<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1997
REGISTRATION NOS. 33-52383 AND 33-58348
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENTS NOS. 3 AND 4 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
JEFFERSON SMURFIT CORPORATION (U.S.)
(FORMERLY CONTAINER CORPORATION OF AMERICA)
(EXACT NAME OF CO-REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 36-2659288
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
JEFFERSON SMURFIT CENTRE PATRICK J. MOORE
8182 MARYLAND AVENUE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
ST. LOUIS, MISSOURI 63105 8182 MARYLAND AVENUE
(314) 746-1100 ST. LOUIS, MISSOURI 63105
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING (314) 746-1100
AREA CODE, OF CO-REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
JSCE, INC.
(EXACT NAME OF CO-REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 37-1337160
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
JEFFERSON SMURFIT CENTRE PATRICK J. MOORE
8182 MARYLAND AVENUE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
ST. LOUIS, MISSOURI 63105 8182 MARYLAND AVENUE
(314) 746-1100 ST. LOUIS, MISSOURI 63105
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING (314) 746-1100
AREA CODE, OF CO-REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
------------------------
COPY TO:
JOHN ETTINGER, ESQ.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
included in these Post-Effective Amendments relates to Registration Statement
No. 33-52383 filed by the Co-Registrants and declared effective May 4, 1994 and
Registration Statement No. 33-58348 filed by the Co-Registrants and declared
effective April 6, 1993. These Post-Effective Amendments consist of
Post-Effective Amendment No. 3 to Registration Statement No. 33-52383 and Post-
Effective Amendment No. 4 to Registration Statement No. 33-58348 and shall
become effective in accordance with Section 8(c) of the Securities Act of 1933.
The Prospectus included in the Post-Effective Amendments has been prepared in
accordance with the requirements of Form S-3 and is filed pursuant to Rule 401
of the Securities Act of 1933. These post-effective amendments are collectively
referred to as 'Post-Effective Amendments' and the registration statements
amended hereby are collectively referred to as the 'Registration Statements.'
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
PROSPECTUS
$900,000,000
[LOGO]
JEFFERSON SMURFIT CORPORATION (U.S.)
$300,000,000 11 1/4% SERIES A SENIOR NOTES DUE 2004
$100,000,000 10 3/4% SERIES B SENIOR NOTES DUE 2002
$500,000,000 9 3/4% 1993 SENIOR NOTES DUE 2003
----------------------------
UNCONDITIONALLY GUARANTEED ON A SENIOR BASIS BY
JSCE, INC.
----------------------------
INTEREST ON THE SERIES A SENIOR NOTES PAYABLE MAY 1 AND NOVEMBER 1
INTEREST ON THE SERIES B SENIOR NOTES PAYABLE MAY 1 AND NOVEMBER 1
INTEREST ON THE 1993 SENIOR NOTES PAYABLE ON APRIL 1 AND OCTOBER 1
----------------------------
THE SERIES A SENIOR NOTES WILL BE REDEEMABLE AT THE OPTION OF JSC(U.S.), IN
WHOLE OR IN PART, ANY TIME ON OR AFTER MAY 1, 1999, INITIALLY AT 105.625% OF
THEIR PRINCIPAL AMOUNT, PLUS ACCRUED INTEREST, DECLINING TO 100% OF THEIR
PRINCIPAL AMOUNT, PLUS ACCRUED INTEREST, ON OR AFTER MAY 1, 2001. IN
ADDITION, JSC(U.S.) MAY REDEEM, AT ANY TIME PRIOR TO MAY 1, 1997, UP
TO $100 MILLION AGGREGATE PRINCIPAL AMOUNT OF THE SERIES A SENIOR
NOTES, AT A REDEMPTION PRICE OF 110% OF THEIR PRINCIPAL AMOUNT,
PLUS ACCRUED INTEREST, WITH THE NET CASH PROCEEDS FROM AN
ISSUANCE OF CAPITAL STOCK OF JSC(U.S.) OR JSCE OR ANY PARENT
OF JSC(U.S.) TO THE EXTENT THAT SUCH PROCEEDS ARE
CONTRIBUTED TO JSC(U.S.). NEITHER THE SERIES B SENIOR
NOTES NOR THE 1993 SENIOR NOTES WILL BE REDEEMABLE
PRIOR TO MATURITY.
----------------------------
THE SENIOR NOTES ARE SENIOR UNSECURED OBLIGATIONS OF JSC(U.S.), AND THE
GUARANTEES OF THE SENIOR NOTES ARE SENIOR UNSECURED OBLIGATIONS OF JSCE.
----------------------------
SEE 'RISK FACTORS' FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------
This Prospectus is to be used by Morgan Stanley & Co. Incorporated in
connection with offers and sales in market-making transactions at negotiated
prices related to prevailing market prices at the time of sale. Morgan Stanley &
Co. Incorporated may act as principal or agent in such transactions.
MORGAN STANLEY & CO.
INCORPORATED
April , 1997
<PAGE>
<PAGE>
ADDITIONAL INFORMATION
JSCE, Inc. ('JSCE') is a wholly-owned subsidiary of Jefferson Smurfit
Corporation ('JSC'). JSC has no operations other than its investment in JSCE. On
December 31, 1994, Jefferson Smurfit Corporation (U.S.), a wholly-owned
subsidiary of JSC ('Old JSC(U.S.)'), merged (the 'Merger') into its wholly-owned
subsidiary, Container Corporation of America ('CCA'), with CCA surviving and
changing its name to Jefferson Smurfit Corporation (U.S.) ('JSC(U.S.)'). JSCE
owns a 100% equity interest in JSC(U.S.) and is the guarantor of JSC(U.S.)'s
11 1/4% Series A Senior Notes due 2004 (the 'Series A Senior Notes'), 10 3/4%
Series B Senior Notes due 2002 (the 'Series B Senior Notes') and 9 3/4% Senior
Notes due 2003 (the '1993 Senior Notes') (the Series A Senior Notes, the Series
B Senior Notes and the 1993 Senior Notes, collectively, the 'Senior Notes').
JSCE has no operations other than its investment in JSC(U.S.). JSC(U.S.) has
extensive operations throughout the United States.
Old JSC(U.S.) and CCA have filed with the Securities and Exchange
Commission (the 'Commission') Registration Statements on Form S-2 (together with
any amendments thereto, including Post-Effective Amendments Nos. 3 and 4 filed
on Form S-3, the 'Registration Statements') under the Securities Act of 1933
(the 'Securities Act'), with respect to the Senior Notes and the related
guarantees thereof. This Prospectus, which constitutes a part of the
Registration Statements, omits certain information contained in the Registration
Statements as permitted by the rules and regulations of the Commission. In
addition, certain documents filed by JSC and JSCE with the Commission have been
incorporated herein by reference. See 'Incorporation of Certain Documents by
Reference'. For further information with respect to JSC, JSCE and JSC(U.S.) and
the securities offered hereby, reference is made to the Registration Statements
and the exhibits, and financial statements, notes and schedules filed as part
thereof.
JSCE is subject to the informational requirements of the Securities
Exchange Act of 1934 (the 'Exchange Act'), and in accordance therewith is
required to file reports and other information with the Commission. The
Registration Statements and the exhibits thereto filed by JSCE with the
Commission, as well as such reports and other information filed by JSCE with the
Commission, may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and should also be available for inspection and copying at the
regional offices of the Commission located in the Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
The Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and other information regarding
registrations that file electronically with the Commission.
The respective indentures pursuant to which the Senior Notes were issued
(and, in the case of the 1993 Senior Notes, as amended by the First Supplemental
Indenture, dated April 8, 1994 (the 'First Supplemental Indenture') and the
Second Supplemental Indenture, dated December 31, 1994 (the 'Second Supplemental
Indenture')) (collectively, the 'Indentures') require JSCE to file with the
Commission annual reports containing consolidated financial statements and the
related report of independent public accountants and quarterly reports
containing unaudited condensed consolidated financial statements for the first
three quarters of each fiscal year for so long as any 1993 Senior Notes, Series
A Senior Notes, or Series B Senior Notes, as the case may be, are outstanding.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission are
hereby incorporated by reference in this Prospectus:
(1) JSCE's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed with the Commission on February 26, 1997 (which
incorporates by reference certain information from JSC's Proxy Statement
relating to the 1997 Annual Meeting of Stockholders), and
2
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<PAGE>
(2) All other reports filed by JSCE pursuant to Section 13(a) or 15(d)
of the Exchange Act since December 31, 1996 and prior to the termination of
the offering of the securities offered hereby.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Copies of this
Prospectus, as amended or supplemented from time to time, and any other
documents (or parts of documents) that constitute part of the Prospectus under
Section 10(a) of the Securities Act will also be provided without charge to each
such person, upon written or oral request. Requests should be directed to
Jefferson Smurfit Corporation, Attention: Charles A. Hinrichs, 8182 Maryland
Avenue, St. Louis, Missouri 63105; telephone (314) 746-1100.
No action has been or will be taken in any jurisdiction by JSC(U.S.), JSCE
or by the Underwriter that would permit a public offering of the Senior Notes or
possession or distribution of this Prospectus in any jurisdiction where action
for that purpose is required, other than in the United States. Persons into
whose possession this Prospectus comes are required by JSC(U.S.), JSCE and the
Underwriter to inform themselves about and to observe any restrictions as to the
offering of the Senior Notes and the distribution of this Prospectus.
In this Prospectus, references to 'dollar' and '$' are to United States
dollars, and the terms 'United States' and 'U.S.' mean the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction. All tons referenced are short tons, unless otherwise
indicated.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Additional Information......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company.................................... 4
Risk Factors................................... 5
Ratio of Earnings to Fixed Charges............. 10
<CAPTION>
PAGE
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<S> <C>
Use of Proceeds................................ 10
Description of the Senior Notes................ 11
Market-Making Activities of MS&Co. ............ 40
Legal Matters.................................. 40
Experts........................................ 40
</TABLE>
3
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<PAGE>
As used in this Prospectus, references to the 'Company' shall, as the
context may require, refer collectively to CCA and Old JSC(U.S.) prior to the
Merger, or JSC, JSCE and JSC(U.S.). Capitalized terms not defined in this
Summary are defined elsewhere in this Prospectus.
THE COMPANY
The Company operates in two business segments, Paperboard/Packaging
Products and Newsprint. The Company believes it is one of the nation's largest
producers of paperboard and packaging products and is the largest producer of
recycled paperboard and recycled packaging products and the largest processor of
wastepaper. In addition, the Company believes it is one of the nation's largest
producers of recycled newsprint.
The Company's Paperboard/Packaging Products segment includes a system of
paperboard mills that, in 1996, produced 1,973,000 tons of virgin and recycled
containerboard, 774,000 tons of recycled boxboard and solid bleached sulfate
('SBS') and 166,000 tons of uncoated recycled boxboard, which were sold to the
Company's own converting operations and to third parties. The Company's
converting operations consist of 50 corrugated container plants, 18 folding
carton plants and 20 industrial packaging plants located across the country,
with three plants located outside the U.S. In 1996, the Company's container
plants converted 1,991,000 tons of containerboard, an amount equal to
approximately 101% of the amount it produced, its folding carton plants
converted 521,000 tons of SBS, recycled boxboard and coated natural kraft, an
amount equal to approximately 67% of the amount it produced, and its industrial
packaging plants converted 153,000 tons of uncoated recycled boxboard, an amount
equal to approximately 92% of the amount it produced. The Paperboard/Packaging
Products segment also includes the Company's reclamation division, which
processed or brokered approximately 4.5 million tons of wastepaper in 1996, its
timber division, which manages approximately one million acres of owned or
leased timberland located close to its virgin fiber mills, and 14 consumer
packaging plants. The Company's Paperboard/Packaging Products segment
contributed 91% of the Company's net sales in 1996.
The Company's Newsprint segment includes two newsprint mills in Oregon,
which produced 576,000 tons of recycled newsprint in 1996, and two facilities
that produce Cladwood'r', a wood composite exterior siding, manufactured from
sawmill shavings and newsprint.
The predecessor to the Company was founded in 1974 when Jefferson Smurfit
Group plc ('JS Group'), a worldwide leader in the packaging products industry,
commenced operations in the United States by acquiring 40% of a small paperboard
and packaging products company. The remaining 60% of that company was acquired
in 1977, and in 1978 net sales were $43 million. The Company implemented a
strategy to build a fully integrated, broadly based, national packaging
business, primarily through acquisitions, including Alton Box Board Company in
1979, the paperboard and packaging divisions of Diamond International
Corporation in 1982, 80% of Smurfit Newsprint Corporation ('SNC') in 1986, and
50% of CCA in 1986. The Company financed its acquisitions by using leverage, and
in several cases, utilized joint venture financing whereby the Company
eventually obtained control of the acquired company, including the remaining 50%
of CCA in 1989. While no major acquisition has been made since 1986, the Company
has made 23 smaller acquisitions and started up eight new facilities which had
combined sales in 1996 of $381 million. In addition, in 1995, JSC(U.S.) acquired
the remaining 20% minority interest in SNC. JSC was formed in 1983 to
consolidate the operations of the Company, and today the Company ranks among the
industry leaders in its two business segments, Paperboard/Packaging Products and
Newsprint. In 1996, the Company had net sales of $3.4 billion, achieving a
compound annual sales growth rate of 28% for the period since 1978.
4
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RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the securities offered by this Prospectus.
SUBSTANTIAL LEVERAGE
The Company has, on a consolidated basis, a substantial amount of debt. The
Company's long-term debt at December 31, 1996 was $1,934 million. The amount of
long-term indebtedness at such date on a historical basis is substantial
relative to the Company's stockholder's equity, which has been negative in
recent years. See ' -- Negative Stockholder's Equity'. Although the consummation
of the Company's recapitalization in 1994 (the 'Recapitalization') reduced the
Company's consolidated interest expense, the Company will remain obligated to
make substantial interest payments on its indebtedness. For the year ended
December 31, 1996, the Company's ratio of earnings to fixed charges was 1.91.
ABILITY TO SERVICE DEBT
The Company generally expects to fund its and its subsidiaries' debt
service obligations, capital expenditures and working capital requirements
through funds generated from operations and additional borrowings under its
revolving credit facility. In February 1995, the Company entered into a $315
million accounts receivable securitization program (the '1995 Securitization')
consisting of a $300 million receivables-backed commercial paper program and a
$15 million term loan. The proceeds of the 1995 Securitization were used to
extinguish the Company's borrowings under the Company's 1991 securitization
program. As of December 31, 1996, the Company had in the aggregate approximately
$322 million in unused borrowing capacity under its revolving credit facility
and $133 million of unused borrowing capacity under its 1995 Securitization,
subject to JSC(U.S.)'s level of eligible accounts receivable.
The ability of the Company to meet its obligations and to comply with the
financial covenants contained in its indebtedness is largely dependent upon the
future performance of the Company, which will be subject to financial, business
and other factors affecting it. Many of these factors are beyond the Company's
control, such as the state of the economy, demand for and selling prices of its
products, costs of its raw materials and legislative factors and other factors
relating to its industry generally or to specific competitors. There can be no
assurance that the Company will generate sufficient cash flow to meet its
obligations under its indebtedness, which, as of December 31, 1996 includes
repayment obligations of $10 million in 1997, $14 million in 1998, $100 million
in 1999, $348 million in 2000 and $281 million in 2001. If the Company were
unable to generate sufficient cash flow or otherwise obtain funds necessary to
make required payments on its indebtedness, or if the Company fails to comply
with the various covenants in such indebtedness, it would be in default under
the terms thereof, which would permit the lenders thereunder to accelerate the
maturity of such indebtedness and could cause defaults under other indebtedness
of the Company or result in a bankruptcy of the Company. The Company made net
payments of $256 million on its indebtedness during 1996. In addition, if a
'Change of Control' as defined in the Company's credit agreement (the 'Credit
Agreement') or the Senior Notes is deemed to have occurred, then the holders of
such indebtedness shall have the right to be repaid 101% of the principal amount
of such indebtedness plus accrued and unpaid interest thereon. See 'Description
of the Senior Notes'. The occurrence of a 'Change of Control' as so defined in
the newsprint supply agreement between the Company and The Times Mirror Company
could also result in The Times Mirror Company having certain rights under such
agreement. Similarly, the exercises of such rights could also trigger
cross-default or cross-acceleration provisions, and lead to the bankruptcy of
the Company.
RESTRICTIVE COVENANTS
The limitations contained in the agreements relating to the Company's
indebtedness, together with its highly leveraged position, as well as various
provisions in the agreements relating to the governance of the Company,
including the Stockholders Agreement and the Registration Rights Agreement (each
as defined below), could limit the ability of the Company to effect future debt
or equity financings and
5
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<PAGE>
may otherwise restrict corporate activities, including its ability to avoid
defaults and to respond to market conditions, to provide for capital
expenditures beyond those permitted or to take advantage of business
opportunities. If the Company cannot generate sufficient cash flow from
operations to meet its obligations, then its indebtedness might have to be
refinanced. There can be no assurance that any such refinancing could be
effected successfully or on terms that are acceptable to the Company. In the
absence of such refinancing, the Company could be forced to dispose of assets in
order to make up for any shortfall in the payments due on its indebtedness under
circumstances that might not be favorable to realizing the best price for such
assets. Moreover, the lenders under the Credit Agreement generally have a
priority right to the proceeds of asset sales and certain sales of securities by
the Company. Further, there can be no assurance that any assets could be sold
quickly enough, or for amounts sufficient, to enable the Company to make any
such payments.
NEGATIVE STOCKHOLDER'S EQUITY
The Company has had a deficit in stockholder's equity since 1989 when JSC
was organized to effect the acquisition of the publicly held shares of Old
JSC(U.S.) and the shares of CCA not then owned by Old JSC(U.S.), and the
recapitalization of such companies (the '1989 Transaction'), since such
transaction was treated as a recapitalization for financial accounting purposes.
On a historical basis, at December 31, 1996, the Company's stockholder's deficit
was $375 million.
EFFECT OF SECURED INDEBTEDNESS ON THE SENIOR NOTES; RANKING
The secured indebtedness will have priority over the Senior Notes with
respect to the assets securing such indebtedness. Although the Senior Notes (and
JSCE's guarantees thereof) rank pari passu with indebtedness outstanding under
the Credit Agreement, such bank debt (including all guarantee obligations of
JSCE in respect thereof) is secured by (i) a security interest in substantially
all of the assets, with the exception of cash and cash equivalents and certain
trade receivables, of JSC(U.S.), JSCE and their material subsidiaries and (ii) a
pledge of all of the capital stock of JSC(U.S.), JSCE and each material
subsidiary of JSC, JSCE and JSC(U.S.). The Senior Notes and JSCE's guarantees
thereof are unsecured and therefore do not have the benefit of such collateral;
that is, if an event of default occurs under the Credit Agreement, the banks
party thereto will have a priority right to the Company's assets and may
foreclose upon such collateral to the exclusion of the holders of the Senior
Notes, notwithstanding the existence of an event of default with respect
thereto. Accordingly, in such an event the Company's assets would first be used
to repay, in full, amounts outstanding under the Credit Agreement, resulting in
a portion of the Company's assets being unavailable to satisfy the claims of
holders of Senior Notes and other pari passu, unsecured indebtedness. As of
December 31, 1996, the Company had $1,016 million of secured indebtedness
outstanding, including indebtedness under the Credit Agreement.
Subsidiaries of the Company may also in the future own assets, incur
indebtedness and liabilities or guarantee senior indebtedness other than the
Senior Notes provided that, if the aggregate amount of indebtedness guaranteed
by any Restricted Subsidiary (as defined in the indentures relating to the
Senior Notes) of the Company (other than SNC) exceeds $50 million, then the
indentures relating to the Senior Notes require such subsidiary to also
guarantee the Senior Notes. Such guarantees will, however, be unsecured, whereas
the guarantees of the indebtedness under the Credit Agreement will be secured.
Consequently, the Senior Notes to the extent not so guaranteed will be
effectively subordinated to claims of creditors of such subsidiaries, including,
in the case of SNC and, subject to the foregoing proviso, other subsidiary
guarantors, the banks that are party to the Credit Agreement. As a result of the
foregoing, in an event of default, holders of Senior Notes may recover less,
ratably, than the banks that are party to the Credit Agreement and other secured
creditors of the Company or its subsidiaries.
PAYMENTS DUE ON COMPANY INDEBTEDNESS PRIOR TO MATURITY OF SENIOR NOTES;
REFINANCING RISKS
An aggregate of approximately $1,614 million, $934 million and $1,107
million of senior indebtedness (excluding intercompany indebtedness) matures
prior to the Series A Senior Notes, the Series B Senior Notes and the 1993
Senior Notes, respectively. Accordingly, the Company will have to
6
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refinance or otherwise generate sufficient cash to repay a substantial amount of
indebtedness prior to the time the Senior Notes mature. The Company's ability to
do this will depend, in part, on the Company's financial condition at the time
and the covenants and other provisions in its debt agreements. In this regard,
it should be noted that the Company's ability to incur new indebtedness will be
quite limited by the terms of its outstanding indebtedness.
PRICING
General. Most markets in which the Company competes are subject to cyclical
changes in the economy and changes in industry capacity, both of which can
significantly impact selling prices of the Company's products. The Company's
sales and profitability have historically been more sensitive to price changes
than changes in volume. Future decreases in prices for the Company's products
would adversely affect its operating results and coupled with the highly
leveraged financial position of the Company, would adversely impact the
Company's ability to respond to competition and to other conditions or to
otherwise take advantage of business opportunities.
The reductions in pricing which have occurred in the second half of 1996
and early 1997 referred to below have had a negative effect on the Company's
profitability. For the months of January and February 1997, the Company's
preliminary internal financial information indicates that the Company's net
sales decreased to $522.4 million as compared to $619.5 million for the first
two months of 1996, its income from operations decreased to $33.1 million as
compared to $99.1 million for the earlier period and a net loss of $.3 million
as compared to a net profit of $39.3 million for the earlier period. The
decreases in net sales and income from operations and the net loss in 1997 were
primarily due to lower prices for the Company's products as compared to the same
period in 1996.
Containerboard. The imbalance of supply and demand brought about by the
addition of new capacity within the industry in 1995 and 1996 resulted in excess
inventories and lower selling prices for containerboard and corrugated shipping
containers. Many paper companies, including the Company, took downtime at their
containerboard mills in the fourth quarter of 1995 and the first half of 1996 to
reduce inventories. Linerboard prices, which had reached a record high of $535
per ton in 1995, dropped rapidly during this period, declining to approximately
$310 per ton by March 1997.
