE>
LEASE AGREEMENT
between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
Dated as of June 1, 1993
The Lease Agreement and all right, title and interest of The Industrial
Development Board of the City of Phenix City, Alabama in any rental payments and
other receipts and revenues derived under this Lease Agreement have been
assigned to AmSouth Bank N.A., as Trustee under the Trust Indenture, dated as of
even date herewith, from The Industrial Development Board of the City of Phenix
City, Alabama, which secures $48,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1993A and
Additional Bonds as permitted and provided for under said Trust Indenture.
This instrument prepared by:
Thompson, Hine and Flory
312 Walnut Street
14th Floor
Cincinnati, Ohio 45202
<PAGE>
LEASE AGREEMENT
---------------
TABLE OF CONTENTS
-----------------
(The Table of Contents for this Lease Agreement is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Lease Agreement.)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION....................... 1
Section 1.1 - Definitions................................. 1
Section 1.2 - Rules of Construction....................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES.............................. 5
Section 2.1 - Representations and Warranties by the
Board....................................... 5
Section 2.2 - Representations and Warranties by the
Company..................................... 7
ARTICLE III LEASING CLAUSES AND TITLE................................... 9
Section 3.1 - Lease of the Project........................ 9
Section 3.2 - Warranty of Title........................... 9
Section 3.3 - Quiet Enjoyment............................. 9
ARTICLE IV COMPLETION OF THE PROJECT FACILITIES; ISSUANCE OF
THE BONDS................................................... 9
Section 4.1 - Agreement to Acquire, Construct and
Install the Project Facilities.............. 9
Section 4.2 - Agreement to Issue Bonds; Application of
Bond Proceeds............................... 10
Section 4.3 - Company Required to Pay Costs if Project
Fund Insufficient........................... 10
Section 4.4 - Board to Pursue Remedies Against Suppliers,
Contractors and Subcontractors and Their
Sureties.................................... 11
Section 4.5 - Issuance of Additional Bonds................ 11
ARTICLE V EFFECTIVE DATE OF THIS AGREEMENT; DURATION OF LEASE
TERM; RENTAL PROVISIONS..................................... 12
Section 5.1 - Effective Date of This Agreement; Duration
of Lease Term............................... 12
Section 5.2 - Delivery and Acceptance of Possession....... 12
Section 5.3 - Rents and Other Amounts Payable............. 12
Section 5.4 - Place of Rental Payments.................... 13
Section 5.5 - Obligations of Company Hereunder Absolute
and Unconditional........................... 13
Section 5.6 - Company's Performance Under Indenture....... 14
Section 5.7 - Payments in Lieu of Taxes................... 14
ARTICLE VI MAINTENANCE, MODIFICATION, TAXES AND INSURANCE............. 15
Section 6.1 - Maintenance and Modification of Project
Facilities by Company....................... 15
Section 6.2 - Removal of Portions of Project.............. 16
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 6.3 - Taxes, Other Governmental Charges and
Utility Charges............................. 17
Section 6.4 - Insurance Required.......................... 18
Section 6.5 - Application of Net Proceeds of Insurance.... 18
Section 6.6 - Additional Provisions Respecting Insurance.. 18
Section 6.7 - Other Board Expenses........................ 18
Section 6.8 - Advances by Board or Trustee................ 19
Section 6.9 - Indemnification of Board and Trustee........ 19
Section 6.10 - Investment Credit........................... 20
ARTICLE VII DAMAGE, DESTRUCTION AND CONDEMNATION........................ 20
Section 7.1 - Damage and Destruction...................... 20
Section 7.2 - Condemnation................................ 20
Section 7.3 - Condemnation of Company-Owned Property...... 21
Section 7.4 - Further Assurances and Corrective
Instruments................................. 21
ARTICLE VIII SPECIAL AGREEMENTS.......................................... 21
Section 8.1 - No Warranty of Condition or Suitability by
the Board................................... 21
Section 8.2 - Inspection of the Project................... 22
Section 8.3 - Company to Maintain Its Corporate
Existence; Exceptions Permitted............. 22
Section 8.4 - Qualification in the State.................. 22
Section 8.5 - Granting of Easements....................... 22
Section 8.6 - Release of Certain Land..................... 23
ARTICLE IX ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING;
REDEMPTION; RENT PREPAYMENT AND ABATEMENT................... 24
Section 9.1 - Assignment and Subleasing................... 24
Section 9.2 - Pledge under Indenture...................... 25
Section 9.3 - Restrictions on Sale of Project by Board.... 25
Section 9.4 - Redemption of Bonds......................... 25
Section 9.5 - Prepayment of Rents......................... 25
Section 9.6 - Rent Abatements if Bonds Paid Prior to
Maturity.................................... 26
Section 9.7 - Reference to Bonds Ineffective After Bonds
Paid........................................ 26
ARTICLE X EVENTS OF DEFAULT AND REMEDIES.............................. 26
Section 10.1 - Events of Default Defined................... 26
Section 10.2 - Remedies.................................... 27
Section 10.3 - No Remedy Exclusive......................... 28
Section 10.4 - Agreement to Pay Attorneys' Fees and
Expenses.................................... 28
Section 10.5 - No Additional Waiver Implied by One
Waiver...................................... 28
Section 10.6 - Waiver of Appraisement, Valuation, etc...... 28
Section 10.7 - Waiver of Events of Default................. 29
</TABLE>
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<TABLE>
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ARTICLE XI OPTIONS IN FAVOR OF COMPANY; OBLIGATION TO PURCHASE
PROJECT..................................................... 29
Section 11.1 - General Option to Prepay Rent and
Purchase Project............................ 29
Section 11.2 - Conveyance on Purchase...................... 30
Section 11.3 - Relative Positions of Options and
Indenture................................... 30
ARTICLE XII MISCELLANEOUS............................................... 30
Section 12.1 - Notices..................................... 30
Section 12.2 - Binding Effect.............................. 31
Section 12.3 - Severability................................ 31
Section 12.4 - Amounts Remaining in Bond Fund.............. 31
Section 12.5 - Amendments, Changes and Modifications....... 31
Section 12.6 - Execution Counterparts...................... 31
Section 12.7 - Captions.................................... 31
Section 12.8 - Recording of Agreement...................... 31
Section 12.9 - Law Governing Construction of Agreement..... 32
Section 12.10 - Net Lease................................... 32
EXHIBIT "A" - DESCRIPTION OF PROJECT LAND................................. A-1
EXHIBIT "B" - PROJECT SUMMARY............................................. B-1
</TABLE>
iii
<PAGE>
LEASE AGREEMENT
between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
Dated as of June 1, 1993
This Lease Agreement and all right, title and interest of The Industrial
Development Board of the City of Phenix City, Alabama in any rental payments and
other receipts and revenues derived under this Lease Agreement have been
assigned to AmSouth Bank N.A., as Trustee under the Trust Indenture, dated as of
even date herewith, from The Industrial Development Board of the City of Phenix
City, Alabama, which secures $48,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1993A and
Additional Bonds as permitted and provided for under said Trust Indenture.
This instrument prepared by:
Thompson, Hine and Flory
312 Walnut Street
14th Floor
Cincinnati, Ohio 45202
<PAGE>
LEASE AGREEMENT
---------------
TABLE OF CONTENTS
-----------------
(The Table of Contents for this Lease Agreement is for convenience of reference
only and is not intended to define, limit or describe the scope or intent of any
provisions of this Lease Agreement.)
<TABLE>
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Page
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<S> <C>
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION....................... 1
Section 1.1 - Definitions................................. 1
Section 1.2 - Rules of Construction....................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES.............................. 5
Section 2.1 - Representations and Warranties by the
Board....................................... 5
Section 2.2 - Representations and Warranties by the
Company..................................... 7
ARTICLE III LEASING CLAUSES AND TITLE................................... 9
Section 3.1 - Lease of the Project........................ 9
Section 3.2 - Warranty of Title........................... 9
Section 3.3 - Quiet Enjoyment............................. 9
ARTICLE IV COMPLETION OF THE PROJECT FACILITIES; ISSUANCE OF
THE BONDS................................................... 9
Section 4.1 - Agreement to Acquire, Construct and
Install the Project Facilities.............. 9
Section 4.2 - Agreement to Issue Bonds; Application of
Bond Proceeds............................... 10
Section 4.3 - Company Required to Pay Costs if Project
Fund Insufficient........................... 10
Section 4.4 - Board to Pursue Remedies Against Suppliers,
Contractors and Subcontractors and Their
Sureties.................................... 11
Section 4.5 - Issuance of Additional Bonds................ 11
ARTICLE V EFFECTIVE DATE OF THIS AGREEMENT; DURATION OF LEASE
TERM; RENTAL PROVISIONS..................................... 12
Section 5.1 - Effective Date of This Agreement; Duration
of Lease Term............................... 12
Section 5.2 - Delivery and Acceptance of Possession....... 12
Section 5.3 - Rents and Other Amounts Payable............. 12
Section 5.4 - Place of Rental Payments.................... 13
Section 5.5 - Obligations of Company Hereunder Absolute
and Unconditional........................... 13
Section 5.6 - Company's Performance Under Indenture....... 14
Section 5.7 - Payments in Lieu of Taxes................... 14
ARTICLE VI MAINTENANCE, MODIFICATION, TAXES AND INSURANCE.............. 15
Section 6.1 - Maintenance and Modification of Project
Facilities by Company....................... 15
Section 6.2 - Removal of Portions of Project.............. 16
</TABLE>
i
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<TABLE>
<S> <C>
Section 6.3 - Taxes, Other Governmental Charges and
Utility Charges............................. 17
Section 6.4 - Insurance Required.......................... 18
Section 6.5 - Application of Net Proceeds of Insurance.... 18
Section 6.6 - Additional Provisions Respecting Insurance.. 18
Section 6.7 - Other Board Expenses........................ 18
Section 6.8 - Advances by Board or Trustee................ 19
Section 6.9 - Indemnification of Board and Trustee........ 19
Section 6.10 - Investment Credit........................... 20
ARTICLE VII DAMAGE, DESTRUCTION AND CONDEMNATION........................ 20
Section 7.1 - Damage and Destruction...................... 20
Section 7.2 - Condemnation................................ 20
Section 7.3 - Condemnation of Company-Owned Property...... 21
Section 7.4 - Further Assurances and Corrective
Instruments................................. 21
ARTICLE VIII SPECIAL AGREEMENTS.......................................... 21
Section 8.1 - No Warranty of Condition or Suitability by
the Board................................... 21
Section 8.2 - Inspection of the Project................... 22
Section 8.3 - Company to Maintain Its Corporate
Existence; Exceptions Permitted............. 22
Section 8.4 - Qualification in the State.................. 22
Section 8.5 - Granting of Easements....................... 22
Section 8.6 - Release of Certain Land..................... 23
ARTICLE IX ASSIGNMENT, SUBLEASING, PLEDGING AND SELLING;
REDEMPTION; RENT PREPAYMENT AND ABATEMENT................... 24
Section 9.1 - Assignment and Subleasing................... 24
Section 9.2 - Pledge under Indenture...................... 25
Section 9.3 - Restrictions on Sale of Project by Board.... 25
Section 9.4 - Redemption of Bonds......................... 25
Section 9.5 - Prepayment of Rents......................... 25
Section 9.6 - Rent Abatements if Bonds Paid Prior to
Maturity.................................... 26
Section 9.7 - Reference to Bonds Ineffective After Bonds
Paid........................................ 26
ARTICLE X EVENTS OF DEFAULT AND REMEDIES.............................. 26
Section 10.1 - Events of Default Defined................... 26
Section 10.2 - Remedies.................................... 27
Section 10.3 - No Remedy Exclusive......................... 28
Section 10.4 - Agreement to Pay Attorneys' Fees and
Expenses.................................... 28
Section 10.5 - No Additional Waiver Implied by One
Waiver...................................... 28
Section 10.6 - Waiver of Appraisement, Valuation, etc...... 28
Section 10.7 - Waiver of Events of Default................. 29
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE XI OPTIONS IN FAVOR OF COMPANY; OBLIGATION TO PURCHASE
PROJECT..................................................... 29
Section 11.1 - General Option to Prepay Rent and
Purchase Project............................ 29
Section 11.2 - Conveyance on Purchase...................... 30
Section 11.3 - Relative Positions of Options and
Indenture................................... 30
ARTICLE XII MISCELLANEOUS............................................... 30
Section 12.1 - Notices..................................... 30
Section 12.2 - Binding Effect.............................. 31
Section 12.3 - Severability................................ 31
Section 12.4 - Amounts Remaining in Bond Fund.............. 31
Section 12.5 - Amendments, Changes and Modifications....... 31
Section 12.6 - Execution Counterparts...................... 31
Section 12.7 - Captions.................................... 31
Section 12.8 - Recording of Agreement...................... 31
Section 12.9 - Law Governing Construction of Agreement..... 32
Section 12.10 - Net Lease................................... 32
EXHIBIT "A" - DESCRIPTION OF PROJECT LAND................................. A-1
EXHIBIT "B" - PROJECT SUMMARY............................................. B-1
</TABLE>
iii
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into as of June 1, 1993, by and
between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY, ALABAMA
(the "Board"), a public corporation organized and existing under the laws of the
State of Alabama, as lessor, and MEAD COATED BOARD, INC. (the "Company"), a
corporation organized and existing under the laws of the State of Delaware and
qualified to do business in the State of Alabama, as lessee;
WITNESSETH:
In consideration of the respective representations and agreements
hereinafter contained, the Board and the Company agree as follows (provided,
that in the performance of the agreements of the Board herein contained, any
obligation it may thereby incur for the payment of money shall not be a general
debt on its part but shall be payable solely out of the rents, payments and
revenues derived from this Lease Agreement, the sale of the "Bonds" as
hereinafter defined, the insurance and condemnation awards herein described and
any other revenues arising out of or in connection with its ownership of the
"Project" as hereinafter defined):
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 - Definitions. In addition to the words and terms
elsewhere defined herein, the following words and terms as used herein shall
have the following meanings unless the context or use clearly indicates another
or different meaning or intent, and any other words and terms defined in the
Indenture shall have the same meanings when used herein as assigned them in the
Indenture unless the context or use clearly indicates another or different
meaning or intent:
"Act" means the statutes codified as Code of Alabama 1975, Title 11,
Chapter 54, Article 4, as amended and supplemented and at the time in force and
effect;
"Additional Bonds" means the bonds of any series, other than the
Bonds, authorized under the Indenture and authenticated and delivered in
accordance with Section 401 of the Indenture.
"Agreement" means this Lease Agreement as it now exists and as it may
hereafter be amended pursuant to Section 12.5 of this Lease Agreement and
Article XV of the Indenture;
"Authorized Board Representative" means the person at the time
designated to act on behalf of the Board by written certificate furnished to the
Company and the Trustee containing the specimen signature of such person and
signed on behalf of the Board by its Chairman or Vice Chairman. Such certificate
may designate an alternate or alternates;
<PAGE>
"Authorized Company Representative" means the person at the time
designated to act on behalf of the Company by written certificate furnished to
the Board and the Trustee containing the specimen signature of such person and
signed on behalf of the Company by the President or any Vice President of the
Company. Such certificate may designate an alternate or alternates;
"Board" means The Industrial Development Board of the City of Phenix
City, Alabama, a public corporation of the State, and its successors and
assigns;
"Bond Fund" means the Bond principal and interest payment fund created
pursuant to Section 702 of the Indenture and within which have been established
a general account and a special account. Any reference herein to the "Bond Fund"
without further limitation or explanation shall be deemed to be a reference to
the general account in the Bond Fund;
"bondholder" or "holder of the Bonds" means the registered owner of
any Bond;
"Bonds" means the $48,000,000 in aggregate principal amount of The
Industrial Development Board of the City of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1993A, issued
pursuant to the Indenture;
"City" means the City of Phenix City, Alabama, a municipal corporation
of the State;
"Company" means the corporation designated as such in the first
paragraph hereof and its successors and assigns, including any surviving,
resulting or transferee corporation as provided in Section 8.3;
"default" means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default;
"Event of Default" means one of the events so denominated and
described in Section 10.1;
"Government Obligations" means (a) direct obligations of the United
States of America, (b) obligations unconditionally guaranteed by the United
States of America and (c) securities or receipts evidencing ownership interests
in obligations or specified portions (such as principal or interest) of
obligations described in (a) or (b);
"Indenture" means the Trust Indenture, of even date herewith, between
the Board and the Trustee, including any indenture supplemental thereto;
"Lease Term" means the duration of the leasehold interest created
hereby as specified in Section 5.1;
2
<PAGE>
"Net Proceeds", when used with respect to any insurance or
condemnation award, means the gross proceeds from the Insurance or condemnation
award with respect to which that term is used remaining after payment of all
expenses ( including attorneys' fees and any Extraordinary Expenses of the
Trustee as defined in the Indenture) incurred in the collection of such gross
proceeds;
"Notes" means those unpaid and outstanding industrial development
notes issued by the Board, pursuant to resolutions of the Board to finance the
costs of the Project;
"payment in full of the Bonds" specifically encompasses the situations
described in Article X of the Indenture;
"Permitted Encumbrances" means, as of any particular time,
(a) liens for ad valorem taxes, special assessments or other
governmental charges not then delinquent or permitted to exist as
provided in Section 6.3;
(b) this Agreement and the security interests created herein;
(c) such utility, access or other easements and rights-of-way,
restrictions, reservations, reversions and exceptions as the
Authorized Company Representative certifies will not materially
interfere with or impair the operation of the Project (or, if it is
not being operated, the operations for which it was designed or last
modified);
(d) unfiled and inchoate mechanics' and materialmen's liens for
construction work in progress;
(e) mechanics', materialmen's, suppliers' and vendors' liens or
other similar liens not then payable, and those permitted to exist as
provided in Section 6.1;
(f) such minor defects, irregularities, encumbrances, easements,
rights-of-ways and clouds on title as the Authorized Company
Representative certifies do not, in the aggregate, materially impair
the property affected thereby for the purpose for which it was
acquired or is held by the Board or the Company;
(g) that certain Lease Agreement dated as of July 1, 1980
between Georgia Kraft Company and the Board, as amended in an
Assignment, Assumption and Amendatory Lease Agreement dated as of
January 4, 1988 among the Board, Georgia Kraft Company and the
Company;
(h) that certain Lease Agreement dated as of November 1, 1983
between Georgia Kraft Company and the Board, as amended in an
Assignment, Assumption and Amendatory Lease Agreement
3
<PAGE>
dated as of January 4, 1988 among the Board, Georgia Kraft Company and
the Company;
(i) that certain Lease Agreement dated as of December 1, 1983
between Georgia Kraft Company and the Board, as amended in an
Assignment, Assumption and Amendatory Lease Agreement dated as of
January 4, 1988 among the Board, Georgia Kraft and the Company;
(j) that Certain Lease Agreement dated as of December 1, 1988
between the Company and the Board executed in connection with the
Board's Environmental Improvement Revenue Bonds (Mead Coated Board
Project), Series 1988;
(k) that certain Lease Agreement dated as of December 1, 1988
between the Company and the Board in connection with the Board's
Industrial Development Revenue Bonds (Mead Coated Board Project),
Series 1988A and other bonds of the Board, as amended and supplemented
from time to time;
(l) that certain Lease Agreement dated as of September 1, 1990
between the Company and the Board in connection with the Board's
Environmental Improvement Revenue Bonds (Mead Coated Board Project),
Series 1990A; and
(m) that certain Lease Agreement dated as of October 1, 1990
between the Company and the Board in connection with the Board's
Environmental Improvement Revenue Refunding Bonds (Mead Coated Board
Project), Series 1990B;
"person" means natural persons, firms, associations, corporations and
public bodies;
"Project" means the Project Land and the Project Facilities, as they
may at any time exist;
"Project Facilities" means the facilities acquired, constructed and
installed with proceeds from the sale of the Notes, to the extent such
Notes are refunded from the proceeds of the sale of the Bonds, as they may
at any time exist. The Project Facilities are more fully described in the
Project Summary;
"Project Fund" means the fund created pursuant to Section 601 of the
Indenture;
"Project Land" means the real property described in Exhibit "A"
attached hereto and by this reference made a part hereof, less such real
property as may be released from this Agreement pursuant to Section 8.6 or
taken by the exercise of the power of eminent domain as provided in Section
7.2;
"Project Summary" means the Project Summary prepared by the Company,
entitled "PROJECT SUMMARY - INDUSTRIAL FACILITIES-MEAD COATED BOARD, INC.
COATED LINERBOARD MILL", a copy of which is
4
<PAGE>
attached hereto as Exhibit "B" and by this reference made a part hereof,
including any amendments thereto made pursuant to the terms thereof;
"security interest" or "security interests" shall refer to the
security interests created herein and in the Indenture and shall have the
meaning set forth in the Uniform Commercial Code of the State;
"State" means the State of Alabama;
"Trustee" means AmSouth Bank N.A., or any co-trustee or any successor
trustee under the indenture.
Section 1.2 - Rules of Construction. Unless the context clearly
indicates to the contrary:
(a) "Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement and
not solely to the particular Article, Section or subdivision hereof in
which such word is used.
(b) Words importing the singular number shall include the plural
number and vice versa, and any pronoun used herein shall be deemed to
cover all genders.
(c) All references herein to particular Articles or Sections are
references to Articles or Sections of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 - Representations and Warranties by the Board. The Board
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) Organization and Authority. The Board is a public
--------------------------
corporation duly organized and validly existing under the provisions
of the Act by authority of a resolution adopted by the Board of
Commissioners of the City on June 14, 1960 and a Certificate of
Incorporation duly filed for record on October 17, 1960, in the office
of the Judge of Probate of Russell County, Alabama, which Certificate
of Incorporation has not been amended or been revoked and is of full
force and effect. The Board has all requisite power and authority
under the Act (1) to issue the Bonds, (2) to use the proceeds thereof
to refund the Notes issued to pay the cost to acquire, construct and
install the Project Facilities, (3) to own, lease, encumber and
dispose of the Project, and (4) to enter into, and perform its
obligations under, the Indenture and this Agreement. This Agreement
and the Indenture have been duly authorized, executed and delivered by
the Board and are legal,
5
<PAGE>
valid and binding agreements enforceable against the Board in
accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits,
------------------
proceedings, inquiries or investigations pending, or to the knowledge
of the Board threatened, against or affecting the Board in any court
or before any governmental authority or arbitration board or tribunal,
which adversely affect the validity or enforceability of the Bonds,
the Indenture, this Agreement, or any agreement or instrument to which
the Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are legal and Authorized.
-----------------------------------------------------------
The issue and sale of the Bonds and the execution and delivery by the
Board of the Indenture and this Agreement and the compliance by the
Board with all of the provisions of each thereof and of the Bonds (i)
are within the purposes, powers and authority of the Board, (ii) to
the best of the knowledge of the Board, have been done in full
compliance with the provisions of the Act, are legal and will not
conflict with or constitute on the part of the Board a violation of or
a breach of or default under, or result in the creation of any lien or
encumbrance (other than Permitted Encumbrances) upon any property of
the Board under the provisions of, its certificate of incorporation or
Bylaws, or any indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Board is a party or by
which the Board is bound, or any license, judgment, decree, law,
statute, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Board or any of its activities or
properties, and (iii) have been duly authorized by all necessary
corporate action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor
---------------------
any of its activities or properties, nor any relationship between the
Board and any other person, nor any circumstance in connection with
the offer, issue, sale or delivery of any of the Bonds is such as to
require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on the
part of the Board in connection with the execution, delivery and
performance of the Indenture and this Agreement, or the offer, issue,
sale or delivery of the Bonds, other than (i) the filing with the
Alabama Securities Commission of the notification of the Board's
intention to issue the Bonds required by Act No. 586 enacted at the
1978 Regular Session of the Legislature of the State and the issuance
by the Director of the Alabama Securities Commission of such
Certificate of Notification as may be required by said Act, and (ii)
the due filing and recording of this Agreement, the Indenture and the
financing statements covering the security interests created hereunder
and under the Indenture. The Board has filed the
6
<PAGE>
notification referred to in (i) of the preceding sentence and the
Director of the Alabama Securities Commission has issued a
Certificate of Notification applicable to the Bonds, which Certificate
of notification has not seen revoked or rescinded and is in full
force and effect.
(e) No Defaults. The Board is not in default under the Act or
-----------
under its Certificate of Incorporation or Bylaws or any other
agreement or instrument to which it is a party or by which is bound.
(f) No Prior Pledge. Neither the Project, this Agreement nor any
---------------
of the payments to be received by the Board under this Agreement have
been mortgaged, pledged or hypothecated in any manner or for any
purpose other than as provided in the Indenture as security of the
payment of the Bonds.
(g) Nature and Location of Project. The Project will constitute
------------------------------
a "project" within the meaning of the Act, and the acquisition,
construction and installation of the Project Facilities is in
furtherance of the public purpose of the Act. The Project will be
located within 25 miles of the corporate limits of the City, and no
part thereof is located within the corporate limits or the police
jurisdiction of any other incorporated municipality or any county of
any state other than Russell County, Alabama.
(h) Official Action. By resolutions duly adopted on November 3,
---------------
1987, January 20, 1988, August 31, 1988, February 27, 1991, October
22, 1991 and December 19, 1991, the Board took official action
providing for the acquisition, construction and installation of the
Project Facilities and the financing of the Project Facilities through
the issuance of the Bonds.
Section 2.2 - Representations and Warranties by the Company. The
Company makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
(a) The Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
(ii) has all requisite corporate power and authority to carry on its
business as now being conducted and as presently proposed to be
conducted, and (ii) has duly qualified and is authorized to do
business and is in good standing as a foreign corporation in the
State.
(b) The Company has the corporate power and has been duly
authorized to enter into this Agreement and to perform all of its
obligations hereunder and thereunder.
(c) The willingness of the Board to issue the Bonds for purposes
of financing costs of acquiring, constructing, and
7
<PAGE>
installing the Project, and to lease the Project to the Company, has
induced the Company to locate the Project within the State of Alabama
and, more particularly, within 25 miles of the City.
(d) The Project will create or preserve jobs and employment
opportunities within the boundaries of the State of Alabama, thereby
improving the economic welfare of the State of Alabama and the City.
(e) The acquisition, construction, and installation of any part
of the Project was not commenced, and no item which constitutes a part
of the Project was ordered, prior to the date of the resolution
referred to in Section 2.1(h) above that refers to such part of the
Project.
(f) The Company is not subject to any contractual or other
limitation or provision of any nature whatsoever which in any material
way limits, restricts or prevents the Company from entering into this
Agreement, or performing any of its obligations hereunder; and the
execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, and the fulfillment of or
compliance with the terms and conditions of this Agreement will not
conflict with or result in a breach of the terms, conditions or
provisions of any restriction, agreement or instrument to which the
Company is a party or by which it is bound, or constitute a default
under any of the foregoing.
(g) The acquisition, construction, and installation of the
Project will comply in all material respects with all applicable
zoning, planning, building, environmental and other regulations of the
governmental authorities having jurisdiction of the Project, and
all necessary permits, licenses, consents and permissions necessary
for the Project have been or will be obtained.
(h) The acquisition, construction, and installation of the
Project as well as its intended use and operation are in complete
conformance with the purposes and provisions of the Act.
(i) No event has occurred and no condition exists that would
constitute an "Event of Default" under this Agreement which, with the
lapse of time or with the giving of notice or both, would become an
"Event of Default" under this Agreement.
(j) To the best of its knowledge and belief, the Company is not
in violation of any laws, ordinances, governmental rules or
regulations to which it is subject and has not failed to obtain any
licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
business, which violation or failure to obtain would reasonably be
expected to
8
<PAGE>
materially and adversely affect the ability of the Company to
perform its obligations under this Agreement.
ARTICLE III
LEASING CLAUSES AND TITLE
Section 3.1 - Lease of the Project. The Board hereby leases to the
Company, and the Company hereby leases from the Board, the Project at the
rent set forth in Sections 5.3 and 5.7 and in accordance with the
provisions hereof.
Section 3.2 - Warranty of Title. The Board for itself, its successors
and assigns, warrants to the Company, its successors and assigns, that it
has good and marketable fee simple title in and to the Project Land free
from all encumbrances except Permitted Encumbrances. Upon the execution and
delivery of this Agreement, the Board agrees that it will furnish to the
Company an opinion of the Board's counsel stating that the Board holds such
title in and to the Project Land.
Section 3.3 - Quiet Enjoyment. The Board warrants and covenants that
it will defend the Company in the quiet enjoyment and peaceable possession
of the Project, and all appurtenances thereto belonging, free from all
claims of all persons whomsoever, throughout the Lease Term, so long as the
Company shall perform the covenants, conditions and agreements to be
performed by it hereunder, or so long as the period for remedying any
default in such performance shall not have expired.
ARTICLE IV
COMPLETION OF THE PROJECT FACILITIES;
ISSUANCE OF THE BONDS
Section 4.1 - Agreement to Acquire, Construct and Install the Project
Facilities. The Board agrees that it will cause the Project Facilities to
be acquired, constructed and installed on the Project Land, wholly within
the boundary lines thereof. The acquisition, construction and installation
of the Project Facilities will be in accordance with the Project Summary, a
copy of which is on file with the Board and the Trustee.
The Board agrees that it will enter into, or accept the assignment of,
such contracts as the Company may request in order to effectuate the
purposes of this Section but that it will not execute any other contract or
give any order for construction or for the acquisition and installation of
any equipment relating to the Project Facilities, unless and until the
Authorized Company Representative shall have approved the same in writing.
9
<PAGE>
The Board hereby makes, constitutes and appoints the Company and The
Mead Corporation as its true, lawful and agents for the acquisition,
construction and installation of the Project Facilities, and the Company and The
Mead Corporation have accepted such agency to act and do all things on behalf of
the Board, to perform all acts and agreements of the Board hereinbefore provided
in this Section, and to bring any actions or proceedings against any person
which the Board might bring with respect thereto as the Company and the Mead
Corporation shall deem proper. The Board hereby ratifies and confirms all
actions of, and assumes and adopts all contracts entered into by, the Company
and The Mead Corporation with respect to the Project Facilities prior to the
date hereof. This appointment of the Company and The Mead Corporation to act as
agents and all authority hereby conferred or granted is conferred and granted
irrevocably until all activities in connection with the acquisition,
construction and installation of the Project Facilities shall have been
completed, and shall not be terminated prior thereto by act of the Board or of
the Company and The Mead Corporation. So long as the Company is not in default
hereunder, upon the completion of the Project (or at any time prior or
subsequent thereto upon the request of the Company) the Board will assign to the
Company all warranties and guarantees of all contractors, subcontractors,
suppliers, architects and engineers for the furnishing of labor, materials or
equipment or supervision or design in connection with the Project Facilities and
any rights or causes of action arising from or against any of the foregoing.
Section 4.2 - Agreement to Issue Bonds; Application of Bond Proceeds.
In order to provide funds for the payment of the cost of the acquisition,
construction and installation of the Project Facilities through the refunding of
the Notes, the Board agrees that it will authorize, sell and deliver the Bonds
to the initial purchasers thereof. Upon receipt of the proceeds from the sale of
the Bonds, the Board will deposit all accrued interest (if any) received upon
the sale of the Bonds in the Bond Fund and will deposit the balance of the
proceeds from said sale to the Project Fund, to be applied to the payment of the
Notes upon receipt by the Trustee of Notes tendered for cancellation.
Section 4.3 - Company Required to Pay Costs if Project Fund
Insufficient. If the moneys in the Project Fund available for payment of the
costs of the Project Facilities should not be sufficient to pay the costs
thereof in full, and if Additional Bonds are not issued to finance the
completion of the Project Facilities, the Company agrees to complete the Project
Facilities and to pay all that portion of the costs of the Project Facilities as
may be in excess of the moneys available therefor in the Project Fund. The Board
does not make any warranty, either express or implied, that the moneys which
will be paid into the Project Fund and which, under the provisions hereof, will
be available for payment of the costs of refunding the Notes, will be sufficient
to pay all the costs which will be incurred in that connection. The Company
agrees that if after exhaustion of the moneys in the Project Fund the Company
should pay any portion of the costs of
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refunding the Notes pursuant to the provisions of this Section, it shall not be
entitled to any reimbursement therefor from the Board or from the Trustee or
from the holders or owners of any of the Bonds, nor shall it be entitled to any
diminution in or postponement or abatement of the rents payable under Section
5.3.
Section 4.4 - Board to Pursue Remedies Against Suppliers, Contractors
and Subcontractors and Their Sureties. At the direction and sole cost of the
Company, the Board will promptly proceed, either separately or in conjunction
with others, to exhaust the remedies of the Board against any defaulting
supplier, contractor or subcontractor and against any surety therefor, for the
performance of any contract made in connection with the Project Facilities. If
the Company shall so notify the Board, the Company may, in its own name or in
the name of the Board, prosecute or defend any action or proceeding or take any
other action involving any such supplier, contractor, subcontractor or surety
which the Company deems reasonably necessary, and in such event the Board agrees
to cooperate fully with the Company and to take all action necessary, to the
extent it might lawfully do so, to effect the substitution of the Company for
the Board in any such action or proceeding. Any moneys recovered by way of
damages, refunds, adjustments or otherwise in connection with the foregoing
shall be paid to the Bond Fund.
Section 4.5 - Issuance of Additional Bonds. So long as there shall not
have occurred and be continuing an event of default hereunder or under the
Indenture, the Board shall, from time to time at the request of the Company, use
its best efforts to issue Additional Bonds in aggregate principal amounts as
requested by the Company under the terms and conditions provided herein and in
the Indenture, but in no event shall the Board be liable for not issuing
Additional Bonds. Additional Bonds may be issued to finance the (a) payment of
outstanding Notes, (b) refunding all of the Bonds of any one or more series then
outstanding, (c) payment of costs of the Project or (d) any combination of the
foregoing; provided, in any case, that either prior to or contemporaneously with
the issuance of Additional Bonds (i) the terms, conditions, manner of issuance,
purchase price, delivery and contemplated disposition of the proceeds of the
sale of such Additional Bonds shall have been approved in writing by the
President or any Vice President of the Company, and (ii) the conditions
specified in Article IV of the Indenture with respect to the issuance of such
Additional Bonds shall have been satisfied.
ARTICLE V
EFFECTIVE DATE OF THIS AGREEMENT;
DURATION OF LEASE TERM; RENTAL PROVISIONS
Section 5.1 - Effective Date of This Agreement; Duration of Lease
Term. This Agreement shall become effective upon its execution and delivery and
the leasehold interest created hereby
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shall then begin and, unless sooner terminated or extended under the provisions
hereof (including particularly Articles X and XI), shall expire upon the latter
to occur of the following events: (i) midnight, June 1, 2033, or (ii) payment in
full of all Bonds and any Additional Bonds.
Section 5.2 - Delivery and Acceptance of Possession. The Board agrees
to deliver to the Company sole and exclusive possession of the Project (subject
to the right of the Trustee to enter thereon for inspection purposes and to the
other provisions of Section 8.2) on the Completion Date and the Company agrees
to accept possession of the Project upon such delivery; provided, however, that
the Company shall be permitted such possession of the Project prior to the
Completion Date as shall not interfere with the acquisition, construction and
installation of the Project Facilities.
Section 5.3 - Rents and Other Amounts Payable. On December 1, 1993,
and June 1 and December 1 in each year thereafter until payment in full of the
Bonds, the Company shall pay to the Trustee, for the account of the Board, as
rent for the Project, a sum of money equal to the amount payable on such date as
principal of and interest on the Bonds, as provided in the Indenture. In any
event, on each date on which a payment of principal or interest is payable on
the Bonds, if at any such date the amount of money available in the Bond Fund is
insufficient to make required payments of principal and interest on such date,
the Company shall forthwith pay to the Trustee, in immediately available funds,
the amount of any such deficiency.
Anything herein to the contrary notwithstanding, any amount of money
at any time held by the Trustee in the Bond Fund shall be credited against the
next succeeding payment of rent and shall reduce the payment to be then made by
the Company; and further, if, and for so long as, the amount held by the Trustee
in the Bond Fund should be sufficient to pay at the times required the principal
of and the interest on all Bonds then remaining unpaid, the Company shall not be
obligated to make any further rental payments under the provisions of this
Section.
The Company agrees to pay to the Trustee until the principal of and
the interest on the Bonds shall have been paid in full (i) an amount equal to
the annual fee of the Trustee for the Ordinary Services of the Trustee rendered
and its Ordinary Expenses incurred under the Indenture, (ii) the reasonable fees
and charges of the Trustee and any other paying agent for acting as paying agent
and as bond registrar and the reasonable fees of Trustee's counsel as provided
in the Indenture, as and when the same become due, and (iii) the reasonable fees
and charges of the Trustee for Extraordinary Services rendered by it and
Extraordinary Expenses incurred by it, as such terms are defined in the
Indenture, as and when the same become due; provided, that the Company may,
without precipitating an Event of Default hereunder, withhold such payment to
contest in good faith the necessity for any such Extraordinary
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Services and Extraordinary Expenses and the reasonableness of any such fees,
charges or expenses.
If the Company should fail to make any of the payments required in
this Section, the item or installment which the Company has failed to make shall
continue as an obligation of the Company until the same shall have been fully
paid, and the Company agrees to pay the same (in the case of interest, to the
extent permitted by law) with interest thereon at the rate per annum equal to
one percent per annum over the applicable interest rate borne by the Bonds,
calculated as described in the Indenture. The provisions of this Section shall
be subject to the provisions of Section 9.6.
Section 5.4 - Place of Rental Payments. The rents provided for in
Section 5.3 and the interest on delinquent rents shall be paid directly to the
Trustee for the account of the Board and will be deposited in the Bond Fund. The
other payments provided for in Section 5.3 shall be paid directly to the Trustee
for its own use or for disbursement to any other paying agent, as the case may
be.
Section 5.5 - Obligations of Company Hereunder Absolute and
Unconditional. Subject to the provisions of Section 9.6, the obligations of the
Company to make the payments required in Section 5.3 and to perform and observe
the other agreements on its part contained herein shall be absolute and
unconditional. Until such time as payment in full of the Bonds shall have been
made, the Company (i) will not suspend or discontinue any payments provided for
in Section 5.3 except to the extent the same have been prepaid, (ii) will
perform and observe all of its other agreements contained herein, (iii) will not
suspend or discontinue any payments provided for in Section 5.3 because of any
right of set off which the Company may have against the Board, the Trustee or
the holder of any Bond (provided that nothing herein shall prevent the assertion
of any claim by the Company by separate suit or compulsory counterclaim) and
(iv) except as provided in Section 11.1 will not terminate the Lease Term for
any cause, including, without limiting the generality of the foregoing, failure
of the Board to complete the Project Facilities, failure of the Board's title in
and to the Project or any part thereof, any acts or circumstances that may
constitute failure of consideration, eviction or constructive eviction,
destruction of or damage to the Project, commercial frustration of purpose, any
change in the tax or other laws of the United States of America or of the State
or any political subdivision of either or any failure of the Board to perform
and observe any agreement, whether express or implied, or any duty, liability or
obligation arising out of or in connection herewith or with the Indenture.
