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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1998
REGISTRATION NOS. 33-52383 AND 33-58348
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENTS NOS. 4 AND 5 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. 4 to Registration Statement No. 33-52383 and Post-
Effective Amendment No. 5 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. 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 17, 1998
<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. 4 and 5 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, 1997, filed with the Commission on March 2, 1998 (which
incorporates by reference certain information from JSC's Proxy Statement
relating to the 1998 Annual Meeting of Stockholders), and
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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, 1997 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
----
<S> <C>
Additional Information......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company.................................... 4
Risk Factors................................... 5
Ratio of Earnings to Fixed Charges............. 11
<CAPTION>
PAGE
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<S> <C>
Use of Proceeds................................ 11
Description of the Senior Notes................ 12
Market-Making Activities of MS&Co. ............ 41
Legal Matters.................................. 41
Experts........................................ 41
</TABLE>
3
<PAGE>
<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 1997, produced 1,933,000 tons of virgin and recycled
containerboard, 823,000 tons of recycled boxboard and solid bleached sulfate
('SBS') and 125,000 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 51 corrugated container plants, 19 folding
carton plants and 22 industrial packaging plants located across the country,
with three plants located outside the U.S. In 1997, the Company's container
plants converted 2,047,000 tons of containerboard, an amount equal to
approximately 106% of the amount it produced, its folding carton plants
converted 547,000 tons of SBS, recycled boxboard and coated natural kraft, an
amount equal to approximately 66% of the amount it produced, and its industrial
packaging plants converted 149,000 tons of uncoated recycled boxboard, an amount
equal to approximately 119% of the amount it produced. The Paperboard/Packaging
Products segment also includes the Company's reclamation facilities, which
processed or brokered approximately 4.8 million tons of wastepaper in 1997, its
timber operations, which manages approximately one million acres of owned or
leased timberland located close to its virgin fiber mills, and 10 consumer
packaging plants. The Company's Paperboard/Packaging Products segment
contributed 91% of the Company's net sales in 1997.
The Company's Newsprint segment includes two newsprint mills in Oregon,
which produced 574,000 metric tons of recycled newsprint in 1997, 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 11 new facilities which had
combined sales in 1997 of $374 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 1997, the Company had net sales of $3.2 billion, achieving a
compound annual sales growth rate of 26% 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, 1997 was $2,025 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, 1997, the Company's ratio of earnings to fixed charges was 1.03.
On March 24, 1998, the Company entered into a new credit facility (the
'1998 Credit Agreement') consisting of a $550 million revolving credit facility
(the 'Revolving Credit Facility'), a $400 million seven-year tranche A term
loan, and a $350 million eight-year tranche B term loan. The proceeds from the
1998 Credit Agreement were used to fully prepay the outstanding loans under the
previous credit facility, (the '1994 Credit Agreement') consisting of a $450
million revolving credit facility, a $312 million tranche A term loan, a $283
million tranche B term loan, and a $141 million tranche C term loan. The 1998
Credit Agreement will reduce the interest expense, extend debt maturities, and
improve the financial flexibility of the Company.
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 March 31, 1998, Company had in the aggregate approximately $358
million in unused borrowing capacity under its revolving credit facility and
$110 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 March 31, 1998 includes
repayment obligations of $5 million in 1998, $36 million in 1999, $62 million in
2000, $264 million in 2001 and $160 million in 2002. 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's total
indebtedness increased $96 million during 1997. In addition, if a 'Change of
Control' as defined in the Company's 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 Smurfit
Newsprint Corporation and The Times Mirror Company could also result in The
Times Mirror Company having certain rights under such
5
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<PAGE>
agreement. Similarly, the exercise 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 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 1998 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.
As of December 31, 1997, the Company's stockholder's deficit was $374 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 1998 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 1998 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 1998 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 March 31, 1998, the Company had $1,143 million of secured indebtedness
outstanding, including indebtedness under the 1998 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 1998 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
6
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<PAGE>
foregoing proviso, other subsidiary guarantors, the lenders that are party to
the 1998 Credit Agreement. As a result of the foregoing, in an event of default,
holders of Senior Notes may recover less, ratably, than the lenders that are
party to the 1998 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 $1,128 million, $397 million and $556 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 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 occurred in 1996 and the first half of 1997
referred to below had a negative effect on the Company's profitability. As a
result of the lower pricing, the Company had a net loss in the first and second
quarters of 1997 of $7 million and $4 million, respectively. Conditions
improved, however, in the second half of the year and the Company had a net
income in the third and fourth quarters of 1997 of $8 million and $4 million,
respectively. Market conditions have been stable since the end of 1997, and, for
the months of January and February 1998, the Company's preliminary internal
financial information indicates that the Company's net sales increased to $554.7
million as compared to $522.4 million for the first two months of 1997, its
income from operations increased to $45.8 million as compared to $33.1 million
for the earlier period and net income was $6.3 million as compared to a net loss
of $.3 million for the earlier period.