Newsprint. Demand for newsprint declined in late 1995 and 1996, causing
excess inventories to develop and selling prices to fall. Many paper companies,
including the Company, took downtime at their newsprint mills during 1996 to
reduce inventories. Prices which had reached a record high level of $760 per
metric ton in 1995, fell to a low of $490 per metric ton during the first
quarter of 1997. In view of increased demand in late 1996, the Company announced
a price increase of $75 per metric ton for newsprint effective March 1, 1997.
COMPETITION
The paperboard and packaging products industries are highly competitive,
and no single company is dominant. The Company's competitors include large,
vertically integrated paperboard and packaging products companies and numerous
smaller companies. In recent years, there has been a trend toward consolidation
within the paperboard and packaging products industries, and the Company
believes that this trend is likely to continue. The primary competitive factors
in the paperboard and packaging products industries are price, design, quality
and service, with varying emphasis on these factors depending on the product
line. To the extent that one or more of the Company's competitors becomes more
successful with respect to any key competitive factor, the Company's business
could be materially, adversely affected. The market for the Newsprint segment is
also highly competitive.
ENVIRONMENTAL MATTERS
Federal, state and local environmental requirements, particularly relating
to air and water quality, are a significant factor in the Company's business.
The Company faces potential environmental liability as a result of violations of
permit terms and similar authorizations that have occurred from time to time at
its facilities. In addition, the Company faces potential liability for 'response
costs' at various sites with respect to which the Company has received notice
that it may be a 'potentially responsible party'
7
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as well as for contamination of certain Company-owned properties, under the
Comprehensive Environmental Response, Compensation and Liability Act, analogous
state laws and other laws concerning hazardous substance contamination. In 1993,
the Company recorded a pretax charge which included approximately $39 million
related to environmental matters, representing primarily asbestos and PCB
removal, solid waste cleanup at existing and former operating sites, and
expenses for response costs at various sites where the Company has received
notice that it is a potentially responsible party. During 1995 and 1996, the
Company incurred $9 million and $3 million, respectively, in cash expenditures
related to these environmental matters. While the Company believes that the
charges it has recorded are adequate, there can be no assurance that actual
expenditures relating to such matters will not exceed such charges over the
period covered thereby. Similarly, while the Company believes it is currently in
compliance with all applicable environmental laws in all material respects and
has budgeted for future expenditures required to maintain such compliance,
unforeseen significant expenditures in connection with such compliance could
have an adverse effect on the Company's financial condition. In addition, the
United States Environmental Protection Agency ('EPA') has proposed a
comprehensive rule governing the pulp, paper and paperboard industry (the
'Cluster Rule'), which will require substantial capital expenditures to achieve
compliance. In order to comply with the Cluster Rule as currently proposed, the
Company estimates that it may require approximately $125 million to $150 million
in capital expenditures over the next three to five years. The ultimate
financial impact of the regulations cannot be predicted with certainty and will
depend on several factors including the actual requirements imposed under the
EPA's final rules, new developments in control process technology and cost
inflation. Since the Company's competitors are, or will be, subject to
comparable pollution standards, including the proposed Cluster Rule, management
is of the opinion that compliance with future pollution standards will not
adversely affect the Company's competitive position.
POTENTIAL FRAUDULENT CONVEYANCE LIABILITY
Various laws enacted for the protection of creditors may have applied to
the Company's incurrence of indebtedness and the making of certain payments in
connection with the 1989 Transaction, debt under the credit agreement to which
the Company was then a party and certain of its previously outstanding debt
securities, and Old JSC(U.S.)'s guarantees thereof. Such state and federal
fraudulent transfer laws may also apply to refinancings of such debt, including
the issuance by the Company of the Senior Notes, the entering into and
incurrence of debt under the Credit Agreement, guarantees by the Company and its
subsidiaries thereof and the application of the proceeds thereof. If a court in
a lawsuit by an unpaid creditor or representative of creditors of the Company,
such as a trustee in bankruptcy or the Company as debtor in possession, were to
find that, at the time of the 1989 Transaction, the Company (a) was insolvent or
was rendered insolvent by reason of the 1989 Transaction or the indebtedness
incurred and payments made in connection therewith, (b) was engaged in a
business or transaction for which the assets remaining with the Company
constituted unreasonably small capital, (c) intended to, or believed that it
would, incur debts beyond its ability to pay as such debts matured or (d)
intended to hinder, delay or defraud its creditors, such court could, under
state or federal fraudulent transfer law, avoid the Senior Notes or such other
indebtedness (including under the Credit Agreement) and order that all payments
made by the Company with respect thereto be returned to it or to a fund for the
benefit of its creditors. Such court could also subordinate the Senior Notes or
such other indebtedness (including under the Credit Agreement) or the guarantees
thereof to all existing and future indebtedness of the Company. Such avoidance
or subordination would result in an event of default under the Credit Agreement.
The measure of insolvency for purposes of the foregoing would vary
depending upon the law of the jurisdiction being applied. Generally, however, a
company would be considered insolvent if the sum of such company's debts were
greater than all of such company's property at a fair valuation or if the
present fair saleable value of such company's assets were less than the amount
that would be required to pay its probable liability on its existing debts
(including contingent liabilities) as they become absolute and matured.
Accordingly, the Company does not believe that the fact that its liabilities
exceed the book value of its assets, as reflected on its balance sheet (which is
not based on fair saleable value or fair value), would be a significant factor
in any fraudulent conveyance analysis.
8
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The Company believed at the time of the 1989 Transaction and continues to
believe today, that at the time of the 1989 Transaction, and after giving effect
thereto, the Company did not come within any of the clauses (a) through (d)
above and that therefore the incurrence of indebtedness under the Senior Notes
or such other indebtedness (including under the Credit Agreement) will not
constitute fraudulent transfers. These beliefs were (and are) based on
management's analysis of, among other things, (i) internal cash flow
projections, (ii) the Company's historical financial information and (iii)
valuations of assets and liabilities of the Company. There can be no assurance,
however, that a court passing on such questions would agree with the Company's
analysis.
CONTROL BY PRINCIPAL STOCKHOLDERS
General. Certain shareholders of JSC, including Smurfit International B.V.
('SIBV'), The Morgan Stanley Leveraged Equity Fund II, L.P. ('MSLEF II'), and
certian other entities (as defined in the Stockholders Agreement described
below, the 'MSLEF II Associated Entities'), acting together have been, by reason
of their ownership of the common stock of JSC (the 'JSC Common Stock'), able to
control the vote on all matters submitted to a vote of holders of JSC Common
Stock. In this regard, JSC, JSCE, JSC(U.S.), SIBV, MSLEF II, and the MSLEF II
Associated Entities and certain other entities have entered into a Stockholders
Agreement (as subsequently amended, the 'Stockholders Agreement'), which
contains, among other things, provisions for various corporate governance
matters, including the election as directors and the appointment as officers of
certain designees of SIBV or MSLEF II. Pursuant to the Stockholders Agreement,
each of SIBV and MSLEF II have the right to elect one-half of the Company's
Board of Directors. The presence of SIBV and, until they dispose of their shares
(see below), MSLEF II and the MSLEF II Associated Entities, as controlling
stockholders, is also likely to deter a potential acquirer from making a tender
offer or otherwise attempting to obtain control of JSC, even if such events
might be favorable to JSC's stockholders. SIBV, MSLEF II and the MSLEF II
Associated Entities are also parties to a registration rights agreement (the
'Registration Rights Agreement') with JSC pursuant to which such shareholders
have certain rights to cause JSC to register for sale their shares of JSC Common
Stock.
SIBV. SIBV, which owns its JSC Common Stock directly and through an
indirect wholly-owned subsidiary, is itself an indirect wholly-owned subsidiary
of JS Group, an international paperboard and packaging corporation organized
under the laws of the Republic of Ireland. JS Group stock is listed on the
London and Dublin Stock Exchanges and its American Depositary Shares are listed
on the New York Stock Exchange. It is the largest industrial corporation in
Ireland. JS Group and its subsidiaries have a number of operations similar to
those of the Company, although for the most part outside the United States other
than their newsprint operations. Accordingly, JS Group's interests with respect
to various business decisions of JSC and the Company may conflict with the
interests of JSC and the Company.
MSLEF II Associated Entities. Under the Stockholders Agreement, sales or
other dispositions by the MS Holders (as defined in the Stockholders Agreement
and which term includes the MSLEF II Associated Entities) (including
distributions to the partners of MSLEF II) could result in SIBV no longer being
limited by such agreement to electing only one-half of JSC's Board of Directors.
In addition, such sales or other dispositions could result in JSC and SIBV no
longer being required to obtain the approval of two directors who are designees
of MSLEF II for JSC and the Company to engage in certain activities, for which
such approval is otherwise required by the Stockholders Agreement. Furthermore,
MSLEF II has the right at any time to waive any of the provisions of the
Stockholders Agreement, to agree (with JSC and SIBV) to the early termination
thereof or to fail to exercise any of its rights thereunder. MSLEF II is an
affiliate of Morgan Stanley & Co. Incorporated ('MS&Co.').
No Obligation to Invest. Although SIBV and the MSLEF II Associated Entities
have in the past made additional investments in JSC and the Company, they are
not obligated to do so in the future. Investors should not assume or expect that
either or both of such stockholders or their affiliates will invest additional
capital, whether in the form of debt or equity, in the future, particularly in
light of the intention of the MSLEF II Associated Entities to dispose of their
shares of JSC Common Stock and the
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fact that SIBV's ability to make such investments is subject to limitations
contained in agreements relating to indebtedness of SIBV and its affiliates.
TERMS OF THE SENIOR NOTES
The indentures pursuant to which the Senior Notes were issued contain
covenants that restrict, among other things, the ability of the Company and its
subsidiaries to incur indebtedness, pay dividends, engage in transactions with
stockholders and affiliates, issue capital stock, create liens, sell assets,
engage in mergers and consolidations and make investments in unrestricted
subsidiaries. The covenants are the result of negotiation among the Company and
the underwriter of the Senior Notes, and although the covenants are generally
designed to protect the holders of the Senior Notes from actions that could
result in significant credit deterioration, the covenants (like covenants in
other similar indebtedness) are subject to various exceptions which are
generally designed to allow the Company to continue to operate its business
without undue restraint and, therefore, are not total prohibitions with respect
to the proscribed activities. For example, the Company could incur additional
indebtedness that is secured or that is pari passu with the Senior Notes in the
future if it were able to satisfy the financial ratios required by the covenant
restricting debt issuance. For a description of such exceptions, see
'Description of the Senior Notes'.
The terms of the Senior Notes generally can be amended or modified with the
consent of the holders of a majority in aggregate principal amount of Senior
Notes then outstanding. While certain provisions related primarily to payment
cannot be modified absent the consent of each holder affected thereby, such
majority approval extends to many significant matters, including, for example,
the waiver of an Event of Default.
TRADING MARKET FOR THE SENIOR NOTES
The Senior Notes are not listed for trading on any securities exchange or
on any automated dealer quotation system. MS&Co. currently makes a market in the
Senior Notes. However, MS&Co. is not obligated to make a market for the Senior
Notes and may discontinue or suspend such market-making at any time without
notice. Accordingly, no assurance can be given as to the liquidity of, or the
trading market for, the Senior Notes. Further, the liquidity of, and trading
market for, the Senior Notes may be adversely affected by declines and
volatility in the market for high yield securities generally as well as any
changes in the Company's financial performance or prospects.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges........................ 1.91 2.60 1.08 (a) (a)
</TABLE>
- ------------
(a) For the years ended December 31, 1993 and 1992, earnings were inadequate to
cover fixed charges by $264 million and $31 million, respectively.
For purposes of these calculations, earnings consist of income (loss)
before income taxes, minority interests and extraordinary items and cumulative
effect of accounting changes, plus fixed charges. Fixed charges consist of
interest on indebtedness, amortization of deferred debt issuance costs and that
portion of lease rental expense considered to be representative of the interest
factors therein (deemed to be one-fourth of lease rental expense).
A statement setting forth the computation of the above ratios is on file as
an exhibit to the Registration Statement of which this Prospectus is a part.
USE OF PROCEEDS
The Company will not obtain any proceeds from the sales by MS&Co. of the
Senior Notes.
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DESCRIPTION OF THE SENIOR NOTES
The Series A Senior Notes were issued under an Indenture (the 'Series A
Senior Note Indenture') among Old JSC(U.S.), CCA and NationsBank of Georgia,
National Association, as trustee. On December 31, 1995, The Bank of New York
(the 'Series A Senior Note Trustee') replaced NationsBank of Georgia, National
Association, as trustee. The Series B Senior Notes were issued under an
Indenture (the 'Series B Senior Note Indenture') among Old JSC(U.S.), CCA and
NationsBank of Georgia, National Association, as trustee. On December 31, 1995,
The Bank of New York (the 'Series B Senior Note Trustee') replaced NationsBank
of Georgia, National Association, as trustee. The 1993 Senior Notes were issued
under an Indenture (the '1993 Senior Note Indenture' and together with the
Series A and Series B Senior Note Indentures, the 'Indentures') among Old
JSC(U.S.), CCA and NationsBank of Georgia, National Association, as trustee. On
December 31, 1995, the Bank of New York (the '1993 Senior Note Trustee')
replaced NationsBank of Georgia, National Association, as trustee. A copy of
each of the Series A Senior Note Indenture, the Series B Senior Note Indenture
and the 1993 Senior Note Indenture has been filed as an exhibit to the
respective Registration Statements of which this Prospectus is a part and is
available as described under 'Additional Information'. Except as described under
' -- Optional Redemption' below or as otherwise indicated, this description
applies to the Series A Senior Note Indenture, the Series B Senior Note
Indenture and the 1993 Senior Note Indenture, and references to the 'Senior
Notes' shall be to the Series A Senior Notes, the Series B Senior Notes or the
1993 Senior Notes, as the case may be, or, if the context requires, to all
three. The following summary of certain provisions of the Indentures does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Indentures, including the definitions of
certain terms therein and those terms made a part thereof by the Trust Indenture
Act of 1939, as amended. Wherever particular sections or defined terms of the
Indentures not otherwise defined herein are referred to, such sections or
defined terms shall be incorporated herein by reference.
GENERAL
Principal of, premium, if any, and interest on the Senior Notes is payable,
and the Senior Notes may be exchanged or transferred, at the office or agency of
JSC(U.S) in the Borough of Manhattan, The City of New York (which for the Series
A Senior Notes shall be the office or agency of the Series A Senior
Note Trustee, at 61 Broadway, Suite 1412, New York, New York 10006, for the
Series B Senior Notes, shall be the office or agency of the Series B
Senior Note Trustee at 61 Broadway, Suite 1412, New York, New York 10006, and
for the 1993 Senior Notes, shall be the office or agency of the 1993
Senior Note Trustee at 61 Broadway, Suite 1412, New York, New York 10006);
provided that, at the option of JSC(U.S.), payment of interest may be made by
check mailed to the address of the Holders as such address appears in the Senior
Notes Register. (Sections 2.01, 2.03 and 2.06)
The Senior Notes were issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000.
(Section 2.02) No service charge was made for any registration of transfer or
exchange of Senior Notes, but JSC(U.S.) may require payment of a sum sufficient
to cover any transfer tax or other similar governmental charge payable in
connection therewith. (Section 2.05)
TERMS OF THE SENIOR NOTES
The Series A Senior Notes and Series B Senior Notes are unsecured senior
obligations of JSC(U.S.), limited to $300 million aggregate principal amount of
Series A Senior Notes, and $100 million aggregate principal amount of Series B
Senior Notes, and will mature on May 1, 2004, and May 1, 2002, respectively.
Each Senior Note bears interest at the rate per annum shown on the front cover
of this Prospectus from the most recent Interest Payment Date to which interest
has been paid or provided for, payable semi-annually (to the Holders of record
at the close of business on the April 15 or October 15 immediately preceding the
Interest Payment Date) on May 1 and November 1 of each year.
The 1993 Senior Notes are unsecured senior obligations of JSC(U.S.),
limited to $500 million aggregate principal amount, and will mature on April 1,
2003. Each 1993 Senior Note bears interest at
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the rate per annum shown on the front cover of this Prospectus from the most
recent Interest Payment Date to which interest has been paid or provided for,
payable semi-annually (to the Holders of record at the close of business on the
March 15 or September 15 immediately preceding the Interest Payment Date) on
April 1 and October 1 of each year.
OPTIONAL REDEMPTION
JSC(U.S.) may not redeem the Series B Senior Notes or the 1993 Senior Notes
prior to maturity.
The Series A Senior Notes are redeemable, at JSC(U.S.)'s option, in whole
or in part, at any time on or after May 1, 1999 and prior to maturity, upon not
less than 30 nor more than 60 days' prior notice mailed by first class mail to
each Holder's last address as it appears in the Senior Notes Register, at the
following Redemption Prices (expressed as percentages of principal amount), plus
accrued interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), if
redeemed during the 12-month period commencing on May 1 of the years set forth
below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
------ ----------
<S> <C>
1999................................................................... 105.625%
2000................................................................... 102.813%
</TABLE>
and, on or after May 1, 2001, at 100% of principal amount. (Sections 11.01 and
11.04)
Notwithstanding the foregoing, at any time prior to May 1, 1997, JSC(U.S.)
may redeem up to $100 million in aggregate principal amount of the Series A
Senior Notes at a Redemption Price of 110% of the principal amount thereof plus
accrued interest to the Redemption Date, with the Net Cash Proceeds from the
issuance of Capital Stock (other than Redeemable Stock) of JSC(U.S.) (or any
entity of which it is a Subsidiary, including JSC and JSCE, to the extent such
Net Cash Proceeds are contributed to JSC(U.S.) or used to acquire Capital Stock
of JSC(U.S.) (other than Redeemable Stock)) in a single transaction or a series
of related transactions (other than the equity offerings made as part of the
Recapitalization Plan or an issuance to a Subsidiary).
Selection. In the case of any partial redemption, selection of the Series A
Senior Notes for redemption will be made by the Series A Senior Note Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Series A Senior Notes are listed or, if the Series A Senior
Notes are not listed on a national securities exchange, on a pro rata basis, by
lot or by such other method as the Series A Senior Note Trustee in its sole
discretion shall deem to be fair and appropriate; provided that no Series A
Senior Note of $1,000 in principal amount at maturity or less shall be redeemed
in part. If any Series A Senior Note is to be redeemed in part only, the notice
of redemption relating to such Series A Senior Note shall state the portion of
the principal amount thereof to be redeemed. A new Series A Senior Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Series A Senior
Note.
The Credit Agreement contains covenants prohibiting the optional redemption
of the Senior Notes.
RANKING
The Indebtedness evidenced by the Senior Notes ranks pari passu in right of
payment with all other senior indebtedness of JSC(U.S.), including, without
limitation, JSC(U.S.)'s obligations under the Credit Agreement. JSCE's guarantee
of the Senior Notes ranks pari passu in right of payment with all other
unsubordinated indebtedness of JSCE, including, without limitation, JSCE's
obligations under the Credit Agreement.
JSC(U.S.)'s obligations under the Credit Agreement and JSCE's guarantees of
such obligations are secured by pledges of substantially all of the assets of
JSC(U.S.), JSCE and their material subsidiaries with the exception of cash and
cash equivalents and trade receivables. JSC(U.S.)'s obligations under the Credit
Agreement, but not the Senior Notes, are guaranteed by JSC, JSCE and certain
subsidiaries of the Company, and the obligations of JSCE and each such
guaranteeing subsidiary are secured, among
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other things, by substantially all of the assets of JSCE and such guaranteeing
subsidiary, as the case may be. The Senior Notes and JSCE's guarantee of the
Senior Notes will be effectively subordinated to such security interests and
guarantees to the extent of such security interests and guarantees. As of
December 31, 1996, JSC(U.S.) had outstanding approximately $1,944 million of
senior indebtedness (excluding intercompany indebtedness), of which
approximately $1,016 million was secured indebtedness. The secured indebtedness
will have priority over the Senior Notes with respect to the assets securing
such indebtedness. See 'Risk Factors -- Effect of Secured Indebtedness on the
Senior Notes; Ranking'.
GUARANTEE
JSC(U.S.)'s obligations under the Senior Notes are unconditionally
guaranteed by JSCE.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indentures. Some definitions appear in the
1993 Senior Note Indenture that do not appear in the other Indentures, and vice
versa. Reference is made to the Indentures for the full definition of all terms
as well as any other capitalized term used herein for which no definition is
provided.
'Acquired Indebtedness' is defined to mean Indebtedness of a Person
existing at the time such Person became a Subsidiary and not Incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary.
'Adjusted Consolidated Net Income' is defined to mean, for any period, the
aggregate net income (or loss) of any Person and its consolidated Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of such Person (other than net income
(or loss) attributable to a Subsidiary of such Person) in which any other Person
(other than such Person or any of its Subsidiaries) has a joint interest, except
to the extent of the amount of dividends or other distributions actually paid to
such Person or any of its Subsidiaries by such other Person during such period;
(ii) solely for the purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of the
'Limitation on Restricted Payments' covenant described below (and in such case,
except to the extent includable pursuant to clause (i) above), the net income
(or loss) of such Person accrued prior to the date it becomes a Subsidiary of
any other Person or is merged into or consolidated with such other Person or any
of its Subsidiaries or all or substantially all of the property and assets of
such Person are acquired by such other Person or any of its Subsidiaries; (iii)
the net income (or loss) of any Subsidiary (other than CCA) of any Person to the
extent that the declaration or payment of dividends or similar distributions by
such Subsidiary of such net income is not at the time permitted by the operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Subsidiary;
(iv) any gains or losses (on an after-tax basis) attributable to Asset Sales;
(v) except for purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of the 'Limitation on
Restricted Payments' covenant described below, any amounts paid or accrued as
dividends on Preferred Stock of such Person or Preferred Stock of any Subsidiary
of such Person owned by Persons other than such Person and any of its
Subsidiaries; (vi) all extraordinary gains and extraordinary losses; and (vii)
all non-cash charges reducing net income of such Person that relate to stock
options or stock appreciation rights and all cash payments reducing net income
of such Person that relate to stock options or stock appreciation rights, to the
extent such cash payments are not made pursuant to clause (xi) of the
'Limitation on Restricted Payments' covenant; provided that, solely for the
purposes of calculating the Interest Coverage Ratio (and in such case, except to
the extent includable pursuant to clause (i) above), 'Adjusted Consolidated Net
Income' of JSCE shall include the amount of all cash dividends received by JSCE
or any Subsidiary of JSCE from an Unrestricted Subsidiary.