Nothing contained in this Section shall be construed to release the Board from
the performance of any of the agreements on its part herein contained; and if
the Board should fail to perform any such agreement, the Company may institute
such action against the Board as the Company may deem necessary to compel
performance or recover its damages for nonperformance so long as such action
shall not do violence to the agreements on the part of the Company contained in
the preceding sentence. The
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Company may, however, at its own cost and expense and in its own name or in the
name of the Board, prosecute or defend any action or proceeding or take any
other action involving third persons which the Company deems reasonably
necessary in order to insure the completion of the acquisition, construction
and installation of the Project Facilities or to secure or protect its right of
possession, occupancy and use of the Project hereunder, and in such event the
Board hereby agrees to cooperate fully with the Company and to take all lawful
action which is required to effect the substitution of the Company for the Board
in any such action or proceeding if the Company shall so request.
Nothing contained herein shall be construed to be a waiver of any
rights which the Company may have against the Board under this Agreement, or
against other persons under this Agreement, the Indenture, or otherwise, or
under any provision of law.
Section 5.6 - Company's Performance Under Indenture. The Company
agrees, for the benefit of the holders from time to time of the Bonds, to do and
perform all acts and things contemplated in the Indenture to be done or
performed by it.
Section 5.7 - Payments in Lieu of Taxes. The Board and the Company
acknowledge that, under present law, the Project, as long as at is owned by the
Board, is exempt from ad valorem taxation by the State of Alabama or any
political or taxing subdivision thereof, including Russell County.
The Company agrees that it will make payments in lieu of taxes ("PILOT
Payments"), consisting of payments in fixed, specified amounts ("Fixed
Payments") and payments in amounts determined by formula as set forth below
("Variable Payments"), so long as the Bonds and any Additional Bonds are
outstanding and subject to the provisions of the last paragraph of this Section
5.7, in the amounts and at the times and in the manner set forth below. The
PILOT Payments shall be payable on July 1 and August 15, 1993 and on August 15
of each subsequent year, commencing August 15, 1994.
The Fixed Payments shall be payable to Russell County and shall be in
the following amounts: $55,000 on July 1, 1993; $145,000 on August 15, 1993;
$200,000 on August 15, 1994; $50,000 on each of August 15, 1995, August 15,
1996, August 15, 1997 and August 15, 1998; and $100,000 on August 15 of each
subsequent year, commencing August 15, 1999.
The aggregate Variable Payments for each year shall be in an amount
equal to 60% of the "education taxes" (as defined below) that would be payable
with respect to the Project leased under the Lease, calculated as of the
December 31 of the second preceding calendar year (each December 31, an
"Assessment Date") with respect to those portions of the Project capitalized
for financial accounting purposes and leased under this Agreement on such
Assessment Date. For purposes of this Section 5.7, "education taxes" means the
ad valorem taxes then currently levied on property
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situated in Russell County to support public schools in Russell County (i.e.,
the levy for the Russell County Board of Education and the Russell County
countywide schools levy levied as of the applicable Assessment Date), which
taxes would be assessed against the Project if the Project was not exempt from
ad valorem taxes. The Variable Payment due on August 15, 1994 (with respect to
the December 31, 1992 Assessment Date) and August 15, 1995 shall be distributed
as follows: 60% to the Phenix City Board of Education and 40% to the Russell
County Board of Education. The Variable Payments due on December 15, 1996 and
thereafter shall be distributed as follows: 55% to the Phenix City Board of
Education, 35% to the Russell County Board of Education, 5% of the Calculation
Amount to the City of Phenix City and 5% of the Calculation Amount to Russell
County.
The Calculation of the amount of PILOT Payments due shall be made by
the Company and by March 15 of each year, the Company will provide to the Board
and each recipient of PILOT Payments a report of the amount due on the next
succeeding August 15. The Company's calculations of the PILOT Payments, absent
manifest error, shall be conclusive and binding upon the Board and all
recipients of PILOT Payments.
The Board acknowledges that the obligation of the Company to make any
payment of PILOT Payments as additional rent provided for in this section is
conditioned upon the Project remaining exempt from ad valorem taxation
throughout the period or term to which the Project so becomes subject to ad
valorem taxation.
ARTICLE VI
MAINTENANCE, MODIFICATION, TAXES AND INSURANCE
Section 6.1 - Maintenance and Modification of Project Facilities by
Company.
(a) Throughout the Lease Term, the Company shall at its own
expense (i) keep the Project Facilities in as reasonably safe
condition as the operation thereof will permit, and (ii) keep the
Project Facilities in good repair and in good operating condition,
making from time to time all necessary repairs thereto and renewals
and replacements thereof.
(b) The Company may from time to time, in its sole discretion and
at its own expense, make any additions, modifications or improvements
to the Project Facilities, including installation of additional
machinery, equipment, and related property that do not impair the
effective use of the Project Facilities. All machinery, equipment and
related personal property so installed by the Company shall not be
subject to this Agreement but shall be subject to the Landlord's Lien
created under the Code of Alabama 1975, Section 35-9-60. All such
machinery, equipment and related
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personal property may be modified or removed at any time while there
exists no event of default hereunder; provided, that any damage to the
Project Facilities occasioned by such modification or removal shall be
repaired by the Company at its own expense.
(c) the Company shall not permit any mechanics', materialmen's,
suppliers', vendors' or other similar liens to be established or
remain against the Project for labor or materials furnished or
services rendered in connection with any additions, modifications,
improvements, repairs, renewals or replacements so made by it;
provided, that if the Company shall first notify the Trustee of its
intention so to do, the Company may in good faith contest any
mechanics', materialmen's, suppliers', vendors' or other similar liens
filed or established against the Project, and in such event may permit
the items so contested to remain undischarged and unsatisfied during
the period of such contest and any appeal therefrom unless the Board
of the Trustee shall notify the Company that by nonpayment of any such
items the lien or security interests afforded by this Agreement or the
Indenture as to any part of the Project or the rents, payments and
revenues from the Project will be materially endangered or the Project
or any part thereof or the rents, payments and revenues from the
Project will be subject to loss or forfeiture, in which event the
Company shall promptly pay and cause to be satisfied and discharged
all such unpaid items. The Board will cooperate fully with the Company
in any such contest.
Section 6.2 - Removal of Portions of Project. The Board shall not be
under any obligation to renew, repair or replace any inadequate, obsolete, worn
out, unsuitable, undesirable, inappropriate or unnecessary items of machinery or
equipment comprising the Project Facilities. If the Company in its sole
discretion determines that any such items have become inadequate, obsolete, worn
out, unsuitable, undesirable, inappropriate or unnecessary for its purposes at
such time, the Company may remove such items from the Project and (on behalf of
the Board) sell, trade in, or otherwise dispose of them (as a whole or in part)
without any responsibility or accountability to the Board or the Trustee
therefor, provided that such removal does not impair the operation of the
Project Facilities.
The removal of any portion of the Project Facilities pursuant to the
provisions of this Section shall not entitle the Company to any diminution in or
postponement or abatement of the rents payable under Section 5.3.
The Company shall promptly report to the Trustee each such removal,
substitution, sale, trade-in or other disposition.
Section 6.3 - Taxes, Other Governmental Charges and Utility Charges.
The Company agrees to pay promptly as and when the same
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shall become due and payable, each and every lawful cost, expense and obligation
of every kind and nature, foreseen or unforeseen, for the payment of which the
Board or the Company is or shall become liable by reason of its estate or
interest in the Project or any portion thereof, by reason of any right or
interest of the Board or the Company in or under this Agreement, or by reason of
or in any manner connected with or arising out of the possession, operation,
maintenance, alteration, repair, rebuilding or use of the Project or any part
thereof. The Company also agrees to pay and discharge all lawful real estate
taxes, personal property taxes, water charges, sewer charges, assessments and
all other lawful governmental taxes, impositions and charges of every kind and
nature, ordinary and extraordinary, general or special, foreseen or unforeseen,
whether similar or dissimilar to any of the foregoing, and all applicable
interest and penalties thereon, if any, which at any time during the term of
this Agreement shall be or become due and payable by the Board or the Company
and which shall be lawfully levied, assessed or imposed
(a) upon or with respect to, or shall be or become liens upon,
the Project or any portion thereof or any interest of the Board or the
Company therein or under this Agreement;
(b) upon or with respect to the income or profits of the Board
from the Project or under this Agreement;
(c) upon or with respect to the possession, operation,
management, maintenance, alterations, repair, rebuilding, use or
occupancy of the Project or any portion thereof; or
(d) upon this transaction or any document to which the Board or
the Company is a party creating or transferring an interest or an
estate in the Project;
under or by virtue of any present or future law, statute, ordinance, regulation
or other requirement of any governmental authority, whether federal, state,
county, city, municipal, school or otherwise.
The Company also agrees to pay any special assessments for public
improvements or benefits for which the Company would have otherwise have been
liable had it in fact been the owner of the Project.
The Company shall, at its sole cost and expense, procure or cause to
be procured any and all necessary building permits, other permits, licenses and
other authorizations required for the lawful and proper construction, use,
occupation, operation and management of the Project. The Company also agrees to
pay or cause to be paid all lawful charges for gas, water, sewer, electricity,
light, heat, power, telephone and other utility and service used, rendered or
supplied to, upon or in connection with the Project and the Board will cooperate
with the Company in securing such permits, licenses and authorizations.
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The Company may, at its own expense and in its own name and behalf or
in the name and behalf of the Board, in good faith contest any such taxes,
assessments and other charges and, in the event of any such contest, may permit
the taxes, assessments and other charges so contested to remain unpaid during
the period of such contest and any appeal therefrom unless the Board or the
Trustee shall notify the Company that by nonpayment of any such items the lien
or security interests afforded by this Agreement or the Indenture as to any part
of the Project or the rents, payments and revenues derived from the Project will
be materially endangered or the Project or any part thereof will be subject to
loss or forfeiture, in which event such taxes, assessments or charges shall be
paid promptly. The Board shall cooperate fully with the Company in any such
contest. If the Company shall fail to pay any of the foregoing items required by
this Section to be paid by the Company and shall not cure any failure within any
applicable curative provisions provided herein, the Board or the Trustee may
(but shall be under no obligation to) pay the same, and any amounts so advanced
therefor by the Board or the Trustee shall become an additional obligation of
the Company to the one making the advancement, which amounts, together with
interest thereon at the rate of interest borne by the Bonds from the date
thereof, the Company agrees to pay.
Section 6.4 - Insurance Required. Throughout the Lease Term the
Company shall keep the Project continuously insured (or maintain programs of
self-insurance) against such risks as are customarily insured against by
businesses of like size and type.
Section 6.5 - Application of Net Proceeds of Insurance. The insurance
carried pursuant to the provisions of Section 6.4 shall be applied as follows:
(i) the Net Proceeds of casualty insurance shall be applied as provided in
Section 7.1, and (ii) the Net Proceeds of public liability insurance shall be
applied toward extinguishment or satisfaction of the liability with respect to
which such insurance proceeds may be paid.
Section 6.6 - Additional Provisions Respecting Insurance. All
insurance, if any, required in Section 6.4 may be taken out and maintained in
insurance companies selected by the Company and may be written with deductible
amounts comparable to those on similar policies carried by other companies
engaged in businesses similar in size and type and other respects as the
Company. The insurance hereby required may be contained in blanket policies or
self-insurance programs now or hereafter maintained by the Company.
Section 6.7 - Other Board Expenses. Anything to the contrary herein
notwithstanding, the Company shall pay any reasonable and necessary expenses not
specifically mentioned herein which are incurred by the Board in connection with
the Project, this Agreement, the Indenture, any financing statements or the
Bonds, and which are not payable from the Project Fund pursuant to Section 4.2.
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Section 6.8 - Advances by Board or Trustee. If the Company fails to
maintain the insurance coverage required hereby or fails to keep the Project
Facilities in as reasonably safe condition as its operating conditions will
permit, or fails to keep the Project Facilities in good repair and good
operating condition and shall not cure any failure within any applicable
curative provisions provided herein, the Board or the Trustee may (but unless
satisfactorily indemnified shall be under no obligation to) take out policies of
insurance and pay the premiums on the same or make the required repairs,
renewals and replacements; and all amounts so advanced therefor by the Board or
the Trustee will become an additional obligation of the Company to the one
making the advancement, which amounts, together with interest thereon at the
rate of interest borne by the Bonds from the date thereof, the Company agrees to
pay.
Section 6.9 - Indemnification of Board and Trustee. The Company will
also pay and discharge and will indemnify and hold harmless the Issuer and the
members, officers, agents and employees or the Issuer from (a) any condition of
the Project caused by the Company, (b) any liens, taxes, assessments,
impositions and other charges upon payments by the Company to the Issuer
hereunder, (c) any breach or default on the part of the Company in the
performance of any of its obligations hereunder, (d) any act of negligence of
the Company or of its agents, contractors, servants, employees or licensees, (e)
any act of negligence of any assignee or sublessee of the Company, or of any
agents, contractors, servants, employees or licensees of any assignee or
sublessee of the Company and (f) any and all liability, damages, costs and
expenses arising out of or resulting from the acquisition, construction and
installation of the Project or the use or operation of the Project or any other
activity carried out thereon or in connection therewith or the transactions
contemplated by this Agreement and the Indenture, including the reasonable fees
and expenses of counsel, except as the same may arise out of the negligence or
misconduct on the part of the Issuer. If any such lien or charge is sought to be
imposed upon payments, or any such taxes, assessments, impositions or other
charges are sought to be imposed, or any such liability, damages, costs and
expenses are sought to be imposed, the Issuer will give prompt notice to the
Company, and the Company shall have the sole right and duty to assume, and will
assume, the defense thereof, with full power to litigate, compromise or settle
the same in its sole discretion. The indemnification provided by the Section
shall survive the termination of this Agreement.
The Company agrees to indemnify the Trustee, and to hold it harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the Indenture, including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties thereunder or hereunder.
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Section 6.10 - Investment Credit. The Board agrees that any investment
tax credit with respect to the Project or any part thereof shall be made
available to the Company, and the Board will fully cooperate with the Company in
any effort by the Company to avail itself of any such investment tax credit, but
neither the Board nor the Trustee shall have any responsibility or liability for
the Company's failure to receive any such investment tax credit. The Board
agrees to cause the Trustee to cooperate in making any investment tax credit
available to the Company.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1 - Damage and Destruction. If prior to payment in full of
the Bonds the Project Facilities are destroyed (in whole or on part) or are
damaged by fire or other casualty, the Company, or the Board at the Company's
direction, (i) shall promptly replace, repair, rebuild or restore the property
damaged or destroyed to substantially the same condition as existed prior to the
event causing such damage or destruction, with such changes, alterations and
modifications (including the substitution and addition of other property) as may
be desired by the Company and as will not impair the operation of the Project
Facilities, and (ii) shall apply for such purpose so much as may be necessary of
any Net Proceeds of insurance resulting from claims for such losses, as well as
any additional moneys of the Company necessary therefor. All Net Proceeds of
insurance resulting from claims for such losses shall be paid to the Company. If
said Net Proceeds are not sufficient to pay in full the costs of such
replacement, repair, rebuilding or restoration, the Company shall nonetheless
complete the work thereof and shall pay that portion of the costs thereof in
excess of the amount of said Net Proceeds. The Company shall not, by reason of
the payment of such excess costs be entitled to any reimbursement from the Board
or any abatement, diminution or postponement of the amounts payable under
Section 5.3.
Section 7.2 - Condemnation. If the title in and to, or the temporary
use of, the Project or any part thereof shall be taken under the exercise of the
power of eminent domain by any governmental body or by any other person acting
under governmental authority, the Company shall be obligated to continue to pay
the rents specified in Section 5.3. The Board, the Company and the Trustee shall
cause the Net Proceeds received by them or any of them, from any award made in
such eminent domain proceeding, to be paid to and held by the Company and
applied in one or more of the following ways at the election of the Company:
(a) the restoration of the Project to substantially the same
condition as existed prior to the exercise of such power of eminent
domain;
(b) the acquisition, by construction or otherwise, of other
industrial facilities suitable for the Company's
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operations at the Project (which facilities will be deemed a part of
the Project and available for use and occupancy by the Company and
will be leased to the Company hereunder without the payment of any
rents other than herein provided to the same extent as if such other
improvements were specifically described herein); provided, that such
facilities will be acquired subject to no liens, security interests or
encumbrances prior to the lien afforded by this Agreement and the
Indenture, other than Permitted Encumbrances; or
(c) payment into the Bond Fund to provide for payment in full of
the Bonds at the earliest date that the Bonds may be called for
redemption.
The Board shall cooperate fully with the Company in the handling and
conduct of any prospective or pending eminent domain proceeding with respect to
the Project or any part thereof and shall, to the extent it may lawfully do so,
permit the Company to litigate in any such proceeding in the name and on behalf
of the Board. In no event will the Board voluntarily settle, or consent to the
settlement of, any prospective or pending eminent domain proceeding with respect
to the Project or any part thereof without the written consent of the Company.
Section 7.3 - Condemnation of Company-Owned Property. The Company shall be
entitled to the proceeds of any condemnation award or portion thereof made for
damages to or taking of its own property or for damages on account of the taking
of or interference with Company's rights to possession, use or occupancy of the
Project.
Section 7.4 - Further Assurances and Corrective Instruments. The Board and
the Company agree that they will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as may reasonably be required for correcting
any inadequate or incorrect description of the Project herein described or
intended so to be or for carrying out the intention of or facilitating the
performance of this Agreement.
ARTICLE VIII
SPECIAL AGREEMENTS
Section 8.1 - No Warranty of Condition or Suitability by the Board. THE
BOARD MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE
PROJECT OR THAT IT WILL BE SUITABLE FOR THE COMPANY'S PURPOSES OR NEEDS. The
Company releases the Board from, agrees that the Board shall not be liable for
and agrees to hold the Board harmless against, any loss that may be occasioned
by any cause whatsoever pertaining to the Project or the use thereof.
Section 8.2 - Inspection of the Project. The Company agrees that the
Authorized Board Representative and any duly authorized
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agent of the Trustee shall have the right at all reasonable times to enter upon,
examine and inspect the Project without interference or prejudice to the
operations at the Company. The Company further agrees that any authorized agent
of the Board or the Trustee shall have such rights of access to the Project as
may be reasonable and necessary for the proper maintenance of the Project in the
event of the failure by the Company to perform its obligations under Section
6.1.
Section 8.3 - Company to Maintain Its Corporate Existence; Exceptions
Permitted. The Company agrees that it will maintain its corporate existence,
will not dissolve or otherwise dispose of all or substantially all of its assets
and will not consolidate with or merge into another corporation or permit one or
more other corporations to consolidate with or merge into it; provided that the
Company may, without violating the agreement contained in this Section 8.3,
consolidate with or merge into another corporation incorporated and existing
under the laws of one of the states of the United States of America or the
District of Columbia (a "domestic corporation"), or permit one or more other
domestic corporations to consolidate with or merge into it, or sell or otherwise
transfer to another domestic corporation all or substantially all of its assets
as an entirety and thereafter dissolve, provided, if the Company is not the
surviving, resulting or transferee corporation, as the case may be, such
surviving, resulting or transferee corporation assumes in writing all of the
obligations of the Company under the Agreement and qualifies to do business in
the State. Notwithstanding the foregoing, the Company shall not dissolve or
otherwise dispose of all or substantially all of its assets and shall not
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it if, after giving effect to
such action, a default would result under this Agreement or the Indenture.
Section 8.4 - Qualification in the State. The Company agrees (except
as may be otherwise permitted pursuant to the provisions of Section 8.3) that
throughout the Lease Term it will continue to be a corporation either organized
under the laws of the State or duly qualified to do business in the State as a
foreign corporation.
Section 8.5 - Granting of Easements. If no Event of Default shall have
happened and be continuing, the Company may at any time or times cause to be
granted easements (including party wall agreements), licenses, rights-of-way
(temporary or perpetual and including the dedication of public highways) and
other rights or privileges in the nature of easements with respect to any
property included in the Project Land and such grant will be free from any lien
or security interest created by this Agreement and the Indenture, or the Company
may cause to be released existing easements, licenses, rights-of-way and other
rights or privileges in the nature of easements, held with respect to any
property included in the Project Land with or without consideration and the
Board agrees that it shall execute and deliver and will cause and direct the
Trustee to execute and deliver any instrument necessary
22
<PAGE>
or appropriate to confirm and grant or release any such easement, license,
right-of-way or other right or privilege upon receipt of: (i) a copy of the
instrument of grant or release, and (ii) a written application signed by the
president or any vice president of the Company requesting the execution and
delivery of such instrument and stating that such grant or release is not
detrimental to the proper conduct of the business of the Company, and that such
grant or release will not impair the effective use or interfere with the
operations of the Project Facilities and will not materially weaken, diminish or
impair the security intended to be given by or under this Agreement and the
Indenture.
Section 8.6 - Release of Certain Land. Notwithstanding any other
provision hereof, the parties hereto reserve the right to amend this Agreement
at any time and from time to time by mutual agreement for the purpose of
effecting the release of and removal of (i) any unimproved part of the Project
Land (on which no component of the Project Facilities is located but on which
parking, transportation or utility facilities may be located) on which the Board
proposes to construct improvements for lease or sale to another person or
persons under another and different agreement, or (ii) any part of the Project
Land with respect to which the Board proposes to grant an easement or convey a
fee interest or other title to a railroad or other public or private carrier or
to any public utility or public body in order that transportation facilities or
services by rail, water, road or other means or utility services for the Project
may be provided, increased or improved; provided, that if at the time any such
amendment is made any of the Bonds are outstanding, there shall be deposited
with the Trustee the following:
(a) a copy of such amendment as executed;
(b) a resolution of the Board (i) stating that the Board is not
in default under any of the provisions hereof or of the Indenture and
that the Company is not to the knowledge of the Board in default under
any of the provisions hereof, (ii) giving an adequate legal
description of that portion of the Project Land to be released, (iii)
stating the purpose for which the Board desires the release, (iv)
stating that the improvements which will be constructed or the
facilities and services which will be provided, increased or improved
will be such as will promote at least one of the public purposes of
the Board, and (v) requesting such release;
(c) a certificate of the president or any vice president of the
Company indicating approval of such amendment and stating that the
Company is not in default under any of the provisions hereof;
(d) a copy of the agreement between the Board and such other
person wherein the Board agrees to construct improvements on the
portion of the Project Land so requested to be released and agrees to
lease or sell the same to such
23
<PAGE>
other person, and wherein such other person agrees to lease or
purchase the same from the Board, or a copy of the Instrument granting
the easement or conveying the title or other interest to a railroad,
public utility or public body; and
(e) a certificate of the Authorized Company Representative, dated
not more than 60 days prior to the date of such amendment and stating
that (i) the portion of the Project Land so proposed to be released is
necessary or desirable for railroad, utility services or roads to
benefit the Project or not otherwise needed for the operation of the
Project Facilities for the purposes hereinabove stated, and (ii) the
release so proposed to be made will not impair the usefulness of the
Project Facilities and will not destroy the means of ingress thereto
and egress therefrom.
No release effected finder this Section shall entitle the Company to any
diminution in or postponement or abatement of the rents payable under Section
5.3.
ARTICLE IX
ASSIGNMENT SUBLEASING, PLEDGING AND SELLING;
REDEMPTION; RENT PREPAYMENT AND ABATEMENT
Section 9.1 - Assignment and Subleasing. This Agreement may be
assigned by the Company without the necessity of obtaining the consent of the
Board or the Trustee, subject, however, to the following conditions:
(a) no assignment (other than pursuant to Section 8.3) or
sublease shall relieve the Company from primary liability for any of
its obligations hereunder, and if any such assignment occurs, the
Company shall continue to remain primarily liable for payment of the
rents specified in Section 5.3 and for performance and observance of
the other agreements on its part herein provided to be performed and
observed by it; and
(b) the Company shall within 30 days after the delivery thereof,
furnish or cause to be furnished to the Board and to the Trustee a
true and complete copy of each such assignment or sublease, as the
case may be, together with any instrument of assumption.
Section 9.2 - Pledge under Indenture. Under the terms of the
Indenture, the Board shall assign and create a security interest with respect to
its interest in, and pledge all rents, revenues and receipts arising out of or
in connection with its ownership of, the Project to the Trustee, as security for
the payment of the principal of and interest on the Bonds, but the Indenture and
said assignment and pledge shall be subject and subordinate to this Agreement.
24
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Section 9.3 - Restrictions on Sale of Project by Board. The Board
agrees that, except as set forth in Section 9.2 or as otherwise provided in the
Agreement and Indenture, it shall not (i) sell (other than as contemplated
herein), assign, transfer or convey the Project during the Lease Term, (ii)
create or suffer to be Created any debt, lien or charge on the rents, payments
and revenues arising out of or in connection with its ownership of the Project,
or (iii) take any other action which might reasonably be construed as tending to
cause or induce the levy or assessment of ad valorem taxes on the Project or on
its title in and to the Project. If the laws of the State at the time permit
such action to be taken, nothing contained in this Section shall prevent the
consolidation of the Board with, or the merger of the Board into, or the
transfer of the Project as an entirety to, any public corporation whose property
and income are not subject to taxation and which has corporate authority to
carry on the business of owning and leasing the Project; provided (a) that no
such action shall be taken without the prior written consent of the Company,
unless such action shall be required by law, and (b) that upon any such
consolidation, merger or transfer, the due and punctual payment of the principal
of and the interest on the Bonds, and the due and punctual performance and
observance of all the agreements hereof to be kept and performed by the Board,
shall be expressly assumed on writing by the corporation resulting from such
consolidation or surviving such merger or to which the Project shall be
transferred as an entirety.
Section 9.4 - Redemption of Bonds. The Board, at the request at any
time of the Company and if the same are then redeemable, shall forthwith take
all steps that may be necessary under the applicable redemption provisions of
the Indenture to effect redemption of all or any portion of the Bonds, as may be
specified by the Company, on the earliest applicable redemption date on which
such redemption may be made under such applicable provisions or upon the date
set for the redemption by the Company pursuant to Sections 7.2 or 11.1. As long
as the Company is not in default hereunder and the Board is not obligated to
call Bonds pursuant to the terms of the Indenture, the Board shall not redeem
any Bond prior to its respective stated maturity unless requested to do so in
writing by the Company.
Section 9.5 - Prepayment of Rents. There is expressly reserved to the
Company the right, and the Company is authorized and permitted, at any time it
may choose, so long as it is not in default hereunder, to prepay all or any part
of the rents and other payments payable under Section 5.3, and the Board agrees
that the Trustee may accept such prepayment when the same is tendered by the
Company. All prepaid rents shall be credited on the rents specified in Section
5.3, and at the election of the Company shall be used for the redemption or
purchase of Bonds in the manner and to the extent provided in the Indenture.
Section 9.6 - Rent Abatements if Bonds Paid Prior to Maturity. If at
any time the Indenture discharged in accordance with
25
<PAGE>
Article X of the Indenture, and if the Company is not at the time otherwise in
default hereunder, the Company shall be entitled to use and occupy the Project,
without the payment of rent during the interval (but otherwise on the terms and
conditions hereof), from the date on which such moneys are in the Bond Fund to
and including the later to occur of either (i) midnight, June 1, 2033 or (ii)
payment in full of all Bonds and any Additional Bonds.
Section 9.7 - Reference to Bonds Ineffective After Bonds Paid. Upon
payment in full of the Bonds and all fees and charges of the Trustee, all
references herein to the Bonds and the Trustee shall be ineffective and neither
the Trustee nor the holders of any of the Bonds shall thereafter have any rights
hereunder, saving and excepting those that shall have theretofore vested.
Reference is hereby made to Section 1002 of the Indenture which sets forth the
conditions upon the existence or occurrence of which payment in full of the
Bonds shall be deemed to have been made.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1 - Events of Default Defined. The following shall be
Events of Default hereunder and the term Event of Default shall mean, whenever
it is used herein, any one or more of the following events:
(a) Failure by the Company to make any payment required under
Section 5.3 on or before the date that the payment is due and
continuance of such failure for ten Business Days after receipt of
notice of such failure from the Trustee.
(b) Failure by the Company to observe and perform any other
covenant, condition or agreement on its part under this Agreement
(other than as referred to in subsection (a) of this Section), for a
period of ninety (90) days after written notice, specifying such
failure and requesting that it be remedied, shall be given to the
Company by the Trustee, unless the Trustee shall agree in writing to
an extension of such time prior to its expiration; provided, however,
if the failure stated in the notice cannot be remedied within the
applicable period, the Board and the Trustee will not unreasonably
withhold their consent to an extension of such time if it is possible
to correct such failure and corrective action is instituted by the
Company within the applicable period and diligently pursued until the
default is corrected;
(c) Any warranty, representation or other statement by or on
behalf of the Company contained in this Agreement, or any instrument
furnished in compliance with or in reference to this Agreement or the
Indenture, is false or misleading in any material respect; or
26
<PAGE>
(d) The dissolution or liquidation of the Company or the filing
by the Company of a voluntary petition in bankruptcy, or the
Commission by the Company of any act of bankruptcy, or adjudication of
the Company as a bankrupt, or assignment by the Company for the
benefit of its creditors, or the entry by the Company into an
agreement of composition with its creditors, or the approval by a
court of competent jurisdiction of a petition applicable to the
Company in any proceeding for its reorganization instituted under the
provisions of the Federal bankruptcy statutes, as amended, or under
any similar act which may hereafter be enacted. The term "dissolution
or liquidation of the Company", as used in this subsection, shall not
be construed to include the cessation of the corporate existence of
the Company resulting from a merger or consolidation of the Company
into or with another corporation or a dissolution or liquidation of
the Company following a transfer of all or substantially all of its
assets as an entirety.
Section 10.2 - Remedies. Whenever any Event of Default shall have
happened and be continuing, the Trustee, as the assignee of the Board under the
Indenture, shall have the following rights and remedies:
(a) The Trustee may, and upon the written request of the holders
of not less than twenty-five percent (25%) in outstanding principal
amount of the Bonds, shall by notice in writing delivered to the
Company, declare all installments of rent payable under Section 5.3
for the remainder of the Lease Term to be immediately due and payable.
Upon such acceleration, the amount then due and payable by the Company
as accelerated rent shall be the sum required to provide for payment
in full of the Bonds on the earliest possible date on which such
payment can be made. Such sums as may then become payable shall be
paid into the Bond Fund and after payment in full of the Bonds and
payment of any cost occasioned by such Event of Default, any excess
moneys in the Bond Fund shall be returned to the Company as an
overpayment of rent. Notwithstanding the foregoing, upon the
occurrence of an Event of Default by reason of the occurrence of any
event specified for Section 10.1(d), all installments of rent payable
under Section 5.3 for the remainder of the Lease Term shall
automatically become and be immediately due and payable without any
action by the Trustee or the Board being necessary.
(b) The Trustee may take whatever action at law or in equity may
appear necessary or desirable to collect the rents and any other
payments then due and thereafter to become due, or to enforce
performance and observance of any covenant, condition or agreement of
the Company hereunder;
(c) The Trustee may exercise any remedies provided for in the
Indenture and, with respect to any security interest,
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<PAGE>
the rights of a secured party under the Uniform Commercial Code of the
State.
Any amounts collected pursuant to action taken under this Section shall be paid
into the Bond Fund and applied in accordance with the provisions of the
Indenture or, if payment in full of the Bonds has been made, shall be paid to
the Company.
Section 10.3 - No Remedy Exclusive. No remedy herein conferred upon
or reserved to the Board or the Trustee is untended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the Board or the Trustee
to exercise any remedy reserved to it in this Article, it shall not be necessary
to give any notice, other than such notice or notices as may be herein expressly
required. Such remedies as are reserved to the Board in this Article shall also
extend to the Trustee, and the Trustee and the holders of the Bonds shall be
deemed third-party beneficiaries of all agreements herein contained.
Section 10.4 - Agreement to Pay Attorneys' Fees and Expenses. If there
should occur an Event of Default hereunder and the Board or the Trustee should
employ attorneys or incur other expenses for the collection of rents or the
enforcement of performance or observance of any agreement on the part of the
Company herein contained, the Company agrees that it will on demand therefor pay
to the Board or the Trustee the reasonable fee of such attorneys and such other
reasonable expenses so incurred by the Board or the Trustee.
Section 10.5 - No Additional Waiver Implied by One Waiver. If any
agreement contained herein should be breached by either party and thereafter
waived by the other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder.
Section 10.6 - Waiver of Appraisement, Valuation, etc. If there
should occur an Event of Default hereunder, the Company agrees to waive, to the
extent it may lawfully do so, the benefit of all appraisement, valuation, stay,
extension or redemption laws now or hereafter in force, and all right of
appraisement and redemption to which it may be entitled.
Section 10.7 - Waiver of Events of Default. Notwithstanding anything
herein to the contrary, the Trustee shall be deemed to have waived any Event of
Default hereunder and its consequences and to have rescinded any acceleration of
the rents and other amounts
28
<PAGE>
payable under this Agreement whenever the Trustee has waived such Event of
Default pursuant to the Indenture.
ARTICLE XI
OPTIONS IN FAVOR OF COMPANY; OBLIGATION TO PURCHASE PROJECT
Section 11.1 - General Option to Prepay Rent and Purchase Project. At
any time, the Company shall have, and is hereby granted, the option to prepay
the rent payable under Section 5.3, in whole or in part. To exercise the option
granted in this paragraph, the Company shall, on or before the 2Oth day next
preceding the date set for redemption of the Bonds (which shall be an interest
payment date if less than all the Bonds are to be redeemed), give written notice
to the Board and the Trustee of its intention to exercise the option granted in
this section on such date and shall specify therein the principal amount of
Bonds to be redeemed with the moneys received upon such prepayment. Upon the
exercise of such option, the Company shall direct the Trustee to redeem Bonds in
the principal amount and on the date specified in the notice referred to in the
preceding sentence and shall make arrangements satisfactory to the trustee for
the giving of the required notice of redemption of Bonds. The purchase price
which shall be paid to the trustee by the Company in the event of its exercise
of the option granted in this paragraph shall be the sum of the principal amount
of the Bonds to be redeemed plus accrued interest thereon to the redemption date
plus all fees and expenses of the trustee and the paying agent accrued and to
accrue through such redemption date.
The Company shall have the option to purchase the Project at any time,
in the event that the Indenture is discharged pursuant to Article IX of the
Indenture, by the Company (i) depositing irrevocably with the Trustee either
moneys in an amount which shall be sufficient, or Government Obligations the
principal of and interest on which when due will provide moneys which, together
with the moneys, if any, deposited with or held by the Trustee at the same time
and available for such purpose shall be sufficient pursuant to the Indenture, to
pay the principal of and interest on all of the Bonds due and to become due on
or prior to the redemption date (if the Bonds are to be redeemed) or maturity
thereof; (ii) paying to the trustee all Trustee's fees and expenses due in
connection with the payment or redemption of any such Bonds, and, (iii) if any
Bonds are to be redeemed on any date prior to their maturity, giving the Trustee
irrevocable instructions to redeem such Bonds on such date and either evidence
satisfactory to the Trustee that all redemption notices required by the
Indenture have been given or irrevocable power authorizing the Trustee to give
such redemption notices.
Section 11.2 - Conveyance on Purchase. At the closing of any purchase
of the Project as provided hereunder, the Board shall upon receipt of the
purchase price deliver to the Company documents
29
<PAGE>
conveying to the Company good and marketable fee simple title in and to the
Project, subject to the following: (a) those liens, security interests and
encumbrances (if any) to which such title in and to said property was subject at
the effective date of this Agreement but excluding this Agreement and the
Indenture; (b) those liens and encumbrances created by the Company or to the
creation or suffering of which the Company consented; (c) those liens and
encumbrances resulting from the failure of the Company to perform or observe any
of its agreements contained herein; and (d) Permitted Encumbrances other than
this Agreement and the indenture.
Section 11.3 - Relative Positions of Options and Indenture. The
options granted to the Company in this Article shall be and remain prior and
superior to the Indenture and may be exercised whether or not there exists an
Event of Default hereunder, provided that the existence of such Event of Default
will not result in nonfulfillment of any condition to the exercise of any such
option.
ARTICLE XII
MISCELLANEOUS
Section 12.1 - Notices. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to the Board - The Industrial Development
Board of the City of
Phenix City, Alabama
c/o Mr. Kenneth A. Roberts
Community Bank
2301 Airport Thruway
Columbus, Georgia 31904
with a copy to
R. Michael Raiford, Esq.
501 14th Street
Phenix City, Alabama 36267
(b) If to the Company - Mead Coated Board, Inc.
Mead World Headquarters
Dayton, Ohio 45463
Attention: Treasurer
with a copy to:
Thompson, Hine and Flory
312 Walnut Street
14th Floor
Cincinnati, Ohio 45202
Attention: Robert A. Selak
30
<PAGE>
(c) If to the Trustee - AmSouth Bank N.A.
1901 Sixth Avenue North
Birmingham, Alabama 35203
Attention: Corporate Trust
Department
A duplicate copy of each notice, certificate or other communication given
hereunder by either the Board, the Company or the Trustee to any one of the
others shall also be given to all of the others. The Board, the Company and the
Trustee may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.
Section 12.2 - Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon the Board, the Company and their respective
successors and assigns. To the extent provided herein and in the Indenture, the
Trustee and the holders of the Bonds shall be deemed to be third party
beneficiaries hereof, but nothing herein contained shall be deemed to create any
right in, or to be for the benefit of, any other person not a party hereto.
Section 12.3 - Severability. If any provision hereof shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
Section 12.4 - Amounts Remaining in Bond Fund. Subject to and in
accordance with the terms and conditions of Section 709 of the Indenture,
certain surplus moneys remaining in the two accounts in the Bond Fund shall
belong to and be paid to the Company by the Trustee as an overpayment of rents.
Section 12.5 - Amendments, Changes and Modifications. Except as
otherwise provided herein or in the Indenture, subsequent to the date of
issuance and delivery of the Bonds and prior to their payment in full, this
Agreement may not be effectively amended or terminated without the written
consent of the Trustee.
Section 12.6 - Execution Counterparts. This Agreement may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 12.7 - Captions. The captions and headings herein are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions hereof.
Section 12.8 - Recording of Agreement. This Agreement and every
assignment and modification hereof shall be recorded in the Office of the Judge
of Probate of Russell County, Alabama, or in such other office as may be at the
time provided by law as the proper place for such recordation.
31
<PAGE>
Section 12.9 - Law Governing Construction of Agreement. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State.
Section 12.10 - Net Lease. This Agreement shall be deemed a "net
lease", and the Company shall pay absolutely net during the Lease Term the rents
specified herein, without abatement, deduction or set-off other than those
herein expressly provided.
IN WITNESS WHEREOF, the Board and the Company have caused this
Agreement to be executed in their respective corporate names as of the date
first above written.
THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF
PHENIX CITY, ALABAMA
[CORPORATE SEAL]
By: /s/ Kenneth A. Roberts
---------------------------------
Chairman
MEAD COATED BOARD, INC.
By: /s/ William R. Graber
---------------------------------
32
<PAGE>
ACKNOWLEDGMENT 0F B0ARD
STATE OF GEORGIA )
)
COUNTY OF MUSCOGEE )
I, a Notary Public in and for said County in said State,
hereby certify that Kenneth A. Roberts, whose name as Chairman of the Board of
Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY,
ALABAMA, a public corporation and instrumentality under the laws of the State of
Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act or said public corporation.