Containerboard. Containerboard markets were weak from the second half of
1995 to early 1997 due to new capacity added within the industry. The added
capacity resulted in excess inventories and lower selling prices for
containerboard and corrugated shipping containers. Linerboard prices, which had
reached a record high of $535 per ton in April 1995, dropped rapidly thereafter,
declining to below $300 per ton in April 1997. Many paper companies, including
the Company, took economic downtime at their containerboard mills during this
time to reduce inventories. The lower inventory levels and improved market
conditions during 1997 resulted in increases in containerboard prices in the
second half of 1997, and by December 1997, the price of linerboard had risen to
approximately $390 per ton. Linerboard prices have remained stable during the
first two months of 1998.
Newsprint. Demand for newsprint was strong throughout 1995, but was weaker
in 1996 due to reductions in ad lineage and conservation measures taken by
newspaper publishers. Strong demand for newsprint during 1995 resulted in an
all-time record price of approximately $760 per metric ton in October 1995. As
market conditions weakened in 1996, excess inventories developed and selling
prices for newsprint fell to below $500 per metric ton in the first quarter of
1997. Many newsprint producers, including the Company, took economic downtime at
their newsprint mills during 1996 to reduce inventories. Improvement in
newsprint demand in 1997, coupled with an extended strike at a competitor's
mills, resulted in a reduction in the excess inventory levels and provided an
opportunity to raise prices. Two attempts to raise prices during 1997 were
successful and by December 1997, newsprint
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prices had risen to approximately $600 per metric ton. Newsprint prices have
remained stable during the first two months of 1998.
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' 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 1996 and 1997, the Company incurred $3 million and $5 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 finalized significant parts of 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
those parts of the Cluster Rule, the Company estimates that, based on
preliminary engineering studies made as of December 31, 1997 it may require
approximately $175 million in capital expenditures over the next three to five
years. The ultimate cost of complying with the regulations cannot be predicted
with certainty, however, until further engineering studies are completed, and
additional regulations are finalized. Compliance with federal, state and local
environmental requirements is a significant, on-going factor in the Company's
business. It is difficult to predict with certainty the amount of capital
expenditures that will be required to comply with future standards. The Company
has averaged $15 million annually in capital expenditures related to
environmental compliance over the last three years and estimates spending
approximately $34 million in capital expenditures related to environmental
compliance in 1998. A significant amount of the increased expenditures in 1998
will be due to compliance with the Cluster Rule and is included in the $175
million estimate referenced above. 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.
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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 1994 Credit Agreement and the 1998 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 1994 Credit Agreement and the 1998 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
1994 Credit Agreement and the 1998 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 1998 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.
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 1994 Credit Agreement and the
1998 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
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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 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.
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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,
------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges........................ 1.03 1.91 2.60 1.08 (a)
</TABLE>
- ------------
(a) For the year ended December 31, 1993, earnings were inadequate to cover
fixed charges by $264 million.
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)
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 1998 Credit Agreement contains covenants limiting 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 1998 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 1998 Credit Agreement.
JSC(U.S.)'s obligations under the 1998 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 1998 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 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 March 31, 1998, JSC(U.S.) had
outstanding approximately $2,071 million of senior indebtedness (excluding
intercompany indebtedness), of which approximately $1,143 million was secured
indebtedness. The secured indebtedness will have priority over the Senior
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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.
'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
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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 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.
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'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 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
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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 either (i) the 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 (the '1994 Credit Agreement'), (ii) the
Credit Agreement, dated as of March 24, 1998, among JSC, JSCE, JSC(U.S.),
Bankers Trust Company, The Chase Manhattan Bank and the other lenders, as
amended from time to time (the '1998 Credit Agreement'), or (iii) any Credit
Agreement which amends, supplements, extends, renews, replaces, or otherwise
modifies from time to time, including, without limitation, any agreement
increasing the amount of, extending the maturity of, refinancing or otherwise
restructuring all or any portion of such agreement or agreements, provided that
such agreement will be a Credit Agreement under the Indenture only if a notice
to that effect is delivered to the Trustee and there shall be at any time no
more than two instruments that are Credit Agreements.