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'Adjusted Consolidated Net Tangible Assets' is defined to mean the total
amount of assets of JSCE and its Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (i) all
current liabilities of JSCE and its Subsidiaries (excluding intercompany items)
and (ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, all as set forth on the most
recently available consolidated balance sheet of JSCE and its Subsidiaries,
prepared in conformity with GAAP.
'Affiliate' is defined to mean, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, 'control'
(including, with correlative meanings, the terms 'controlling', 'controlled by',
and 'under common control with'), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. For purposes of this
definition, no Bank nor any affiliate of any Bank shall be deemed to be an
Affiliate of JSCE or any of its Subsidiaries nor shall MS&Co. (or any affiliate
thereof) be deemed an Affiliate of JSCE or any of its Subsidiaries solely by
reason of its ownership of or right to vote any Indebtedness of JSCE or any of
its Subsidiaries.
'Asset Acquisition' is defined to mean (i) an investment by JSCE or any of
its Subsidiaries in any other Person pursuant to which such Person shall become
a Subsidiary of JSCE or any of its Subsidiaries or shall be merged into or
consolidated with JSCE or any of its Subsidiaries or (ii) an acquisition by JSCE
or any of its Subsidiaries of the assets of any Person other than JSCE or any of
its Subsidiaries that constitute substantially all of a division or line of
business of such Person.
'Asset Disposition' is defined to mean the sale or other disposition by
JSCE or any of its Subsidiaries (other than to JSCE or another Subsidiary of
JSCE) of (i) all or substantially all of the Capital Stock of any Subsidiary of
JSCE or (ii) all or substantially all of the assets that constitute a division
or line of business of JSCE or any of its Subsidiaries.
'Asset Sale' is defined to mean, with respect to any Person, any sale,
transfer or other disposition (including by way of merger, consolidation or
sale-leaseback transactions) in one transaction or a series of related
transactions by such Person or any of its Subsidiaries to any Person other than
JSCE or any of its Subsidiaries of (i) all or any of the Capital Stock of any
Subsidiary of such Person (other than pursuant to a public offering of the
Capital Stock of CCA or JSCE pursuant to which at least 15% of the total issued
and outstanding Capital Stock of CCA or JSCE has been sold by means of an
effective registration statement under the Securities Act or sales, transfers or
other dispositions of Capital Stock of CCA or JSCE substantially concurrently
with or following such a public offering), (ii) all or substantially all of the
property and assets of an operating unit or business of such Person or any of
its Subsidiaries or (iii) any other property and assets of such Person or any of
its Subsidiaries outside the ordinary course of business of such Person or such
Subsidiary and, in each case, that is not governed by the provisions of the
Indenture applicable to Mergers, Consolidations and Sales of Assets (it being
acknowledged that JSCE and its Subsidiaries may dispose of equipment in the
ordinary course of their respective businesses); provided that sales or other
dispositions of inventory, receivables and other current assets shall not be
included within the meaning of 'Asset Sale.'
'Attributable Indebtedness' is defined to mean, when used in connection
with a sale-leaseback transaction referred to in the 'Limitation on
Sale-Leaseback Transactions' covenant, at any date of determination, the product
of (i) the net proceeds from such sale-leaseback transaction and (ii) a
fraction, the numerator of which is the number of full years of the term of the
lease relating to the property involved in such sale-leaseback transaction
(without regard to any options to renew or extend such term) remaining at the
date of the making of such computation and the denominator of which is the
number of full years of the term of such lease (without regard to any options to
renew or extend such term) measured from the first day of such term.
'Average Life' is defined to mean, at any date of determination with
respect to any debt security, the quotient obtained by dividing (i) the sum of
the product of (A) the number of years from such date
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of determination to the dates of each successive scheduled principal payment of
such debt security and (B) the amount of such principal payment by (ii) the sum
of all such principal payments.
'Banks' is defined to mean the lenders who are from time to time parties to
any Credit Agreement.
'Board of Directors' is defined to mean the Board of Directors of JSCE or
CCA, as the case may be, or any committee of such Board of Directors duly
authorized to act under the Indenture.
'Business Day' is defined to mean any day except a Saturday, Sunday or
other day on which commercial banks in The City of New York, or in the city of
the Corporate Trust Office of the Trustee, are authorized by law to close.
'Capital Stock' is defined to mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's capital stock, whether now
outstanding or issued after the date of the Indenture, including, without
limitation, all Common Stock and Preferred Stock.
'Capitalized Lease' is defined to mean, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with GAAP, is required to be capitalized on the balance sheet of such Person;
and 'Capitalized Lease Obligation' is defined to mean the rental obligations, as
aforesaid, under such lease.
'Change of Control' is defined to mean such time as (i) (a) a 'person' or
'group' (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
other than the Original Stockholders, becomes the 'beneficial owner' (as defined
in Rule 13d-3 under the Exchange Act) of more than 35% of the total voting power
of the then outstanding Voting Stock of JSC or a JSC Parent and (b) the Original
Stockholders beneficially own, directly or indirectly, less than the then
outstanding Voting Stock of JSC or a JSC Parent beneficially owned by such
'person' or 'group'; or (ii) (a) a 'person' or 'group' (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act), other than the Original
Stockholders, becomes the 'beneficial owner' (as defined in Rule 13d-3 under the
Exchange Act) of more than 35% of the total voting power of the then outstanding
Voting Stock of JSCE, (b) the Original Stockholders beneficially own, directly
or indirectly, less than the then outstanding Voting Stock of JSCE beneficially
owned by such 'person' or 'group' and (c) CCA is a Subsidiary of JSCE at the
time that the later of (a) and (b) above occurs.
'Closing Date' is defined to mean the date on which the respective series
of Senior Notes were originally issued under the Indentures.
'Common Stock' is defined to mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of the Indenture, including, without
limitation, all series and classes of such common stock.
'Consolidated EBITDA' is defined to mean, with respect to any Person for
any period, the sum of the amounts for such period of (i) Adjusted Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) income taxes (other than
income taxes (either positive or negative) attributable to extraordinary and
non-recurring gains or losses or sales of assets), (iv) depreciation expense,
(v) amortization expense and (vi) all other non-cash items reducing Adjusted
Consolidated Net Income, less all non-cash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for such
Person and its Subsidiaries in conformity with GAAP; provided that, if a Person
has any Subsidiary that is not a Wholly Owned Subsidiary of such Person,
Consolidated EBITDA of such Person shall be reduced (to the extent not otherwise
reduced by GAAP) by an amount equal to (A) the Adjusted Consolidated Net Income
of such Subsidiary multiplied by (B) the quotient of (1) the number of shares of
outstanding Common Stock of such Subsidiary not owned on the last day of such
period by such Person or any Subsidiary of such Person divided by (2) the total
number of shares of outstanding Common Stock of such Subsidiary on the last day
of such period.
'Consolidated Interest Expense' is defined to mean, with respect to any
Person for any period, the aggregate amount of interest in respect of
Indebtedness (including amortization of original issue
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discount on any Indebtedness and the interest portion of any deferred payment
obligation, calculated in accordance with the effective interest method of
accounting; all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing; the net costs
associated with Interest Rate Agreements; and Indebtedness that is Guaranteed by
such Person) and all but the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by such Person and its consolidated subsidiaries during such period;
excluding, however, (i) any amount of such interest of any Subsidiary of such
Person if the net income (or loss) of such Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income for such person pursuant to
clause (iii) of the definition thereof (but only in the same proportion as the
net income (or loss) of such Subsidiary is excluded from the calculation of
Adjusted Consolidated Net Income for such Person pursuant to clause (iii) of the
definition thereof) and (ii) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the 1989 Transaction, the 1992
Transaction, the 1993 Transaction (i.e., the Refinancing), the issuance of the
New Subordinated Notes and the applications of the proceeds thereof or the
Recapitalization Plan, all as determined on a consolidated basis in conformity
with GAAP.
'Consolidated Net Worth' is defined to mean, at any date of determination,
shareholders' equity as set forth on the most recently available consolidated
balance sheet of JSCE and its Subsidiaries (which shall be as of a date not more
than 60 days prior to the date of such computation), less any amounts
attributable to Redeemable Stock or any equity security convertible into or
exchangeable for Indebtedness, the cost of treasury stock and the principal
amount of any promissory notes receivable from the sale of the Capital Stock of
JSCE or any Subsidiary of JSCE, each item to be determined in accordance with
GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
'Credit Agreement' is defined to mean the Amended and Restated Credit
Agreement, dated as of May 11, 1994, amended and restated as of May 17, 1996,
among JSC, JSCE, JSC(U.S.), The Chase Manhattan Bank, Bankers Trust Company
and the other lenders, as amended from time to time.
'Currency Agreement' is defined to mean any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect JSCE or any of its Subsidiaries against fluctuations in currency values
to or under which JSCE or any of its Subsidiaries is a party or a beneficiary on
the date of the Indenture or becomes a party or a beneficiary thereafter.
'Default' is defined to mean any event that is, or after notice or passage
of time or both would be, an Event of Default.
'Existing Subordinated Debt Refinancing' is defined to mean the refinancing
of any or all of the Indebtedness represented by the Junior Accrued Debentures,
Senior Subordinated Notes and the Subordinated Debentures, including pursuant to
any Credit Agreement.
'Foreign Subsidiary' is defined to mean any Subsidiary of JSCE that (i)
derives more than 80% of its sales or net income from, or (ii) has more than 80%
of its assets located in, territories and jurisdictions outside the United
States of America (in each case determined on a consolidated basis in conformity
with GAAP).
'GAAP' is defined to mean generally accepted accounting principles in the
United States of America as in effect as of the date of the Indenture,
including, without limitation, those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession. All ratios and
computations based on GAAP contained in the Indenture shall be computed in
conformity with GAAP, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of the
Indenture shall be made without giving effect to (i) the amortization of any
expenses incurred in connection with the 1989 Transaction, the 1992 Transaction,
the 1993 Transaction (i.e., the Refinancing), the issuance of the New
Subordinated Notes and the application of the proceeds thereof or the
Recapitalization Plan, (ii) except as otherwise provided, the amortization of
any amounts required or permitted by Accounting Principles
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Board Opinion Nos. 16 and 17 and (iii) any charges associated with the adoption
of Financial Accounting Standard Nos. 106 and 109.
'Guarantee' is defined to mean any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term 'Guarantee' shall not include endorsements for
collection or deposit in the ordinary course of business. The term 'Guarantee'
used as a verb has a corresponding meaning.
'Holder' or 'Noteholder' or 'Securityholder' or 'Senior Notes Holder' is
defined to mean the registered holder of any Series A Senior Note, Series B
Senior Note or 1993 Senior Note, as the case may be.
'Incur' is defined to mean, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness; provided that neither the accrual of interest (whether such
interest is payable in cash or kind) nor the accretion of original issue
discount shall be considered an Incurrence of Indebtedness.
'Indebtedness' is defined to mean, with respect to any Person at any date
of determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (other than, in the case of JSCE
and its Subsidiaries, any non-negotiable notes of JSCE or its Subsidiaries
issued to its insurance carriers in lieu of maintenance of policy reserves in
connection with its workers' compensation and liability insurance programs),
(iii) all obligations of such Person in respect of letters of credit or other
similar instruments (including reimbursement obligations with respect thereto),
(iv) all obligations of such Person to pay the deferred and unpaid purchase
price of property or services, which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, except Trade Payables, (v) all
obligations of such Person as lessee under Capitalized Leases, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided that the
amount of such Indebtedness shall be the lesser of (A) the fair market value of
such asset at such date of determination and (B) the amount of such
Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person, (viii) all
obligations in respect of borrowed money under any Credit Agreement, the Secured
Notes and any Guarantees thereof and (ix) to the extent not otherwise included
in this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability determined by such Person's board of directors,
in good faith, as reasonably likely to occur, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date, provided that the amount outstanding at any time of any Indebtedness
issued with original issue discount is the face amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP; and provided
further that Indebtedness shall not include (A) any liability for federal,
state, local or other taxes or (B) obligations of JSCE or its Restricted
Subsidiaries pursuant to Receivables Programs.
'Interest Coverage Ratio' is defined to mean, with respect to any Person on
any Transaction Date, the ratio of (i) the aggregate amount of Consolidated
EBITDA of such Person for the four fiscal quarters for which financial
information in respect thereof is available immediately prior to such
Transaction Date to (ii) the aggregate Consolidated Interest Expense of such
Person during such four
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fiscal quarters. In making the foregoing calculation, (A) pro forma effect shall
be given to (1) any Indebtedness Incurred subsequent to the end of the
four-fiscal-quarter period referred to in clause (i) and prior to the
Transaction Date (other than Indebtedness Incurred under a revolving credit or
similar arrangement to the extent of the commitment thereunder (or under any
predecessor revolving credit or similar arrangement) on the last day of such
period), (2) any Indebtedness Incurred during such period to the extent such
Indebtedness is outstanding at the Transaction Date and (3) any Indebtedness to
be Incurred on the Transaction Date, in each case as if such Indebtedness had
been Incurred on the first day of such four-fiscal-quarter period and after
giving pro forma effect to the application of the proceeds thereof as if such
application had occurred on such first day; (B) Consolidated Interest Expense
attributable to interest on any Indebtedness (whether existing or being
Incurred) computed on a pro forma basis and bearing a floating interest rate
shall be computed as if the rate in effect on the date of computation (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months) had been
the applicable rate for the entire period; (C) there shall be excluded from
Consolidated Interest Expense any Consolidated Interest Expense related to any
amount of Indebtedness that was outstanding during such four-fiscal-quarter
period or thereafter but that is not outstanding or is to be repaid on the
Transaction Date, except for Consolidated Interest Expense accrued (as adjusted
pursuant to clause (B)) during such four-fiscal-quarter period under a revolving
credit or similar arrangement to the extent of the commitment thereunder (or
under any successor revolving credit or similar arrangement) on the Transaction
Date; (D) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving pro forma effect to the application of proceeds
of any Asset Disposition) that occur during such four-fiscal-quarter period or
thereafter and prior to the Transaction Date as if they had occurred and such
proceeds had been applied on the first day of such four-fiscal-quarter period;
(E) with respect to any such four-fiscal-quarter period commencing prior to the
Refinancing, the Refinancing shall be deemed to have taken place on the first
day of such period; and (F) pro forma effect shall be given to asset
dispositions and asset acquisitions (including giving pro forma effect to the
application of proceeds of any asset disposition) that have been made by any
Person that has become a Subsidiary of JSC or has been merged with or into JSCE
or any Subsidiary of JSCE during the four-fiscal-quarter period referred to
above or subsequent to such period and prior to the Transaction Date and that
would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Subsidiary of JSCE as if such asset
dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions
that occurred on the first day of such period; provided that to the extent that
clause (D) or (F) of this sentence requires that pro forma effect be given to an
Asset Acquisition or an asset acquisition, such pro forma calculation shall be
based upon the four full fiscal quarters immediately preceding the Transaction
Date of the Person, or division or line of business of the Person, that is
acquired for which financial information is available.
'Interest Rate Agreement' is defined to mean any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect JSCE or any of its Subsidiaries against
fluctuations in interest rates or obtain the benefits of floating interest rates
to or under which JSCE or any of its Subsidiaries is a party or a beneficiary on
the date of the Indenture or becomes a party or a beneficiary thereafter.
'Investment' is defined to mean any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable on the balance sheet of any Person or its Subsidiaries)
or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, bonds, notes, debentures or other similar instruments issued by
any other Person. For purposes of the definition of 'Unrestricted Subsidiary'
and the 'Limitation on Restricted Payments' covenant described below, (i)
'Investment' shall include the fair market value of the net assets of any
Subsidiary of JSCE at the time that such Subsidiary of JSCE is designated an
Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary of JSCE and (ii) any property
transferred to or from an Unrestricted Subsidiary
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shall be valued at its fair market value at the time of such transfer, in each
case as determined by the Board of Directors in good faith.
'JSC' is defined to mean Jefferson Smurfit Corporation, a Delaware
corporation.
'JSC Parent' is defined to mean any entity of which JSC is a direct or
indirect Subsidiary.
'Junior Accrual Debentures' is defined to mean CCA's 15 1/2% Junior
Subordinated Accrual Debentures due 2004.
'Lien' is defined to mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).
'Net Cash Proceeds' is defined to mean, with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to JSCE or any Subsidiary of JSCE) and proceeds from the
conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of JSCE and its Subsidiaries, taken as
a whole, (iii) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured by a Lien
on the property or assets sold or (B) is required to be paid as a result of such
sale and (iv) appropriate amounts to be provided by JSCE or any Subsidiary of
JSCE as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP.
'New Senior Notes', when used in reference to the 1993 Senior Notes, is
defined to mean the Series A Senior Notes and Series B Senior Notes and such
other debt securities that may be issued in substitution therefor (in whole or
in part) pursuant to clause (i) of the definition of 'Recapitalization Plan', in
each case issued in connection with the Recapitalization Plan.
'New Subordinated Notes' is defined to mean the 11 1/2% Junior Subordinated
Notes maturing 2005, in an aggregate amount not to exceed $200 million, of CCA
which SIBV had committed to purchase (which commitment terminates on the Closing
Date without any of such notes having been issued).
'1989 Transaction' is defined to mean the transaction in which (i) JSC
acquired the entire equity interest in Old JSC(U.S.), (ii) Old JSC(U.S.)
(through its ownership of JSC Enterprises) acquired the entire equity interest
in CCA, (iii) the MSLEF I Group received $500 million in respect of its shares
of CCA common stock, (iv) SIBV received $41.75 per share, or an aggregate of
approximately $1.25 billion, in respect of its shares of Old JSC(U.S.) stock and
(v) the public stockholders received $43 per share of Old JSC(U.S.) stock.
'1993 Transaction' is defined to mean the issuance and sale of the 1993
Senior Notes, the repayment of Indebtedness with the proceeds of such sale and
the amendments (and consent payments in respect thereof) to certain debt
instruments, and the agreements related thereto, that were effected in April
1993 (also referred to as the Refinancing).
'1992 Stock Option Plan' is defined to mean the JSC 1992 Stock Option Plan,
as the same may be amended, supplemented or otherwise modified from time to
time.
'1992 Transaction' is defined to mean the purchase, in August 1992, by
certain stockholders of JSC of $232 million of Common Stock of JSC, the
contribution by JSC of such $232 million to CCA and the application by CCA of
such $232 million to repurchase Junior Accrual Debentures and repay other
subordinated Indebtedness of CCA.
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'Original Stockholders' is defined to mean, collectively, MSLEF II, Morgan
Stanley Group, SIBV, JS Group and any Affiliate of any such Person.
'Permitted Liens' is defined to mean (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made; (ii) statutory Liens of landlords
and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or
other similar Liens arising in the ordinary course of business and with respect
to amounts not yet delinquent or being contested in good faith by appropriate
legal proceedings promptly instituted and diligently conducted and for which a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; (iii) Liens incurred or deposits made
in the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (iv) Liens incurred
or deposits made to secure the performance of tenders, bids, leases, statutory
or regulatory obligations, bankers' acceptances, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a similar nature incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money); (v) easements,
rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of JSCE or any of its
Subsidiaries; (vi) Liens (including extensions and renewals thereof) upon real
or tangible personal property acquired after the Closing Date; provided that (a)
such Lien is created solely for the purpose of securing Indebtedness Incurred
(1) to finance the cost (including the cost of improvement or construction) of
the item of property or assets subject thereto and such Lien is created prior
to, at the time of or within six months after the later of the acquisition, the
completion of construction or the commencement of full operation of such
property or (2) to refinance any Indebtedness previously so secured, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such cost and (c) any such Lien shall not extend to or cover any property or
assets other than such item of property or assets and any improvements on such
item; (vii) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of JSCE or any of its
Subsidiaries; (viii) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of JSCE or any of its
Subsidiaries relating to such property or assets; (ix) any interest or title of
a lessor in the property subject to any Capitalized Lease or Operating Lease;
provided that any sale-leaseback transaction related thereto complies with the
'Limitation on Sale-Leaseback Transactions' covenant; (x) Liens arising from
filing Uniform Commercial Code financing statements regarding leases; (xi) Liens
on property of, or on shares of stock or Indebtedness of, any corporation
existing at the time such corporation becomes, or becomes a part of, any
Restricted Subsidiary; (xii) Liens in favor of JSCE or any Restricted
Subsidiary; (xiii) Liens arising from the rendering of a final judgment or order
against JSCE or any Subsidiary of JSCE that does not give rise to an Event of
Default; (xiv) Liens securing reimbursement obligations with respect to letters
of credit that encumber documents and other property relating to such letters of
credit and the products and proceeds thereof; (xv) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; (xvi) Liens encumbering
customary initial deposits and margin deposits, and other Liens that are either
within the general parameters customary in the industry and incurred in the
ordinary course of business or otherwise permitted under the terms of the Credit
Agreement, in each case securing Indebtedness under Interest Rate Agreements,
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed to protect JSCE or any of
its Subsidiaries from fluctuations in the price of commodities; (xvii) Liens
arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by JSCE or any of its
Subsidiaries in the ordinary course of business in accordance with the past
practices of JSCE and its Subsidiaries prior to the Closing Date; (xviii) Liens
on or sales of receivables; and (xix) Liens securing any real property or other
assets of JSCE or any Restricted Subsidiary in favor of the United States of
America or any State thereof, or any department, agency, instrumentality or
political subdivision thereof, in connection with the financing of industrial
revenue bond facilities or any equipment or other property designed primarily
for the purpose of air or water
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pollution control; provided that any such Lien on such facilities, equipment or
other property shall not apply to any other assets of JSCE or any Restricted
Subsidiary.
'Person' is defined to mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
'Preferred Stock' is defined to mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of the Indenture, including,
without limitation, all series and classes of such preferred or preference
stock.
'Principal Property' is defined to mean any manufacturing or processing
plant, warehouse or other building used by JSCE or any Restricted Subsidiary,
other than a plant, warehouse or other building that, in the good faith opinion
of the Board of Directors of JSCE as reflected in a Board Resolution, is not of
material importance to the business conducted by JSCE and its Restricted
Subsidiaries taken as a whole as of the date such Board Resolution is adopted.
'Recapitalization Closing Date' is defined to mean the date on which the
transactions described in clauses (i) through (iv) of the definition of
'Recapitalization Plan' are consummated; provided that if such transactions do
not occur on the same date, 'Recapitalization Closing Date' shall be defined to
mean the date designated as such by the Company.