GIVEN under my hand and seal of office, this 27th day of April, 1994.
/s/ Linda Boyd
------------------------
Notary Public
(SEAL)
My commission expires: 12-17-96
33
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO )
)
COUNTY OF MONTGOMERY )
I, a Notary Public in and for said County in said State, hereby
Certify that William R. Graber, whose name as Treasurer of MEAD COATED BOARD,
INC., a corporation organized and existing under the laws of the State of
Delaware, is signed to the foregoing instrument and who as known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he or she, as such officer and with full authority, executed
the same voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 27th day of April, 1994.
/s/ Robert A. Selak
-----------------------------
Notary Public
(SEAL) ROBERT A. SELAK, Attorney at Law
Notary Public, State of Ohio
My Commission has no expiration date.
Section 147.03 O. R. C.
My commission expires:
-----------
34
<PAGE>
EXHIBIT "A"
to
Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of June 1, 1993
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
The following real estate and premises situated in the County of
Russell and State of Alabama:
Eight hundred eighty four and 47/100 (884.47) acres located in Sections 32,
33, 21, 28, and 27, Township 14 North, Range 30 East, and Section 5,
Township 13 North, Range 30 East, and beginning at the Southwest corner of
Section 32, Township 14 North, Range 30 East, Russell County, Alabama, run
thence North 00 degrees 38 minutes East a distance of 354.26 feet along a
fence line to a concrete monument, thence North 37 degrees 57 minutes 25
seconds East a distance of 2086.55 feet to a point, thence North 57 degrees
13 minutes East a distance of 4397.87 feet to a point, thence North 01
degree 38 minutes East a distance of 970.55 feet to a point, thence North
37 degrees 53 minutes East a distance of 1948.85 feet to a point, thence
North 00 degrees 37 minutes West a distance of 2783.92 feet to a point,
thence North 45 degrees 16 minutes East a distance of 1570.95 feet to a
concrete monument, thence North 00 degrees 27 minutes East a distance of
621.32 feet to a concrete monument, thence South 88 degrees 26 minutes 40
seconds East a distance of 1048.15 feet to a concrete monument, thence
South 00 degrees 41 minutes 10 seconds East a distance of 601.95 feet to a
concrete monument, thence South 89 degrees 33 minutes 20 seconds East along
the north line of Section 28, Township 14 North, Range 30 East a distance
of 1915.88 feet to a concrete monument, said monument being the northeast
corner of said Section 28, which is the northwest corner of Section 27, in
Township 14 North, Range 30 East, thence South 89 degrees 33 minutes 20
seconds East along the North line of said Section 27 to the boundary line
between the State of Georgia, and the State of Alabama; thence Southerly
and Southwesterly along said line between the State of Alabama and the
State of Georgia, as the same runs, to the northerly and southerly line
along the west side of Section 5, Township 13 North, Range 30 East, run
thence North 00 degrees 28
A-1
<PAGE>
minutes East along the West line of said Section 5, to a point marked by an
iron pipe; thence North 00 degrees 28 minutes East along the west line of
said Section 5 a distance of 2825.00 feet to the northwest corner of
Section 5, and the point of beginning. (The Portion of said line from the
northerly line of a public road known as the Ferry Road to the northwest
corner of said Section 5, which is the southwest corner of Section 32,
Township 14 North, Range 30 East, being along an old fence.)
There is hereby expressly excepted from said described lands those
lands heretofore taken in fee simple by condemnation by the United States
of America and subject to flowage easements taken by the United States of
America by condemnation and subject to the easement rights (a) for right of
way for railroad purposes and (b) for a public road over and through said
described lands, such public road right of way having been conveyed by the
W.C. Bradley Company, to Russell County, Alabama, by deed recorded in Deed
Record 387, pages 787-788, in the office of the Judge of Probate in and for
Russell County, Alabama.
Said described lands hereby conveyed contain in the aggregate
according to survey made, eight hundred eighty four and 47/100ths (884.47)
acres (the "1993 Leased Land");
less and except the following property:
PARCEL l
Beginning at a point which is 743.81 feet east and 477.58 feet south of the
northwest corner of section 28, Township 14 North, Range 30 East, Russell
County, Alabama, which section corner is marked by a concrete monument,
this point thus determined, being the northwest corner of the property to
be conveyed, then proceeding south 128.84 feet, then east 85.0 feet, then
north 128.84 feet, then west 85.0 feet to the point of beginning.
PARCEL 2
Beginning at a point which is 928.0 feet South and 1479.0 feet East of
the Northwest corner of Section 28 in Township 14 North, Range 30 East,
Russell County, Alabama, which corner is marked by a concrete monument,
then proceeding North a distance of 120.0 feet, then West 100.0 feet, then
South 120.0 feet, then East 100.0 feet to the point of beginning.
PARCEL 3
At the Southwest corner of Section 22, Township 14 North, Range 30 East,
Russell County, Alabama as the point of beginning, run along the South line
of Section 22 N89 degrees-50'E 976.85 feet to the property line of the
United States Government; thence along said property line N2 degrees-50'W
1296.69 feet to a branch which runs into Bluff Creek; thence along said
branch the following courses; N41 degrees-41'W 340.67 feet;
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S85 degrees-42'W 324.22 feet; S81 degrees-08'W 330.0 feet; N25 degrees-48'W
145.58 feet; S76 degrees-52'W 198.66 feet; N44 degrees-03'W 152.62 feet;
S46 degrees-35'Q 84.21 feet; S21 degrees-OO'E 83.39 feet; N82 degrees-27'W
94.15 feet; S7 degrees-51'E 148.82 feet; S66 degrees-39'W 386.20 feet; S62
degrees-55'W 237.23 feet; S65 degrees-05'W 232.38 feet; S74 degrees-24'W
408.97 feet; S51 degrees-52'W 371.60 feet; S19 degrees-42'W 231.02 feet;
S62 degrees-26'W 198.83 feet; N85 degrees-48'W 229.54 feet; S89 degrees-
23'W 159.01 feet; N83 degrees-01'W 327.29 feet; S80 degrees-02'W 437.03
feet; thence S59 degrees-27'W 318.79 feet; thence S3 degrees-28'E 199.83
feet; thence S1 degrees-16'E 607.22 feet; thence N87 degrees-24'E 343.43
feet; thence N82 degrees-04'E 516.01 feet; thence N70 degrees-45'E 540.58
feet; thence N89 degrees-18'E 472.15 feet; thence N0 degrees-01'E 400.58
feet; thence S89 degrees-59'E 446.0 feet; thence S0 degrees-01'W 395.0
feet; thence N89 degrees-18'E 171.06 feet; thence N46 degrees-28'E 463.45
feet to the South line of Section 21; thence along said Section line S90
degrees-48'E 749.92 feet to the point of beginning and containing 121.14
acres more or less.
PARCEL 4A
All that tract or parcel of and situated lying and being in Section 28,
Township 14 North, Range 30 East, Russell County, Alabama, and being more
particularly described as follows: To find the point of beginning, commence
at the northwest corner of Section 28, Township 14 North, Range 30 East,
which corner is marked by a concrete monument and, from said point, thence
running South 89 degrees 33 minutes 20 seconds East, along the North line
of said Section 28, a distance of 1,250.03 feet to an iron pin, said iron
pin being the beginning point of the property herein conveyed; and from
said point of beginning running thence South 89 degrees 33 minutes 20
seconds East, along the North line of said Section 28, a distance of 400.0
feet to a point; thence running South 01 degree 02 minutes 40 seconds West
a distance of 704.0 feet, more or less, to a point; thence running South 45
degrees 16 minutes 00 seconds West a distance of 560.0 feet, more or less,
to an iron pin; thence running North 01 degree 02 minutes 40 seconds East a
distance of 1,076.19 feet to the point of beginning. The property herein
described is bounded on the West and South by property of Grantee herein,
on the North and East by property of Grantor herein and said described
tract contains 8.2 acres, more or less.
PARCEL 4B
Commencing at the Northwest corner of Section 28 in Township 14 North,
Range 30 East, Russell County, Alabama, which corner is marked by a
concrete monument and proceeding east along the north line of said Section
28, which is the north property line of Georgia Kraft Company, a distance
of two hundred forth-nine and ninety-six hundredths (249.96) feet to the
point of intersection with the east right-of-way line of the Central of
Georgia Railroad which point is marked by an iron pin, said iron pin being
the point of beginning of the property herein conveyed. From said point of
beginning
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<PAGE>
running thence over and along the west boundary of said tract number one,
which is the east right-of-way line of the Central of Georgia Railroad
which as fifty feet from and parallel to the center line of the main line
track, on a bearing of south one degree, two minutes and forty seconds west
(S 1 degree 02' 40" W) a distance of sixteen hundred forty-three and fifty-
nine hundredths (1643.59) feet to a point, thence along the west boundary
of the said tract number one, which is the east right-of-way line of the
Central of Georgia Railroad and is fifty (50) feet from and concentric with
the center line of the main line track, following a circular curve to the
right, having a radius of eight hundred sixty-four and forty-nine
hundredths (864.49) feet for an arc distance of three hundred seventy-two
and forty-three hundredths (372.43) feet to an iron pin marking the
southwest corner of said tract number one which is the point where the east
right-of-way line of the Central of Georgia Railroad main line terminates
on the north right-of-way line of the spur track serving the Georgia Kraft
Company mill, said point being fifty (50) feet from the center line of the
main line track and twenty-five (25) feet from the center line of the
aforesaid spur track; thence along the south boundary of said tract number
one, which is the north right-of-way line of the spur track serving the
Georgia Kraft Company mill and is twenty-five (25) feet from and parallel
to the center line of the aforesaid spur track, on a bearing of north
fifty-one degrees, fifty-two minutes and ten seconds east (N 51 degrees 52'
10" E) for a distance of thirteen-hundred fifty-nine and ninety-three
hundredths (1359.93) feet to an iron pin marking the south-east corner of
said tract number one; thence along the east line of said tract number one
on a bearing of north zero degrees and thirty-seven minutes west (N 0
degrees 37' W) a distance of fifty-three and fifty-six hundredths (53.56)
feet to an iron pan; thence along the east boundary of said tract number
one on bearing of north forty-five degrees and sixteen minutes east a
distance of thirty-seven and eighty hundredths (37.80) feet to an iron pin;
thence along the east boundary of said tract number one on a bearing of
north one degree, two minutes and forty seconds east (N 1 degree 02' 40"
E) a distance of one thousand seventy-six and nineteen hundredths (1076.19)
feet to an iron pin marking the north east corner of said tract number one
and being on the north line of the aforesaid Section 28; on a bearing of
north eighty-nine degrees thirty-three minutes and twenty seconds West (N
89 degrees 33' 20" W) a distance of one thousand and seven hundredths
(1000.07) feet to the point of beginning. The above described boundaries of
said tract number one enclose thirty-five and fifty-one hundredths (35.51)
acres, more or less;
excepting from the foregoing description of Parcel 4A and Parcel 4B the
following described Tracts A, B and C:
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<PAGE>
TRACT A
A 200 foot wide strip of land for a road right-of-way situated in
Sections 20, 28 and 29, Township 14 North, Range 30 East, in Russell
County, Alabama, and being 100 feet on either side of and contiguous with
the following described centerline:
Commence at the Northeast corner of Section 20, Township 14 North, Range 30
East and run North 86 degrees 56 minutes West for a distance of 751.7 feet;
thence South 33 degrees 37 minutes West for a distance of 2187 0 feet;
thence South 18 degrees 31 minutes West for a distance of 856.7 feet;
thence South 19 degrees 29 minutes West for a distance of 507.5 feet;
thence South 89 degrees 26 minutes East for a distance of 91.80 feet;
thence from the last described course turn left 151 degrees 00 minutes and
run Northwesterly 138.20 feet to a point in the center of Alabama Highway
No. 165 and the point of beginning for said centerline; thence turn right
180 degrees 00 minutes and run Southeasterly along said centerline 230.00
feet to the point of a curve to the right; said curve having a 17 degree 32
minutes 16 seconds degree of curvature and an included angle of 62 degrees
45 minutes; thence continue along said curve an arc distance of 359.20 feet
to the point of tangent to said curve; thence continue tangent to last
described curve Southerly a distance of 1719.47 feet to the point of a
curve to the left; said curve having a 10 degree 00 minutes 14 seconds
degree of curvature and an included angle of 27 degrees 25 minutes 40
seconds; thence continue along said curve an arc distance of 274.51 feet to
the point of tangent to said curve; thence continue tangent to the last
described curve Southeasterly 1097.83 feet to the point of a curve to the
left; said curve having a 12 degree 30 minute degree of curvature and an
included angle of 101 degrees 50 minutes 41 seconds; thence continue along
said curve an arc distance of 816.38 feet to the point of tangent to said
curve; thence continue tangent to last described curve Northeasterly
1351.87 feet to the point of a curve to the right; said curve having a 22
degree 31 minutes 55 seconds degree of curvature and an included angle of
37 degrees 53 minutes 10 seconds; thence continue along said curve an arc
distance of 168.14 feet to the intersection of said curve and the
centerline of existing railroad; said intersection being the end of said
centerline of roadway description.
Said strip of land lying in Sections 20, 28 and 29, Township 14 North,
Range 30 East, Russell County, Alabama and containing 27.62 acres more or
less.
TRACT B
Beginning at a point which is 743.81 feet east and 477.58 feet south of the
northwest corner of Section 28, Township 14 North, Range 30 East, Russell
County, Alabama, which section
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<PAGE>
corner us marked by a concrete monument, this point thus determined being
the northwest corner of the property to be conveyed, then proceeding south
128.84 feet, then east 85.0 feet, then north 128.84 feet, then west 85.0
feet to the point of beginning.
TRACT C
Beginning at a point which is 928.0 feet South and 1479.0 feet East of the
Northwest corner of Section 28 in Township 14 North, Range 30 East, Russell
County, Alabama, which corner is marked by a concrete monument, then
proceeding North a distance of 120.0 feet, then West 100.0 feet, then South
120.0 feet, then East 100.0 feet to the point of beginning.
PARCEL 5
WASTE WOOD CONVEYOR TO SCALPER (C-28506) AREA AND TRUCK DUMPER (C-28505)
AREA
All that portion of land and structures lying 9' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
31 degrees 59' 52' E, 291.25' to the point of beginning; thence S 0 degrees
00' W, 231.00' to a point on the north side of a rectangular area (Truck
Dumper) bounded by a N 792,366.0, N 792,326.5, and E 234,642.0, and E
234,765.5, said rectangular area being the point of ending; said land being
0.21 (plus or minus) acres;
NO. 1 BARK TRANSFER CONVEYOR (C-28503) AREA,
NO. 2 BARK TRANSFER CONVEYOR (C-28504) AREA,
BARK HOG STRUCTURE (C-28534) AREA
AND REFUSE CONVEYOR SCALPER (C-28533) AREA
All that portion of land and structures lying 9' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
31 degrees 59' 52" E, 291.25' to the point of beginning; thence S 8 degrees
20' 17" W, 284.46' to the center of a rectangular area which is parallel to
the last said course 22' north to south by 15' east to west; thence S 81
degrees 39' 40" E, 843.58' to a parallel rectangular area (Bark Hog
Structure) 26.00' north to south
A-6
<PAGE>
(10.00 lying south of last said course) by 37.50'; thence Continue along
last said course 27.00'; thence N 45 degrees 07' 38" E, 350.71' to the
point of ending; said land being 0.63 + acres;
NO. 2 TURBINE AREA
A11 that portion of land, and structures lying thereon, On Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02
of the West Zone of the State of Georgia Coordinate System; thence S 25
degrees 19' 16" E, 663.98' to the point of beginning (N 792,550.0 E
233,534.0); thence S 0 degrees 00' W, 50.00'; thence N 90 degrees 00' E,
121.00'; thence N 0 degrees 00' W, 50.00'; thence N 90 degrees 00' W,
121.00' to the point of beginning; said land being 0.14 (plus or minus)
acres;
SANITARY PACKAGE TREATMENT PLANT AREA
All that portion of land, and structures lying thereon, in Section
28, T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S 48
degrees 35' 13" W, 1186.73' to the point of beginning (N 791,565.0. E
233,610.0); thence S 0' 00" W, 12.00'; thence N 90 degrees 00' W, 64.00';
thence N. 0' 00" W 12.00'; thence N 90' 00" E, 64.00' to the point of
beginning; said land being 0.02 (plus or minus) acres; and
NO. 3 BARK BOILER AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02
of the West Zone of the State of Georgia Coordinate System; thence S 29
degrees 39' 25" E, 461.76' to the point of beginning (N 792,748.92, E
233,478.50); thence N 90 degrees 00' E, 73.57'; thence S 0 degrees 00' W,
34.50'; thence N 90 degrees 00' W, 11.82'; thence S 0 degrees 00' W,
143.17'; thence N 90 degrees 00' W, 90.62'; thence N 0 degrees 00" W,
83.08'; thence N 90 degrees 00" E, 28.87'; thence N 0 degrees 00' W. 94.59'
to the point of beginning; said land being 0.32 (plus or minus) acres;
A-7
<PAGE>
PARCEL 6
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
AND CHIPS SCREEN HOUSE AREA (C-28515)
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
63 degrees 51' 31" E, 790.90' to the point of beginning; thence N 90
degrees 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90 degrees 00' W,
232.22'; thence S 15 degrees 17' 15" E, 479.72' to a point on the northmost
side of a rectangular area (Chip Screen House) which parallels last said
course and is 75.0' north to south (7.00' of which is west of last said
course) by 49.0' east to west; said rectangular area being the point of
ending; said land being 0.56+ acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
All that portion of land and structures lying 14' on each side of the
following described centerline:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
45 degrees 24' 34" E, 692.79' to the point of beginning; thence S 36
degrees 51' 02" E, 454.94' to the point of ending; said land being 0.29
(plus or minus) acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO
HARDWOOD STORAGE CONVEYOR AREA (C-28537)
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
71 degrees 34' 06" E, 600.24' to the point of beginning; thence S 71
degrees 04' 32" E, 640.91'; thence N 50 degrees 08' 32" E, 61.59' to the
point of ending; said land being 0.45 (plus or minus) acres;
A-8
<PAGE>
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
CHIP CONVEYOR TO SURGE BIN AREA (C-28519),
AND CHIP SILO AREA (C-28520)
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence S
48 degrees 21' 59" W, 84.29' to the point of beginning; thence S 56 degrees
07' 32" E, 319.22' to the center of a circular area (Chip Silo) with a
radius of 15.00' and a central angle of 360 degrees 00' bounded by a
rectangular structure 32' -6" (plus or minus) East-West and 32' -6" (plus
or minus) North-South; thence N 82 degrees 51' 32" E, 355.48' to the point
of ending; said land being 0.45 (plus or minus) acres;
NEW WASHER FACILITY AND BATCH DIGESTER AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence N 48
degrees 06' 06" W, 35.94' to the point of beginning (N 792,374.0, E
234,473.25); thence S 0 degrees 00' W, 133.50'; thence N 90 degrees 00' W,
103.39'; thence S 0 degrees 00' W, 103.50'; thence 90 degrees 00' W,
48.00'; thence N 0 degrees 00' W, 55.75'; thence N 90 degrees 00' W, 80.00;
thence S 0 degrees 00' W, 42.75'; thence N 90 degrees 00' W, 63.00; thence
N 0 degrees 00' W, 110.00'; thence N45 degrees 00' E, 55.00'; thence N0
degrees 00' W, 23.11'; thence 90 degrees 00' E, 23.00'; thence N 0 degrees
00' W, 23.25'; thence N90 degrees 00' E, 170.00'; thence N 0 degrees 00' W,
28.75'; thence N 90 degrees 00' E, 62.50' to the point of beginning; said
area being 1.01 (plus or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
All that portion of and, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S 48
degrees 46' 07" W, 591.71' to the point of beginning (N 791, 960.0 E
234,055.0); thence S 0 degrees 00' W, 170.00'; thence N 90 degrees 00' W,
111.00; thence 0 degrees 00' W, 170.00'; thence N 90 degrees 00' E, 111.00'
to the point of beginning; said land being 0.43 (plus or minus) acres;
A-9
<PAGE>
TURPENTINE RECOVERY FACILITY AREA
All that port on of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S 63
degrees 26' 06" W, 11.18' to the point of beginning (N 792,345.0, E 234,
490.0); thence N 0' 00" W, 30.00'; thence N 90 degrees 00" E, 20.00';
thence S 0 degrees 00' W, 30.00; thence N 90 degrees 00' W, 20.00' to the
point of beginning; said land being 0.01 (plus or minus) acres;
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523),
DRUM AREA (C-28525, VIBRATING CONVEYORS AREA (C-28532),
CHIPPER POWER FEED ROLLS AREA (C-28528), CHIP BLDG.
AREA (C-28535), AND BARK COLLECTING CONVEYOR AREA (C-28531)
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence N 80
degrees 22' 54" E, 879.79' to the point of beginning; thence N 0 degrees
00' W, 326.00'; thence N 90 degrees 00' E, 711.08'; thence S 0 degrees 00'
W, 326.00'; thence N 90 degrees 00' W, 328.00'; thence S 0 degrees 00' W,
188.00'; thence N 90 degrees 00' W, 50.00'; thence N 0 degrees 00' W,
188.00'; thence N 90 degrees 00' W, 333.08' to the point of beginning; said
land being 5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S 11
degrees 04' 57" W, 197.69' to the point of beginning (N 792,156.0, E
234,462.0); thence S 0 degrees 00" W, 82.00'; thence N 90 degrees 00" w,
52.00'; thence N 0 degrees 00' W, 82.00'; thence N 90 degrees 00' E, 52.00
to the point of beginning' said land being 0.10 (plus or minus) acres;
NEW LIME KILN/RECAUSTICIZING
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County or Russell, State of Alabama, more particularly
described as follows:
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<PAGE>
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02
of the West Zone of the State of Georgia Coordinate System; thence N 70
degrees 51' 29" E, 267.79' to the point of beginning (N 793,238.0 E
233,503.0); thence N 90 degrees 00' E, 399.23'; thence S 0 degrees 00' W,
50.00'; thence N 90 degrees 00' W, 10.00'; thence S 0 degrees 00' W,
40.00'; thence N 90 degrees 00' W, 136.23'; thence N 0 degrees 00' W,
80.00'; thence N 90 degrees 00' W, 50.00'; thence S 0 degrees 00' W,
10.00'; thence N 90 degrees 00' W, 54.00'; thence S 0 degrees 00' W,
40.00'; thence N 90 degrees 00' E, 65.00'; thence S 0 degrees 00' W,
30.00'; thence N 90 degrees 00' W, 150.00'; thence N 0 degrees 00' W,
17.00'; thence N; 90 degrees 00' W, 64.00'; thence N 0 degrees 00' W,
73.00' to the point of beginning; said land being 0.657, more or less
acres, less than and except all structures not included in the Mead
Corporation Contract No. 21-3097A.
NO. 2 RECOVERY BOILER AREA
All that portion Of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02,
of the West Zone of the State of Georgia Coordinate System; thence S 40
degrees 16' 34" E, 439.77' to the point of beginning (N 792,814.67, E
233,534.32'); thence N 90 degrees 00' E, 36.30'; thence N 0 degrees 00' W,
20.50'; thence N 90 degrees 00' E, 72.26'; thence N 0 degrees 00' W,
14.83'; thence N 90 degrees 00' E, 110.50'; thence S 0 degrees 00' W,
42.58'; thence N 90 degrees 00' E, 26.00'; thence S 0 degrees 00' W, 81.00'
thence N 90 degrees 00' W, 51.00' thence N 0 degrees 00" W, 25.12'; thence
N 90 degrees 00' W, 72.26'; thence N 90 degrees 00' W, 20.50'; thence N
degrees 00' W, 36.30'; thence N 0 degrees 00' W, 34.00' to the point of
beginning; said land being 0.47 (plus or minus) acres;
NEW EVAPORATORS AND NEW TANKS AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19; E 233,250.02,
of the West Zone of the State of Georgia Coordinate System; thence S 62
degrees 01' 33" E, 637.83' to the point of beginning (N 792,851.0, E
233,813.33); thence N 90 degrees 00' E, 246.67'; thence along an arc South
and East 53.41' having a radius of 34.00' with a central angle of 90
degrees 00'; thence S 0 degrees 00' W, 135.33'; thence along an arc South
and West 53.41' having a radius of 34.00' with a central angle of 90
degrees 00'; thence N 90 degrees 00' W, 34.00'; thence N 0 degrees 00' W,
99.79'; thence N 90 degrees 00' W, 69.00'; thence N 59 degrees 47' 19" W,
91.42'; thence N 90 degrees 00' W, 64.67'; thence N 0 degrees 00' W, 57.54'
to the point of beginning; said land being 0.72 (plus or minus) acres;
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<PAGE>
PARCEL 7
LIME MUD WASTE DISPOSAL FACILITIES
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid Coordinates N 793,150.19, E 233, 250.02
of the West Zone of the State of Georgia Coordinate System; thence N 86
degrees 38' 59" E, 253.41' to the point of beginning (N 793,165.00 E
233,503.00); thence N 90 degrees 00' E, 64.00'; thence S 0 degrees 00' E,
17.00'; thence N 90 degrees 00' E, 150.00; thence N 0 degrees 00' E,
30.00'; thence N 90 degrees 00' W, 65.00'; thence N 0 degrees 00' E,
40.00': thence N 90 degrees 00' E, 54.00'; thence N 0 degrees 00' E,
10.00'; thence N 90 degrees 00' E, 50.00'; thence S 0 degrees 00' E,
80.00'; thence N 90 degrees 00' E, 136.23'; thence N 0 degrees 00' E,
40.00'; thence N 90 degrees 00' E, 75.00'; thence S 0 degrees 00' E,
78.00;' thence N 90 degrees 00' W. 464.23'; thence 0 degrees 00' E, 55.00';
to the point of beginning; said land being 0.633 more or less acres, less
than and except all structures not included in the Mead Corporation
Contract No. 21-3097A.
PARCEL 8A
A tract of land situated in the Northwest Quarter of the Northeast
Quarter (NW 1/4 of NE 1/4 ) and the Southwest Quarter of the Northeast
Quarter (SW 1/4 of NE 1/4) of Section 28, Township 14 North, Range 30 East,
Russell County, Alabama, being more particularly described as follows:
Commence at the Northwest corner of Section 28 Township 14 North, Range 30
East; thence run South 89 degrees 33 minutes 20 seconds East along the
North Boundary of such Section 28 a distance of 2806.62 feet to a point;
thence turn right and run due South a distance of 1210.86 feet to a point
at the western end of the Bark Handling System, such point being the
beginning of the tract of land herein described.
Begin at such point of beginning, turn an angle to the left and run North
45 degrees 00 minutes East a distance of 63.64 feet to a point; thence turn
an angle to the right 45 degrees 00 minutes and run easterly a distance of
310.00 feet to a point; thence turn an angle to the right 45 degrees 00
minutes and run southeasterly a distance of 63.64 feet to a point; thence
turn an angle to the left 45 degrees 00 minutes and run easterly a distance
of 270.00 feet to a point; thence turn an angle to the right 90 degrees 00
minutes and run southerly a distance of 155.00 feet to a point; thence turn
an angle to the left 90 degrees 00 minutes and run easterly a distance of
136.00 feet to a point; thence turn an angle to the right 90 degrees 00
minutes and run southerly a distance of 94.35 feet to a point; thence turn
an angle to the right 30 degrees 00 minutes and run southwesterly a
distance of 263.00 feet to a
A-12
<PAGE>
point; thence turn an angle to the left 30 degrees 00 minutes and run
southerly a distance of 132.88 feet to a point; thence turn an angle to
the right 90 degrees 00 minutes and run westerly a distance of 84.50 feet
to a point; thence turn an angle to the right 90 degrees 00 minutes and run
northerly a distance of 405.00 feet to a point; thence turn an angle to the
left 90 degrees 00 minutes and run westerly a distance of 120.00 feet to a
point; thence turn an angle to the right 90 degrees 00 minutes and run
northerly a distance of 115.00 feet to a point; thence turn an angle to the
left 90 degrees 00 minutes and run westerly a distance of 470.00 feet to a
point; thence turn an angle to the right 90 degrees 00 minutes and run
northerly a distance of 90.00 feet to the point of beginning.
PARCEL 8B
A tract of land situated an the Northeast Quarter of the Northwest
Quarter (NE 1/4 of NW 1/4) and the Southeast Quarter of the Northwest
Quarter (SE 1/4 of NW 1/4) of Section 28, Township 14 North, Range 30
East, Russell County, Alabama, being more particularly described as
follows:
Commence at the Northwest corner of Section 28, Township 14 North, Range 30
East; thence run South 89 degrees 33 minutes 20 seconds East along the
North Boundary of such Section 28 a distance of 2290.86 feet to a point;
thence turn right and run due South a distance of 1225.36 feet to a point
at the Northeast corner of the #2 Bark Boiler Building, such point being
the point of beginning of the tract of land herein described.
Being at such point of beginning, continue due South a distance of 95.75
feet to a point; thence turn an angle to the right 90 degrees 00 minutes
and run westerly a distance of 67.50 feet to a point; thence turn an angle
to the right 90 degrees 00 minutes and run northerly a distance of 95.75
feet to a point; thence turn an angle to the right 90 degrees 00 minutes
and run easterly a distance of 15.00 feet to a point; thence turn an angle
to the left 90 degrees 00 minutes and run northerly a distance of 40.00
feet to a point; thence turn an angle to the right 90 degrees 00 minutes
and run easterly a distance of 34.50 feet to a point; thence turn an angle
to the right 90 degrees 00 minutes and run southerly a distance of 40.00
feet to a point; thence turn an angle to the left 90 degrees 00 minutes and
run easterly a distance of 18.00 feet to the point of beginning.
PARCEL 9
All that portion of land, and structures lying thereon, in Section 28,
T14N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
A-13
<PAGE>
Commence at a monument having grid coordinates N 794,023.97, E 232,940.10
of the West Zone of the State of Georgia Coordinate System; thence S
52(degrees) 11' 16" E 381.63' to the point of beginning (N 793,790.00 E
233,241.60); thence N 90 degrees 00' 00" E 760.00'; thence S 0 degrees 00'
00" E 102.00'; thence N 90 degrees 00' 00" E 128.04'; thence S 0 degrees
00' 00" E 960.48' (at existing utility bridge)' the N 90 degrees 00' 00" W
13.00'; thence N 0 degrees 00' 00" W 672.48', thence N 90 degrees 00' 00 W
875.04'; thence N 0 degrees 00' 00" E 390.00' to the point of beginning;
said land being 7.85(plus or minus) acres; less than and except any
structures not included in the Mead Corporation Contract No. 21-4162;
(collectively, (Parcels 1 through 9) the "Other Leased Land")
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Other Leased Land in order to provide all necessary or convenient
ingress or egress between the 1993 Leased Land and railroads, public roads
and highways and the Chattahoochee River and to permit passage between the
1993 Leased Land and the Other Leased Land;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Other Leased Land
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the 1993 Leased Land to the Other Leased Land, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Other Leased Land in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Other Leased
Land, such pipes, conduits, and wires as are necessary or convenient to
insure access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control, and other similar facilities to the 1993 Leased Land and the
Project including, without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Other Leased Land; and
A-14
<PAGE>
(d) An easement and right to create and maintain upon the Other
Leased Land encroachments of equipment, structures or other improvements
which will be included on the 1993 Leased Land and within the project as
presently planned, and any similar replacements or substitutions of
portions of the Project for as long as any such equipment, structures or
other improvements remain standing, including without limitation the rights
of lateral or party wall support, and to connect any such equipment,
structure or other improvements to any structure or improvement on the
Other Leased Land;
but subject to the following easements over the 1993 Leased Land in favor of
the Other Leased Land:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the 1993 Leased Land in order to provide all necessary or convenient
ingress and egress among and between all portions of the Other Leased Land
and between the Other Leased Land and the 1993 Leased Land, including
without limitation portions on which additional improvements may be
erected, and railroads, public works and highways and the Chattahoochee
River and to permit passage among and between the various parcels of land
comprising the Other Leased Land;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the 1993 Leased Land necessary
or convenient in order to assure the passage of equipment, and finished
products from one portion of the Other Leased Land to another or between
the Other Leased Land and the 1993 Leased Land, including, without
limitation such rights and easements as are necessary for the movement of
personnel, vehicles and material among and between the various parcels of
land comprising the Other Leased Land in order to permit and facilitate the
operation of any facilities located on the Other Leased Land;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the 1993 Leased Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of gas,
oil, steam, compressed air, process and space heat, water, fire protection,
sewage and industrial waste disposal, electricity, communications,
instrumentation and control, and other similar facilities to the Other
Leased Land, including without limitation, the right to make connections
with machinery, equipment, pipes, conduits and wires, structures and other
A-15
<PAGE>
improvements and appurtenances thereto, on the 1993 Leased Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Other Leased Land as encroachments upon the 1993 Leased Land
as long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the 1993
Leased Land in respect of any additional improvements constructed adjacent
to the 1933 Leased Land, as long as any such additional improvements remain
standing, including without limitation the rights of lateral or party wall
support, and to connect such additional improvements to any structure or
any improvements on the 1993 Leased Land.
subject in all cases to the following:
(1) Lease Agreement dated as of November 1, 1983 between the Board, as lessor,
and the Company (as assignee of Georgia Kraft Company), as lessee, as
amended and supplemented from time to time relating to the Board's
Industrial Development Revenue Bonds (Georgia Kraft Project), Series 1983;
(2) Lease Agreement dated as of December 1, 1983 between the Board as lessor,
and the Company (as assignee of Georgia Kraft Company), as lessee, as
amended and supplemented from time to time, relating to the Board's
Environmental Improvement Revenue Bonds (Georgia Kraft Project), Series
1983;
(3) Lease Agreement dated as of December 1, 1985 between the Board, as lessor,
and the Company (as assignee of Georgia Kraft Company), as lessee, as
amended and supplemented from time to time, relating to the Board's
Environmental Improvement Revenue Refunding Bonds (Georgia Kraft Project),
Series 1985;
(4) Lease Agreement dated as of July 1, 1986 between the Board, as lessor, and
the Company (as assignee of Georgia Kraft Company), as lessee, as amended
and supplemented from time to time, relating to the Board's Industrial
Development Revenue Bonds (Georgia Kraft Project), Series 1986;
(5) Lease Agreement dated as of December 1, 1988 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Bonds (Mead
Coated Board Project), Series 1988;
(6) Lease Agreement dated as of June 1, 1990 between the Board, as lessor, and
Industrial Warehouse Services, Inc., as lessee, as amended and supplemented
from time to time, relating to the
A-16
<PAGE>
Board's First Mortgage Revenue Bonds (Industrial Warehouse Services, Inc.),
Series 1990;
(7) Lease Agreement dated as of December 1, 1988 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Industrial Development Revenue Bonds (Mead Coated
Board Project), Series 1988A, 1989A, 1989B, 1989C, 1989D, 1989E, 1900A and
1991A;
(8) Lease Agreement dated as of September 1, 1990 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Bonds (Mead
Coated Board Project), Series 1990A;
(9) Lease Agreement dated as of October 1, 1990 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Refunding Bonds
(Mead Coated Board Project), Series 1990B; and
(10) Lease Agreement dated as of June 1, 1993 between the Board, as lessor, and
the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Bonds (Mead
Coated Board Project), Series 1993A.
A-17
<PAGE>
EXHIBIT "B"
to
Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of June 1, 1993
PROJECT SUMMARY - INDUSTRIAL FACILITIES
RUSSELL COUNTY, ALABAMA
The Project in an expansion of and improvements to an existing coated linerboard
mill (the "Mill") in Russell County, Alabama owned in part by the Board and
leased to the Company and owned in part by the Company.
B-1
<PAGE>
FIRST AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS FIRST AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of February 1, 1995 by and between THE INDUSTRIAL DEVELOPMENT
BOARD OF THE CITY OF PHENIX CITY, ALABAMA (the "Board"), a public body corporate
and politic duly organized and existing under the Constitution and laws of the
State of Alabama, and MEAD COATED BOARD, INC., a Delaware corporation (the
"Company").
R E C I T A L S
---------------
The Board has previously issued and sold $48,000,000 in aggregate principal
amount of The Industrial Development Board of the City of Phenix City, Alabama
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1993A
(the "Series 1993A Bonds") pursuant to a Trust Indenture dated as of June 1,
1993 (the "Original Indenture") from the Board to AmSouth Bank of Alabama
(formerly AmSouth Bank, N.A.), as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the Series 1993A Bonds for
the payment of outstanding industrial development temporary borrowing notes (the
"Notes") issued by the Board for the purpose of funding the acquisition,
construction and installation of a coated natural kraft mill and related
facilities (the "Project") in connection with certain industrial facilities
located near Phenix City, Alabama. The Project is owned by the Board and leased
to the Company pursuant to a Lease Agreement dated as of June 1, 1993 (the
"Agreement"). The Agreement obligates the Company to make rental payments in
such amounts and at such times as will provide for the payment of the principal
and interest on the Series 1993A Bonds as the same becomes due and payable.
Under Article IV of the Original Indenture, the Board is permitted to issue
Additional Bonds (as defined in the Original Indenture) in order to pay
additional Notes issued by the Board in connection with the Project. In that
connection, the Board is issuing $88,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1995A
(the "Series 1995A Bonds"), pursuant to the Indenture as supplemented by a First
Supplemental Trust Indenture dated as of February 1, 1995 (the "First
Supplemental Indenture") from the Board to the Trustee. The Indenture as
supplemented by the First Supplemental Indenture is hereinafter referred to as
the "Indenture".
NOW, THEREFORE, as contemplated by Section 4.5 of the Agreement and in
accordance with Section 1501 of the Original Indenture, the parties hereto
desire to amend the Agreement as follows:
<PAGE>
ARTICLE I
PROVISIONS FOR AMENDING THE AGREEMENT
-------------------------------------
Section 1.1 Amendment of Section 5.3 of the Agreement. The term "Bonds" as
----------- -----------------------------------------
used in Section 5.3 of the Agreement shall include the Series 1995A Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1995A Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1993A Bonds and not specifically otherwise provided for
in the Indenture, any supplements thereto or the Agreement, shall apply with
full force and effect to the Series 1995A Bonds. Without limiting the foregoing,
all references in the Agreement to the "Bonds" shall be deemed to mean the
Series 1993A Bonds and the Series 1995A Bonds, including without limitation the
provisions of Section 5.3 of the Agreement relating to the payment of rents.
