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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, 1999
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 25, 2000, the aggregate market value of the voting shares
held by non-affiliates of the Registrant was approximately $3,820,778,508
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 March 1, 2000 was 102,791,099.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held on April 27, 2000, are incorporated by
reference in Part III; definitive copies of said Proxy Statement were filed with
the Securities and Exchange Commission on March 8, 2000.
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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 consumer and office 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 U on pages 47-49.
Paper
Mead's Paper division manufactures coated and uncoated papers for use by
publishers of books, magazines, catalogs, and advertising brochures and by
commercial printers; 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. The division sells
papers nationwide, both on a direct basis to publishers, printers and converters
and through paper merchants. The pulp mills adjacent to the paper mills of this
division produce most of the pulp required for use in the paper mills. The
division owns various timberlands in Kentucky, Maine, Michigan, New Hampshire
and Ohio.
The Gilbert Paper division manufactures premium cotton content business
correspondence papers and premium text and cover papers for printed business
use. The papers are specified by graphic designers and sold principally through
wholesale paper merchants in the United States and internationally.
Mead's Specialty Paper division manufactures and sells, primarily through
its own sales force, decorative and overlay laminating papers. The division also
manufactures and sells tape papers and 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 market pulp manufactured by Great Lakes
Pulp and Fibre, Inc. in Menominee, Michigan, and Mead Paper of Escanaba,
Michigan and Rumford, Maine. Mead Pulp Sales also represents MODO Paper AB, of
Sweden, 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.
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
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and Greenville, Georgia, and owns various timberlands in Alabama and Georgia.
The subsidiary is engaged primarily in the manufacture of coated unbleached
kraft paperboard products used by the beverage packaging industry and by
manufacturers of folding cartons for consumer products such as 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 60% of the mill output to the Mead Packaging division. The
remainder is sold to folding carton manufacturers in North America and Europe.
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. The division
owns various timberlands in Alabama and Tennessee.
Forest Products Affiliate
Northwood Panelboard Company ("Panelboard"), a partnership owned 50% by
Mead and 50% by Nexfor Inc., located in Bemidji, Minnesota, has the annual
capacity to produce approximately 400 million square feet of oriented structural
board ("OSB") (3/8-inch basis). All of the wood products produced by Panelboard
are sold through a subsidiary of Nexfor Inc. in North America.
Consumer and Office Products
The Mead Consumer and Office Products division (formerly known as the
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 also acquired AT-A-GLANCE, a producer
and marketer of time management products including planners, organizers,
calendars and posters, in late 1999. The division's products are distributed
primarily through mass market retailers, office supply superstores, commercial
stationers, and warehouse clubs. The school supply business is highly seasonal
with inventories built in the winter and spring for shipment in late spring and
summer, the calendar planners and time management products are shipped primarily
in the second half of the year, while the home and office products and computer
accessories portion of the business is generally less seasonal in nature.
Manufacturing is done in ten facilities and distributed from eight distribution
centers in the United States. Internationally, one manufacturing facility and
distribution center is located in Canada and one manufacturing facility and
distribution center is located in Mexico.
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 and Northwood Panelboard Company in 1999 was
approximately 10,600,000 tons, of which approximately 24% was obtained from
timberlands owned or leased by Mead. The annual wood requirement for Mead's
wholly-owned operations and for Northwood Panelboard Company expected in 2000
will be approximately the same.
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As of December 31, 1999, Mead owned or controlled approximately 2,090,000
acres of timberlands in the United States. Approximately 107,000 acres of land
are controlled by Mead under long-term agreements that expire at different times
through 2027.
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
packaging systems and folding carton packaging in Europe, Asia and Latin
America. Mead Specialty Paper also operates a decorative laminating and
specialty paper mill in England. Mead also has sales subsidiaries, affiliates,
agents or distributors in a number of countries in Europe, Asia, Australia and
Latin America.
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 Paper division competes with numerous
other major paper manufacturers both domestic and foreign. The Specialty Paper
division competes primarily with North American and European based decorative
laminating papermakers. The Gilbert Paper 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 Consumer and Office Products division competes with national
and regional converters as well as foreign producers. Some of the competitors
have broad product offerings and others are focused on narrow product segments.
Employee and Labor Relations
Mead employs approximately 14,000 persons within the United States and
2,300 persons outside the United States. Approximately 7,400 are production,
maintenance and clerical employees represented by labor unions. Mead's 50% owned
company, Northwood Panelboard, employs approximately 140 persons. Mead has
approximately 26 labor agreements currently in force, of which approximately
one-fifth are subject to renegotiation each year.
Mead's employee relations policies are based on mutual confidence and
trust. All Mead labor contract negotiations during 1999 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 "Apex," "Appli," "Aria," "AT-A-GLANCE," "Blue
Horse," "Bungee," "Cambridge," "Chief," "Clearfold," "Clip Note," "Cluster-Pak,"
"CNK," "Daydream," "DayMinder," "DEFENSA," "Duodozen," "Duoply," "Dura,"
"Duraline," "Esse," "Excel," "Fastrak," "Fill the Void," "First Gear," "Five
Star," "FLIPDISC," "Gilbert," "Gilclear," "Gilcrest," "Gizmos," "Hilroy,"
"Hobbies & Ideas," "Hometown Graphics," "Info," "Jet-Tech," "Keith Clark,"
"Landmark," "Laserline," "Mailbox Collection," "Management Series," "Mead,"
"Mead Expression," "Mead Impressions," "Mead Mind Meld," "Mead Packaging," "Mead
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Papers," "MEDIAZONE," "Montag," "Neatbook," "Neu-Tech," "Nite Writer," "OPAS,"
"OPTICA," "Organizer," "Oxford," "Pal-A-Round," "Paper Knowledge," "Prima,"
"Printloc," "Prism," "PTO," "Publishers Matte," "QuickNotes," "Realm,"
"Scottie," "Signature," "Smartbook," "Spiral," "Studio," "Studio Series," "Time
Line," "Trans/Rite," "Trans/Tab," "Trans Ultra," "Trapper," "Trapper Keeper,"
"ULTRATECH," "Vision," "Voice," "Wallaroos," "Xpanz," "Zip Tote," 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
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 three years (January 1, 1997 - December 31, 1999), Mead
constructed air and water pollution control and other environmental facilities
at a cost of approximately $87 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 three years it may be required to incur
expenditures of approximately $39 million.
Various Great Lakes states, including Michigan and Ohio, have adopted water
quality regulations consistent with the federal Great Lakes Initiative ("GLI").
These state regulations remain subject to United States Environmental Protection
Agency ("USEPA") review and final approval. The regulations are subject to
change. However, Mead does not expect that any significant additional capital
expenditures beyond expenditures stated above will be necessary in the next
three years at Mead's Escanaba facility to comply with the requirements of the
Michigan GLI regulations as are likely to be finally adopted and approved by
USEPA. The State of Ohio determined that it would not apply all GLI regulations
to facilities discharging into the Ohio River Basin for the time being. Mead
does not expect that any significant additional capital expenditures beyond
expenditures stated above will be necessary in the next three years at Mead's
Chillicothe facility to comply with any requirements of the Ohio GLI regulations
as are likely to be finally adopted, approved by USEPA and made applicable to
the Ohio River Basin.
The USEPA has undertaken several initiatives to reduce ozone-causing
pollutants from large utility and industrial sources in the Midwest. These
initiatives follow claims by several "downwind" Northeastern states that
emissions from the Midwestern sources impair their ability to meet national
ozone standards. USEPA is seeking emission reductions through several
techniques, including a call for states to adopt more stringent emission
controls on all or some of the sources within their boundaries and the
promulgation of new federal
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emission standards that may be applied to specific identified sources in the
affected states. Ohio and Michigan are among the states affected by these USEPA
initiatives. Legal challenges to these initiatives have been filed or are
threatened by one or more of the affected states and various private
organizations. It is not certain what actions will be taken by the affected
states to reduce emissions or what requirements, if any, will be imposed on
individual facilities like Mead's Chillicothe, Ohio and Escanaba, Michigan
mills. However, no new emission limitations or standards are expected to take
effect before 2003.
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.
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 the Company's bleached paper mills, Mead does not expect that any
required actions in response to dioxin concerns will have a material adverse
effect on the Company.
USEPA has announced its intention to emphasize review and enforcement of
compliance with the major source air permitting program established under the
Clean Air Act. The Agency has identified certain industries on which it will
focus, including the pulp and paper industry. During 1999, USEPA issued Notices
of Violation against seven companies with kraft pulp mills in Maryland,
Pennsylvania, Virginia, and West Virginia, alleging various violations of the
Clean Air Act dating back to the late 1970's and early 1980's. Mead has received
requests for information (pursuant to Section 114 of the Clean Air Act) from
USEPA concerning Mead's kraft pulp mills in Chillicothe, Ohio, Rumford, Maine,
Phenix City, Alabama and Escanaba, Michigan. Mead has responded to three of the
requests and is preparing its responses to the other request. Mead has not
received any Notices of Violations or other claims.
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 six 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 20 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 $40 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
three years stated above. Mead believes that it is reasonably possible that
costs associated with these owned and unowned sites may exceed current reserves
by amounts that
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may prove insignificant or by as much as approximately $40 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, Mead owns all of the properties described
herein. For additional information regarding leases see Note Q on page 46. 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:
<TABLE>
<CAPTION>
Business Unit Facility Locations Principal Use
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<S> <C> <C>
Paper Chillicothe, Ohio Pulp mill, coated, uncoated and
carbonless paper mill
Escanaba, Michigan Pulp mill, coated paper mill
Indianapolis, Indiana Carbonless coating facility
Rumford, Maine Pulp mill, coated, uncoated and
specialty paper mill
Gilbert Paper Menasha, Wisconsin Cotton and recycled content and
specialty paper mill
Appleton, Wisconsin Converting and distribution
center
Specialty Paper South Lee, Massachusetts Decorative laminating and
Potsdam, New York specialty paper mills
County Devon, England
Packaging Lanett, Alabama Paperboard packaging, multiple
Atlanta, Georgia packaging systems for beverage
Buena Park, California and food, packaging machinery
Chicago, Illinois manufacturing or repair
Ajax, Ontario, Canada facilities
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
</TABLE>
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<TABLE>
<CAPTION>
Business Unit Facility Locations Principal Use
- ------------- ------------------ -----------------------------
<S> <C> <C>
Consumer and 10 manufacturing and 8 Home, office, consumer and
Office Products distribution locations school products manufacturing
throughout the United and distribution facilities
States, one manufacturing
and distribution location
in Toronto, Ontario,
Canada, one manufacturing
location in Nuevo Laredo,
Mexico, and one
distribution location in
Mexico City, Mexico
</TABLE>
Item 3. Legal Proceedings
In March 1991, Mead was served with a complaint entitled Beazer East Inc.
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v. The Mead Corporation, C.A. No. 91-0408, filed in the United States District
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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. In
November, 1999, the magistrate judge issued a report and recommendation to the
District Court concluding that Mead should be allocated approximately 74% of the
liability. In December, 1999, Mead filed objections to the report and
recommendation, which are pending before the District Court. 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, liquidity 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 1994 Mead undertook a
removal action at the closed coke plant site, consisting of demolition of
structures, removal of asbestos, control of surface water ponding and repairs to
fencing. Mead has been engaged in discussions with TDEC concerning the scope of
any additional remedial actions that may be required for the site, although no
significant progress in the negotiations can be reported through the end of
1999. 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,
which subsequently became 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 expect this proceeding will have a material adverse effect on the
financial condition, liquidity 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 subject to fines of up to $27,500 per day and punitive
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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. USEPA completed the
removal action in November, 1998, and issued a Final Action Report in 1999. More
contamination than expected was discovered and excavated. In January 2000, USEPA
sent a letter to the PRPs, including Mead, indicating the cost of the removal
action was approximately $13 million and the Agency was preparing to engage in
negotiations with the PRPs for recovery of these costs. The letter did not
address future remediation costs; however, USEPA issued a draft Feasibility
Study in 1999 that estimated future costs to complete the remediation of
Chattanooga Creek in the range of $6.3 million to $12.6 million. 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,
liquidity or results of operations of the Company.
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.
A patent infringement proceeding entitled Riverwood International
-----------------------
Corporation v. The Mead Corporation was brought against Mead in the United
- -----------------------------------
States District Court for the Northern District of Georgia (Civil Action No. 1-
94-CV-90 CAM) by Riverwood International Corporation. On March 9, 1998 a Special
Master's decision was entered in the proceeding which held that Riverwood's '806
patent was invalid. Riverwood filed objections to the Special Master's Order on
the issue of invalidity. The District Court heard the objections on October 27,
1998 and reversed the Special Master's conclusion of invalidity on January 13,
1999. The order of the District Court was appealed to the Court of Appeals for
the Federal Circuit (Appeal No. 99-1274). A second patent infringement
proceeding against Mead filed by Riverwood with the same title and in the same
court (Civil Action No. 97-CV-2767) has been stayed pending the outcome of the
case involving the '806 patent. The second proceeding involves Riverwood's '789
and '361 patents. Mead expects these proceedings will not have a material
adverse effect on the financial condition, liquidity or results of operation of
the Company.
Additional information is included in Part I, Item 1, "Business--
Environmental Laws and Regulations," and Note R on pages 46-47.
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, 2000, their ages,
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:
Name Age Position and Offices
---- --- --------------------
Elias M. Karter 59 Executive Vice President since April, 1996;
prior to that Vice President, Operating
Officer since July, 1994.
Raymond W. Lane 51 Executive Vice President since April, 1996;
prior to that Vice President, Operating
Officer since July, 1994.
Sue K. McDonnell 51 Vice President, General Counsel and
Secretary since June, 1999; prior to
that Vice President, Deputy General
Counsel since 1996; prior to that Deputy
General Counsel since 1995.
Timothy R. McLevish 45 Vice President and Chief Financial
Officer since December, 1999; prior to
that Vice President, Finance and
Treasurer since 1998; prior to that
President of the Specialty Paper
Division.
Wallace O. Nugent 61 Vice President, Purchasing and Logistics.
William B. Plummer 41 Vice President, Strategy and Planning since
July, 1998; prior to that Treasurer since
February, 1997; prior to that Vice
President, Equity Capital Group since May,
1995 with General Electric Company; prior to
that Business Analyst, Corporate Financial
Planning since February, 1994 with General
Electric Company.
A. Robert Rosenberger 55 Vice President, Human Resources since June,
1997; prior to that Vice President of Human
Resources of Mead Packaging Division since
August, 1994.
Jerome F. Tatar 53 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.
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Name Age Position and Offices
---- --- --------------------
Peter H. Vogel, Jr. 46 Vice President, Finance and
Treasurer since December, 1999;
prior to that Vice President -
Business Affairs since February,
1999; prior to that President of
the Zellerbach Division since
January, 1997; prior to that
President of the Gilbert Paper
Division since March, 1993.
All Executive Officers of Mead are elected annually by the Board of Directors.
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
- ------------------------------
1999 1998
---- ----
High Low High Low
---- --- ---- ---
First quarter $33.312 $28.312 $37.312 $27.062
Second quarter 44.750 32.562 37.125 28.437
Third quarter 46.312 33.000 33.563 25.938
Fourth quarter 43.625 32.375 33.500 27.000
DIVIDENDS PAID PER COMMON SHARE
- -------------------------------
1999 1998
---- ----
First quarter $.16 $.16
Second quarter .16 .16
Third quarter .16 .16
Fourth quarter .17 .16
---- ----
Year $.65 $.64
==== ====
The number of Common shareowners of record as of March 1, 2000, was 53,412.
See Note I on pages 35-36 for information regarding the amount of retained
earnings available for dividends.
10
<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 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Operations:
Net sales $3,799.5 $3,772.2 $3,745.8 $3,303.9 $3,402.8
Earnings from continuing
operations 208.1 140.1 163.0 183.8 333.9
Earnings per common share
from continuing operations
- assuming dilution 1.99 1.34 1.53 1.73 3.02
Liquidity:
Working capital 229.7 406.9 312.7 280.1 401.2
Current ratio 1.2 1.6 1.5 1.4 1.5
Assets:
Property, plant and
equipment-net 3,357.4 3,372.7 3,273.8 3,084.6 2,328.3
Total assets 5,661.7 5,142.2 5,152.4 4,905.9 4,284.0
Capital:
Borrowed capital -
long-term debt 1,333.7 1,367.4 1,428.0 1,239.7 694.8
Equity capital 2,430.8 2,252.0 2,288.5 2,246.4 2,160.2
----------------------------------------------------
Total capital $3,764.5 $3,619.4 $3,716.5 $3,486.1 $2,855.0
Borrowed capital as a percent
of total capital 35.4% 37.8% 38.4% 35.6% 24.3%
Cash dividends per common share $ .65 $ .64 $ .61 $ .59 $ .55
</TABLE>
11
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
REVIEW OF OPERATIONS
--------------------
OVERVIEW OF 1999
Sales revenue of $3.80 billion in 1999 was essentially unchanged from the level
of $3.77 billion in 1998 as higher shipments of paper and paperboard offset
lower selling prices for many paper products. Prices for paper declined in the
second half of 1998 and for much of 1999. Average selling prices in 1999 were
lower than in 1998 for coated paper, carbonless paper and uncoated paper.
Earnings from continuing operations were $208.1 million in 1999 compared to
$140.1 million in 1998. The increase in 1999 was largely a result of a $52.7
million after-tax gain on the sale of Mead's 50% ownership in Northwood Inc.
Earnings from continuing operations before special items increased 2% in 1999
compared to 1998.
Within Mead's Paper segment, sales volume increased from 1998 levels for coated,
uncoated, carbonless and specialty papers as a result of strong demand. Paper
segment earnings were lower as selling prices in the marketplace for many paper
products, especially coated paper, continued the decline that began in the
second half of 1998. Prices stabilized in the second half of 1999 and a price
increase was announced near year-end. Inventory levels at year-end 1999 were
lower than at year-end 1998 in coated paper as a result of market-related
downtime and increased sales volume. Sales volume growth continued in industrial
specialty papers with the purchase of a small specialty paper mill in the third
quarter.
In the Packaging and Paperboard segment, sales and earnings improved on higher
sales volume and higher selling prices for corrugating medium. Sales volume of
coated paperboard increased to Mead's integrated packaging business and to open
market folding carton customers. Production increased at the expanded Stevenson,
Alabama, containerboard mill and at the Mahrt coated paperboard mill in Phenix
City, Alabama. Mead Packaging division's sales were lower, primarily as the
result of the sale of two small business units in 1998. Packaging's earnings
declined on reduced margins and weaker foreign currencies primarily in Europe.
For the Consumer and Office Products segment, sales revenue in 1999 increased
over 1998 as a result of the acquisition of AT-A-GLANCE, a producer of time-
management products. Without the acquisition, sales and earnings would have been
lower than in 1998, as a result of lower selling prices and lower unit volume
for school and office supplies.
<TABLE>
<CAPTION>
Review of Operations
Earnings Per Share Analysis
----------------------------------------------------------------------
1999 1998 1997
----------------------------------------------------------------------
<S> <C> <C> <C>
Continuing operations before
special items $1.58 $1.55 $1.53
Special items .41 (.21)
----- ----- -----
Continuing operations 1.99 1.34 1.53
Discontinued operations (.20) (.12)
----- ----- -----
Net earnings (assuming
dilution) $1.99 $1.14 $1.41
----------------------------------------------------------------------
</TABLE>
SPECIAL ITEMS AND DISCONTINUED OPERATIONS
- -----------------------------------------
During 1999, Mead sold several non-strategic assets including its 50% ownership
in its principal investee, Northwood Inc. of Prince George, British Columbia,
Canada, for $240 million (Canadian) in cash and convertible debentures of $77.5
million (Canadian). The assets of Northwood Inc. included a pulp mill and
lumber
12
<PAGE>
and plywood facilities. Mead recorded an after-tax gain of 50 cents per share
($52.7 million) related to this sale. Earnings from investees in 1999 totaled
$34.7 million, compared to a loss of $1.8 million in 1998.
In addition, in 1999 Mead completed the sale of the merchandising unit of its
packaging business and a sawmill that was part of its Paper segment. Proceeds
from the sale of these assets were approximately the same as the asset value and
therefore had no impact on earnings. Mead purchased a small specialty paper mill
in County Devon, England in the third quarter of 1999. In the fourth quarter,
Mead purchased the AT-A-GLANCE group of Cullman Ventures, Inc. for approximately
$540 million, which has become a part of Mead's Consumer and Office Products
segment.
Special items in 1999 also included a total pretax charge of $18.9 million
($11.9 million after tax) or 11 cents per share for asset write-offs and
severance costs related to the shutdown of four uncoated paper machines at the
company's mill in Rumford, Maine. The charges (see Note K to the Financial
Statements) were taken during the second and fourth quarters of 1999.
In the third quarter of 1998, Mead recorded a pretax charge of $22 million or 13
cents per share, for an organizational change and workforce reduction program
that included plans for eliminating 318 positions. As a result of refinements in
the program, 291 positions were eliminated and actual costs related to the
program, which included costs for severance and outplacement benefits, were
reduced. As a result of lower costs, the company reversed $2.7 million (pretax),
or two cents per share, of the original charge to selling and administrative
expenses in the third quarter of 1999.
During 1998, Mead undertook a number of initiatives that included the sale of
its Distribution segment and related real estate for $288 million which resulted
in an after tax charge of $20.4 million or 20 cents per share (see Note N to the
Financial Statements). Special items in 1998 included asset write-downs, asset
sales, organizational changes and related workforce reductions. For asset write-
downs and employee termination costs, the company recorded a pretax charge of
$37.7 million ($26.8 million after tax) or 25 cents per share. Asset sales in
the fourth quarter of 1998 resulted in pretax gains of $28.3 million ($17.8
million after tax) or 17 cents per share.
Paper Segment
<TABLE>
<CAPTION>
---------------------------------------------------------
1999 1998 1997
---------------------------------------------------------
<S> <C> <C> <C>
Sales $1,783.3 $1,795.6 $1,797.8
Earnings before
income taxes and
special items 165.0 222.7 195.6
Special items (17.4) (16.4)
-------- -------- --------
Earnings before
income taxes $ 147.6 $ 206.3 $ 195.6
---------------------------------------------------------
</TABLE>
Sales revenue in the Paper segment was essentially unchanged from 1998. Earnings
before special items decreased 26% from 1998 primarily as a result of lower
selling prices for all major grades of paper.
Demand in the U.S. for coated paper strengthened in 1997 and selling prices
began to strengthen by the second half of the year. Prices continued to improve
into the first quarter of 1998. In the second quarter of 1998, as markets
weakened in
13
<PAGE>
Asia Pacific, the flow of imports of coated paper into the U.S. increased,
primarily from Europe. Increased supply from imports led to a decline in selling
prices for coated paper by the second half of 1998. Prices continued to decline
through the first half of 1999. Prices stabilized in the second half of the year
and improved slightly in the fourth quarter. For the year, Mead's average
selling prices for coated paper declined 7%. Mead took market-related downtime
of 40,000 tons in coated paper in the second half of 1998 and continued to take
market-related downtime in the first three quarters of 1999, which totaled
67,000 tons. Average selling prices were also lower in 1999 than 1998 for
uncoated and carbonless paper.
In 1998, sales revenue in the Paper segment was essentially unchanged from 1997.
Earnings before special items increased 14% over 1997 primarily as a result of
improved operating performance.
Paper
- -----
Mead Paper manufactures and sells coated paper for use by book and magazine
publishers and by catalog and commercial printers, carbonless copy paper for use
in multi-part business forms and uncoated paper. The division operates three
mills located in Ohio, Maine and Michigan.
Division sales revenue was essentially unchanged from 1998 levels as higher
shipping volume was offset by lower selling prices for all grades of paper.
Earnings were lower as a result of lower prices, partially offset by higher
volume and improvements in productivity that led to lower unit cost. The mills
operated well, although productivity improvement was constrained by market-
related downtime taken in coated paper. As a result of market-related downtime,
production of coated paper declined slightly from the level of 1998. The
division's inventory of coated paper declined during 1999 as a result of lower
production and higher selling volume. Sales volume of carbonless paper increased
slightly from the level of 1998 returning to the level of 1997, despite an
overall decline in the market for multi-part business forms.
During the year, the division announced plans to permanently shut down four
older paper machines at its Maine mill at year-end 1999. The machines produced
uncoated paper, which is not a strategic business for Mead. The division also
continued to improve manufacturing efficiencies across its three mills,
rationalizing product grade lines and moving the production of grades to
machines and mills within its system where the grades can be produced most
efficiently.
In 1998, division sales revenue was essentially unchanged from 1997 as lower
shipping volume was offset by higher selling prices. Earnings increased in 1998
over 1997 as a result of higher selling prices and improvement in productivity
and cost control.
Specialty Paper
- ---------------
Mead Specialty Paper division manufactures a variety of decorative and overlay
papers for laminates used in furniture, flooring, countertops and cabinets. It
also produces specialty grades including tape papers and filter and friction
papers for industrial and automotive applications. The division has a total of
four mills located in South Lee, Massachusetts; Potsdam, New York; and County
Devon, England.
Division sales increased over 1998 as a result of higher shipments of several
specialty grades including wear-resistant overlay papers, filter and friction
papers and tape papers. Earnings were slightly higher in 1999 than in 1998 as a
result of higher shipments. Demand for wear-resistant overlay continued to grow
in North America, Europe and Asia Pacific. The division's shipments for this
grade increased over 1998 and 1997 levels. Shipment volume of tape papers also
increased in 1999.
14
<PAGE>
In the second half of 1999, the division acquired a specialty paper mill in
County Devon, England, which produces decorative papers as well as papers for
automotive filter products, food packaging and vacuum bags. The Potsdam mill
completed a capital project initiated in 1998 to upgrade its product mix to
include the production of overlay papers.
In 1998, the division's sales and earnings increased over 1997. The increase was
driven by the addition of shipments from the Potsdam mill acquired in the second
quarter of 1998 and from productivity improvements at its South Lee mills.
Gilbert Paper
- -------------
Gilbert Paper division produces premium cotton-content business correspondence
papers and premium text and cover papers at its mill in Menasha, Wisconsin.
Division sales revenue declined in 1999 from the levels of 1998 and 1997. The
decline was a result of lower shipments due to weaker market conditions and a
strategic decision to reduce production and sale of lower-margin products.