'Recapitalization Plan' is defined to mean, collectively, the following
transactions: (i) the sale of the Series A and Series B Senior Notes, (ii) the
sale by JSC of JSC Common Stock substantially concurrently with the transaction
described in clause (i), (iii) the SIBV Investment substantially concurrently
with the transaction described in clause (i), (iv) the execution and delivery of
the Credit Agreement, (v) the application of the proceeds of the transactions
described in clauses (i) through (iv), (vi) the Existing Subordinated Debt
Refinancing, (vii) the obtaining of all consents and waivers necessary or
determined by CCA, Old JSC(U.S.) or JSC to be appropriate in connection with the
foregoing, (viii) all other transactions related to, or entered into in
connection with, the foregoing unless CCA determines that any such transaction
should not be considered part of the Recapitalization Plan and (ix) the payment
and accrual of all fees and expenses related to the foregoing.
'Receivables Programs' is defined to mean, with respect to any Person,
obligations of such Person or its Subsidiaries pursuant to accounts receivable
securitization programs, to the extent that the proceeds received pursuant to a
pledge, sale or other encumbrance of accounts receivable pursuant to such
programs do not exceed 91% of the total book value of such accounts receivable
(determined on a consolidated basis in accordance with GAAP as of the end of the
most recent fiscal quarter for which financial information is available), and
any extension, renewal, modification or replacement of such programs, including,
without limitation, any agreement increasing the amount of, extending the
maturity of, refinancing or otherwise restructuring all or any portion of the
obligations under such programs or any successor agreement or agreements.
'Redeemable Stock' is defined to mean any class or series of Capital Stock
of any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Senior Notes, (ii) redeemable at the option
of the holder of such class or series of Capital Stock at any time prior to the
Stated Maturity of the Senior Notes, or (iii) convertible into or exchangeable
for Capital Stock referred to in clause (i) or (ii) above or Indebtedness having
a scheduled maturity prior to the Stated Maturity of the Senior Notes; provided
that any Capital Stock that would not constitute Redeemable Stock but for
provisions thereof giving holders thereof the right to require such Person to
repurchase or redeem such Capital Stock upon the occurrence of an 'asset sale'
or 'change of control' occurring prior to the Stated Maturity of the Senior
Notes shall not constitute Redeemable Stock if the 'asset sale' or 'change of
control' provisions applicable to such Capital Stock are no more favorable
(except with respect to any premium payable) to the holders of such Capital
Stock than the provisions contained in 'Limitation on Asset Sales' and
'Repurchase of Senior Notes upon Change of Control' covenants described below
and such Capital Stock specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provisions prior to such
Person's repurchase of
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such Senior Notes, as are required to be repurchased pursuant to the 'Limitation
on Asset Sales' and 'Repurchase of Senior Notes upon Change of Control'
covenants described below.
'Refinancing' is defined to mean the issuance and sale of the 1993 Senior
Notes, the repayment of Indebtedness under the credit agreements in effect in
1993 with the proceeds of such sale and the amendments (and consent payments in
respect thereof) to the credit agreements in effect in 1993 and the Secured
Notes, and the agreements related thereto, that were effected prior to, or at
approximately the same time as, the issuance and sale of the 1993 Senior Notes.
'Restricted Subsidiary' is defined to mean any Subsidiary of JSCE other
than an Unrestricted Subsidiary.
'Secured Notes' is defined to mean CCA's Senior Secured Floating Rate
Senior Notes due 1998 and the note purchase agreement relating thereto, as the
foregoing may be amended from time to time.
'Senior Subordinated Notes' is defined to mean CCA's 13 1/2% Senior
Subordinated Notes due 1999.
'SIBV Investment' is defined to mean the purchase by SIBV (or a corporate
affiliate thereof) of shares of JSC Common Stock, substantially concurrently
with the sale by CCA of the Series A and Series B Senior Notes.
'Significant Subsidiary' is defined to mean, at any date of determination,
any Subsidiary of JSCE that, together with its Subsidiaries, (i) for the most
recent fiscal year of JSCE, accounted for more than 10% of the consolidated
revenues of JSCE or (ii) as of the end of such fiscal year, was the owner of
more than 10% of the consolidated assets of JSCE, all as set forth on the most
recently available consolidated financial statements of JSCE for such fiscal
year.
'Smurfit Newsprint' is defined to mean Smurfit Newsprint Corporation, a
Delaware corporation.
'Stated Maturity' is defined to mean, (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled installment of principal of or interest on
any debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
'Subordinated Debentures' is defined to mean CCA's 14% Subordinated
Debentures due 2001.
'Subsidiary' is defined to mean, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
outstanding Voting Stock is owned, directly or indirectly, by JSCE or by one or
more other Subsidiaries of JSCE, or by such Person and one or more other
Subsidiaries of such Person; provided that, except as the term 'Subsidiary' is
used in the definition of 'Unrestricted Subsidiary' set forth below, an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary of JSCE for
purposes of the Indenture.
'Times Mirror Agreement' is defined to mean the Shareholders Agreement,
dated February 21, 1986 between Old JSC(U.S.) and The Times Mirror Company, as
the same may at any time be amended, modified or supplemented.
'Trade Payables' is defined to mean, with respect to any Person, any
accounts payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by such Person or any of its
Subsidiaries arising in the ordinary course of business in connection with the
acquisition of goods or services.
'Transaction Date' is defined to mean, with respect to the Incurrence of
any Indebtedness by JSCE or any of its Subsidiaries, the date such Indebtedness
is to be Incurred and, with respect to any Restricted Payment, the date such
Restricted Payment is to be made.
'Unrestricted Subsidiary' is defined to mean (i) any Subsidiary of JSCE
that at the time of determination shall be designated an Unrestricted Subsidiary
by the Board of Directors of JSCE in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of JSCE may
designate any Subsidiary of JSCE (including any newly acquired or newly formed
Subsidiary of JSCE) other than CCA to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, JSCE or any other Subsidiary of JSCE that is
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not a Subsidiary of the Subsidiary to be so designated; provided that either (A)
the Subsidiary to be so designated has total assets of $1,000 or less or (B) if
such Subsidiary has assets greater than $1,000, that such designation would be
permitted under the 'Limitation on Restricted Payments' covenant described
below. The Board of Directors of JSCE may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary of JSCE; provided that immediately after giving
effect to such designation (x) JSCE could Incur $1.00 of additional Indebtedness
under the first paragraph of the 'Limitation on Indebtedness' covenant described
below and (y) no Default or Event of Default shall have occurred and be
continuing. Any such designation by the Board of Directors of JSCE shall be
evidenced to the Trustee by promptly filing with the Trustee a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions. Any
Subsidiary of JSCE may be designated as an Unrestricted Subsidiary (or not so
designated) for purposes of the Indenture without regard to whether such
Subsidiary is so designated (or not so designated) for purposes of any other
agreement relating to Indebtedness of JSCE or any of its Subsidiaries.
'Voting Stock' is defined to mean Capital Stock of any class or kind
ordinarily having the power to vote for the election of directors.
'Wholly Owned Subsidiary' is defined to mean, with respect to any Person,
any Subsidiary of such Person if all of the Common Stock or other similar equity
ownership interests (but not including Preferred Stock) in such Subsidiary
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned directly or indirectly by such Person.
COVENANTS
LIMITATION ON INDEBTEDNESS
Under the terms of the Indentures, JSCE shall not, and shall not permit any
Restricted Subsidiary to, Incur any Indebtedness unless, after giving effect to
the Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Interest Coverage Ratio of JSCE would be greater than
<TABLE>
<S> <C>
(1) prior to July 1, 1994............................................................ 1.50:1,
(2) after June 30, 1994 and prior to July 1, 1995.................................... 1.75:1,
(3) after June 30, 1995.............................................................. 2.00:1.
</TABLE>
Notwithstanding the foregoing, JSCE and any Restricted Subsidiary (except
as expressly provided below) may Incur each and all of the following: (i)
Indebtedness (A) of JSCE and CCA outstanding at any time in an aggregate
principal amount not to exceed the amount of outstanding Indebtedness and unused
commitments under the Credit Agreement on the Closing Date less any Indebtedness
Incurred pursuant to clause (iii) below to refinance or refund the Junior
Accrual Debentures, the Senior Subordinated Notes or the Subordinated Debentures
(or, in the case of the 1993 Senior Note Indenture, Indebtedness (A) of JSCE and
CCA outstanding at any time in an aggregate principal amount not to exceed the
sum of (x) the amount of outstanding Indebtedness and unused commitments under
the Credit Agreement on the Recapitalization Closing Date less any Indebtedness
Incurred pursuant to clause (iii) below to refinance or refund the Junior
Accrual Debentures, the Senior Subordinated Notes or the Subordinated Debentures
and (y) the Indebtedness represented by the New Senior Notes), (B) of JSCE and
CCA outstanding at any time in an aggregate principal amount not to exceed $275
million, (C) of JSC Enterprises, CCA Enterprises and Smurfit Newsprint under any
Credit Agreement outstanding at any time in an aggregate principal amount not to
exceed the amount of outstanding Indebtedness and unused commitments under the
Credit Agreement on the Closing Date less, for purposes of determining cash
borrowings under any Credit Agreement by JSC Enterprises, CCA Enterprises and
Smurfit Newsprint, (1) any Indebtedness Incurred pursuant to clause (iii) below
to refinance or refund the Junior Accrual Debentures, the Senior Subordinated
Notes or the Subordinated Debentures and (2) the amount of Indebtedness Incurred
under clause (i)(A) of this paragraph (or, in the case of the 1993 Senior Note
Indenture, (C) of JSC Enterprises, CCA Enterprises and Smurfit Newsprint under
any Credit Agreement), (D) of Restricted Subsidiaries of JSCE (other than CCA)
in an aggregate principal amount not to exceed $50 million at any one time
outstanding, and (E) consisting of Guarantees by Restricted Subsidiaries of JSCE
(other than CCA) of Indebtedness of JSCE and its
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Restricted Subsidiaries under any Credit Agreement or any other Indebtedness of
such Persons for borrowed money; provided that any such Restricted Subsidiary
that Guarantees such Indebtedness under any Credit Agreement or any such other
Indebtedness for borrowed money shall fully and unconditionally Guarantee the
Senior Notes on a senior basis (to the same extent and for only so long as such
Indebtedness under any Credit Agreement or such other Indebtedness for borrowed
money is Guaranteed by such Restricted Subsidiary); provided further that (x)
any such Guarantees of Indebtedness subordinated to the Senior Notes will be
subordinated to such Subsidiary's Guarantee of the Senior Notes, if any, in a
like manner and (y) for purposes of this covenant, a Guarantee by a Restricted
Subsidiary shall not be deemed to exist, and Indebtedness shall not be deemed to
have been Incurred by a Restricted Subsidiary, solely by reason of one or more
security interests in assets of such Restricted Subsidiary having been granted
pursuant to any Credit Agreement (or, in the case of the 1993 Senior Note
Indenture, having been granted to any Person); (ii) Indebtedness (A) of JSCE to
any of its Restricted Subsidiaries that is a Wholly Owned Subsidiary of JSCE, or
of a Restricted Subsidiary to JSCE or to any other Restricted Subsidiary that is
a Wholly Owned Subsidiary of JSCE, (B) of JSCE or any Restricted Subsidiary to
Smurfit Newsprint or (C) of JSCE or any Restricted Subsidiary to any Foreign
Subsidiary in an aggregate principal amount not to exceed $20 million at any one
time outstanding; (iii) Indebtedness issued in exchange for, or the net proceeds
of which are used to refinance or refund, outstanding Indebtedness of JSCE or
any of its Restricted Subsidiaries, other than Indebtedness Incurred under
clauses (i)(A), (B) or (D), (ii)(C), (vi) or (ix) of this paragraph and any
refinancings thereof, in an amount (or, if such new Indebtedness provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, with an original issue price) not to exceed
the amount so exchanged, refinanced or refunded (plus premiums, accrued
interest, fees and expenses); provided that Indebtedness issued in exchange for,
or the proceeds of which are used to refinance or refund, the Senior Notes or
JSCE's Guarantee thereof or other Indebtedness of CCA or JSCE that is pari passu
with, or subordinated in right of payment to, the Senior Notes or JSCE's
Guarantee thereof, as the case may be (other than the Junior Accrual Debentures,
Senior Subordinated Notes and the Subordinated Debentures), shall only be
permitted under this clause (iii) if (A) in case the Indebtedness to be
refinanced is subordinated in right of payment to the Senior Notes or JSCE's
Guarantee thereof, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is issued or
remains outstanding, is expressly made subordinate in right of payment to the
Senior Notes or JSCE's Guarantee thereof, as the case may be, at least to the
extent that the Indebtedness to be refinanced is subordinated to the Senior
Notes or JSCE's Guarantee thereof, as the case may be, (B) in case the Senior
Notes are refinanced in part or the Indebtedness to be refinanced is pari passu
with, or subordinated in right of payment to, the Senior Notes or JSCE's
Guarantee thereof, such new Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to six months after
the Stated Maturity of the Indebtedness to be refinanced (or, if earlier, six
months after the Stated Maturity of the Senior Notes) and the Average Life of
such new Indebtedness is at least equal to the remaining Average Life of the
Indebtedness to be refinanced plus six months (or, if less, the remaining
Average Life of the Senior Notes plus six months), and (C) if the Indebtedness
to be refinanced is Indebtedness of JSCE or CCA, such new Indebtedness Incurred
pursuant to this clause (iii) may not be Indebtedness of any Restricted
Subsidiary of JSCE other than CCA; (iv) Indebtedness (A) in respect of
performance, surety or appeal bonds provided in the ordinary course of business,
(B) under Currency Agreements and Interest Rate Agreements; provided that, in
the case of Currency Agreements that relate to other Indebtedness, such Currency
Agreements do not increase the Indebtedness of JSCE or its Restricted
Subsidiaries outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of JSC or any Restricted Subsidiary of JSCE pursuant to such
agreements, in any case Incurred in connection with the disposition of any
business, assets or Restricted Subsidiary of JSCE, other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Restricted Subsidiary of JSCE for the purpose of financing
such acquisition; (v) Indebtedness in respect of letters of credit and bankers'
acceptances Incurred in the ordinary course of business consistent with past
practice; (vi) Indebtedness of JSCE or
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CCA in an aggregate amount not to exceed $100 million at any one time
outstanding; provided that such Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such Indebtedness is issued or
remains outstanding, (A) is expressly made subordinate in right of payment to
the Senior Notes or JSCE's Guarantee thereof, as the case may be, (B) provides
that no required payments of principal of such Indebtedness by way of sinking
fund, mandatory redemption or otherwise shall be made by JSCE or CCA (including,
without limitation, at the option of the holder thereof other than an option
given to a holder pursuant to an 'asset sale' or 'change of control' provision
that is no more favorable (except with respect to any premium payable) to the
holders of such Indebtedness than the provisions contained in the 'Limitation on
Asset Sales' and 'Repurchase of Senior Notes upon Change of Control' covenants
and such Indebtedness specifically provides that JSCE and CCA will not
repurchase or redeem such Indebtedness pursuant to such provisions prior to
CCA's repurchase of the Senior Notes required to be repurchased by CCA under the
'Limitation on Asset Sales' and 'Repurchase of Senior Notes upon Change of
Control' covenants) at any time prior to the Stated Maturity of the Senior Notes
and (C) after giving effect to the Incurrence of such Indebtedness and the
application of the proceeds therefrom, JSCE's Interest Coverage Ratio would be
at least 1.25:1; (vii) Indebtedness of CCA or JSCE Incurred on or before
December 1, 1994, the proceeds of which are used to pay cash interest on the
Junior Accrual Debentures; (viii) Acquired Indebtedness, provided that, at the
time of the Incurrence thereof, JSCE could Incur at least $1.00 of Indebtedness
under the first paragraph of this 'Limitation on Indebtedness' covenant, and
refinancings thereof; provided that such refinancing Indebtedness may not be
Incurred by any Person other than JSCE, CCA or the Restricted Subsidiary that is
the obligor on such Acquired Indebtedness; (ix) Indebtedness of JSCE or CCA
Incurred to finance, directly or indirectly, capital expenditures of JSCE and
its Restricted Subsidiaries in an aggregate principal amount not to exceed $75
million in each fiscal year of JSCE, and any refinancing of such Indebtedness
(including pursuant to any Capitalized Lease); provided that the amount of
Indebtedness which may be Incurred in any fiscal year of JSCE pursuant to this
clause (ix) shall be increased by the amount of Indebtedness (other than
refinancing Indebtedness) which could have been Incurred in the prior fiscal
year (including by reason of this proviso) of JSCE pursuant to this clause (ix)
but which was not so Incurred; and (x) Indebtedness represented by the
obligations of JSCE or CCA to repurchase shares, or cancel or repurchase options
to purchase shares, of JSC's, a JSC Parent's, JSCE's or CCA's Common Stock held
by employees of JSC, JSCE or any of its Restricted Subsidiaries (or, in the case
of the 1993 Senior Note Indenture, employees of JSCE and its Restricted
Subsidiaries) as set forth in the agreements under which such employees purchase
or hold shares of JSC's, a JSC Parent's, JSCE's or CCA's Common Stock, as such
agreements may be amended; provided that such Indebtedness is subordinated to
the Senior Notes and JSCE's Guarantee thereof, as the case may be, and that no
payment of principal of such Indebtedness may be made while any Senior Notes are
outstanding.
In the case of the Series A Senior Note Indenture and the Series B Senior
Note Indenture, notwithstanding any other provision of this 'Limitation on
Indebtedness' covenant, (i) the maximum amount of Indebtedness that JSCE or any
Restricted Subsidiary may Incur pursuant to this 'Limitation on Indebtedness'
covenant shall not be deemed to be exceeded due solely to fluctuations in the
exchange rates of currencies, (ii) Indebtedness Incurred pursuant to the Credit
Agreement on the Closing Date (and after repaying the Indebtedness to be repaid
pursuant to the Recapitalization Plan (other than the Existing Subordinated Debt
Refinancing) and without giving effect to any exercise of any overallotment
option granted in connection with sales of JSC Common Stock pursuant to clause
(ii) of the definition of 'Recapitalization Plan' and the application of any
proceeds thereof), shall be treated as Incurred immediately after the Closing
Date pursuant to clause (i)(A) or (i)(C), as the case may be, of the second
paragraph of this 'Limitation on Indebtedness' covenant, (iii) for purposes of
calculating the amount of Indebtedness outstanding at any time under clause (i)
of the second paragraph of this 'Limitation on Indebtedness' covenant, no amount
of Indebtedness of JSCE or any Restricted Subsidiary outstanding on the Closing
Date, including the Senior Notes, shall be considered to be outstanding and (iv)
neither JSCE nor CCA may Incur any Indebtedness that is expressly subordinated
to any other Indebtedness of JSCE or CCA, as the case may be, unless such
Indebtedness, by its terms or the terms of any agreement or instrument pursuant
to which such Indebtedness is issued, is also expressly made subordinate to the
Senior Notes or JSCE's Guarantee of the Senior Notes, as the
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case may be, at least to the extent that such Indebtedness is subordinated to
such other Indebtedness; provided that the limitation in clause (iv) above shall
not apply to distinctions between categories of unsubordinated Indebtedness
which exist by reason of (a) any liens or other encumbrances arising or created
in respect of some but not all unsubordinated Indebtedness, (b) intercreditor
agreements between holders of different classes of unsubordinated Indebtedness
or (c) different maturities or prepayment provisions.
In the case of the 1993 Senior Note Indenture, notwithstanding any other
provision of this 'Limitation on Indebtedness' convenant, (i) the maximum amount
of Indebtedness that JSCE or any Restricted Subsidiary may Incur pursuant to
this 'Limitation on Indebtedness' convenant shall not be deemed to be exceeded
due solely to fluctuations in the exchange rates of currencies, (ii)
Indebtedness Incurred pursuant to the Credit Agreement, or represented by the
New Senior Notes, on the Recapitalization Closing Date (and after repaying the
Indebtedness to be repaid pursuant to the Recapitalization Plan (other than the
Existing Subordinated Debt Refinancing) and without giving effect to any
exercise of any overallotment option granted in connection with sales of Common
Stock of JSC pursuant to clause (ii) of the definition of 'Recapitalization
Plan' and the application of any proceeds thereof) shall be treated as Incurred
immediately after the Recapitalization Closing Date pursuant to clause (i)(A) of
the second paragraph of this 'Limitation on Indebtedness' covenant, (iii) for
purposes of calculating the amount of Indebtedness outstanding at any time under
clauses (i)(B) and (i)(D) of the second paragraph of this 'Limitation on
Indebtedness' covenant, no amount of Indebtedness of JSCE or any Restricted
Subsidiary outstanding on the Closing Date shall be considered to be outstanding
and (iv) neither JSCE nor CCA may Incur any Indebtedness that is expressly
subordinated to any other Indebtedness of JSCE or CCA, as the case may be,
unless such Indebtedness, by its terms or the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is also expressly made
subordinate to JSCE Guarantee of the 1993 Senior Notes or the New Senior Notes,
as the case may be, at least to the extent that such Indebtedness is
subordinated to such other Indebtedness; provided that the limitation in clause
(iv) above shall not apply to distinctions between categories of unsubordinated
Indebtedness which exist by reason of (a) any liens or other encumbrances
arising or created in respect of some but not all unsubordinated Indebtedness,
(b) intercreditor agreements between holders of different classes of
unsubordinated Indebtedness or (c) different maturities or prepayment
provisions.