Section 1.3 Representations and Warranties by the Board. The Board makes
----------- -------------------------------------------
the following representations and warranties as the basis for the undertakings
on its part herein contained:
(a) Organization and Authority. The Board is a public corporation duly
--------------------------
organized and validly existing under the provisions of the Act by authority
of a resolution adopted by the Board of Commissioners of the City on June
14, 1960 and a Certificate of Incorporation duly filed for record on
October 17, 1960, in the office of the Judge of Probate of Russell County,
Alabama, which Certificate of Incorporation has not been amended or been
revoked and is of full force and effect. The Board has all requisite power
and authority under the Act (1) to issue the Series 1995A Bonds, (2) to use
the proceeds thereof to refund the Notes issued to pay the cost to acquire,
construct and install the Project, (3) to own, lease, encumber and dispose
of the Project, and (4) to enter into, and perform its obligations under,
the Indenture, the Agreement and this Amendment. This Amendment and the
First Supplemental Indenture have been duly authorized, executed and
delivered by the Board and are legal, valid and binding agreements
enforceable against the Board in accordance with their respective terms.
(b) Pending Litigation. There are no actions, suits, proceedings,
------------------
inquiries or investigations pending, or to the knowledge of the Board
threatened, against or affecting the Board in any court or before any
governmental authority or arbitration board or tribunal, which adversely
affect the validity or enforceability of the Series 1995A Bonds, the
Indenture, the Agreement, this Amendment, or any agreement or instrument to
which the Board is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(c) Issue, Sale and Other Transactions Are Legal and Authorized. The
-----------------------------------------------------------
issue and sale of the Series 1995A Bonds and the execution and delivery by
the Board of the First
-2-
<PAGE>
Supplemental Indenture and this Amendment and the compliance by the Board
with all of the provisions of each thereof and of the Series 1995A Bonds
(i) are within the purposes, powers and authority of the Board, (ii) to the
best of the knowledge of the Board, have been done in full compliance with
the provisions of the Act, are legal and will not conflict with or
constitute on the part of the Board a violation of or a breach of or
default under, or result in the creation of any lien or encumbrance (other
than Permitted Encumbrances under the Agreement) upon any property of the
Board under the provisions of, its certificate of incorporation or Bylaws,
or any indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which the Board is a party or by which the Board
is bound, or any license, judgment, decree, law, statute, order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Board or any of its activities or properties, and (iii) have been
duly authorized by all necessary corporate action on the part of the Board.
(d) Governmental Consents. Neither the nature of the Board nor any of
---------------------
its activities or properties, nor any relationship between the Board and
any other person, nor any circumstance in connection with the offer, issue,
sale or delivery of any of the Series 1995A Bonds is such as to require the
consent, approval or authorization of, or the filing, registration or
qualification with, any governmental authority on the part of the Board in
connection with the execution, delivery and performance of the First
Supplemental Indenture and this Amendment, or the offer, issue, sale or
delivery of the Series 1995A Bonds, other than (i) the filing with the
Alabama Securities Commission of the notification of the Board's intention
to issue the Series 1995A Bonds required by Act No. 586 enacted at the 1978
Regular Session of the Legislature of the State and the issuance by the
Director of the Alabama Securities Commission of such Certificate of
Notification as may be required by said Act, and (ii) the due filing and
recording of this Amendment, the First Supplemental Indenture and the
financing statements covering the security interests created hereunder and
under the Indenture. The Board has filed the notification referred to in
(i) of the preceding sentence and the Director of the Alabama Securities
Commission has issued a Certificate of Notification applicable to the
Series 1995A Bonds, which Certificate of notification has not been revoked
or rescinded and is in full force and effect.
(e) No Defaults. The Board is not in default under the Act or under
-----------
its Certificate of Incorporation or Bylaws or any other agreement or
instrument to which it is a party or by which is bound.
Section 1.4 Representations and Warranties by the Company. The Company
----------- ---------------------------------------------
makes the following representations and warranties as the basis for the
undertakings on its part herein contained:
-3-
<PAGE>
(a) The Company (i) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (ii) has all
requisite corporate power and authority to carry on its business as now being
conducted and as presently proposed to be conducted, and (iii) has duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in the State.
(b) The Company has the corporate power and has been duly authorized
to enter into this Amendment and to perform all of its obligations hereunder.
(c) The willingness of the Board to issue the Series 1995A Bonds for
purposes of financing costs of acquiring, constructing, and installing the
Project, and to lease the Project to the Company, has induced the Company to
locate the Project within the State of Alabama and, more particularly, within 25
miles of the City.
(d) The Company is not subject to any contractual or other limitation
or provision of any nature whatsoever which in any material way limits,
restricts or prevents the Company from entering into this Amendment, or
performing any of its obligations hereunder; and the execution and delivery of
this Amendment, the consummation of the transactions contemplated hereby, and
the fulfillment of or compliance with the terms and conditions of this Amendment
will not conflict with or result in a breach of the terms, conditions or
provisions of any restriction, agreement or instrument to which the Company is a
party or by which it is bound, or constitute a default under any of the
foregoing.
(e) No event has occurred and no condition exists that would
constitute an "Event of Default" under the Agreement or this Amendment which,
with the lapse of time or with the giving of notice or both, would become an
"Event of Default" under the Agreement or this Amendment.
(f) To the best of its knowledge and belief, the Company is not in
violation of any laws, ordinances, governmental rules or regulations to which it
is subject and has not failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its properties
or to the conduct of its business, which violation or failure to obtain would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations under this Amendment.
-4-
<PAGE>
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document. As amended by this
----------- ---------------------------------------
Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to any
----------- ----------
Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously executed in
----------- ------------
several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are for
----------- --------
convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
----------- --------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this Amendment to
be executed in their respective corporate names as of the date first written
above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By:
------------------------------------
Chairman
MEAD COATED BOARD, INC.
By: /s/ SIGNATURE ILLEGIBLE
------------------------------------
Treasurer
-5-
<PAGE>
ARTICLE II
MISCELLANEOUS
-------------
Section 2.1 Agreement and Amendment as One Document. As amended by this
----------- ---------------------------------------
Amendment, the Agreement is in all respects ratified and confirmed and the
Agreement and this Amendment shall be read, taken and construed as one and the
same instrument.
Section 2.2 References. All references herein or in the Agreement to any
----------- ----------
Article, Section or provision of the Agreement shall refer to any such
Article, Section or provision as hereby amended.
Section 2.3 Counterparts. This Amendment may be simultaneously executed in
----------- ------------
several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
Section 2.4 Captions. The captions or headings in this Amendment are for
----------- --------
convenience only and in no way define, limit or describe the scope or intent
of any provision of this Amendment.
Section 2.5 Applicable Law. This Amendment shall be construed in
----------- --------------
accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the Board and the Company have caused this Amendment to
be executed in their respective corporate names as of the date first written
above.
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
By: /s/ SIGNATURE ILLEGIBLE
------------------------------------
Chairman
MEAD COATED BOARD, INC.
By:
------------------------------------
-5-
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA
COUNTY OF RUSSELL
I, Robert P. Lane, a Notary Public in and for said County in said State,
hereby certify that Kenneth A. Roberts, whose name as Chairman of the Board of
Directors of THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF PHENIX CITY,
ALABAMA, a public corporation and instrumentality under the laws of the State of
Alabama, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
GIVEN under my hand and seal of office, this 4th day of April, 1995.
/S/
----------------------------------------
Notary Public
(SEAL)
My commission expires: February 28, 1996
------------------
-6-
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Robert A. Selak, Notary Public in and for said County in said State,
hereby certify that Gregory T. Geswein, whose name as Treasurer of MEAD COATED
BOARD, INC., a corporation organized and existing under the laws of the State of
Delaware, is signed to the foregoing instrument and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
said instrument, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
GIVEN under my hand and seal of office, this 6th day of April, 1995.
/S/
----------------------------------------
Notary Public
(SEAL)
My commission expires:
------------------
ROBERT A. SELAK, Attorney at Law
Notary Public, State of Ohio
My Commission has no expiration date.
Section 147.03 O. R. C.
-7-
<PAGE>
CONSENT OF BONDHOLDER
---------------------
Mead Coated Board, Inc., as holder of all of the outstanding Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1993A and Series
1995A of The Industrial Development Board of the City of Phenix City, Alabama
(the "Board"), hereby consents to the execution and delivery of the foregoing
First Supplemental Trust Indenture, dated as of February 1, 1995, between the
Board and AmSouth Bank of Alabama, supplementing a Trust Indenture, dated as of
June 1, 1993 between the Board and AmSouth Bank of Alabama.
IN WITNESS WHEREOF, Mead Coated Board, Inc. has caused this Consent of
Bondholder to be executed in its name and behalf as of February 1, 1995
MEAD COATED BOARD, INC.
By: /S/ G. T. Geswein
-------------------------------------
Treasurer
-8-
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK OF ALABAMA (formerly AmSouth Bank, N.A.), as Trustee under the
Trust Indenture dated as of June 1, 1993 from the Industrial Development Board
of the City of Phenix City, Alabama (the "Board"), hereby consents to the
execution and delivery of the foregoing First Amendment To Lease Agreement,
dated as of February 1, 1995, between the Board and Mead Coated Board, Inc.,
amending the Lease Agreement, dated as of June 1, 1993 between the Board and
Mead Coated Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank of Alabama has caused this Consent of
Trustee to be executed in its name and behalf as of February 1, 1995.
AMSOUTH BANK OF ALABAMA, as Trustee
By: /s/ Renee Ragland
-------------------------------------
Title: CORPORATE TRUST OFFICER
-9-
<PAGE>
EXHIBIT "A"
to
First Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of February 1, 1995
DESCRIPTION OF PROJECT LAND
---------------------------
The Project Land includes the following property:
The following real estate and premises situated in the County of
Russell and State of Alabama:
Eight hundred eighty four and 47/100 (884.47) acres located in Sections 32,
33, 21, 28, and 27, Township 14 North, Range 30 East, and Section 5,
Township 13 North, Range 30 East, and beginning at the Southwest corner of
Section 32, Township 14 North, Range 30 East, Russell County, Alabama, run
thence North 00 degrees 38 minutes East a distance of 354.26 feet along a
fence line to a concrete monument, thence North 37 degrees 57 minutes 25
seconds East a distance of 2086.55 feet to a point, thence North 57 degrees
13 minutes East a distance of 4397.87 feet to a point, thence North 01
degree 38 minutes East a distance of 970.55 feet to a point, thence North
37 degrees 53 minutes East a distance of 1948.85 feet to a point, thence
North 00 degrees 37 minutes West a distance of 2783.92 feet to a point,
thence North 45 degrees 16 minutes East a distance of 1570.95 feet to a
concrete monument, thence North 00 degrees 27 minutes East a distance of
621.32 feet to a concrete monument, thence South 88 degrees 26 minutes 40
seconds East a distance of 1048.15 feet to a concrete monument, thence
South 00 degrees 41 minutes 10 seconds East a distance of 601.95 feet to a
concrete monument, thence South 89 degrees 33 minutes 20 seconds East along
the north line of Section 28, Township 14 North, Range 30 East a distance
of 1915.88 feet to a concrete monument, said monument being the northeast
corner of said Section 28, which is the northwest corner of Section 27, in
Township 14 North, Range 30 East, thence South 89 degrees 33 minutes 20
seconds East along the North line of said Section 27 to the boundary line
between the State of Georgia, and the State of Alabama; thence Southerly
and Southwesterly along said line between the State of Alabama and the
State of Georgia, as the same runs, to the northerly and southerly line
along the west side of Section 5, Township 13 North, Range 30 East, run
thence North 00 degrees 28 minutes East along the West line of said Section
5, to a point marked by an iron pipe; thence North 00 degrees 28 minutes
East along the west line of said Section 5 a distance of 2825.00 feet to
the northwest corner of Section 5, and the point of beginning. (The Portion
of said line from the northerly line of a public road known as
<PAGE>
the Ferry Road to the northwest corner of said Section 5, which is the
southwest corner of Section 32, Township 14 North, Range 30 East, being
along an old fence.)
There is hereby expressly excepted from said described lands those
lands heretofore taken in fee simple by condemnation by the United States
of America and subject to flowage easements taken by the United States of
America by condemnation and subject to the easement rights (a) for right of
way for railroad purposes and (b) for a public road over and through said
described lands, such public road right of way having been conveyed by the
W.C. Bradley Company, to Russell County, Alabama, by deed recorded in Deed
Record 387, pages 787-788, in the office of the Judge of Probate in
and for Russell County, Alabama.
Said described lands hereby conveyed contain in the aggregate
according to survey made, eight hundred eighty four and 47/100ths (884.47)
acres (the "1993 Leased Land");
less and except the following property:
PARCEL 1
Beginning at a point which is 743.81 feet east and 477.58 feet south of the
northwest corner of section 28, Township 14 North, Range 30 East, Russell
County, Alabama, which section corner is marked by a concrete monument,
this point thus determined, being the northwest corner of the property to
be conveyed, then proceeding south 128.84 feet, then east 85.0 feet, then
north 128.84 feet, then west 85.0 feet to the point of beginning.
PARCEL 2
Beginning at a point which is 928.0 feet South and 1479.0 feet East of the
Northwest corner of Section 28 in Township 14 North, Range 30 East, Russell
County, Alabama, which corner is marked by a concrete monument, then
proceeding North a distance of 120.0 feet, then West 100.0 feet, then South
120.0 feet, then East 100.0 feet to the point of beginning.
PARCEL 3
At the Southwest corner of Section 22, Township 14 North, Range 30 East,
Russell County, Alabama as the point of beginning, run along the South line
of Section 22 N89(degrees)-50'E 976.85 feet to the property line of the
United States Government; thence along said property line N2(degrees)-50'W
1296.69 feet to a branch which runs into Bluff Creek; thence along said
branch the following courses; N41(degrees)-41'W 340.67 feet; S85(degrees)-
42'W 324.22 feet; S81(degrees)-08'W 330.0 feet; N25(degrees)-48'W 145.58
feet; S76(degrees)-52'W 198.66 feet; N44(degrees)-03'W 152.62 feet;
S46(degrees)-35'Q 84.21 feet; S21(degrees)-00'E 83.39 feet; N82(degrees)-
27'W 94.15 feet; S7(degrees)-51'E 148.82 feet; S66(degrees)-39'W 386.20
feet; S62(degrees)-55'W 237.23 feet; S65(degrees)-05'W 232.38 feet;
S74(degrees)-24'W 408.97 feet; S51(degrees)-52'W 371.60 feet; S19(degrees)-
42'W 231.02 feet; S62(degrees)-26'W 198.83 feet; N85(degrees)-48'W 229.54
feet; S89(degrees)-23'W 159.01 feet; N83(degrees)-01'W 327.29 feet;
S80(degrees)-02'W 437.03 feet; thence S59(degrees)-27'W 318.79 feet; thence
S3(degrees)-28'E 199.83 feet; thence S1(degrees)-16'E 607.22 feet; thence
N87(degrees)-24'E 343.43 feet; thence N82(degrees)-
A-2
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04'E 516.01 feet; thence N70(degrees)-45'E 540.58 feet; thence
N89(degrees)-18'E 472.15 feet; thence N0(degrees)-01'E 400.58 feet; thence
S89(degrees)-59'E 446.0 feet; thence S0(degrees)-O1'W 395.0 feet; thence
N89(degrees)-18'E 171.06 feet; thence N46(degrees)-28'E 463.45 feet to the
South line of Section 21; thence along said Section line S90(degrees)-48'E
749.92 feet to the point of beginning and containing 121.14 acres more or
less.
PARCEL 4A
All that tract or parcel of land situated lying and being in Section 28,
Township 14 North, Range 30 East, Russell County, Alabama, and being more
particularly described as follows: To find the point of beginning, commence
at the northwest corner of Section 28, Township 14 North, Range 30 East,
which corner is marked by a concrete monument and, from said point, thence
running South 89 degrees 33 minutes 20 seconds East, along the North line
of said Section 28, a distance of 1,250.03 feet to an iron pin, said iron
pin being the beginning point of the property herein conveyed; and from
said point of beginning running thence South 89 degrees 33 minutes 20
seconds East, along the North line of said Section 28, a distance of 400.0
feet to a point; thence running South 01 degree 02 minutes 40 seconds West
a distance of 704.0 feet, more or less, to a point; thence running South 45
degrees 16 minutes 00 seconds West a distance of 560.0 feet, more or less,
to an iron pin; thence running North 01 degree 02 minutes 40 seconds East a
distance of 1,076.19 feet to the point of beginning. The property herein
described is bounded on the West and South by property of Grantee herein,
on the North and East by property of Grantor herein and said described
tract contains 8.2 acres, more or less.
PARCEL 4B
Commencing at the Northwest corner of Section 28 in Township 14 North,
Range 30 East, Russell County, Alabama, which corner is marked by a
concrete monument and proceeding east along the north line of said Section
28, which is the north property line of Georgia Kraft Company, a distance
of two hundred forth-nine and ninety-six hundredths (249.96) feet to the
point of intersection with the east right-of-way line of the Central of
Georgia Railroad which point is marked by an iron pin, said iron pin being
the point of beginning of the property herein conveyed. From said point of
beginning running thence over and along the west boundary of said tract
number one, which is the east right-of-way line of the Central of Georgia
Railroad which is fifty feet from and parallel to the center line of the
main line track, on a bearing of south one degree, two minutes and forty
seconds west (S 1(degrees) 02' 40" W) a distance of sixteen hundred forty-
three and fifty-nine hundredths (1643.59) feet to a point, thence along the
west boundary of the said tract number one, which is the east right-of-way
line of the Central of Georgia Railroad and is fifty (50) feet from and
concentric with the center line of the main line track, following a
circular curve to the right, having a radius of eight hundred sixty-four
and forty-nine hundredths (864.49) feet
A-3
<PAGE>
for an arc distance of three hundred seventy-two and forty-three hundredths
(372.43) feet to an iron pin marking the southwest corner of said tract
number one which is the point where the east right-of-way line of the
Central of Georgia Railroad main line terminates on the north right-of-way
line of the spur track serving the Georgia Kraft Company mill, said point
being fifty (50) feet from the center line of the main line track and
twenty-five (25) feet from the center line of the aforesaid spur track;
thence along the south boundary of said tract number one, which is the
north right of-way line of the spur track serving the Georgia Kraft Company
mill and is twenty-five (25) feet from and parallel to the center line of
the aforesaid spur track, on a bearing of north fifty-one degrees, fifty-
two minutes and ten seconds east (N 51(degrees) 52' 10" E) for a distance
of thirteen-hundred fifty-nine and ninety-three hundredths (1359.93) feet
to an iron pin marking the south-east corner of said tract number one;
thence along the east line of said tract number one on a bearing of north
zero degrees and thirty-seven minutes west (N 0(degrees) 37' W) a distance
of fifty-three and fifty-six hundredths (53.56) feet to an iron pin; thence
along the east boundary of said tract number one on bearing of north forty-
five degrees and sixteen minutes east a distance of thirty-seven and eighty
hundredths (37.80) feet to an iron pin; thence along the east boundary of
said tract number one on a bearing of north one degree, two minutes and
forty seconds east (N 1(degrees) 02' 40" E) a distance of one thousand
seventy-six and nineteen hundredths (1076.19) feet to an iron pin marking
the north east corner of said tract number one and being on the north line
of the aforesaid Section 28; on a bearing of north eighty-nine degrees
thirty-three minutes and twenty seconds West (N 89(degrees) 33' 20" W) a
distance of one thousand and seven hundredths (1000.07) feet to the point
of beginning. The above described boundaries of said tract number one
enclose thirty-five and fifty-one hundredths (35.51) acres, more or less;
excepting from the foregoing description of Parcel 4A and Parcel 4B the
following described Tracts A, B and C:
TRACT A
A 200 foot wide strip of land for a road right-of-way situated in
Sections 20, 28 and 29, Township 14 North, Range 30 East, in Russell
County, Alabama, and being 100 feet on either side of and contiguous with
the following described centerline:
Commence at the Northeast corner of Section 20, Township 14 North, Range 30
East and run North 86 degrees 56 minutes West for a distance of 751.7 feet;
thence South 33 degrees 37 minutes West for a distance of 2187.0 feet;
thence South 18 degrees 31 minutes West for a distance of 856.7 feet;
thence South 19 degrees 29 minutes West for a distance of 507.5 feet;
thence South 89 degrees 26 minutes East for a distance of 91.80 feet;
thence from the last described course turn left 151 degrees 00 minutes and
run Northwesterly 138.20 feet to a point in the center of
A-4
<PAGE>
Alabama Highway No. 165 and the point of beginning for said centerline;
thence turn right 180 degrees 00 minutes and run Southeasterly along said
centerline 230.00 feet to the point of a curve to the right; said curve
having a 17 degree 32 minutes 16 seconds degree of curvature and an
included angle of 62 degrees 45 minutes; thence continue along said curve
an arc distance of 359.20 feet to the point of tangent to said curve;
thence continue tangent to last described curve Southerly a distance of
1719.47 feet to the point of a curve to the left; said curve having a 10
degree 00 minutes 14 seconds degree of curvature and an included angle of
27 degrees 25 minutes 40 seconds; thence continue along said curve an arc
distance of 274.51 feet to the point of tangent to said curve; thence
continue tangent to the last described curve Southeasterly 1097.83 feet to
the point of a curve to the left; said curve having a 12 degree 30 minute
degree of curvature and an included angle of 101 degrees 50 minutes 41
seconds; thence continue along said curve an arc distance of 816.38 feet to
the point of tangent to said curve; thence continue tangent to last
described curve Northeasterly 1351.87 feet to the point of a curve to the
right; said curve having a 22 degree 31 minutes 55 seconds degree of
curvature and an included angle of 37 degrees 53 minutes 10 seconds; thence
continue along said curve an arc distance of 168.14 feet to the
intersection of said curve and the centerline of existing railroad; said
intersection being the end of said centerline of roadway description.
Said strip of land lying in Sections 20, 28 and 29, Township 14 North,
Range 30 East, Russell County, Alabama and containing 27.62 acres more or
less.
TRACT B
Beginning at a point which is 743.81 feet east and 477.58 feet south of the
northwest corner of Section 28, Township 14 North, Range 30 East, Russell
County, Alabama, which section corner is marked by a concrete monument,
this point thus determined, being the northwest corner of the property to
be conveyed, then proceeding south 128.84 feet, then east 85.0 feet, then
north 128.84 feet, then west 85.0 feet to the point of beginning.
TRACT C
Beginning at a point which is 928.0 feet South and 1479.0 feet East of the
Northwest corner of Section 28 in Township 14 North, Range 30 East,
Russell County, Alabama, which corner is marked by a concrete monument,
then proceeding North a distance of 120.0 feet, then West 100.0 feet, then
South 120.0 feet, then East 100.0 feet to the point of beginning.
PARCEL 5
WASTE WOOD CONVEYOR TO SCALPER (C-28506) AREA AND TRUCK DUMPER
(C-28505) AREA
All that portion of land and structures lying 9' on each side of the
following described centerline and also
A-5
<PAGE>
including any specifically noted areas which extend beyond said centerline
strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying
in Section 28, T 14 N, R 30 E, County of Russell State of Alabama; thence N
31(degrees) 59' 52 E, 291.25' to the point of beginning; thence S
0(degrees) 00' W, 231.00' to a point on the north side of a rectangular
area (Truck Dumper) bounded by a N 792,366.0, N 792,326.5, and E 234,642.0,
and E 234,765.5, said rectangular area being the point of ending; said land
being 0.21 (plus or minus) acres;
NO. 1 BARK TRANSFER CONVEYOR (C-28503) AREA,
NO. 2 BARK TRANSFER CONVEYOR (C-28504) AREA,
BARK HOG STRUCTURE (C-28534) AREA
AND REFUSE CONVEYOR SCALPER (C-28533) AREA
All that portion of land and structures lying 9' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 281 T 14 N, R 30 E, County of Russell, State of Alabama; thence N
31(degrees) 59' 52" E, 291.25' to the point of beginning; thence S
8(degrees) 20' 17" W, 284.46' to the center of a rectangular area which is
parallel to the last said course 22' north to south by 15' east to west;
thence S 81(degrees) 39' 40" E, 843.58' to a parallel rectangular area
(Bark Hog Structure) 26.00' north to south (10.00' lying south of last said
course) by 37.50'; thence continue along last said course 27.00'; thence N
45(degrees) 07' 38" E, 350.71' to the point of ending; said land being 0.63
(plus) acres;
NO. 2 TURBINE AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02
of the West Zone of the State of Georgia Coordinate System; thence S
25(degrees) 19' 16" E, 663.98' to the point of beginning (N 792,550.0 E
233,534.0); thence S 0(degrees) 00' W, 50.00'; thence N 90(degrees) 00' E,
121.00'; thence N 0(degrees) 00' W, 50.00'; thence N 90(degrees) 00' W,
121.00' to the point of beginning; said land being 0.14 (plus or minus)
acres;
SANITARY PACKAGE TREATMENT PLANT AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
A-6
<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S
48(degrees) 35' 13" W, 1186.73' to the point of beginning (N 791,565.0. E
233,610.0); thence S O' 00" W, 12.00'; thence N 90(degrees) 00' W, 64.00';
thence N, O' 00" W 12.00', thence N 90' 00" E, 64.00' to the point of
beginning; said land being 0.02 (plus or minus) acres; and
NO. 3 BARK BOILER AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02
of the West Zone of the State of Georgia Coordinate System; thence S
29(degrees) 39' 25" E, 461.76' to the point of beginning (N 792,748.92, E
233,478.50); thence N 90(degrees) 00' E, 73.57'; thence S 0(degrees)
00' W, 34.50'; thence N 90(degrees) 00' W, 11.82'; thence S 0(degrees) 00'
W, 143.17'; thence N 90(degrees) 00' W, 90.62'; thence N 0(degrees) 00" W,
83.08'; thence N 90(degrees) 00" E, 28.87'; thence N 0(degrees) 00' W,
94.59' to the point of beginning; said land being 0.32 (plus or minus)
acres;
PARCEL 6
NEW RECLAIM PLATE FEED AND CONVEYOR AREA (C-28511),
CHIPS CONVEYOR TO SCREEN HOUSE AREA (C-28513),
AND CHIPS SCREEN HOUSE AREA (C-28515)
All that portion of land and structures lying 13' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
63(degrees) 51' 31" E, 790.90' to the point of beginning; thence N
90(degrees) 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90(degrees)
00' W, 232.22'; thence S 15(degrees) 17' 15" E, 479.72' to a point on the
northmost side of a rectangular area (Chip Screen House) which parallels
last said course and is 75.0' north to south (7.00' of which is west of
last said course) by 49.0' east to west; said rectangular area being the
point of ending; said land being 0.56 (plus or minus) acres;
CHIPS CONVEYOR TO PINE STORAGE AREA (C-28538)
All that portion of land and structures lying 14' on each side of the
following described centerline:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
45(degrees) 24' 34" E,
A-7
<PAGE>
692.79' to the point of beginning; thence S 36(degrees) 51' 02" E, 454.94'
to the point of ending; said land being 0.29 (plus or minus) acres;
CHIPPER DISCHARGE CONVEYOR AREA (C-28536) AND CHIPS TO HARDWOOD STORAGE
CONVEYOR AREA (C-28537)
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; and lying in
Section 28, T 14 N, R 30 E, County of Russell, State of Alabama; thence N
71(degrees) 34' 06" E, 600.24' to the point of beginning; thence S
71(degrees) 04' 32" E, 640.91 '; thence N 50(degrees) 08' 32" E, 61.59'
to the point of ending; said land being 0.45 (plus or minus) acres;
CHIP CONVEYOR TO DIGESTER AREA (C-28521),
CHIP CONVEYOR TO SURGE BIN AREA (C-28519)
AND CHIP SILO AREA (C-28520)
All that portion of land and structures lying 14' on each side of the
following described centerline and also including any specifically noted
areas which extend beyond said centerline strip:
Commence at a monument having grid coordinates N 792,350.00, E
234,500.00, of the West Zone of the State of Georgia Coordinate System; and
lying in Section 28, T 14 N, R 30 E, County of Russell, State of Alabama;
thence S 48(degrees) 21' 59" W, 84.29' to the point of beginning; thence S
56(degrees) 07' 32" E, 319.22' to the center of a circular area (Chip
Silo) with a radius of 15.00' and a central angle of 360(degrees) 00'
bounded by a rectangular structure 32' -6" (plus or minus) East-West and
32' -6" (plus or minus) North-South; thence N 82(degrees) 51' 32" E,
355.48' to the point of ending; said land being 0.45 (plus or minus) acres;
NEW WASHER FACILITY AND BATCH DIGESTER AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence N
48(degrees) 06' 06" W, 35.94' to the point of beginning (N 792,374.0, E
234,473.25); thence S 0(degrees) 00' W, 133.50'; thence N 90(degrees) 00'
W, 103.39'; thence S 0(degrees) 00' W, 103.50'; thence 90(degrees) 00' W,
48.00'; thence N 0(degrees) 00' W, 55.75'; thence N 90(degrees) 00' W,
80.00; thence S 0(degrees) 00' W, 42.75'; thence N 90(degrees) 00' W,
63.00; thence N 0(degrees) 00' W, 110.00'; thence N45(degrees) 00' E,
55.00'; thence N0(degrees) 00' W, 23.11'; thence 90(degrees) 00' E,
23.00'; thence N 0(degrees) 00' W, 23.25'; thence N90(degrees) 00' E,
170.00'; thence N 0(degrees) 00' W, 28.75';
A-8
<PAGE>
thence N 90(degrees) 00' E, 62.50' to the point of beginning; said area
being 1.01 (plus or minus) acres;
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
All that portion of and, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S
48(degrees) 46' 07" W, 591.71' to the point of beginning (N 791, 960.0 E
234,055.0); thence S 0(degrees) 00' W 170.00'; thence N 90(degrees) 00' W,
111.00; thence 0(degrees) 00' W, 170.00'; thence N 90(degrees) 00' E,
111.00' to the point of beginning; said land being 0.43 (plus or minus)
acres;
TURPENTINE RECOVERY FACILITY AREA
A11 that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S
63(degrees) 26' 06" W, 11.18' to the point of beginning (N 792,345.0, E
234, 490.0); thence N 0' 00" W, 30.00'; thence N 90(degrees) 00" E, 20.00';
thence S 0(degrees) 00' W, 30.00'; thence N 90(degrees) 00' W, 20.00' to
the point of beginning; said land being 0.01 (plus or minus) acres;
LOG STORAGE AREA (C-28522), LOG FEED DECKS AREA (C-28523), DRUM AREA
(C-28525, VIBRATING CONVEYORS AREA (C-28532), CHIPPER POWER FEED ROLLS
AREA (C-28528), CHIP BLDG. AREA (C-28535), AND BARK COLLECTING CONVEYOR
AREA (C-28531)
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence N
80(degrees) 22' 54" E, 879.79' to the point of beginning; thence N
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' E, 711.08'; thence S
0(degrees) 00' W, 326.00'; thence N 90(degrees) 00' W, 328.00'; thence S
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 50.00'; thence N
0(degrees) 00' W, 188.00'; thence N 90(degrees) 00' W, 333.08' to the point
of beginning; said land being 5.54 (plus or minus) acres;
AREA "B" MAINTENANCE SHOP AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
A-9
<PAGE>
Commence at a monument having grid coordinates N 792,350.00, E 234,500.00,
of the West Zone of the State of Georgia Coordinate System; thence S
11(degrees) 04' 57" W, 197.69' to the point of beginning (N 792,156.0, E
234,462.0); thence S 0(degrees) 00" W, 82.00'; thence N 90(degrees) 00"
w, 52.00'; thence N 0(degrees) 00' W, 82.00'; thence N 90(degrees) 00' E,
52.00 to the point of beginning' said land being 0.10 (plus or minus)
acres;
NEW LIME KILN/RECAUSTICIZING
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02
of the West Zone of the State of Georgia Coordinate System; thence N
70(degrees) 51' 29" E, 267.79' to the point of beginning (N 793,238.0 E
233,503.0); thence N 90(degrees) 00' E, 399.23'; thence S 0(degrees) 00' W,
50.00'; thence N 90(degrees) 00' W, 10.00'; thence S 0(degrees) 00' W,
40.00'; thence N 90(degrees) 00' W, 136.23'; thence N 0(degrees) 00' W,
80.00'; thence N 90(degrees) 00' W, 50.00'; thence S 0(degrees) 00' W,
10.00'; thence N 90(degrees) 00' W, 54.00'; thence S 0(degrees) 00' W,
40.00'; thence N 90(degrees) 00' E, 65.00'; thence S 0(degrees) 00' W,
30.00'; thence N 90(degrees) 00' W, 150.00'; thence N 0(degrees) 00' W,
17.00'; thence N 90(degrees) 00' W, 64.00'; thence N 0(degrees) 00' W,
73.00' to the point of beginning; said land being 0.657, more or less
acres, less than and except all structures not included in the Mead
Corporation Contract No. 21-3097A.
NO. 2 RECOVERY BOILER AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233,250.02,
of the West Zone of the State of Georgia Coordinate System; thence S
40(degrees) 16' 34" E, 439.77' to the point of beginning (N 792,814.67, E
233,534.32'); thence N 90(degrees) 00' E, 36.30'; thence N 0(degrees) 00'
W, 20.50'; thence N 90(degrees) 00' E, 72.26'; thence N 0(degrees) 00' W,
14.83'; thence N 90(degrees) 00' E, 110.50'; thence S 0(degrees) 00' W,
42.58'; thence N 90(degrees) 00' E, 26.00'; thence S 0(degrees) 00' W,
81.00' thence N 90(degrees) 00' W, 51.00' thence N 0(degrees) 00" W,
25.12'; thence N 90(degrees) 00' W, 72.26'; thence N 90(degrees) 00' W,
20.50'; thence N 0(degrees) 00' W, 36.30'; thence N 0(degrees) 00' W,
34.00' to the point of beginning' said land being 0.47 (plus or minus)
acres;
NEW EVAPORATORS AND NEW TANKS AREA
All that portion of land, and structures lying thereon, in Section 28,
T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19; E 233,250.02,
of the West Zone of the State of Georgia
A-10
<PAGE>
Coordinate System; thence S 62(degrees) 01' 33" E, 637.83' to the point of
beginning (N 792,851.0, E 233,813.33); thence N 90(degrees) 00' E, 246.67';
thence along an arc South, and East 53.41' having a radius of 34.00' with a
central angle of 90(degrees) 00; thence S 0(degrees) 00' W, 135.33'; thence
along an arc South and West 53.41' having a radius of 34.00' with a central
angle of 90(degrees) 00'; thence N 90(degrees) 00' W. 34.00'; thence N
0(degrees) 00' W, 99.79'; thence N 90(degrees) 00' W. 69.00'; thence N
59(degrees) 47' 19" W, 91.42'; thence N 90(degrees) 00' W, 64.67'; thence N
0(degrees) 00' W. 57.54' to the point of beginning; said land being 0.72 +
acres;
PARCEL 7
LIME MUD WASTE DISPOSAL FACILITIES
All that portion of land, and structures lying thereon, is, in Section
28, T 14 N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 793,150.19, E 233, 250.02
of the West Zone of the State of Georgia Coordinate System; thence N
86(degrees) 38' 59" E, 253.41' to the point of beginning (N 793,165.00 E
233,503.00); thence N 90(degrees) 00' E, 64.00'; thence S 0(degrees) 00' E,
17.00'; thence N 90(degrees) 00' E, 150.00; thence N 0(degrees) 00' 5E,
30.00'; thence N 90(degrees) 00' W, 65.00'; thence N 0(degrees) 00' E,
40.00'; thence N 90(degrees) 00' E, 54.00'; thence N 0(degrees) 00' E,
10.00'; thence N 90(degrees) 00' E, 50.00'; thence S 0(degrees) 00' E,
80.00'; thence N 90(degrees) 00' 1E, 136.23'; thence N 0(degrees) 00' E,
40.00'; thence N 90(degrees) 00' E, 75.00'; thence S 0(degrees) 00' E,
78.00;' thence N 90(degrees) 00' W, 464.23'; thence 0(degrees) 00' E,
55.00'; to the point of beginning; said land being 0.633 more or less
acres, less than and except all structures not included in the Mead
Corporation Contract No. 21-3097A.
PARCEL 8A
A tract of land situated in the Northwest Quarter of the Northeast
Quarter (NW 1/4 of NE 1/4) and the Southwest Quarter of the Northeast
Quarter (SW 1/4 of NE 1/4) of Section 28, Township 14 North, Range 30 East,
Russell County Alabama, being more particularly described as follows:
Commence at the Northwest corner of Section 28 Township 14 North, Range 30
East; thence run South 89 degrees 33 minutes 20 seconds East along the
North Boundary of such Section 28 a distance of 2806.62 feet to a point;
thence turn right and run due South a distance of 1210.86 feet to a point
at the western end of the Bark Handling System, such point being the
beginning of the tract of land herein described.
Begin at such point of beginning, turn an angle to the left and run North
45 degrees 00 minutes East a distance of 63.64 feet to a point; thence turn
an angle to the right 45 degrees 00 minutes and run easterly a distance of
310.00 feet to a point; thence turn an angle to the right 45 degrees 00
minutes and run southeasterly a distance of 63.64
A-11
<PAGE>
feet to a point; thence turn an angle to the left 45 degrees 00 minutes and
run easterly a distance of 270.00 feet to a point; thence turn an angle to
the right 90 degrees 00 minutes and run southerly a distance of 155.00 feet
to a point; thence turn an angle to the left 90 degrees 00 minutes and run
easterly a distance of 136.00 feet to a point; thence turn an angle to the
right 90 degrees 00 minutes and run southerly a distance of 94.35 feet to a
point; thence turn an angle to the right 30 degrees 00 minutes and run
southwesterly a distance of 263.00 feet to a point; thence turn an angle to
the left 30 degrees 00 minutes and run southerly a distance of 132.88 feet
to a point; thence turn an angle to the right 90 degrees 00 minutes and run
westerly a distance of 84.50 feet to a point; thence turn an angle to the
right 90 degrees 00 minutes and run northerly a distance of 405.00 feet to
a point; thence turn an angle to the left 90 degrees 00 minutes and run
westerly a distance of 120.00 feet to a point; thence turn an angle to the
right 90 degrees 00 minutes and run northerly a distance of 115.00 feet to
a point; thence turn an angle to the left 90 degrees 00 minutes and run
westerly a distance of 470.00 feet to a point; thence turn an angle to the
right 90 degrees 00 minutes and run northerly a distance of 90.00 feet to
the point of beginning.
PARCEL 8B
A tract of land situated in the Northeast Quarter of the Northwest
Quarter (NE 1/4 of NW 1/4) and the Southeast Quarter of the Northwest
Quarter (SE 1/4 of NW 1/4) of Section 28, Township 14 North, Range 30 East,
Russell County, Alabama, being more particularly described as follows:
Commence at the Northwest corner of Section 28, Township 14 North, Range 30
East; thence run South 89 degrees 33 minutes 20 seconds East along the
North Boundary of such Section 28 a distance of 2290.86 feet to a point;
thence turn right and run due South a distance of 1225.36 feet to a point
at the Northeast corner of the #2 Bark Boiler Building, such point being
the point of beginning of the tract of land herein described.