'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 any 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 1994 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 1994 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 1994 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 1994 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 1994
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 1994 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 1998 Credit Agreement contains 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 1998 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
1998 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, 1998, affiliates of MS&Co. owned approximately 28.7% of the
outstanding shares of JSC Common Stock. Leigh J. Abramson, Alan E. Goldberg,
Michael C. Hoffman, Michael M. Janson 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, 1997, 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 included 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.
41
<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(a) Operating Agreement, dated as of April 30, 1992, by and between Old JSC(U.S.)/CCA and
Smurfit Paperbond, Inc. ('SPI') (incorporated by reference to Exhibit 10.42 to Old
JSC(U.S.)/CCA's Quarterly report on Form 10-Q for the quarter ended March 31, 1992).
10.6(b) Amendment dated February 1, 1998 to allocation policies and procedures for Fernandina
Beach, Florida Mill under the Operating Agreement by and among CCA n/k/a JSC(U.S.) and
SPI.
10.7 Rights Agreement, dated as of April 30, 1992, among Old JSC(U.S.), CCA, SPI 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).
10.8(a) Agreement dated as of May 11, 1994 to amend each of the Operating Agreement and the Rights
Agreement by and between CCA, SPI, SIBV and Bankers Trust Company, as collateral trustee,
and Chemical Bank, as collateral agent.
10.8(b) Agreement dated as of March 24, 1998 to amend each of the Operating Agreement and the
Rights Agreement by and between JSC(U.S.), CCA, SPI, SIBV and the Chase Manhattan Bank, as
collateral agent.
10.9 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).
10.10 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).
10.11 JSC Amended and Restated 1992 Stock Option Plan dated as of May 1, 1997 (incorporated by
reference to Exhibit 10.10 to JSC's Annual report on Form 10-K for the fiscal year ended
December 31, 1997).
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).
</TABLE>
II-2
<PAGE>
<PAGE>
<TABLE>
<C> <S>
10.12(c) Amendment No. 2 dated as of June 15, 1997, to the Amended and Restated Credit Agreement
among JSC, JSC(U.S.), JSCE and the financial institutions party thereto (incorporated by
reference to Exhibit 10.1 to JSC's Quarterly report on Form 10-Q for the quarter ended
June 30, 1997).
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) 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(f) 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(g) 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).
10.13(h) 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).
10.13(i) 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).
10.13(j) Amendment No. 2 dated as of August 19, 1997 to the Term Loan Agreement among JS Finance
and Bank Brussels Lambert, New York Branch and JSC(U.S.) as Servicer (incorporated by
reference to Exhibit 10.12(j) to JSC's Annual report on Form 10-K for the fiscal year
ended December 31, 1997).
10.13(k) Amendment No. 2 dated as of August 19, 1997 to the Receivables Purchase and Sale Agreement
among JSC(U.S.) as the Seller and Servicer and JS Finance as the Purchaser, Bankers Trust
Company as Facility Agent and Bank Brussels Lambert, New York Branch as the Term Bank
(incorporated by reference to Exhibit 10.12(k) to JSC's Annual report on Form 10-K for the
fiscal year ended December 31, 1997).
10.13(l) Amendment No. 2 dated as of August 19, 1997 to the Liquidity Agreement among JS Finance,
Bankers Trust Company as Facility Agent, JSC(U.S.) as Servicer, Bank Brussels Lambert, New
York Branch as Term Bank and the Financial Institutions parties thereto as Banks
(incorporated by reference to Exhibit 10.12(l) to JSC's Annual report on Form 10-K for the
fiscal year ended December 31, 1997).
10.14 Credit Agreement dated as of March 24, 1998, among JSC, JSC(U.S.), JSCE, the Lenders and
Fronting Banks named herein, the Managing Agents named herein, Bankers Trust Company, as
Senior Managing Agent and the Chase Manhattan Bank, as Administrative Agent and Senior
Managing Agent.
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).
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).
</TABLE>
II-3
<PAGE>
<PAGE>
<TABLE>
<C> <S>
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 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.