For purposes of determining any particular amount of Indebtedness under
this 'Limitation on Indebtedness' covenant, (1) Indebtedness resulting from
security interests granted with respect to Indebtedness of JSCE or any
Restricted Subsidiary otherwise included in the determination of such particular
amount, and Guarantees (and security interests in respect thereof) of, or
obligations with respect to letters of credit supporting, Indebtedness otherwise
included in the determination of such particular amount shall not be included,
(2) any Liens granted pursuant to the equal and ratable provisions referred to
in the first paragraph or clause (i) of the second paragraph of the 'Limitation
on Liens' covenant shall not be treated as Indebtedness and (3) Indebtedness
permitted under this 'Limitation of Indebtedness' covenant need not be permitted
solely by reference to one provision permitting such Indebtedness but may be
permitted in part by reference to one such provision and in part by reference to
one or more other provisions of this covenant permitting such Indebtedness. For
purposes of determining compliance with this 'Limitation on Indebtedness'
covenant, (x) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described in the above clauses, JSCE,
in its sole discretion, shall classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of such
clauses and (y) the amount of Indebtedness issued at a price that is less than
the principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in conformity with GAAP. (Section 3.03)
LIMITATION ON RESTRICTED PAYMENTS
So long as any of the Senior Notes are outstanding, JSCE will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, (i) declare or
pay any dividend or make any distribution on its Capital Stock (other than
dividends or distributions payable solely in shares of its or such Restricted
Subsidiary's Capital Stock (other than Redeemable Stock) of the same class held
by such holders or in options, warrants or other rights to acquire such shares
of Capital Stock) held by Persons
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other than JSCE or any Restricted Subsidiary that is a Wholly Owned Subsidiary
of JSCE, (ii) purchase, redeem, retire or otherwise acquire for value any shares
of Capital Stock of JSC, a JSC Parent, JSCE or CCA (including options, warrants
or other rights to acquire such shares of Capital Stock) held by Persons other
than JSCE or any Restricted Subsidiary that is a Wholly Owned Subsidiary of
JSCE, (iii) make any voluntary or optional principal payment, or voluntary or
optional redemption, repurchase, defeasance, or other voluntary acquisition or
retirement for value, of (1) Indebtedness of JSC or a JSC Parent, (2)
Indebtedness of CCA that is subordinated in right of payment to the Senior Notes
(other than the Senior Subordinated Notes, the Subordinated Debentures and the
Junior Accrual Debentures) or (3) Indebtedness of JSCE that is subordinated in
right of payment to JSCE's Guarantee of the Senior Notes (other than the
Guarantees of JSCE with respect to the Senior Subordinated Notes, the
Subordinated Debentures and the Junior Accrual Debentures), or (iv) make any
Investment in any Unrestricted Subsidiary (such payments or any other actions
described in clauses (i) through (iv) being collectively 'Restricted Payments')
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing, (B)
JSCE could not Incur at least $1.00 of Indebtedness under the first paragraph of
the 'Limitation on Indebtedness' covenant or (C) the aggregate amount expended
for all Restricted Payments (the amount so expended, if other than in cash, to
be determined in good faith by the Board of Directors of JSCE, whose
determination shall be conclusive and evidenced by a Board Resolution) after the
date of the Indenture shall exceed the sum of (1) 50% of the aggregate amount of
the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated Net
Income is a loss, minus 100% of such amount) of JSCE (determined by excluding
income resulting from the transfers of assets received by JSCE or a Restricted
Subsidiary from an Unrestricted Subsidiary) accrued on a cumulative basis during
the period (taken as one accounting period) beginning on the first day of the
month immediately following the Closing Date and ending on the last day of the
last fiscal quarter preceding the Transaction Date plus (2) the aggregate net
proceeds (including the fair market value of noncash proceeds as determined in
good faith by the Board of Directors of JSCE) received by JSCE or CCA from the
issuance and sale permitted by the Indenture of the Capital Stock of JSCE or CCA
(other than Redeemable Stock) to a Person who is not a Restricted Subsidiary of
JSCE or an Unrestricted Subsidiary of JSCE, including an issuance or sale
permitted by the Indenture for cash or other property upon the conversion of any
Indebtedness of JSCE or CCA subsequent to the Closing Date, or from the issuance
of any options, warrants or other rights to acquire Capital Stock of JSCE or CCA
(in each case, exclusive of any Redeemable Stock or any options, warrants or
other rights that are redeemable at the option of the holder, or are required to
be redeemed, prior to the Stated Maturity of the Senior Notes) plus all amounts
contributed to the capital of JSCE by JSC plus (3) an amount equal to the net
reduction in Investments in Unrestricted Subsidiaries (other than such
Investments made pursuant to clause (v) of the second paragraph of this
'Limitation on Restricted Payments' covenant) resulting from payments of
interest on Indebtedness, dividends, repayments of loans or advances, or other
transfers of assets, in each case to JSCE or any Restricted Subsidiary from
Unrestricted Subsidiaries, or from redesignation of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the definition of
'Investments'), not to exceed in the case of any Unrestricted Subsidiary the
amount of Investments previously made by JSCE or any Restricted Subsidiary in
such Unrestricted Subsidiary plus (4) $25 million.
The foregoing provision shall not take into account, and shall not be
violated by reason of: (i) the payment of any dividend within 60 days after the
date of declaration thereof if, at said date of declaration, such payment would
comply with the foregoing paragraph; (ii) the redemption, repurchase, defeasance
or other acquisition or retirement for value of (A) Indebtedness of JSC or a JSC
Parent, (B) Indebtedness of CCA that is subordinated in right of payment to the
Senior Notes or (C) Indebtedness of JSCE that is subordinated in right of
payment to JSCE's Guarantee of the Senior Notes, including premium, if any, and
accrued and unpaid interest, with the proceeds of, or in exchange for,
Indebtedness Incurred under clause (iii) or (vi) of the second paragraph of the
'Limitation on Indebtedness' covenant; (iii) the payment of dividends on the
Capital Stock of JSCE or CCA, following any initial public offering of Capital
Stock of JSC provided for in the Recapitalization Plan, of up to 6% per annum of
the net proceeds received by JSCE or CCA, as the case may be, from JSC out of
the proceeds of (a) such public offering and (b) the SIBV Investment (and, in
the case of the 1993 Senior Note Indenture, (c) any other sale of Capital Stock
of JSC, JSCE or CCA which is substantially concurrent
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with the public offering referred to in (a)) (net of underwriting discounts and
commissions, if any, but without deducting other fees or expenses therefrom);
(iv) the repurchase, redemption or other acquisition of Capital Stock of JSC, a
JSC Parent, JSCE or CCA in exchange for, or out of the proceeds of a
substantially concurrent offering of, shares of Capital Stock (other than
Redeemable Stock) of JSC, a JSC Parent, JSCE or CCA; (v) the making of
Investments in Unrestricted Subsidiaries in an aggregate amount not to exceed
$25 million in each fiscal year of JSCE; (vi) the acquisition of (A)
Indebtedness of JSC or a JSC Parent, (B) Indebtedness of CCA which is
subordinated in right of payment to the Senior Notes or (C) Indebtedness of JSCE
that is subordinated in right of payment to JSCE's Guarantee of the Senior Notes
in exchange for, or out of the proceeds of, a substantially concurrent offering
of, shares of the Capital Stock of JSC, a JSC Parent, JSCE or CCA (other than
Redeemable Stock); (vii) payments or distributions pursuant to or in connection
with a consolidation, merger or transfer of assets that complies with the
provisions of the Indenture applicable to mergers, consolidations and transfers
of all or substantially all of the property and assets of JSCE or CCA; (viii)
payments to JSC (A) in an aggregate amount not to exceed $2 million per annum to
cover the reasonable expenses of JSC incurred in the ordinary course of business
and (B) in an amount not to exceed the amount believed in good faith by the
Board of Directors of JSCE or CCA, as the case may be, to be necessary or
advisable for the payment of any liability of JSC, JSCE and CCA in connection
with federal, state, local or foreign taxes; (ix) payments to JSC or any
Restricted Subsidiary of JSCE in respect of Indebtedness of JSCE or any
Restricted Subsidiary of JSCE owed to JSCE or another Restricted Subsidiary of
JSCE; (x) distributions and payments required to be made pursuant to the Times
Mirror Agreement or distributions or payments to JSC, to enable JSC to satisfy
its payment obligations under the Times Mirror Agreement; (xi) payments to
Persons who are no longer Employees (as defined in the 1992 Stock Option Plan)
or the beneficiaries or estates of such Persons, as a result of the purchase by
JSC of options issued pursuant to the 1992 Stock Option Plan (or Common Stock
issued upon the exercise of such options) held by such Persons in accordance
with the 1992 Stock Option Plan; provided that such payments do not exceed $4
million in any fiscal year; or payments or distributions to JSC to enable JSC to
make any such payments; or (xii) the payment of pro rata dividends to holders of
Capital Stock of Smurfit Newsprint; provided that, in the case of clauses (ii)
through (vii), (xi) and (xii), no Default or Event of Default shall have
occurred and be continuing or occur as a consequence of the actions or payments
set forth therein. In connection with any purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value of any security which is
not Capital Stock but which is convertible into or exchangeable for Capital
Stock (including options, warrants or other rights to purchase Capital Stock),
such purchase, repurchase, redemption, defeasance or other acquisition or
retirement shall be deemed covered by clause (iii) and not by clause (ii) of the
first paragraph of this 'Limitation on Restricted Payments' covenant if the
Board of Directors of JSCE makes a good faith determination that the value of
the underlying Capital Stock, less any consideration payable by the holder of
such security in connection with such conversion or exchange, is less than the
value of the referenced security. Notwithstanding the foregoing, any amounts
paid pursuant to clause (iii) of this second paragraph of this 'Limitation on
Restricted Payments' covenant shall reduce the amount available for Restricted
Payments under clause (C) of the first paragraph of this 'Limitation on
Restricted Payments' covenant.
Notwithstanding the foregoing, in the event of an issuance of Capital Stock
of CCA or JSCE (or JSC or a JSC Parent to the extent that the proceeds therefrom
are contributed to CCA) and (1) the repurchase, redemption or other acquisition
of Capital Stock out of the proceeds of such issuance as permitted by clause
(iv) above, or (2) the acquisition of Indebtedness that is subordinated in right
of payment to the Senior Notes, as permitted by clause (vi) above, then, in
calculating whether the conditions of clause (C) of the first paragraph of this
'Limitation on Restricted Payments' covenant have been met with respect to any
subsequent Restricted Payments, both the proceeds of such issuance and the
application of such proceeds shall be included under clause (C) of the first
paragraph of this 'Limitation on Restricted Payments' covenant. (Section 3.04)
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
So long as any of the Senior Notes are outstanding, JSCE will not, and will
not permit any Restricted Subsidiary to, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Restricted Subsidiary (other than CCA) to
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(i) pay dividends or make any other distributions permitted by applicable law on
any Capital Stock of such Restricted Subsidiary owned by JSCE or any other
Restricted Subsidiary, (ii) pay any Indebtedness owed to JSCE or any other
Restricted Subsidiary, (iii) make loans or advances to JSCE or any other
Restricted Subsidiary or (iv) transfer, subject to certain exceptions, any of
its property or assets to JSCE or any other Restricted Subsidiary.
The foregoing provision shall not restrict or prohibit any encumbrances or
restrictions: (i) existing in any Credit Agreement, (ii) existing under the
Senior Notes, the Senior Subordinated Notes, the Subordinated Debentures, the
Junior Accrual Debentures, any indenture or agreement related to any of the
foregoing or any agreements in effect on the Closing Date or in any Indebtedness
containing any such encumbrance or restriction that is permitted pursuant to
clause (v) below or in any extensions, refinancings, renewals or replacements of
any of the foregoing; provided that the encumbrances and restrictions in any
such extensions, refinancings, renewals or replacements are not materially less
favorable taken as whole to the Holders than those encumbrances or restrictions
that are then in effect and that are being extended, refinanced, renewed or
replaced; (iii) existing under any Receivables Program or any other agreement
providing for the Incurrence of Indebtedness (or any exhibit, appendix or
schedule to such agreement or other agreement executed as a condition to the
execution of, funding under or pursuant to such agreement); provided that the
encumbrances and restrictions in any such agreement are not materially less
favorable taken as a whole to the Holders than those encumbrances and
restrictions contained in any Credit Agreement as of the Closing Date (or the
Recapitalization Closing Date); (iv) existing under or by reason of applicable
law; (v) existing with respect to any Person or the property or assets of such
Person acquired by JSCE or any Restricted Subsidiary and existing at the time of
such acquisition, which encumbrances or restrictions are not applicable to any
Person or the property or assets of any Person other than such Person or the
property or assets of such Person so acquired; (vi) in the case of clause (iv)
of the first paragraph of this 'Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries' covenant, (A) that restrict in a
customary manner the subletting, assignment or transfer of any property or asset
that is a lease, license, conveyance or contract or similar property or asset,
(B) existing by virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of JSCE or any
Restricted Subsidiary not otherwise prohibited by the Indenture or (C) arising
or agreed to in the ordinary course of business and that do not, individually or
in the aggregate, detract from the value of property or assets of JSCE or any
Restricted Subsidiary in any manner material to JSCE and its Restricted
Subsidiaries taken as a whole; or (vii) with respect to a Restricted Subsidiary
and imposed pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or property and
assets of, such Restricted Subsidiary. Nothing contained in this 'Limitation on
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries'
covenant shall prevent JSCE or any Restricted Subsidiary from (1) entering into
any agreement permitting or providing for the incurrence of Liens otherwise
permitted in the 'Limitation on Liens' covenant or (2) restricting the sale or
other disposition of property or assets of JSCE or any of its Subsidiaries that
secure Indebtedness of JSCE or any of its Subsidiaries. (Section 3.05)
LIMITATION ON THE ISSUANCE OF CAPITAL STOCK OF JSCE AND RESTRICTED SUBSIDIARIES
Under the terms of the Indentures, JSCE will not and will not permit any
Restricted Subsidiary (other than CCA), directly or indirectly, to issue or sell
any shares of its Capital Stock (including options, warrants or other rights to
purchase shares of such Capital Stock) except (i) to JSCE or another Restricted
Subsidiary that is a Wholly Owned Subsidiary of JSCE, (ii) if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary for purposes of the Indenture, (iii)
if the Net Cash Proceeds from such issuance or sale are applied, to the extent
required to be applied, pursuant to the 'Limitation on Asset Sales' covenant or
if such issuance or sale does not constitute an 'Asset Sale,' (iv) issuances or
sales to foreign nationals of shares of the Capital Stock of Foreign
Subsidiaries, to the extent mandated by applicable foreign law, or (v) issuances
or sales of Capital Stock by JSCE to JSC. (Section 3.06)
LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
Under the terms of the Indentures, JSCE will not, and will not permit any
Restricted Subsidiary of JSCE to, directly or indirectly, enter into, renew or
extend any transaction (including, without
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limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of JSC or with any Affiliate of JSCE,
except upon fair and reasonable terms no less favorable to JSCE or such
Restricted Subsidiary of JSCE than could be obtained, at the time of such
transaction or at the time of the execution of the agreement providing therefor,
in a comparable arm's-length transaction with a Person that is not such a holder
or an Affiliate.
The foregoing limitation does not limit, and shall not apply to: (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which JSCE or a Restricted Subsidiary delivers to
the Trustee a written opinion of a nationally recognized investment banking firm
or a nationally recognized accounting firm stating that the transaction is fair
or, in the case of an opinion of a nationally recognized accounting firm,
reasonable or fair to JSCE or such Restricted Subsidiary from a financial point
of view; (ii) any transaction among JSCE and any Restricted Subsidiaries or
among Restricted Subsidiaries; (iii) the payment of reasonable and customary
regular fees to directors of JSCE or any Restricted Subsidiary who are not
employees of JSCE or any Restricted Subsidiary; (iv) any payments or other
transactions pursuant to any tax-sharing agreement between JSCE, CCA and JSC or
any other Person with which JSCE is required or permitted to file a consolidated
tax return or with which JSCE is or could be part of a consolidated group for
tax purposes; (v) any Restricted Payments not prohibited by the 'Limitation on
Restricted Payments' covenant; (vi) the provisions of management, financial and
operational services by JSCE and its Subsidiaries to Affiliates of JSCE in which
JSCE or its Subsidiaries have Investments and the payment of compensation for
such services; provided, that the Board of Directors of JSCE has determined that
the provision of such services is in the best interests of JSCE and its
Subsidiaries; (vii) any transaction required by the Times Mirror Agreement; or
(viii) any transaction contemplated by the terms of the Recapitalization Plan.
(Section 3.07)
LIMITATION ON LIENS
Under the terms of the Indentures, JSCE will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien on
any Principal Property, or any shares of Capital Stock or Indebtedness of any
Restricted Subsidiary, without making effective provision for all of the Senior
Notes and all other amounts due under the Indenture to be directly secured
equally and ratably with (or prior to) the obligation or liability secured by
such Lien for so long as such Lien affects such Principal Property, shares of
Capital Stock or Indebtedness unless, after giving effect thereto, the aggregate
amount of any Indebtedness so secured, plus, the Attributable Indebtedness for
all sale-leaseback transactions restricted as described in the 'Limitation on
Sale-Leaseback Transactions' covenant, does not exceed 10% of Adjusted
Consolidated Net Tangible Assets.
The foregoing limitation does not apply to, and any computation of secured
Indebtedness under such limitation shall exclude: (i) Liens securing obligations
under (A) any Credit Agreement and (B) any Receivables Programs (and, in the
case of the 1993 Senior Note Indenture, (C) the Secured Notes for so long as
they remain outstanding); (ii) other Liens existing on the Closing Date; (iii)
Liens securing Indebtedness of Restricted Subsidiaries (other than Acquired
Indebtedness and refinancings thereof); (iv) Liens securing Indebtedness
Incurred under clause (iv) or (v) of the second paragraph of the 'Limitation on
Indebtedness' covenant; (v) Liens granted in connection with the extension,
renewal or refinancing, in whole or in part, of any Indebtedness described in
clauses (i) through (iv) above; provided that with respect to clauses (ii) and
(iii) the amount of Indebtedness secured by such Lien is not increased thereby;
and provided further that the extension, renewal or refinancing of Indebtedness
of JSCE may not be secured by Liens on assets of any Restricted Subsidiary
(other than CCA) other than to the extent the Indebtedness being extended,
renewed or refinanced was at any time previously secured by Liens on assets of
such Restricted Subsidiary; (vi) Liens with respect to Acquired Indebtedness
permitted under clause (viii) of the second paragraph of the 'Limitation on
Indebtedness' covenant and permitted refinancings thereof; provided that such
Liens do not extend to or cover any property or assets of JSCE or any Subsidiary
of JSCE other than the property or assets of the Subsidiary acquired; (vii)
Liens securing the Senior Subordinated Notes, the Subordinated Debentures, the
Junior Accrual Debentures or the other Senior Notes, in each case to the extent
required to be
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incurred pursuant to the terms of the indentures governing such Indebtedness; or
(viii) Permitted Liens. (Section 3.08)
LIMITATION ON SALE-LEASEBACK TRANSACTIONS
Under the terms of the Indentures, JSCE will not, and will not permit any
Restricted Subsidiary to, enter into any sale-leaseback transaction involving
any Principal Property, unless the aggregate amount of all Attributable
Indebtedness with respect to such transactions, plus all Indebtedness secured by
Liens on Principal Properties (excluding secured Indebtedness that is excluded
as described in the 'Limitation on Liens' covenant), does not exceed 10% of
Adjusted Consolidated Net Tangible Assets.
The foregoing restriction does not apply to, and any computation of
Attributable Indebtedness under such limitation shall exclude, any
sale-leaseback transaction if: (i) the lease is for a period, including renewal
rights, of not in excess of three years; (ii) the sale or transfer of the
Principal Property is entered into prior to, at the time of, or within 12 months
after the later of the acquisition of the Principal Property or the completion
of construction thereof; (iii) the lease secures or relates to industrial
revenue or pollution control bonds; (iv) the transaction is between JSCE and any
Restricted Subsidiary or between Restricted Subsidiaries; or (v) JSCE or such
Restricted Subsidiary, within 12 months after the sale of any Principal Property
is completed, applies an amount not less than the net proceeds received from
such sale to the retirement of unsubordinated Indebtedness, to Indebtedness of a
Restricted Subsidiary (other than CCA) or to the purchase of other property that
will constitute Principal Property or improvements thereto. (Section 3.09)
LIMITATION ON ASSET SALES
Under the terms of the Indentures, in the event and to the extent that the
Net Cash Proceeds received by JSC, JSCE or any of its Restricted Subsidiaries
from one or more Asset Sales occurring on or after the Closing Date in any
period of 12 consecutive months (other than Asset Sales by JSC, JSCE or any
Restricted Subsidiary to JSCE or another Restricted Subsidiary) exceed 10% of
Adjusted Consolidated Net Tangible Assets in any one fiscal year (determined as
of the date closest to the commencement of such 12-month period for which a
consolidated balance sheet of JSCE has been prepared), then JSCE shall or shall
cause the relevant Restricted Subsidiary to (i) within 12 months (or, in the
case of Asset Sales of plants or facilities, 24 months) after the date Net Cash
Proceeds so received exceed 10% of Adjusted Consolidated Net Tangible Assets in
any one fiscal year (determined as of the date closest to the commencement of
such 12-month period for which a balance sheet of JSCE and its Subsidiaries has
been prepared) (A) apply an amount equal to such excess Net Cash Proceeds to
repay unsubordinated Indebtedness of CCA or JSCE, make a dividend or
distribution to JSCE for application by JSCE to repay unsubordinated
Indebtedness of JSCE, or repay Indebtedness of any Restricted Subsidiary of
JSCE, in each case owing to a Person other than JSCE or any of its Restricted
Subsidiaries or (B) invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement committing to so
invest within 12 months after the date of such agreement), in property or assets
of a nature or type or which will be used in a business (or in a company having
property and assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the business of,
JSCE and its Restricted Subsidiaries existing on the date of such Investment (as
determined in good faith by the Board of Directors of JSCE, whose determination
shall be conclusive and evidenced by a Board Resolution) and (ii) apply (no
later than the end of such 12-month period or 24-month period, as the case may
be, referred to in clause (i)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (i)) as provided in the following paragraphs of this
'Limitation on Asset Sales' covenant. The amount of such excess Net Cash
Proceeds required to be applied (or to be committed to be applied) during such
12-month period or 24-month period, as the case may be, as set forth in clause
(A) or (B) of the preceding sentence and neither applied nor committed to be
applied as set forth above by the end of such period shall constitute 'Excess
Proceeds.'
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below) totals at least $10 million, CCA must, not later than the fifteenth
Business Day of such month, make an offer (an 'Excess Proceeds Offer') to
purchase from the Holders of the Senior Notes on a pro rata basis an aggregate
principal amount of Senior Notes equal to the Excess Proceeds on such date, at a
purchase price equal to 101%
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of the principal amount of such Senior Notes, plus, in each case, accrued
interest (if any) to the date of purchase (the 'Excess Proceeds Payment').
Notwithstanding the foregoing, (i) to the extent that any or all of the Net
Cash Proceeds of any Asset Sale are prohibited or delayed by applicable local
law from being repatriated to the United States of America, the portion of such
Net Cash Proceeds so affected will not be required to be applied pursuant to
this 'Limitation on Asset Sales' covenant but may be retained for so long, but
only for so long, as the applicable local law will not permit repatriation to
the United States of America (under the Indenture JSCE will agree to promptly
take or cause the relevant Restricted Subsidiary to promptly take all reasonable
actions required by the applicable local law and within JSCE's control to permit
such repatriation) and once such repatriation of any such affected Net Cash
Proceeds is permitted under the applicable local law, such repatriation will be
immediately effected and such repatriated Net Cash Proceeds will be applied in
the manner set forth in this 'Limitation on Asset Sales' covenant as if such
Asset Sale had occurred on the date of repatriation; and (ii) to the extent that
the Board of Directors of JSCE has determined in good faith that repatriation of
any or all of the Net Cash Proceeds would have an adverse tax or other
consequence to JSCE, the Net Cash Proceeds so affected may be retained outside
the United States of America for so long as such adverse tax or other
consequence would continue.