Being at such point of beginning, continue due South a distance of 95.75
feet to a point; thence turn an angle to the right 90 degrees 00 minutes
and run westerly a distance of 67.50 feet to a point; thence turn an angle
to the right 90 degrees 00 minutes and run northerly a distance of 95.75
feet to a point; thence turn an angle to the right 90 degrees 00 minutes
and run easterly a distance of 15.00 feet to a point; thence turn an angle
to the left 90 degrees 00 minutes and run northerly a distance of 40.00
feet to a point; thence turn an angle to the right 90 degrees 00 minutes
and run easterly a distance of 34.50 feet to a point; thence turn an angle
to the right 90 degrees 00 minutes and run southerly a distance of 40.00
feet to a point; thence turn an angle to the left 90 degrees 00
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<PAGE>
minutes and run easterly a distance of 18.00 feet to the point of
beginning.
PARCEL 9
All that portion of land, and structures lying thereon, in Section 28,
T14N, R 30 E, County of Russell, State of Alabama, more particularly
described as follows:
Commence at a monument having grid coordinates N 794,023.97, E 232,940.10
of the West Zone of the State of Georgia Coordinate System; thence S
52(degrees) 11' 16" E 381.63' to the point of beginning (N 793,790.00 E
233,241.60); thence N 90(degrees) 00' 00" E 760.00'; thence S 0(degrees)
00' 00" E 102.00'; thence N 90(degrees) 00' 100" E 128.04'; thence S
0(degrees) 00' 00" E 960.48'(at existing utility bridge)' the N 90(degrees)
00' 00" W 13.00'; thence N 0(degrees) 00 00" W 672.48', thence N
90(degrees) 00' 00 W 875.04'; thence N 0(degrees) 00' 00" E 390.00' to the
point of beginning; said land being 7.85(plus or minus) acres; less than
and except any structures not included in the Mead Corporation Contract No.
21-4162;
(collectively, (Parcels 1 through 9) the "Other Leased Land")
together with the following easements:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the Other Leased Land in order to provide all necessary or convenient
ingress or egress between the 1993 Leased Land and railroads, public roads
and highways and the Chattahoochee River and to permit passage between the
1993 Leased Land and the Other Leased Land;
(b) An easement and right for the passage of pedestrians and vehicles
and for the construction, erection, installation, operation, maintenance,
renewal, replacement and use of material conveying systems, including
without limitation pipelines, through any part of the Other Leased Land
necessary or convenient in order to assure the passage of equipment, raw
materials, items in the process of manufacture, and finished products from
the 1993 Leased Land to the Other Leased Land, including without limitation
such rights and easements as are necessary for the movement of personnel,
vehicles and materials among and between the various parcels of land
comprising the Other Leased Land in order to permit and facilitate the
operation of the Project;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the Other Leased
Land, such pipes, conduits, and wires as are necessary or convenient to
insure access to and an adequate system for or supply of gas, oil, steam,
compressed air, process and space heat, water, fire protection, sewage and
industrial waste disposal, electricity, communications, instrumentation and
control,
A-13
<PAGE>
and other similar facilities to the 1993 Leased Land and the Project
including, without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the Other Leased Land; and
(d) An easement and right to create and maintain upon the Other Leased
Land encroachments of equipment, structures or other improvements which
will be included on the 1993 Leased Land and within the Project as
presently planned, and any similar replacements or substitutions of
portions of the Project for as long as any such equipment, structures or
other improvements remain standing, including without limitation the rights
of lateral or party wall support, and to connect any such equipment,
structure or other improvements to any structure or improvement on the
Other Leased Land;
but subject to the following easements over the 1993 Leased Land in favor of the
Other Leased Land:
(a) An easement and right for pedestrian and vehicular traffic to use
all present and future walks, railroads, roads, driveways and docks upon
the 1993 Leased Land in order to provide all necessary or convenient
ingress and egress among and between all portions of the Other Leased Land
and between the Other Leased Land and the 1993 Leased Land, including
without limitation portions on which additional improvements may be
erected, and railroads, public works and highways and the Chattahoochee
River and to permit passage among and between the various parcels of land
comprising the Other Leased Land;
(b) An easement and right for the passage of pedestrians, vehicles,
and for the construction, installation, operation, maintenance, renewal,
replacement and use of material conveyance systems, including without
limitation, pipelines, through any part of the 1993 Leased Land necessary
or convenient in order to assure the passage of equipment, and finished
products from one portion of the Other Leased Land to another or between
the Other Leased Land and the 1993 Leased Land, including, without
limitation such rights and easements as are necessary for the movement of
personnel, vehicles and material among and between the various parcels of
land comprising the Other Leased Land in order to permit and facilitate the
operation of any facilities located on the Other Leased Land;
(c) An easement and right to erect, install, construct, maintain,
renew, replace and use on, over and under any part of the 1993 Leased Land,
such pipes, conduits, and wires and appurtenances as are necessary or
convenient to assure access to and an adequate system for or supply of
gas, oil, steam, compressed air, process and space heat, water, fire
protection, sewage and industrial waste disposal, electricity,
communications, instrumentation and control, and other similar facilities
to the Other Leased
A-14
<PAGE>
Land, including without limitation, the right to make connections with
machinery, equipment, pipes, conduits and wires, structures and other
improvements and appurtenances thereto, on the 1993 Leased Land; and
(d) An easement and right to maintain any present equipment,
structures or other improvements included within the facilities presently
located on the Other Leased Land as encroachments upon the 1993 Leased Land
as long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the 1993
Leased Land in respect of any additional improvements constructed adjacent
to the 1993 Leased Land, as long as any such additional improvements remain
standing, including without limitation the rights of lateral or party wall
support, and to connect such additional improvements to any structure or
any improvements on the 1993 Leased Land.
subject in all cases to the following:
(1) Lease Agreement dated as of November 1, 1983 between the Board, as lessor,
and the Company (as assignee of Georgia Kraft Company), as lessee, as
amended and supplemented from time to time relating to the Board's
Industrial Development Revenue Bonds (Georgia Kraft Project), Series 1983;
(2) Lease Agreement dated as of December 1, 1983 between the Board as lessor,
and the Company (as assignee of Georgia Kraft Company), as lessee, as
amended and supplemented from time to time, relating to the Board's
Environmental Improvement Revenue Bonds (Georgia Kraft Project), Series
1983;
(3) Lease Agreement dated as of December 1, 1985 between the Board, as lessor,
and the Company (as assignee of Georgia Kraft Company), as lessee, as
amended and supplemented from time to time, relating to the Board's
Environmental Improvement Revenue Refunding Bonds (Georgia Kraft Project),
Series 1985;
(4) Lease Agreement dated as of July 1, 1986 between the Board, as lessor, and
the Company (as assignee of Georgia Kraft Company), as lessee, as amended
and supplemented from time to time, relating to the Board's Industrial
Development Revenue Bonds (Georgia Kraft Project), Series 1986;
(5) Lease Agreement dated as of December 1, 1988 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Bonds (Mead
Coated Board Project), Series 1988;
(6) Lease Agreement dated as of June 1, 1990 between the Board, as lessor, and
Industrial Warehouse Services, Inc., as lessee, as amended and supplemented
from time to time, relating to the Board's First Mortgage Revenue Bonds
(Industrial Warehouse Services, Inc.) Series 1990;
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<PAGE>
(7) Lease Agreement dated as of December 1, 1988 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Industrial Development Revenue Bonds (Mead Coated
Board Project), Series 1988A, 1989A, 1989B, 1989C, 1989D, 1989E, 1900A and
1991A;
(8) Lease Agreement dated as of September 1, 1990 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Bonds (Mead
Coated Board Project), Series 1990A;
(9) Lease Agreement dated as of October 1, 1990 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Refunding Bonds
(Mead Coated Board Project), Series 1990B; and
(10) Lease Agreement dated as of June 1, 1993 between the Board, as lessor, and
the Company, as lessee, as amended and supplemented from time to time,
relating to the Board's Environmental Improvement Revenue Bonds (Mead
Coated Board Project), Series 1993A and Series 1995A.
A-16
<PAGE>
THE MEAD CORPORATION
INCENTIVE COMPENSATION ELECTION PLAN
<PAGE>
ARTICLE I
---------
PURPOSE
-------
The purpose of this Incentive Compensation Election Plan is to afford
to certain key employees of The Mead Corporation and its subsidiaries who may
receive incentive compensation under an Incentive Compensation Plan an
opportunity to elect the manner in which such incentive compensation is to be
paid as provided hereafter.
ARTICLE II
----------
DEFINITIONS
-----------
1.1 Calendar Years means a calendar year.
--------------
1.2 Common Shares means the Common Shares of the Company.
-------------
1.3 Company means The Mead Corporation, an Ohio corporation, and its
-------
corporate successors.
1.4 Compensation Committee means the Compensation Committee of the
----------------------
Board of Directors of the Company.
1.5 Employee means any person, including an officer of the Company or
--------
a subsidiary (whether or not he/she is a director thereof), who is employed by
the Company or a subsidiary on a full-time basis and is compensated for such
employment by a regular salary.
1.6 Incentive Compensation Plans means the incentive compensation
----------------------------
plans of the Company and its subsidiaries (as now constituted or as adopted
hereafter or as the same may be modified, amended or changed from time to time
hereafter).
1.7 Participant means an employee who may be eligible to receive an
-----------
incentive compensation payment under an Incentive Compensation Plan and who has
been designated by the Compensation Committee as eligible to participate in the
Plan for a particular Calendar Year.
1.8 Plan means this Incentive Compensation Election Plan.
----
<PAGE>
1.9 Subsidiary means a corporation in an unbroken chain of
----------
corporations, beginning with the Company if each of the corporations, other than
the last corporation in the unbroken chain, own stock possessing fifty percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
1.10 Termination Date means the date of a Participant's severance from
----------------
employment with the Company or a subsidiary by death, complete disability,
retirement, resignation, discharge or otherwise.
ARTICLE III
-----------
ELIGIBILITY
-----------
The Plan is limited to those present or future employees of the
Company or of a subsidiary who may be eligible to receive an incentive
compensation payment under an Incentive Compensation Plan and who have been
designated by the Compensation Committee as eligible to participate in the Plan
for a particular Calendar Year. A director of the Company or of a subsidiary who
is not also such an employee is not eligible to participate in the Plan.
ARTICLE IV
----------
ADMINISTRATION
--------------
4.1 The Plan shall be administered by the Compensation Committee. The
Compensation Committee may delegate to the appropriate officers and/or employees
of the Company or of a subsidiary such duties in connection with the
administration of the Plan as they may deem necessary, advisable or appropriate.
None of the members of the Compensation Committee shall be eligible to
participate in the Plan.
- 2 -
<PAGE>
4.2 Subject to the express provisions of the Plan, the Compensation
Committee shall have authority to construe and interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, and to make all
other determinations necessary or advisable for administering the Plan. The
Compensation Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent it shall
deem expedient to carry out the intent of the Plan for the benefit of the
Company and Participants. The determination of the Compensation Committee on any
matters referred to in this Section 4.2 shall be conclusive.
ARTICLE V
---------
ELECTION BY PARTICIPANTS
------------------------
5.1 At least fifteen days prior to the commencement of a new Calendar
Year, the Compensation Committee shall cause to be furnished to each
Participant, who has been designated as eligible to participate in the Plan for
the Calendar Year, an appropriate form which provides the Participant with the
following election with respect to the payment of any incentive compensation
which he/she may be awarded under an Incentive Compensation Plan for such
Calendar Year.
The Participant may elect to defer payment of a minimum of 20% up
to a maximum 100% (in increments of 10%) of such incentive compensation award
until after his or her Termination Date. The Participant shall select the date
and manner of receiving any incentive compensation that is deferred for each
calendar year, provided that such selection may be made only in accordance with
the following:
(i) with respect to incentive compensation payable for the 1987
Calendar Year and preceding years,
-3-
<PAGE>
(I) the date to pay or commence paying the incentive
compensation award shall be the first day of any month after the
Participant's Termination Date and before the Participant's 70th
birthday, and
(II) the incentive compensation award shall be paid either
in one lump sum on the Deferral Date or in up to 25 annual
installments, commencing on the Deferral Date.
(ii) With respect to incentive compensation payable for the 1988
Calendar Year and subsequent years,
(I) the date to commence paying the incentive compensation
award shall be the January 2 next following the Participant's
Termination Date or such later January 2 as may be chosen by the
Participant, but not later than the January 2 of the Calendar
Year following the year in which the Participant becomes or would
have become age 65, and
(II) The incentive compensation award shall be paid in 15
level annual installments commencing on the Deferral Date.
The date chosen to pay or commence payment of an incentive
compensation award pursuant to paragraph (i)(I) or (ii)(I) above is referred to
herein as the "Deferral Date". If the Participant dies before the Deferral Date
chosen, the Deferral Date will be advanced to the first day of the month
following the date of the Participant's death.
5.2 Except to the extent otherwise provided in this Section, the
election made by the Participant shall be binding
-4-
<PAGE>
upon the Participant and shall be irrevocable. A Deferral Date chosen by the
Participant who is not an elected officer of the Company and/or the number of
installments payable to such Participant may be changed by the chairperson of
the Compensation Committee, in his/her sole discretion, but only, unless the
Compensation Committee determines otherwise, in the event of a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident to the Participant, or a dependent (as defined in Section 152(a) of the
Internal Revenue Code) of the Participant, loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. For
Participants who are elected officers of the Company, the Compensation Committee
in its sole discretion, may change a Deferral Date and/or the number of
installments payable to each such Participant on the same basis as set forth in
this paragraph. The number of installments payable to the Participant's
designated beneficiary may be changed by the chairperson of the Compensation
Committee on the same basis as set forth in this paragraph.
5.3 In order to be effective, the form must be signed by the
Participant and must be returned to the Compensation Committee (or its delegate)
prior to the commencement of such Calendar Year. If the Participant fails to
return the form or if the form is received after the commencement of such
Calendar Year, then the Participant shall be paid cash at the time such award
would be otherwise payable to him/her under the Incentive Compensation Plan.
5.4 In the case of a newly hired Participant who has been designated
as eligible to participate in the Plan for the Calendar Year in which he/she is
hired, a timely election with respect to such Calendar Year, will be deemed to
have been made if it is in fact made and returned to the Compensation Committee
within 30 days after such Participant becomes an Employee.
-5-
<PAGE>
ARTICLE VI
----------
DEFERRED COMPENSATION
----------------------
6.1 Deferred Compensation Account. The Company shall establish an
appropriate record (hereinafter referred to as the "Deferred Compensation
Ledger") and thereafter from time to time enter therein the name of each
Participant who has elected to defer an incentive compensation award in
accordance with Article 5 hereof, the amount of an incentive compensation award
which he/she has elected to defer and his/her preference as to the manner of
payment of such award. The Company shall maintain a separate account in the
Deferred Compensation Ledger with respect to each incentive compensation award
which a Participant has elected to defer.
6.2 With respect to incentive compensation awards earned for 1979 and
prior Calendar Years, the Company shall credit annually to a Participant's
(including a Participant who has passed his Termination Date) account maintained
in the Deferred Compensation Ledger, with respect to a particular award, such
percentage of the amount then credited to such account (including all previous
credits to such account by operation of this Section 6.2) as the Compensation
Committee in its sole discretion shall have determined at the time of such
incentive compensation award. For awards earned in 1980 through 1983, the
percentage to be credited for each year shall be equal to the weekly composite
bond yield for single A bonds rounded to the nearest 1/10 of 1%, as published in
the S & P Indexes of the Security Markets for the last week of the third quarter
of the Calendar Year preceding the year earned.
For awards earned in 1984 and 1985, the percentage to be credited
to each such award shall be equal to the nine-month average composite bond yield
for single A bonds rounded to the nearest 1/10 of 1% as published in the S & P
Indexes of the Security Markets for the first nine months of the Second Calendar
Year preceding the year such percentage is credited.
- 6 -
<PAGE>
For awards earned in 1986 and subsequent years, the percentage to
be credited to such award shall be equal to the nine-month average composite
bond yield for prime grade, ten-year municipal bonds rounded to the nearest 1/10
of 1% published in the Salomon Brothers Index of the Security Markets for the
first nine months of the Second Calendar Year preceding the year such percentage
is credited. Each post-1983 account will be credited with a percentage, which
will change from year to year based upon the above calculations.
6.3 Except to the extent otherwise provided in this Section, the
amount credited to a Participant's account (or accounts) in the Deferred
Compensation Ledger shall be paid to the Participant (or his/her beneficiary
designated under Section 6.4 hereof) after his/her Termination Date in
accordance with Section 5.1 hereof. In the case of installment payments, each
such payment shall include an aliquot share of each account of a Participant
valued as of his/her Deferral Date, plus, for second and succeeding payments, an
amount equal to the percentages credited to all such accounts under Section 6.2
hereof since the next preceding payment.
Notwithstanding the form of payment selected by the Participant,
the amounts (or a portion of the amounts) credited to a Participant's account
(or accounts) in the Deferred Compensation Ledger shall be paid as follows under
the following circumstances:
(i) if the aggregate amount credited to a Participant's account
(or accounts) is $10,000 or less at the time of his/her Termination
Date [after all distributions pursuant to (ii) below], then such
amount shall be paid in one lump sum on or before the last day of the
month next following the Participant's Termination Date, and
-7-
<PAGE>
(ii) if a Participant's Termination Date precedes his/her 55th
birthday (other than as a result of the Participant's death or
disability), then deferred incentive compensation relating to the 1988
Calendar Year and subsequent years and earnings thereon credited to
the Participant's account (or accounts) shall be paid in one lump sum
on or before the last day of the month next following the
Participant's Termination Date.
6.4 Each Participant who elects to defer an incentive compensation
award shall file with the Compensation Committee (or its delegate) a notice in
writing designating one or more beneficiaries to whom payment otherwise due to
such Participant under Section 6.3 shall be made in the event of his/her death.
The Participant shall have the right to change the beneficiary or beneficiaries
from time to time; provided, however, that any change shall not become effective
until received in writing by the Compensation Committee (or its delegate). In
the event a Participant fails to deliver such written designation, then such
payments shall be made to the estate of such Participant.
6.5 Nothing contained in the Plan and no action taken pursuant to the
provisions hereof shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant, or any
beneficiary of such Participant designated pursuant to Section 6.4 hereof or any
other person. Title to, and beneficial ownership of, any amounts credited to the
Deferred Compensation Ledger shall at all times remain in the Company, and no
Participant or any beneficiary designated pursuant to Section 6.4 hereof shall
have any property interest whatsoever in such amounts or in any specific assets
of the Company. All amounts so credited shall remain general assets of the
Company and shall be subject to the claims of general creditors of the Company.
-8-
<PAGE>
ARTICLE VII
-----------
LIMITATION OF RIGHTS
--------------------
7.1 Nothing contained in this Plan shall be construed to:
(i) Give any Participant any right to be awarded incentive
compensation under an Incentive Compensation Plan;
(ii) Limit in any way the right of the Company or a subsidiary to
terminate a Participant's employment at any time; or
(iii) Be evidence of any agreement or understanding, expressed or
implied, that the Company or subsidiary will employ a Participant in
any particular position or at any particular rate of remuneration.
ARTICLE VIII
------------
NONALIENATION OF BENEFITS
-------------------------
No right or benefit under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
the same shall be void. No right or benefit hereunder shall in any manner be
liable for or subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefits. If any Participant or beneficiary hereunder
should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge any right or benefit hereunder, then such right or benefit
shall, in the discretion of the Compensation Committee, cease and terminate, and
in such event, the Company may hold or apply the same or any part hereof for the
benefit of the Participant or beneficial, his/her spouse, children, or other
-9-
<PAGE>
dependents, or any of them in such manner and in such proportion as the
Compensation Committee may deem proper.
ARTICLE IX
----------
AMENDMENT OR TERMINATION OF PLAN
--------------------------------
The Board of Directors of the Company may amend or terminate the
Plan at any time.
* * *
IN WITNESS WHEREOF, the Company has caused this Plan to be executed in
its name and behalf this 17th day of November, 1987, by its officer thereunto
duly authorized .
THE MEAD CORPORATION
By: /s/ Charles J. Mazza
------------------------
Title:
Attest
/s/ Lorraine J. Francis
- ------------------------
Title:
-10-
<PAGE>
Amended Through
October 29, 1988
COMPOSITE
---------
THE MEAD CORPORATION
INCENTIVE COMPENSATION ELECTION PLAN*
------------------------------------
Section 1. Purpose.
The purpose of this Incentive Compensation Election Plan is to afford to
certain key employees of The Mead Corporation and its subsidiaries who may
receive incentive compensation under an Incentive Compensation Plan an
opportunity to elect the manner in which such incentive compensation is to be
paid as provided hereafter.
Section 2. Definitions.
(a) Calendar Years means a calendar year.
(b) Company means The Mead Corporation, an Ohio corporation, and its
corporate successors.
(c) Compensation Committee means the Compensation Committee of the
Board of Directors of the Company.
(d) Employee means any person, including an officer of the Company or
a subsidiary (whether or not he/she is a director thereof), who is
employed by the Company or a subsidiary on a full-time basis and
is compensated for such employment by a regular salary.
(e) Incentive Compensation Plans means the incentive compensation
plans of the Company and its subsidiaries (as now constituted or
as adopted hereafter or as the same may be modified, amended or
changed from time to time hereafter).
(f) Participant means an employee who may be eligible to receive an
incentive compensation payment under an Incentive Compensation
Plan and who has been designated by the Compensation Committee as
eligible to participate in the Plan for a particular Calendar
Year.
(g) Plan means this Incentive Compensation Election Plan.
(h) Subsidiary means a corporation in an unbroken chain of
corporations, beginning with the Company if each of the
corporations, other than the last corporation in the unbroken
chain, own stock possessing fifty percent or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
(i) Termination Date means the date of a Participant's severance from
employment with the Company or a subsidiary by death, complete
disability, retirement, resignation, discharge or otherwise.
Section 3. Eligibility.
The Plan is limited to those present or future employees of the Company or
of a subsidiary who may be eligible to receive an incentive compensation payment
under an Incentive Compensation Plan and who have been designated by the
Compensation Committee as eligible to participate in the Plan for a particular
Calendar Year. A director of the Company or of a subsidiary who is not also such
an employee is not eligible to participate in the Plan.
Section 4. Administration.
(a) The Plan shall be administered by the Compensation Committee. The
Compensation Committee may delegate to the appropriate officers and/or employees
of the Company or of a subsidiary such duties in connection with the
administration of the Plan as they may deem necessary, advisable or appropriate.
None of the members of the Compensation Committee shall be eligible to
participate in the Plan.
- ---------------
*This is a composite of The Mead Corporation Incentive Compensation
Election Plan, reflecting the plan and all amendments adopted through
October 29, 1988. The plan has been supplemented by a 1985 Supplement which
is set forth in a separate document.
<PAGE>
(b) Subject to the express provisions of the Plan, the Compensation
Committee shall have authority to construe and interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, and to make all
other determinations necessary or advisable for administering the Plan. The
Compensation Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent it shall
deem expedient to carry out the intent of the Plan for the benefit of the
Company and Participants. The determination of the Compensation Committee on any
matters referred to in this Section 4(b) shall be conclusive.
Section 5. Election by Participants.
(a) At least fifteen days prior to the commencement of a new Calendar
Year, the Compensation Committee shall cause to be furnished to each
Participant, who has been designated as eligible to participate in the Plan for
the Calendar Year, an appropriate form which provides the Participant with the
following elections with respect to the payment of any incentive compensation
which he/she may be awarded under an Incentive Compensation Plan for such
Calendar Year.
The Participant may elect to defer payment of a minimum of 20% up to a
maximum 100% (in increments of 10%) of such incentive compensation award until
after his or her Termination Date. The Participant shall select the date and
manner of receiving any incentive compensation that is deferred for each
Calendar Year, provided that such selection may be made only in accordance with
the following:
(i) with respect to incentive compensation payable for the 1987
Calendar Year and preceding years,
(I) the date to pay or commence paying the incentive
compensation award shall be the first day of any month after the
Participant's Termination Date and before the Participant's 70th
birthday, and
(II) the incentive compensation award shall be paid either
in one lump sum on the Deferral Date or in up to 25 annual
installments, commencing on the Deferral Date.
(ii) With respect to incentive compensation payable for the 1988
Calendar Year and subsequent years,
(I) the date to commence paying the incentive compensation
award shall be the January 2 next following the Participant's
Termination Date or such later January 2 as may be chosen by the
Participant, but not later than the January 2 of the Calendar
Year following the year in which the Participant becomes or would
have become age 65, and
(II) the incentive compensation award shall be paid in 15
level annual installments commencing on the Deferral Date.
The date chosen to pay or commence payment of an incentive
compensation award pursuant to paragraph (i)(I) or (ii)(I) above is referred to
herein as the "Deferral Date." If the Participant dies before the Deferral Date
chosen, the Deferral Date will be advanced to the first day of the month
following the date of the Participant's death.
(b) Except to the extent otherwise provided in this Section, the
election made by the Participant shall be binding upon the Participant and shall
be irrevocable. A Deferral Date chosen by the Participant who is not an elected
officer of the Company and/or the number of installments payable to such
Participant may be changed by the chairperson of the Compensation Committee, in
his/her sole discretion, but only, unless the Compensation Committee determines
otherwise, in the event of a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident to the Participant,
or a dependent (as defined in Section 152(a) of the Internal Revenue Code) of
the Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. For Participants who are elected
officers of the Company, the Compensation Committee, in its sole discretion, may
change a Deferral Date and/or the number of installments payable to each such
Participant on the same basis as set forth in this paragraph. The number of
installments payable to the Participant's designated beneficiary may be changed
by the chairperson of the Compensation Committee on the same basis as set forth
in this paragraph.
(c) In order to be effective, the form must be signed by the
Participant and must be returned to the Compensation Committee (or its delegate)
prior to the commencement of such Calendar Year. If the Participant fails to
return the form or if the form is received after the commencement of such
Calendar Year, then the Participant shall be paid cash at the time such award
would be otherwise payable to him/her under the Incentive Compensation Plan.
(2)
<PAGE>
(d) In the case of a newly hired Participant who has been designated
as eligible to participate in the Plan for the Calendar Year in which he/she is
hired, a timely election with respect to such Calendar Year will be deemed to
have been made if it is in fact made and returned to the Compensation Committee
within 30 days after such Participant becomes an Employee.
Section 6. Deferred Compensation Account.
(a) The Company shall establish an appropriate record (hereinafter
referred to as the "Deferred Compensation Ledger") and thereafter from time to
time enter therein the name of each Participant who has elected to defer an
incentive compensation award in accordance with Section 5 hereof, the amount of
an incentive compensation award which he/she has elected to defer and his/her
preference as to the manner of payment of such award. The Company shall maintain
a separate account in the Deferred Compensation Ledger with respect to each
incentive compensation award which a Participant has elected to defer.
(b) With respect to incentive compensation awards earned for 1979 and
prior Calendar Years, the Company shall credit annually to a Participant's
(including a Participant who has passed his Termination Date) account maintained
in the Deferred Compensation Ledger, with respect to a particular award, such
percentage of the amount then credited to such account (including all previous
credits to such account by operation of this Section 6(b)) as the Compensation
Committee in its sole discretion shall have determined at the time of such
incentive compensation award. For awards earned in 1980 through 1983, the
percentage to be credited for each year shall be equal to the weekly composite
bond yield for single A bonds rounded to the nearest 1/10 of 1%, as published in
the S & P Indexes of the Security Markets for the last week of the third quarter
of the Calendar Year preceding the year earned.
For awards earned in 1984 and 1985, the percentage to be credited to each
such award shall be equal to the nine-month average composite bond yield for
single A bonds rounded to the nearest 1/10 of 1% as published in the S & P
Indexes of the Security Markets for the first nine months of the Second Calendar
Year preceding the year such percentage is credited.
For awards earned in 1986 and subsequent years, the percentage to be
credited to such award shall be equal to the nine-month average composite bond
yield for prime grade, ten-year municipal bonds rounded to the nearest 1/10 of
1% published in the Salomon Brothers Index of the Security Markets for the first
nine months of the Second Calendar Year preceding the year such percentage is
credited. Each post-1983 account will be credited with a percentage, which will
change from year to year based upon the above calculations.
(c) Except to the extent otherwise provided in this Section, the
amounts credited to a Participant's account (or accounts) in the Deferred
Compensation Ledger shall be paid to the Participant (or his/her beneficiary
designated under Section 6(d) hereof) after his/her Termination Date in
accordance with Section 5(a) hereof. In the case of installment payments, each
such payment shall include an aliquot share of each account of a Participant
valued as of his/her Deferral Date, plus, for second and succeeding payments, an
amount equal to the percentages credited to all such accounts under Section 6(b)
hereof since the next preceding payment.
Notwithstanding the form of payment selected by the Participant, the
amounts (or a portion of the amounts) credited to a Participant's account (or
accounts) in the Deferred Compensation Ledger shall be paid as follows under the
following circumstances:
(i) if the aggregate amount credited to a Participant's account (or
accounts) is $10,000 or less at the time of his/her Termination Date (after all
distributions pursuant to (ii) below), then such amount shall be paid in one
lump sum on or before the last day of the month next following the Participant's
Termination Date, and
(ii) if a Participant's Termination Date precedes his/her 55th
birthday (other than as a result of the Participant's death or disability), then
deferred incentive compensation relating to the 1988 Calendar Year and
subsequent years and earnings thereon credited to the Participant's account (or
accounts) shall be paid in one lump sum on or before the last day of the month
next following the Participant's Termination Date.
(3)
<PAGE>
(d) Each Participant who elects to defer an incentive compensation award
shall file with the Compensation Committee (or its delegate) a notice in writing
designating one or more beneficiaries to whom payments otherwise due to such
Participant under Section 6(c) shall be made in the event of his/her death. The
Participant shall have the right to change the beneficiary or beneficiaries from
time to time; provided, however, that any change shall not become effective
until received in writing by the Compensation Committee (or its delegate). In
the event a Participant fails to deliver such written designation, then such
payments shall be made to the estate of such Participant.
(e) Nothing contained in the Plan and no action taken pursuant to the
provisions hereof shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Participant, or any
beneficiary of such Participant designated pursuant to Section 6(d) hereof or
any other person. Title to, and beneficial ownership of, any amounts credited
to the Deferred Compensation Ledger shall at all times remain in the Company,
and no participant or any beneficiary designated pursuant to Section 6(d) hereof
shall have any property interest whatsoever in such amounts or in any specific
assets of the Company. All amounts so credited shall remain general assets of
the Company and shall be subject to the claims of general creditors of the
Company.
Section 7. Limitation of Rights.
Nothing contained in this Plan shall be construed to:
(i) Give any Participant any right to be awarded incentive compensation
under an Incentive Compensation Plan;
(ii) Limit in any way the right of the Company or a subsidiary to terminate
a Participant's employment at any time; or
(iii) Be evidence of any agreement or understanding, expressed or implied,
that the company or subsidiary will employ a Participant in any particular
position or at any particular rate or remuneration.
Section 8. Nonalienation of Benefits.
No right or benefit under this Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge the same shall
be void. No right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the person entitled to
such benefits. If any Participant or beneficiary hereunder should become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber, or
charge any right or benefit hereunder, then such right or benefit shall, in the
discretion of the Compensation Committee, cease and terminate, and in such
event, the Company may hold or apply the same or any part hereof for the benefit
of the Participant or beneficiary, his/her spouse, children, or other
dependents, or any of them in such manner and in such proportion as the
Compensation Committee may deem proper.
Section 9. Amendment or Termination of Plan.
The Board of Directors of the Company may amend or terminate the Plan at
any time; provided, however, that the percentage which has been or will be
credited to Participant's account in accordance with Section 6(b) shall not
change and the rights of a Participant or beneficiary to commence or continue
distributions from the Deferred Compensation Ledger (including its valuation)
shall not be affected.
- --------------------------------
1. Amended through November 1, 1985.
2. Amendments to Sections 5 and 6 adopted, former Section 7 deleted, and
former Sections 8, 9 and 10 renumbered, effective as of October 1, 1987.
3. Amendment to Section 9 adopted October 29, 1988.
(4)
<PAGE>
Amended Through
October 29, 1988
COMPOSITE
---------
1985 SUPPLEMENT
TO
THE MEAD CORPORATION
INCENTIVE COMPENSATION ELECTION PLAN*
------------------------------------
WHEREAS, The Mead Corporation Incentive Compensation Election Plan
("Plan") was established for incentive awards earned on and after January 1,
1977, for the benefit of eligible Employees; and
WHEREAS, the Plan has been amended on prior occasions; and
WHEREAS, it is currently desirable to supplement the Plan effective
August 1, 1985 (the "Effective Date"),
NOW THEREFORE, with respect only to amounts on the Deferred Compensation
Ledger on the Effective Date, amounts of 1985 earned incentive for which a
deferral election is in force on the Effective Date under Plan Alternative A,
and amounts of salary deferral permitted under this Supplement, the following
provisions determine Participant rights and Company obligations under the Plan.
All other provisions of the Plan, to the extent not in conflict with this
Supplement, shall continue in effect.
(1) Amounts covered under the terms of this Supplement shall, on and after
the Effective Date, be maintained in a separate record (hereinafter referred to
as the "Supplemental Ledger").
(2) Contributions through salary deferral may be made to the Plan during
any portion of the period beginning October 1, 1985 and ending December 31,
1986, not exceeding twelve (12) consecutive months. Participation through salary
deferral shall be by monthly deduction of at least $200 and not less than $2400
in the aggregate. All monthly deductions shall be of an equal amount except the
monthly amount deducted during 1985 may be different than the monthly amount
deducted during 1986.
(3) The Participant shall elect, on or before September 30, 1985, that all
or a portion of his/her account in the Supplemental Ledger be distributed
under Option A or under Option B or be divided between them.
(a) OPTION A - The Participant or his/her Beneficiary will receive
fifteen (15) level annuity payments from his/her account in the
Supplemental Ledger commencing on the January 2 next following his/her
Termination Date or such later January as shall have been chosen by the
Participant, but not later than the January 2 of the Calendar Year
following the year in which he/she becomes or would have become age 65, the
date chosen by him/her being hereafter referred to as the "Annuity Starting
Date."
(b) OPTION B - Commencement, method, and duration will be the same as
under Option A, except that four (4) additional annual payments commencing
on January 2, 1993 (hereinafter referred to in the aggregate as the "Annual
Payments"), shall be paid to the Participant. The Annual Payments shall
reduce the amount otherwise payable to the Participant or his/her
Beneficiary on his/her Annuity Starting Date in accordance with Option A.
Each annual installment of a Participant's Annual Payments shall be equal
to the pro rata amount designated for Option B of the total of (i) amounts
that were in the Deferred Compensation Ledger on the Effective Date, (ii)
amounts of 1985 earned incentive for which a deferred election is in force
on the Effective Date, and (iii) amounts of salary deferral elected under
the terms of this Supplement. Notwithstanding the foregoing, no payment of
an annual installment of a Participant's Annual Payments shall be made if
such installment coincides with or follows a Participant's Annuity Starting
Date. Any annual installment of a Participant's Annual Payments not made in
accordance with the preceding sentence shall be included in valuing the
Supplemental Ledger in accordance with (4) below.
- -------------------------
*This is a composite of the 1985 Supplement to The Mead Corporation
Incentive Compensation Election Plan, reflecting the supplement and all
amendments adopted through October 29, 1988. The Mead Corporation
Incentive Compensation Election Plan is set forth in a separate document.
<PAGE>
Except to the extent otherwise provided in this Section, election of Option
A or Option B under the foregoing paragraph shall be irrevocable and may not be
subsequently changed.
Notwithstanding the Participant's election of Option A or Option B, if this
Supplement is terminated prior to, or if his/her Termination Date for reasons
other than death or disability, precedes his/her 55th birthday, distribution of
the Participant's account in the Supplemental Ledger shall be made in one lump
sum payment on or before the last day of the month next following the date of
such occurrence. If the Participant's Termination Date occurs due to death or
disability prior to his/her 55th birthday and the value of his/her account on
such Termination Date is less than $50,000, such account shall also be so
distributed in one lump sum. If the Participant dies on or after his/her Annuity
Starting Date, remaining annuity installments, if any, shall continue to be paid
from the Plan. In all cases of death, a lump sum payment or a commencement or
continuation of a level annuity shall be to the Beneficiary designated pursuant
to Section 6(d) of the Plan.
An Annuity Starting Date chosen by the Participant who is not an elected
officer of the Company and/or the number of installments chosen by such
Participant may be changed by the chairperson of the Compensation Committee, in
his/her sole discretion, but only, unless the Compensation Committee determines
otherwise, in the event of a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident to the Participant or
a dependent (as defined in Section 152(a) of the Internal Revenue Code) of the
Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. For Participants who are elected
officers of the Company, the Compensation Committee, in its sole discretion, may
change an Annuity Starting Date and/or the number of installments chosen by each
such Participant on the same basis as set forth in this paragraph. The number of
installments payable to the Participant's designated Beneficiary may be changed
by the chairperson of the Compensation Committee on the same basis as set forth
in this paragraph.
In the event the Termination Date of a Participant who has elected Option B
occurs (for reasons other than death or disability) before receipt of all the
Annual Payments to which the Participant is entitled, remaining payments to
which the Participant or his/her Beneficiary shall be entitled shall be
calculated as if the Participant had elected Option A. If such Participant shall
have received one or more but not all of the Annual Payments, his/her
Supplemental Ledger account shall be valued pursuant to (4) below as if it had
been reduced on the Effective Date by the Effective Date value of Annual
Payments received (discounted at Basic plus Option B Incremental Rate) and
credited thereafter with the Basic plus Option A Incremental Rate. In the event
the Termination Date of such a Participant precedes receipt of all Annual
Payments because of death or disability, or in the event all Annual Payments are
not made due to coincidence with annuity payments on or after the Annuity
Starting Date, the Participant or Beneficiary shall receive payments from the
Supplemental Ledger valued at the Basic plus Option B Incremental Rate less any
Annual Payments received by the Participant.
(4) Except as provided below, the Participant's Supplemental Ledger account
shall be valued on the Annuity Starting Date, or earlier distribution date if
applicable, according to whichever of the following (a) or (b) produces the
highest value:
(a) as if all amounts had remained in the Deferred Compensation Ledger
on the Effective Date in their separate accounts established pursuant to
Section 6(a) of the Plan and were credited pursuant to Plan Section 6(b) in
the absence of this Supplement; or
(b) by crediting the Participant's Supplemental Ledger account each
Calendar Year (with pro rata adjustment for partial years) with a
percentage equal to the nine-month average composite yield on single A
bonds rounded to the nearest 1/10 of 1% as published in the S & P Indexes
of the Security Markets for the first nine months of the Second Calendar
Year preceding the year such percentage is credited (hereinafter referred
to as the "Basic Rate"), PLUS a percentage (hereinafter referred to as the
"Incremental Rate") based on the Participant's age on the Effective Date
and his/her choice of Option A or Option B according to the following
table:
<TABLE>
<CAPTION>
Incremental
Age Option A Option B
<S> <C> <C>
39 and under 4% 7%
40-44 5% 8%
45-49 7% 9%
50-54 8% 10%
55-59 11% 11%
60 and over 12% --
</TABLE>
(2)
<PAGE>
In no event, however, shall the valuation reflect the addition of the
Incremental Rate to the Basic Rate if the Participant's Termination Date (for
reasons other than death or disability) precedes his/her 55th birthday, or if
prior to his/her 55th birthday, a distribution is made to a Participant due to
adverse tax or economic consequences.