Despite lower sales revenue, earnings in 1999 improved over the level of 1998 as
a result of a more profitable sales mix, a reduction of fixed and variable costs
and improved operating efficiencies. The reduction in costs was partially offset
by higher costs for purchased pulp in the second half of the year. Division
shipments increased through its primary channel of merchant distribution; direct
sales decreased, while export and retail sales remained stable.
In 1998, the division's operating results decreased from 1997 levels as a result
of lower sales volume reflecting weak markets.
Packaging and Paperboard Segment
<TABLE>
<CAPTION>
--------------------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------------------------------------
Sales $1,506.9 $1,494.2 $1,431.8
Earnings before
income taxes and
special items 169.2 153.8 129.6
Special items .8 (11.3)
-------- -------- --------
Earnings before
income taxes $ 170.0 $ 142.5 $ 129.6
--------------------------------------------------------
</TABLE>
Sales revenue for the Packaging and Paperboard segment was essentially unchanged
in 1999 as higher sales volume and selling prices for corrugating medium offset
lower sales revenue in coated paperboard and packaging. Earnings before special
items increased 10% over 1998, primarily as a result of improved pricing for
medium.
Prices for corrugating medium strengthened beginning in the second quarter of
1999 after declining throughout 1998. Mead's average selling prices increased
approximately 10% over 1998. The improvement in 1999 came as a result of
continued strengthening in demand and a reduction in containerboard supply in
domestic markets. Supply declined in 1998 and 1999 as a result of the closure of
industry containerboard capacity, as reported by the American Forest and Paper
Association. Prices for corrugated containers also averaged approximately 5%
higher in 1999 than in 1998. Mead's average selling prices of coated paperboard
sold to folding carton manufacturers were slightly lower than in 1998.
In 1998, sales revenue in the segment increased on higher sales volume of coated
paperboard, corrugating medium and beverage packaging. Earnings before special
15
<PAGE>
items increased 19% over 1997, primarily as a result of continued growth in
multiple beverage packaging.
Containerboard
- --------------
Mead Containerboard produces corrugating medium at its mill in Stevenson,
Alabama. It also produces shipping containers at eight corrugated container
plants.
Division sales revenue increased in 1999 over 1998 as shipment volume of
corrugating medium continued to increase following the completion of the mill
expansion in mid-year 1998. Earnings improved significantly over 1998 and 1997
as a result of higher shipments of medium and higher selling prices for medium
and containers. Costs for purchased recycled fiber used in the production of
medium were higher in 1999 than in 1998. Production costs were higher than in
1998 at the Stevenson mill as a result of operating difficulties with the
chemical recovery and conversion systems installed in 1998. In addition, the
mill encountered interruptions in production on the newer paper machine that was
expanded last year. By year-end, these operating difficulties were substantially
resolved. For the full year, production volume at the mill increased over 1998
and 1997 including production of lightweight medium for this growing segment of
Containerboard.
In 1998, sales revenue increased over the level of 1997 as shipment volume of
corrugating medium increased following expansion of the mill. Operating results
improved slightly over 1997, primarily as a result of increased volume. In 1998,
the division completed an expansion of the mill and reorganized its operations
in an effort to reduce selling and administrative costs and improve operating
efficiency.
Coated Board
- ------------
Mead Coated Board manufactures coated unbleached kraft paperboard for use in
multiple beverage packaging and folding cartons. The coated paperboard is
produced at the Mahrt mill near Phenix City, Alabama. Approximately 60% of the
paperboard production is used by Mead Packaging division's worldwide beverage
packaging business. The remainder is sold to folding carton manufacturers in
North America and Europe.
Sales volume of coated paperboard increased to Mead's integrated packaging
business. Sales volume to external customers was slightly higher as sales to
open market customers increased in North America, but declined in international
markets. Earnings for the division increased slightly from 1998 on higher sales
volume of paperboard and higher selling prices for lumber at the division's
sawmill operations, partially offset by lower selling prices for coated
paperboard. Production at the Mahrt mill increased during 1999, despite 20,000
tons of market-related downtime taken during the year. Finished inventory levels
were down slightly from year-end 1998 as a result of higher shipment volume and
production downtime. Operating costs were unchanged from 1998.
In 1998, sales revenue from external customers was slightly lower than in 1997.
Shipments to Mead Packaging increased for multiple beverage packaging
applications over the levels of 1997. Earnings for the division in 1998 were
unchanged from 1997 as increased overall sales volume of coated paperboard and
improved mill productivity were offset by weaker results from the division's
sawmill operations.
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
16
<PAGE>
food and other consumer products companies. The division has packaging plants in
North America, Europe and Japan and packaging licensees in several international
markets.
Division sales revenue declined slightly from 1998 as a result of the sale of
two small business units and weaker foreign currencies. Sales volume of cartons
increased in 1999 over 1998. Earnings decreased in 1999 from 1998 as a result of
a weaker sales mix, costs for outsourcing some manufacturing, the impact of
currency exchange rates primarily from the weakening of the euro versus the U.S.
dollar, and costs associated with reducing the number of employees in its
European operations. Carton volume increased in Japan, Australia and Latin
America, reflecting continued growth in regional demand. Carton volume was
essentially unchanged in North America and Europe, reflecting lower sales volume
to soft drink bottlers in those regions and consolidation in the brewery
industry. During 1999, the division continued worldwide placement of new modular
beverage packaging systems with customers in international markets at a rate
similar to 1998, despite competitive pressures from other packaging materials
and non-proprietary packaging systems.
In 1998, sales revenue increased over 1997 as a result of higher sales volume.
Earnings increased over 1997 as a result of strong volume in North America,
slightly higher selling prices and gains in productivity from improved cost
control.
Consumer and Office Products Segment
<TABLE>
<CAPTION>
--------------------------------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------------------------------
Sales $509.3 $482.4 $516.2
Earnings before
income taxes and
special items 37.9 47.4 57.3
Special items .1 (4.6)
------ ------ ------
Earnings before
income taxes $ 38.0 $ 42.8 $ 57.3
--------------------------------------------------
</TABLE>
Consumer and Office Products is a producer and distributor of school supplies in
North America. It also provides stationery products and computer accessories for
home and office use. In 1999, Mead acquired AT-A-GLANCE, as part of its Consumer
and Office Products segment. AT-A-GLANCE is a leading producer and marketer of
time-management products including planners, appointment books, desk and wall
calendars, organizers, posters and related accessories. The segment, formerly
known as School and Office Products, was renamed Consumer and Office Products
following the acquisition of AT-A-GLANCE.
Sales revenue for the segment increased over 1998 as a result of the acquisition
of AT-A-GLANCE in the fourth quarter of 1999. Without the acquisition, sales
revenue and earnings would have been lower than in 1998 as a result of lower
selling prices and lower unit volume of school and office supplies. Segment
earnings before special items declined 20% from 1998. Lower prices for paper
used in tablets and envelopes led to lower selling prices for many products.
Unit volume declined in 1999 as mass retailers shifted the way they managed
inventory, reducing the levels they hold. The segment's results were also
affected by increased foreign competition in commodity-based and value-added
products and from the lack of a strong new product line for the back-to-school
selling season.
Under the direction of a new management team, the division took steps to
strengthen its new product development and announced new licensing arrangements
17
<PAGE>
for the back-to-school selling season in 2000. In addition, in 1999 Mead
established a subsidiary to expand its current manufacturing and sales in the
Mexican market. Mead acquired assets of a Mexican distribution company that has
distributed Mead's school supplies in the region for more than 10 years. With
the acquisition of AT-A-GLANCE, Mead broadened its distribution system in office
products channels, which include office superstores and commercial and contract
stationers, complementing Mead's existing presence in school products with mass
retailers. The combination also should enable Mead to offer current mass retail
customers an expanded product line of time-management products with the AT-A-
GLANCE brand name.
In 1998, sales declined by 7% compared to 1997 as a result of lower sales
volume. Earnings declined from 1997 as lower overall sales volume more than
offset improved sales mix and margin rates.
SELLING AND ADMINISTRATIVE EXPENSES
- -----------------------------------
Selling and administrative expenses for 1999 were $433 million compared to $422
million in 1998. Included in 1998 expenses was a charge of $22 million
associated with certain organizational changes and a related reduction in Mead's
workforce. Excluding the effect of this charge, the increase in selling and
administrative expenses from 1998 to 1999 was $33 million, of which the majority
was November and December expenses from AT-A-GLANCE which Mead acquired on
November 1, 1999. Another factor contributing to the increase was expense
associated with Mead's project to implement an enterprise resource planning
("ERP") system. Excluding the 1998 charge for organizational changes, 1998
expenses were under the 1997 level of $404 million, driven by reduced
administrative expenses.
OTHER REVENUE
- -------------
Other revenue amounts for 1999, 1998 and 1997 were $97 million, $34 million and
$7 million, respectively. A gain of $82 million on the sale of Mead's investment
in Northwood Inc. was the most significant component of other revenue in 1999.
Gains on the sales of other non-strategic assets amounted to $4 million in 1999
and $28 million in 1998. Investment income was $5 million, $6 million and $3
million in 1999, 1998 and 1997, respectively. Of the remaining $6 million in
1999, the most significant item was foreign exchange hedge gains, helping offset
the negative effects of weaker currencies in many of the countries in which Mead
has foreign operations.
INTEREST AND DEBT EXPENSE
- -------------------------
Interest and debt expense of $105 million decreased by 3.6 % from the 1998
level of $109 million, despite the increase in the amount of total borrowings at
year-end 1999. During most of the year, average debt levels were lower than
during 1998. When compared with interest and debt expense for 1997 of $98
million, the 1998 level was higher due to slightly higher average debt levels.
Interest rates paid by Mead were not significantly different during the three
years, although short-term rates paid by Mead moved up late in 1999.
FINANCIAL REVIEW
----------------
LIQUIDITY AND CAPITAL RESOURCES
During 1999, Mead spent $570 million to purchase AT-A-GLANCE and two other much
smaller entities. These acquisitions were financed with available funds and
short-term borrowings. By year-end, the short-term borrowings were reduced by
cash proceeds from the sale of Northwood Inc. and other subsequent cash flows
from operations. Mead expects the $186 million in short-term borrowings at
December 31, 1999, to be substantially paid off by the end of 2000 in the
ordinary course of business, provided additional borrowings are not required to
fund strategic initiatives.
18
<PAGE>
During 1999, Mead's cash flow from operating activities was $474 million
compared to $420 million and $400 million in 1998 and 1997, respectively.
Improved earnings drove the increase in cash flow compared to 1998.
During 1999, Mead received $53 million as proceeds from issuances of common
shares resulting from employee exercises of stock options. Proceeds resulting
from stock option exercises in 1998 and 1997 were $15 million and $44 million,
respectively.
Mead continued its stock repurchase program in 1999, acquiring 1.2 million
shares for $43 million. Share repurchases in 1998 were 2.6 million shares for
$83 million, and 2.1 million shares for $70 million in 1997. Funds for the 1999
repurchases came from internally generated cash flows.
Mead's total debt (including notes payable and current maturities) at year-end
1999 was $1.555 billion, up from $1.375 billion in 1998 and $1.430 billion in
1997. A portion of the proceeds of the sale of Mead's distribution business was
used to reduce overall debt levels in 1998. During 1998 and 1999, Mead
refinanced some of its borrowings related to the Stevenson, Alabama mill. Mead's
total debt as a percentage of total capital was 39.0% at the end of 1999
compared with 37.9% at the end of 1998 and 38.5% at the end of 1997. The
percentages may change, as warranted, by borrowings to fund strategic
opportunities.
Additional financing capability is afforded by a $500 million bank credit
agreement which expires in October 2002 and a bank credit agreement of $200
million which expires in October 2000. The bank credit agreements support $59.5
million of the company's capital lease obligations and $165.2 million of short-
term borrowings, leaving $475.3 million that can be borrowed.
At the end of 1999, Mead paid a fixed or capped rate on 67% of its debt and paid
a floating rate of interest on the remaining amount. A change of 1% in the
floating rate, on an annual basis, would result in a change of three cents in
earnings per share. The estimated market value of long-term debt was $39 million
less than book value at the end of 1999.
Working capital at the end of 1999 was $230 million, down from $407 million and
$313 million at the end of 1998 and 1997, respectively. The decrease from 1998
was primarily attributable to a $213 million increase in notes payable and
current maturities and a $46 million reduction in cash, offset by approximately
$69 million of working capital from AT-A-GLANCE. The 1998 increase from 1997 was
primarily driven by growth in cash and inventory balances. Mead's current ratios
at the end of 1999, 1998 and 1997 were 1.2, 1.6 and 1.5, respectively. Mead's
inventory levels increased by $10 million to $490 million in 1999 compared
with $480 million in 1998 and $424 million in 1997. The increase arising from
the acquisition of AT-A-GLANCE partially offset reductions occurring elsewhere
in the company. The replacement values of inventories exceeded their LIFO values
by $170 million at the end of 1999. Adjusted for LIFO, Mead's current ratio
would be 1.3 at year-end.
CAPITAL SPENDING
Capital spending in 1999 was $213 million, down considerably from 1998 and 1997
levels of $384 million and $437 million, respectively. Much of the 1998 and 1997
spending was related to the $224 million expansion and upgrade at the Stevenson,
Alabama, corrugating medium mill, which was completed in mid-1998. That project
added virgin pulp-making capabilities, a wood fuel boiler and additional dryer
capacity to the paper machine. That expansion increased the mill's annual
capacity to 815,000 tons from 640,000 tons.
In 1999, there were several projects at the specialty paper mill in Potsdam, New
York, the paper mill in Chillicothe, Ohio, and the coated paperboard mill in
Alabama.
19
<PAGE>
EFFECTS OF INFLATION
Inflation remains at a low rate and is not expected to have a significant effect
in the near term.
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 PRP, or has received third party
requests for contributions under federal, state or local laws with respect to at
least 20 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 that may contain contamination or 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 $40 million related to current
environmental litigation and proceedings that 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 $40 million. The estimate of this range is
less certain than the estimates upon which the reserves are based.
In April 1998, USEPA promulgated 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 regulations. Various
Great Lakes States in 1997, including Michigan and Ohio, adopted state
regulations consistent with the Federal Great Lakes Initiative ("GLI"). These
state regulations remain subject to USEPA review and final approval. The
regulations are subject to change. However, Mead does not expect any
significant additional capital expenditures beyond those previously stated in
Part I, Item 1, "Business - Environmental Laws and Regulations," will be
necessary in the next three years at Mead's Escanaba facility to comply with the
requirements of the Michigan GLI regulations as are likely to be finally adopted
and approved by USEPA. The State of Ohio determined that it would not apply all
GLI regulations to facilities discharging into the Ohio River Basin, for now.
Mead's Chillicothe, Ohio, facility discharges into the Ohio River Basin. Mead
does not expect that any significant additional capital expenditures beyond
those referenced above will be necessary in the next three years at Mead's
Chillicothe facility to comply with any requirements of the Ohio GLI regulations
as are likely to be finally adopted, approved by USEPA and made applicable to
the Ohio River Basin.
YEAR 2000 READINESS DISCLOSURE
Mead did not experience any significant Year 2000 issues in its information
technology ("IT") systems nor non-information technology systems through January
31, 2000. No major business processes, operations or customer deliveries were
disrupted as a result of the Year 2000 issue.
Beginning in 1997, Mead worked through a five-step process in dealing with the
Year 2000 issue: inventory; assessment; corrective action; testing; and
implementation. Mead completed all five steps with regard to its information
technology systems by year-end 1999. Mead completed all five steps with regard
20
<PAGE>
to its non-IT systems, (process control systems in its manufacturing and
converting facilities) for all critical systems by year-end 1999.
Through the fourth quarter of 1999, the total cost associated with the company's
remediation of the Year 2000 issue from 1997 through year-end 1999 was
approximately $28 million. The total cost includes approximately $16 million in
repair costs and $12 million in replacement costs. Mead had estimated the total
cost to be approximately $30 million.
The company had contingency plans within each of its businesses for addressing
the greatest areas of risk of noncompliance or threats to business operations or
company assets related to the Year 2000 issue.
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 5 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 risk by estimating the potential increase in
fair market value of its debt that would result 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 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 by approximately $81 million and $91 million, at December
31, 1999 and 1998, respectively.
During 2000, several financial instruments will mature and the company will
consider alternatives that are consistent with business conditions, the interest
rate environment and its management policy on interest rate exposure.
FOREIGN CURRENCY
Mead has foreign-based operations, primarily in Canada and Western Europe, which
accounted for approximately 14% of its 1999 net sales. In addition, certain of
Mead's domestic operations have 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's foreign currency management policy
permits Mead to enter into foreign currency hedges when these flows exceed a
threshold which is a function of these cash flows and forecasted annual net
income. During 1999, the company entered into foreign currency hedges to
partially offset the foreign currency impact of these flows on operating
earnings.
21
<PAGE>
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, 1999, 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 and demand. While growth in demand is generally gradual and tracks the
rate of domestic economic growth, new supply comes onto the market in large
increments with the start-up of new production capacity. The result can be
temporary periods of oversupply that lead to price weakness, as in 1998 and
1999. New capacity for paper and paperboard in the U.S. is expected to grow at a
slower rate between 2000 and 2002 than in the previous three years, according to
the American Forest and Paper Association. New global capacity, in Europe, Asia
Pacific and Canada, has increasingly become a factor in recent years. In 1998
and 1999, new global capacity, weaker markets in Asia Pacific and a strong U.S.
dollar relative to many foreign currencies led to an increase in imports into
the U.S., lower selling prices for much of the year and an increase in market-
related downtime by U.S. paper producers. The overall market demand for
carbonless copy paper used in multi-part business forms continued to decline
gradually in 1999 as it did in 1998 and 1997. The potential for e-commerce to
affect the market for coated paper, which is used for mail order catalogs and
magazines, is unknown at this time. Any impact of e-commerce to date appears to
be additive to the traditional uses of coated printing papers.
The sales by Mead's foreign operations are approximately 14% of overall sales,
with most of it in Mead's Packaging, Coated Board and Consumer and Office
Products divisions, primarily in Europe and Canada. Fluctuations in European and
Canadian currencies can affect operating results of these divisions. Continuing
restructuring of Mead's business portfolio has reduced exposure in Canada, with
the sale of the company's Northwood investee, and added the potential for
exposure with its relatively small acquisitions in the United Kingdom and
Mexico. While the impact of currency fluctuations can affect the results of
Mead's individual businesses, the impact in 1998 and 1999 was not significant to
Mead's overall results.
During the year, Mead continued the initial phases of a multi-year
implementation of an ERP software system across the company. Mead expects the
technology and the redesign of business processes will help achieve meaningful
cost reductions and enhanced operating efficiencies. Mead expects a 5% reduction
in the number of salaried employees when the implementation is completed, and
expects charges in future quarters related to the ERP implementation. Mead
previously stated that total charges could be as much as $15 million in future
quarters. Mead expects to spend in the range of $100 million to $125 million to
implement its ERP system between 1998 and 2002. Through 1999, Mead incurred
costs totaling approximately $48 million. These costs include incremental costs
for hardware and software, and non-incremental costs such as redeployment of
company resources. The expenditures
22
<PAGE>
for this system will replace some expenditures that would have been spent to
upgrade or replace existing planning systems. These costs do not include costs
incurred by operating divisions as they implement the ERP system. Some of the
ERP costs will be expensed as incurred. Other costs, such as those for the
purchase of systems, will be capitalized in accordance with generally accepted
accounting principles. In 1998 and 1999, approximately 70% of the costs were
capitalized and 30% were expensed. During 1998 and 1999, Mead assembled an
implementation team, developed a common format for the system corporate wide and
began a multi-year, phased-in implementation program. The initial implementation
was successful at two small Mead operating facilities in the fourth quarter of
1999. In 2000, Mead's Coated Board and Paper divisions are scheduled to
implement the ERP system with additional company divisions to follow in 2001 and
2002.
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 Pacific; demand for paper and paperboard in U.S., European and
Asia Pacific markets; market prices for these products; fluctuations in foreign
currency, primarily in Europe; the stability of financial markets; capacity
spending levels in the industry; general business and economic conditions in the
U.S., Europe, Asia Pacific and South America; interest rates and their
volatility; government actions; 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.
Item 8. Financial Statements and Supplementary Data
Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
Financial Statements:
Independent Auditors' Report............................... 24
Statement of earnings...................................... 25
Balance sheets............................................. 26
Statement of shareowners' equity........................... 27
Statement of cash flows.................................... 28
Notes to financial statements.............................. 29-49
Supplementary Data
Selected quarterly financial data........................... 50
</TABLE>
23
<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 at December 31, 1999 and 1998, and the related
statements of earnings, shareowners' equity and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements 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, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Dayton, Ohio
January 27, 2000
24
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF EARNINGS
- ----------------------
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
(All amounts in millions, except per share amounts)
<S> <C> <C> <C>
Net sales $3,799.5 $3,772.2 $3,745.8
Cost of products sold (Note K) 3,086.6 3,049.5 3,008.5
------------------------------
Gross profit 712.9 722.7 737.3
Selling and administrative expenses (Note K) 432.6 422.3 404.4
------------------------------
Earnings from operations 280.3 300.4 332.9
Other revenues - net (Note L) 96.7 34.2 7.3
Interest and debt expense (105.1) (109.0) (98.2)
------------------------------
Earnings from continuing operations before income taxes 271.9 225.6 242.0
Income taxes (Note M) 98.5 83.7 87.9
------------------------------
Earnings from continuing operations before equity in net
earnings (loss) of investees 173.4 141.9 154.1
Equity in net earnings (loss) of investees 34.7 (1.8) 8.9
------------------------------
Earnings from continuing operations 208.1 140.1 163.0
Discontinued operations (Note N) (20.4) (12.9)
------------------------------
Net earnings $ 208.1 $ 119.7 $ 150.1
==============================
Earnings per common share - basic (Note A):
Earnings from continuing operations $ 2.04 $ 1.36 $ 1.56
Discontinued operations (.20) (.12)
------------------------------
Net earnings $ 2.04 $ 1.16 $ 1.44
==============================
Weighted-average number of common shares outstanding 102.3 103.3 104.5
==============================
Earnings per common share - assuming dilution (Note A):
Earnings from continuing operations $ 1.99 $ 1.34 $ 1.53
Discontinued operations (.20) (.12)
------------------------------
Net earnings $ 1.99 $ 1.14 $ 1.41
==============================
Weighted-average number of
common shares outstanding - assuming dilution 104.6 104.9 106.4
==============================
</TABLE>
See notes to financial statements.
25
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
December 31 1999 1998
(All amounts in millions)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 56.4 $ 102.0
Accounts receivable, less allowance
for doubtful accounts of $15.5 in 1999
and $17.3 in 1998 547.7 414.7
Inventories (Note C) 489.9 479.5
Deferred tax asset (Note M) 77.5 42.6
Other current assets 58.8 47.6
-------------------
Total current assets 1,230.3 1,086.4
Investments and other assets (Notes D and O) 1,074.0 683.1
Property, plant and equipment, net (Note E) 3,357.4 3,372.7
-------------------
Total assets $5,661.7 $5,142.2
===================
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
Current liabilities:
Notes payable (Note G) $ 186.2 $
Accounts payable (Note F) 266.1 275.9
Accrued expenses and other current
liabilities (Notes F and R) 513.2 395.7
Current maturities of long-term debt
(Note G) 35.1 7.9
-------------------
Total current liabilities 1,000.6 679.5
Long-term debt (Notes G and Q) 1,333.7 1,367.4
Commitments and contingent liabilities
(Notes Q and R)
Deferred items (Notes M and P) 896.6 843.3
Shareowners' equity (Notes I and J):
Common shares 153.0 151.9
Additional paid-in capital 121.6 66.3
Retained earnings 2,178.0 2,076.9
Other comprehensive loss (21.8) (43.1)
-------------------
2,430.8 2,252.0
-------------------
Total liabilities and shareowners' equity $5,661.7 $5,142.2
===================
</TABLE>
See notes to financial statements.
26
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF SHAREOWNERS' EQUITY
- ---------------------------------
<TABLE>
<CAPTION>
(All dollar amounts in
millions, except per
share
amounts; all share Other
amounts in thousands) Comprehensive Comprehensive
Common Shares Additional Retained Loss Earnings
-----------------------
Shares Amount Paid-In Capital Earnings (Note T) (Note T)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996 104,272 $155.5 $ 13.2 $2,080.1 $ (2.4)
Net earnings 150.1 $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) (18.1)
--------------------------------------------------------------------------------------------
December 31, 1997 103,885 154.9 53.5 2,100.6 (20.5) $132.0
======
Net earnings 119.7 $119.7
Shares issued 587 .9 14.5
Shares purchased (2,642) (3.9) (1.7) (77.2)
Cash dividends - $.64 a
common share (66.2)
Foreign currency
translation
adjustment (15.0) (15.0)
Change in minimum
pension liability (net
of income tax benefit
of $4.5) (7.6) (7.6)
--------------------------------------------------------------------------------------------
December 31, 1998 101,830 151.9 66.3 2,076.9 (43.1) $ 97.1
======
Net earnings 208.1 $208.1
Shares issued 1,978 2.9 56.4
Shares purchased (1,229) (1.8) (1.1) (40.5)
Cash dividends - $.65 a
common share (66.5)
Foreign currency
translation
adjustment 17.2 (3.3)
Change in minimum
pension liability (net
of income taxes of $.5) .8 .8
Change in unrealized
gain on
available-for-sale
securities (net of
income taxes
of $1.8) (Note D) 3.3 3.3
--------------------------------------------------------------------------------------------
December 31, 1999 102,579 $153.0 $121.6 $2,178.0 $(21.8) $208.9
============================================================================================
</TABLE>
See notes to financial statements.