CCA shall commence an Excess Proceeds Offer by mailing a notice to the
Trustee and each Holder stating: (i) that the Excess Proceeds Offer is being
made pursuant to this 'Limitation on Asset Sales' covenant and that all Senior
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the 'Excess Proceeds Payment Date'); (iii) that any Senior Note not tendered
will continue to accrue interest; (iv) that, unless CCA defaults in the payment
of the Excess Proceeds Payment, any Senior Note accepted for payment pursuant to
the Excess Proceeds Offer shall cease to accrue interest after the Excess
Proceeds Payment Date; (v) that Holders electing to have a Senior Note purchased
pursuant to the Excess Proceeds Offer will be required to surrender the Senior
Note together with the form entitled 'Option of the Holder to Elect Purchase' on
the reverse side of the Senior Note completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the Business
Day immediately preceding the Excess Proceeds Payment Date; (vi) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the third Business Day immediately preceding
the Excess Proceeds Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Senior
Notes delivered for purchase and a statement that such Holder is withdrawing his
election to have such Senior Notes purchased; and (vii) that Holders whose
Senior Notes are being purchased only in part will be issued new Senior Notes
equal in principal amount to the unpurchased portion of the Senior Notes
surrendered; provided that each Senior Note purchased and each new Senior Note
issued shall be in an original principal amount of $1,000 or integral multiples
thereof.
On the Excess Proceeds Payment Date, CCA shall (i) accept for payment on a
pro rata basis Senior Notes or portions thereof tendered pursuant to the Excess
Proceeds Offer; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Senior Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the relevant Trustee all Senior Notes or
portions thereof so accepted together with an Officers' Certificate specifying
the Senior Notes or portions thereof accepted for payment by CCA. The Paying
Agent shall promptly mail to the Holders of Senior Notes so accepted payment in
an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Senior Note equal in principal
amount to any unpurchased portion of the Senior Notes surrendered; provided that
each Senior Notes purchased and each new Senior Notes issued shall be in an
original principal amount of $1,000 or integral multiples thereof. CCA will
publicly announce the results of the Excess Proceeds Offer as soon as
practicable after the Excess Proceeds Payment Date. For purposes of this
'Limitation on Asset Sales' covenant, the Trustee shall act as the Paying Agent.
CCA will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that such Excess Proceeds are received
by CCA under this 'Limitation on Asset Sales' covenant and CCA is
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required to repurchase Senior Notes as described above and CCA may modify any of
the foregoing provisions of this 'Limitation on Asset Sales' covenant to the
extent it is advised by independent counsel that such modification is necessary
or appropriate in order to ensure such compliance. (Section 3.10)
REPURCHASE OF SENIOR NOTES UPON CHANGE OF CONTROL
(a) In the event of a Change of Control, each Holder shall have the right
to require the repurchase of its Senior Notes by CCA in cash pursuant to the
offer described below (the 'Change of Control Offer') at a purchase price equal
to 101% of the principal amount thereof, plus accrued interest (if any) to the
date of purchase (the 'Change of Control Payment'). Prior to the mailing of the
notice to Holders provided for in the succeeding paragraph, but in any event
within 30 days following any Change of Control, CCA covenants to (i) (A) repay
in full all unsubordinated Indebtedness of CCA or make a dividend or
distribution to JSCE for application by JSCE to repay in full all unsubordinated
Indebtedness of JSCE or (B) offer to repay in full all such unsubordinated
Indebtedness of either JSCE or CCA and to repay such unsubordinated Indebtedness
of each holder of such unsubordinated Indebtedness who has accepted such offer
or (ii) obtain the requisite consents, if any, under the instruments governing
any such unsubordinated Indebtedness of JSCE or CCA to permit the repurchase of
the Senior Notes as provided for in the succeeding paragraph. CCA shall first
comply with the covenant in the preceding sentence before it shall be required
to repurchase Senior Notes pursuant to this 'Repurchase of Senior Notes upon
Change of Control' covenant.
(b) Within 30 days of the Change of Control, CCA shall mail a notice to the
Trustee and each Holder stating: (i) that a Change of Control has occurred, that
the Change of Control Offer is being made pursuant to this 'Repurchase of Senior
Notes upon Change of Control' covenant and that all Senior Notes validly
tendered will be accepted for payment; (ii) the purchase price and the date of
purchase (which shall be a Business Day no earlier than 30 days nor later than
60 days from the date such notice is mailed) (the 'Change of Control Payment
Date'); (iii) that any Senior Notes not tendered will continue to accrue
interest; (iv) that, unless CCA defaults in the payment of the Change of Control
Payment, any Senior Notes accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control Payment Date;
(v) that Holders electing to have any Senior Notes or portion thereof purchased
pursuant to the Change of Control Offer will be required to surrender such
Senior Notes, together with the form entitled 'Option of the Holder to Elect
Purchase' on the reverse side of such Senior Notes completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the Business Day immediately preceding the Change of Control Payment Date; (vi)
that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of such Holder, the
principal amount of Senior Notes delivered for purchase and a statement that
such Holder is withdrawing his election to have such Senior Notes purchased; and
(vii) that Holders whose Senior Notes are being purchased only in part will be
issued new Senior Notes equal in principal amount to the unpurchased portion of
the Senior Notes surrendered; provided that each Senior Note purchased and each
new Senior Note issued shall be in an original principal amount of $1,000 or
integral multiples thereof.
(c) On the Change of Control Payment Date, CCA shall: (i) accept for
payment Senior Notes or portions thereof tendered pursuant to the Change of
Control Offer; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Senior Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee, all Senior Notes or portions
thereof so accepted together with an Officers' Certificate specifying the Senior
Notes or portions thereof accepted for payment by CCA. The Paying Agent shall
promptly mail, to the Holders of Senior Notes so accepted, payment in an amount
equal to the purchase price, and the Trustee shall promptly authenticate and
mail to such Holders a new Senior Notes equal in principal amount to any
unpurchased portion of the Senior Notes surrendered; provided that each Senior
Notes purchased and each new Senior Note issued shall be in an original
principal amount of $1,000 or integral multiples thereof. CCA will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of
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Control Payment Date. For purposes of this 'Repurchase of Senior Notes upon
Change of Control' covenant, the Trustee shall act as Paying Agent.
(d) CCA will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in the event that a Change of Control occurs under
this 'Repurchase of Senior Notes upon Change of Control' covenant and CCA is
required to repurchase Senior Notes as described above and CCA may modify any of
the foregoing provisions of this 'Repurchase of Senior Notes upon Change of
Control' covenant to the extent it is advised by independent counsel that such
modification is necessary or appropriate in order to ensure such compliance.
(Section 3.18)
If CCA is unable to repay all of its unsubordinated Indebtedness and is
also unable to obtain the consents of its unsubordinated creditors (and/or of
the holders of other Indebtedness, if any, of CCA or JSCE outstanding at the
time of a Change of Control whose consent would be so required) to permit the
repurchase of Senior Notes either pursuant to clause (i)(B) or clause (ii) of
the first paragraph of the foregoing covenant, then CCA will have breached such
covenant. This breach will constitute an Event of Default under the Indenture if
it continues for a period of 30 consecutive days after written notice is given
to CCA by the Trustee or the holders of at least 25% in aggregate principal
amount of the Senior Notes outstanding. See ' -- Events of Default.' In
addition, the failure by CCA to repurchase Senior Notes at the conclusion of the
Change of Control Offer will constitute an Event of Default without any waiting
period or notice requirements. JSCE has guaranteed all payments due on the
Senior Notes, including those due by reason of the acceleration thereof
following the occurrence of an Event of Default. This obligation of JSCE is not
subject to any waiting period or notice requirement once such an acceleration
has occurred; as discussed above, however, in certain circumstances there are
notice and waiting period requirements that must be satisfied before CCA's
breach of the above covenant constitutes an Event of Default.
There can be no assurances that CCA (or JSCE) will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of the Senior Notes) required by the foregoing covenant
and similar provisions contained in the Senior Subordinated Notes, the
Subordinated Debentures, the Junior Accrual Debentures, any Credit Agreement and
the Secured Notes (as well as in any other indebtedness which might be
outstanding at the time). Although there is some variation in the definition of
'Change of Control' among such different classes of debt, there is substantial
overlap. In any event, the above covenant requiring CCA to repurchase the Senior
Notes will, unless the consents referred to above are obtained, require CCA and
JSCE to offer to repay or repay all indebtedness outstanding under any Credit
Agreement and the Secured Notes, and any other indebtedness then outstanding
which by its terms prohibits such repurchases of the Senior Notes, either prior
to or concurrently with such repurchases.
EVENTS OF DEFAULT
The following events will be defined as 'Events of Default' in the
Indenture: (a) CCA defaults in the payment of principal of (or premium, if any,
on) any Senior Notes when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise; (b) CCA defaults in the payment of
interest on any Senior Notes when the same becomes due and payable, and such
default continues for a period of 30 days; (c) JSCE or CCA defaults in the
performance of or breaches any other covenant or agreement of JSCE or CCA in the
Indenture or under the Senior Notes and such default or breach continues for a
period of 30 consecutive days after written notice by the Trustee or the Holders
of 25% or more in aggregate principal amount of the Series A Senior Notes and
the Series B Senior Notes then outstanding taken together as one class or, in
the case of any such default or breach under only one Indenture, 25% or more in
aggregate principal amount of the Series A Senior Notes or the Series B Senior
Notes, as the case may be, then outstanding, or, in the case of the 1993 Senior
Notes, written notice by the Trustee or Holders of 25% or more in the aggregate
principal amount of the 1993 Senior Notes; (d) there occurs with respect to any
issue or issues of Indebtedness of JSCE, CCA and/or one or more of their
Significant Subsidiaries having an outstanding principal amount of $50 million
or more individually or $100 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, an event of default that has caused the holder thereof to
declare such Indebtedness to be due and payable prior to its Stated Maturity and
such
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Indebtedness has not been discharged in full or such acceleration has not been
rescinded or annulled within 30 days of such acceleration; (e) any final
judgment or order (not covered by insurance) for the payment of money in excess
of $50 million individually or $100 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against JSCE,
CCA or any of their Significant Subsidiaries and shall not be paid or
discharged, and there shall be any period of 30 consecutive days following entry
of the final judgment or order in excess of $50 million individually or that
causes the aggregate amount for all such final judgments or orders outstanding
and not paid or discharged against all such Persons to exceed $100 million
during which a stay of enforcement of such final judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; (f) a court having
jurisdiction in the premises enters a decree or order for (i) relief in respect
of JSCE, CCA or any of their Significant Subsidiaries in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, (ii) appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of JSCE, CCA or any of
their Significant Subsidiaries or for all or substantially all of the property
and assets of JSCE, CCA or any of their Significant Subsidiaries or (iii) the
winding up or liquidation of the affairs of JSCE, CCA or any of their
Significant Subsidiaries and, in each case, such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; (g) JSCE, CCA or any
of their Significant Subsidiaries (i) commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
under any such law, (ii) consents to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of JSCE, CCA or any of their Significant Subsidiaries or for all or
substantially all of the property and assets of JSCE, CCA or any of their
Significant Subsidiaries or (iii) effects any general assignment for the benefit
of creditors; (h) JSCE, CCA and/or one or more of their Significant Subsidiaries
fails to make (i) at the final (but not any interim) fixed maturity of any issue
of Indebtedness a principal payment of $50 million or more or (ii) at the final
(but not any interim) fixed maturity of more than one issue of such Indebtedness
principal payments aggregating $100 million or more and, in the case of clause
(i), such defaulted payment shall not have been made, waived or extended within
30 days of the payment default and, in the case of clause (ii), all such
defaulted payments shall not have been made, waived or extended within 30 days
of the payment default that causes the amount described in clause (ii) to exceed
$100 million; or (i) the non-payment of any two or more items of Indebtedness of
JSCE, CCA and/or one or more of their Significant Subsidiaries that would
constitute at the time of such nonpayments, but for the individual amounts of
such Indebtedness, an Event of Default under clause (d) or clause (h) above, or
both, and which items of Indebtedness aggregate $100 million or more. (Section
5.01)
If an Event of Default (other than an Event of Default specified in clause
(f) or (g) above that occurs with respect to JSCE or CCA) occurs and is
continuing under both the Series A Senior Note Indenture and the Series B Senior
Note Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Series A Senior Notes and Series B Senior Notes then
outstanding taken together as one class or, in the case of any such Event of
Default which occurs and is continuing under only one Indenture, 25% in
aggregate principal amount of the Series A Senior Notes or the Series B Senior
Notes, as the case may be, then outstanding, by written notice to CCA (and to
the Trustee if such notice is given by the Holders) (or, in the case of the 1993
Senior Note Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the 1993 Senior Notes, then outstanding, by written notice
to CCA (and to the Trustee if such notice is given by the Holders)) (the
'Acceleration Notice'), may, and the Trustee at the request of the Holders
shall, declare the entire unpaid principal of, premium, if any, and accrued
interest on the Senior Notes to be immediately due and payable. Upon a
declaration of acceleration, such principal of, premium, if any, and accrued
interest shall be immediately due and payable. In the event of a declaration of
acceleration because an Event of Default set forth in clause (d), (h) or (i)
above has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (d), (h) or (i) shall be remedied, cured by
JSCE or CCA or waived by the holders of the relevant Indebtedness within 60 days
after the declaration of acceleration with respect thereto. If an Event of
Default specified in clause (f) or (g) above occurs with respect to JSCE or CCA,
all unpaid principal of, premium, if any, and accrued interest on the Senior
Notes then outstanding shall
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ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder. The Holders of at least a
majority in principal amount of the outstanding Series A Senior Notes and Series
B Senior Notes taken together as one class (or, in the case of any default under
the respective Indenture relating to the Series A Senior Notes or the Series B
Senior Notes, then a majority in principal amount of the outstanding Series A
Senior Notes or Series B Senior Notes, as the case may be) (or, in the case of
the 1993 Senior Note Indenture, the Holders of at least a majority in aggregate
principal amount of the 1993 Senior Notes then outstanding), by written notice
to JSCE, CCA and to the Trustee, may waive all past defaults and rescind and
annul a declaration of acceleration and its consequences if (i) all existing
Events of Default, other than the nonpayment of the principal of, premium, if
any, and interest on the Senior Notes that have become due solely by such
declaration of acceleration, have been cured or waived and (ii) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction. (Section 5.02) For information as to the waiver of defaults, see
' -- Modification and Waiver.'
As a result of the foregoing voting provisions relating to Events of
Default under the Series B Senior Note Indenture, Holders of Series B Senior
Notes even if acting unanimously may not be able to (i) declare a default under
the Series B Senior Note Indenture following a default in the performance of or
any breach of covenants or agreements of JSCE or CCA as set forth in clause (c)
above, or (ii) request acceleration of the principal of, premium, if any, and
accrued interest on, the Series B Senior Notes if an Event of Default occurs.
The Holders of at least a majority in aggregate principal amount of the
outstanding Senior Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of Senior Notes not joining in the
giving of such direction. (Section 5.05) A Holder may not pursue any remedy with
respect to the Indenture or the Senior Notes unless: (i) the Holder gives the
Trustee written notice of a continuing Event of Default; (ii) the Holders of at
least 25% in aggregate principal amount of outstanding Senior Notes make a
written request to the Trustee to pursue the remedy; (iii) such Holder or
Holders offer the Trustee indemnity satisfactory to the Trustee against any
costs, liability or expense; (iv) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity; and (v)
during such 60-day period, the Holders of a majority in aggregate principal
amount of the outstanding Senior Notes do not give the Trustee a direction that
is inconsistent with the request. (Section 5.06) However, such limitations do
not apply to the right of any Holder of a Senior Note to receive payment of the
principal of, premium, if any, or interest on, such Senior Note or to bring suit
for the enforcement of any such payment, on or after the due date expressed in
the Senior Notes which right shall not be impaired or affected without the
consent of the Holder. (Section 5.07) For purposes of the foregoing paragraph,
actions that may be taken by Holders of at least a majority or 25% in aggregate
principal amount of the outstanding Senior Notes may only be taken by Holders of
at least a majority or 25% (as the case may be) in aggregate principal amount of
the Series A Senior Notes and the Series B Senior Notes taken together as one
class or, in the case of any remedy which relates solely to one Indenture or one
class of Senior Notes, by Holders of at least a majority or 25% (as the case may
be) in aggregate principal amount of the Series A Senior Notes, the Series B
Senior Notes or the 1993 Senior Notes as the case may be. (Sections 5.04, 5.05
and 5.06)
The Indentures require certain officers of JSCE and CCA to certify, on or
before a date not more than 90 days after the end of each fiscal year, that a
review has been conducted of the activities of JSCE and CCA and their
Subsidiaries and JSCE's and CCA's and their Subsidiaries' performance under the
Indenture and that JSCE and CCA have fulfilled all obligations thereunder, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default and the nature and status thereof. JSCE and CCA
will also be obligated to notify the Trustee of any default or defaults in the
performance of any covenants or agreements under the Indenture. (Section 3.15)
CONSOLIDATION, MERGER AND SALE OF ASSETS
Neither JSCE nor CCA shall consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an
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entirety in one transaction or a series of related transactions) to, any Person
(other than a Restricted Subsidiary that is a Wholly Owned Subsidiary of JSCE
with a positive net worth; provided that, in connection with any merger of JSCE
or CCA with a Restricted Subsidiary that is a Wholly Owned Subsidiary of JSCE,
no consideration (other than common stock in the surviving Person, JSCE or CCA)
shall be issued or distributed to the stockholders of JSCE) unless: (i) JSCE or
CCA shall be the continuing Person, or the Person (if other than JSCE or CCA)
formed by such consolidation or into which JSCE or CCA is merged or that
acquired or leased such property and assets of JSCE or CCA shall be a
corporation organized and validly existing under the laws of the United States
of America or any jurisdiction thereof and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, all of the
obligations of JSCE or CCA, as the case may be, on all of the Senior Notes and
under the Indenture; (ii) immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing; (iii)
immediately after giving effect to such transaction on a pro forma basis, the
Interest Coverage Ratio of the continuing Person continuing as, or becoming the
successor, obligor on the Senior Notes or the Guarantee is at least 1:1, or, if
less, equal to the Interest Coverage Ratio of JSCE or CCA, as the case may be,
immediately prior to such transaction; provided that, if the Interest Coverage
Ratio of JSCE or CCA, as the case may be, before giving effect to such
transaction is within the range set forth in column (A) below, then the pro
forma Interest Coverage Ratio of the continuing Person becoming the successor
obligor of the Senior Notes shall be at least equal to the lesser of (1) the
ratio determined by multiplying the percentage set forth in column (B) below by
the Interest Coverage Ratio of JSCE or CCA, as the case may be, prior to such
transaction and (2) the ratio set forth in column (C) below:
<TABLE>
<CAPTION>
(A) (B) (C)
--- --- ------
<S> <C> <C>
1.11:1 to 1.99:1................................................................ 90% 1.5:1
2.00:1 to 2.99:1................................................................ 80% 2.1:1
3.00:1 to 3.99:1................................................................ 70% 2.4:1
4.00:1 or more.................................................................. 60% 2.5:1
</TABLE>
and provided further that, if the pro forma Interest Coverage Ratio of JSCE, CCA
or any Person becoming the successor obligor of the Senior Notes, as the case
may be, is 3:1 or more, the calculation in the preceding proviso shall be
inapplicable and such transaction shall be deemed to have complied with the
requirements of this clause (iii); (iv) immediately after giving effect to such
transaction on a pro forma basis, JSCE, CCA or any Person becoming the successor
obligor of the Senior Notes shall have a Consolidated Net Worth equal to or
greater than the Consolidated Net Worth of JSCE or CCA, as the case may be,
immediately prior to such transaction; and (v) JSCE or CCA, as the case may be,
delivers to the Trustee an Officers' Certificate (attaching the arithmetic
computations to demonstrate compliance with clauses (iii) and (iv)) and Opinion
of Counsel, in each case stating that such consolidation, merger or transfer and
such supplemental indenture comply with this provision and that all conditions
precedent provided for herein relating to such transaction have been complied
with (in no event, however, shall such Opinion of Counsel cover financial
ratios, the solvency of any Person or any other financial or statistical data or
information); provided, however, that clauses (iii) and (iv) above do not apply
if, in the good faith determination of the Board of Directors of JSCE or CCA, as
the case may be, whose determination shall be evidenced by a Board Resolution,
the principal purpose of such transaction is to change the state of
incorporation of JSCE or CCA, as the case may be; and provided further that any
such transaction shall not have as one of its purposes the evasion of the
foregoing limitations.
JSCE shall be released from all of its obligations under its Guarantee of
the Senior Notes and the Indenture if the purchaser of Capital Stock of CCA
having a majority of the voting rights thereunder, or the parent of CCA (other
than JSCE) following a consolidation or merger of CCA, satisfies the
requirements of clauses (iii) and (iv) of the preceding sentence with respect to
JSCE.
Notwithstanding the foregoing, nothing in clause (ii), (iii), (iv) or (v)
above shall prevent the occurrence of (i) a merger or consolidation of JSCE and
CCA, or either of their respective successors, (ii) the sale of all or
substantially all of the assets of CCA to JSCE, (iii) the sale of all or
substantially all of the assets of JSCE to CCA or (iv) the assumption by JSCE of
the Indebtedness represented by the Senior Notes. (Section 4.01)
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In the event (i) JSCE merges into CCA and (ii) in connection therewith a
direct or indirect Wholly Owned Subsidiary of JSC ('Interco'), of which CCA is
at such time a direct or indirect Wholly Owned Subsidiary, (x) guarantees the
obligations of CCA on the Senior Notes on the same terms and to the same extent
as JSCE had guaranteed such obligations prior to the aforesaid merger, and (y)
assumes all obligations of JSCE set forth in the Indenture (without giving
effect to the effect of the aforesaid merger on such obligations) (collectively,
the 'Substitution Transaction') then, notwithstanding anything to the contrary
in the Indenture, upon delivery of an Officers' Certificate to the effect that
the foregoing has occurred and the execution and delivery by CCA and Interco of
a supplemental indenture evidencing such merger and guarantee and assumption,
and without regard to the requirements set forth in clauses (i) through (v) of
the first paragraph under 'Consolidation, Merger and Sale of Assets', (a) all
references in the Indenture to 'CCA' shall continue to refer to CCA, as the
survivor in such merger, (b) all references to 'JSCE' and to 'JSCE's guarantee'
shall refer to Interco and to Interco's guarantee contemplated by clause (ii)
above, respectively; and (c) no breach or default under the Indenture shall be
deemed to have occurred solely by reason of the Substitution Transaction.