II-4
<PAGE>
<PAGE>
(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-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. 4 and 5 to the Registration Statements to be
signed on its behalf by the undersigned, thereunto duly authorized, on
.
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. 4 and 5 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 17, 1998
......................................... (Principal Financial and
PATRICK J. MOORE Accounting Officer)
* Director
.........................................
LEIGH J. ABRAMSON
* Director
.........................................
MICHAEL M. JANSON
* Director
.........................................
ALAN E. GOLDBERG
* Director
.........................................
MICHAEL C. HOFFMAN
* Director
.........................................
G. THOMPSON HUTTON
* Director
.........................................
HOWARD E. KILROY
* Director
.........................................
JAMES E. TERRILL
* Director
.........................................
THOMAS A. REYNOLDS, III
</TABLE>
*By /s/ PATRICK J. MOORE
..................................
PATRICK J. MOORE
ATTORNEY-IN-FACT
APRIL 17, 1998
II-6
<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. 4 and 5 to the Registration Statements to be
signed on its behalf by the undersigned, thereunto duly authorized, on
.
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. 4 and 5 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 17, 1998
......................................... (Principal Financial and
PATRICK J. MOORE Accounting Officer)
* Director
.........................................
LEIGH J. ABRAMSON
* Director
.........................................
MICHAEL M. JANSON
* Director
.........................................
ALAN E. GOLDBERG
* Director
.........................................
MICHAEL C. HOFFMAN
* Director
.........................................
G. THOMPSON HUTTON
* Director
.........................................
HOWARD E. KILROY
* Director
.........................................
JAMES E. TERRILL
* Director
.........................................
THOMAS A. REYNOLDS, III
</TABLE>
*By /s/ PATRICK J. MOORE
..................................
PATRICK J. MOORE
ATTORNEY-IN-FACT
APRIL 17, 1998
II-7
<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(a) Operating Agreement, dated as of April 30, 1992, by and between Old JSC(U.S.)/CCA
and SPI (incorporated by reference to Exhibit 10.42 to Old JSC(U.S.)/CCA's
Quarterly report on Form 10-Q for the quarter ended March 31, 1992)...............
10.6(b) Amendment dated February 1, 1998 to Allocation Policies and Procedures for Fernandia
Beach, Florida Mill under the Operating Agreement by and among CCA n/k/a JSC(U.S.)
and SPI...........................................................................
10.7 Rights Agreement, dated as of April 30, 1992, among Old JSC(U.S.), CCA, SPI 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)...................................................................
10.8(a) Agreement dated as of May 11, 1994 to amend each of the Operating Agreement and the
Rights Agreement by and between CCA, SPI, SIBV and Bankers Trust Company, as
collateral trustee, and Chemical Bank, as collateral agent........................
10.8(b) Agreement dated as of March 24, 1998 to amend each of the Operating Agreement and
the Rights Agreement by and between JSC(U.S.), CCA, SPI, SIBV, and the Chase
Manhattan Bank, as collateral agent...............................................
10.9 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)................................................................
10.10 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).....
10.11 JSC Amended and Restated 1992 Stock Option Plan dated as of May 1, 1997
(incorporated by reference to Exhibit 10.10 to JSC's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997)......................................
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).............................................................................
10.12(c) Amendment No. 2 dated as of June 15, 1997, to the Amended and Restated Credit
Agreement among JSC, JSC(U.S.), JSCE and the financial institutions party thereto
(incorporated by reference to Exhibit 10.1 to JSC's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997)..............................................
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) 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).............................................
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OF EXHIBIT
EXHIBIT IN SEQUENTIAL
NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- --------- ------------------------------------------------------------------------------------ -------------------
<C> <S> <C>
10.13(f) 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(g) 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).............................................................
10.13(h) 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)................
10.13(i) 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).
10.13(j) Amendment No. 2 dated as of August 19, 1997 to the Term Loan Agreement among JS
Finance and Bank Brussels Lambert, New York Branch and JSC(U.S.) as Servicer
(incorporated by reference to Exhibit 10.12(j) to JSC's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997)......................................
10.13(k) Amendment No. 2 as of August 19, 1997 to the Receivables Purchase and Sale Agreement
among JSC(U.S.) as the Seller and Servicer and JS Finance as the Purchaser,
Bankers Trust Company as Facility Agent and Bank Brussels Lambert, New York Branch
as the Term Bank (incorporated by reference to Exhibit 10.12(k) to JSC's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997)..................