27
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
STATEMENTS OF CASH FLOWS
- ------------------------
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities:
Net earnings $ 208.1 $ 119.7 $ 150.1
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, amortization and depletion of
property, plant and equipment 263.2 260.3 238.4
Depreciation and amortization of other assets 44.2 41.5 44.1
Deferred income taxes 11.9 30.5 37.2
Investees - earnings and dividends (16.1) 16.3 1.3
Gain on sale of assets (86.3) (28.3)
Discontinued operations 20.4 12.9
Other 23.0 8.9 (20.8)
Change in assets and liabilities, excluding
effects of acquisitions and dispositions:
Accounts receivable (1.2) 17.1 .3
Inventories 34.0 (46.0) 11.5
Other current assets 7.4 (5.6) 2.1
Accounts payable and accrued liabilities (14.5) (6.1) (26.7)
Cash (used in) discontinued operations (8.5) (50.2)
---------------------------
Net cash provided by operating activities 473.7 420.2 400.2
---------------------------
Cash flows from investing activities:
Capital expenditures (212.9) (384.0) (437.3)
Additions to equipment rented to others (26.8) (31.1) (33.0)
Payments for acquired businesses, net of
cash acquired (559.0) (50.9)
Proceeds from sale of assets 185.2 342.2
Other (33.0) (33.6) (3.4)
---------------------------
Net cash (used in) investing activities (646.5) (157.4) (473.7)
---------------------------
Cash flows from financing activities:
Additional borrowings 15.0 160.5 719.5
Payments on borrowings (23.4) (217.2) (547.2)
Notes payable 186.2
Cash dividends paid (66.5) (66.2) (63.8)
Common shares issued 59.3 15.4 43.8
Common shares purchased (43.4) (82.8) (69.9)
---------------------------
Net cash provided by (used in) financing
activities 127.2 (190.3) 82.4
---------------------------
Increase (decrease) in cash and cash equivalents (45.6) 72.5 8.9
Cash and cash equivalents at beginning of year 102.0 29.5 20.6
---------------------------
Cash and cash equivalents at end of year $ 56.4 $ 102.0 $ 29.5
===========================
</TABLE>
See notes to financial statements.
28
<PAGE>
THE MEAD CORPORATION AND CONSOLIDATED SUBSIDIARIES
- --------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
- --------------------------------------------
A - Significant Accounting Policies
CONSOLIDATION. The accompanying financial statements include the accounts of the
company and its wholly owned subsidiaries. All intercompany transactions are
eliminated. Investments in investees are stated at cost plus the company's
equity in their undistributed net earnings since acquisition.
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 20 years. The company periodically reviews goodwill balances for
impairment based on the expected future cash flows of the related businesses
acquired.
COMPUTER SOFTWARE COSTS. Effective January 1, 1999, the company adopted the
American Institute of Certified Public Accountants' Statement of Position (SOP)
98-1, "Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." SOP 98-1 revises the accounting for software development costs
and requires the capitalization of certain costs which the company has
historically expensed. The adoption of this Statement did not have a material
effect on the financial condition, results of operations or liquidity of the
company.
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 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.
29
<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.
REVENUE RECOGNITION. The company recognizes revenue when ownership risk passes,
which is generally when goods are shipped.
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.
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.
ACCOUNTING PRONOUNCEMENTS. In 1998, SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," was issued. The statement requires
derivatives to be recorded on the balance sheet as assets or liabilities,
measured at fair value. Gains or losses resulting from changes in fair value of
the derivatives are recorded depending upon whether the instruments meet the
criteria for hedge accounting. The company is investigating the impact of this
pronouncement, but does not expect it to have a material impact on the company's
results of operations, financial position or cash flows. In June 1999,
SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities-
Deferral of the Effective Date of FASB Statement No. 133-an amendment of FASB
Statement No. 133," was issued which delayed the effective date of SFAS No. 133
to fiscal years beginning after June 15, 2000.
B - Acquisitions
On November 1, 1999, the company acquired the AT-A-GLANCE Group of Cullman
Ventures, Inc., a manufacturer of diaries, appointment books, calendars,
posters, organizers and planners, for approximately $540 million in cash. The
acquisition has been accounted for as a purchase, and the results of its
operations are reflected in the accompanying financial statements from the date
of acquisition. The acquisition resulted in goodwill of approximately $235
million, subject to the finalization of the appraisals and other purchase price
adjustments which will be completed in 2000. The goodwill will be amortized on
the straight-line method over 20 years.
To comply with disclosures required by generally accepted accounting principles
related to acquisitions, the following unaudited pro forma combined results of
operations are presented as though the acquisition occurred at the beginning of
each period presented below. In management's opinion, the unaudited pro forma
combined results of operations are not indicative of the actual results that
would have occurred under the ownership and management of the company.
The following unaudited pro forma information includes adjustments for income
taxes, interest expense, depreciation and amortization expense to reflect the
accounting bases used to record the acquisition:
30
<PAGE>
Year Ended December 31 1999 1998
(All dollar amounts in millions)
Net sales $4,084.7 $4,102.1
==================
Earnings from continuing operations $ 210.4 $ 141.9
==================
Net earnings $ 210.4 $ 121.5
==================
Earnings per common share - basic:
Earnings from continuing operations $ 2.06 $ 1.37
==================
Net earnings $ 2.06 $ 1.17
==================
Earnings per common share -
assuming dilution:
Earnings from continuing operations $ 2.01 $ 1.35
==================
Net earnings $ 2.01 $ 1.16
==================
The company made additional acquisitions during 1999 for approximately $27
million in cash. These acquisitions were also accounted for as purchases.
C - Inventories
December 31 1999 1998
(All dollar amounts in millions)
Finished and semi-finished products $297.1 $295.0
Raw materials 113.7 109.2
Stores and supplies 79.1 75.3
------------------
$489.9 $479.5
==================
For purposes of comparison to non-LIFO companies, inventories valued at current
replacement cost would have been $169.7 million and $175.6 million higher than
reported at December 31, 1999 and 1998, respectively.
D - Investments and Other Assets
December 31 1999 1998
(All dollar amounts in millions)
Pension asset $ 285.5 $264.3
Investment in investees 28.3 127.5
Goodwill and other intangibles (net of
accumulated amortization of $10.0 in 1999
and $4.8 in 1998) 387.0 26.3
Cash surrender value of life insurance, less
policy loans of $50.6 in 1999 and $45.4 in 1998 147.3 118.8
Equipment rented to others, at cost (net of
accumulated depreciation of $265.4 in 1999 and
$290.7 in 1998) 69.4 83.3
Convertible debentures (including unrealized gain
of $5.1 in 1999) 69.4
Other 87.1 62.9
------------------
$1,074.0 $683.1
==================
31
<PAGE>
During 1999, the company sold its 50%-owned investment in Northwood Inc. (see
Note L). The company's remaining principal investees are the 30% ownership
interest in a limited partnership which operates the cogeneration facility
located at the Rumford, Maine paper mill and the 50% ownership interest in
Northwood Panelboard Company, an oriented structural board mill in Bemidji,
Minnesota. The company received dividends and partnership distributions of $27.1
million, $20.3 million and $11.9 million in 1999, 1998 and 1997, respectively.
The convertible debentures have a par value of $77.5 million in Canadian
dollars. They are classified as available-for-sale securities and are carried at
fair value with unrealized gains or losses, net of tax, reported in other
comprehensive income. Fair value of the securities is based on an independent
valuation. The securities are convertible to common shares of the issuer after
May 2000, redeemable by the issuer beginning in November 2002 and mature in
November 2006.
E - Property, Plant and Equipment
December 31 1999 1998
(All dollar amounts in millions)
Property, plant and equipment, at cost:
Land and land improvements $ 159.6 $ 158.6
Buildings 638.3 615.3
Machinery and equipment 4,646.0 4,492.2
Construction in progress 82.9 87.9
-----------------------
5,526.8 5,354.0
Less accumulated amortization and depreciation (2,547.0) (2,369.1)
-----------------------
2,979.8 2,984.9
Timber and timberlands, net of timber depletion 377.6 387.8
-----------------------
Property, plant and equipment, net $ 3,357.4 $ 3,372.7
=======================
F - Current Liabilities
December 31 1999 1998
(All dollar amounts in millions)
Accounts payable:
Trade $ 209.1 $ 199.2
Affiliated companies 11.1 32.5
Outstanding checks 45.9 44.2
-----------------------
$ 266.1 $ 275.9
=======================
Accrued expenses and other current liabilities:
Accrued wages $ 108.0 $ 88.7
Taxes, other than income 40.2 40.1
Accrued interest 36.8 37.2
Accrued rebates and allowances 99.0 28.6
Other current liabilities 229.2 201.1
-----------------------
$ 513.2 $ 395.7
=======================
32
<PAGE>
G - Long-Term Debt
December 31 1999 1998
(All dollar amounts in millions)
Capital lease obligations $ 287.4 $ 288.3
Variable-rate Industrial Development Revenue Bonds,
due from 2001 through 2023, average effective rate
3.2% 165.4 165.4
8-1/8% debentures, face amount of $150.0, due 2023
(effective rate 8.4%) 148.0 147.9
7-1/8% debentures, face amount of $150.0, due 2025
(effective rate 7.4%) 147.3 147.2
7.35% debentures, face amount of $150.0, due 2017
(effective rate 7.4%) 148.6 148.5
6.84% debentures, face amount of $150.0, due 2037
(effective rate 7.0%) 148.4 148.2
7.55% debentures, face amount of $150.0, due 2047
(effective rate 7.7%) 143.7 143.6
6.60% notes, face amount of $100.0, due 2002
(effective rate 6.9%) 99.3 99.0
Medium-term notes, 7.3% to 9.8%, face amount of
$78.5, due from 2000 through 2020 (effective rate
10.0%) 76.8 75.9
Other 3.9 11.3
--------------------
1,368.8 1,375.3
Less current portion 35.1 7.9
--------------------
$1,333.7 $1,367.4
====================
Capital lease obligations consist primarily of Industrial Development Revenue
Bonds and Notes with an average effective rate of 3.9%. 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. Notes payable represent commercial paper
borrowings with a weighted-average interest rate of 5.94%.
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 $500 million bank credit agreement that extends until
October 2002 and an unused $200 million bank credit agreement that expires
October 2000. These agreements support $59.5 million of the company's capital
lease obligations and $165.2 million of notes payable. They contain restrictive
covenants and require commitment fees in accordance with standard banking
practice. The company has the ability to borrow up to $475.3 million pursuant to
these agreements at December 31, 1999.
Maturities of long-term debt for the next five years are $35.1 million in 2000,
$12.6 million in 2001, $135.3 million in 2002, $.7 million in 2003 and $6.7
million in 2004.
The company has guaranteed obligations of certain affiliated operations and
others totaling $39.1 million at December 31, 1999. 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 a syndicate of banks, which
matures in 2003. 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
33
<PAGE>
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.
H - 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 nor 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 considered
significant by management. 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.
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:
Swap agreements Cap agreements
December 31 1999 1998 1999 1998
(All dollar amounts in millions)
Notional amount $ 114.2 $ 114.2 $ 50.0 $ 50.0
=======================================
Fair value $ (3.1) $ (4.6) $ $
Carrying amount (1.5) (3.2) .1 .2
_______________________________________
Net unrecognized (loss) $ (1.6) $ (1.4) $ (.1) $ (.2)
=======================================
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
34
<PAGE>
of 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
Canadian dollar, British pound, Japanese yen and euro. Selected information
related to the company's foreign currency forward contracts is as follows:
Foreign currency
forward contracts
December 31 1999 1998
(All dollar amounts in millions)
Notional amount $239.7 $127.2
===============
Fair value $ 6.9 $ (.2)
Carrying amount 6.9 (.2)
---------------
Net unrecognized gain (loss) $ $
===============
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 was $1,295.0 million and $1,439.8 million at December 31, 1999 and 1998,
respectively, and the related carrying amounts were $1,333.7 million and
$1,367.4 million, respectively. The carrying amount of the notes payable and the
current maturities of long-term debt are reasonable estimates of their fair
value.
At December 31, 1999 and 1998, 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. See Note D for disclosure
regarding the investment in convertible debentures.
I - Shareowners' Equity
The company has authorized 300 million no par common shares. During 1999, the
company completed its share repurchase program. In October 1999, the Board of
Directors approved a new plan to repurchase up to 10 million common shares from
time to time.
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 10 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 $100 for $50, the initial exercise
price. The rights expire in 2006 and are presently redeemable at $.005 per
right. At December 31, 1999, 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
35
<PAGE>
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, 1999, 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.
J - Stock-Based Compensation Plans
Officers and key employees have been granted stock options under various stock-
based compensation plans. Options to purchase 3.4 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 10 years and vest after one year or three years. Under the 1996 Stock
Option Plan, additional options (reload options) can be granted at the current
market price upon the exercise of the original incentive stock option. The
option holder must hold the shares acquired for three years in order to vest in
the reload options. There are 11.0 million shares reserved for issuance under
these plans.
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. At
December 31, 1999, 5,000 common shares are issued and outstanding under the
plan. There are 731,000 shares reserved for issuance under this plan. There were
39,000, 7,000 and 27,000 shares granted in 1999, 1998 and 1997, respectively, at
a weighted-average price of $29.99, $29.24 and $29.58, respectively.
36
<PAGE>
The following table summarizes activity in the company's stock-based
compensation plans:
<TABLE>
<CAPTION>
(All share amounts in thousands) 1999 1998 1997
--------------------- -------------------- -------------------
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 8,574 $26.68 7,480 $24.62 7,470 $22.44
Granted 1,954 30.59 1,734 34.11 1,902 29.73
Exercised (2,021) 24.98 (604) 22.12 (1,825) 21.02
Canceled (65) 31.89 (36) 32.97 (67) 25.52
------- ------- ------
Outstanding at end of year 8,442 $27.95 8,574 $26.68 7,480 $24.62
======= ======= ======
Exercisable at year-end 6,343 $27.05 6,739 $24.77 5,445 $22.80
======= ======= ======
Weighted-average fair value of
options granted during the year
using the extended binomial option-
pricing model $ 8.58 $ 10.56 $ 8.30
Weighted-average assumptions
used for grants:
Expected dividend yield 2% 2% 2%
Expected volatility 25% 29% 21%
Risk-free interest rate 5.2% 5.6% 6.3%
Expected life of option (in years) 6.0 6.0 5.8
</TABLE>
The following table shows various information about stock options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
(All share amounts in thousands)
Options Outstanding Options Exercisable
----------------------------------------- -----------------------------
Weighted-
Average
Number Remaining Weighted- Number Weighted-
Outstanding at Contractural Average Exercisable at Average
Range of December 31, Life (in Exercise December 31, Exercise
Exercise Prices 1999 years) Price 1999 Price
<S> <C> <C> <C> <C> <C>
$13.31 - $18.32 568 1.6 $ 16.08 568 $ 16.08
20.75 - 29.82 6,176 6.6 27.28 4,416 26.27
30.22 - 43.41 1,698 8.3 34.36 1,359 34.20
----------- ----------
$13.31 - $43.41 8,442 6.6 $ 27.95 6,343 $ 27.05
=========== ==========
</TABLE>
Total compensation costs charged to earnings from continuing operations before
income taxes for all stock-based compensation awards were immaterial in 1999,
1998 and 1997. 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:
37
<PAGE>
Year Ended December 31 1999 1998 1997
Net earnings (in millions):
As reported $208.1 $119.7 $150.1
======================
Pro forma $198.4 $108.7 $141.4
======================
Earnings per common share - assuming dilution:
As reported $ 1.99 $ 1.14 $ 1.41
======================
Pro forma $ 1.90 $ 1.04 $ 1.33
======================
K - Asset Write-downs and Employee Termination Costs
During 1999, the company recorded a pretax charge of $18.9 million ($17.5
million in cost of sales and $1.4 million in selling and administrative
expenses) associated with the shutdown and disposal of four uncoated paper
machines at the Rumford, Maine paper mill. The charge included $13.5 million for
asset write-downs and contractual obligations and $5.4 million for severance
costs including medical, dental and other benefits. A review for impairment in
accordance with SFAS No. 121 was performed and resulted in recognition of a
$10.6 million impairment charge to adjust the carrying amount of machinery and
equipment and related spare parts included in stores and supplies inventory to
their estimated fair values. Also included in the $13.5 million charge is $2.6
million to write off an investment in a joint venture as a result of the
permanent decline in its value. The joint venture sold products manufactured on
the affected machines. A charge of $.3 million was recorded related to certain
contractual obligations which will derive no future benefits. The severance
costs relate to 113 salaried and hourly employees, of whom 86 employees have
left the company on or before December 31, 1999. Substantially all
severance-related amounts not paid by December 31, 1999, are expected to be paid
by the end of the first quarter of 2000. Of the total charge, $15.6 million was
recorded in the second quarter and $3.3 million in the fourth quarter.
In 1998, the company recorded a pretax charge of $37.7 million primarily in cost
of sales for asset write-downs and other charges. The charges were comprised of
a $10.4 million reserve for stores and supplies inventory; $10.4 million for the
write-off of capitalized costs related to unimplemented software in development
abandoned as a result of the decision to implement an enterprise resource
planning computer system; an $8.2 million charge related to the Japanese
packaging operation; $4.6 million for the write-off and disposal of certain
plant equipment that was replaced by new equipment at the Containerboard
division's mill in Stevenson, Alabama; $2.9 million for the write-off of a
capital project in process that was not undertaken as a result of market
changes; and a special assessment of $1.2 million related to customs issues.
The reserve for stores and supplies was recorded upon the completion of a study
in the second quarter of 1998 to determine the future utility of obsolete and
excess replacement parts that are used to support the maintenance of plant
machinery and equipment in the Paper and Packaging and Paperboard Segments. The
study identified the specific items which were to be disposed of and the company
is holding those items for disposal. The reserve adjusted those items identified
to their net realizable value and the company commenced a disposal program at
that time. The majority of the items have been disposed of by December 31, 1999.
Those items not yet disposed of have been segregated and are being actively
marketed, with final disposition expected by the end of the first quarter of
2000.
As a result of the deteriorating economic environment in Japan and poor
operating performance by the Japanese packaging operation, a charge was recorded
in 1998 to write down certain inventory and to reflect the impairment of
property, plant
38
<PAGE>
and equipment and goodwill. The fair value of the fixed assets and goodwill and
the related write-down in value was determined based on management's assessment
of the future cash flows of the operations.
In the third quarter of 1998, the company adopted a plan to make organizational
changes and reduce its workforce, and recorded a charge of $22.0 million for
employee severance and related costs in selling and administrative expenses.
This plan involved terminating 318 domestic employees, primarily salaried, and
was communicated to affected employees in the third quarter of 1998. The charge
covered severance payments and medical, dental and other benefits. Pursuant to
this plan, 291 people left the company, with the remainder of the planned
terminations not occurring as a result of placement of affected employees in
other open positions within the company. As a result of fewer people being
terminated, lower severance benefits paid than estimated and less utilization of
outplacement benefits by terminated employees, the company reversed $2.7 million
of the original charge to selling and administrative expenses in the third
quarter of 1999.
The following is a summary related to the severance charges (All dollar amounts
in millions):
1999 1998
Severance Severance
Charge Charge
Charge recorded $ $ 22.0
Used for intended purpose (12.1)
--------------------------
Balance at December 31, 1998 9.9
Charge recorded 5.4
Used for intended purpose (2.7) (7.2)
Charge reversed (2.7)
--------------------------
Balance at December 31, 1999 $ 2.7 $
==========================
The total charges (credits) by segment for asset write-downs and employee
termination costs are as follows:
Year Ended December 31 1999 1998
(All dollar amounts in millions)
Paper $ 17.4 $ 28.2
Packaging and Paperboard (.8) 25.2
Consumer and Office Products (.1) 4.6
Corporate and other (.3) 1.7
--------------
$ 16.2 $ 59.7
==============
L - Other Revenues - Net
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
Investment income $ 5.4 $ 6.4 $ 3.0
Gain on sale of Northwood 82.3
Gain on sale of assets 4.0 28.3
Other 5.0 (.5) 4.3
-----------------------
$ 96.7 $34.2 $ 7.3
=======================
39
<PAGE>
During the fourth quarter of 1999, the company sold its 50%-owned investment in
Northwood Inc. for $77.5 million of convertible debentures in Canadian dollars
(fair value of $63.8 million in U.S. dollars at the sale date) and approximately
$163.8 million of cash and recognized a gain of $82.3 million.
The 1998 gain on sale of assets is comprised of $11.8 million on the sale of
timberland, $13.9 million related to the sale of non-strategic packaging
businesses and $2.6 million on the sale of an undeveloped mill site in
Tennessee.
M - Income Taxes
The principal current and non-current deferred tax assets and (liabilities) are
as follows:
December 31 1999 1998
(All dollar amounts in millions)
Deferred tax liabilities:
Accelerated depreciation for tax purposes $(564.8) $(540.3)
Nontaxable pension asset (108.5) (100.4)
Deferred installment gain (47.5) (47.5)
Other (64.3) (63.5)
-----------------
(785.1) (751.7)
Deferred tax assets:
Tax credit carryforwards 40.6 27.1
Compensation and fringe benefits accruals 67.9 61.2
Postretirement benefit accrual 52.9 46.9
Loss provisions and other expenses not
currently deductible 72.2 50.7
Other 30.1 25.0
-----------------
263.7 210.9
-----------------
Net deferred liability $(521.4) $(540.8)
=================
Included in the balance sheets:
Current assets - deferred tax asset $ 77.5 $ 42.6
Deferred items (598.9) (583.4)
-----------------
Net deferred liability $(521.4) $(540.8)
=================
40
<PAGE>
The significant components of income tax expense are as follows:
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
Currently payable:
Federal $ 33.3 $ 9.8 $15.5
Federal alternative minimum tax 2.1 11.1 16.0
State and local 5.3 3.3 .2
Foreign 54.4 13.4 14.3
----------------------------
95.1 37.6 46.0
Change in deferred income taxes 14.2 26.0 37.2
----------------------------
109.3 63.6 83.2
Allocation to partnership earnings (8.5) (5.7) (1.9)
Allocation to discontinued operations 21.3 6.6
Allocation to other comprehensive loss (2.3) 4.5
----------------------------
$ 98.5 $83.7 $87.9
============================
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:
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
Federal taxes computed at statutory rate $95.2 $79.0 $84.7
State and local income taxes, net of
federal benefit 3.4 2.9 4.0
Impact related to difference in tax
rates for foreign operations 3.1 2.1 (1.2)
Other (3.2) (.3) .4
-----------------------
Income taxes $98.5 $83.7 $87.9
=======================
Effective tax rate 36.2% 37.1% 36.3%
=======================
Earnings from operations of foreign subsidiaries were $33.0 million, $35.0
million, and $43.9 million in 1999, 1998 and 1997, respectively. At December 31,
1999, no domestic income taxes have been provided on the company's share of the
undistributed net earnings of overseas operations due to management's intent to
reinvest such amounts indefinitely. Those earnings totaled $113.4 million,
including foreign currency translation adjustments. The aggregate amount of
unrecognized deferred tax liability is approximately $6 million at December 31,
1999.
N - Discontinued Operations
In 1998, the company sold its Distribution segment, Zellerbach, and related real
estate for $288 million. Revenues of the Distribution segment were $965.0
million and $1,553.3 million in 1998 and 1997, respectively.
41
<PAGE>
The following are the components of discontinued operations:
Year Ended December 31 1998 1997
(All dollar amounts in millions)
Losses from operations of Distribution
segment, net of income tax benefit of $3.1
and $6.6 in 1998 and 1997 $ (6.0) $ (12.9)
Loss on sale of Distribution segment (including
loss on operations during phase-out period of
$3.2), net of income tax benefit of $18.2 (14.4)
------------------
$(20.4) $ (12.9)
==================
O - 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.
42
<PAGE>
Summary information for all of the company's plans is as follows:
December 31
1999 1998
(All dollar amounts in millions)
Change in the projected benefit obligation:
Projected benefit obligation at beginning of year $ (854.4) $ (749.9)
Plan obligation assumed (30.2)
Service cost (24.8) (22.0)
Interest cost (53.8) (50.7)
Actuarial gain (loss) 66.9 (105.4)
Benefits paid 101.8 123.9
Plan amendments (16.2) (31.0)
Termination adjustment due to benefit enhancements (2.1) (3.6)
Settlement adjustment (24.0)
Curtailment adjustment .8 8.3
-------------------
Projected benefit obligation at end of year (812.0) (854.4)
-------------------
Change in the plan assets:
Fair value of plan assets at beginning of year 1,026.8 978.5
Plan assets assumed 38.1
Actual return on plan assets 165.2 156.4
Employer contributions 3.0 15.8
Benefits paid (101.8) (123.9)
-------------------
Fair value of plan assets at end of year 1,131.3 1,026.8
-------------------
Plan assets in excess of projected
benefit obligation 319.3 172.4
Reconciliation of financial status of plans to
amounts recorded in Mead's balance sheets:
Unamortized prior service cost 41.9 28.7
Unrecorded effect of net loss(gain) arising from
differences between actuarial assumptions used
to determine periodic pension expense and actual
experience (82.6) 67.2
Unamortized plan assets in excess of plan liabilities
(overfunding) at January 1, 1986 - to be recognized
as a reduction of future years' pension expense (9.6) (16.0)
Adjustment for minimum pension liability (12.3) (16.9)
-------------------
Net pension asset $ 256.7 $ 235.4
===================
Amounts recognized in Mead's balance sheets consist of:
Pension asset $ 285.5 $ 264.3
Other current liabilities (28.8) (28.9)
Other assets 1.5 4.8
Other comprehensive loss 6.8 7.6
Benefit obligation discount rate 8.00% 6.50%
===================
Rate of compensation increase
(for pay-related plans only) 5.25% 5.25%
===================
43
<PAGE>
The total projected benefit obligation for the company's pension plans includes
$40.3 million and $39.7 million at December 31, 1999 and 1998, respectively, of
the unfunded plans, of which $28.8 million and $28.9 million represent the
accumulated benefit obligation.
The components of net pension (income) for all pension plans are as follows:
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
Service cost, benefits earned
during the year $ 24.8 $ 22.0 $ 20.9
Interest cost on projected benefit
obligation 53.8 50.7 51.0
Expected return on plan assets (90.4) (86.7) (78.2)
Amortization of prior service cost 2.6 2.8 2.7
Amortization of unrecognized net (gain) loss 6.6 (.3) .8
Amortization of net transition asset (6.4) (7.9) (7.9)
Termination loss 3.6 2.5
Settlement loss 13.3 .7
Curtailment loss .4
-------------------------
Net pension (income) (9.0) (2.1) (7.5)
Less - net pension expense allocated
to discontinued operations 7.4 3.3
-------------------------
Net pension (income) - continuing operations $ (9.0) $ (9.5) $(10.8)
=========================
The plan assets consist primarily of common stocks and fixed income securities.