(Section 4.03)
DEFEASANCE
Defeasance and Discharge. The Indentures provide that JSCE and CCA will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Senior Notes on the 123rd day after the deposit referred to
below, and the provisions of the Indenture will no longer be in effect with
respect to the Senior Notes or JSCE's Guarantee of the Senior Notes (except for,
among other matters, certain obligations to register the transfer or exchange of
the Senior Notes, to replace stolen, lost or mutilated Senior Notes to maintain
paying agencies and to hold monies for payment in trust) if, among other things,
(A) CCA has deposited with the Trustee, in trust, money and/or U.S. Government
Obligations that through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, premium, if any, and accrued interest on the
outstanding Senior Notes on the Stated Maturity of such payments in accordance
with the terms of the Indenture and the Senior Notes (B) JSCE or CCA has
delivered to the Trustee (i) either an Opinion of Counsel to the effect that
Holders will not recognize income, gain or loss for federal income tax purposes
as a result of CCA's exercise of its option under this 'Defeasance' provision
and will be subject to federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred, which Opinion of Counsel must be
accompanied by a ruling of the Internal Revenue Service to the same effect
unless there has been a change in applicable federal income tax law after the
date of the Indenture such that a ruling is no longer required or a ruling
directed to the Trustee received from the Internal Revenue Service to the same
effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit, the trust fund will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15.6-A of the New York Debtor and
Creditor Law, (C) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or lapse of
time or both would become an Event of Default, shall have occurred and be
continuing on the date of such deposit or during the period ending on the 123rd
day after the date of such deposit, and such deposit shall not result in a
breach or violation of, or constitute a default under, any other agreement or
instrument to which JSCE or CCA is a party or by which JSCE or CCA is bound, and
(D) if at such time the Senior Notes are listed on a national securities
exchange, CCA has delivered to the Trustee an Opinion of Counsel to the effect
that the Senior Notes will not be delisted as a result of such deposit,
defeasance and discharge. (Section 7.02)
Defeasance of Certain Covenants and Certain Events of Default. The
Indentures further provide that the provisions of the Indentures will no longer
be in effect with respect to clauses (iii) and (iv) under 'Consolidation, Merger
and Sale of Assets' and all the covenants described herein under 'Covenants,'
clause (c) under 'Events of Default with respect to such covenants and clauses
(iii) and (iv) under 'Consolidation, Merger and Sale of Assets,' and clauses
(d), (e), (h) and (i) under 'Events of Default' shall be deemed not to be Events
of Default, upon, among other things, the deposit with the Trustee, in trust, of
money and/or U.S. Government Obligations that through the payment of interest
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and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the outstanding Senior Notes on the Stated Maturity of such
payments in accordance with the terms of the Indenture and the Senior Notes, the
satisfaction of the provisions described in clauses (B)(ii), (C), and (D) of the
preceding paragraph and the delivery by CCA to the Trustee of an Opinion of
Counsel to the effect that, among other things, the Holders will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and defeasance of certain obligations and will be subject to federal income tax
on the same amount and in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred. (Section 7.03)
Defeasance and Certain Other Events of Default. In the event CCA exercises
its option to omit compliance with certain covenants and provisions of the
Indenture with respect to the Senior Notes as described in the immediately
preceding paragraph and the Senior Notes are declared due and payable because of
the occurrence of an Event of Default that remains applicable, the amount of
money and/or U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Senior Notes at the time of their Stated
Maturity but may not be sufficient to pay amounts due on the Senior Notes at the
time of the acceleration resulting from such Event of Default. However, CCA will
remain liable for such payments and JSCE's Guarantee with respect to such
payments will remain in effect.
The Credit Agreement and the Secured Notes contain a covenant prohibiting
defeasance of the Senior Notes.
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by JSCE, CCA and
the Trustee with (x) in the case of the 1993 Senior Notes, the consent of the
Holders of not less than a majority in aggregate principal amount of the
outstanding 1993 Senior Notes, and (y) in the case of the Series A Senior Notes
and the Series B Senior Notes, the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Series A Senior Notes
and Series B Senior Notes taken together as one class or, in the case of any
such modification or amendment which affects only one class of Senior Notes, a
majority in aggregate principal amount of the outstanding Series A Senior Notes
or Series B Senior Notes, as the case may be, provided, however, that no such
modification or amendment may, without the consent of each Holder affected
thereby, (i) change the Stated Maturity of the principal of, or any installment
of interest on, any Senior Note, (ii) reduce the principal amount of, or
premium, if any, or interest on, any Senior Note, (iii) change the place or
currency of payment of principal of, or premium, if any, or interest on, any
Senior Note, (iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption, on or
after the Redemption Date) of any Senior Note, (v) reduce the above-stated
percentage of outstanding Senior Notes, the consent of whose Holders is
necessary to modify or amend the Indenture, (vi) waive a default in the payment
of principal of, premium, if any, or interest on the Senior Notes, (vii) reduce
the percentage of aggregate principal amount of outstanding Senior Notes, the
consent of whose Holders is necessary for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults, (or, in the case
of the Series A and Series B Senior Notes, (viii) release JSCE from its
Guarantee of the Senior Notes). The provisions requiring the consent or approval
of specified percentages of Holders of either class of the Series A and Series B
Senior Notes or both classes of the Series A and Series B Senior Notes jointly
cannot be modified or amended without the consent of a majority in aggregate
principal amount of the Holders of such class of the Series A and Series B
Senior Notes or such two classes of the Series A and Series B Senior Notes
jointly, as the case may be. (Section 8.02)
To the extent that modifications and amendments of the Indenture may be
made with the consent of a majority in aggregate principal amount of the
outstanding Series A Senior Notes and Series B Senior Notes taken together as
one class, modifications and amendments of the Series B Senior Note Indenture
could be made without the consent of any Holder of Series B Senior Notes.
The Credit Agreement contains a covenant prohibiting JSCE or CCA from
consenting to any modification of the Indenture or waiver of any provision
thereof without the consent of a specified percentage of the lenders under the
Credit Agreement.
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NO PERSONAL LIABILITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS, DIRECTORS OR
EMPLOYEES
The Indentures provide that no recourse for the payment of the principal
of, premium, if any, or interest on any of the Senior Notes or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of JSCE or CCA in the Indentures, or in any of
the Senior Notes or because of the creation of any Indebtedness represented
thereby, shall be had against any incorporator, shareholder, officer, director,
employee or controlling person of JSCE or CCA or of any successor Person
thereof. Each Holder, by accepting the Senior Notes, waives and releases all
such liability. (Section 9.09)
CONCERNING THE TRUSTEE
The Indentures provide that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in each such Indenture. If an Event of Default has occurred and is continuing,
the Trustee will exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. (Section 6.01)
The Indentures and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein contain limitations on the rights of
the Trustee, should it become a creditor of CCA or JSCE, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided, however, that if it acquires any
conflicting interest, it must eliminate such conflict or resign.
MARKET-MAKING ACTIVITIES OF MS&CO.
This Prospectus is to be used by MS&Co. in connection with offers and sales
of the Senior Notes in market-making transactions at negotiated prices related
to prevailing market prices at the time of sale. MS&Co. may act as principal or
agent in such transactions. MS&Co. has no obligation to make a market for the
Senior Notes and may discontinue or suspend its market-making activities at any
time without notice.
MS&Co. acted as underwriter in connection with the original offering of the
Senior Notes and received an underwriting discount of $23 million in connection
therewith.
As of March 31, 1997, affiliates of MS&Co. owned approximately 28.7% of the
outstanding shares of JSC Common Stock. Donald P. Brennan, Alan E. Goldberg,
James S. Hoch, Leigh J. Abramson and G. Thompson Hutton, directors of JSC, JSCE
and JSC(U.S.), are designees of MSLEF II. For further information regarding the
involvement of affiliates of MS&Co. in the management of the Company and their
equity ownership, see 'Risk Factors -- Control by Principal Stockholders' and
JSCE's Annual Report on Form 10-K.
LEGAL MATTERS
The validity of the Senior Notes and the guarantees thereof have been
passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom, New York,
New York.
EXPERTS
The consolidated financial statements of JSCE appearing in JSCE's Annual
Report on Form 10-K for the year ended December 31, 1996, incorporated by
reference into this Prospectus and the Registration Statements of which this
Prospectus forms a part, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference therein
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
40
<PAGE>
<PAGE>
[Logo]
JEFFERSON SMURFIT CORPORATION (U.S.)
JSCE, INC.
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all fees and expenses paid by CCA in
connection with the original offerings of the securities being registered
hereby, other than underwriting discounts and commissions. All of such expenses,
except the Securities and Exchange Commission registration fee and the National
Association of Securities Dealers, Inc. filing fees, have been estimated.
<TABLE>
<CAPTION>
EXPENSES AMOUNT
---------- ----------
<S> <C>
Securities and Exchange Commission registration fee................................................. $ 363,147
National Association of Securities Dealers, Inc. filing fee......................................... 61,000
Blue Sky fees and expenses.......................................................................... 55,000
Printing and engraving expenses..................................................................... 825,000
Legal fees and expenses............................................................................. 1,300,000
Accounting fees and expenses........................................................................ 450,000
Miscellaneous....................................................................................... 27,603
----------
Total..................................................................................... $3,081,750
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-Laws of the Co-Registrants provide the Co-Registrants with the
authority to indemnify their directors, officers, employees and agents to the
full extent allowed by Delaware law. JSC maintains an insurance policy which
provides directors and officers of the Co-Registrants with coverage in
connection with certain events. In addition, the Co-Registrants have indemnified
SIBV and MSLEF II and certain related parties with respect to certain matters
relating to their business, pursuant to the Second Amended and Restated
Organization Agreement among such parties.
See Item 17 for the Co-Registrants' undertaking with respect to
indemnification.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<C> <S>
1.1(a)* Underwriting Agreement relating to the Series A and Series B Senior Notes, previously
filed as Exhibit 1.1 to the Company's Registration Statement on Form S-2 (No. 33-52383).
1.1(b)* Underwriting Agreement relating to the 1993 Senior Notes, previously filed as Exhibit 1.1
to the Company's Registration Statement on Form S-2 (No. 33-58348).
1.2* Agreements, dated April 4, 1994, between JSC(U.S.) and A.G. Edwards & Sons, Inc., the
qualified independent underwriter.
3.1* Restated Certificate of Incorporation of JSC(U.S.).
3.2* Certificate of Incorporation of JSCE.
3.3* By-laws of JSC(U.S.).
3.4* By-laws of JSCE.
4.1 Indenture for the Series A Senior Notes (incorporated by reference to Exhibit 4.1 to JSC's
quarterly report on Form 10-Q for the quarter ended March 31, 1994).
4.2 Indenture for the Series B Senior Notes (incorporated by reference to Exhibit 4.2 to JSC's
quarterly report on Form 10-Q for the quarter ended March 31, 1994).
4.3 Indenture for the 1993 Senior Notes (incorporated by reference to Exhibit 4.4 to JSC's
Registration Statement on Form S-1 (File No. 33-75520)).
4.4 First Supplemental Indenture to the 1993 Senior Note Indenture (incorporated by reference
to Exhibit 4.5 to JSC's Registration Statement on Form S-1 (File No. 33-75520)).
4.5* Second Supplemental Indenture to the 1993 Senior Note Indenture.
5.1(a)* Opinion of Skadden, Arps, Slate, Meagher & Flom relating to the Series A and Series B
Senior Notes, previously filed as Exhibit 5.1 to the Company's Registration Statement on
Form S-2 (No. 33-52383).
</TABLE>
II-1
<PAGE>
<PAGE>
<TABLE>
<C> <S>
5.1(b)* Opinion of Skadden, Arps, Slate, Meagher & Flom relating to the 1993 Senior Notes,
previously filed as Exhibit 5.1 to the Company's Registration Statement on Form S-2 (No.
33-58348).
10.1 Second Amended and Restated Organization Agreement, dated as of August 26, 1992, among Old
JSC(U.S.), CCA, MSLEF II, Inc., SIBV, JSC and MSLEF II (incorporated by reference to
Exhibit 10.1(d) to Old JSC(U.S)/CCA's quarterly report on Form 10-Q for the quarter ended
September 30, 1992).
10.2(a) Stockholders Agreement among JSC, SIBV, MSLEF II and certain related entities
(incorporated by reference to Exhibit 10.2 to JSC's quarterly report on Form 10-Q for the
quarter ended March 31, 1994).
10.2(b) First Amendment to Stockholders Agreement, dated as of January 13, 1997, among JSC, SIBV,
MSLEF II and certain related entities (incorporated by reference to Exhibit 10.2(b) to
JSC's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.3 Registration Rights Agreement among JSC, MSLEF II and SIBV (incorporated by reference to
Exhibit 10.3 to JSC's quarterly report on Form 10-Q for the quarter ended March 31, 1994).
10.4 Subscription Agreement among JSC, Old JSC(U.S.) and SIBV (incorporated by reference to
Exhibit 10.4 to JSC's quarterly report on Form 10-Q for the quarter ended March 31, 1994).
10.5(a) Restated Newsprint Agreement, dated January 1, 1990, by and between SNC and The Times
Mirror Company (incorporated by reference to Exhibit 10.39 to Old JSC(U.S.)'s Annual
Report on Form 10-K for the fiscal year ended December 31, 1990). Portions of this exhibit
have been excluded pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
10.5(b) Amendment No. 1 to the Restated Newsprint Agreement (incorporated by reference to Exhibit
10.6(b) to JSC's Registration Statement on Form S-1 (File No. 33-75520)).
10.6 Operating Agreement, dated as of April 30, 1992, by and between Old JSC(U.S.)/CCA and
Smurfit Paperboard, Inc. (incorporated by reference to Exhibit 10.42 to Old
JSC(U.S.)'s/CCA quarterly report on Form 10-Q for the quarter ended March 31, 1992).
10.7 JSC(U.S.) Deferred Compensation Plan as amended (incorporated by reference to Exhibit 10.7
to JSC's Annual Report on Form 10-K for the fiscal year ended December 31, 1996).
10.8 JSC(U.S.) Management Incentive Plan (incorporated by reference to Exhibit 10.10 to JSC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995).
10.9 JSC(U.S.) 1994 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.13 to
JSCs' Registration Statement on Form S-1 (File No. 33-75520)).
10.10 Rights Agreement, dated as of April 30, 1992, among Old JSC(U.S.), CCA, Smurfit
Paperboard, Inc. and Bankers Trust Company, as collateral trustee (incorporated by
reference to Exhibit 10.43 to Old JSC(U.S.)/CCA's quarterly report on Form 10-Q for the
quarter ended March 31, 1992).
10.11(a) 1992 SIBV/MS Holdings, Inc. Stock Option Plan (incorporated by reference to Exhibit 10.48
to Old JSC(U.S.)/CCA's quarterly report on Form 10-Q for the quarter ended September 30,
1992).
10.11(b) Amendment No. 1 to 1992 SIBV/MS Holdings, Inc. Stock Option Plan (incorporated by
reference to Exhibit 10.16(b) to JSCs' Registration Statement on Form S-1 (File No.
33-75520)).
10.11(c) Amendment No. 2 to 1992 SIBV/MS Holdings, Inc. Stock Option Plan.
10.12(a) Credit Agreement, amended and restated as of May 17, 1996, among JSC, JSCE, JSC(U.S.) and
the banks parties thereto (incorporated by reference to Exhibit 10.1 to JSC's quarterly
report on Form 10-Q for the quarter ended June 30, 1996).
10.12(b) Amendment Agreement dated as of May 17, 1996 among JSC, JSCE, JSC(U.S.), SNC and the banks
parties thereto (incorporated by reference to Exhibit 10.2 to JSC's quarterly report on
Form 10-Q for the quarter ended June 30, 1996).
10.13(a) Term Loan Agreement dated as of February 23, 1995 among JSCF and Bank Brussels Lambert
(incorporated by reference to Exhibit 10.1 to JSC's quarterly report on Form 10-Q for the
quarter ended March 31, 1995).
10.13(b) Depositary and Issuing and Paying Agent Agreement (Series A Commercial Paper) dated as of
February 23, 1995 (incorporated by reference to Exhibit 10.2 to JSC's quarterly report on
Form 10-Q for the quarter ended March 31, 1995).
</TABLE>
II-2
<PAGE>
<PAGE>
<TABLE>
<C> <S>
10.13(c) Depositary and Issuing and Paying Agent Agreement (Series B Commercial Paper) dated as of
February 23, 1995 (incorporated by reference to Exhibit 10.3 to JSC's quarterly report on
Form 10-Q for the quarter ended March 31, 1995).
10.13(d) Receivables Purchase and Sale Agreement dated as of February 23, 1995 among JSC(U.S.), as
the seller, JSC(U.S), as the initial servicer and JSCF as the purchaser (incorporated by
reference to Exhibit 10.4 to JSC's quarterly report on Form 10-Q for the quarter ended
March 31, 1995).
10.13(e) Termination and Reassignment Agreement dated as of March 3, 1995 among JSCF, JSC(U.S.),
Emerald Funding Corporation and Bankers Trust (incorporated by reference to Exhibit 10.5
to JSC's quarterly report on Form 10-Q for the quarter ended March 31, 1995).
10.13(f) Liquidity Agreement dated as of February 23, 1995 among JSCF, the banks party thereto,
Bankers Trust, as facility agent and Bankers Trust as collateral agent (incorporated by
reference to Exhibit 10.6 to JSC's quarterly report on Form 10-Q for the quarter ended
March 31, 1995).
10.13(g) Commercial Paper Dealer Agreement dated as of February 23, 1995 among BTSC, MS&Co.,
NationsBank Capital Markets, Inc., JSC(U.S.) and JSCF (incorporated by reference to
Exhibit 10.7 to JSC's quarterly report on Form 10-Q for the quarter ended March 31, 1995).
10.13(h) Addendum dated March 6, 1995 to Commercial Paper Dealer Agreement (incorporated by
reference to Exhibit 10.8 to JSC's quarterly report on Form 10-Q for the quarter ended
March 31, 1995).
10.14(a) First Omnibus Amendment dated as of March 31, 1996 among JSC(U.S.), JSFC and the banks
parties thereto (incorporated by reference to Exhibit 10.3 to JSC's quarterly report on
Form 10-Q for the quarter ended June 30, 1996).
10.14(b) Affiliate Receivables Sale Agreement dated as of March 31, 1996 between SNC and JSC
(incorporated by reference to Exhibit 10.4 to JSC's quarterly report on Form 10-Q for the
quarter ended June 30, 1996).
10.15 Consulting Agreement dated as of October 24, 1996 by and between James E. Terrill and
JSC(U.S.) (incorporated by reference to Exhibit 10.15 to JSC's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996).
10.16 Engagement letter dated August 1, 1996 between Mr. Eric Priestley and JSC (incorporated by
reference to Exhibit 10.16 to JSC's Annual Report on Form 10-K for the fiscal yer ended
December 31, 1996).
12.1 Calculation of Historical Ratios of Earnings to Fixed Charges for JSCE.
12.2 Calculation of Historical Ratios of Earnings to Fixed Charges for JSC(U.S.).
23.1(a)* Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5.1(a)).
23.1(b)* Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5.1(b)).
23.2 Consent of Ernst & Young LLP.
24.1 Powers of Attorney (other than Powers of Attorney previously filed).
25.1(a)* Statement on Form T-1 of the eligibility of NationsBank of Georgia, National Association,
as Trustee under the Series A Senior Note Indenture and the Series B Senior Note
Indenture, previously filed as Exhibit 25.1 to the Company's Registration Statement on
Form S-2 (No. 33-52383).
25.1(b)* Statement on Form T-1 of the eligibility of NationsBank of Georgia, National Association,
as Trustee under the 1993 Senior Note Indenture, previously filed as Exhibit 25.1 to the
Company's Registration Statement on Form S-2 (No. 33-58348).
</TABLE>
- ------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ('Securities Act') may be permitted to directors, officers and
controlling persons of the Co-Registrants pursuant to the foregoing provisions,
or otherwise, the Co-Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Co-Registrants of expenses incurred or paid by a director,
officer or controlling person of the Co-Registrants in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities
II-3
<PAGE>
<PAGE>
being registered, the Co-Registrants will, unless in the opinion of their
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The Co-Registrants hereby undertake:
(1) That for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Co-Registrants pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
(2) That for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) (a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(d) If the Co-Registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of Regulation S-X at the
start of any delayed offering or throughout a continuous offering.
(4) For purposes of determining any liability under the Securities Act
of 1933, as amended (the 'Securities Act'), each filing of the
Co-Registrants' annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the 'Exchange Act') (and
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act), that is incorporated by
reference into these Post-Effective Amendments shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused these
Post-Effective Amendments Nos. 3 and 4 to the Registration Statements to be
signed on its behalf by the undersigned, thereunto duly authorized, on April 15,
1997.
JEFFERSON SMURFIT CORPORATION (U.S.)
BY /S/ PATRICK J. MOORE
...................................
Patrick J. Moore
Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, these
Post-Effective Amendments Nos. 3 and 4 to the Registration Statements have been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------------------------- ------------------
<C> <S> <C>
* Director, Chairman of the Board
.........................................
MICHAEL W. J. SMURFIT
* Director, President and Chief Executive
......................................... Officer (Principal Executive Officer)
RICHARD W. GRAHAM
/s/ PATRICK J. MOORE Vice President and Chief Financial Officer April 15, 1997
......................................... (Principal Financial and
PATRICK J. MOORE Accounting Officer)
* Director
.........................................
LEIGH J. ABRAMSON
* Director
.........................................
DONALD P. BRENNAN
* Director
.........................................
ALAN E. GOLDBERG
* Director
.........................................
JAMES S. HOCH
* Director
.........................................
G. THOMPSON HUTTON
* Director
.........................................
HOWARD E. KILROY
* Director
.........................................
JAMES E. TERRILL
* Director
.........................................
JAMES R. THOMPSON
</TABLE>
*By /s/ PATRICK J. MOORE
..................................
PATRICK J. MOORE
ATTORNEY-IN-FACT
APRIL 15, 1997
II-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused these
Post-Effective Amendments Nos. 3 and 4 to the Registration Statements to be
signed on its behalf by the undersigned, thereunto duly authorized, on April 15,
1997.
JSCE, INC.
By /s/ PATRICK J. MOORE
...................................