(5) All level annuities paid under this Supplement shall be computed using
an interest rate percentage equal to an average of the valuation percentages
credited under (4) above during the three-year period immediately preceding the
Calendar Year in which the first annuity payment is made to a Participant.
(6) Except as provided in (7) below, the Board of Directors of the Company
may amend or terminate the Plan or this Supplement as provided in Section 9 of
the Plan.
(7) Notwithstanding any other provision contained herein, in no event,
including but not limited to termination or amendment of the Plan or Supplement
or liquidation or reorganization of the Company:
(a) shall a Participant who has not reached his/her 55th birthday
receive less than the amount credited to the Participant's Supplemental
Ledger account with interest at the Basic Rate, or the total amounts
credited to his/her Deferred Compensation Ledger accounts as provided in
(4)(a) above, if greater;
(b) shall the Basic Rate and Incremental Rate of interest which has
been or will be credited to the account of a Participant who has reached
his/her 55th birthday, or the interest rate percentage for level annuities
provided in (5) above, be changed unless the tax laws of the United States
change to increase the cost of the Incremental Rate to the Company in which
event the Incremental Rate may be adjusted only to the extent necessary to
reflect such change in cost, nor shall the rights of the Participant or
Beneficiary to commence or continue distributions from the Supplemental
Ledger (including its valuation) be affected.
- -----------------------------------
1. Adopted effective August 1, 1985.
2. Amendments to Sections (3), (5) and (6) adopted effective as of October
1, 1987.
(3)
<PAGE>
FIRST AMENDMENT
TO THE 1985 SUPPLEMENT
TO THE INCENTIVE COMPENSATION ELECTION PLAN
-------------------------------------------
WHEREAS, The Mead Incentive Compensation Election Plan was established for
the benefit of its eligible employees; and
WHEREAS, it is desirable to amend the Plan;
NOW, THEREFORE, effective as of September 1, 1987, the Plan hereby is
amended in the respects herein provided.
1. Section 3 of the 1985 Supplement to The Mead Corporation Incentive
Compensation Election Plan ("Plan") is hereby amended in its entirety to read as
follows:
3. The Participant shall elect, on or before September 30, 1985, that
all or a portion of his/her account in the Supplemental Ledger be
distributed under Option A or under Option B or be divided between
them.
(a) OPTION A - The Director or his/her Beneficiary will receive
fifteen (15) level annuity payments from his/her account in the
Supplemental Ledger commencing on the January 2 next following
his/her Termination Date or such later January 2 as shall have
been chosen by the Participant, but not later than the January 2
of the Calendar Year following the year in which he/she becomes
or would have become age 65, the date chosen by him/her being
hereafter referred to as the "Annuity Starting Date".
(b) OPTION B - Commencement, method, and duration will be the
same as under Option A, except that four (4) additional annual
payments commencing on
<PAGE>
January 2, 1993 (hereinafter referred to in the aggregate as the
"Annual Payments"), shall be paid to the Participant. The Annual
Payments shall reduce the amount otherwise payable to the
Participant of his/her Beneficiary on his/her Annuity Starting
Date in accordance with Option A. Each annual installment of a
Participant's Annual Payments shall be equal to the pro rata
amount designated for Option B of the total of (i) amounts that
were in the Deferred Compensation Ledger on the Effective Date,
(ii) amounts of 1985 earned incentive for which a deferred
election is in force on the Effective Date, and (iii) amounts of
salary deferral elected under the terms of this Supplement.
Notwithstanding the foregoing, no payment of an annual
installment of a Participant's Annual Payments shall be made if
such installment coincides with or follows a Participant's
Annuity Starting Date. Any annual installment of a Participant's
Annual Payments not made in accordance with the preceding
sentence shall be included in valuing the Supplemental Ledger in
accordance with (4) below.
Except to the extent otherwise provided in this Section, election
of Option A or Option B under the foregoing paragraph shall be
irrevocable and may not be subsequently changed.
Notwithstanding the Participant's election of Option A or Option
B, if this Supplement is terminated prior to, or if his/her
Termination Date for reasons other than death or disability precedes,
his/her 55th birthday, distribution of the Participant's account in
the Supplemental Ledger shall be made in one lump sum payment on or
before the last day of the month next following the date of such
occurrence. If the Participant's Termination Date occurs due to death
or disability prior to his/her 55th birthday and the value of his/her
account on such Termination Date is less than $50,000, such account
shall also be so distributed in one lump sum. If the Participant dies
on or after his/her Annuity Starting Date, remaining annuity
installments, if any, shall continue to be paid from the Plan. In all
cases of death, a lump sum payment or a commencement or continuation
of a level annuity shall be to the beneficiary designated pursuant to
Section 6(d) of the Plan.
An Annuity Starting Date chosen by the Participant who is not an
elected officer of the Company and/or the number of installments
chosen by such Participant may be changed by the chairperson of the
Compensation Committee, in his/her sole discretion, but only, unless
the Compensation Committee determines otherwise, in the event of a
severe financial hardship to the Participant
<PAGE>
resulting from a sudden and unexpected illness or accident to the
Participant or a dependent (as defined in Section 152(a) of the
Internal Revenue Code) of the Participant, loss of the Participant's
property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
control of the Participant. For Participants who are elected officer
of the Company, the Compensation Committee, in its sole discretion,
may change an Annuity Starting Date and/or the number of installments
chosen by each such Participant on the same basis as set forth in this
paragraph. The number of installments payable to the Participant's
designated Beneficiary may be changed by the chairperson of the
Compensation Committee on the same basis as set forth in this
paragraph.
In the event the Termination Date of a Participant who has
elected Option B occurs (for reasons other than death or disability)
before receipt of all the Annual Payments to which the Participant is
entitled, remaining payments to which the Participant or his/her
Beneficiary shall be entitled shall be calculated as if the
Participant had elected Option A. If such Participant shall have
received one or more but not all of the Annual Payments, his/her
Supplemental Ledger account shall be valued pursuant to (4) below as
if it had been reduced on the Effective Date by the Effective Date
value of Annual Payments received (discounted at Basic plus Option B
Incremental Rate) and credited thereafter with the Basic plus Option A
Incremental Rate. In the event the Termination Date of such a
Participant precedes receipt of all Annual Payments because of death
or disability, or in the event all Annual Payments are not made due to
coincide with annuity payments on or after the Annuity Starting Date,
the Participant or Beneficiary shall receive payments from the
Supplemental Ledger valued at the Basic plus Option B Incremental Rate
less any Annual Payments received by the Participant.
B. Section 5 of the Plan is hereby amended in its entirety to read as
follows:
(5) All level annuities paid under this Supplement shall be
computed using an interest rate percentage equal to an average of the
valuation percentages credited under (4) above during the three-year
period immediately preceding the Calendar Year in which the first
annuity payment is made to a Participant.
<PAGE>
C. Section 6 of the Plan is hereby amended in its entirety to read as
follows:
(6) Except as provided in (7) below, the Board of Directors of
the Company may amend or terminate the Plan or this Supplement as provided in
Section 9 of the Plan.
* * *
EXECUTED at Dayton, Ohio, this 17th day of November, 1987.
THE MEAD CORPORATION
/S/ Charles J. Mazza
-----------------------
Title: Vice President
Attest:
/S/ LORRAINE J. FRANCIS
- ---------------------------
Title: Assistant Secretary
AMEND
<PAGE>
INDEMNIFICATION AGREEMENT
-------------------------
AGREEMENT between The Mead Corporation, an Ohio corporation (the
"Company"), and J. Lawrence Wilson (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors
the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors of public companies
in today's environment;
WHEREAS, basic protection against undue risk of personal liability of
directors heretofore has been provided through insurance coverage providing
reasonable protection at reasonable cost, and Indemnitee has relied on the
availability of such coverage; but as a result of substantial changes in the
marketplace for such insurance it has become increasingly more difficult to
obtain such insurance on terms providing reasonable protection at reasonable
cost;
WHEREAS, the Regulations of the Company and the Ohio General Corporation
Law each provide that the indemnification provided therein shall not be
exclusive;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to enhance Indemnitee's continued service to
the Company in an effective manner, the Company wishes to provide in this
Agreement for the indemnification of and the advancing of expenses to Indemnitee
to the full extent (whether partial or complete) permitted by law and as set
forth in this Agreement, and, to the extent insurance is maintained, for the
continued coverage of Indemnitee under the Company's directors' and officers'
liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of Indemnitee
continuing to serve the Company directly or, at its request, with another
enterprise, and intending to be legally bound hereby, the parties hereto agree
that the Prior Agreement be, and the same hereby is, amended and restated in its
entirety as follows:
1. Certain Definitions.
-------------------
(a) Change in Control: shall be deemed to have occurred if (i) any
-----------------
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or
<PAGE>
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding Voting
Securities without the prior approval of the Board of Directors, or (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of the Company and any new director
whose election by the Board of Directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) Claim: any threatened, pending or completed action, suit or
-----
proceeding, or any inquiry or investigation, whether conducted by the Company or
any other party, that Indemnitee in good faith believes might lead to the
institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.
(c) Expenses: include attorneys' fees and all other costs, expenses
--------
and obligations paid or incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal) or preparing to
defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event (including all interest, assessments and other charges paid
or payable in connection with or in respect of any of the foregoing).
(d) Judgments: include judgments, fines, penalties and amounts paid in
---------
settlement that are paid or payable in connection with any Claim relating to any
Indemnifiable Event (including all interest, assessments and other charges paid
or payable in connection with or in respect of any of the foregoing).
(e) Indemnifiable Event: any event or occurrence related to the fact
-------------------
that Indemnitee is or was a director of the Company, or is or was serving at the
request of the Company as a director, trustee, officer, employee, agent or
representative of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by reason of anything done or not
done by Indemnitee in any such capacity.
(f) Reviewing Party: any appropriate person or body consisting of a
---------------
member or members of the Company's Board of Directors or any other person or any
other person or body appointed by the Board (including the special, independent
counsel referred to in Section 4) who is not a party to the particular Claim for
which Indemnitee is seeking indemnification.
2
<PAGE>
(g) Voting Securities: any securities of the Company which vote
-----------------
generally in the election of directors.
2. Scope of Indemnification.
------------------------
(a) Basic Indemnification Arrangement. In the event Indemnitee was, is
or becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim by reason of (or
arising in part out of), an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as practicable but in
any event no later than 30 days after written demand is presented to the Company
against any and all Judgments arising from or relating to such Claim.
(b) Expenses. Any and all Expenses and any and all expenses referred
--------
to in Section 2(c) shall be paid by the Company promptly as they are incurred by
Indemnitee (any such payment of expenses by the Company is hereinafter referred
to as an "Expense Advance"). Indemnitee hereby agrees to repay the amount of
Expenses so paid if it is proved by clear and convincing evidence in a court of
competent jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the Company or
undertaken with reckless disregard for the best interests of the Company.
Indemnitee hereby further agrees to reasonably cooperate with the Company
concerning any Claim.
(c) Indemnification for Additional Expenses. The Company shall
---------------------------------------
indemnify Indemnitee against any and all expenses (including attorneys' fees)
which are incurred by Indemnitee in connection with any claim asserted against
or action brought by Indemnitee for (i) indemnification of Expenses or Judgments
or advance payment of Expenses by the Company under this Agreement or under any
other agreement, the Company's Regulations, statute or rule of law now or
hereafter in effect relating to Claims for Indemnifiable Events and/or (ii)
recovery under any directors' and officers' liability insurance policy or
policies maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advance expense payment or
insurance recovery, as the case may be.
(d) Partial Indemnity. If Indemnitee is entitled under any provision
-----------------
of this Agreement to indemnification by the Company for some or a portion of the
Judgments arising from or relating to a Claim but not, however, for all of the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled.
(e) Indemnification of Successful Defense Expenses. Notwithstanding
----------------------------------------------
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to an Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
3
<PAGE>
3. Reviewing Party Determinations.
------------------------------
(a) General Rules. Notwithstanding the provisions of Section 2, the
-------------
obligations of the Company under Section 2(a) shall be subject to the condition
that the Reviewing Party shall not have determined (in a written opinion, in any
case in which the special, independent counsel referred to in Section 4 thereof
is involved) that Indemnitee would not be permitted to be indemnified under
applicable law; provided, however, that if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any determination made by
the Reviewing Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding until a final judicial determination
is made with respect thereto (as to which all rights of appeal therefrom have
been exhausted or lapsed) and any such determination by the Reviewing Party
shall be modified, to the extent necessary, to conform to such final judicial
determination.
(b) Selection of Reviewing Party. If there has not been a Change in
----------------------------
Control, the Reviewing Party shall be selected by the Board of Directors. If
there has been such a Change in Control, the Reviewing Party shall be the
special, independent counsel referred to in Section 4 hereof.
(c) Judicial Review. If there has been no determination by the
---------------
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence litigation in any
court in the state of Ohio having subject matter jurisdiction thereof and in
which venue is proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
and the Company hereby consents to service of process and to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
(d) Burden of Proof. In connection with any determination by the
---------------
Reviewing Party pursuant to Section 3(a), or by a court of competent
jurisdiction pursuant to Section 3(c) or otherwise, as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish by clear and convincing evidence that Indemnitee is not so
entitled.
4. Change in Control. The Company agrees that if there is a Change in
-----------------
Control of the Company (other than a Change in Control which has been approved
by a majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control) then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments under this
Agreement or under any other agreement, the Company's Regulations, statute or
rule of law now or hereafter in effect relating to Claims for Indemnifiable
Events, the Company shall seek legal advice only from special, independent
counsel selected by Indemnitee and approved by the Company (which approval shall
not be unreasonably withheld), and who has not otherwise performed services for
the Company within the last five years (other than in connection with such
matters) or Indemnitee. Unless Indemnitee has theretofore selected counsel
pursuant to this Section 4 and such counsel has been approved by the Company,
the firms on the
4
<PAGE>
attached Exhibit I hereto shall be deemed to satisfy the requirements set forth
above, except with respect to any such firms which the Company or Indemnitee
shall have engaged for any purpose at any time within the five years preceding
such engagement (other than, in the case of the Company, with respect to matters
concerning the rights of Indemnitee (or of other indemnitees under similar
indemnity agreements) to indemnity payments). The Company agrees to pay the
reasonable fees of the special, independent counsel referred to above and to
indemnify fully such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
5. No Presumption. For purposes of this Agreement, the termination of any
--------------
claim, action, suit or proceeding, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
---- ----------
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court
has determined that indemnification is not permitted by applicable law.
6. Non-exclusivity. The rights of Indemnitee hereunder shall be in
---------------
addition to any other rights Indemnitee may now or hereafter have to
indemnification by the Company. More specifically, the parties intend that
Indemnitee shall be entitled to indemnification to the maximum extent permitted
by any or all of the following:
(a) The fullest benefits provided by the Company's Regulations in
effect on the date hereof, a copy of the relevant portions of
which are attracted hereto as Exhibit II;
(b) The fullest benefits provided by the Articles of Incorporation,
Regulations, or Bylaws or their equivalent of the Company in
effect at the time the Indemnifiable Event occurs or at the time
Expenses are incurred by Indemnitee;
(c) The fullest benefits allowable under Ohio law in effect at the
date hereof, a copy of the relevant portions of which are
attached hereto as Exhibit III, or as the same may be amended to
the extent that such benefits are increased thereby;
(d) The fullest benefits allowable under the law of the jurisdiction
under which the Company exists at the time the Indemnifiable
Event occurs or at the time Expenses are incurred by the
Indemnitee; and
(e) Such other benefits as are or may be otherwise available to
Indemnitee pursuant to this Agreement, any other agreement or
otherwise.
The parties intend that combination of two or more of the benefits referred to
in (a) through (e) shall be available to Indemnitee to the extent that the
document or law providing for such benefits does not require that the benefits
provided therein be exclusive of other benefits. The Company
5
<PAGE>
hereby undertakes to use its best efforts to assist Indemnitee, in all proper
and legal ways, to obtain all such benefits to which Indemnitee is entitled.
7. Liability Insurance. The rights of the Indemnitee hereunder shall also
-------------------
be in addition to any other rights Indemnitee may now or hereafter have under
policies of insurance maintained by the Company or otherwise. To the extent the
Company maintains an insurance policy or policies providing directors' and
officers' liability insurance, Indemnitee shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any Company director. The parties hereby acknowledge that
the Company presently maintains directors' and officers' liability insurance
under policies issued by the following insurers and with the following limits of
liability: National Union Fire Insurance Company of Pittsburgh ($25 million);
Federal Insurance Company ($25 million in excess of $25 million); Continental
Casualty Company ($15 million in excess of $50 million); Zurich Insurance
Company ($25 million in excess of $65 million); and Fidelity & Casualty Company
of New York ($10 million in excess of $90 million). The scope of such insurance
is described in the "Executive Summary" attached hereto as Exhibit IV. The
Company shall maintain such insurance coverage for so long as Indemnitee's
services are covered hereunder, provided and to the extent that such insurance
is available on a basis acceptable to the Company. In the event that such
insurance becomes unavailable in the amount of the present policy limits or in
the present scope of coverage at premium costs and on other terms acceptable to
the Company, then the Company may forego maintenance of all or a portion of such
insurance coverage. However, in the event of any reduction in (or cancellation
of) such insurance coverage (whether voluntary or involuntary), the Company
shall, and hereby agrees to, stand as a self-insurer with respect to the
coverage, or portion thereof, not retained and shall indemnify the Indemnitee
against any loss arising out of the reduction in or cancellation of such
insurance coverage; provided that the Company's obligation as a self-insurer and
indemnitor hereunder shall only extend to the first $60 million of such
coverage.
8. Escrow Fund. As collateral security for its obligations hereunder
-----------
(including specifically its indemnity obligations (other than Judgments) and
other obligations pursuant to Sections 2, 6 and 7) and under similar agreements
with other directors, officers and representatives, in the event of a Change in
Control, the Company shall dedicate and maintain, for a period of five years
following the Change in Control, an escrow account in the aggregate of TEN
MILLION DOLLARS ($10,000,000) by depositing assets or bank letters of credit in
escrow or reserving lines of credit that may be drawn down by an escrow agent in
said amount (the "Escrow Reserve"). The Company shall promptly, following
establishment of the Escrow Reserve, provide Indemnitee with a true and complete
copy of the agreement relating to the establishment and operation of the Escrow
Reserve, together with such additional documentation or information with respect
to the Escrow Reserve as Indemnitee may from time to time reasonably request.
The Company shall promptly, following establishment of the Escrow Reserve,
deliver an executed copy of this Agreement to the escrow agent for the Escrow
Reserve to evidence to that agent that Indemnitee is a beneficiary of the Escrow
Reserve and shall deliver to Indemnitee the escrow agent's signed receipt
evidencing that delivery. Notwithstanding anything to the contrary contained in
this Section 8, any assets deposited by the Company in the
6
<PAGE>
Escrow Reserve shall at all times be and remain subject to the claims of the
general creditors of the Company.
9. Period of Limitations. No legal action shall be brought and no cause of
---------------------
action shall be asserted by or on behalf of the Company or any affiliate of the
Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or
legal representatives after the expiration of two years from the date of accrual
of such cause of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within such two year period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such
cause of action such shorter period shall govern.
10. Liability Standards. This Agreement shall be construed on the basis of
-------------------
the duties owed by Indemnitee as a director of the Company, and the standards
for determining liability in damages for a breach thereof, which apply to each
particular Claim. The parties acknowledge that changes in such duties or such
liability standards may result in an expansion or contraction of the Company's
indemnification exposure hereunder.
11. Amendments, Etc. No supplement, modification or amendment of this
---------------
Agreement shall be binding unless executed in writing by both of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
12. Subrogation. In the event of payment under this Agreement, the Company
-----------
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under this
--------------------------
Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, the Company's Regulations or otherwise) of the
amounts otherwise indemnifiable hereunder.
14. Binding Effect, Etc. This Agreement shall be binding upon and inure to
-------------------
the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as a director of the Company or as a director,
trustee, officer, agent or representative of any other enterprise at the
Company's request.
15. Severability. The provisions of this Agreement shall be severable in
------------
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise
7
<PAGE>
unenforceable, and the remaining provisions shall remain enforceable to the
fullest extent permitted by law.
16. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the state of Ohio applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws.
Executed and effective this 26th day of June, 1997.
By /s/ Steven C. Mason
------------------------
Steven C. Mason
Chairman of the Board
/s/ J. Lawrence Wilson
------------------------
J. Lawrence Wilson
Director
8
<PAGE>
Exhibit I
Special, Independent, Counsel
Taft, Stettinius & Hollister Kirkland & Ellis
1800 Star Bank Center 200 East Randolph Dr.
425 Walnut Center Chicago, IL 60601
Cincinnati, Ohio 45202-3957 (312) 861-2000
(513) 381-2838
Baker & Hostetler Pope & John, Ltd.
3200 National City Center 311 South Wacker Dr.
1900 East Ninth Street Suite 4200
Cleveland, Ohio 44114 Chicago, IL 60606
(216) 621-0200 (312) 362-0200
Vorys, Sater, Seymour and Pease
52 East Gay Street
P.O. Box 1008
Columbus, OH 43216-1008
(614) 464-6400
9
<PAGE>
Exhibit IV
EXECUTIVE SUMMARY
Director & Officer
Indemnification & Insurance
Mead provides two methods of protecting its directors and officers:
indemnification and insurance.
Indemnification
---------------
Under Mead's indemnification, the Company must reimburse a director for expenses
----
and attorneys fees if he or she prevails in the defense of a claim. In addition,
the Company may reimburse a director for expenses, attorneys' fees, settlement
---
amounts, fines and judgments (even if he or she does not prevail on the claim),
if Mead's Board, Mead's legal counsel, Mead's shareholders or an appropriate
court decides that the director acted in good faith and in a manner he believed
was in, or not opposed to, Mead's best interests. In a criminal matter the
director must have had no reason to believe his conduct was unlawful. Mead's
Board may also indemnify a director (regardless of whether he or she prevails in
--------
the defense of a claim), against expenses, attorneys fees, fines,
settlement amounts and judgments if the Board decides such indemnification is in
the best interest of Mead.
Under Ohio law, Mead may not, however, indemnify a director against fines,
settlement amounts and judgments in an action brought by Mead or in a derivative
action brought by a shareholder on behalf of Mead, if the director is judged to
be negligent or guilty of misconduct. Mead does have insurance to protect a
director in such event.
Mead may advance expenses to a director, provided he or she agrees to repay Mead
if it is later determined that indemnification is not available.
Insurance
---------
Mead carries insurance which provides two types of coverage: indemnification
coverage and "D&O" coverage. Under the indemnification coverage, the
insurance carrier(s) reimburse Mead for amounts paid to indemnify directors and
officers. Under the D&O, the insurance carrier
<PAGE>
pays amounts directly to the director or officer involved in the claim for
nonindemnifiable acts.
These coverages, called D&O Insurance, have a $100 million aggregate limit.
Defense costs are included within the limit. The indemnification coverage has a
$500,000 per incident deductible.
The D&O coverage has no deductible. Mead currently pays $70,000 for the
coverage, and this premium is renegotiated annually.
The following matters, among others, are excluded from coverage under the
policies:
. Libel and slander.
. Gains attributable to personal profit to which a director was not
entitled.
. Insider trading liability.
. Active and deliberate dishonesty with actual dishonest purpose and
intent.
. Any claim related to or arising from pollution.
. Bodily injury to or sickness, disease or death of a person.
. Injury or destruction to tangible property.
. Illegal payments.
. Suit brought by a director or officer of Mead.
Mead's coverage does protect the directors for acts and omissions related to
takeover situations, subject to policy exclusions.
<PAGE>
SECOND AMENDMENT
OF
THE MEAD CORPORATION EXECUTIVE CAPITAL ACCUMULATION PLAN
--------------------------------------------------------
WHEREAS, The Mead Corporation maintains The Mead Corporation Executive
Capital Accumulation Plan (the "Plan"), and amendment of the Plan is now
considered desirable;
NOW THEREFORE, it is resolved that the Plan be, and it hereby is, amended,
effective as of July 1, 1997, by substituting the following for paragraph
3.2 (a) of the Plan:
(a) The amount of a Participant's annual base salary deferral:
(i) shall not exceed 80 percent of the amount of that salary,
determined as of the last day of the month during which the
election is made;
(ii) shall, at a Participant's election made on his Annual Written
Election to Participate (and on such form as the Committee shall
decide with respect to exercises to be made during the period
August 1, 1997 to November 30, 1997), be automatically increased
by an amount equal to all or any part of the amount of the income
realized by the Participant on the post-July 31, 1997 exercise of
non-qualified stock options granted to him by an Employer and
held by him for at least 5 years, subject to the limitations of
paragraph (i) next above and to the following:
(A) the amount of increased deferral shall:
(1) not exceed an amount equal to the Participant's
remaining unpaid annual base salary for the year of
exercise;
(2) be made in equal monthly increments, beginning with the
calendar month next following the month of exercise of
the non-qualified stock option and continuing for the
remainder of the calendar year;
(B) a Participant may not elect an increased deferral with
respect to gain realized on account of his exercise of a
non-qualified stock option during the month of December of
any calendar year; and
<PAGE>
(C) if a Participant is subject to stock ownership guidelines
established by Mead, the increased deferral contemplated by this
paragraph 3.2(a) is conditioned on the Participant's conformance
with those guidelines.
(2) By deleting the word "and" at the end of paragraph 1.1(a) of the
Plan and by substituting the following for paragraph 1.1(b)
thereof, effective January 1, 1998:
(b) who is either:
(i) compensated by his Employer at a salary grade at least
equivalent to Mead's salary grade 19; or
(ii) is designated by the Committee or its delegate as an
Eligible Employee, but only for such period as the
Committee or its delegate shall decide.
(3) By designating subsection 8.5 of the Plan to be subsection 8.6
thereof and by adding the following new subsection 8.5 to the
Plan to follow immediately after subsection 8.4 thereof,
effective January 1, 1998:
8.5 Change in Control Distributions.
--------------------------------
In connection with a "Change in Control" (as defined in subsection
11.4), the Committee, in its sole discretion, may distribute a
Participant's Participant Accounts established for his benefit on and
after January 1, 1998, to him in a single lump sum.
<PAGE>
("Date")
("Name")
("Company")
("Address")
("City, State, Zip")
Dear ("First Name"):
The Mead Corporation (the "Corporation") recognizes that your contribution to
the growth and success of the Corporation ("Has Been") ("Will Be") substantial
and desires to assure the Corporation of your continued employment. In this
connection the Board of Directors of the Corporation (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control may exist and that such possibility, the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Corporation and its
stockholders.
The Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Corporation's
management, including yourself, to their assigned duties without distraction in
the face of potentially disturbing circumstances arising from the possibility of
a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation, the
Corporation agrees that you shall receive the severance benefits set forth in
Section 4 hereof in the even your employment with the Corporation is terminated
subsequent to a "Change in Control of the Corporation" (as defined in Section 2
hereof) under the circumstances described below.
1. Term of Agreement. This Agreement will commence on the date hereof and
-----------------
shall continue in effect until December 31, ("Year of Agreement"); provided,
however, that commencing on January 1, ("Year Following Agreement") and each
January 1 thereafter, the term of this Agreement shall automatically be extended
for one additional year unless, not later than November 1 of the preceding year,
the Corporation shall have given notice that it does not wish to extend this
Agreement; provided, further, if a Change in Control of the Corporation shall
have occurred during the original or extended term of this Agreement, this
Agreement shall continue in effect for a period of twenty-four (24) months
beyond the month in which such Change in Control of the Corporation occurred.
<PAGE>
("Name")
("Date")
Page 2
2. Change in Control of the Corporation.
------------------------------------
(a) No benefits shall be payable hereunder unless there shall have
been a Change in Control of the Corporation, as set forth below. For purposes
of this Agreement, a "Change in Control of the Corporation" shall mean a change
in control of a nature that would be required to be reported in response to Item
6(e) (or any successor thereto) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
whether or not the Corporation is then subject to such reporting requirement;
provided, that, without limitation, such a change in control shall be deemed to
have occurred if
(i) any "person" (as defined in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing twenty-five percent (25%) or more of the combined
voting power of the Corporation's then outstanding securities;
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement) there shall cease
to be a majority of the Board comprised as follows: individuals who at the
beginning of such period constitute the Board and any new director(s) whose
election by the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved;
or
(iii) (x) the shareholders of the Corporation approve a merger
or consolidation of the Corporation with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving or parent entity) at least 80% of the combined voting power of the
voting securities of the Corporation or such surviving or parent entity
outstanding immediately after such merger or consolidation, or (y) the
shareholders of the Corporation approve a plan of complete liquidation of the
Corporation or an agreement for the sale or disposition by the Corporation of
all or substantially all the Corporation's assets.
(b) For purposes of this Agreement, a "Potential Change in Control of
the Corporation" shall be deemed to have occurred if (i) the Corporation enters
into an agreement, the consummation of which would result in the occurrence of a
Change in Control of the Corporation, (ii) any person (including the
Corporation) publicly announces an intention to
<PAGE>
("Name")
("Date")
Page 3
take or to consider taking actions which if consummated would constitute a
Change in Control of the Corporation, (iii) any person, other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Corporation or a corporation owned, directly or indirectly, by the stockholders
of the Corporation in substantially the same proportions as their ownership of
stock of the Corporation, increases his beneficial ownership of the combined
voting power of the Corporation's then outstanding securities by 5% or more over
the percentage so owned by such person on the date hereof and, after such
increase, is the beneficial owner, directly or indirectly, of securities of the
Corporation representing 9.5% or more of such securities; or (iv) the Board
adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control of the Corporation has occurred. You agree that,
subject to the terms and conditions of this Agreement, in the event of a
Potential Change in Control of the Corporation, you will remain in the employ of
the Corporation until the earliest of (i) a date which is six (6) months from
the occurrence of such Potential Change in Control of the Corporation, (ii) the
termination by you of your employment by reason of Disability or Retirement (at
your normal retirement date), as defined in Section 3(a), or (iii) the
occurrence of a Change in Control of the Corporation.
3. Termination Following a Change in Control of the Corporation. If any of
------------------------------------------------------------
the events described in Section 2 hereof constituting a Change in Control of the
Corporation shall have occurred, subject to the limitations of Section 4(e)
hereof, you shall be entitled to the benefits provided in Section 4(d) hereof
upon the termination of your employment during the term of this Agreement unless
such termination is (i) because of your death, Disability or Retirement, (ii) by
the Corporation for Cause or (iii) by you other than for Good Reason.
(a) Disability; Retirement. If, as a result of your incapacity due to
----------------------
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Corporation for six (6) consecutive months,
and within thirty (30) days after written notice of termination is given you
shall not have returned to the full-time performance of your duties, the
Corporation may terminate your employment for "Disability." Termination for
Disability, in accordance with, and for the purposes of, this Agreement shall
not necessarily mean that you are "terminated" for purposes of determining your
participation in the Corporation's retirement, insurance and other applicable
programs and plans. Your status as a terminated or inactive employee and your
benefits under the Corporation's applicable programs and plans then in effect
shall be determined in accordance with such programs and plans. Termination by
the Corporation or you of your employment by reason of "Retirement" shall mean
termination on or after your "normal retirement date," as defined in The Mead
Retirement Plan for Salaried and Certain Non-Bargaining Hourly Employees as of
the date
<PAGE>
("Name")
("Date")
Page 4
hereof, or in accordance with any retirement arrangement established with your
consent with respect to you.
(b) Cause. Termination by the Corporation of your employment for
-----
"Cause" shall mean termination upon (i) the willful and continued failure by you
to substantially perform your duties with the Corporation (other than any such
failure resulting from termination by you for Good Reason), after a demand for
substantial performance is delivered to you that specifically identifies the
manner in which the Corporation believes that you have not substantially
performed your duties, and you have failed to resume substantial performance of
your duties on a continuous basis within fourteen (14) days of receiving such
demand, (ii) the willful engaging by you in conduct which is demonstrably and
materially injurious to the Corporation, monetarily or otherwise or (iii) your
conviction of a felony or conviction of a misdemeanor which impairs your ability
substantially to perform your duties with the Corporation. For purpose of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Corporation.
(c) Good Reason. You shall be entitled to terminate your employment
-----------
for Good Reason. For purposes of this Agreement, "Good Reason" shall mean,
without your express written consent, the occurrence after a Change in Control
of the Corporation of any one or more of the following:
(i) the assignment to you of duties which are substantially
inconsistent with your present duties, responsibilities and status as the ("Job
Title") of the Corporation or a substantial reduction or alteration in the
nature or status of your responsibilities from those in effect as of the date
hereof;
(ii) a reduction by the Corporation in your base salary as in
effect on the date hereof or as the same shall be increased from time to time
("Base Salary");
(iii) the Corporation's requiring you to be based at a location
in excess of twenty-five (25) miles from the location where you are currently
based;
(iv) the failure by the Corporation to continue in effect any of
the Corporation's employee benefit plans, policies, practices or arrangements,
including, but not limited to, those plans, policies and arrangements maintained
solely for the benefit of key management personnel, in which you participate, or
the failure by the Corporation to continue
<PAGE>
"Name"
"Date"
Page 5
your participation therein on substantially the same basis, both in terms of the
amount of benefits provided and the level of your participation relative to
other participants, as existed as of the date hereof; provided, however, that
such plans, policies or arrangements are not replaced by one or more alternative
or substitute plans, policies, or arrangements providing substantially
equivalent benefits in the aggregate;
(v) the failure of the Corporation to obtain a satisfactory
agreement from any successor to the Corporation to assume and agree to perform
this Agreement, as contemplated in Section 5 hereof; and
(vi) any purported termination by the Corporation of your
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Subsection (d) below, and for purposes of this Agreement, no
such purported termination shall be effective.
Your right to terminate your employment pursuant to this Subsection (c) shall
not be affected by your incapacity due to physical or mental illness. Your
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any termination by the Corporation for
---------------------
Cause or by you for Good Reason shall be communicated by Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) Date of Termination. "Date of Termination" shall mean the date
-------------------
specified in the Notice of Termination where required or in any other case upon
ceasing to perform services to the Corporation; provided that if within thirty
(30) days after any Notice of Termination one party notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date finally determined to be the Date of Termination, either by mutual
written agreement of the parties or by a binding and final arbitration award.
4. Compensation Upon Termination or During Disability. Except as provided
--------------------------------------------------
in Section 4(e) hereof, following a Change in Control of the Corporation, as
defined in Section 2 hereof, upon termination of your employment or during a
period of disability, you shall be entitled to the following benefits:
<PAGE>
("Name")
("Date")
Page 6
(a) During any period that you fail to perform your full-time duties
with the Corporation as a result of incapacity due to physical or mental
illness, you shall continue to receive your Base Salary at the rate in effect at
the commencement of any such period, until your employment is terminated
pursuant to Section 3(a) hereof. Thereafter, your benefits shall be determined
in accordance with the Corporation's retirement, insurance and other applicable
programs and plans then in effect.
(b) If your employment shall be terminated by the Corporation for
Cause or by you other than for Good Reason, the Corporation shall pay you your
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given or on the Date of Termination if no Notice
of Termination is required hereunder, plus all other amounts to which you are
entitled under any compensation plan of the Corporation at the time such
payments are due, and the Corporation shall have no further obligations to you
under this Agreement.
(c) If your employment terminates by reason of your Retirement, or by
reason of your death, your benefits shall be determined in accordance with the
Corporation's retirement, survivor's benefits, insurance and other applicable
programs and plans, then in effect.
(d) If your employment by the Corporation shall be terminated (i) by
the Corporation other than for Cause, Retirement or Disability or (ii) by you
for Good Reason, you shall be entitled to the benefits (the "Severance
Payments") provided below, in lieu of the benefits provided by the Corporation's
general severance program:
(i) the Corporation shall pay you your full Base Salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, or the Date of Termination where no Notice of Termination is required
hereunder;
(ii) the Corporation will pay as severance benefits to you, not
later than the fifth day following the Date of Termination, a lump sum severance
payment equal to two times the sum of your (A) annual Base Salary in effect
immediately prior to the occurrence of the circumstances giving rise to such
termination, and (B) the greater of (1) your most recent annual award under the
Corporation's long-term and short-term incentive plans as in effect from time to
time or (2) the target payout under such plan in respect of the year in which
such termination occurs;
<PAGE>
("Name")
("Date")
Page 7
(iii) in lieu of shares of common stock of the Corporation
("Option Shares") issuable upon exercise of outstanding options ("Options"), if
any, granted to you under the Corporation's stock option plans, together with
any additional, substitute or successor option program or plan as may be in
effect from time to time (which Options shall be cancelled upon the making of
the payment referred to below), you shall receive an amount in cash equal to the
product of (A) the higher of the closing price of Option Shares reported on the
New York Stock Exchange on the Date of Termination or the highest per share
price for Option Shares actually paid in connection with any Change in Control
of the Corporation, over the per share exercise price of each Option held by
you, times (B) the number of Option Shares covered by each such Option;
(iv) for a twenty-four (24) month period after the Date of
Termination, the Corporation will arrange to provide you at the Corporation's
expense with benefits under the Corporation's life insurance, medical and dental
plans, or benefits substantially similar to the benefits you were receiving
immediately prior to the Notice of Termination under such plans and to provide
you, at your expense, with benefits under the Corporation's accident and
disability plans, if the respective insurance carrier agrees to do so; but
benefits otherwise receivable by you pursuant to this Paragraph (iv) shall be
reduced to the extent comparable benefits are actually received by you during
the twenty-four (24) month period following your termination, and any such
benefits actually received by you shall be reported to the Corporation; and
(v) for a twelve (12) month period after the Date of
Termination, the Corporation will provide you with outplacement counselling with
an independent professional at the Corporation's expense.
(e) Notwithstanding the provisions of Subsection (d) hereof, if, in
the opinion of tax counsel selected by the Corporation's independent auditors,
(i) any payments or benefits which would otherwise be received
by you, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Corporation, any person whose actions result
in a change in control of the Corporation or any person affiliated with the
Corporation or such person, constitute "parachute payments" (such payments,
including the Severance Payments, being hereinafter called "Total Payments")
within the meaning of section 280G(b)(2) of the Internal Revenue Code of 1986,
as amended (the "Code"), and
<PAGE>
("Name")
("Date")
Page 8
(ii) the aggregate present value of the Total Payments would
exceed 2.99 times your "base amount," as defined in section 280G(b)(3) of the
Code, then, in lieu of the Severance Payments, the Corporation shall pay to you
under this Subsection, no later than the fifth day following the Date of
Termination, a lump sum amount such that the aggregate present value of the
Total Payments is equal to 2.99 times your base amount.
For purposes of the preceding paragraph, your base amount and the value of the
Total Payments shall be determined by the Corporation's independent auditors in
accordance with the principles of section 280G of the Code and based upon the
advice of the tax counsel referred to herein.
(f) The payments provided for in Subsections (d) and (e) above shall
be made not later than the fifth day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Corporation shall pay to you on such day
an estimate as determined in good faith by the Corporation of the minimum amount
of such payments and shall pay the remainder of such payments (together with
interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon as
the amount thereof can be determined but in no event later than the thirtieth
day after the Date of Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such
excess shall constitute a loan by the Corporation to you payable on the fifth
day after demand by the Corporation (together with interest at the rate provided
in section 1274(b)(2)(B) of the Code).