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.
The company also has 401(k) plans that cover substantially all U.S. employees.
Expense for company matching contributions under these plans was approximately
$11.1 million in 1999, $11.9 million in 1998 and $10.3 million in 1997.
P - Postretirement Benefits Other than Pension
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.
44
<PAGE>
Summary information on the company's plans is as follows:
<TABLE>
<CAPTION>
December 31 1999 1998
(All dollar amounts in millions)
<S> <C> <C>
Change in the projected benefit obligation:
Accumulated postretirement benefit obligation
at beginning of year $(119.7) $(120.6)
Plan obligation assumed (11.2)
Service cost (3.9) (3.7)
Interest cost (7.5) (7.6)
Actuarial gain (loss) 12.3 (1.0)
Benefits paid 8.5 8.5
Curtailment adjustment 4.7
--------------------------
Accumulated postretirement benefit obligation
at end of year (121.5) (119.7)
--------------------------
Change in the plan assets:
Fair value of plan assets at beginning of year 10.1 9.1
Actual return on plan assets .9 1.0
Employer contributions 5.6 8.5
Benefits paid (8.5) (8.5)
--------------------------
Fair value of plan assets at end of year 8.1 10.1
--------------------------
Accumulated postretirement benefit obligation
in excess of plan assets (113.4) (109.6)
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
expense and actual experience (25.9) (14.1)
--------------------------
Accrued postretirement benefit cost -
included in deferred items $(139.3) $(123.7)
==========================
Benefit obligation discount rate 7.75% - 8.00% 6.50%
==========================
</TABLE>
The components of net periodic postretirement benefit cost are as follows:
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
<S> <C> <C> <C>
Service cost, benefits attributed to
employee service during the year $ 3.9 $ 3.7 $ 2.5
Interest cost on accumulated
postretirement benefit obligation 7.5 7.6 8.0
Expected return on plan assets (.8) (.7) (.6)
Curtailment gain (4.7)
Amortization of unrecognized net (gain) (.5) (.7) (1.4)
--------------------------
Net periodic postretirement benefit cost $10.1 $ 5.2 $ 8.5
==========================
</TABLE>
45
<PAGE>
Included in net periodic postretirement benefit cost in 1998 is a curtailment
gain of $4.7 million allocated to the company's discontinued operations.
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 1999 was 9.0% declining by 1% per year to an ultimate rate of 5%.
The assumed health care trend rates used in 1998 and 1997 were 7.4% and 8.2%,
respectively, declining by .8% per year.
If the health care cost trend rate assumptions were increased or decreased by
1%, the accumulated postretirement benefit obligation at December 31, 1999,
would be increased or decreased by 6.9% and 6.8%, respectively. The effect of
this change on the sum of the service cost and interest cost components of net
periodic postretirement benefit cost for 1999 would be an increase or decrease
of 10.7% and 9.8%, respectively.
Q - Leases
At December 31, 1999, future minimum annual rental commitments under
noncancelable lease obligations are as follows:
Capital Operating
Leases Leases
Year Ending December 31:
(All dollar amounts in millions)
2000 $ 13.5 $ 34.6
2001 12.0 26.8
2002 12.0 18.5
2003 12.0 12.8
2004 12.0 10.2
Later years through 2033 582.7 40.5
---------------------
Total minimum lease payments 644.2 $143.4
======
Less amount representing interest (356.8)
-------
Capital lease obligations $ 287.4
=======
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 $63.3
million, $51.7 million and $49.8 million in 1999, 1998 and 1997, respectively.
R - 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 is involved in investigations regarding
customs that may result in payments by the company ranging from an insignificant
amount to as much as $15 million; however, no liability has been recorded
relating to this matter because an obligation is not viewed as probable. The
company has also been identified as a potentially responsible party in at least
20 environmental proceedings. It is not possible to determine the ultimate
liability, if any, in all these matters. The company has established reserves of
approximately $40 million relating to environmental liabilities, including those
related to previously 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 $40 million. The
estimate
46
<PAGE>
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.
S - Additional Information on Cash Flows
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
Cash paid during the year for:
Interest $106.1 $111.3 $90.0
Less amount capitalized (2.8) (6.3) (9.2)
-------------------------
Interest, net of amount capitalized $103.3 $105.0 $80.8
=========================
Income taxes $ 54.0 $ 31.8 $41.3
=========================
T - Comprehensive Earnings
The difference between net earnings and comprehensive earnings relates to the
changes in foreign currency translation adjustment, additional minimum pension
liability and unrealized gain on available-for-sale securities. At December 31,
1999, accumulated other comprehensive loss was comprised of $(18.3) million of
foreign currency translation adjustment, $(6.8) million of additional minimum
pension liability and $3.3 million of unrealized gain on available-for-sale
securities. At December 31, 1998, accumulated other comprehensive loss was
comprised of $(35.5) million of foreign currency translation adjustment and
$(7.6) million of additional minimum pension liability.
The 1999 foreign currency translation adjustment is comprised of $17.2 million
of foreign currency translation adjustment arising during 1999 less a $20.5
million reclassification adjustment for foreign currency translation adjustment
included in gain on sale of assets.
U - Segment Information
Industry Segments
The company classifies its businesses into three industry segments. 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 Asia Pacific. The Consumer and Office Products
operations are conducted predominantly in North America and manufacture and
distribute school, office and dated material products to retailers and
commercial distributors.
47
<PAGE>
The company evaluates performance based on earnings from continuing operations
before income taxes and equity in net earnings of investees. The accounting
policies of the segments are the same as those described in the significant
accounting policies (Note A).
<TABLE>
<CAPTION>
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
<S> <C> <C> <C>
Net sales:
Industry segments:
Paper $1,783.3 $1,795.6 $1,797.8
Packaging and Paperboard 1,506.9 1,494.2 1,431.8
Consumer and Office Products 509.3 482.4 516.2
------------------------------
Total $3,799.5 $3,772.2 $3,745.8
==============================
Earnings (loss) from continuing operations before income taxes:
Industry segments:
Paper $ 147.6 $ 206.3 $ 195.6
Packaging and Paperboard 170.0 142.5 129.6
Consumer and Office Products 38.0 42.8 57.3
Corporate and other (1) (83.7) (166.0) (140.5)
------------------------------
Total $ 271.9 $ 225.6 $ 242.0
==============================
Depreciation, depletion and amortization:
Industry segments:
Paper $ 120.2 $ 116.8 $ 111.1
Packaging and Paperboard 150.5 160.9 149.1
Consumer and Office Products 16.2 9.1 8.2
Corporate and other 20.5 15.0 14.1
------------------------------
Total $ 307.4 $ 301.8 $ 282.5
==============================
Identifiable assets (2):
Industry segments:
Paper $2,114.9 $2,181.3 $2,113.4
Packaging and Paperboard 1,887.0 1,935.9 1,941.3
Consumer and Office Products 803.0 229.8 191.3
Intersegment Elimination (4.9) (1.4) (.5)
Corporate and other 861.7 796.6 906.9
------------------------------
Total $5,661.7 $5,142.2 $5,152.4
==============================
Capital expenditures:
Industry segments:
Paper $ 82.3 $ 178.4 $ 110.5
Packaging and Paperboard 92.4 169.9 293.8
Consumer and Office Products 14.7 10.6 11.6
Corporate and other 23.5 25.1 21.4
------------------------------
Total $ 212.9 $ 384.0 $ 437.3
==============================
</TABLE>
48
<PAGE>
(1) Corporate and other includes the following:
Year Ended December 31 1999 1998 1997
Other revenues $ 96.4 $ 11.2 $ 13.0
Interest expense (105.1) (109.0) (98.2)
Other expenses (75.0) (68.2) (55.3)
----------------------------
$ (83.7) $(166.0) $(140.5)
============================
(2) Corporate and other consists primarily of cash and cash equivalents,
property, plant and equipment, investments, other assets and net assets of
discontinued operations in 1997.
Geographic Areas
The company has sales from foreign subsidiaries primarily in Canada, Europe,
Latin America and Asia Pacific. No individual foreign geographic area is
significant to the company relative to total net sales, earnings from continuing
operations before income taxes or identifiable assets.
The following represents net sales and total assets of the company's foreign
subsidiaries:
Year Ended December 31 1999 1998 1997
(All dollar amounts in millions)
Net Sales:
Europe $294.6 $307.1 $309.1
Canada 138.4 139.8 132.3
Asia Pacific 61.6 46.9 52.7
Latin America 46.3 45.5 40.5
--------------------------
Total $540.9 $539.3 $534.6
==========================
Assets:
Europe $218.1 $230.2 $226.9
Canada 49.6 50.5 55.0
Asia Pacific 44.8 39.4 48.4
Latin America 33.4 35.1 35.5
--------------------------
Total $345.9 $355.2 $365.8
==========================
49
<PAGE>
Selected Quarterly Financial Data (unaudited)
(All dollar amounts in millions, except per share data)
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Year
Net sales:
1999 $863.2 $1,004.8 $ 982.2 $949.3 $3,799.5
1998 839.0 1,050.9 1,009.3 873.0 3,772.2
1997 829.5 1,001.4 1,031.4 883.5 3,745.8
Gross profit:
1999 158.7 181.1 174.1 199.0 712.9
1998 178.0 197.5 197.6 149.6 722.7
1997 157.8 193.7 201.6 184.2 737.3
Earnings from continuing operations:
1999 22.9 44.8 50.8 89.6 208.1
1998 33.6 40.2 35.4 30.9 140.1
1997 24.5 49.6 54.8 34.1 163.0
Net earnings:
1999 22.9 44.8 50.8 89.6 208.1
1998 30.6 15.2 35.4 38.5 119.7
1997 20.2 47.8 50.3 31.8 150.1
Per common share - basic: (1)
Earnings from continuing operations:
1999 .22 .44 .50 .87 2.04
1998 .32 .39 .34 .30 1.36
1997 .23 .48 .52 .33 1.56
Net earnings:
1999 .22 .44 .50 .87 2.04
1998 .29 .15 .34 .37 1.16
1997 .19 .46 .48 .31 1.44
Per common share - assuming dilution: (1)
Earnings from continuing operations:
1999 .22 .43 .48 .86 1.99
1998 .32 .38 .34 .30 1.34
1997 .23 .47 .51 .32 1.53
Net earnings:
1999 .22 .43 .48 .86 1.99
1998 .29 .14 .34 .37 1.14
1997 .19 .45 .47 .30 1.41
Cash dividends per common share:
1999 .16 .16 .16 .17 .65
1998 .16 .16 .16 .16 .64
1997 .15 .15 .15 .16 .61
(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.
50
<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 24 of the Company's Proxy Statement, definitive copies of which
were filed with the Securities and Exchange Commission ("Commission") on March
8, 2000. 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 9 through 23 of the Company's Proxy Statement (excluding the "Report of
Compensation Committee on Executive Compensation" on pages 11 through 15 and the
"Performance Graph" on page 21), definitive copies of which were filed with the
Commission on March 8, 2000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information pursuant to this item is incorporated herein by reference to
pages 9 through 11 of the Company's Proxy Statement, definitive copies of which
were filed with the Commission on March 8, 2000.
Item 13. Certain Relationships and Related Transactions
Information pursuant to this item is incorporated herein by reference to
pages 24 and 25 of the Company's Proxy Statement, definitive copies of which
were filed with the Commission on March 8, 2000.
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.
2. Financial Statement Schedule
The information required to be submitted in Schedules I 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.
51
<PAGE>
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); Amendment No. 5 thereto dated as of October 31, 1997
(incorporated by reference to Exhibit (4)(i) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997); and
Amendment No. 6 thereto dated as of April 10, 1998 (incorporated by
reference to Exhibit (4)(1) to Registrant's Quarterly Report on Form
10-Q for the Quarterly Period ended June 28, 1998).
(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 (incorporated by reference to Exhibit (4)(ii) to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1997).
(iii) Indenture dated as of February 1, 1993 between Registrant
and The First National Bank of Chicago, as Trustee (incorporated by
reference to Exhibit (4)(iii) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997).
(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).
(v) 364-Day Credit Agreement dated November 3, 1999 with Bank
One, N.A. and nine other banks.
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.
52
<PAGE>
(10) Material Contracts:
(i) Restated Rights Agreement dated as of November 9, 1996
between Registrant and BankBoston, N.A., 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), as
amended December 7, 1999 (incorporated by reference to Registrant's
Form 8-A/A dated December 15, 1999); as amended February 16, 2000, and
restated in Registrant's Form 8-A/A dated March 6, 2000.
(ii) Amended Board Purchase Agreement dated as of January 4,
1988 among the Registrant, Georgia Kraft Company and Inland Container
Corporation (incorporated by reference to Exhibit (10)(iv) to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997).
(iii) 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 (incorporated by reference
to Exhibit (10)(v) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997).
(iv) 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 (incorporated by reference to
Exhibit (10)(vi) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997).
(v) 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 (incorporated by reference to Exhibit
(10)(vii) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997).
(vi) Lease Agreement between The Industrial Development Board
of the City of Phenix City, Alabama and Mead Coated Board, Inc., dated
as of September 1, 1997, as amended.
(vii) Lease Agreement between The Industrial Development Board
of the City of Stevenson, Alabama and The Mead Corporation, dated as
of March 1, 1998 (incorporated by reference to Exhibit (10)(3) to
Registrant's Quarterly Report on Form 10-Q for the Quarterly Period
ended March 29, 1998).
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 June 24, 1999 (incorporated by reference to Exhibit
(10)(1) to Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 4, 1999).
(ix) 1991 Stock Option Plan of the Registrant, as amended
through June 24, 1999 (incorporated by reference to Exhibit (10)(2) to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended July 4, 1999).
(x) 1996 Stock Option Plan of the Registrant as amended
through June 24, 1999 (incorporated by reference to Exhibit (10)(3) to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended July 4, 1999).
53
<PAGE>
(xi) Incentive Compensation Election Plan of the Registrant as
amended November 17, 1987, as amended October 29, 1988 (incorporated
by reference to Exhibit (10)(xi) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1997); as amended
effective June 24, 1998 (incorporated by reference to Exhibit 10 (xii)
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).
(xii) 1985 Supplement to Registrant's Incentive Compensation
Election Plan, as amended November 17, 1987, and as further amended
October 29, 1988 (incorporated by reference to Exhibit (10)(xii) to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997); as amended effective June 24, 1998 (incorporated
by reference to Exhibit 10 (xiii) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998).
(xiii) Excess Benefit Plan of the Registrant dated January 1,
1996 (incorporated by reference to Exhibit (10)(3) to Registrant's
Quarterly Report on Form 10-Q for the Quarterly Period ended March 31,
1996); as amended effective June 24, 1998 (incorporated by reference
to Exhibit 10 (xiv) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998).
(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); as amended effective June 24, 1998
(incorporated by reference to Exhibit 10 (xv) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998).
(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); as amended effective June 24, 1998
(incorporated by reference to Exhibit 10 (xvi) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998).
(xvi) Form of Indemnification Agreement between Registrant and
each of John C. Bogle, John G. Breen, Duane E. Collins,
William E. Hoglund, James G. Kaiser, Robert J. Kohlhepp, John A. Krol,
Susan J. Kropf, Charles S. Mechem, Jr., Heidi G. Miller,
Lee J. Styslinger, Jr., Jerome F. Tatar and J. Lawrence Wilson
(incorporated by reference to Exhibit 10 (4) to Registrant's Quarterly
Report on Form 10-Q for the Quarterly Period ended July 4, 1999).
(xvii) Form of Severance Agreement between Registrant and each
of Elias M. Karter, Raymond W. Lane, Wallace O. Nugent, A. Robert
Rosenberger, 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); as amended effective June 24, 1998 (incorporated by
reference to Exhibit 10 (xix) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998).
(xix) Restricted Stock Plan effective December 10, 1987, as
amended through June 24, 1999 (incorporated by reference to Exhibit
(10)(5) to Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 4, 1999).
54
<PAGE>
(xx) Deferred Compensation Plan for Directors of the
Registrant, as amended through October 29, 1988 (incorporated by
reference to Exhibit (10)(xx) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997); as amended
effective June 24, 1998 (incorporated by reference to Exhibit 10 (xxi)
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998).
(xxi) 1985 Supplement to Registrant's Deferred Compensation
Plan for Directors, as amended through October 29, 1988 (incorporated
by reference to Exhibit (10)(xxi) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997); as amended
effective June 24, 1998 (incorporated by reference to Exhibit 10
(xxii) to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998).
(xxii) Restated Directors Capital Accumulation Plan
(incorporated by reference to Exhibit (10)(4) of Registrant's
Quarterly Report on Form 10-Q for the Quarterly Period ended April 4,
1999).
(xxiii) Form of Executive Life Insurance Policy for Key
Executives.
(xxiv) Long Term Incentive Plan effective 1998 (incorporated by
reference to Exhibit (10)(2) to Registrant's Quarterly Report on Form
10-Q for the Quarterly Period ended March 29, 1998); as amended
effective June 24, 1998 (incorporated by reference to Exhibit 10
(xxvi) to Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998).
(xxv) Long Term Incentive Plan effective 1999 (incorporated by
reference to Exhibit 10(2) to Registrant's Quarterly Report on
Form 10-Q for the Quarterly Period ended April 4, 1999).
(xvi) Annual Incentive Plan for 1999 (incorporated by reference
to Exhibit (10)(1) of Registrant's Quarterly Report on Form 10-Q for
the Quarterly Period ended April 4, 1999).
(xvii) Restated Executive Capital Accumulation Plan effective
January 1, 1999 (incorporated by reference to Exhibit (10)(3) of
Registrant's Quarterly Report on Form 10-Q for the Quarterly Period
ended April 4, 1999).
(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 25, 1999 reporting under Item 5
Registrant's press release reporting financial results for the quarter
ended October 3, 1999. Also filed as an exhibit was a copy of the
press release.
(2) A Form 8-K was filed on November 2, 1999 reporting under Item 5 the
completion of the acquisition of Cullman Ventures, Inc. by merger with
Mead Acquisition Corp. Also filed as exhibits were a copy of the
Agreement and Plan of Merger and a press release.
(3) A Form 8-K was filed on December 15, 1999 reporting under Item 5
Registrant's amendment of a Shareholder Rights Plan. Also filed as an
exhibit was a copy of the Amendment.
55
<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 24, 2000 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 24, 2000 By JEROME F. TATAR
---------------------------
Jerome F. Tatar
Director, Chairman of the Board,
Chief Executive Officer and
President
Date: February 24, 2000 By TIMOTHY R. MCLEVISH
---------------------------
Timothy R. McLevish
Vice President and Chief
Financial Officer (principal
financial officer)
Date: February 24, 2000 By PETER H. VOGEL, JR.
---------------------------
Peter H. Vogel, Jr.
Vice President, Finance and Treasurer
(principal accounting officer)
Date: February 24, 2000 By JOHN C. BOGLE
---------------------------
John C. Bogle
Director
Date: February 24, 2000 By JOHN G. BREEN
----------------------------
John G. Breen
Director
Date: February 24, 2000 By DUANE E. COLLINS
----------------------------
Duane E. Collins
Director
56
<PAGE>
Date: February 24, 2000 By WILLIAM E. HOGLUND
----------------------------------
William E. Hoglund
Director
Date: February 24, 2000 By JAMES G. KAISER
----------------------------------
James G. Kaiser
Director
Date: February 24, 2000 By ROBERT J. KOHLHEPP
----------------------------------
Robert J. Kohlhepp
Director
Date: February 24, 2000 By JOHN A. KROL
----------------------------------
John A. Krol
Director
Date: February 24, 2000 By SUSAN J. KROPF
----------------------------------
Susan J. Kropf
Director
Date: February 24, 2000 By CHARLES S. MECHEM, JR.
----------------------------------
Charles S. Mechem, Jr.
Director
Date: February 24, 2000 By HEIDI G. MILLER
----------------------------------
Heidi G. Miller
Director
Date: February 24, 2000 By LEE J. STYSLINGER, JR.
----------------------------------
Lee J. Styslinger, Jr.
Director
Date: February 24, 2000 By J. LAWRENCE WILSON
-----------------------------------
J. Lawrence Wilson
Director
57
<PAGE>
THE MEAD CORPORATION
EXHIBITS TO FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1999
58
<PAGE>
Exhibit 4(v)
November 3, 1999
THE MEAD CORPORATION
Courthouse Plaza Northeast
Dayton, Ohio 45463
Attention:
Re: 364 Day Revolving Credit Line
-----------------------------
Ladies and Gentlemen:
Each of the banks listed on Schedule I attached hereto (each a "Lender" and
collectively, the "Lenders") is pleased to confirm that it is prepared to make
funds available to The Mead Corporation, an Ohio corporation ("Borrower"), for
general corporate purposes, including acquisitions, and for a liquidity and
back-up facility to the Borrower's commercial paper program, subject to the
terms and conditions outlined below.
Agent. Bank One, NA, a national banking association with its principal
-----
banking office in Chicago, Illinois (the "Agent") shall act as Agent on behalf
of the Lenders under this 364 Day Revolving Credit Line Letter Agreement (this
"Agreement") and any documents, instruments and notes in connection herewith
(collectively, "Loan Documents"). The provisions of Section 9 (other than the
first sentence of Section 9.1) of the Credit Agreement, dated as of November 15,
1989, among the Borrower, the banks party thereto and the Agent (as amended,
modified and supplemented from time to time, the "Credit Agreement") shall apply
to the duties, obligations, rights and powers of the Agent and the Lenders as if
such Section 9 (other than the first sentence of Section 9.1) had been set forth
herein mutatis mutandis (all references in the Credit Agreement to "Banks",
------- --------
"Agents", "Company", "Agreement", "Notes", "Loan Documents", "Required Banks",
"Commitment" and "Loans" shall be deemed to be references to Lenders, Agent,
Borrower, Agreement, Notes (as defined below) and Loan Documents, Required
Lenders (as defined below), Commitment (as defined below) and Loans (as defined
below), respectively, herein and all other defined terms contained in the Credit
Agreement shall have the same meaning in this Agreement unless otherwise defined
in this Agreement, but shall be interpreted in the context of this Agreement.
Interpretation. In the event of the termination or expiration of the
--------------
Credit Agreement (or the Commitments (as defined therein) thereunder), any
provisions of the Credit Agreement which are expressly made applicable hereunder
or expressly incorporated by reference herein as if such provisions had been set
forth herein mutatis mutandis shall be deemed to remain in full force and effect
----------------
for purposes of this Agreement in the form in effect immediately prior to such
termination or expiration. In the event of any ambiguity in the interpretation
of terms and provisions of this Agreement, such terms and provisions shall be
construed and interpreted by reference to similar provisions in the Credit
Agreement in the context of this Agreement (including, without limitation, the
intent and purposes hereof).
Commitment. Each Lender severally agrees to make loans ("Loans") to
----------
Borrower in an aggregate principal amount not to exceed at any one time such
Lender's maximum commitment as set forth opposite such Lender's name on Schedule
I attached hereto as such amount may be reduced in part or in whole by three
business days written notice to such Lender (with respect to such Lender, the
"Commitment" and, all commitments together, the "Total Commitment"). Borrower
may borrow, repay and prepay Loans and reborrow at any time during the period
from the date hereof to but excluding the date occurring 364 days after the date
of the Notes (the "Availability Period"), subject to the limitations set forth
herein and in the promissory notes in favor of each of the
<PAGE>
Lenders (collectively, the "Notes" or each individually, a "Note"), which shall
evidence the Loans and be substantially in the form of Exhibit "A" attached
hereto.
Termination; Reduction of Commitment. Borrower may, upon at least three
------------------------------------
business days notice to the Agent, terminate at any time, or irrevocably reduce
from time to time, the unused amount of the Total Commitment pro rata to the
--------
Commitment of each Lender in multiples of $10,000,000 or, if less, the amount of
the Total Commitment; provided, that no reduction shall reduce the Total
--------
Commitment below the aggregate unpaid principal amount of all Loans then
outstanding. All accrued but unpaid facility fees with respect to such
terminated or reduced Commitments shall be payable on the effective date of such
termination or reduction.
Facility Fee. A facility fee shall accrue on the Commitment of each Lender
------------
during the Availability Period at a rate per annum equal to 0.08%, calculated on
the basis of a 365/366 day year, for the actual number of days elapsed, and
payable quarterly in arrears on the last business day of each calendar quarter.
Utilization Fee. A utilization fee shall also accrue on the Commitment of
----------------
each Lender during the Availability Period during any calendar quarter when the
daily average sum of the outstanding principal balance of the Loans during such
quarter exceeds 33% of the average daily Total Commitments during such quarter,
which utilization fee shall be in an amount equal to 0.125% per annum times the
daily average outstanding principal amount of the Loans during such quarter.
Accrued utilization fees shall be calculated on the basis of 365/366 day year,
for the actual number of days elapsed, and shall be payable quarterly in arrears
on the last business day of each calendar quarter.
Interest Rate. Each Loan shall bear interest as selected by Borrower and
-------------
provided in the Notes.
Interest Periods; Maturity. Eurodollar Loans (defined in the Notes) and
--------------------------
Variable Rate Loans (defined in the Notes) shall be available for interest
periods ("Interest Periods") of, at Borrower's selection, one, two, three or six
months or such other period as may be agreed upon among the Lenders and the
Borrower. Upon three business days notice to the Agent, at the expiration of any
Interest Period, Borrower may elect to continue or convert any applicable Loans
consistent with the provisions of this Agreement. No Interest Period may extend
beyond the date occurring 364 days after the date of the Notes (the "Termination
Date"), the date on which all Loans shall finally mature.
Payments; Prepayments. All payments and prepayments of principal and
---------------------
interest shall be made on the terms and conditions specified in the Notes.
Drawdowns; Funding. Borrower may borrow under the Total Commitment by
------------------
giving the Agent notice by 12:00 noon New York City time at least one business
day prior to a Variable Rate Loan and at least three business days prior to a
Eurodollar Loan. Immediately upon its receipt thereof, the Agent shall deliver
copies of such notices to the Lenders. No later than 11:00 a.m. (Chicago time)
on the date of the requested Loan, each Lender shall pay to the Agent its pro
---
rata portion of the principal amount of the requested Loan to be made on such
- ----
date. No later than 2:00 p.m. (Chicago time) on the date of the requested Loan,
the Agent shall make available to Borrower the principal amount of the requested
Loan. Each requested Loan shall be in a minimum amount of $10,000,000 and in
integral multiples of $1,000,000 thereafter.