Patrick J. Moore
Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, these
Post-Effective Amendments Nos. 3 and 4 to the Registration Statements have been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------------------------- ------------------
<C> <S> <C>
* Director, Chairman of the Board
.........................................
MICHAEL W. J. SMURFIT
* Director, President and Chief Executive
......................................... Officer (Principal Executive Officer)
RICHARD W. GRAHAM
/s/ PATRICK J. MOORE Vice President and Chief Financial Officer April 15, 1997
......................................... (Principal Financial and
PATRICK J. MOORE Accounting Officer)
* Director
.........................................
LEIGH J. ABRAMSON
* Director
.........................................
DONALD P. BRENNAN
* Director
.........................................
ALAN E. GOLDBERG
* Director
.........................................
JAMES S. HOCH
* Director
.........................................
G. THOMPSON HUTTON
* Director
.........................................
HOWARD E. KILROY
* Director
.........................................
JAMES E. TERRILL
* Director
.........................................
JAMES R. THOMPSON
</TABLE>
*By /s/ PATRICK J. MOORE
..................................
PATRICK J. MOORE
ATTORNEY-IN-FACT
APRIL 15, 1997
II-6
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- --------- ------------------------------------------------------------------------------------ -------------------
<C> <S> <C>
1.1(a)* Underwriting Agreement relating to the Series A and Series B Senior Notes,
previously filed as Exhibit 1.1 to the Company's Registration Statement on Form
S-2 (No. 33-52383)................................................................
1.1(b)* Underwriting Agreement relating to the 1993 Senior Notes, previously filed as
Exhibit 1.1 to the Company's Registration Statement on Form S-2 (No. 33-58348)....
1.2* Agreements, dated April 4, 1994, between JSC(U.S.) and A.G. Edwards & Sons, Inc.,
the qualified independent underwriter.............................................
3.1* Restated Certificate of Incorporation of JSC(U.S.)..................................
3.2* Certificate of Incorporation of JSCE................................................
3.3* By-laws of JSC(U.S.)................................................................
3.4* By-laws of JSCE.....................................................................
4.1 Indenture for the Series A Senior Notes (incorporated by reference to Exhibit 4.1 to
JSC's quarterly report on Form 10-Q for the quarter ended March 31, 1994).........
4.2 Indenture for the Series B Senior Notes (incorporated by reference to Exhibit 4.2 to
JSC's quarterly report on Form 10-Q for the quarter ended March 31, 1994).........
4.3 Indenture for the 1993 Senior Notes (incorporated by reference to Exhibit 4.4 to
JSC's Registration Statement on Form S-1 (File No. 33-75520)).....................
4.4 First Supplemental Indenture to the 1993 Note Indenture (incorporated by reference
to Exhibit 4.5 to JSC's Registration Statement on Form S-1 (File No. 33-75520))...
4.5* Second Supplemental Indenture to the 1993 Note Indenture............................
5.1(a)* Opinion of Skadden, Arps, Slate, Meagher & Flom relating to the Series A and Series
B Senior Notes, previously filed as Exhibit 5.1 to the Company's Registration
Statement on Form S-2 (No. 33-52383)..............................................
5.1(b)* Opinion of Skadden, Arps, Slate, Meagher & Flom relating to the 1993 Senior Notes,
previously filed as Exhibit 5.1 to the Company's Registration Statement on Form
S-2 (No. 33-58348)................................................................
10.1 Second Amended and Restated Organization Agreement, dated as of August 26, 1992,
among Old JSC(U.S.), CCA, MSLEF II, Inc., SIBV, JSC and MSLEF II (incorporated by
reference to Exhibit 10.1(d) to Old JSC(USC)/CCA's quarterly report on Form 10-Q
for the quarter ended September 30, 1992).........................................
10.2(a) Stockholders Agreement among JSC, SIBV, MSLEF II and certain related entities
(incorporated by reference to Exhibit 10.2 to JSC's quarterly report on Form 10-Q
for the quarter ended March 31, 1994).............................................
10.2(b) First Amendment to Stockholders Agreement, dated as of January 13, 1997, among JSC,
SIBV, MSLEF II and certain related entities (incorporated by reference to Exhibit
10.2(b) to JSC's Annual Report on Form 10-K for the fiscal year ended December 31,
1996).............................................................................
10.3 Registration Rights Agreement among JSC, MSLEF II and SIBV (incorporated by
reference to Exhibit 10.3 to JSC's quarterly report on Form 10-Q for the quarter
ended March 31, 1994).............................................................
10.4 Subscription Agreement among JSC, Old JSC(U.S.) and SIBV (incorporated by reference
to Exhibit 10.4 to JSC's quarterly report on Form 10-Q for the quarter ended March
31, 1994).........................................................................
10.5(a) Restated Newsprint Agreement, dated January 1, 1990, by and between SNC and The
Times Mirror Company (incorporated by reference to Exhibit 10.39 to Old
JSC(U.S.)'s Annual Report on Form 10-K for the fiscal year ended December 31,
1990). Portions of this exhibit have been excluded pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.......................................
10.5(b) Amendment No. 1 to the Restated Newsprint Agreement (incorporated by reference to
Exhibit 10.6(b) to JSC's Registration Statement on Form S-1 (File No.
33-75520))........................................................................
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- --------- ------------------------------------------------------------------------------------ -------------------
<C> <S> <C>
10.6 Operating Agreement, dated as of April 30, 1992, by and between Old JSC(U.S.)/CCA
and Smurfit Paperboard, Inc. (incorporated by reference to Exhibit 10.42 to Old
JSC(U.S.)'s/CCA quarterly report on Form 10-Q for the quarter ended March 31,
1992).............................................................................
10.7 JSC(U.S.) Deferred Compensation Plan as amended (incorporated by reference to
Exhibit 10.7 to JSC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996).
10.8 JSC(U.S.) Management Incentive Plan (incorporated by reference to Exhibit 10.10 to
JSC's Annual Report on Form 10-K for the fiscal year ended December 31, 1995).....
10.9 JSC(U.S.) 1994 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.13
to JSCs' Registration Statement on Form S-1 (File No. 33-75520))..................
10.10 Rights Agreement, dated as of April 30, 1992, among Old JSC(U.S.), CCA, Smurfit
Paperboard, Inc. and Bankers Trust Company, as collateral trustee (incorporated by
reference to Exhibit 10.43 to Old JSC(U.S.)/CCA's quarterly report on Form 10-Q
for the quarter ended March 31, 1992).............................................
10.11(a) 1992 SIBV/MS Holdings, Inc. Stock Option Plan (incorporated by reference to Exhibit
10.48 to Old JSC(U.S.)/CCA's quarterly report on Form 10-Q for the quarter ended
September 30, 1992)...............................................................
10.11(b) Amendment No. 1 to 1992 SIBV/MS Holdings, Inc. Stock Option Plan (incorporated by
reference to Exhibit 10.16(b) to JSCs' Registration Statement on Form S-1 (File
No. 33-75520))....................................................................
10.11(c) Amendment No. 2 to 1992 SIBV/MS Holdings, Inc. Stock Option Plan....................
10.12(a) Credit Agreement, amended and restated as of May 17, 1996, among JSC, JSCE,
JSC(U.S.) and the banks parties thereto (incorporated by reference to Exhibit 10.1
to JSC's quarterly report on Form 10-Q for the quarter ended June 30, 1996).......
10.12(b) Amendment Agreement dated as of May 17, 1996 among JSC, JSCE,
JSC(U.S.), SNC and the banks parties thereto (incorporated by reference to Exhibit
10.2 to JSC's quarterly report on Form 10-Q for the quarter ended June 30,
1996).............................................................................
10.13(a) Term Loan Agreement dated as of February 23, 1995 among JSCF and Bank Brussels
Lambert (incorporated by reference to Exhibit 10.1 to JSC's quarterly report on
Form 10-Q for the quarter ended March 31, 1995)...................................
10.13(b) Depositary and Issuing and Paying Agent Agreement (Series A Commercial Paper) dated
as of February 23, 1995 (incorporated by reference to Exhibit 10.2 to JSC's
quarterly report on Form 10-Q for the quarter ended March 31, 1995)...............
10.13(c) Depositary and Issuing and Paying Agent Agreement (Series B Commercial Paper) dated
as of February 23, 1995 (incorporated by reference to Exhibit 10.3 to JSC's
quarterly report on Form 10-Q for the quarter ended March 31, 1995)...............
10.13(d) Receivables Purchase and Sale Agreement dated as of February 23, 1995 among
JSC(U.S.), as the seller, JSC(U.S), as the initial servicer and JSCF as the
purchaser (incorporated by reference to Exhibit 10.4 to JSC's quarterly report on
Form 10-Q for the quarter ended March 31, 1995)...................................
10.13(e) Termination and Reassignment Agreement dated as of March 3, 1995 among JSCF,
JSC(U.S.), Emerald Funding Corporation and Bankers Trust (incorporated by
reference to Exhibit 10.5 to JSC's quarterly report on Form 10-Q for the quarter
ended March 31, 1995).............................................................
10.13(f) Liquidity Agreement dated as of February 23, 1995 among JSCF, the banks party
thereto, Bankers Trust, as facility agent and Bankers Trust as collateral agent
(incorporated by reference to Exhibit 10.6 to JSC's quarterly report on Form 10-Q
for the quarter ended March 31, 1995).............................................
10.13(g) Commercial Paper Dealer Agreement dated as of February 23, 1995 among BTSC, MS&Co.,
NationsBank Capital Markets, Inc., JSC(U.S.) and JSCF (incorporated by reference
to Exhibit 10.7 to JSC's quarterly report on Form 10-Q for the quarter ended March
31, 1995).........................................................................
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- --------- ------------------------------------------------------------------------------------ -------------------
<C> <S> <C>
10.13(h) Addendum dated March 6, 1995 to Commercial Paper Dealer Agreement (incorporated by
reference to Exhibit 10.8 to JSC's quarterly report on Form 10-Q for the quarter
ended March 31, 1995).............................................................
10.14(a) First Omnibus Amendment dated as of March 31, 1996 among JSC(U.S.), JSFC and the
banks parties thereto (incorporated by reference to Exhibit 10.3 to JSC's
quarterly report on Form 10-Q for the quarter ended June 30, 1996)................
10.14(b) Affiliate Receivables Sale Agreement dated as of March 31, 1996 between SNC and JSC
(incorporated by reference to Exhibit 10.4 to JSC's quarterly report on Form 10-Q
for the quarter ended June 30, 1996).
10.15 Consulting Agreement dated as of October 24, 1996 by and between James E. Terrill
and JSC(U.S.) (incorporated by reference to Exhibit 10.15 to JSC's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996).........................
10.16 Engagement letter dated August 1, 1996 between Mr. Eric Priestley and JSC
(incorporated by reference to Exhibit 10.16 to JSC's Annual Report on Form 10-K
for the fiscal yer ended December 31, 1996).......................................
12.1 Calculation of Historical Ratios of Earnings to Fixed Charges for JSCE..............
12.2 Calculation of Historical Ratios of Earnings to Fixed Charges for JSC(U.S.).........
23.1(a)* Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5.1(a))........
23.1(b)* Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5.1(b))........
23.2 Consent of Ernst & Young LLP........................................................
24.1 Powers of Attorney (other than Powers of Attorney previously filed).................
25.1(a)* Statement on Form T-1 of the eligibility of NationsBank of Georgia, National
Association, as Trustee under the Series A Senior Note Indenture and the Series B
Senior Note Indenture, previously filed as Exhibit 25.1 to the Company's
Registration Statement on Form S-2 (No. 33-52383).................................
25.1(b)* Statement on Form T-1 of the eligibility of NationsBank of Georgia, National
Association, as Trustee under the 1993 Senior Note Indenture, previously filed as
Exhibit 25.1 to the Company's Registration Statement on Form S-2 (No. 33-52348)...
</TABLE>
- ------------
* Previously filed.
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as 'r'
<PAGE>
<PAGE>
EXHIBIT 10.11(c)
AMENDMENT NO. 2
TO THE
JEFFERSON SMURFIT CORPORATION
1992 STOCK OPTION PLAN
(formerly the SIBV/MS Holdings, Inc.
1992 Stock Option Plan)
The Jefferson Smurfit Corporation 1992 Stock Option Plan, as amended (the
"Plan"), is hereby further amended, effective as of October 6, 1994, as set
forth below.
1. Section 2 of the Plan is amended by adding thereto a new subsection (q)
to read as follows and by renumbering subsequent subsections thereof
accordingly:
(q) `Early Retirement' shall mean the termination of employment of an
Optionee for any reason other than for Cause on or after the earlier of (i)
the attainment of age fifty-five (55) with five years of service with the
Company and (ii) twenty-five years of service with the Company.
2. Section 6(h) of the Plan shall be amended by restating subsection (2)
thereof to read as follows:
(2) Death, Disability, Early Retirement or Retirement of Options.
If an Optionee shall die while employed by the Company, a Subsidiary
or an affiliate of the Company, or if an Optionee shall die within
ninety (90) days after the date of termination of such Optionee's
employment other than as a result of his termination for Cause, or if
an Optionee's employment shall terminate by reason of Disability,
Early Retirement or Retirement, all
<PAGE>
<PAGE>
Options theretofore granted to such Optionee may, unless earlier
terminated in accordance with their terms, be exercised (to the extent
otherwise vested upon termination of employment in accordance with
provisions Section 6(c) hereof) by the Optionee or by the Optionee's
estate or by a person who acquired the right to exercise such Options
by bequest or inheritance or otherwise by reason of the death of
Disability of the Optionee, at any time within five (5) years after
the later to occur of (A) the date of death, Disability, Early
Retirement or Retirement of the Optionee or (B) a Trigger Date. In the
event that an Option granted hereunder be exercised by the legal
representatives of a deceased or former Optionee, written notice of
such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal,
representative to exercise such Option.
Except as set forth above, the Plan is hereby ratified and affirmed in all
respects.
2
<PAGE>
<PAGE>
EXHIBIT 12.1
JSCE, INC.
CALCULATION OF HISTORICAL RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ----- ----
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Income (loss) before income taxes, extraordinary item and cumulative
effect of accounting changes........................................ $194 $403 $ 28 $(258) $(24)
Add (deduct):
Minority interest share of income (loss)......................... 2 (1) (3) (3)
Interest expense(a).............................................. 194 234 269 254 300
Interest component of rental expense............................. 13 12 11 12 11
---- ---- ---- ----- ----
Earnings available for fixed charges.................................. $401 $651 $307 $ 5 $284
---- ---- ---- ----- ----
---- ---- ---- ----- ----
Fixed charges:
Interest expense(a).............................................. $194 $234 $269 $ 254 $300
Capitalized interest............................................. 3 4 4 3 4
Interest component of rental expense............................. 13 12 11 12 11
---- ---- ---- ----- ----
Total fixed charges......................................... $210 $250 $284 $ 269 $315
---- ---- ---- ----- ----
---- ---- ---- ----- ----
Ratio of earnings to fixed charges.................................... 1.91 2.60 1.08 (b) (b)
---- ---- ---- ----- ----
---- ---- ---- ----- ----
</TABLE>
- ------------
(a) For the years ended December 31, 1996, 1995, 1994 1993 and 1992, interest
expense includes amortization of deferred debt issuance costs of $13
million, $14 million, $10 million, $8 million and $15 million,
respectively.
(b) For the years ended December 31, 1993 and 1992, earnings were inadequate to
cover fixed charges by $264 million and $31 million, respectively.
<PAGE>
<PAGE>
EXHIBIT 12.2
JEFFERSON SMURFIT CORPORATION (U.S.)
CALCULATION OF HISTORICAL RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ----- ----
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Income (loss) before income taxes, extraordinary item and cumulative
effect of accounting changes........................................ $194 $403 $ 28 $(258) $(24)
Add (deduct):
Minority interest share of income (loss)......................... (1) (3) (3)
Interest expense(a).............................................. 194 234 269 254 300
Interest component of rental expense............................. 13 12 11 12 11
---- ---- ---- ----- ----
Earnings available for fixed charges.................................. $401 $651 $307 $ 5 $284
---- ---- ---- ----- ----
---- ---- ---- ----- ----
Fixed charges:
Interest expense(a).............................................. $194 $234 $269 $ 254 $300
Capitalized interest............................................. 3 4 4 3 4
Interest component of rental expense............................. 13 12 11 12 11
---- ---- ---- ----- ----
Total fixed charges......................................... $210 $250 $284 $ 269 $315
---- ---- ---- ----- ----
---- ---- ---- ----- ----
Ratio of earnings to fixed charges.................................... 1.91 2.60 1.08 (b) (b)
---- ---- ---- ----- ----
---- ---- ---- ----- ----
</TABLE>
- ------------
(a) For the years ended December 31, 1996, 1995, 1994, 1993 and 1992, interest
expense includes amortization of deferred debt issuance costs of $13
million, $14 million, $10 million, $8 million and $15 million,
respectively.
(b) For the years ended December 31, 1993 and 1992, earnings were inadequate to
cover fixed charges by $264 million and $31 million, respectively.
<PAGE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption 'Experts' in the
Post-Effective Amendment No. 3 to the Registration Statement (Form S-3, No.
33-52383) and the Post Effective Amendment No. 4 to the Registration Statement
(Form S-3, No. 33-58348), and the related Prospectuses of Jefferson Smurfit
Corporation (U.S.), for the registration of $300 million aggregate principal
amount of 11 1/4% Series A Senior Notes due 2004, $100 million aggregate
principal amount of 10 3/4% Series B Senior Notes due 2002, and $500 million
aggregate principal amount of 9 3/4% 1993 Senior Notes due 2003, all of which
are unconditionally guaranteed on a senior basis by JSCE, Inc., and to the
incorporation by reference therein of our report dated January 22, 1997 with
respect to the consolidated financial statements and schedule of JSCE, Inc.
appearing in its Annual Report on Form 10-K for the year ended December 31,
1996.
ERNST & YOUNG LLP
St. Louis, Missouri
April 10, 1997
<PAGE>
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Michael W.J. Smurfit and Patrick J. Moore, each with full power to act
without the other as his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, (i) to sign a post-effective amendment to
Registration Statement No. 33-52383 of Jefferson Smurfit Corporation (U.S.)
(`JSC(U.S.)'), as co-registrant, and JSCE, Inc., as co-registrant, filed under
the Securities Act of 1933, as amended, and any and all post-effective
amendments thereto, with respect to the 11.25% Series A Senior Notes due 2004
and the 10.75% Series B Senior Notes due 2002 issued by JSC(U.S.) and guaranteed
by JSCE, Inc. (the `SERIES A AND SERIES B SENIOR NOTES POST-EFFECTIVE
AMENDMENT'), (ii) to sign a post-effective amendment to Registration Statement
No. 33-58348 of JSC(U.S.), as co-registrant, and JSCE, Inc., as co-registrant,
filed under the Securities Act of 1933, as amended, and any and all
post-effective amendments thereto, with respect to the 9.75% Senior Notes due
2003 issued by JSC(U.S.) and guaranteed by JSCE, Inc.(the `1993 SENIOR NOTES
POST-EFFECTIVE AMENDMENT'), (iii) to file the Series A and Series B Senior Notes
Post-Effective Amendment and the 1993 Senior Notes Post-Effective Amendment, in
each case, together with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and such other state and
federal government commissions and agencies as may be necessary, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their or his substitute or substitutes,
lawfully do or cause to be done by virtue hereof.
/s/ Richard W. Graham
------------------------
Richard W. Graham
April 8, 1997
<PAGE>
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Michael W.J. Smurfit, Richard W. Graham and Patrick J. Moore, each with
full power to act without the others as his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities, (i) to sign a post-effective
amendment to Registration Statement No. 33-52383 of Jefferson Smurfit
Corporation (U.S.) (`JSC(U.S.)'), as co-registrant, and JSCE, Inc., as
co-registrant, filed under the Securities Act of 1933, as amended, and any and
all post-effective amendments thereto, with respect to the 11.25% Series A
Senior Notes due 2004 and the 10.75% Series B Senior Notes due 2002 issued by
JSC(U. S.) and guaranteed by JSCE, Inc. (the `SERIES A AND SERIES B SENIOR NOTES
POST-EFFECTIVE AMENDMENT'), (ii) to sign a post-effective amendment to
Registration Statement No. 33-58348 of JSC(U.S.), as co-registrant, and JSCE,
Inc., as co-registrant, filed under the Securities Act of 1933, as amended, and
any and all post-effective amendments thereto, with respect to the 9.75% Senior
Notes due 2003 issued by JSC(U.S.) and guaranteed by JSCE, Inc.(the `1993 SENIOR
NOTES POST-EFFECTIVE AMENDMENT'), and (iii) to file the Series A and Series B
Senior Notes Post-Effective Amendment and the 1993 Senior Notes Post-Effective
Amendment, in each case, together with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission and such
other state and federal government commissions and agencies as may be necessary,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their or his substitute or
substitutes, lawfully do or cause to be done by virtue hereof.
/s/ James S. Hoch
---------------------
James S. Hoch
April 8, 1997
2
<PAGE>
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Michael W.J. Smurfit, Richard W. Graham and Patrick J. Moore, each with
full power to act without the others as his true and lawful attorneys-in-fact
and agents with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities, (i) to sign a post-effective
amendment to Registration Statement No. 33-52383 of Jefferson Smurfit
Corporation (U.S.) (`JSC(U.S.)'), as co-registrant, and JSCE, Inc., as
co-registrant, filed under the Securities Act of 1933, as amended, and any and
all post-effective amendments thereto, with respect to the 11.25% Series A
Senior Notes due 2004 and the 10.75% Series B Senior Notes due 2002 issued by
JSC(U.S.) and guaranteed by JSCE, Inc. (the `SERIES A AND SERIES B SENIOR NOTES
POST-EFFECTIVE AMENDMENT'), (ii) to sign a post-effective amendment to
Registration Statement No. 33-58348 of JSC(U.S.), as co-registrant, and JSCE,
Inc., as co-registrant, filed under the Securities Act of 1933, as amended, and
any and all post-effective amendments thereto, with respect to the 9.75% Senior
Notes due 2003 issued by JSC(U.S.) and guaranteed by JSCE, Inc.(the `1993 SENIOR
NOTES POST-EFFECTIVE AMENDMENT'), and (iii) to file the Series A and Series B
Senior Notes Post-Effective Amendment and the 1993 Senior Notes Post-Effective
Amendment, in each case, together with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission and such
other state and federal government commissions and agencies as may be necessary,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their or his substitute or
substitutes, lawfully do or cause to be done by virtue hereof.
/s/ Leigh J. Abramson
------------------------
Leigh J. Abramson
April 8, 1997
3
<PAGE>