(g) The Corporation shall also pay to you all legal fees and expenses
incurred by you as a result of such termination of employment (including all
such fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder).
(h) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section 4 be reduced by any
compensation earned by you as the result of employment by another employer after
the Date of Termination, or otherwise.
5. Successors; Binding Agreement.
-----------------------------
<PAGE>
("Name")
("Date")
Page 9
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation or of any
division or subsidiary thereof employing you to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform it if no such succession had taken
place. Failure of the Corporation to obtain such assumption and agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle you to compensation from the Corporation in the same amount
and on the same terms as you would be entitled hereunder if you terminated your
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement, to your devisee, legatee or other designee or,
if there is not such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement.
7. Miscellaneous. No provision of this Agreement may be modified, waived
-------------
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Ohio.
8. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
<PAGE>
("Name")
("Date")
Page 10
10. Arbitration. Any dispute or controversy arising under or in connection
-----------
with this Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific performance of
your right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
11. Effective Date. This Agreement shall become effective as of the date
--------------
set forth above.
If this letter sets forth our agreement on the subject matter hereof, kindly
sign and return to the Corporation the enclosed copy of this letter which will
then constitute our agreement on this subject.
Sincerely,
THE MEAD CORPORATION
By
---------------------------------
Jerome F. Tatar
Chairman of the Board,
Chief Executive Officer and President
Agreed to this day
--------
of ("Month, Year")
By
-------------------------
("Addressee")
("Title")
<PAGE>
Amended Through
October 29, 1988
COMPOSITE
---------
THE MEAD CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS*
----------------------------------------
Section 1. Definitions.
(a) Year means each calendar year commencing on January 1 and ending on
the succeeding December 31.
(b) Company means The Mead Corporation, an Ohio corporation, and its
corporate successors.
(c) Compensation Committee means the Compensation Committee of the Board
of Directors of the Company.
(d) Director means any person who serves on the Board of Directors of the
Company except members of the Board of Directors who are also
employees of the Company.
(e) Plan means this Deferred Compensation Plan for Directors.
(f) Termination Date means the date a Director concludes his/her service
on the Company's Board of Directors.
Section 2. Eligibility.
The Plan is limited to those present or future Directors of the Company.
Section 3. Administration.
(a) The Plan shall be administered by the Compensation Committee which may
delegate to the appropriate officers and/or employees of the Company such duties
in connection with the administration of the Plan as they may deem
necessary, advisable or appropriate. All Directors who are members of the
Compensation Committee shall be eligible to participate in the Plan.
(b) Subject to the express provisions of the Plan, the Compensation
Committee shall have authority to construe and interpret the Plan, to prescribe,
amend, and rescind rules and regulations relating to the Plan, and to make all
other determinations necessary or advisable for administering the Plan. The
Compensation Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent it shall
deem expedient to carry it into effect. The determinations of the Compensation
Committee on any matters within the scope of this Section 3(b) shall be
conclusive.
Section 4. Election by Participants.
(a) At least thirty days prior to the commencement of each Year, the
Compensation Committee shall cause to be furnished to each Director an
appropriate form which enables the Director to elect to defer, until after the
Director's termination date, payment of a minimum of 20% up to a maximum of 100%
(in increments of 10%) of compensation earned for service on the Company's Board
of Directors during the upcoming year (including annual retainer and fees for
attending meetings of the Board and its Committees, but excluding expense
reimbursement). The Director shall select the date and manner of receiving any
compensation that is deferred each year, provided that such selection must be in
accordance with the following:
(i) with respect to compensation payable for the 1987 Year and preceding
years.
(I) the date to pay or commence paying the compensation shall be the
first day of any month after the Director's Termination Date and before the
Director's 72nd birthday, and
(II) the compensation shall be paid either in one lump sum on the
Deferral Date or in up to 25 annual installments, commencing on the Deferral
Date.
- ---------------
*This is a composite of The Mead Corporation Deferred Compensation Plan for
Directors, reflecting the plan and all amendments adopted through October
29, 1988. The plan has been supplemented by a 1985 Supplement which is set
forth in a separate document.
<PAGE>
(ii) with respect to compensation payable for the 1988 Year and
subsequent years.
(I) the date to commence paying the compensation shall be the January
2 next following the Director's Termination Date or such later January 2 as may
be chosen by the Director, but in any event not later than the January 2 of the
Year following the year in which the Participant becomes or would have become
age 72, and
(II) the compensation shall be paid in 15 level annual installments
commencing on the Deferral Date.
The date chosen to pay or commence payment of compensation pursuant to
paragraph (i)(I) or (ii)(I) above is referred to herein as the "Deferral Date."
The actual payment of the lump sum or of the first of the annual installments
may be at any time within one year of the Deferral Date, at the sole discretion
of the Compensation Committee (or its delegate). To the extent that a Director
has not elected to defer compensation, such compensation payment shall be made
in cash to him/her at the time it would be otherwise payable.
(b) In order to be effective, the form must be signed by the Director and
must be returned to the Compensation Committee (or its delegate) prior to the
commencement of the Year. If the Director fails to return the form or if the
form is received after the commencement of the Year, then the Director shall be
deemed to have elected not to defer compensation and no amended election made
thereon, which is otherwise permitted by Section 4(c), shall be effective.
(c) The election made by the Director under Section 4(a) shall be
irrevocable provided that a Deferral Date chosen by the Participant and/or the
number of installments payable to the Director may be changed by the
Compensation Committee, in its sole discretion, but only, unless the
Compensation Committee determines otherwise, in the event of a severe financial
hardship to the Director resulting from a sudden and unexpected illness or
accident to the Director or a dependent (as defined in Section 152(a) of the
Internal Revenue Code) of the Director, loss of the Director's property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Director. In the event a change
made pursuant to this paragraph affects a Director who is a member of the
Compensation Committee, such Director shall not participate in the Compensation
Committee's decision. The number of installments payable to the Director's
designated beneficiary may be changed by the Compensation Committee on the same
basis as set forth in this paragraph.
(d) In the case of a new Director who has been designated as eligible to
participate in the Plan for the Year in which he/she begins service on the
Company Board of Directors, a timely election with respect to such Year will be
deemed to have been made if it is in fact made and returned to the Compensation
Committee within 30 days after such person becomes a Director.
Section 5. Deferred Compensation.
(a) The Company shall establish an appropriate record (hereinafter
referred to as the "Deferred Compensation Ledger") and thereafter from time to
time enter therein the name of each Director who has elected Deferred
Compensation in accordance with Section 4 hereof, the amount of compensation
payments which he/she has elected to defer and his/her preference as to the
manner of payment of such compensation.
(b) With respect to compensation earned in 1982 through 1983, the Company
shall credit annually to a Director's account (including the account of a
Director who has passed his Termination Date) interest at a rate equal to the
weekly composite bond yield for single A bonds rounded to the nearest 1/10 of
1%, as published in the S & P Indexes of the Security Markets for the last week
of the third quarter of the Year preceding the year earned.
For compensation earned in 1984 and 1985, the interest to be credited to
such account(s) shall be at a rate equal to the nine-month average composite
bond yield for single A bonds rounded to the nearest 1/10 of 1% as published in
the S & P Indexes of the Security Markets for the first nine months of the
Second Year preceding the year such interest is credited.
For compensation earned in 1986 and subsequent years, the interest to be
credited to such account(s) shall be at a rate equal to the nine-month average
composite bond yield for prime grade, ten-year municipal bonds rounded to the
nearest 1/10 of 1% published in the Salomon Brothers Index of the Security
Markets for the first nine months of the Second Year preceding the year such
interest is credited. Each post-1983 account will be credited with interest,
which will change from year to year based upon the above calculations.
(2)
<PAGE>
(c) Except to the extent otherwise provided in this Section, the amounts
credited to a Director's account in the Deferred Compensation Ledger shall be
paid to the Director (or his/her beneficiary designated under Section 5(d)
hereof) after his/her Termination Date in accordance with Section 4(a) hereof.
In the case of installment payments, each such payment shall include an amount
equal to the percentages credited to his/her account under Section 5(b) hereof
since the next preceding payment.
Notwithstanding the form of payment selected by the Director, the amounts
(or a portion of the amounts) credited to a Director's account (or accounts) in
the Deferred Compensation Ledger shall be paid as follows under the following
circumstances:
(i) if the aggregate amount credited to a Director's account is $10,000 or
less, at the time of his/her Termination Date (after all distributions pursuant
to (ii) below), then such amount shall be paid in one lump sum on or before the
last day of the month next following the Director's Termination Date.
(ii) if the Director's Termination Date precedes his/her 55th birthday
(other than as a result of the Director's death or disability), then deferred
compensation relating to the 1988 Year and subsequent years and earnings thereon
credited to the Director's account shall be paid in one lump sum on or before
the last day of the month next following the Director's Termination Date.
(d) Each Director upon election of Deferred Compensation shall file with
the Compensation Committee (or its delegate) a notice in writing designating one
or more beneficiaries to whom payments shall be made in the event of his/her
death. The Director shall have the right to change the beneficiary or
beneficiaries from time to time; provided, however, that any change shall not
become effective until received in writing by the Compensation Committee (or its
delegate). In the event a Director fails to deliver such written designation,
then such payments shall be made to the estate of such Director. At the time of
filing a form pursuant to Section 4(a), the Director may also file with the
Compensation Committee (or its delegate) a written election of the date for
commencement of payments to the designated beneficiary and manner of payment in
the event of his/her death. In the event a Director fails to deliver such
written election, payment shall commence as of the date of his/her death or
continue to be paid to his/her beneficiary in the manner elected under Section
4(a). In no event shall the aggregate number of annual installments paid to a
Director and his/her beneficiary exceed 25.
(e) Nothing contained in the Plan and no action taken pursuant to the
provisions hereof shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Company and any Director, or any
beneficiary of such Director designated pursuant to Section 5(d) hereof or any
other person. Title to, and beneficial ownership of, any amounts credited to the
Deferred Compensation Ledger shall at all times remain in the Company, and no
Director or any beneficiary designated pursuant to Section 5(d) hereof shall
have any property interest whatsoever in such amounts or in any specific assets
of the Company. All amounts so credited shall remain general assets of the
Company and shall be subject to the claims of general creditors of the Company.
Section 6. Nonalienation of Benefits.
No right or benefit under this Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge the same shall
be void. No right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the person entitled to
such benefits. If any Director or beneficiary hereunder should become bankrupt
or attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
any right or benefit hereunder, then such right or benefit shall, in the
discretion of the Compensation Committee, cease and terminate, and in such
event, the Company may hold or apply the same or any part hereof for the benefit
of the Director or beneficiary, his/her spouse, children, or other dependents,
or any of them in such manner and in such proportion as the Compensation
Committee may deem proper.
Section 7. Amendment or Termination of Plan.
The Board of Directors of the Company may amend or terminate the Plan at
any time; provided, however, that the percentage which has been or will be
credited to a Director's account in accordance with Section 5(b) shall not
change and the rights of a Director or beneficiary to commence or continue
distributions from the Deferred Compensation Ledger (including its valuation)
shall not be affected.
- ------------------------
1. Amended through November 1, 1985.
2. Amendments to Sections 4 and 5 adopted effective as of October 1, 1987.
3. Amendment to Section 7 adopted October 29, 1988.
(3)
<PAGE>
Amended Through
October 29, 1988
COMPOSITE
---------
1985 SUPPLEMENT
TO
THE MEAD CORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS*
-----------------------------------------
WHEREAS, The Mead Corporation Deferred Compensation Plan for Directors
("Plan") was established for compensation earned on and after January 1, 1982,
for the benefit of eligible Directors; and
WHEREAS, the Plan has been amended on prior occasions; and
WHEREAS, it is currently desirable to supplement the Plan effective August
1, 1985 (the "Effective Date").
NOW THEREFORE, with respect only to amounts on the Deferred Compensation
Ledger on the Effective Date, amounts of 1985 earned compensation for which a
deferral election is in force on the Effective Date under Plan Section 4, and
amounts of compensation deferral permitted under this Supplement, the following
provisions determine Director rights and Company obligations under the Plan. All
other provisions of the Plan, to the extent not in conflict with this
Supplement, shall continue in effect.
(1) Amounts covered under the terms of this Supplement shall, on and
after the Effective Date, be maintained in a separate record (hereinafter
referred to as the "Supplemental Ledger").
(2) Contributions of an equal percentage of each compensation payment
earned during 1986 may be made to the Plan through December 31, 1986.
Participation through compensation deferral shall include annual retainer and
meeting fees but exclude expense reimbursement.
(3) The Director shall elect, on or before September 30, 1985, that all or
a portion of his/her account in the Supplemental Ledger be distributed under
Option A or under Option B or be divided between them.
(a) OPTION A - The Director or his/her Beneficiary will receive
fifteen (15 level annuity payments from his/her account in the Supplemental
Ledger commencing on the January 2 next following his/her Termination Date
or such later January 2 as shall have been chosen by the Director, but not
later than the January 2 of the Year following the year in which he/she
becomes or would have become age 72, the date chosen by him/her being
hereafter referred to as the "Annuity Starting Date."
(b) OPTION B - Commencement, method, and duration will be the same as
under Option A, except that four (4) additional annual payments commencing
on January 3, 1993 (hereinafter referred to in the aggregate as the "Annual
Payments"), shall be paid to the Director. The Annual Payments shall reduce
the amount otherwise payable to the Director or his/her Beneficiary on
his/her Annuity Starting Date in accordance with Option A. Each annual
installment of a Director's Annual Payments shall be equal to the pro rata
amount designated for Option B of the total of (i) amounts that were in the
Deferred Compensation Ledger on the Effective Date, (ii) amounts of 1985
earned compensation for which a deferred election is in force on the
Effective Date, and (iii) amounts of compensation deferral elected under
the terms of this Supplement. Notwithstanding the foregoing, no payment of
an annual installment of a Director's Annual Payments shall be made if such
installment coincides with or follows a Director's Annuity Starting Date.
Any annual installment of a Director's Annual Payments not made in
accordance with the preceding sentence shall be included in valuing the
Supplemental Ledger in accordance with (4) below.
- -----------------------
*This is a composite of the 1985 Supplement to The Mead Corporation
Deferred Compensation Plan for Directors, reflecting the supplement and all
amendments adopted through October 29, 1988. The Mead Corporation Deferred
Compensation Plan for Directors is set forth in a separate document.
<PAGE>
Except as otherwise provided, election of Option A or Option B under the
foregoing paragraph shall be irrevocable and may not be subsequently changed.
Notwithstanding the Director's election of Option A or Option B, if this
Supplement is terminated prior to, or if his/her Termination Date for reasons
other than death or disability, precedes his/her 55th birthday, distribution of
his/her account in the Supplemental Ledger shall be made in one lump sum payment
on or before the last day of the month next following the date of such
occurrence. If the Director's Termination Date occurs due to death or
disability prior to his/her 55th birthday and the value of his/her account on
such Termination Date is less than $50,000, such account shall also be so
distributed in one lump sum. If the Director dies on or after his/her Annuity
Starting Date, remaining annuity installments, if any, shall continue to be
paid from the Plan. In all cases of death, a lump sum payment or a commencement
or continuation of a level annuity shall be to the Beneficiary designated
pursuant to Section 5(d) of the Plan.
An Annuity Starting Date and/or the number of installments chosen by the
Director may be changed by the Compensation Committee, in its sole discretion,
but only, unless the Compensation Committee determines otherwise, in the event
of a severe financial hardship to the Director resulting from a sudden and
unexpected illness or accident to the Director or a dependent (as defined in
Section 152(a) of the Internal Revenue Code) of the Director, loss of the
Director's property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Director. In the event a change made pursuant to this paragraph affects a
Director who is a member of the Compensation Committee, such Director shall not
participate in the Compensation Committee's decision. The number of installments
payable to the Participant's designated Beneficiary may be changed by the
Compensation Committee on the same basis as set forth in this paragraph.
In the event the Termination Date of a Director who has elected Option B
occurs (for reasons other than death or disability) before receipt of all the
Annual Payments to which the Director is entitled, remaining payments to which
the Director or his/her Beneficiary shall be entitled shall be calculated as if
the Director had elected Option A. If such Director shall have received one or
more but not all of the Annual Payments, his/her Supplemental Ledger account
shall be valued pursuant to (4) below as if it had been reduced on the Effective
Date by the Effective Date value of Annual Payments received (discounted at
Basic plus Option B Incremental Rate) and credited thereafter with the Basic
plus Option A Incremental Rate. In the event the Termination Date of such a
Director precedes receipt of all Annual Payments because of death or disability,
or in the event all Annual Payments are not made due to coincidence with annuity
payments on or after the Annuity Starting Date, the Director or Beneficiary
shall receive payments from the Supplemental Ledger valued at the Basic plus
Option B Incremental Rate less any Annual Payments received by the Director.
(4) Except as provided below, the Director's Supplemental Ledger account
shall be valued on the Annuity Starting Date or earlier distribution date if
applicable, according to whichever of the following (a) or (b) produces the
highest value:
(a) as if all amounts had remained in the Deferred Compensation
Ledger on the Effective Date in their separate accounts established
pursuant to Section 5(a) of the Plan and were credited pursuant to Plan
Section 5(b) in the absence of this Supplement; or
(b) by crediting the Director's Supplemental Ledger account each Year
(with pro rata adjustment for partial years) with a percentage equal to the
nine-month average composite yield on single A bonds rounded to the nearest
1/10 of 1% as published in the S&P Indexes of the Security Markets for the
first nine months of the Second Calendar Year preceding the year such
percentage is credited (hereinafter referred to as the "Basic Rate"), PLUS
a percentage (hereinafter referred to as the "Incremental Rate") based on
the Director's age on the Effective Date and his/her choice of Option A or
Option B according to the following table:
Incremental Rate
<TABLE>
<CAPTION>
Age Option A Option B
--- -------- --------
<S> <C> <C>
39 and under 4% 7%
40-44 5% 8%
45-49 7% 9%
50-54 8% 10%
55-59 11% 11%
60 and over 12% --
</TABLE>
(2)
<PAGE>
In no event, however, shall the valuation reflect the addition of the
Incremental Rate to the Basic Rate if the Director's Termination Date (for
reasons other than death or disability) precedes his/her 55th birthday, or if
prior to his/her 55th birthday, a distribution is made to a Director due to
adverse tax or economic consequences.
(5) All level annuities paid under this Supplement shall be computed using
an interest rate percentage equal to an average of the valuation percentages
credited under (4) above during the three-year period immediately preceding the
Year in which the first annuity payment is made to a Director.
(6) Except as provided in (7) below, the Board of Directors of the Company
may amend or terminate the Plan or this Supplement as provided in Section 7 of
the Plan.
(7) Notwithstanding any other provision contained herein, in no event,
including but not limited to termination or amendment of the Plan or Supplement
or liquidation or reorganization of the Company:
(a) shall a Director who has not reached his/her 55th birthday receive
less than the amount credited to the Director's Supplemental Ledger account
with interest at the Basic Rate, or the total amounts credited to his/her
Deferred Compensation Ledger accounts as provided in (4)(a) above, if
greater;
(b) shall the Basic Rate and Incremental Rate of interest which has
been or will be credited to the account of a Director who has reached
his/her 55th birthday, or the interest rate percentage for level annuities
provided in (5) above, be changed unless the tax laws of the United States
change to increase the cost of the Incremental Rate to the Company in which
event the Incremental Rate may be adjusted only to the extent necessary to
reflect such change in cost, nor shall the rights of the Director or
Beneficiary to commence or continue distributions from the Supplemental
Ledger (including its valuation) be affected.
- --------------------
1. Adopted effective August 1, 1985.
2. Amendments to Section (3) and (5) adopted effective as of October 1,
1987.
(3)
<PAGE>
<TABLE>
<CAPTION>
Mead Executive Life Insurance Plan
TABLE OF CONTENTS
Page
<S> <C>
Definitions....................................................................4
General Provisions.............................................................4
Owner
Beneficiary
Premium Provisions.............................................................6
Grace Period...................................................................7
Reinstatement
Proceeds.......................................................................8
Death Benefit Provisions.......................................................8
Optional Changes In An Insured's Coverage......................................9
Certificate Values............................................................10
Continuation Of Insurance.....................................................12
Surrender Provisions..........................................................12
Certificate Loans.............................................................14
Termination Or Discontinuance.................................................15
Income Settlement Options.....................................................15
Endorsements, If Any
Riders, If Any
</TABLE>
<PAGE>
CERTIFICATE SCHEDULE
GROUP NUMBER: 960000945G
POLICYHOLDER: CT-0000000004
EMPLOYER: THE MEAD CORPORATION
CERTIFICATE NUMBER:
INSURED:
CERTIFICATE DATE:
ISSUE AGE OF THE INSURED:
RATING CLASS:
FACE AMOUNT:
MINIMUM FACE AMOUNT:
MINIMUM INCREASE IN FACE AMOUNT:
DEATH BENEFIT OPTION: OPTION B
ANNUAL PLANNED PERIODIC PREMIUM:
ELIGIBILITY PERIOD: 0 DAYS
LOAN INTEREST RATE PER YEAR, PAYABLE IN ARREARS:
MINIMUM LOAN AMOUNT:
PREMIUM EXPENSE CHARGE: 2.500% OF EACH CERTIFICATE PREMIUM PAID
MAXIMUM ADMINISTRATION EXPENSE CHARGE PER CERTIFICATE: $4.00 PER MONTH
MORTALITY TABLE:
100% OF THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE B,
AGE LAST BIRTHDAY
GUARANTEED INTEREST RATE: 4% PER YEAR, MONTHLY EQUIVALENT .00327
COVERAGE IS PROVIDED FROM THE EFFECTIVE DATE OF THE CERTIFICATE TO THE INSUREDS
AGE 95 OR THE INSUREDS PRIOR DEATH. WHEN ANY OF THE ADDITIONAL BENEFITS ABOVE
CEASE, THE MONTHLY DEDUCTION WILL BE REDUCED BY THE COST OF THAT ADDITIONAL
BENEFIT. COVERAGE WILL EXPIRE PRIOR TO THE INSUREDS AGE 95 IF PREMIUMS PAID AND
INTEREST CREDITED ARE INSUFFICIENT TO CONTINUE COVERAGE TO SUCH TIME.
<PAGE>
CERTIFICATE SCHEDULE CONTINUED
EXCESS INTEREST RATE:
FOR LOANED PORTIONS OF THE FUND VALUE:
THE EXCESS INTEREST RATE FOR LOANED PORTIONS OF THE FUND VALUE WILL BE
DECLARED BY OUR BOARD OF DIRECTORS AND WILL BE BASED ON OUR ESTIMATES OF
FUTURE INVESTMENT EARNINGS. THE RATE WILL BE DECLARED IN ADVANCE AND
GUARANTEED FOR A PERIOD OF AT LEAST ONE MONTH. HOWEVER, THE RATE APPLIED
WILL NOT BE LESS THAN THE GUARANTEED INTEREST RATE.
FOR UNLOANED PORTIONS OF THE FUND VALUE:
THE FOLLOWING RULES APPLY DURING THE FIRST TEN YEARS THAT THE CERTIFICATE
IS INFORCE.
NEW MONEY: THE EXCESS INTEREST RATE PLUS THE GUARANTEED RATE WILL NOT
BE LESS THAN THE YIELD ON FIVE-YEAR TREASURY BONDS FOR THE FIRST FULL
WEEK OF THE MONTH PRECEDING THE CALENDAR QUARTER FOR WHICH THE NEW
MONEY EXCESS INTEREST RATE IS DECLARED. THE RATE SO DECLARED WILL BE
APPLICABLE FOR NEW MONEY RECEIVED DURING THIS CALENDAR QUARTER UNTIL
THE BEGINNING OF THE CORRESPONDING CALENDAR QUARTER IN THE NEXT
CALENDAR YEAR. AT THAT TIME, NEW MONEY BECOMES OLD MONEY. FOR PURPOSES
OF THIS RULE, NEW MONEY IS ANY PREMIUM RECEIVED DURING THE CALENDAR
QUARTER.
OLD MONEY: THE EXCESS INTEREST RATE PLUS THE GUARANTEED RATE FOR THE
UNLOANED PORTIONS OF THE FUND VALUE WILL NOT BE LESS THAN THE AVERAGE
OF THE YIELD ON FIVE-YEAR TREASURY BONDS FOR THE FIRST FULL WEEK OF
EACH CALENDAR QUARTER FOR THE TWENTY MOST RECENT CALENDAR QUARTERS,
NOT INCLUDING THE QUARTER FOR WHICH THE CURRENT EXCESS INTEREST RATE
IS DECLARED, LESS TWO TENTHS OF ONE PERCENT.
NOT WITHSTANDING THE ABOVE, IF THE AVERAGE YIELD AS DEFINED ABOVE IS
LESS THAN 5%, THEN OUR BOARD OF DIRECTORS MAY, AT ITS DISCRETION,
CREDIT INTEREST AT THE GUARANTEED RATE ONLY, WITH NO EXCESS INTEREST.
THE YIELD FOR THE FIVE-YEAR TREASURY BONDS WILL BE THE YIELD AS PUBLISHED
IN THE "SALOMON BROTHERS BOND MARKET ROUND-UP". IN THE EVENT THAT THE
"SALOMON BROTHERS BOND MARKET ROUND-UP" DISCONTINUES PUBLICATION OF THE
YIELD, THEN OUR BOARD OF DIRECTORS MAY SUBSTITUTE ANOTHER REFERENCE SOURCE
FOR THE RATE, AT THEIR DISCRETION. IN THE EVENT THAT THE UNITED STATES
GOVERNMENT NO LONGER ISSUES FIVE-YEAR TREASURY BONDS, THEN OUR BOARD OF
DIRECTORS MAY SUBSTITUTE ANOTHER TYPE OF UNITED STATES GOVERNMENT
OBLIGATION, AT THEIR SOLE DISCRETION.
<PAGE>
CERTIFICATE SCHEDULE CONTINUED
AFTER THE FIRST TEN YEARS THAT THE CERTIFICATE IS INFORCE, THE EXCESS
INTEREST RATE FOR UNLOANED PORTION OF THE FUND VALUE WILL BE DECLARED BY
OUR BOARD OF DIRECTORS AND WILL BE BASED ON OUR ESTIMATES OF OUR FUTURE
INVESTMENT EARNINGS. THE RATE WILL BE DECLARED IN ADVANCE AND GUARANTEED
FOR A PERIOD OF AT LEAST ONE MONTH. HOWEVER, THE RATE APPLIED WILL NOT BE
LESS THAN THE GUARANTEED INTEREST RATE.
REDUCED PAID-UP COVERAGE-MORTALITY TABLE AND GUARANTEED INTEREST RATE:
100% OF THE 1980 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE B.
AGE LAST BIRTHDAY
GUARANTEED INTEREST RATE: 4.0%
PER YEAR: MONTHLY EQUIVALENT .00327
<PAGE>
TABLE OF SURRENDER CHARGES
<TABLE>
<CAPTION>
CERTIFICATE % INITIAL
YEAR SURRENDER CHARGE
<S> <C>
1 100%
2 80%
3 60%
4 40%
5 20%
</TABLE> Thereafter 0%
SURRENDER CHARGE: $3.08 PER $1,000 OF FACE AMOUNT
MINIMUM PARTIAL SURRENDER AMOUNT: $500
<PAGE>
AUTHORIZATION INFORMATION
(Complete for all cases)
COVERAGE ACCEPTANCE
This Application includes any amendments. No agent may change the terms of the
Application or of any policy or certificate issued by the Company and no agent
may waive any of the Company's rights or requirements.
I understand that the insurance I have selected for myself will begin on the
effective date as defined in policy/certificate provided I am actively at work
on that effective date. If I am not actively at work on such date, the effective
date of my coverage will be delayed until I am again actively at work. I
understand that if I am not actively at work, my dependents coverage does not
begin until I return to active status. Further, if any member of my family to be
insured is not performing normal daily activities on the effective date and/or
is confined to a hospital or other medical facility on such date, the individual
effective date of coverage will be delayed until the date that individual ceases
to be confined to a hospital and/or resumes normal activities.
I understand, under penalties of perjury, that my correct Social Security number
is shown and that I am not subject to back up withholding.
I represent that the statements contained in this application are true and
complete to the best of my knowledge and belief. I understand that they shall be
the basis of and part of the consideration for the certificate applied for.
I have received a Notice of Insurance Information Practices.
Proposed Insured
Signature _____________________________________ Date _________________________
Witness/
Print Name _____________________ Enroller _____________________________________
AUTHORIZATION TO RELEASE INFORMATION
I authorize any of the following: licensed physician; health professional;
hospital; clinic; other medically related facility; insurance company;
reinsuring company; MIB Inc.; consumer reporting agency; or employer that has
any record or knowledge of me, or of my health to give to Connecticut Mutual
Life Insurance Company, GroupAmerica or its reinsurers all such information. I
permit the Company to give to MIB Inc., a brief report of this information. This
information will be used to determine eligibility for group life insurance. All
medical information may be released. This includes: medical history; mental or
physical condition; diagnosis; prognosis; and treatment. This release shall be
valid for thirty (30) months from its date.
A copy of this is as valid as the original. I have the right to receive a copy.
Proposed Insured
Signature _____________________________________ Date _________________________
Print Name _____________________
<PAGE>
CERTIFICATE SCHEDULE CONTINUED
TABLE OF DEATH BENEFIT FACTORS
PER $1,000 OF INSURED'S FACE AMOUNT
<TABLE>
<CAPTION>
ATTAINED ATTAINED
AGE FACTORS AGE FACTORS
<S> <C> <C> <C>
18 7.04 57 2.10
19 6.83 58 2.04
20 6.63 59 1.99
21 6.44 60 1.94
22 6.25 61 1.89
23 6.06 62 1.84
24 5.88 63 1.80
25 5.69 64 1.75
26 5.52 65 1.71
27 5.34 66 1.67
28 5.17 67 1.64
29 5.00 68 1.60
30 4.84 69 1.57
31 4.68 70 1.53
32 4.53 71 1.50
33 4.38 72 1.47
34 4.24 73 1.44
35 4.10 74 1.42
36 3.97 75 1.39
37 3.84 76 1.37
38 3.72 77 1.35
39 3.60 78 1.32
40 3.48 79 1.30
41 3.37 80 1.29
42 3.27 81 1.27
43 3.17 82 1.25
44 3.07 83 1.23
45 2.97 84 1.22
46 2.88 85 1.20
47 2.80 86 1.19
48 2.71 87 1.17
49 2.63 88 1.16
50 2.56 89 1.14
51 2.48 90 1.13
52 2.41 91 1.11
53 2.34 92 1.09
54 2.28 93 1.07
55 2.21 94 1.04
56 2.15 95 1.00
</TABLE>
Page 1
<PAGE>
CERTIFICATE SCHEDULE CONTINUED
TABLE OF MONTHLY GUARANTEED MAXIMUM COST OF INSURANCE RATES
PER $1,000 AMOUNT OF TERM INSURANCE
ATTAINED ATTAINED
AGE RATE AGE RATE
18 0.138 57 1.005
19 0.143 58 1.088
20 0.145 59 1.178
21 0.145 60 1.280
22 0.143 61 1.394
23 0.142 62 1.526
24 0.139 63 1.675
25 0.137 64 1.839
26 0.135 65 2.016
27 0.134 66 2.203
28 0.135 67 2.400
29 0.137 68 2.610
30 0.139 69 2.842
31 0.143 70 3.103
32 0.149 71 3.405
33 0.156 72 3.753
34 0.163 73 4.149
35 0.173 74 4.586
36 0.185 75 5.055
37 0.198 76 5.548
38 0.214 77 6.059
39 0.233 78 6.594
40 0.253 79 7.170
41 0.274 80 7.808
42 0.298 81 8.527
43 0.322 82 9.343
44 0.348 83 10.252
45 0.377 84 11.235
46 0.407 85 12.274
47 0.438 86 13.356
48 0.473 87 14.478
49 0.510 88 15.640
50 0.553 89 16.852
51 0.600 90 18.132
52 0.653 91 19.516
53 0.714 92 21.058
54 0.781 93 22.898
55 0.852 94 25.343
56 0.927
Page 2
<PAGE>
CERTIFICATE SCHEDULE CONTINUED
For amounts which were fully underwritten, the risk factors below apply to the
attained age rate table.
<TABLE>
<CAPTION>
Class of Risk Risk Factor Class of Risk Risk Factor Class of Risk Risk Factor
- ------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <S> <C> <S> <C>
Standard 1.00 Class F 2.50 Class L 4.00
Class A 1.25 Class G 2.75 Class M 4.25
Class B 1.50 Class H 3.00 Class N 4.50
Class C 1.75 Class I 3.25 Class 0 4.75
Class D 2.00 Class J 3.50 Class P 5.00
Class E 2.25 Class K 3.75
</TABLE>
For guaranteed Issue, the guaranteed monthly cost of insurance rate is 100% of
the above attained age rate table. For simplified acceptance, the guaranteed
monthly cost of insurance rate is 100% of the above attained age rate table
unless a greater class of risk factor is applicable.
Page 3
<PAGE>
DEFINITIONS
WE, OUR, US, COMPANY - Connecticut Mutual Life Insurance Company.
YOU OR YOUR - the Owner shown in the Certificate Schedule.
HOME OFFICE - Our office at 140 Garden Street, Hartford, Connecticut 06154.
AGE- age last birthday.
ATTAINED AGE - the Issue Age of an Insured shown on the Certificate Schedule
increased by the number Certificate Years lapsed.
CERTIFICATE YEAR, CERTIFICATE ANNIVERSARY, CERTIFICATE MONTH - The Certificate
Date is the date coverage begins for an Insured. Certificate months, years and
anniversaries are computed from the Certificate Date.
MONTHLY ANNIVERSARY DAY - the same day of each calendar month as the Certificate
Date.
INSURED means the insured shown in the Certificate Schedule.
AGE 95 means the Certificate Anniversary on or next following the Insured's 95th
birthday.
DEBT means any outstanding Loan, plus any Loan Interest due or accrued.
WRITTEN REQUEST - a request in writing in a form satisfactory to us and received
at our Home Office, 140 Garden Street, Hartford, Connecticut 06154.
GENERAL PROVISIONS
Certificate
This Certificate contains a summary of the terms of the Policy. Any changes or
amendments to the Policy which affect the coverage under this Certificate will
be described in an endorsement to this Certificate or a revised Certificate
furnished to you. This Certificate supersedes and replaces any previously
issued Certificate.
. All statements made by the Policyholder or by an Owner or an Insured will be
deemed representations and not warranties. No statement made by any Insured
will be used in any contest of coverage under the Policy unless a copy of the
instrument containing such statement has been furnished to the Insured, if
living, otherwise to the Beneficiary of the coverage being contested.
. No change in any Certificate will be valid unless it is submitted in writing
and until it is approved by one of our officers.
. No agent may change or waive any provision of the Policy or this Certificate
issued under the Policy.
. We may modify the terms and conditions of the Policy or this Certificate to
conform to any new law or regulation affecting the Policy.
Page 4
<PAGE>
Owner
The Owner has the exclusive right to exercise all rights and privileges and to
receive all benefits under the Certificate during the lifetime of the Insured.
If no Owner designated under this Certificate is living and the Policy does not
provide otherwise, the Owner will be the successor in interest to said Owner.
. If the Owner is an entity (other than a natural person) which ceases to
exist, the Owner will be the successor in interest to said Owner.
Beneficiary
The Beneficiary is the Beneficiary shown in the Certificate Schedule unless
later changed.
. If no beneficiary survives an Insured, the Beneficiary will be the estate of
the Insured, unless the Certificate states otherwise.
. The interest of any Beneficiary will be subject to:
(1) any assignment of this Certificate which is binding on us; and
(2) any optional settlement agreement in effect at an Insured's death.
Change of Owner or Beneficiary
. While the Insured is alive you can change the Owner or the Beneficiary. Any
request for a change must be in writing to us.
. The change will take effect on the date the request is signed whether or not
the Insured is living when we receive the request at our Home Office.
However, the change will be subject to any payment made or actions taken by
us before receiving the request.
Misstatement of Age
If the age of the Insured has been misstated, we will adjust the amount of any
Death Benefit payable. The Death Benefit will be the benefit that would be
purchased by the most recent mortality charge at the Insured's correct age.
Incontestability
We cannot contest an Insured's coverage after it has been in force during the
lifetime of the Insured for a period of two years from the Certificate Date.
We cannot contest any optional increase in an Insured's coverage after the
increase has been in force during the Insured's lifetime for two years after the
Effective Date of the increase. After this Certificate has been in force for two
years, any contest of an increase will be based solely on the application for
such increase.
Suicide
If an Insured dies by suicide, whether sane or insane, within one year from the
Certificate Date, the proceeds we will pay will be limited to the premiums paid
less any Debt and less any Partial Surrenders.
If an Insured dies by suicide, whether sane or insane, within one year from the
Effective Date of any optional increase in Face Amount, the amount we will pay
with respect to such increase will be limited to its cost.
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<PAGE>
Assignment
You may assign this Certificate. Written notice of the terms of transfer or a
copy of any assignment must be filed at our Home Office. Until we receive such
notice we will not be required to take notice of or be responsible for any
transfer of interest in this Certificate by an assignment, agreement or
otherwise.
. We will not be responsible for the validity of any assignment.
. Any assignment made after the Insured's death will be valid only with our
consent.
Periodic Report
At least once a year we will furnish you a report which includes:
(1) the current status of this Certificate;
(2) all transactions in connection with this Certificate since the last report;
and
(3) any other information required by the state in which this Certificate was
delivered.
Illustration of Benefits and Values
Upon written request we will send you an illustration of future benefits and
values illustrated on both a guaranteed and current basis. The illustration may
also be based upon such assumptions as you may specify. We may limit the number
of such illustrations in any Certificate Year. We reserve the right to charge a
fee not to exceed $10.00 for each illustration.
Claims of Creditors
To the extent allowed by law, the amount held and the payments made by us shall
not be subject to the claims of any Insured's, Owner's or Beneficiary's
creditors.
PREMIUM PROVISIONS
Payment of Premiums
The initial premium for the Insured's coverage under the Group Policy must be
paid before the Certificate Date. Such premium is payable in advance at our Home
Office. The Policyholder may request a receipt signed by our President or
Secretary and countersigned by our authorized agent.
Certificate Planned Periodic Premiums
The Insured's planned periodic premium amount and frequency are shown on the
Certificate Schedule. Changes in frequency and increases or decreases in amount
of Planned Periodic Premium payments may be made by you. We reserve the right to
limit any increase in Planned Periodic Premiums as described in the Certificate
Premium Limits provision.
Certificate Unscheduled Premiums
Any premium we receive under this Certificate in an amount different from the
Planned Periodic Premium will be considered an unscheduled premium. Unscheduled
premium payments can be made at any time while this Certificate is In Force.
They will be credited to the Certificate Fund Value on the date we receive them,
subject to the limits described below.