Defaulting Lenders. No Lender shall be responsible for any default by any
------------------
other Lender in fulfilling its obligations hereunder and each Lender shall be
obligated to fulfill its obligations hereunder regardless of the failure of any
other Lender to fulfill its obligations hereunder. A defaulting Lender shall not
be entitled to any facility fees, utilization fees or interest with respect to
any amounts not funded by such Lender in breach of its obligations hereunder.
The Agent may, in its sole discretion, but shall not be obligated to, fulfill
the funding obligations of any defaulting Lender.
<PAGE>
Conditions of Lending. The obligation of the Lenders to make Loans to
---------------------
Borrower is subject to the conditions precedent that (a) in the case of the
initial Loan, each Lender shall have received its Note duly executed and
delivered by Borrower, and the Agents shall have received (i) a corporate
borrowing resolution certified by Borrower's Secretary or Assistant Secretary,
(ii) an incumbency certificate of Borrower's Secretary or Assistant Secretary
setting forth the names, titles and true signatures of Borrower's officers
authorized to sign this Agreement and the Notes, (iii) an opinion of counsel to
the Borrower substantially in the form of Exhibit "B" hereto, (iv) the
representations and warranties of Borrower in the Credit Agreement shall be true
and correct in all material respects as if made on such date (other than the
representations and warranties that relate solely to an earlier date which shall
be true as of such date) and (b) in the case of all Loans, (i) no Event of
Default (or event or circumstance which with the giving of notice or the passage
of time or both would constitute an Event of Default (a "Default")) under this
Agreement or the Notes has occurred and is continuing, or would result from the
making of such Loan, and (ii) the representations and warranties of Borrower
herein shall be true and correct in all material respects as if made on such
date (other than representations and warranties that relate solely to an earlier
date which shall be true as of such date, the representation in clause (h) of
the following section and the representation in the following section regarding
Year 2000 Issues and the Year 2000 Program).
Representations and Warranties. Borrower hereby represents and warrants
------------------------------
that: (a) this Agreement and the Notes when delivered will be the legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally, (b) the execution, delivery and performance by Borrower of
this Agreement and the Notes have been authorized by all necessary corporate
action and do not and will not contravene Borrower's charter or by-laws or any
applicable law or any contractual provision binding on or affecting Borrower,
(c) as of the date hereof, there is no Default or Event of Default under this
Agreement, (d) there are no pending or threatened actions, suits or proceedings
against or affecting the Borrower before any court, governmental agency or
arbitrator, which are reasonably likely to, in any one case or in the aggregate,
materially adversely affect the financial condition, operations, properties or
business of the Borrower or the ability of the Borrower to perform in its
obligations under any of the Loan Documents, (e) no part of the proceeds of any
Loan shall be used to purchase or carry any "margin stock" (as defined in
Regulation U) in violation of Regulations G, T, U or X of the Board of Governors
of the Federal Reserve System, (f) to the best of Borrower's knowledge, the
financial statement schedules contained in Borrower's most recent 10-K Report
are true and accurate, were prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of the Borrower
at such date, (g) the representations and warranties set forth in Sections 8.4
and 8.6 of the Credit Agreement are true and correct in all material respects,
which representations and warranties are incorporated herein by reference as if
fully set forth herein, and (h) since December 31, 1998 and except for matters
disclosed by the Borrower in any filing since December 31, 1998 with the
Securities and Exchange Commission, there has been no change in the business,
conditions (financial or otherwise) or results of operations of the Borrower and
its subsidiaries which could reasonably be expected to have a Material Adverse
Effect. "Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
business, property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under this Agreement or the
Notes, or (iii) the validity or enforceability of this Agreement or the Notes or
the rights or remedies of the Agent or the Lenders thereunder.
In addition, Borrower hereby represents and warrants that it has made an
assessment of the Year 2000 Issues and has a program for remediating the Year
2000 Issues on a timely basis (the "Year 2000 Program"). Based on such
assessment and on the Year 2000 Program, Borrower does not reasonably anticipate
that Year 2000 Issues will have a Material Adverse Effect. As used in this
Agreement, "Year 2000 Issues" means anticipated costs, problems and
----------------
uncertainties associated with the inability of
<PAGE>
certain computer applications to effectively handle data including dates on and
after January 1, 2000, as such inability materially affects the business,
operations and financial condition of the Borrower and its subsidiaries.
Covenants. During the term of this Agreement, Borrower will, for the
---------
benefit of the Lenders, perform, comply with and be bound by its agreements,
covenants and obligations set forth in Sections 5 and 6 of the Credit Agreement
as such Sections may be modified or amended, and subject to any waivers of
compliance granted by the Required Banks (as defined therein), from time to
time, as if such Sections 5 and 6 had been set forth herein mutatis mutandis.
------- --------
In addition, Borrower covenants and agrees that it will take all such actions as
are reasonably necessary to assure that the Borrower's and each subsidiary's
computer systems are able to operate and effectively process data including
dates on and after January 1, 2000. At the request of the Agent, the Borrower
will provide the Agent with assurance acceptable to the Agent of the Borrower's
Year 2000 compatibility.
Events of Default. Any following events shall be an "Event of Default":
----------------- ----------------
(a) Borrower shall fail to pay (i) the principal of any Note as and when due and
payable, or (ii) any interest on, or any other amount due under, any Note or
this Agreement within ten (10) days of the due date thereof; (b) any material
representation or warranty made by Borrower in any Note, this Agreement or any
other Loan Document shall prove to have been incorrect in any material respect
on or as of the date made; (c) Borrower shall fail to perform or observe any
other term, covenant or agreement contained in any Loan Document on its part to
be performed or observed, and such failure shall not have been remedied within
thirty (30) days after written notice thereof from the Agent or any Lender; (b)
Borrower or any Significant Subsidiary (as defined in the Credit Agreement)
defaults in the payment of principal of, or interest on, any indebtedness for
borrowed money in an amount equal to at least $50,000,000 (other than
indebtedness under this Agreement or the Credit Agreement) and such default has
not been cured within any period of grace provided with respect thereto; (e) any
Event of Default (as defined in the Credit Agreement) shall occur under the
Credit Agreement; (f) Borrower or any Significant Subsidiary (i) shall generally
not, or be unable to, or shall admit in writing its inability to, pay its debts
as its debts become due; (ii) shall make a general assignment for the benefit of
creditors; (iii) shall file a petition in bankruptcy or for any relief under any
law of any jurisdiction relating to reorganization, arrangement, readjustment of
debt, dissolution or liquidation; (iv) shall have any such petition filed
against it in which an adjudication is made or order for relief is entered or
which shall remain undismissed for a period of 60 days or shall consist nor
acquiesce thereto; or (v) shall have had a receiver, custodian or trustee
appointed for all or a substantial part of its property; or (g) any "group" (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
acquires 20% or more, in the aggregate, of the capital stock of Borrower
entitled, at the time, to vote for the election of Borrower's directors. If an
Event of Default shall have occurred and be continuing, the Agent, if directed
in writing by Lenders with Commitments aggregating at least 66 2/3% of the Total
Commitment (or if the Total Commitment has been terminated, Lenders with Loans
aggregating at least 66 2/3% of the total amount of Loans then outstanding) (the
"Required Lenders"), shall declare the principal and accrued but unpaid interest
----------------
under the Notes immediately due and payable, and the Agent, if directed in
writing by the Required Lenders, shall terminate the Total Commitment. Upon the
occurrence of any "bankruptcy" or "insolvency" Event of Default, the Total
Commitment shall terminate immediately and the principal and accrued but unpaid
interest under the Notes shall be immediately due and payable without requiring
any notice or action by the Agents or the Lenders.
Amendment and Waiver. With the prior written consent of the Required
--------------------
Lenders and Borrower, any provision of this Agreement or any Note may be
amended, waived, supplemented, restated, discharged or terminated; except that
the written consent of Borrower and all of the Lenders shall be required to
extend the final maturity of any Loan or any Note, to reduce the rate of
interest on principal or the amount of the facility fee or the utilization fee,
to extend the time of payment of principal, interest, the facility fee or the
utilization fee, to reduce the amount of unpaid
<PAGE>
principal of any Loan or any Note, to increase the Commitment of any Lender then
in effect, to change the percentage specified in the definition of Required
Lenders or to amend, modify or waive this paragraph.
Expenses; Indemnification. (i) The Borrower shall reimburse the Agent for
-------------------------
any costs, reasonable internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent) paid or incurred by the Agent in
connection with the preparation, negotiation, execution, delivery, syndication,
review, amendment, modification, and administration of the Loan Documents. The
Borrower also agrees to reimburse the Agent and the Lenders for any costs,
reasonable internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent and the Lenders,
which attorneys may be employees of the Agent or the Lenders) paid or incurred
by the Agent or any Lender in connection with the collection and enforcement of
the Loan Documents.
(ii) The Borrower hereby further agrees to indemnify the Agent, each
Lender, their respective affiliates, and each of their directors, officers and
employees against all losses, claims, damages, penalties, judgments, liabilities
and expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent, any Lender or any affiliate is a
party thereto) which any of them may reasonably pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder except to the extent that they
result from the gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrower under this Section shall
survive the termination of this Agreement.
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 Lender is hereby authorized at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower 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 Lender (including without limitation by branches, affiliates and
agencies of such Lender wherever located) to or for the credit or the account of
the Borrower against and on account of the obligations and liabilities of the
Borrower to such Lender under this Agreement and the Notes, including, without
limitation, all interests, in obligations purchased by such Lender pursuant to
the following paragraph, and all other claims of any nature or description
arising out of or connected with this Agreement and the Notes, irrespective of
whether or not such Lender shall have made any demand hereunder and although
said obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
Proration of Excess Payments. The Lenders 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, equitable adjustment will be made so
that, in effect, all such amounts will be shared ratably among the Lenders 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 Lenders 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 Lender receiving such
--------
excess payment shall purchase for cash from the other Lenders an interest in the
Notes of such Lenders in such amount as shall result in a ratable participation
by each of the Lenders in the aggregate unpaid amount of all outstanding Notes
then held by all of the Lenders. If all or any portion of such excess payment
is thereafter recovered from such Lender, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
<PAGE>
Governing Law. This Agreement shall be governed by the laws of the State
-------------
of New York.
Waiver of Jury Trial. The Agent, the Lenders and the Borrower, after
--------------------
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of this Agreement, the
Notes or any related instrument or agreement or any of the transactions
contemplated by this Agreement, the Notes or any course of conduct, dealing,
statements (whether oral or written) or actions of any of them. Neither the
Agent, any Lender nor the Borrower shall seek to consolidate, by counterclaim or
otherwise, any such action in which a jury trial has been waived with any other
action in which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished by the
Agent, any Lender or the Borrower except by a written instrument executed by all
of them.
<PAGE>
Please evidence your acceptance of the foregoing by signing and returning
to us the enclosed copy of this Agreement on or before November 3, 1999, the
----------------
date on which our commitment to enter into this Agreement (if not accepted prior
thereto) will expire.
Very truly yours,
BANK ONE, NA,
As Agent and a Lender
By: Glenn A. Currin
--------------------------------------------
GLENN A. CURRIN
Title: First Vice President
-----------------------------------------
BANK OF AMERICA, N.A.
By: Michael Balok
--------------------------------------------
MICHAEL BALOK
Title: Managing Director
-----------------------------------------
CITICORP USA, INC.
By: Wolfgang Viragh
--------------------------------------------
Title: _________________________________________
DEUTSCHE BANK AG, New York Branch and/or Cayman
Islands Branch
By: Hans-Josef Thiele
--------------------------------------------
Title: Director
-----------------------------------------
By: Belinda J. Wheeler
--------------------------------------------
Title: Vice President
----------------------------------------
MELLON BANK, NA
By: Mark F. Johnston
--------------------------------------------
Title: VP
-----------------------------------------
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: Robert Bottamedi
--------------------------------------------
ROBERT BOTTAMEDI
Title: VICE PRESIDENT
-----------------------------------------
THE BANK OF NOVA SCOTIA
By: F. C. H. Ashby
--------------------------------------------
F. C. H. ASHBY
Title: Senior Manager Loan Operations
-----------------------------------------
<PAGE>
SOCIETE GENERALE
By: Jay Sands
--------------------------------------------
Title: Managing Director
-----------------------------------------
WACHOVIA BANK OF GEORGIA, NA
By: Bradford Watkins
--------------------------------------------
Title: Vice President
-----------------------------------------
THE SUMITOMO BANK, LIMITED
By: Peter R. C. Knight
--------------------------------------------
Title: S V P
-----------------------------------------
Agreed and Accepted:
THE MEAD CORPORATION
By: Timothy R. McLevish
------------------------------
Title: Vice President-Finance & Treasurer
----------------------------------
<PAGE>
Exhibit "A"
-----------
Promissory Note
---------------
THE MEAD CORPORATION
$_____________ November __, 1999
FOR VALUE RECEIVED, the undersigned unconditionally promises to pay to the
order of ___________________________(the "Bank"), at the principal office of the
Agent, for the account of the Lending Office (as hereinafter defined), the
principal amount of each loan endorsed on the schedule attached hereto and made
a part hereof (including any continuations, the "Schedule") on the maturity date
of such loan as shown on the Schedule, and to pay interest on the unpaid balance
of the principal amount of such loan from and including the date of such loan
(as shown on the Schedule) to such maturity date at a rate per annum equal to:
(a) a variable rate equal to: the higher of (i) the Federal Funds Rate plus 1/2
of 1% and (ii) the Corporate Base Rate (such higher rate being the "Variable
Rate" and such loan a "Variable Rate Loan"; or (b) a fixed rate 32/100 of 1%
above the Eurodollar Rate applicable to such loan (such loan a "Eurodollar
Loan"). Any principal not paid when due shall bear interest from maturity until
paid in full at a rate per annum equal to the Default Rate. Interest shall be
payable on the relevant Interest Payment Date. Interest shall be calculated on
the basis of a year of 365 or 366 days (in the case of Variable Rate Loans) and
360 days (in the case of the Eurodollar Loans) and, in each case, for the actual
days elapsed. All payments hereunder shall be made in lawful money of the United
States and in immediately available funds. Any extension of time for the payment
of the principal of this note resulting from the due date falling on a non-
Banking Day shall be included in the computation of interest. The date, and
Interest Periods (as defined in the Letter Agreement (as defined below)) of, and
the interest rates with respect to, the loans and any payments of principal
shall be recorded by the Bank on its books and prior to any transfer of this
note (or, at the discretion of the Bank, at any other time) endorsed by the Bank
on the Schedule, which shall be conclusive in the absence of manifest error;
provided, however, that the Bank's failure to endorse the Schedule shall not
affect the Undersigned's obligations hereunder.
1. Related Letter Agreement. Loans evidenced hereby are made pursuant to
------------------------
that certain 364 day revolving credit line letter agreement dated November __,
1999 (as amended, modified or supplemented from time to time, the "Letter
Agreement") between the undersigned, the Bank and the other banks party thereto
as Lenders, and Bank One, NA (the "Agent"). Capitalized terms used herein and
not defined herein shall have the meanings given thereto to the Letter
Agreement.
2. Certain Definitions. As used herein, the following terms shall have
-------------------
the corresponding meanings:
(a) "Banking Day" means (i) with respect to any borrowing, payment or
-----------
rate selection of Eurodollar Loans, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial lending
activities and interbank wire transfers can be made on the Fedwire system.
(b) "Corporate Base Rate" means a rate per annum equal to the
-------------------
corporate base rate or prime rate of interest announced by the Agent or its
parent, Bank One
<PAGE>
Corporation, from time to time, changing when and as said corporate base rate or
prime rate changes.
(c) "Default Rate" means, in respect of any amount not paid when due,
------------
a rate per annum during the period commencing on the due date until such amount
is paid in full equal to a rate 2% above the Variable Rate.
(d) "Eurodollar Rate" means, with respect to a Eurodollar Loan for the
---------------
relevant Interest Period, the sum of (i) the quotient of (a) the average rate
per annum (rounded to the nearest 1/16 of 1%) quoted by the Agent at
approximately 11:00 a.m. London time (or as soon thereafter as practicable) two
Banking Days prior to the first day of an Interest Period during which the
Eurodollar Rate will accrue for the offering by the Agent to leading banks in
the London interbank market of U.S. dollar deposits having a term comparable to
the relevant Loan and in an amount comparable to the Agent's portion of the
principal amount of the relevant Loan, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period.
(e) "Federal Funds Rate" means, for any day, an interest rate per
------------------
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Banking Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Banking Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
(f) "Interest Payment Date" means for any loan hereunder, the first
---------------------
day commencing after such loan as follows: (i) for any Variable Rate Loan, the
last Banking Day of each March, June, September and December; (ii) for any
Eurodollar Loan, at three-month intervals; and (iii) for any amount, upon
maturity and any repayment.
(g) "Lending Office" means the office (or affiliate) as the Bank may
--------------
from time to time specify, provided that the Bank shall not be entitled to
designate or change the lending office if, as a result, the undersigned shall be
required to make any payment pursuant to Section 3 hereof.
(h) "Regulation D" means Regulation D of the Board of Governors of the
------------
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
(i) "Regulatory Change" means any changes after the date hereof in
-----------------
United States federal, state or foreign laws or regulations (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks including the Bank of or
under any United States federal or state, or any foreign, laws or regulations
(whether or not having the force of law) by any court or governmental or
monetary authority charged with the interpretation or administration thereof.
(j) "Reserve Requirement" means, with respect to an Interest Period,
-------------------
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
3. Additional Costs, Etc.
----------------------
(a) If, as a result of any Regulatory Change, the Bank determines that
the cost to the Bank of making or maintaining any Eurodollar Loan evidenced
hereby is increased (including, without limitation, due to increased capital
requirements), or any amount received or receivable by the Bank hereunder is
reduced, or the Bank is required to make any payment in connection with any
transaction contemplated hereby
<PAGE>
(excluding, however, income, gross or net receipts, franchise or other similar
taxes), then the undersigned shall pay to the Bank on demand such additional
amount or amounts as the Bank determines in good faith will compensate the Bank
for such increased cost, reduction or payment, provided that the foregoing shall
not apply to (i) any taxes, or any withholding or deduction of taxes unless the
Bank is, on the date hereof, entitled to a complete exemption from withholding
or deduction of taxes on all amounts to be received hereunder by the Bank, or
(ii) to any taxes (or withholding or deductions with respect thereto) required
to be deducted or withheld by reason of the failure of the Bank to comply with
applicable certification, information, documentation or other reporting
requirements if such compliance is required by treaty, statute or regulation as
a precondition to relief or exemption from such taxes, withholding or
deductions.
(b) If it becomes unlawful for the Bank to maintain any Eurodollar
Loan, the Bank shall promptly notify the undersigned, and such loan shall be
thereby converted into a Variable Rate Loan on the date specified by the Bank.
(c) If there is any payment of a Eurodollar Loan prior to its stated
maturity (by reason of acceleration or otherwise) or a Eurodollar Loan is not
borrowed or prepaid after a notice of borrowing or prepayment has been received
by the Bank, the undersigned will promptly pay the Bank on demand an amount
determined by the Bank in good faith sufficient to compensate it for such
payment.
4. Events of Default. If an Event of Default shall have occurred and be
-----------------
continuing, THEN, in any case, Eurodollar Loans may not be continued for
additional interest periods and the Bank may instruct the Agent in writing to
declare that the unpaid principal amount of this Note, together with accrued but
unpaid interest, shall be immediately due and payable; provided, that such
principal, together with accrued but unpaid interest, shall not become
immediately due and payable unless the Required Lenders shall have so requested;
provided, further, that in the case of an Event of Default under clause (e) of
the definition thereof in the Letter Agreement, the unpaid principal amount of
this Note, together with accrued interest, shall immediately become due and
payable without any notice or other action by the Bank.
5. Miscellaneous.
-------------
(a) The undersigned waives presentment, notice of dishonor, protest
and any other formality with respect to this Note.
(b) The undersigned agrees to reimburse the Bank on demand for all
costs, expenses and charges (including, without limitation, reasonable fees and
charges of external legal counsel for the Bank and costs allocated by its
internal legal department) in connection with the enforcement of this Note and
the Letter Agreement.
(c) This Note shall be binding on the undersigned and its successors
and assigns and shall inure to the benefit of the Bank and its successors and
assigns, except that the undersigned may not delegate any obligations hereunder
without the prior written consent of the Bank.
<PAGE>
(d) This Note shall be governed by and interpreted and construed in
accordance with the laws of the State of New York, provided that the foregoing
is not intended to limit the maximum rate of interest which may be charged or
collected by the Bank hereon if, under the law applicable to it, the Bank may
charge or collect such interest at a higher rate than is permissible under the
law of said State. In no case shall the interest hereon exceed the maximum
amount which the Bank may charge or collect under such law applicable to it.
THE MEAD CORPORATION
By: ____________________________________________
Its: ___________________________________________
<PAGE>
<TABLE>
<CAPTION>
Loan Number Amount of Balance
Amount and Maturity Payment and Remaining Notation
Date Interest Date of Loan Number Unpaid Made by
- ---- -------- -- ----------- ------ -------
Rate Loan
---- ----
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
SCHEDULE I
----------
Lenders
-------
Name and Address of Lenders Commitment
- ------------------------------------------------ -----------
BANK ONE, NA, a national banking association $27,000,000
with its principal office in Chicago, Illinois
c/o Bank One, NA
100 East Broad Street
Columbus, Ohio 43215
Attention: Paul Harris
Facsimile: (614) 248-5518
BANK OF AMERICA, N.A. $23,000,000
555 California Street, 41/st/ Floor
San Francisco, CA 94104
Attention: Michael Balok
Facsimile: (415) 622-4585
CITICORP USA, INC. $23,000,000
399 Park Avenue, 8/th/ Floor
Zone 6
New York, New York 10043
Attention: Wolfgang Viragh
Facsimile: (212) 793-0289
DEUTSCHE BANK AG New York Branch $18,500,000
and/or Cayman Island Branch
31 West 52/nd/ Street
24/th/ Floor
New York, New York 10019
Attention: Hans-Josef Thiele
Facsimile: (212-469-8212
MELLON BANK, NA $18,500,000
One Mellon Center, Room 4401
Pittsburgh, PA 15258
Attention: George Davis
Facsimile: (412) 234-8888
<PAGE>
SCHEDULE I
----------
Lenders
-------
Name and Address of Lenders Commitment
- ------------------------------------------- -----------
MORGAN GUARANTY TRUST COMPANY OF NEW YORK $18,500,000
60 Wall Street
New York, New York 10260
Attention: Robert Bottamedi
Facsimile: (212) 648-5018
THE BANK OF NOVA SCOTIA $18,500,000
181 West Madison Street
Suite 3700
Chicago. Illinois 60602
Attention: Keith Rauschenberger
Facsimile: (312) 201-4106
With a copy to:
BNS Atlanta Office
600 Peachtree St. Northeast, Suite 2700
Atlanta, GA 30308
Attention: Shannon Dancila
Facsimile: (404) 888-8998
SOCIETE GENERALE $18,500,000
181 West Madison Street
Suite 3400
Chicago, Illinois 60602
Attention: Michael Lincoln
Facsimile: (312) 578-5099
WACHOVIA BANK OF GEORGIA, NA $18,500,000
191 Peachtree Street Northeast, 28/th/ Floor
Atlanta, Georgia 30303
Attention: Bradford Watkins
Facsimile: (404) 332-6898
THE SUMITOMO BANK, LIMITED $16,000,000
New York Branch
277 Park Avenue
New York, New York 10172
Attention: Rohn Laudenschlager
Facsimile: (212) 224-4384
<PAGE>
EXHIBIT (10)(i)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-A/A
AMENDMENT NO. 3
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
THE MEAD CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-0535759
- --------------------------------------------------------------------------------
(State of Incorporation or Organization) (IRS Employer Identification No.)
Mead World Headquarters,
Courthouse Plaza Northeast
Dayton, Ohio 45463
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
If this form relates to the registration If this form relates to the
of a class of securities pursuant to registration of a class of
Section 12(b) of the Exchange Act and is securities pursuant to Section
effective pursuant to General Instruction 12(g) of the Exchange Act and
A.(c), please check the following box. [X] is effective pursuant to General
Instruction A.(d), please check
the following box. [_]
Securities Act registration statement file number to which this form relates:
N/A
- ---------------
(If applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Common Share Stock Purchase New York Stock Exchange
Rights (Pursuant to Rights Pacific Stock Exchange
Agreement dated as of Chicago Stock Exchange
November 9, 1996 and amended
as of December 7, 1999 and
February 16, 2000 and
Certificate of Adjustment
dated as of November 1, 1997)
Securities to be registered pursuant to Section 12(g) of the Act:
None
- --------------------------------------------------------------------------------
(Title of Class)
<PAGE>
This Registration Statement on Form 8-A/A amends and
restates the Registration Statement on Form 8-A filed with the
Securities and Exchange Commission by The Mead Corporation (the
"Company") on November 13, 1996 (the "Original Form 8-A") relating
to the rights distributed to the stockholders of the Company (the
"Rights") in connection with the Rights Agreement (the "Rights
Agreement"), dated as of November 9, 1996, between the Company and
BankBoston, N.A. (as successor to The First National Bank of
Boston) (the "Rights Agent"), as Rights Agent. On December 7,
1999, the Company and the Rights Agent entered into Amendment No.
1 to the Rights Agreement, which is incorporated herein by
reference. On February 16, 2000, the Company and the Rights Agent
entered into Amendment No. 2 to the Rights Agreement, which is
included as Exhibit 4 hereto and is incorporated herein by
reference.
Item 1. Description of Securities To Be Registered.
------------------------------------------
On November 9, 1996, the Board of Directors of The
Mead Corporation, an Ohio corporation (the "Company"), authorized
and granted to each holder of a Common Share, without par value,
of the Company (the "Common Shares") outstanding at the close of
business on November 14, 1996 (the "Record Date") one Right for
each Common Share held as of the Record Date. At such time, each
Right entitled the registered holder to purchase from the Company
one Common Share (or, in certain other circumstances, other
consideration) at a price of $200 (the "Purchase Price"), subject
to adjustment in certain circumstances. The Purchase Price may be
paid, at the election of the registered holder, in cash, Common
Shares or a combination thereof.
The description and terms of the Rights are set forth in
a Rights Agreement, dated as of November 9, 1996 (the "Rights
Agreement"), between the Company and the First National Bank of
Boston, a Certificate of Adjustment dated as of November 1, 1997,
Amendment No. 1 (the "Amendment No. 1") dated as of December 7,
1999, between the Company and BankBoston, N.A. (as successor to
The First National Bank of Boston), as Rights Agent and Amendment
No. 2 (the "Amendment No. 2") dated as of February 16, 2000,
between the Company and BankBoston, N.A.
Initially, the Rights are attached to the certificates
representing outstanding Common Shares, and no separate
certificates evidencing the Rights (the "Rights Certificates")
have been distributed. Until the earlier to occur of (i) ten days
following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership
of 20% or more of the outstanding Common Shares (the "Share
Acquisition Date"), (ii) ten Business Days following the
commencement of (or public announcement of the intent to commence)
a tender offer or exchange offer by any person or group if upon
consummation thereof, such person or group would be the beneficial
owner of 20% or more of the outstanding Common Shares or (iii) ten
days following a determination by the Board of Directors of the
Company that any Person is an Adverse Person (the earliest of such
dates being called the "Distribution Date"), the Rights will be
evidenced by the Common Share certificates. The Board of Directors
of the Company will declare any Person to be an Adverse Person
upon their determination that such Person has become the
Beneficial Owner of a substantial amount (i.e., not less than 10%)
---
of the Common Shares then outstanding and upon the determination
by a majority of the independent Directors that: (i) such
Beneficial Ownership is intended to cause the Company to
repurchase the Common Shares owned by such Person or to cause
pressure on the Company to take action intended to provide such
person
2
<PAGE>
with short-term financial gain which, in their determination, is not in the best
long-term interests of the Company and its shareholders or (ii) such Beneficial
Ownership is reasonably likely to cause a material adverse impact on the
business of the Company.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with Common Share certificates. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
transfer of any certificate for Common Shares will also constitute the transfer
of the Rights associated with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, Right Certificates will
be mailed to holders of record of the Common Shares as of the Close of Business
on the Distribution Date and, thereafter, such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the Close of Business on November 14, 2006, unless earlier redeemed or
extended by the Company as described below.
In the event that (i) a person or group becomes an Acquiring Person
(other than pursuant to an offer for all outstanding Common Shares at a price
and on terms which a majority of the independent Directors determine to be
adequate and otherwise to be in the best interests of shareholders) or (ii) the
Board of Directors of the Company declares a Person to be an Adverse Person, the
Rights Agreement provides that proper provision shall be made so that each
holder of a Right will thereafter have the right to receive, upon the exercise
thereof, Common Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two (2) times the exercise
price of the Right. However, Rights are not exercisable following the occurrence
of either of the events set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below. Notwithstanding the
foregoing, following the occurrence of any of the events set forth in this
paragraph, any Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by an Acquiring Person or an Adverse
Person shall immediately become null and void.
In the event that following the Share Acquisition Date, (i) the Company
engages in a merger or consolidation in which the Company is not the surviving
corporation, (ii) the Company engages in a merger or consolidation with another
person in which the Company is the surviving corporation, but in which all or
part of its Common Shares are changes or exchanged, or (iii) 50% or more of the
Company's assets or earning power is sold or transferred (except with respect to
clause (i) and (ii), a "cleanup" merger which follows an offer described in the
preceding paragraph), the Rights Agreement provides that proper provision shall
be made so that each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof, Common Shares of the acquiring company
having a value equal to two (2) times the exercise price of the Right. The
events set forth in this paragraph and in the preceding paragraph are referred
to as the "Triggering Events."
The Purchase Price payable, and the number of Common Shares issuable,
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Shares, (ii) upon the grant to
holders of the Common Shares of certain rights or warrants to subscribe for
Common Shares or securities convertible into Common Shares at less than the
current market price of the Common Shares, or (iii) upon the distribution to
3
<PAGE>
holders of the Common Shares of evidences of indebtedness or assets (excluding
regular quarterly dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued upon exercise of
the Rights and, in lieu thereof, a cash payment will be made based on the market
price of the Common Shares on the last trading date prior to the date of
exercise.
At any time after the date of the Rights Agreement until ten days
following the Share Acquisition Date, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at the then current redemption
price per Right, payable in cash or stock (the "Redemption Price"). Immediately
upon the action of the Board of Directors of the Company ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price. The foregoing notwithstanding,
the Rights may not be redeemed at any time subsequent to the Board of Directors'
determination that any Person is an Adverse Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that a Triggering Event
shall occur.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company in order to cure any ambiguity, defect or
inconsistency; to shorten or lengthen any time period under the Rights
Agreement; or in any other respect that will not adversely affect the interests
of holders of Rights; provided, however, that no amendment may be made at such
-------- -------
time as the Rights are not redeemable.
As of November 5, 1996, there were 52,261,831 Common Shares
outstanding, 13,964,589 shares held in the treasury and 8,845,593 Common Shares
authorized for issuance upon exercise of options granted under the Company's
employee benefit plans. Each outstanding Common Share on November 14, 1996, will
receive one Right. As long as the Rights are attached to the Common Shares and
in certain other circumstances specified in the Rights Agreement, the Company
will issue one Right for each Common Share issued on or after November 14, 1996.
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company without conditioning the offer on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors of the Company since the Board of
Directors may, at its option, at any time prior to ten days following the Share
Acquisition Date redeem all but not less than all the then outstanding Rights.
4
<PAGE>
On November 1, 1997, the Board of Directors of the Company declared a
two-for-one stock split to be effectuated through the distribution on December
1, 1997 of one Common Share to the holder of record of each Common Share
outstanding at the close of business on November 12, 1997 (the "Share
Distribution"). Certain computational adjustments under the Rights Agreement are
required as a consequence of the Share Distribution.
Pursuant to Sections 11, 12 and 23 of the Rights Agreement, effective
as of the close of business on November 12, 1997: (a) the Purchase Price will be
adjusted from $200 to $100; (b) the Redemption Price will be adjusted from $0.01
to $0.0O5; and (c) the number of Rights outstanding will be adjusted, in lieu of
any adjustment in the number of Common Shares issuable upon the exercise of a
Right, by issuing one new Right attached to each Common Share in the Share
Distribution.
A copy of Amendment No. 2 is attached hereto as Exhibit 4 and is
incorporated herein by reference. The foregoing description of the Rights does
not purport to be complete and is qualified in its entirety by reference to such
Exhibit.
Item 2. Exhibits.
--------
1 Rights Agreement, dated as of November 9, 1996, between The Mead
Corporation and BankBoston, N.A. (as successor to the First National
Bank of Boston), as Rights Agent, including the form of Rights
Certificate as Exhibit A and the Summary of Rights to Purchase Common
Stock as Exhibit B. Pursuant to the Rights Agreement, printed Rights
Certificates will not be mailed until after the earlier of (i) the
tenth day after the Share Acquisition Date (ii) the tenth Business Day
after the date of the commencement of a tender or exchange offer by any
person or group of affiliated or associated persons, if upon
consummation thereof, such person or group would be the beneficial
owner of 20% or more of such outstanding Common Shares or (iii) the
tenth day after the Board of Directors determines that a person is an
Adverse Person. (Incorporated by reference to Exhibit 1 to the
Company's Registration Statement on Form 8-A dated November 13, 1996.)
2 Certificate of Adjustment dated as of November 1, 1997 made by the Mead
Corporation in accordance with the Rights Agreement. (Incorporated by
reference to Exhibit 2 to the Company's Registration Statement on Form
8-A/A-1 dated November 3, 1997.)
3 Amendment No. 1 to the Rights Agreement, dated as of December 7,
1999, between The Mead Corporation and BankBoston, N.A. (as successor
to the First National Bank of Boston), as Rights Agent. (Incorporated
by reference to Exhibit 3 to the Company's Registration Statement on
Form 8-A/A-1 dated December 15, 1999.)
4 Amendment No. 2 to the Rights Agreement, dated as of February 16, 2000,
between The Mead Corporation and BankBoston, N.A. (as successor to the
First National Bank of Boston), as Rights Agent.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: March 6, 2000 THE MEAD CORPORATION
By: /s/ Timothy R. McLevish
----------------------------
Name: Timothy R. McLevish
Title: Vice President and Chief
Financial Officer
6
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Description
- ------- -----------
1 Rights Agreement, dated as of November 9, 1996, between The Mead
Corporation and BankBoston, N.A. (as successor to the First National
Bank of Boston), as Rights Agent, including the form of Rights
Certificate as Exhibit A and the Summary of Rights to Purchase Common
Stock as Exhibit B. Pursuant to the Rights Agreement, printed Rights
Certificates will not be mailed until after the earlier of (i) the
tenth day after the Share Acquisition Date (ii) the tenth Business Day
after the date of the commencement of a tender or exchange offer by
any person or group of affiliated or associated persons, if upon
consummation thereof, such person or group would be the beneficial
owner of 20% or more of such outstanding Common Shares or (iii) the
tenth day after the Board of Directors determines that a person is an
Adverse Person. (Incorporated by reference to Exhibit 1 to the
Company's Registration Statement on Form 8-A dated November 13, 1996.)
2 Certificate of Adjustment dated as of November 1, 1997 made by the
Mead Corporation in accordance with the Rights Agreement.
(Incorporated by reference to Exhibit 2 to the Company's Registration
Statement on Form 8-A/A-1 dated November 3, 1997.)
3 Amendment No. 1 to the Rights Agreement, dated as of December 7, 1999,
between The Mead Corporation and BankBoston, N.A. (as successor to the
First National Bank of Boston), as Rights Agent. (Incorporated by
reference to Exhibit 3 to the Company's Registration Statement on Form
8-A/A dated December 15, 1999.)
4 Amendment No. 2 to the Rights Agreement, dated as of February 16,
2000, between The Mead Corporation and BankBoston, N.A. (as successor
to the First National Bank of Boston), as Rights Agent.
7
<PAGE>
AMENDMENT NO. 2 TO THE RIGHTS AGREEMENT
---------------------------------------
Amendment No. 2 to the Rights Agreement, dated as of February 16, 2000
--
(the "Amendment"), by and between The Mead Corporation, an Ohio corporation (the
"Company"), and BankBoston, N.A. (formerly The First National Bank of Boston), a
national banking association organized under the laws of the United States of
America, as Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement on November 9, 1996 and Amendment No. 1 on December 7, 1999 thereto
(collectively, the "Agreement");
WHEREAS, pursuant to Section 26 of the Agreement, the Company has
determined to modify the terms of the Agreement in certain respects.
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein set forth, and intending to be legally bound hereby, the parties hereto
agree that the Agreement shall be and hereby is amended in the following manner:
Section 1. Amendment of Reservation and Availability of Common Shares.
----------------------------------------------------------
Section 9(a) of the Agreement is hereby amended in its entirety to read as
follows:
"The Company covenants and agrees that from after the time that the Rights
first become exercisable and except as provided in Section 11(a)(iii) or
in the following sentence, the Company will cause to be reserved and kept
available for issuance upon exercise of the Rights out of its authorized
and unissued Common Shares or Common Shares held in its treasury, all
Common Shares which are not reserved for other purposes. The foregoing
notwithstanding, if at the time the Rights first become exercisable (other
than as a result of a Triggering Event), the sum of the number of
authorized, but unissued Common Shares and the number of Common Shares held
in treasury (including for this purpose the number of authorized, but
unissued shares or treasury shares reserved for issuance upon exercise of
the Rights) minus the number of Common Shares (whether authorized, but
unissued shares or treasury shares) reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights for Common Shares, each Right shall
thereafter be exercisable for a fraction of a
<PAGE>
Common Share and such other consideration designated by the Board of
Directors of the Company which the Board of Directors of the Company has
determined, based on the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company, to have a
value equal to the Common Share (or fraction thereof) for which the Right
may otherwise have been exercisable. Common Shares shall not be deemed
reserved hereunder and, as such, unavailable for other purposes, unless and
until the Rights first become exercisable. The provisions of this Section
9(a) shall be interpreted in a manner consistent with Section 11(a)(iii)".
Section 2. Amendment of Appointment of Rights Agent. Section 2 of the
----------------------------------------
Agreement is hereby amended by inserting the following which appears at the end
thereof:
", upon ten (10) days' prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for,
the acts or omissions of any such co-Rights Agent".
Section 3. Amendment of Concerning the Rights Agent. Section 18 is hereby
----------------------------------------
amended by inserting the word "gross" in front of the words "negligence, bad
faith or willful misconduct" in the tenth line of Section 18.
Section 4. Amendment of Duties of Rights Agent. Section 20(c) is hereby
-----------------------------------
amended by inserting the word "gross" in front of the words "negligence, bad
faith or willful misconduct" in the second line of Section 20.
Section 5. Changing the Name of Rights Agent. All references in the
---------------------------------
Agreement to "The First National Bank of Boston" are hereby amended to read
"BankBoston, N.A."
Section 6. "Agreement" as Amended. The term "Agreement" as used in the
---------------------
Agreement shall be deemed to refer to the Agreement as amended hereby, and all
references to the Agreement shall be deemed to include this Amendment.
Section 7. Effectiveness. This Amendment shall be effective as of the date
-------------
first written above, and except as set forth herein, the Agreement shall remain
in full force and effect and otherwise shall be unaffected hereby.
2
<PAGE>
Section 8. Counterparts. This Amendment may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and attested as of the date first written above.
THE MEAD CORPORATION
By: /s/ TIMOTHY R. MCLEVISH
------------------------
Name: Timothy R. McLevish
Title: Vice President and CFO
BANKBOSTON, N.A.
By: /s/ TYLER H. HAYNES
--------------------
Name: Tyler H. Haynes
Title: Director, Client Services
4
<PAGE>
EXHIBIT 10(vi)
LEASE AGREEMENT
between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
Dated as of September 1, 1997
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 of Alabama, 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 $150,000,000 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 1997A
and Additional Bonds as permitted and provided for under said Trust Indenture.
This instrument prepared by:
Thompson Hine & Flory LLP
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 8
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 10
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
Section 6.3 - Taxes, Other Governmental Charges and Utility Charges 16
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
</TABLE>
<PAGE>
<TABLE>
<S> <C>
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 21
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 24
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 25
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 28
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 29
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
</TABLE>
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into as of September 1, 1997, 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;
"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;
<PAGE>
"bondholder" or "holder of the Bonds" means the registered owner of any
Bond;
"Bonds" means the $150,000,000 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 1997A, 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;
"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;
<PAGE>
(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 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;
(h) 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 Company and the Company;
(i) that certain Lease Agreement dated as of December 1, 1985 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 July 1, 1986 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, 1988 between
the Company and the Board executed in connection with the Board's
Environmental Improvement Revenue Bonds (Mead Coated Board Project), Series
1988;
(l) 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, 1989A,
1989B, 1989C, 1989D, 1989E, 1990A, 1991A and other bonds of the Board, as
amended and supplemented from time to time;
(m) 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;
(n) 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;
(o) that certain Lease Agreement dated as of June 1, 1993 between the
Company and the Board in connection with the Board's Environmental
Improvement Revenue Bonds (Mead Coated Board Project), Series 1993A;
(p) that certain Lease Agreement dated as of June 1, 1993 between the
Company and the Board in connection with the Board's Industrial Development
Revenue Bonds (Mead Coated Board Project), Series 1993A, 1995A and other
bonds of the Board, as amended and supplemented from time to time; and
(q) that certain Lease Agreement dated as of March 1, 1996 between
the Company and the Board in connection with the Board's Environmental
Improvement Revenue Bonds (Mead Coated Board Project), Series 1996;
"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;
<PAGE>
"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;
"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;
"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 of Alabama, 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, 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
<PAGE>
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 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 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.
<PAGE>
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 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 materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement.
<PAGE>
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 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 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.
<PAGE>
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, 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.
<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 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, September 1, 2037, 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 March 1, 1998, and
September 1 and March 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.
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
<PAGE>
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 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 it 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")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 August 15 of each year, commencing August 15, 1998.
The aggregate PILOT 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
<PAGE>
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
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 PILOT Payments 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 made 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 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
<PAGE>
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 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.
<PAGE>
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.
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
<PAGE>
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 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 this 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.
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. 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.
<PAGE>
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
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 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
<PAGE>
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 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:
<PAGE>
(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 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.
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
<PAGE>
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 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, September 1, 2037 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.
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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
(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
22
<PAGE>
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, 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.
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
23
<PAGE>
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.
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.
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:
24
<PAGE>
(a) If to the Board - The Industrial Development
Board of the City of
Phenix City, Alabama
c/o Kenneth A. Roberts
SouthTrust Bank of Russell County
P.O. Box 2316
Phenix City, Alabama 36868-2316
with a copy to
Sydney Smith, Esq.
Smith & Smith
1503 Broad Street
Phenix City, Alabama 36867
(b) If to the Company- Mead Coated Board, Inc.
Mead World Headquarters
Dayton, Ohio 45463
Attention: Treasurer
with a copy to:
Thompson Hine & Flory LLP
312 Walnut Street
14th Floor
Cincinnati, Ohio 45202
Attention: Robert A. Selak
(c) If to the Trustee- AmSouth Bank of Alabama
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.
25
<PAGE>
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 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
Kenneth A. Roberts
By: -------------------------------
Chairman
MEAD COATED BOARD, INC.
William B. Plummer
By: -------------------------------
Treasurer
26
<PAGE>
ACKNOWLEDGMENT OF BOARD
STATE OF ALABAMA )
)
COUNTY OF RUSSELL )
I, Carol D. Clegg, 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 11th day of September, 1997.
----
Carol D. Clegg
-----------------------------
Notary Public
CAROL D. CLEGG
NOTARY PUBLIC
ALABAMA STATE-AT-LARGE
(SEAL)
My commission expires: 1/2/2001
---------
27
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO )
)
COUNTY OF MONTGOMERY )
I, Carol D. Clegg, a Notary Public in and for said County in said State,
--------------
hereby certify that William Plummer, 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 11th day of September, 1997.
----
Carol D. Clegg
-------------------------------
Notary Public
CAROL D. CLEGG
NOTARY PUBLIC
ALABAMA STATE-AT-LARGE
(SEAL)
My commission expires: 1/2/2001
---------
28
<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 September 1, 1997
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 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 "1997 Leased Land");
29
<PAGE>
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 -50'E 976.85 feet to the property line of the United
States Government; thence along said property line N2 -50'W 1296.69 feet to
a branch which runs into Bluff Creek; thence along said branch the
following courses; N41 -41'W 340.67 feet; S85 -42'W 324.22 feet; S81 -08'W
330.0 feet; N25 -48'W 145.58 feet; S76 -52'W 198.66 feet; N44 -03'W 152.62
feet; S46 -35'Q 84.21 feet; S21 -00'E 83.39 feet; N82 -27'W 94.15 feet; S7
-51'E 148.82 feet; S66 -39'W 386.20 feet; S62 -55'W 237.23 feet; S65 -05'W
232.38 feet; S74 -24'W 408.97 feet; S51 -52'W 371.60 feet; S19 -42'W 231.02
feet; S62 -26'W 198.83 feet; N85 -48'W 229.54 feet; S89 -23'W 159.01 feet;
N83 -01'W 327.29 feet; S80 -02'W 437.03 feet; thence S59 -27'W 318.79 feet;
thence S3 -28'E 199.83 feet; thence S1 -16'E 607.22 feet; thence N87 -24'E
343.43 feet; thence N82 -04'E 516.01 feet; thence N70 -45'E 540.58 feet;
thence N89 -18'E 472.15 feet; thence N0 -01'E 400.58 feet; thence S89 -59'E
446.0 feet; thence S0 -01'W 395.0 feet; thence N89 -18'E 171.06 feet;
thence N46 -28'E 463.45 feet to the South line of Section 21; thence along
said Section line S90 -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
30
<PAGE>
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 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 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 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 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 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 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
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<PAGE>
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 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 59' 52' E, 291.25' to the point of beginning; thence S 0 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 +
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 59' 52" E, 291.25' to the point of beginning; thence S 8 20' 17" W,
284.46' to the center
32
<PAGE>
of a rectangular area which is parallel to the last said course 22' north
to south by 15' east to west; thence S 81 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 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
19' 16" E, 663.98' to the point of beginning (N 792,550.0 E 233,534.0);
thence S 0 00' W, 50.00'; thence N 90 00' E, 121.00'; thence N 0 00' W,
50.00'; thence N 90 00' W, 121.00' to the point of beginning; said land
being 0.14 + 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
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 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 + 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
39' 25" E, 461.76' to the point of beginning (N 792,748.92, E 233,478.50);
thence N 90 00' E, 73.57'; thence S 0 00' W, 34.50'; thence N 90 00' W,
11.82'; thence S 0 00' W, 143.17'; thence N 90 00' W, 90.62'; thence N 0
00" W, 83.08'; thence N 90 00" E, 28.87'; thence N 0 00' W, 94.59' to the
point of beginning; said land being 0.32 + 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 51' 31" E, 790.90' to the point of beginning; thence N 90 00' W, 82.00;
thence S 0' 00" W, 8.75'; thence N 90 00' W, 232.22'; thence S 15 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
33
<PAGE>
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 24' 34" E, 692.79' to the point of beginning; thence S 36 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 34' 06" E, 600.24' to the point of beginning; thence S 71 04' 32" E,
640.91'; thence N 50 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 21' 59" W, 84.29' to the point of beginning; thence S 56 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 00' bounded by a rectangular structure
32' -6" + East-West and 32' -6" + North-South; thence N 82 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:
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
06' 06" W, 35.94' to the point of beginning (N 792,374.0, E 234,473.25);
thence S 0 00' W, 133.50'; thence N 90 00' W, 103.39'; thence S 0 00' W,
103.50'; thence 90 00' W, 48.00'; thence N 0 00' W, 55.75'; thence N 90
00' W, 80.00; thence S 0 00' W, 42.75'; thence N 90 00' W, 63.00; thence
N 0 00' W, 110.00'; thence N45 00' E, 55.00'; thence N0 00' W, 23.11';
thence 90 00' E, 23.00'; thence N 0 00' W, 23.25'; thence N90 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 + acres;
-
MILL WATER COOLING TOWER AND NEW REACTOR CLARIFIER AREA
34
<PAGE>
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
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 00' W, 111.00; thence 0 00' W,
170.00'; thence N 90 00' E, 111.00' to the point of beginning; said land
being 0.43 + 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
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 00" E, 20.00'; thence S 0 00' W,
30.00'; thence N 90 00' W, 20.00' to the point of beginning; said land
being 0.01 + 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
22' 54" E, 879.79' to the point of beginning; thence N 0 00' W, 326.00';
thence N 90 00' E, 711.08'; thence S 0 00' W, 326.00'; thence N 90 00'
W, 328.00'; thence S 0 00' W, 188.00'; thence N 90 00' W, 50.00'; thence
N 0 00' W, 188.00'; thence N 90 00' W, 333.08' to the point of beginning;
said land being 5.54 + 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
04' 57" W, 197.69' to the point of beginning (N 792,156.0, E 234,462.0);
thence S 0 00" W, 82.00'; thence N 90 00" w, 52.00'; thence N 0 00' W,
82.00'; thence N 90 00' E, 52.00 to the point of beginning' said land
being 0.10 + 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
51' 29" E, 267.79' to the point of beginning (N 793,238.0 E 233,503.0);
thence N 90 00' E, 399.23'; thence S 0 00' W, 50.00'; thence N 90 00' W,
10.00'; thence S 0 00' W, 40.00'; thence N 90 00' W, 136.23'; thence N 0
00' W, 80.00'; thence N 90 00' W, 50.00'; thence S
35
<PAGE>
0 00' W, 10.00'; thence N 90 00' W, 54.00'; thence S 0 00' W, 40.00';
thence N 90 00' E, 65.00'; thence S 0 00' W, 30.00'; thence N 90 00' W,
150.00'; thence N 0 00' W, 17.00'; thence N 90 00' W, 64.00'; thence N 0
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
16' 34" E, 439.77' to the point of beginning (N 792,814.67, E 233,534.32');
thence N 90 00' E, 36.30'; thence N 0 00' W, 20.50'; thence N 90 00' E,
72.26'; thence N 0 00' W, 14.83'; thence N 90 00' E, 110.50'; thence S 0
00' W, 42.58'; thence N 90 00' E, 26.00'; thence S 0 00' W, 81.00' thence
N 90 00' W, 51.00' thence N 0 00" W, 25.12'; thence N 90 00' W, 72.26';
thence N 90 00' W, 20.50'; thence N 0 00' W, 36.30'; thence N 0 00' W,
34.00' to the point of beginning' said land being 0.47 + 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
01' 33" E, 637.83' to the point of beginning (N 792,851.0, E 233,813.33);
thence N 90 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 00'; thence S 0 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 00'; thence N 90 00' W, 34.00'; thence
N 0 00' W, 99.79'; thence N 90 00' W, 69.00'; thence N 59 47' 19" W,
91.42'; thence N 90 00' W, 64.67'; thence N 0 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, 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
38' 59" E, 253.41' to the point of beginning (N 793,165.00 E 233,503.00);
thence N 90 00' E, 64.00'; thence S 0 00' E, 17.00'; thence N 90 00' E,
150.00; thence N 0 00' E, 30.00'; thence N 90 00' W, 65.00'; thence N 0
00' E, 40.00'; thence N 90 00' E, 54.00'; thence N 0 00' E, 10.00';
thence N 90 00' E, 50.00'; thence S 0 00' E, 80.00'; thence N 90 00' E,
136.23'; thence N 0 00' E, 40.00'; thence N 90 00' E, 75.00'; thence S 0
00' E, 78.00;' thence N 90 00' W, 464.23'; thence 0 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:
36
<PAGE>
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 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 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
11' 16" E
37
<PAGE>
381.63' to the point of beginning (N 793,790.00 E 233,241.60); thence N 90
00' 00" E 760.00'; thence S 0 00' 00" E 102.00'; thence N 90 00' 00" E
128.04'; thence S 0 00' 00" E 960.48' (at existing utility bridge)' the N
90 00' 00" W 13.00'; thence N 0 00' 00" W 672.48', thence N 90 00' 00 W
875.04'; thence N 0 00' 00" E 390.00' to the point of beginning; said land
being 7.85+ 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 1997 Leased Land and railroads, public roads
and highways and the Chattahoochee River and to permit passage between the
1997 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 1997 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 1997 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 1997 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 1997 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 1997 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 1997 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;
38
<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 1997 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 1997 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 1997 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
improvements and appurtenances thereto, on the 1997 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 1997 Leased Land
as long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the 1997
Leased Land in respect of any additional improvements constructed adjacent
to the 1997 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 1997 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 December 1, 1988 between the Board, as lessor,
and the Company, as lessee, as amended and supplemented from time to time,
relating
39
<PAGE>
to the Board's Industrial Development Revenue Bonds (Mead Coated Board
Project), Series 1988A, 1989A, 1989B, 1989C, 1989D, 1989E, 1900A and 1991A;
(7) 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;
(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;
(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;
(11) 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 Industrial Development Revenue Bonds (Mead Coated
Board Project), Series 1993A and 1995A; and
(12) Lease Agreement dated as of March 1, 1996 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 1996.