Certificate Premium Limits
We may refuse to accept any Certificate Premium payment in any Certificate Year
which:
(1) would result in an increase in an Insured's Death Benefit by more than it
would increase the Fund Value as a result of the application of the Death
Benefit Factors, unless we receive evidence satisfactory to us of the
Insured's insurability; or
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<PAGE>
(2) would prevent the coverage under the Certificate from continuing to qualify
as life insurance under the Internal Revenue Code of 1954, as amended.
If any premiums in excess of the limits described above are accepted, we may
return them to you as soon as we determine that they are in violation of any of
these limits.
GRACE PERIOD
Grace Period for Payment of Certificate Premiums
If on any Certificate Monthly Anniversary Day, the Fund Value less any Debt, is
not enough to cover the Monthly Deduction for the following month, a grace
period of 61 days will be allowed for payment of any balance needed for the
Monthly Deduction. If the balance needed is not paid within the grace period,
the coverage under this Certificate will end without value at the end of the
grace period. Notice of the required premium will be mailed to you and to any
Assignee of record at your last known address(es) at least 30 days before the
end of the grace period. If the Insured should die during the Grace Period, the
death proceeds will be reduced by the required premium.
Reinstatement
If this Certificate terminates other than by maturity, or death of the Insured,
you may reinstate it within 5 years after the date of termination. We require
the following:
(1) a written application for reinstatement;
(2) evidence of the Insured's insurability satisfactory to us;
(3) payment of the amount that remained unpaid at the end of the grace period;
(4) a premium large enough to pay Monthly Deductions for at least three months
from the date of reinstatement.
The Certificate date of reinstatement will be the Certificate Monthly
Anniversary on or next following our approval. If the Insured's coverage before
the end of the grace period includes benefits provided by rider, such benefits
will be reinstated subject to the terms of the rider.
The Fund Value on the date of reinstatement will be the amount provided by the
Net Certificate Premium paid on reinstatement less the monthly deduction for the
first certificate month following reinstatement. The Surrender Charge for the
reinstated Policy will be based on the number of years the Insured's coverage
was in force before the reinstatement. The time the coverage was not in force
will not be counted.
DIVIDENDS
Each year, we will ascertain the surplus, if any, to be allotted on the Policy
as a dividend. It will be allotted as of the end of each Policy Year. If this
Policy ends, any surplus to be allotted as a final dividend may be reduced to
provide for a terminal claim reserve. The dividend and terminal claim reserve
will be in accordance with our rules then in effect.
The Certificate Owner may elect to have any surplus allotted on the Policy:
(1) to be paid in cash to the Certificate Owner; or
(2) to be used to pay any premium for coverage under the Policy; or
(3) to be converted into a participating paid-up addition to the face amount
of the Certificate.
The Certificate Owner may, at any time, surrender to us for cash any such
dividends outstanding. The cash amount will be equal to the reserve of the
paid-up additions.
Any dividends paid under the Policy will be used for the sole benefit of the
Insureds.
GUL-2C-89 Page 7
(d2c891rs)
<PAGE>
We do not expect to pay dividends on the Policy.
PROCEEDS
General
Proceeds means the amount payable on the Maturity Date, upon Surrender or at the
death of the Insured prior to the Maturity Date.
. If the Insured is alive on the Certificate Maturity Date, the proceeds will
be the Fund Value on that date, less any Debt.
. If the Certificate is surrendered before the Certificate Maturity Date, the
proceeds will be the Surrender Value.
. The proceeds on the death of an Insured will be the Death Benefit, plus any
insurance provided by an additional benefit rider on the life of the Insured,
less any Debt. The Death Benefit is described in the Death Benefit provision.
. Proceeds may be subject to adjustment as provided in the Misstatement of Age,
Suicide and Grace Period provisions.
Settlement
. All amounts payable by us are payable only at our Home Office.
. Unless an optional settlement agreement is elected, proceeds will be paid in
a single sum.
. We may require the return of the Certificate before paying proceeds.
Interest on Death Proceeds
We will pay interest on death proceeds paid in a single sum from the Insured's
date of death to the date of payment. The rate of interest will not be less
than the current rate credited on death proceeds left on deposit with us under
the regular interest option or the rate required by law, but in no case less
than 3% a year.
DEATH BENEFIT PROVISIONS
Death Benefit
The Death Benefit will depend on the Death Benefit option in effect on the date
of the Insured's death.
Option A.
The Death Benefit is the Face Amount on the date of death, or, if greater, the
Fund Value on the date of death multiplied by the Death Benefit Factor for the
Insured's Attained Age at death.
Option B.
The Death Benefit is the Face Amount plus the Fund Value on the date of death,
or, if greater, the Fund Value on the date of death multiplied by Death Benefit
factor for the Insured's Attained Age at death.
. The Death Benefit Factors are listed in the Certificate Schedule.
. The Death Benefit Option in effect is shown in Insured's Certificate
Schedule.
Face Amount
The Initial Face Amount and the Minimum Face Amount are shown in the Certificate
Schedule. You may request a change in the Face Amount as described in the
Optional Changes in Face Amount provision.
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OPTIONAL CHANGES IN COVERAGE
Optional Changes in Face Amount
The existing Face Amount may be increased or decreased by written request from
you. Any change will be effective on the Certificate Monthly Anniversary Day on
or next following the date we approve the request, unless you request a later
date. No change in the Face Amount is allowed in the first Certificate Year. We
will issue an endorsement to this Certificate to reflect any change.
. Decreases
Any decrease in Face Amount is subject to the following conditions.
(1) no decrease is permitted until the first Certificate Anniversary;
(2) the Face Amount in effect after a decrease may never be less than the
Minimum Face Amount.
(3) any decrease will reduce the Face Amount in the following order:
(a) against any increases beginning with the most recent; and then
(b) against the Initial Face Amount.
. Increases
Any increase in Face Amount is subject to the following conditions:
(1) submission of an application for an increase and satisfactory evidence of
insurability of the Insured.
(2) if the Fund Value, less any Debt, is not sufficient to continue the
coverage in force for three months at guaranteed rates of mortality and
interest, a premium sufficient to increase the Fund Value to such amount
is required.
(3) the minimum amount of any increase in Face Amount is shown in the
Certificate Schedule.
. Increases are not available if the Certificate Monthly Deduction is being
waived under the terms of a waiver rider.
Changing to Reduced Paid-Up Coverage
Prior to the Certificate Maturity Date, you may elect that the Insured's
coverage under the Group Policy be changed to a reduced paid-up status. The
following conditions will apply:
. The election must be made by a written request.
. If Death Benefit Option B is in effect on the date of request, it will be
changed to Death Benefit Option A immediately prior to the Effective Date of
the paid-up coverage and the Face Amount after such change shall be equal to
the Face Amount prior to such change plus the Fund Value on the date of
change.
. The Cash Value will be applied as a net single premium at the Insured's
Attained Age to determine a paid-up Face Amount.
. The maximum amount of Cash Value that may be applied without evidence of
insurability is the amount needed to provide a paid-up Face Amount not
greater than the Death Benefit immediately prior to the Effective Date of the
paid-up coverage. If the entire Cash Value is not applied to purchase the
paid-up Face Amount, any excess Surrender Value will be refunded to the
Insured.
. The Cash Value must be an amount that will provide a paid-up Face Amount of
not less than the Minimum Face Amount shown on the Certificate Schedule.
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The election will go into effect on the Certificate Monthly Anniversary Date on
or next following the date we receive your election request.
. Once the election for reduced paid-up coverage goes into effect:
(1) we will not accept any further Certificate Premiums for the Insured's
coverage;
(2) no further optional changes in the Insured's coverage may be made;
(3) any Debt which existed on the date the coverage was changed to a reduced
paid-up status will be continued under the paid-up coverage and any loan
interest will be due and payable as described in the Certificate Loans
provision; and
(4) any additional benefits provided by rider will terminate.
(5) This Certificate may be reinstated as described in the Reinstatement
provision.
. We will issue an endorsement to the Certificate to reflect the election of
the paid-up option.
. The endorsement will show the new paid-up Face Amount and the guaranteed cash
value at age 95.
. If the entire Surrender Value is not applied to purchase the paid-up
insurance, the excess Surrender Value will be refunded to you.
. The guaranteed net single premium rates will be based on the attained age and
rating class of the Insured and the mortality table and guaranteed interest
rate for the Reduced Paid-Up Coverage as shown in the Certificate Schedule.
We may use a lower net single premium rate at our discretion.
. The paid-up coverage may be surrendered for its cash value less any debt at
any time. The cash value of the paid-up coverage will equal the present value
of future guaranteed benefits based on the mortality table and interest rate
that are shown in the certificate schedule determined on the date of the
change. If the paid-up coverage is surrendered within 30 days after a
Certificate Anniversary, the cash value will not be less than the value on
such anniversary.
. The paid-up coverage will be eligible for dividends.
CERTIFICATE VALUES
Fund Value
The Fund Value on the Certificate Date is the Initial Certificate Net Premium
paid less the Monthly Deduction for the first Certificate Month.
On any Certificate Monthly Anniversary Day, the Fund Value of an Insured's
coverage will be equal to:
(1) the Fund Value on the prior Monthly Anniversary Day; plus
(2) one month's interest on item (1); plus
(3) the sum of net certificate premiums received at our Home Office since the
prior Monthly Anniversary Day; plus
(4) interest on item (3) from the date of receipt to the Certificate Monthly
Anniversary Day; less
(5) any Partial Surrenders plus Surrender Charge made on the Monthly Anniversary
Day; less
(6) the Monthly Deduction due on the Certificate Monthly Anniversary Day.
On any other day the Fund Value will be calculated in a consistent manner.
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Net Certificate Premium
The net certificate premium is the premium paid less the Premium Expense Charge
shown in the Certificate Schedule.
Monthly Deduction
The Monthly Deduction due on any Monthly Anniversary Day is:
(1) the Cost of Insurance for the following month; plus
(2) the cost of any additional benefits provided by rider for the following
month; plus
(3) the Administration Expense Charge shown in the Certificate Schedule.
Fund Value Interest Rate Calculations
. On each Certificate Monthly Anniversary Day we will credit interest
separately to the portion of the Fund Value equal to any existing Debt and
to the balance of the Fund Value.
. The Guaranteed Interest Rate is shown on the Certificate Schedule.
Excess Interest Rate
. An interest rate in excess of the Guaranteed Interest Rate may be applied in
the calculation of the Fund Value. Descriptions of how the excess interest
rate for the Loaned and Unloaned portions of the Fund Value are shown on the
Certificate Schedule.
. In no event will the interest rate credited to the Fund Value be less than
the Guaranteed Interest Rate shown on the Certificate Schedule.
. All interest rates stated are effective annual rates. They will be applied
to properly reflect the date of receipt of any Certificate Planned Periodic
Premiums and any changes in Debt during a Certificate Month.
Cost of Insurance
The Cost of Insurance for an Insured is determined on a monthly basis on each
Certificate Monthly Anniversary Day. The Cost of Insurance is determined
separately for each of the following, in the order shown:
(1) the Initial Face Amount as follows:
(a) that part which is on a guaranteed issue basis; next
(b) that part which is on a simplified issue basis; next
(c) that part which is fully underwritten;
(2) each increase in Face Amount, successively, in the order in which it took
effect; and
(3) any portion of the Insured's Death Benefit which is a result of the Death
Benefit being equal to the Fund Value multiplied by the Death Benefit
Factor.
The Cost of Insurance for each of (1), (2) and (3) above is calculated by
multiplying its Cost of Insurance Rate by its Amount at Risk.
The "Amount at Risk" at the beginning of the Certificate Month is the difference
between:
(a) the Insured's Death Benefit that would have been payable in the event of
the Insured's death on that day divided by one plus the Guaranteed Monthly
Equivalent Interest Rate; and
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(b) the Fund Value at the beginning of the Certificate Month, decreased by the
monthly deduction for any additional benefit riders.
The Fund Value for the Insured's coverage as described in (b) is applied in the
order shown above in (1), (2) and (3) to determine the Amount at Risk for each.
If the Fund Value when so applied equals or exceeds the Initial Face Amount
there is no Amount at Risk for that Initial Face Amount and no Cost of Insurance
for it. If the Fund Value when so applied equals or exceeds the Initial Face
Amount plus an increase in Face Amount, there is no Amount at Risk for that
increase and no cost of Insurance for it.
Cost of Insurance Rate
The monthly Cost of Insurance Rate is based on the Insured's attained age and
rating class. The rating class for the Insured's Initial Face Amount is the
Insured's rating class on the Certificate Date as shown in the Certificate
Schedule. The Insured's rating class for optional increases in Face Amount is
the Insured's rating class on the Effective Date of the Increase in Face Amount.
The rating class with the most recent Effective Date will apply to any portion
of the Death Benefit which is a result of the Death Benefit being equal to the
Fund Value on the date of death multiplied by the Death Benefit Factor.
Monthly Cost of Insurance Rates will be determined by us based on our
expectations as to future mortality, interest, expenses, and persistency. We can
change the rates from time to time, but they will never be more than the Monthly
Guaranteed Cost of Insurance Rates shown on the Certificate Schedule. Any change
in rates, and the way in which they are determined, will be made on a uniform
basis for Insureds of the same age and rating class. We will file any such
changes with the insurance supervisory official of the state in which the
Certificate is delivered.
Cash Value
The Cash Value is the Fund Value less any Surrender Charge.
CONTINUATION OF INSURANCE
If Certificate premium payments are not continued, the coverage under this
Certificate will be continued as long as the Fund Value less any Debt is
sufficient to cover any Monthly Deductions. The coverage will not be continued
beyond the Certificate Maturity Date. If the Insured is living on the
Certificate Maturity Date, the Fund Value, if any, less any Debt will be paid to
you.
The planned periodic premium may not provide coverage to the Certificate
Maturity Date even if the planned periodic premium is paid as scheduled. The
period for which coverage under the Certificate will continue will be effected
by the following:
(a) the amount, timing and frequency of premium payments;
(b) change in the Face Amount and Death Benefit Options;
(c) change in interest credits and Monthly Deduction charges;
(d) deductions for additional riders; and
(e) any Partial Surrenders or loans.
SURRENDER PROVISIONS
Surrender Value
The Insured's coverage may be surrendered by you for its Surrender Value at any
time while the Insured is living and before the Maturity Date.
The Surrender Value is the Cash Value less any Debt.
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We may postpone payment for up to 6 months after we receive your request unless
the surrender is to pay premiums to us. We will not defer a payment for more
than 6 months after we receive your written request. If we defer a payment for
10 working days or more, we will pay interest at a rate not less than 3% a year
for the period the payment is deferred.
Surrender Charge
The Surrender Charge is a charge made against the Fund Value in the event of
Total or Partial Surrender. The amounts and durations of the Surrender Charges
are shown in the Table of Surrender Charges shown in the Certificate Schedule.
The Surrender Charges applicable to the Initial Face Amount are the charges
shown in the Table of Surrender Charges.
For any requested increase in the Face Amount that is approved, Surrender
Charges will apply to the amount of the increase. Such charges will be the
charges shown in the Table of Surrender Charges effective on the date the
requested increase is approved and for the duration shown in the Table of
Surrender Charges.
For a Partial Surrender a Surrender Charge will be made against the amount of
the Fund Value that is surrendered. This Surrender Charge will be applied if the
amount of the Partial Surrender is greater than 25% of the Fund Value in any
certificate year. This charge will be in proportion to the charge for the total
Surrender Value. The proportion will be computed as the amount of Surrender
Value that is surrendered divided by the total Surrender Value. When a partial
Surrender is made, future Surrender Charges will be reduced in the same
proportion.
Any requested decrease in the Face Amount will not reduce the applicable
Surrender Charges.
Surrender
. You may surrender this Certificate by:
(1) filing a written request in a form acceptable to us; and
(2) returning the Certificate to our Home Office.
. The date of surrender will be the Certificate Monthly Anniversary on or next
following our receipt of the request.
. The surrender proceeds equal the Surrender Value on the date of surrender.
However, the surrender proceeds within 30 days after a Certificate
Anniversary will not be less than:
(1) the surrender proceeds on that Certificate Anniversary; plus
(2) any unscheduled premiums received since that Anniversary but not yet
credited; less
(3) any increase in Debt or any partial surrender since that Anniversary.
. This Certificate of Insurance will terminate as of the date of surrender.
Partial Surrender
You may make a Partial Surrender of the Surrender Value by written request. The
date of the Partial Surrender will be the Monthly Anniversary Day on or next
following our receipt of the request.
. Partial Surrenders are subject to the following conditions:
(1) Partial Surrenders are not allowed before the first Certificate
Anniversary.
(2) The amount of any Partial Surrender must be at least the Minimum Partial
Surrender amount shown in the Certificate Schedule.
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(3) A Partial Surrender may not result in a remaining Cash Value equal to
less than twelve Monthly Deductions.
. The amount of a Partial Surrender, plus the Surrender Charge, will be
deducted from the Fund Value. This will result in a reduction of the Cash
Value and Death Benefit.
If Death Benefit Option A is in effect on the Monthly Anniversary Day on which a
Partial Surrender is made, the Face Amount will be reduced by the amount of the
Partial Surrender. The reduction will apply first against any increases
beginning with the most recent and then against the Initial Face Amount.
Partial withdrawals are not allowed if the resulting decrease in the specified
amount goes below the minimum shown in the following schedule.
Basis of Values
Minimum Cash Values are based on the mortality table and Guaranteed Interest
Rate shown in the Certificate Schedule.
The Cash Values are not less than the minimum values required by the law in the
state in which this Certificate is delivered. Where required, the method of
determining Cash Values has been filed with the insurance supervisory official
of the state in which this Certificate is delivered.
CERTIFICATE LOANS
General
On or after the first Certificate Anniversary, while the Certificate is in
force, you may, by written request, borrow against it. We will lend any sum up
to the Certificate's Maximum Loan Value, less existing Debt. This Certificate
will be the sole security for the loan.
Maximum Loan Value
The Maximum Loan Value on any date is the Cash Value on such date less three
Monthly Deductions.
Interest Rate
A loan bears interest at the Loan Interest Rate shown on the Certificate
Schedule.
Interest accrues daily from the date of the loan and is due at the end of each
Certificate Year. If the interest is not paid when it is due, it will be added
to the loan and will bear interest at the same loan rate.
Minimum Loan Amount
The Minimum Loan Amount as shown on the Certificate Schedule.
Repayment
You may repay all or part of a Certificate Loan at any time while the Insured is
alive and the insurance is in force. Every payment to us will be considered a
premium payment unless clearly marked for Debt repayment.
Termination
This Certificate will terminate if Debt equals or exceeds the Cash Value unless
an additional premium or loan repayment is made. The due date for such payment
will be the 61st day after the date when Debt first equals or exceeds the Cash
Value. We will mail 30 days notice of pending termination to your last known
address
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and the last known address(es) of any assignee of record. The notice will
indicate the loan repayment or premium required to keep this Certificate in
force. Unless we receive such amount by the 62nd day, the Certificate will
terminate without value on that date.
We may postpone payment for up to 6 months after we receive your request unless
the loan is to pay premiums to us. We will not defer a payment for more than 6
months after we receive your written request.
TERMINATION OR DISCONTINUANCE
Termination of the Policy
The Policy will terminate without the right of reinstatement on the date the
coverage ends for the last remaining Insured under the Policy.
Continuation of Insured's Coverage After Discontinuance
If the Group Policy is discontinued, any insurance then in effect will remain in
force under the Policy, provided it is not cancelled or surrendered by the
Owner. The continuance of the coverage is subject to the Continuation of
Insurance provision of this Certificate. All insurance that is continued will be
automatically changed from deduction from wages to a direct billing status.
Certificate Premiums will then be payable directly to us.
Individual Termination
The Insured's coverage under the Policy will terminate when one of the following
occur:
(1) the Insured dies;
(2) the Insured's coverage matures;
(3) the date the Insured's coverage ends without value;
(4) the date the Insured's coverage is surrendered for its Surrender Value; or
(5) the date the Group Policy terminates or is discontinued, except as provided
in the Continuance of Insured's Coverage After Discontinuance provision.
If, for any reason, contributions for coverage are no longer being deducted from
wages, the status of the insurance under this Certificate will change from
deduction of contributions to direct billing.
INCOME SETTLEMENT OPTIONS
If elected, we will pay proceeds under the terms of an optional settlement
agreement, rather than in a single sum. You may elect such an agreement before
proceeds become payable. If proceeds are at least $10,000, the payee may elect
such an agreement if none is in effect. The following options are available.
Option 1. Installments for a Special Period. Equal payments for a stated number
of years, not more than 30. The amount is shown in the Option 1 Table.
Option 2. Life Income. Equal monthly payments while the payee is alive, as shown
in the Option 2 Table. Payments with or without installments certain may be
elected.
Option 3. Interest. Interest payments while the payee is alive or for a shorter
period. Interest will be paid at an effective rate of 3% per year. Payments are
increased by any additional interest earnings we may apportion. For each $1,000
of proceeds, interest payments equal $30 annually, $14.89 semi-annually, $7.42
quarterly and $2.47 monthly.
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Option 4. Installments of Specified Amount. Equal annual, semi-annual, quarterly
or monthly payments for a stated amount. Payments will be made until the
proceeds and interest are all paid out. The total yearly amount paid must be at
least 6% of the original proceeds. Any unpaid balance left with us will be
increased by interest at 3% a year. We will also add any additional interest
earnings we may apportion.
Option 5. Life Income With Installment Refund. Equal monthly payments as shown
in the Option 5 Table. Payments will be made until the total amount paid equals
the proceeds and as long thereafter as the payee lives.
Option 6. Joint Life Income for the Payee and One Other Person With Two-Thirds
to Survivor. (One Hundred and Twenty Months Certain). Based on the Option 6
Table, we will pay a joint monthly income to the payee and one other person
designated at exercise of this option. We will pay the income for 120 months
certain, and as long afterwards as both payees are living. After the death of
either payee, and following payment of any remaining income certain, monthly
payments equal to two-thirds of monthly income will be continued to the
surviving payee for life. The Alternate Life Income and Payment Provisions
paragraphs apply to this option.
Alternate Life Income
If Option 2, 5 or 6 is elected, the payee may elect to receive an alternate life
income. This is instead of receiving income based upon the rates shown in the
following tables. The election must be made at the time the income is to begin.
. The alternate life income will be more than the monthly income provided by a
new single premium immediate annuity (first payment immediate), based upon
our published rate then in use.
Payment Provisions
. If an optional settlement agreement becomes effective, we will issue a
supplementary contract in exchange for this Certificate and agreement. The
contract will show the rights and benefits provided by the agreement.
. We may change the payment basis to quarterly, semi-annual, or annual if any
payment is less than $50.
. Payments under Option 2, 5 and 6 will be subject to proof of the payees' age.
. The first installment under Options 1, 2, 4, 5 and 6 is due as of the date
the proceeds become payable.
. Installments certain under Options 1, 2, 5 and 6 are computed at 3% interest
compounded annually. This does not apply when alternate life income is
selected.
Installments certain, after the first, will be increased by any additional
interest earnings we may apportion. If the alternate life income is elected, we
will not increase payments certain by additional interest earnings.
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<TABLE>
<CAPTION>
--------------------------------------------------
INSTALLMENTS CERTAIN
FOR EACH $1000 OF PROCEEDS
--------------------------------------------------
OPTION 1
--------------------------------------------------
Number Annual Monthly
of Years Installment Installment
--------------------------------------------------
<S> <C> <C>
1 $1000.00 $84.47
2 507.39 42.86
3 343.23 28.99
4 261.19 22.06
5 212.00 17.91
6 179.22 15.14
7 155.83 13.16
8 138.31 11.68
9 124.69 10.53
10 113.82 9.61
11 104.93 8.86
12 97.54 8.24
13 91.29 7.71
14 85.95 7.26
15 81.33 6.87
16 77.29 6.53
17 73.74 6.23
18 70.59 5.96
19 67.78 5.73
20 65.25 5.51
21 62.98 5.32
22 60.92 5.15
23 59.04 4.99
24 57.33 4.84
25 55.76 4.71
26 54.31 4.59
27 52.97 4.47
28 51.74 4.37
29 50.60 4.27
30 49.53 4.18
</TABLE>
--------------------------------------------------
Semiannual installments are 50.37% of the annual
installments. Quarterly installments are 25.28% of
the annual installments.
--------------------------------------------------
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
MONTHLY LIFE INCOME PER $1,000 OF PROCEEDS
- -------------------------------------------------------------------------------------------------------------------------
OPTION 2 OPTION 5 OPTION 2 OPTION 5
--------------------------------------------- ---------------------------------------------
PAYEE Number of PAYEE Number of
Age Without Monthly With Age Without Monthly With
Nearest Installments Installments Installment Nearest Installments Installments Installment
Birthday Certain Certain 120 Refund Birthday Certain Certain 120 Refund
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
20 $3.00 $2.99 $2.98 55 $4.49 $4.44 $4.27
21 3.01 3.01 2.99 56 4.58 4.52 4.34
22 3.03 3.03 3.01 57 4.68 4.61 4.42
23 3.05 3.05 3.03 58 4.79 4.71 4.50
24 3.07 3.07 3.05 59 4.90 4.81 4.58
25 3.09 3.09 3.07 60 5.01 4.91 4.67
26 3.12 3.11 3.09 61 5.14 5.02 4.76
27 3.14 3.14 3.11 62 5.27 5.14 4.86
28 3.16 3.16 3.14 63 5.42 5.26 4.96
29 3.19 3.18 3.16 64 5.57 5.39 5.07
30 3.21 3.21 3.18 65 5.74 5.53 5.19
31 3.24 3.24 3.21 66 5.91 5.67 5.31
32 3.27 3.27 3.23 67 6.10 5.81 5.43
33 3.30 3.30 3.26 68 6.30 5.96 5.56
34 3.33 3.33 3.29 69 6.51 6.12 5.70
35 3.37 3.36 3.32 70 6.74 6.28 5.85
36 3.40 3.39 3.35 71 6.98 6.44 6.00
37 3.44 3.43 3.38 72 7.24 6.61 6.16
38 3.47 3.47 3.42 73 7.51 6.79 6.33
39 3.51 3.51 3.45 74 7.81 6.96 6.51
40 3.56 3.55 3.49 75 8.12 7.14 6.70
41 3.60 3.59 3.53 76 8.46 7.31 6.90
42 3.65 3.63 3.56 77 8.82 7.49 7.10
43 3.69 3.68 3.61 78 9.21 7.67 7.32
44 3.74 3.73 3.65 79 9.62 7.84 7.58
45 3.80 3.78 3.69 80 10.07 8.01 7.80
46 3.85 3.83 3.74 81 10.54 8.17 8.05
47 3.91 3.89 3.79 82 11.05 8.33 8.32
48 3.97 3.94 3.84 83 11.59 8.48 8.60
49 4.03 4.01 3.89 84 12.16 8.62 8.90
50 4.10 4.07 3.95 85 12.78 8.75 9.22
51 4.17 4.14 4.01 and over
52 4.25 4.21 4.07
53 4.32 4.28 4.13
54 4.41 4.36 4.20
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 18
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
MONTHLY INCOME FOR EACH $1,000 OF PROCEEDS - OPTION 6
- --------------------------------------------------------------------------------------
FIRST
PAYEE SECOND PAYEE - Age Nearest Birthday
Age -----------------------------------------------------------------------------
Nearest
Birthday 50 51 52 53 54 55 56 57 58 59 60
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.63 $3.66 $3.68 $3.70 $3.72 $3.74 $3.77 $3.79 $3.82 $3.84 $3.86
46 3.66 3.68 3.70 3.73 3.75 3.77 3.80 3.82 3.85 3.87 3.90
47 3.69 3.71 3.73 3.75 3.78 3.80 3.83 3.85 3.88 3.90 3.93
48 3.71 3.73 3.76 3.78 3.81 3.83 3.86 3.88 3.91 3.94 3.96
49 3.74 3.76 3.79 3.81 3.84 3.86 3.89 3.92 3.94 3.97 4.00
50 3.77 3.79 3.82 3.84 3.87 3.89 3.92 3.95 3.98 4.00 4.03
51 3.79 3.82 3.85 3.87 3.90 3.93 3.96 3.98 4.01 4.04 4.07
52 3.82 3.85 3.88 3.90 3.93 3.96 3.99 4.02 4.05 4.08 4.11
53 3.85 3.88 3.91 3.94 3.97 3.99 4.02 4.05 4.08 4.12 4.15
54 3.88 3.91 3.94 3.97 4.00 4.03 4.06 4.09 4.12 4.16 4.19
55 3.91 3.94 3.97 4.00 4.03 4.07 4.10 4.13 4.16 4.20 4.23
56 3.94 3.97 4.01 4.04 4.07 4.10 4.13 4.17 4.20 4.24 4.27
57 3.97 4.01 4.04 4.07 4.11 4.14 4.17 4.21 4.24 4.28 4.32
58 4.01 4.04 4.07 4.11 4.14 4.18 4.21 4.25 4.29 4.32 4.36
59 4.04 4.07 4.11 4.14 4.18 4.22 4.25 4.29 4.33 4.37 4.41
60 4.07 4.11 4.14 4.18 4.22 4.26 4.29 4.33 4.37 4.41 4.45
61 4.11 4.14 4.18 4.22 4.26 4.30 4.34 4.38 4.42 4.46 4.50
62 4.14 4.18 4.22 4.26 4.30 4.34 4.38 4.42 4.46 4.51 4.55
63 4.18 4.21 4.25 4.29 4.34 4.38 4.42 4.47 4.51 4.56 4.60
64 4.21 4.25 4.29 4.33 4.38 4.42 4.47 4.51 4.56 4.60 4.65
65 4.25 4.29 4.33 4.37 4.42 4.46 4.51 4.56 4.61 4.65 4.70
66 4.28 4.33 4.37 4.41 4.46 4.51 4.55 4.60 4.65 4.71 4.76
67 4.32 4.36 4.41 4.45 4.50 4.55 4.60 4.65 4.70 4.76 4.81
68 4.36 4.40 4.45 4.50 4.54 4.59 4.65 4.70 4.75 4.81 4.87
69 4.39 4.44 4.49 4.54 4.59 4.64 4.69 4.75 4.80 4.86 4.92
70 4.43 4.48 4.53 4.58 4.63 4.68 4.74 4.80 4.85 4.91 4.97
- -------------------------------------------------------------------------------------
</TABLE>
*Second Payee - Ages 61 to 70 appears on the next page.
The rate for any combination of ages not stated in the table will be furnished
on request.
Page 19
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MONTHLY INCOME FOR EACH $1,000 OF PROCEEDS - OPTION 6
- --------------------------------------------------------------------------------
FIRST SECOND PAYEE - Age Nearest Birthday
PAYEE --------------------------------------------------------------------
Age
Nearest
Birthday 61 62 63 64 65 66 67 68 69 70
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
45 $3.89 $3.91 $3.94 $3.97 $3.99 $4.02 $4.04 $4.07 $4.09 $4.12
46 3.92 3.95 3.97 4.00 4.03 4.05 4.08 4.10 4.13 4.16
47 3.95 3.98 4.01 4.03 4.06 4.09 4.12 4.14 4.17 4.19
48 3.99 4.02 4.04 4.07 4.10 4.13 4.15 4.18 4.21 4.24
49 4.02 4.05 4.08 4.11 4.14 4.17 4.19 4.22 4.25 4.28
50 4.06 4.09 4.12 4.15 4.18 4.21 4.24 4.27 4.29 4.32
51 4.10 4.13 4.16 4.19 4.22 4.25 4.28 4.31 4.34 4.37
52 4.14 4.17 4.20 4.23 4.26 4.29 4.32 4.36 4.39 4.42
53 4.18 4.21 4.24 4.27 4.31 4.34 4.37 4.40 4.43 4.47
54 4.22 4.25 4.29 4.32 4.35 4.39 4.42 4.45 4.48 4.52
55 4.26 4.30 4.33 4.37 4.40 4.44 4.47 4.50 4.54 4.57
56 4.31 4.34 4.38 4.41 4.45 4.49 4.52 4.56 4.59 4.63
57 4.35 4.39 4.43 4.46 4.50 4.54 4.57 4.61 4.65 4.68
58 4.40 4.44 4.48 4.51 4.55 4.59 4.63 4.67 4.71 4.74
59 4.45 4.49 4.53 4.57 4.61 4.65 4.69 4.73 4.77 4.80
60 4.49 4.54 4.58 4.62 4.66 4.70 4.75 4.79 4.83 4.87
61 4.54 4.59 4.63 4.68 4.72 4.76 4.81 4.85 4.89 4.94
62 4.60 4.64 4.69 4.73 4.78 4.82 4.87 4.91 4.96 5.00
63 4.65 4.70 4.74 4.79 4.84 4.89 4.93 4.98 5.03 5.07
64 4.70 4.75 4.80 4.85 4.90 4.95 5.00 5.05 5.10 5.15
65 4.76 4.81 4.86 4.91 4.96 5.02 5.07 5.12 5.17 5.22
66 4.81 4.86 4.92 4.97 5.03 5.08 5.14 5.19 5.25 5.30
67 4.87 4.92 4.98 5.04 5.09 5.15 5.21 5.27 5.32 5.38
68 4.92 4.98 5.04 5.10 5.16 5.22 5.28 5.34 5.40 5.46
69 4.98 5.04 5.10 5.16 5.23 5.29 5.35 5.42 5.48 5.54
70 5.04 5.10 5.17 5.23 5.30 5.36 5.43 5.50 5.56 5.63
- --------------------------------------------------------------------------------
</TABLE>
The rate for any combination of ages not stated in the table
will be furnished on request.
Page 20
<PAGE>
GROUP FLEXIBLE PREMIUM ADJUSTABLE LIFE
INSURANCE TO AGE 95 CERTIFICATE
DEATH PROCEEDS PAYABLE UPON DEATH OF THE INSURED BEFORE AGE 95
FUND VALUE, IF ANY, LESS ANY DEBT
PAYABLE AT THE INSURED'S AGE 95 IF THEN LIVING
<PAGE>
EXHIBIT (12)
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(All dollar amounts in millions)
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Earnings:
The Mead Corporation earnings
from continuing operations
before income taxes $222.5 $294.6 $487.7 $ 52.4 $135.0
Mead's share of earnings of
investees before income taxes 15.3 8.2 63.4 95.7 30.3
Interest and debt expense 116.2 73.3 86.0 113.4 107.5
Amortization of capitalized interest:
The Mead Corporation 5.0 4.8 4.5 4.6 6.5
Mead's share of investees .7 .7 .7 1.3 1.4
Portion of rental payments deemed
to be interest 20.1 18.6 16.9 18.0 16.5
------- ------- ------- ------- ------
$379.8 $400.2 $659.2 $285.4 $297.2
======= ======= ======= ======= ======
Combined fixed charges:
Interest and debt expense:
The Mead Corporation $ 98.2 $ 57.7 $ 69.4 $ 101.1 $ 94.6
Mead's share of investees 18.0 15.6 16.6 12.3 12.9
------- ------- ------- ------- ------
116.2 73.3 86.0 113.4 107.5
------- ------- ------- ------- ------
Capitalized interest-
The Mead Corporation 9.2 6.9 2.0 5.7 2.6
------- ------- ------- ------- ------
Portion of rental payments deemed
to be interest:
The Mead Corporation 19.7 18.2 16.4 17.6 16.2
Mead's share of investees 0.4 .4 .5 .4 .3
------- ------- ------- ------- ------
20.1 18.6 16.9 18.0 16.5
------- ------- ------- ------- ------
$ 145.5 $ 98.8 $ 104.9 $ 137.1 $126.6
======= ======= ======= ======= ======
Ratio of earnings to fixed charges 2.6 4.1 6.3 2.1 2.3
======= ======= ======= ======= ======
</TABLE>
<PAGE>
Exhibit (21)
SUBSIDIARIES OF THE MEAD CORPORATION*
State of Jurisdiction
Name of Incorporation
---- ---------------------
Escanaba Paper Company Michigan
Forest Kraft Company Delaware
MCB Woodlands and Services, Inc. Alabama
Mead Coated Board, Inc. Delaware
Mead Emballage, S.A. France
Mead Oxford Corporation Delaware
Mead Panelboard, Inc. Ohio
Mead Verpakking B.V. Amsterdam
--------------
* The names of additional subsidiaries have been omitted because the
unnamed subsidiaries, considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary.
Subsidiaries which are consolidated into the above-listed
subsidiaries are also omitted.
<PAGE>
EXHIBIT (23)
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in (i) the Form S-8 Registration
Statement (No. 33-59007) pertaining to The Mead Corporation Employees Stock
Purchase Plan, (ii) the Post-Effective Amendment No. 2 to Form S-8 Registration
Statement (No. 2-90746) pertaining to the 1984 Stock Option Plan, (iii) the Form
S-8 Registration Statements (Nos. 33-37961 and 33-47580) pertaining to the Mead
Salaried Savings Plan, (iv) the Form S-3 Registration Statements (Nos. 33-14759
and 33-34009) pertaining to Common Shares of Selling Shareholders, (v) the Form
S-3 Registration Statements (Nos. 33-43994, 33-51337 and 333-16135) pertaining
to $850,000,000 aggregate principal amount of Debt Securities, (vi) the Form S-8
Registration Statement (No. 33-40118) pertaining to the 1991 Stock Option Plan,
(vii) the Form S-8 Registration Statement (No. 33-03047) pertaining to the 1996
Stock Option Plan, (viii) the Form S-3 Registration Statement (No. 333-16221)
pertaining to transferred stock options, and (ix) the Form S-8 Registration
Statement (No. 33-53421) pertaining to the Mead Savings Plan for Bargaining Unit
Employees, and Prospectus pertaining to Common Shares of Selling Shareholders,
included in such Registration Statement, of our report dated January 22, 1998,
appearing in the Annual Report on Form 10-K of The Mead Corporation for the year
ended December 31, 1997.
DELOITTE & TOUCHE LLP
Dayton, Ohio
March 10, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT ON FORM 10-K OF THE MEAD CORPORATION FOR THE YEAR ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
THIS SCHEDULE SHALL NOT BE DEEMED TO BE FILED FOR PURPOSES OF SECTION 11 OF THE
SECURITIES ACT OF 1933, SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934 AND
SECTION 323 OF THE TRUST INDENTURE ACT OF 1939, OR OTHERWISE SUBJECT TO THE
LIABILITIES OF SUCH SECTIONS, NOR SHALL IT BE DEEMED A PART OF ANY REGISTRATION
STATEMENT TO WHICH IT RELATES.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 30
<SECURITIES> 0
<RECEIVABLES> 586
<ALLOWANCES> 25
<INVENTORY> 525
<CURRENT-ASSETS> 1,218
<PP&E> 5,541
<DEPRECIATION> 2,231
<TOTAL-ASSETS> 5,230
<CURRENT-LIABILITIES> 715
<BONDS> 1,428
0
0
<COMMON> 155
<OTHER-SE> 2,134
<TOTAL-LIABILITY-AND-EQUITY> 5,230
<SALES> 0
<TOTAL-REVENUES> 5,077
<CGS> 0
<TOTAL-COSTS> 4,177
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> 223
<INCOME-TAX> 81
<INCOME-CONTINUING> 150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 150
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.41
</TABLE>