40
<PAGE>
FIRST AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS FIRST AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of August 1, 1998 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 $150,000,000 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
1997A (the "Bonds") pursuant to a Trust Indenture dated as of September 1, 1997
(the "Original Indenture") from the Board to AmSouth Bank (formerly AmSouth Bank
of Alabama and AmSouth Bank, N.A.), as Trustee (the "Trustee").
The Board has used the proceeds of the sale of the 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 September 1, 1997 (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 Bonds as the same becomes due and payable. In addition, the Company is
required under Section 5.7 of the Agreement to make certain payments in lieu of
taxes ("PILOT Payments").
The Board and the Company now wish to amend Section 5.7 to revise the
provisions relating to PILOT Payments. Pursuant to Section 1502 of the
Indenture, the Board and the Company are permitted to amend the Agreement so
long as the Trustee and the Bondholder consent to such amendment. The Trustee
and the Bondholder have consented to this Amendment.
NOW, THEREFORE, as contemplated by Section 12.5 of the Agreement and in
accordance with Section 1502 of the Indenture, the parties hereto desire to
amend the Agreement as follows:
Section 1. Amendment of Agreement. Section 5.7 of the Agreement is
--------- ----------------------
amended by adding at the end of such section the following paragraph:
<PAGE>
Notwithstanding the foregoing, the PILOT Payments shall be reduced as set
forth in this paragraph. The PILOT Payments in the aggregate due under this
Agreement, combined with the payments in lieu of tax payable by the Company
pursuant to Section 5.7 of the Lease Agreement dated as of June 1, 1993 (the
"1993 Lease") between the Board and the Company, without giving effect to the
reduction provided for in this paragraph, are herein referred to as the "Formula
Payments". The total payments due under this Section 5.7 and under Section 5.7
of the 1993 Lease are herein referred to as the "Aggregate Payments". The
Aggregate Payments due to the Phenix City Board of Education in August, 1998
shall be $139,867, reflecting a reduction from the Formula Payments otherwise
due to the Phenix City Board of Education. The Aggregate Payments due to the
Russell County Board of Education in August, 1998 shall be $82,256, reflecting a
reduction from the Formula Payments otherwise due to the Russell County Board of
Education. The Aggregate Payments due to the Russell County Board of Education
in August, 1999 shall be reduced by $6,551 from the Formula Payments otherwise
due to the Russell County Board of Education. The Aggregate Payments due to
Russell County in August, 1998 and each successive year thereafter shall be
reduced from the Formula Payments otherwise due to Russell County to $61,894
until the aggregate amount of such reductions from the Formula Payment totals
$135,310; provided that in the year in which such aggregate reductions would
exceed $135,310, such reduction from the Formula Payment shall be in an amount
equal to the amount necessary to cause the aggregate reductions to total
$135,310.
Section 2. 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 3. 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 4. 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 5. 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 6. Applicable Law. This Amendment shall be construed in
---------- --------------
accordance with the laws of the State of Alabama.
<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
Kenneth A. Roberts
By:--------------------------------
Chairman
MEAD COATED BOARD, INC.
Timothy R. McLevish
By: -------------------------------
Treasurer
<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 9th day of September, 1998.
---
Sydney S. Smith
-----------------------------
Notary Public
SYDNEY S. SMITH
NOTARY PUBLIC
ALABAMA STATE-AT-LARGE
(SEAL)
My commission expires:2/28/2000
---------
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Phyllis M. Crabill, Notary Public in and for said County in said State,
------------------
hereby certify that Timothy R. McLevish, 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 16th day of September, 1998.
----
Phyllis M. Crabill
-------------------------------
Notary Public
Phyllis M. Crabill
In and for the State of Ohio
(SEAL)
My commission expires: August 31, 1999
---------------
<PAGE>
CONSENT OF BONDHOLDER
---------------------
Mead Coated Board, Inc., as holder of all of the outstanding Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1997A 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 Amendment
To Lease Agreement, dated as of August 1, 1998, between the Board and Mead
Coated Board, Inc., amending the Lease Agreement, dated as of September 1, 1997,
as amended 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 August 1, 1998.
MEAD COATED BOARD, INC.
Timothy R. McLevish
By: -------------------------------
Treasurer
<PAGE>
CONSENT OF TRUSTEE
------------------
AMSOUTH BANK, as Trustee under the Trust Indenture dated as of September 1,
1997, as amended, 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 August 1, 1998,
between the Board and Mead Coated Board, Inc., amending the Lease Agreement
dated as of September 1, 1997 between the Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, AmSouth Bank has caused this Consent of Trustee to be
executed in its name and behalf as of August 1, 1998.
AMSOUTH BANK, as Trustee
Lyn R. Cone
By: -------------------------------
Title: Assistant Vice President
<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 August 1, 1998
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
<PAGE>
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 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 "1997 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 -50'E 976.85 feet to the property line of the United
States Government; thence along said property line N2 -50'W 1296.69 feet to
a branch which runs into Bluff Creek; thence along said branch the
following courses;
<PAGE>
N41 -41'W 340.67 feet; S85 -42'W 324.22 feet; S81 -08'W 330.0 feet; N25 -
48'W 145.58 feet; S76 -52'W 198.66 feet; N44 -03'W 152.62 feet; S46 -35'Q
84.21 feet; S21 -00'E 83.39 feet; N82 -27'W 94.15 feet; S7-51'E 148.82
feet; S66 -39'W 386.20 feet; S62 -55'W 237.23 feet; S65 -05'W 232.38 feet;
S74 -24'W 408.97 feet; S51 -52'W 371.60 feet; S19 -42'W 231.02 feet; S62 -
26'W 198.83 feet; N85 -48'W 229.54 feet; S89 -23'W 159.01 feet; N83 -01'W
327.29 feet; S80 -02'W 437.03 feet; thence S59 -27'W 318.79 feet; thence
S3 - 28'E 199.83 feet; thence S1 -16'E 607.22 feet; thence N87 -24'E 343.43
feet; thence N82 -04'E 516.01 feet; thence N70 -45'E 540.58 feet; thence
N89 -18'E 472.15 feet; thence N0 -01'E 400.58 feet; thence S89 -59'E 446.0
feet; thence S0 -01'W 395.0 feet; thence N89 -18'E 171.06 feet; thence
N46 - 28'E 463.45 feet to the South line of Section 21; thence along said
Section line S90 -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,
<PAGE>
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 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 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 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 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 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:
<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 corner is marked by a concrete monument,
this point thus determined, being the northwest corner of the property to
be
<PAGE>
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 59' 52' E, 291.25' to the point of beginning; thence S 0 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 +
-
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 59' 52" E, 291.25' to the point of beginning; thence S 8 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 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
<PAGE>
course 27.00'; thence N 45 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
19' 16" E, 663.98' to the point of beginning (N 792,550.0 E 233,534.0);
thence S 0 00' W, 50.00'; thence N 90 00' E, 121.00'; thence N 0 00' W,
50.00'; thence N 90 00' W, 121.00' to the point of beginning; said land
being 0.14 + 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
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 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 + 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
39' 25" E, 461.76' to the point of beginning (N 792,748.92, E 233,478.50);
thence N 90 00' E, 73.57'; thence S 0 00' W, 34.50'; thence N 90 00' W,
11.82'; thence S 0 00' W, 143.17'; thence N 90 00' W, 90.62'; thence N 0
00" W, 83.08'; thence N 90 00" E, 28.87'; thence N 0 00' W, 94.59' to the
point of beginning; said land being 0.32 + acres;
-
<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 51' 31" E, 790.90' to the point of beginning; thence N 90 00' W,
82.00; thence S 0' 00" W, 8.75'; thence N 90 00' W, 232.22'; thence S 15
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 24' 34" E, 692.79' to the point of beginning; thence S 36 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 34' 06" E, 600.24' to the point of beginning; thence S 71 04' 32" E,
640.91'; thence N 50 08' 32" E, 61.59' to the point of ending; said land
being 0.45 + acres;
-
<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 21' 59" W, 84.29' to the point of beginning; thence S 56 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 00' bounded by a rectangular structure
32' -6" + East-West and 32' -6" + North-South; thence N 82 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:
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
06' 06" W, 35.94' to the point of beginning (N 792,374.0, E 234,473.25);
thence S 0 00' W, 133.50'; thence N 90 00' W, 103.39'; thence S 0 00' W,
103.50'; thence 90 00' W, 48.00'; thence N 0 00' W, 55.75'; thence N 90
00' W, 80.00; thence S 0 00' W, 42.75'; thence N 90 00' W, 63.00; thence
N 0 00' W, 110.00'; thence N45 00' E, 55.00'; thence N0 00' W, 23.11';
thence 90 00' E, 23.00'; thence N 0 00' W, 23.25'; thence N90 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 + 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
46' 07" W, 591.71' to the point of beginning (N 791, 960.0 E 234,055.0);
thence S 0
<PAGE>
00' W, 170.00'; thence N 90 00' W, 111.00; thence 0 00' W, 170.00'; thence
N 90 00' E, 111.00' to the point of beginning; said land being 0.43 +
-
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
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 00" E, 20.00'; thence S 0 00' W,
30.00'; thence N 90 00' W, 20.00' to the point of beginning; said land
being 0.01 + 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
22' 54" E, 879.79' to the point of beginning; thence N 0 00' W, 326.00';
thence N 90 00' E, 711.08'; thence S 0 00' W, 326.00'; thence N 90 00'
W, 328.00'; thence S 0 00' W, 188.00'; thence N 90 00' W, 50.00'; thence
N 0 00' W, 188.00'; thence N 90 00' W, 333.08' to the point of beginning;
said land being 5.54 + 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
04' 57" W, 197.69' to the point of beginning (N 792,156.0, E 234,462.0);
thence S 0 00" W, 82.00'; thence N 90 00" w, 52.00'; thence N 0 00' W,
82.00'; thence N 90 00' E, 52.00 to the point of beginning' said land
being 0.10 + acres;
-
<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
51' 29" E, 267.79' to the point of beginning (N 793,238.0 E 233,503.0);
thence N 90 00' E, 399.23'; thence S 0 00' W, 50.00'; thence N 90 00' W,
10.00'; thence S 0 00' W, 40.00'; thence N 90 00' W, 136.23'; thence N 0
00' W, 80.00'; thence N 90 00' W, 50.00'; thence S 0 00' W, 10.00';
thence N 90 00' W, 54.00'; thence S 0 00' W, 40.00'; thence N 90 00' E,
65.00'; thence S 0 00' W, 30.00'; thence N 90 00' W, 150.00'; thence N 0
00' W, 17.00'; thence N 90 00' W, 64.00'; thence N 0 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
16' 34" E, 439.77' to the point of beginning (N 792,814.67, E 233,534.32');
thence N 90 00' E, 36.30'; thence N 0 00' W, 20.50'; thence N 90 00' E,
72.26'; thence N 0 00' W, 14.83'; thence N 90 00' E, 110.50'; thence S 0
00' W, 42.58'; thence N 90 00' E, 26.00'; thence S 0 00' W, 81.00' thence
N 90 00' W, 51.00' thence N 0 00" W, 25.12'; thence N 90 00' W, 72.26';
thence N 90 00' W, 20.50'; thence N 0 00' W, 36.30'; thence N 0 00' W,
34.00' to the point of beginning' said land being 0.47 + 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
01' 33" E, 637.83' to the point of beginning (N 792,851.0, E 233,813.33);
thence N 90 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 00'; thence S 0 00'
W, 135.33'; thence along an arc South and West 53.41' having a radius of
<PAGE>
34.00' with a central angle of 90 00'; thence N 90 00' W, 34.00'; thence
N 0 00' W, 99.79'; thence N 90 00' W, 69.00'; thence N 59 47' 19" W,
91.42'; thence N 90 00' W, 64.67'; thence N 0 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, 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
38' 59" E, 253.41' to the point of beginning (N 793,165.00 E 233,503.00);
thence N 90 00' E, 64.00'; thence S 0 00' E, 17.00'; thence N 90 00' E,
150.00; thence N 0 00' E, 30.00'; thence N 90 00' W, 65.00'; thence N 0
00' E, 40.00'; thence N 90 00' E, 54.00'; thence N 0 00' E, 10.00';
thence N 90 00' E, 50.00'; thence S 0 00' E, 80.00'; thence N 90 00' E,
136.23'; thence N 0 00' E, 40.00'; thence N 90 00' E, 75.00'; thence S 0
00' E, 78.00;' thence N 90 00' W, 464.23'; thence 0 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
<PAGE>
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 minutes and
run easterly a distance of 18.00 feet to the point of beginning.
<PAGE>
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
11' 16" E 381.63' to the point of beginning (N 793,790.00 E 233,241.60);
thence N 90 00' 00" E 760.00'; thence S 0 00' 00" E 102.00'; thence N 90
00' 00" E 128.04'; thence S 0 00' 00" E 960.48' (at existing utility
bridge)' the N 90 00' 00" W 13.00'; thence N 0 00' 00" W 672.48', thence
N 90 00' 00 W 875.04'; thence N 0 00' 00" E 390.00' to the point of
beginning; said land being 7.85 + 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 1997 Leased Land and railroads, public roads
and highways and the Chattahoochee River and to permit passage between the
1997 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 1997 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 1997 Leased Land and the
Project including,
<PAGE>
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 1997 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 1997 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 1997 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 1997 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 1997 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 1997 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 1997 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,
<PAGE>
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
improvements and appurtenances thereto, on the 1997 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 1997 Leased Land
as long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the 1997
Leased Land in respect of any additional improvements constructed adjacent
to the 1997 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 1997 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;
<PAGE>
(6) 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;
(7) 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;
(8) 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;
(9) 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 Industrial Development Revenue Bonds (Mead Coated
Board Project), Series 1993A and 1995A;
(10) Lease Agreement dated as of March 1, 1996 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 1996;
(11) Lease Agreement dated as of September 1, 1997 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 1997A;
(12) Lease Agreement dated as of February 1, 1998 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 1998A; and
(13) Lease Agreement dated as of February 1, 1998 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 1998B.
<PAGE>
SECOND AMENDMENT
----------------
TO
--
LEASE AGREEMENT
---------------
THIS SECOND AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of September 30, 1998 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 previously issued and sold (i) $150,000,000 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
1997A (the "Series 1997A Bonds") pursuant to a Trust Indenture dated as of
September 1, 1997 (the "Original Indenture") from the Board to AmSouth Bank,
formerly AmSouth Bank of Alabama, as Trustee (the "Prior Trustee").
Pursuant to the First Supplemental Indenture dated as of September 15, 1998
(the "First Supplemental Indenture") and a resolution of the Board of even date,
The First National Bank of Chicago has been appointed as successor trustee under
the Original Indenture (the "Trustee").
The Board has used the proceeds of the sale of the Series 1997A 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 September 1, 1997, as
amended by a First Amendment to Lease Agreement dated as of August 1, 1998 (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 1997A 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 $85,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1998A
(the "Series 1998A Bonds"), pursuant to the Original Indenture as supplemented
by a Second Supplemental Trust Indenture dated as of September 30, 1998 (the
"Second Supplemental Indenture") from the Board to the Trustee. The Original
Indenture as supplemented by the First Supplemental Indenture, 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 1998A Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1998A Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the Series 1997A Bonds and not specifically otherwise provided for
in the Indenture, any
<PAGE>
supplements thereto or the Agreement, shall apply with full force and effect to
the Series 1998A Bonds. Without limiting the foregoing, all references in the
Agreement to the "Bonds" shall be deemed to mean the Series 1997A Bonds and the
Series 1998A 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 1998A 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 1998A 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 1998A 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 1998A 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 1998A 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 1998A Bonds, other than (i) the filing with the
Alabama Securities Commission of the notification of the Board's intention
to issue the Series 1998A 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
<PAGE>
recording of this Amendment, the Second Supplemental Indenture and any
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 1998A 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 (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 1998A 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 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.
<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
Kenneth A. Roberts
By:--------------------------------
Chairman
MEAD COATED BOARD, INC.
Timothy R. McLevish
By:-------------------------------
Treasurer
<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 9th day of September, 1998.
---
Sydney S. Smith
-----------------------------
Notary Public
SYDNEY S. SMITH
NOTARY PUBLIC
ALABAMA STATE-AT-LARGE
(SEAL)
My commission expires:2/28/2000
-----------------
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Phyllis M. Crabill, Notary Public in and for said County in said State,
------------------
hereby certify that Timothy R. McLevish, 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 23rd day of September, 1998.
----
Phyllis M. Crabill
-------------------------------
Notary Public
Phyllis M. Crabill
In and for the State of Ohio
(SEAL)
My commission expires:August 31, 1999
----------------
<PAGE>
CONSENT OF BONDHOLDER
---------------------
Mead Coated Board, Inc., as holder of all of the outstanding Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1997A of 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 September 30, 1998, between the Board and Mead
Coated Board, Inc., amending the Lease Agreement, dated as of September 1, 1997
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 September 30, 1998.
MEAD COATED BOARD, INC.
By: /s/ Timothy R. McLevish
-------------------------------
Treasurer
<PAGE>
CONSENT OF TRUSTEE
------------------
THE FIRST NATIONAL BANK OF CHICAGO, as successor Trustee under the Trust
Indenture dated as of September 1, 1997, as supplemented 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 September 30, 1998, between the Board and Mead
Coated Board, Inc., amending the Lease Agreement, dated as of September 1, 1997
between the Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, The First National Bank of Chicago has caused this
Consent of Trustee to be executed in its name and behalf as of September 30,
1998.
THE FIRST NATIONAL BANK OF CHICAGO as Trustee
By: /s/ Sandra L. Caruba
-------------------------------
Title: Vice President
----------------------------
<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 September 30, 1998
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 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 "1997 Leased Land");
less and except the following property:
<PAGE>
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 -50'E 976.85 feet to the property line of the United
States Government; thence along said property line N2 -50'W 1296.69 feet to
a branch which runs into Bluff Creek; thence along said branch the
following courses; N41 -41'W 340.67 feet; S85 -42'W 324.22 feet; S81 -08'W
330.0 feet; N25 -48'W 145.58 feet; S76 -52'W 198.66 feet; N44 -03'W 152.62
feet; S46 -35'Q 84.21 feet; S21 -00'E 83.39 feet; N82 -27'W 94.15 feet; S7
-51'E 148.82 feet; S66 -39'W 386.20 feet; S62 -55'W 237.23 feet; S65 -05'W
232.38 feet; S74 -24'W 408.97 feet; S51 -52'W 371.60 feet; S19 -42'W 231.02
feet; S62 -26'W 198.83 feet; N85 -48'W 229.54 feet; S89 -23'W 159.01 feet;
N83 -01'W 327.29 feet; S80 -02'W 437.03 feet; thence S59 -27'W 318.79 feet;
thence S3 -28'E 199.83 feet; thence S1 -16'E 607.22 feet; thence N87 -24'E
343.43 feet; thence N82 -04'E 516.01 feet; thence N70 -45'E 540.58 feet;
thence N89 -18'E 472.15 feet; thence N0 -01'E 400.58 feet; thence S89 -59'E
446.0 feet; thence S0 -01'W 395.0 feet; thence N89 -18'E 171.06 feet;
thence N46 -28'E 463.45 feet to the South line of Section 21; thence along
said Section line S90 -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
<PAGE>
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 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 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 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 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 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 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
<PAGE>
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 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 59' 52' E, 291.25' to the point of beginning; thence S 0 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 +
-
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 59' 52" E, 291.25' to the point of beginning; thence S 8 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 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';
<PAGE>
thence N 45 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
19' 16" E, 663.98' to the point of beginning (N 792,550.0 E 233,534.0);
thence S 0 00' W, 50.00'; thence N 90 00' E, 121.00'; thence N 0 00' W,
50.00'; thence N 90 00' W, 121.00' to the point of beginning; said land
being 0.14 + 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
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 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 + 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
39' 25" E, 461.76' to the point of beginning (N 792,748.92, E 233,478.50);
thence N 90 00' E, 73.57'; thence S 0 00' W, 34.50'; thence N 90 00' W,
11.82'; thence S 0 00' W, 143.17'; thence N 90 00' W, 90.62'; thence N 0
00" W, 83.08'; thence N 90 00" E, 28.87'; thence N 0 00' W, 94.59' to the
point of beginning; said land being 0.32 + 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 51' 31" E, 790.90' to the point of beginning; thence N 90 00' W,
82.00; thence S 0' 00" W, 8.75'; thence N 90 00' W, 232.22'; thence S 15
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)
<PAGE>
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 24' 34" E, 692.79' to the point of beginning; thence S 36 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 34' 06" E, 600.24' to the point of beginning; thence S 71 04' 32" E,
640.91'; thence N 50 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 21' 59" W, 84.29' to the point of beginning; thence S 56 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 00' bounded by a rectangular structure
32' -6" + East-West and 32' -6" + North-South; thence N 82 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:
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
06' 06" W, 35.94' to the point of beginning (N 792,374.0, E 234,473.25);
thence S 0 00' W, 133.50'; thence N 90 00' W, 103.39'; thence S 0 00' W,
103.50'; thence 90 00' W, 48.00'; thence N 0 00' W, 55.75'; thence N 90
00' W, 80.00; thence S 0 00' W, 42.75'; thence N 90 00' W, 63.00; thence
N 0 00' W, 110.00'; thence N45 00' E, 55.00'; thence N0 00' W, 23.11';
thence 90 00' E, 23.00'; thence N 0 00' W, 23.25'; thence N90 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 + 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
46' 07" W,
<PAGE>
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 00' W, 111.00; thence 0 00' W, 170.00'; thence
N 90 00' E, 111.00' to the point of beginning; said land being 0.43 +
-
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
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 00" E, 20.00'; thence S 0 00' W,
30.00'; thence N 90 00' W, 20.00' to the point of beginning; said land
being 0.01 + 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
22' 54" E, 879.79' to the point of beginning; thence N 0 00' W, 326.00';
thence N 90 00' E, 711.08'; thence S 0 00' W, 326.00'; thence N 90 00'
W, 328.00'; thence S 0 00' W, 188.00'; thence N 90 00' W, 50.00'; thence
N 0 00' W, 188.00'; thence N 90 00' W, 333.08' to the point of beginning;
said land being 5.54 + 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
04' 57" W, 197.69' to the point of beginning (N 792,156.0, E 234,462.0);
thence S 0 00" W, 82.00'; thence N 90 00" w, 52.00'; thence N 0 00' W,
82.00'; thence N 90 00' E, 52.00 to the point of beginning' said land
being 0.10 + 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
51' 29" E, 267.79' to the point of beginning (N 793,238.0 E 233,503.0);
thence N 90 00' E, 399.23'; thence S 0 00' W, 50.00'; thence N 90 00' W,
10.00'; thence S 0 00' W, 40.00'; thence N 90 00' W, 136.23'; thence N 0
00' W, 80.00'; thence N 90 00' W, 50.00'; thence S 0 00' W, 10.00';
thence N 90 00' W, 54.00'; thence S 0 00' W, 40.00'; thence N 90 00' E,
65.00'; thence S 0 00' W, 30.00'; thence N 90 00' W, 150.00'; thence N 0
00' W, 17.00'; thence N 90 00' W, 64.00'; thence N 0 00' W, 73.00' to the
point of beginning; said land being 0.657, more
<PAGE>
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
16' 34" E, 439.77' to the point of beginning (N 792,814.67, E 233,534.32');
thence N 90 00' E, 36.30'; thence N 0 00' W, 20.50'; thence N 90 00' E,
72.26'; thence N 0 00' W, 14.83'; thence N 90 00' E, 110.50'; thence S 0
00' W, 42.58'; thence N 90 00' E, 26.00'; thence S 0 00' W, 81.00' thence
N 90 00' W, 51.00' thence N 0 00" W, 25.12'; thence N 90 00' W, 72.26';
thence N 90 00' W, 20.50'; thence N 0 00' W, 36.30'; thence N 0 00' W,
34.00' to the point of beginning' said land being 0.47 + 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
01' 33" E, 637.83' to the point of beginning (N 792,851.0, E 233,813.33);
thence N 90 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 00'; thence S 0 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 00'; thence N 90 00' W, 34.00'; thence
N 0 00' W, 99.79'; thence N 90 00' W, 69.00'; thence N 59 47' 19" W,
91.42'; thence N 90 00' W, 64.67'; thence N 0 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, 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
38' 59" E, 253.41' to the point of beginning (N 793,165.00 E 233,503.00);
thence N 90 00' E, 64.00'; thence S 0 00' E, 17.00'; thence N 90 00' E,
150.00; thence N 0 00' E, 30.00'; thence N 90 00' W, 65.00'; thence N 0
00' E, 40.00'; thence N 90 00' E, 54.00'; thence N 0 00' E, 10.00';
thence N 90 00' E, 50.00'; thence S 0 00' E, 80.00'; thence N 90 00' E,
136.23'; thence N 0 00' E, 40.00'; thence N 90 00' E, 75.00'; thence S 0
00' E, 78.00;' thence N 90 00' W, 464.23'; thence 0 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:
<PAGE>
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 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 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:
<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
11' 16" E 381.63' to the point of beginning (N 793,790.00 E 233,241.60);
thence N 90 00' 00" E 760.00'; thence S 0 00' 00" E 102.00'; thence N 90
00' 00" E 128.04'; thence S 0 00' 00" E 960.48' (at existing utility
bridge)' the N 90 00' 00" W 13.00'; thence N 0 00' 00" W 672.48', thence
N 90 00' 00 W 875.04'; thence N 0 00' 00" E 390.00' to the point of
beginning; said land being 7.85 + 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 1997 Leased Land and railroads, public roads
and highways and the Chattahoochee River and to permit passage between the
1997 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 1997 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 1997 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 1997 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 1997 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 1997 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 1997 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;
<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 1997 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 1997 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 1997 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
improvements and appurtenances thereto, on the 1997 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 1997 Leased Land
as long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the 1997
Leased Land in respect of any additional improvements constructed adjacent
to the 1997 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 1997 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 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;
<PAGE>
(7) 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;
(8) 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;
(9) 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 Industrial Development Revenue Bonds (Mead Coated
Board Project), Series 1993A and 1995A;
(10) Lease Agreement dated as of March 1, 1996 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 1996;
(11) Lease Agreement dated as of September 1, 1997 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 1997A and 1998A;
(12) Lease Agreement dated as of February 1, 1998 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 1998A; and
(13) Lease Agreement dated as of February 1, 1998 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 1998B.
<PAGE>
THIRD AMENDMENT
---------------
TO
--
LEASE AGREEMENT
---------------
THIS THIRD AMENDMENT TO LEASE AGREEMENT (the "Amendment") is made and
entered into as of August 1, 1999 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 previously issued and sold (i) $150,000,000 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
1997A (the "Series 1997A Bonds"), and (ii) $85,000,000 in aggregate principal
amount of the Industrial Development Board of Phenix City, Alabama Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1998A (the "Series
1998A Bonds") pursuant to a Trust Indenture dated as of September 1, 1997 (the
"Original Indenture" as amended and supplemented to date, the "Indenture") from
the Board to The First National Bank of Chicago, as successor Trustee (the
"Trustee").
The Board has used the proceeds of the sale of the Series 1997A 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 September 1, 1997, as
amended by a First Amendment to Lease Agreement dated as of August 1, 1998 and a
Second Amendment to Lease Agreement dated as of September 30, 1998 (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 1997A Bonds and the Series 1998A 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 furtherance of the Project. In that
connection, the Board is issuing $30,000,000 in aggregate principal amount of
Industrial Development Revenue Bonds (Mead Coated Board Project), Series 1999A
(the "Series 1999A Bonds"), pursuant to the Original Indenture as supplemented
by a Third Supplemental Trust Indenture dated as of August 1, 1999 (the "Third
Supplemental Indenture") from the Board to the Trustee. The Original Indenture
as supplemented by the First Supplemental Indenture, the Second Supplemental
Indenture and 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 1999A Bonds.
Section 1.2 Terms of Agreement Applicable to Series 1999A Bonds. All
----------- ---------------------------------------------------
terms, conditions, representations and covenants set forth in the Agreement
applicable to the
<PAGE>
Series 1997A Bonds and the Series 1998A 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 1999A Bonds. Without limiting the
foregoing, all references in the Agreement to the "Bonds" shall be deemed to
mean the Series 1997A Bonds, the Series 1998A Bonds and the Series 1999A 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 1999A 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 1999A 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 1999A 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 1999A 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 1999A 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 1999A Bonds, other than (i) the filing with the
Alabama Securities Commission of the notification of the Board's intention
to issue the Series 1999A Bonds required by Act No. 586
<PAGE>
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 Third Supplemental Indenture and any 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 1999A
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 (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 1999A 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 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.
<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/ Timothy R. McLevish
--------------------------------
Treasurer
<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 21st day of July _____, 1999.
----
Sydney S. Smith
-----------------------------
Notary Public
SYDNEY S. SMITH
NOTARY PUBLIC
ALABAMA STATE-AT-LARGE
(SEAL)
My commission expires: 2/28/2000
---------
<PAGE>
ACKNOWLEDGMENT OF COMPANY
STATE OF OHIO
COUNTY OF MONTGOMERY
I, Denise L. Williams, Notary Public in and for said County in said State,
------------------
hereby certify that Timothy R. McLevish, 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 3rd day of August, 1999.
---
Denise L. Williams
-------------------------------
Notary Public
DENISE L. WILLIAMS, Notary Public
In and for the State of Ohio
My Commission Expires May 1, 2002
(SEAL)
My commission expires: May 1, 2002
------------
<PAGE>
CONSENT OF BONDHOLDER
---------------------
Mead Coated Board, Inc., as holder of all of the outstanding Industrial
Development Revenue Bonds (Mead Coated Board Project), Series 1997A and Series
1998A of The Industrial Development Board of the City of Phenix City, Alabama
(the "Board"), hereby consents to the execution and delivery of the foregoing
Third Amendment To Lease Agreement, dated as of August 1, 1999, between the
Board and Mead Coated Board, Inc., amending the Lease Agreement, dated as of
September 1, 1997 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 August 1, 1999.
-
MEAD COATED BOARD, INC.
Timothy R. McLevish
By:-------------------------------
Treasurer
<PAGE>
CONSENT OF TRUSTEE
------------------
THE FIRST NATIONAL BANK OF CHICAGO, as successor Trustee under the Trust
Indenture dated as of September 1, 1997, as supplemented from the Industrial
Development Board of the City of Phenix City, Alabama (the "Board"), hereby
consents to the execution and delivery of the foregoing Third Amendment To Lease
Agreement, dated as of August 1, 1999, between the Board and Mead Coated Board,
Inc., amending the Lease Agreement, dated as of September 1, 1997 between the
Board and Mead Coated Board, Inc.
IN WITNESS WHEREOF, The First National Bank of Chicago has caused this
Consent of Trustee to be executed in its name and behalf as of August 1, 1999.
-
THE FIRST NATIONAL BANK OF CHICAGO as Trustee
Amy Movitz
By: -------------------------------
Assistant Vice President
Title: -----------------------------
<PAGE>
EXHIBIT "A"
to
Third Amendment To Lease Agreement between
THE INDUSTRIAL DEVELOPMENT BOARD OF
THE CITY OF PHENIX CITY, ALABAMA
and
MEAD COATED BOARD, INC.
dated as of August 1 , 1999
-
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 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 "1997 Leased Land");
<PAGE>
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 -50'E 976.85 feet to the property line of
the United States Government; thence along said property line N2 -50'W
1296.69 feet to a branch which runs into Bluff Creek; thence along
said branch the following courses; N41 -41'W 340.67 feet; S85 -42'W
324.22 feet; S81 -08'W 330.0 feet; N25 -48'W 145.58 feet; S76 -52'W
198.66 feet; N44 -03'W 152.62 feet; S46 -35'Q 84.21 feet; S21 -00'E
83.39 feet; N82 -27'W 94.15 feet; S7-51'E 148.82 feet; S66 -39'W
386.20 feet; S62 -55'W 237.23 feet; S65 -05'W 232.38 feet; S74 -24'W
408.97 feet; S51 -52'W 371.60 feet; S19 -42'W 231.02 feet; S62 -26'W
198.83 feet; N85 -48'W 229.54 feet; S89 -23'W 159.01 feet; N83 -01'W
327.29 feet; S80 -02'W 437.03 feet; thence S59 -27'W 318.79 feet;
thence S3 -28'E 199.83 feet; thence S1 -16'E 607.22 feet; thence N87 -
24'E 343.43 feet; thence N82 -04'E 516.01 feet; thence N70 -45'E
540.58 feet; thence N89 -18'E 472.15 feet; thence N0 -01'E 400.58
feet; thence S89 -59'E 446.0 feet; thence S0 -01'W 395.0 feet; thence
N89 -18'E 171.06 feet; thence N46 -28'E 463.45 feet to the South line
of Section 21; thence along said Section line S90 -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
<PAGE>
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 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 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 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
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 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 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
<PAGE>
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 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 59' 52' E, 291.25' to the point of
beginning; thence S 0 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 + 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 59' 52" E, 291.25' to the point of
beginning; thence S 8 20' 17" W, 284.46' to the center of a
rectangular area which is parallel to the last said course 22' north
to
<PAGE>
south by 15' east to west; thence S 81 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 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 19' 16" E, 663.98' to the point of beginning (N 792,550.0
E 233,534.0); thence S 0 00' W, 50.00'; thence N 90 00' E, 121.00';
thence N 0 00' W, 50.00'; thence N 90 00' W, 121.00' to the point of
beginning; said land being 0.14 + 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 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 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 + 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 39' 25" E, 461.76' to the point of beginning (N
792,748.92, E 233,478.50); thence N 90 00' E, 73.57'; thence S 0 00'
W, 34.50'; thence N 90 00' W, 11.82'; thence S 0 00' W, 143.17';
thence N 90 00' W, 90.62'; thence N 0 00" W, 83.08'; thence N 90 00"
E, 28.87'; thence N 0 00' W, 94.59' to the point of beginning; said
land being 0.32 + 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 51' 31" E, 790.90' to the point of beginning;
thence N 90 00' W, 82.00; thence S 0' 00" W, 8.75'; thence N 90 00' W,
232.22'; thence S 15 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;
<PAGE>
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 24' 34" E, 692.79' to the point of
beginning; thence S 36 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 34' 06" E, 600.24' to the point of
beginning; thence S 71 04' 32" E, 640.91'; thence N 50 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 21' 59" W, 84.29' to the point of
beginning; thence S 56 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
00' bounded by a rectangular structure 32' -6" + East-West and 32' -6"
-
+ North-South; thence N 82 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:
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 06' 06" W, 35.94' to the point of beginning (N
792,374.0, E 234,473.25); thence S 0 00' W, 133.50'; thence N 90 00'
W, 103.39'; thence S 0 00' W, 103.50'; thence 90 00' W, 48.00'; thence
N 0 00' W, 55.75'; thence N 90 00' W, 80.00; thence S 0 00' W, 42.75';
thence N 90 00' W, 63.00; thence N 0 00' W, 110.00'; thence N45 00' E,
55.00'; thence N0 00' W, 23.11'; thence 90 00' E, 23.00'; thence N 0
00' W, 23.25'; thence N90 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 + 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:
<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 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 00' W,
111.00; thence 0 00' W, 170.00'; thence N 90 00' E, 111.00' to the
point of beginning; said land being 0.43 + 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 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 00"
E, 20.00'; thence S 0 00' W, 30.00'; thence N 90 00' W, 20.00' to the
point of beginning; said land being 0.01 + 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 22' 54" E, 879.79' to the point of beginning;
thence N 0 00' W, 326.00'; thence N 90 00' E, 711.08'; thence S 0 00'
W, 326.00'; thence N 90 00' W, 328.00'; thence S 0 00' W, 188.00';
thence N 90 00' W, 50.00'; thence N 0 00' W, 188.00'; thence N 90 00'
W, 333.08' to the point of beginning; said land being 5.54 + 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 04' 57" W, 197.69' to the point of beginning (N
792,156.0, E 234,462.0); thence S 0 00" W, 82.00'; thence N 90 00" w,
52.00'; thence N 0 00' W, 82.00'; thence N 90 00' E, 52.00 to the
point of beginning' said land being 0.10 + 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
51' 29" E, 267.79' to the point of beginning (N 793,238.0 E 233,503.0);
thence N 90 00' E, 399.23'; thence S 0 00' W, 50.00'; thence N 90 00' W,
10.00'; thence S 0 00' W, 40.00'; thence N 90 00' W, 136.23'; thence N 0
00' W, 80.00'; thence N 90 00' W, 50.00'; thence S 0 00' W, 10.00';
thence N 90 00' W, 54.00'; thence S 0 00' W, 40.00'; thence N 90 00' E,
65.00'; thence S 0 00' W, 30.00'; thence N 90 00' W, 150.00'; thence N 0
00' W, 17.00'; thence N 90 00' W, 64.00';
<PAGE>
thence N 0 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
16' 34" E, 439.77' to the point of beginning (N 792,814.67, E 233,534.32');
thence N 90 00' E, 36.30'; thence N 0 00' W, 20.50'; thence N 90 00' E,
72.26'; thence N 0 00' W, 14.83'; thence N 90 00' E, 110.50'; thence S 0
00' W, 42.58'; thence N 90 00' E, 26.00'; thence S 0 00' W, 81.00' thence
N 90 00' W, 51.00' thence N 0 00" W, 25.12'; thence N 90 00' W, 72.26';
thence N 90 00' W, 20.50'; thence N 0 00' W, 36.30'; thence N 0 00' W,
34.00' to the point of beginning' said land being 0.47 + 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
01' 33" E, 637.83' to the point of beginning (N 792,851.0, E 233,813.33);
thence N 90 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 00'; thence S 0 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 00'; thence N 90 00' W, 34.00'; thence
N 0 00' W, 99.79'; thence N 90 00' W, 69.00'; thence N 59 47' 19" W,
91.42'; thence N 90 00' W, 64.67'; thence N 0 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, 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
38' 59" E, 253.41' to the point of beginning (N 793,165.00 E 233,503.00);
thence N 90 00' E, 64.00'; thence S 0 00' E, 17.00'; thence N 90 00' E,
150.00; thence N 0 00' E, 30.00'; thence N 90 00' W, 65.00'; thence N 0
00' E, 40.00'; thence N 90 00' E, 54.00'; thence N 0 00' E, 10.00';
thence N 90 00' E, 50.00'; thence S 0 00' E, 80.00'; thence N 90 00' E,
136.23'; thence N 0 00' E, 40.00'; thence N 90 00' E, 75.00'; thence S 0
00' E, 78.00;' thence N 90 00' W, 464.23'; thence 0 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:
<PAGE>
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 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 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
11' 16" E
<PAGE>
381.63' to the point of beginning (N 793,790.00 E 233,241.60); thence N 90
00' 00" E 760.00'; thence S 0 00' 00" E 102.00'; thence N 90 00' 00" E
128.04'; thence S 0 00' 00" E 960.48' (at existing utility bridge)' the N
90 00' 00" W 13.00'; thence N 0 00' 00" W 672.48', thence N 90 00' 00 W
875.04'; thence N 0 00' 00" E 390.00' to the point of beginning; said land
being 7.85 + 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 1997 Leased Land and railroads, public roads
and highways and the Chattahoochee River and to permit passage between the
1997 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 1997 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 1997 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 1997 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 1997 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 1997 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 1997 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
<PAGE>
and use of material conveyance systems, including without limitation,
pipelines, through any part of the 1997 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 1997 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 1997 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
improvements and appurtenances thereto, on the 1997 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 1997 Leased Land
as long as any such equipment, structures or other improvements remain
standing, and to construct and maintain similar encroachments on the 1997
Leased Land in respect of any additional improvements constructed adjacent
to the 1997 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 1997 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 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;
<PAGE>
(7) 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;
(8) 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;
(9) 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 Industrial Development Revenue Bonds (Mead Coated
Board Project), Series 1993A and 1995A;
(10) Lease Agreement dated as of March 1, 1996 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 1996;
(11) Lease Agreement dated as of September 1, 1997 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 1997A and 1998A;
(12) Lease Agreement dated as of February 1, 1998 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 1998A; and
(13) Lease Agreement dated as of February 1, 1998 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 1998B.
<PAGE>
Exhibit 10(xvii)
January 1, 2000
Name
Title
The Mead Corporation
Courthouse Plaza N.E.
Dayton, Ohio 45463
Dear Name:
The Mead Corporation (the "Corporation") recognizes that your contribution to
the growth and success of the Corporation has been 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 event 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, 2000; provided, however, that
commencing on January 1, 2001 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.
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 be deemed to have
occurred if an event set forth in any one of the following paragraphs shall have
occurred:
(i) date of expiration of a Tender Offer (other than an offer
by the Corporation), if the offeror acquires Shares pursuant to such Tender
Offer;
(ii) the date of approval by the shareholders of the
Corporation of a definitive agreement: (x) for the merger or consolidation of
the Corporation or any direct or indirect subsidiary of the Corporation into or
with another corporation, other than (1) a merger or consolidation which would
result in the voting securities of the Corporation outstanding immediately prior
thereto continuing to represent ((i) in the case of a merger or consolidation of
the Corporation, either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof, or (ii) in the
case of a merger or consolidation of any direct or indirect subsidiary of the
Corporation,
<PAGE>
either by remaining outstanding if the Corporation continues as a parent of the
merged or consolidated subsidiary or by being converted into voting securities
of the surviving entity or any parent thereof) at least 51% 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 (2)
a merger or consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Corporation or its Affiliates) representing 20% or
more of the combined voting power of the Corporation's then outstanding
securities, or (y) for the sale or disposition of all or substantially all of
the assets of the Corporation, other than a sale or disposition by the
Corporation of all or substantially all of the Corporation's assets to an
entity, at least 51% of the combined voting power of the voting securities of
which are owned (directly or indirectly) by shareholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
immediately prior to such sale or disposition;
(iii) (x) any Person is or becomes the Beneficial Owner of 20%
or more of the voting power of the then outstanding securities of the
Corporation (not including in the securities beneficially owned by such Person
any securities acquired directly from the Corporation or its affiliates),
excluding any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (x) (1) of paragraph (ii) above or (y) the date
of authorization, by both a majority of the voting power of the Corporation and
a majority of the portion of such voting power excluding the voting power of
interested Shares, of a control share acquisition (as such term in defined in
Chapter 1701 of the Ohio Revised Code); and
(iv) a change in the composition of the Board of Directors
such that individuals who were members of the Board of Directors on the date two
years prior to such change (and any new directors (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Corporation) who were elected, or were
nominated for election, by the Corporation's shareholders with the affirmative
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such two year period or whose election or
nomination for election was previously so approved) no longer constitute a
majority of the Board of Directors.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Corporation immediately prior to such transaction or series
of transactions continue to have substantially the same proportionate ownership
in an entity which owns all or substantially all of the assets of the
Corporation immediately following such transaction or series of transactions.
Terms used in this Section 2 have the following meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the 1934 Act.
"Beneficial Owner" shall have the meaning defined in Rule 13d-3 under the
1934 Act.
"Person" shall have the meaning given in Section 3(a)(9) of the 1934 Act,
as modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Corporation or any of its subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Corporation or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation
owned, directly or
<PAGE>
indirectly, by the shareholders of the Corporation in substantially the same
proportions as their ownership of stock of the Corporation.
"Tender Offer" means a tender offer or a request or invitation for tenders
or an exchange offer subject to regulation under Section 14(d) of the 1934 Act
and the rules and regulations thereunder, as the same may be amended, modified
or superseded from time to time.
(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 take or to consider taking
actions which if consummated would constitute a Change in Control of the
Corporation, (iii) any person is declared to be an "Adverse Person" by the Board
under the Rights Agreement dated November 9, 1996; 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 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 purposes of this
Subsection, no act, or failure to act, on your
<PAGE>
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 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 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.
<PAGE>
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:
(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;
(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 (the
"Product Amount"); provided, however, that, if payment of the Product Amount in
cash would cause a transaction of the Corporation intended by the Corporation to
qualify for "pooling-of-interests" accounting not to qualify for such
accounting, payment of the Product Amount shall be made in shares of the stock
of the company which is the resulting or surviving
<PAGE>
company in such transaction which are at the time of closing of such transaction
of equal value to the Product Amount.
(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 counseling 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
(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. Notwithstanding the immediately preceding
sentence, in the event that payment of the amount described in Section 4(d)(iii)
is required by the proviso in such Section to be made in shares of stock, the
calculation of the number of such shares and the payment of such shares may be
delayed by the Corporation beyond the thirty-day payment deadline, if such delay
is determined in good faith by the Corporation to be necessary and payment is
made as soon as the number of such shares can be determined. 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).
<PAGE>
(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.
-----------------------------
(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
--------
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.
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
<PAGE>
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 _______________________________
Name
Title
Agreed to this _____ day
of _______, ____.
By ___________________________
Name
Title
<PAGE>
Exhibit 10(xxiii)
CERTIFICATE SCHEDULE
GROUP NUMBER: 960000945G
POLICYHOLDER: CT-0000000004
EMPLOYER: THE MEAD CORPORATION
CERTIFICATE NUMBER: 005722786A
INSURED: _____________________
CERTIFICATE DATE: JAN 01, 2000
ISSUE AGE OF THE INSURED: ____________
RATING CLASS: UNISMOKE
FACE AMOUNT:________________
MINIMUM FACE AMOUNT: $100,000
MINIMUM INCREASE IN FACE AMOUNT: 25,000
DEATH BENEFIT OPTION: OPTION B
ANNUAL PLANNED PERIODIC PREMIUM:____________
ELIGIBILITY PERIOD: 0 DAYS
LOAN INTEREST RATE PER YEAR, PAYABLE IN ARREARS: 8%
MINIMUM LOAN AMOUNT: $500
PREMIUM EXPENSE CHARGE: ACTUAL STATE PREMIUM TAX RATE, CURRENTLY
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
CERTIFICATE % INITIAL
YEAR SURRENDER CHARGE
1 100%
2 80%
3 60%
4 40%
5 20%
THEREAFTER 0%
SURRENDER CHARGE: $ 3.08 PER $1,000 OF FACE AMOUNT
MINIMUM PARTIAL SURRENDER AMOUNT: $500
<PAGE>
TITLE PAGE
INSURED:________________________
BENEFICIARY
TO________________________WIFE OF THE INSURED, AS PRIMARY, TO __________________
AND ___________________, CHILDREN OF THE INSURED AS SECONDARIES IN EQUAL SHARES.
OWNER
___________________________
<PAGE>
TABLE OF CONTENTS
Page
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
<PAGE>
CERTIFICATE SCHEDULE CONTINUED
TABLE OF DEATH BENEFIT FACTORS
PER $1,000 OF INSURED'S FACE AMOUNT
ATTAINED ATTAINED
AGE FACTORS AGE FACTORS
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
Page 1
<PAGE>
CERTIFICATE SCHEDULE CONTINUED
TABLE OF MONTHLY GUARANTEED MAXIMUM COST OF INSURANCE RATES
PER $1,000 AMOUNT OF TERM INSURANCE
<TABLE>
<CAPTION>
ATTAINED ATTAINED
AGE RATE AGE RATE
<S> <C> <C> <C>
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
</TABLE>
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> <C> <C> <C> <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 O 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.
Page 5
<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
Page 6
<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.
Page 7
<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.
Page 8
<PAGE>
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 waive 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.
Page 9
<PAGE>
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.
Page 10
<PAGE>
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 the 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
Page 11
<PAGE>
(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.
Page 12
<PAGE>
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.
Page 13
<PAGE>
(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
Page 14
<PAGE>
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.
Page 15
<PAGE>
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 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 additional interest
earnings we may apportion. If the alternate life income is elected, we will not
increase payments certain by additional interest earnings.
Page 16
<PAGE>
-----------------------------------------
INSTALLMENTS CERTAIN
FOR EACH $1000 OF PROCEEDS
-----------------------------------------
OPTION 1
-----------------------------------------
Number Annual Monthly
of Years Installment Installment
-----------------------------------------
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
-----------------------------------------
Semiannual installments are 50.37% of
the annual installments. Quarterly
installments are 25.28% of the annual
installments.
-----------------------------------------
Page 17
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
MONTHLY LIFE INCOME PER $1,000 OF PROCEEDS
- ------------------------------------------------------------------------------------------------------------------------
OPTION 2 OPTION 5 OPTION 2 OPTION 5
--------------------------------------------- --------------------------------------------
PAYEE Without Number of With PAYEE Without Number of With
Age Installments Monthly Installment Age Installments Monthly Installment
Nearest Certain Installments Refund Nearest Certain Installments Refund
Birthday Certain Birthday Certain
120 120
- ------------------------------------------------------------------------------------------------------------------------
<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>
- ------------------------------------------------------------------------
MONTHLY INCOME FOR EACH $1,000 OF PROCEEDS - OPTION 6.
- ------------------------------------------------------------------------
FIRST
PAYEE SECOND PAYEE - Age Nearest Birthday
-------------------------------------------------------------
Age
Nearest
Birthday 61 62 63 64 65 66 67 68 69 70
- ------------------------------------------------------------------------
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 5.57
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
- ------------------------------------------------------------------------
The rate for any combination of ages not stated in the table
will be furnished on request.
Page 20
<PAGE>
Exhibit (21)
SUBSIDIARIES OF THE MEAD CORPORATION*
State or Jurisdiction
Name of Incorporation
- ---- ---------------------
AT-A-GLANCE, INC. New York
Escanaba Paper Company Michigan
Forest Kraft Company Delaware
MB Pulp Company Delaware
MCB Woodlands and Services, Inc. Alabama
Mead Coated Board, Inc. Delaware
Mead Emballage, S.A. Paris, France
Mead Foreign Holdings, Inc. Ohio
Mead International Ireland Dublin, Ireland
Mead Oxford Corporation Delaware
Mead Packaging International, Inc. Ohio
Mead Panelboard, Inc. Ohio
- --------------
* 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, (ix) the Form S-8 Registration
Statement (No. 333-61285) pertaining to The Mead Corporation Executive Capital
Accumulation Plan, and (x) 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 27, 2000, appearing in the
Annual Report on Form 10-K of The Mead Corporation for the year ended December
31, 1999.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Dayton, Ohio
March 3, 2000
<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, 1999
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 IF BE DEEMED A PART OF ANY REGISTRATION
STATEMENT TO WHICH IT RELATES.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 56
<SECURITIES> 0
<RECEIVABLES> 548
<ALLOWANCES> 16
<INVENTORY> 490
<CURRENT-ASSETS> 1,230
<PP&E> 5,904
<DEPRECIATION> 2,547
<TOTAL-ASSETS> 5,662
<CURRENT-LIABILITIES> 1,001
<BONDS> 1,334
0
0
<COMMON> 153
<OTHER-SE> 2,278
<TOTAL-LIABILITY-AND-EQUITY> 5,662
<SALES> 0
<TOTAL-REVENUES> 3,800
<CGS> 0
<TOTAL-COSTS> 3,087
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105
<INCOME-PRETAX> 272
<INCOME-TAX> 99
<INCOME-CONTINUING> 208
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 208
<EPS-BASIC> 2.04
<EPS-DILUTED> 1.99
</TABLE>