10.13(l) Amendment No. 2 dated as of August 19, 1997 to the Liquidity Agreement among JS
Finance, Bankers Trust Company as Facility Agent, JSC(U.S.) as Servicer, Bank
Brussels Lambert, New York Branch as Term Bank and the Financial Institutions
parties thereto as Banks (incorporated by reference to Exhibit 10.12(l) to JSC's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997)...........
10.14 Credit Agreement dated as of March 24, 1998, among JSC, JSC(U.S.), JSCE, the Lenders
and Fronting Banks named herein, the Managing Agents named herein, Bankers Trust
Company, as Senior Managing Agent and the Chase Manhattan Bank, as Administrative
Agent and Senior Managing Agent...................................................
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).........................
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>
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* Previously filed.
<PAGE>
<PAGE>
EXHIBIT 10.6(b)
AMENDMENT TO ALLOCATION POLICIES AND PROCEDURES
FOR FERNANDINA BEACH, FLORIDA MILL
UNDER THE
OPERATING AGREEMENT
BY AND AMONG
CONTAINER CORPORATION OF AMERICA
N/K/A JEFFERSON SMURFIT CORPORATION (U.S.)
AND
SMURFIT PAPERBOARD, INC.
THIS AMENDMENT is effective this lst day of February 1998 by and between
Jefferson Smurfit Corporation (U.S.), f/k/a Container Corporation of America
(hereinafter 'JSC'), and Smurfit Paperboard, Inc. ('SPI').
WITNESSETH
WHEREAS, JSC and SPI entered into that certain Operating Agreement dated as
of the 30th day of April 1992 (the 'Operating Agreement') in connection with the
ownership, operation and related transactions involving the production and sale
of linerboard from SPI's No. 2 linerboard machine located at JSC's Fernandina
Beach, Florida paper mill; and
WHEREAS, the division of operating costs and other matters, including
transfer pricing with respect to the sale of linerboard from the No. 2 machine
to JSC and its exchange customers, is set forth in Exhibit A to the Operating
Agreement titled 'Allocation Policies and Procedures for Fernandina Beach,
Florida Mill' (hereinafter, the 'Allocation Policies'); and
WHEREAS, the parties desire to amend the Transfer Price Method section of
the Allocation Policies to reflect an objective approximation of actual market
pricing.
NOW, THEREFORE, the parties hereby agree as follows:
1. References to JSC in this amendment shall be deemed to mean CCA, as
defined in the Operating Agreement.
2. The section titled 'Proposed Transfer Price Method' of the Allocation
Policies is hereby amended to read in its entirety as set forth in
Attachment 1 hereto.
3. This amendment shall be effective as of February 1, 1998.
4. Except as amended hereby, by Revision No. 1 (effective January 1992) to
pages 67/68 of the Allocation Policies, and by Agreement dated as of May
11, 1994 by and between CCA, SPI, SIBV, Bankers Trust and Chemical (each
as defined therein), the Operating Agreement and the Allocation Policies
have not been amended and remain in full force and effect as of the date
hereof.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
JEFFERSON SMURFIT CORPORATION (U.S.)
By: PATRICK J. MOORE
..............................
Name: Patrick J. Moore
Title: Vice President and CFO
SMURFIT PAPERBOARD, INC.
By: MICHAEL SMURFIT JNR
...........................
Name: Michael Smurfit Jnr
Title: President and CEO
<PAGE>
<PAGE>
ATTACHMENT I
PROPOSED TRANSFER PRICE METHOD
Net sales recorded by SPI will be determined as if it was independent of
JSC. All sales from SPI's paper machine will be processed by SPI, regardless of
the customer. Sales to trade customers or JSG affiliates other than JSC will be
recorded by SPI at the invoice price. Sales to JSC ('intercompany transfers')
and to JSC exchange customers ('exchanges') will be invoiced by SPI to JSC or
the exchange customer and recorded as sales by SPI at the intercompany transfer
and exchange list price per ton for each of the applicable grades, as determined
by JSC's Logistics Department, which prices are derived from the publication
Pulp and Paper Week. SPI will record the freight costs it incurs related to its
sales. An adjustment to the intercompany transfer and exchange prices invoiced
by SPI will be made at the end of each month, resulting in a payment by SPI or
JSC to the other, as the case may be. The invoiced prices will be adjusted such
that intercompany transfers and exchanges will be recorded as follows:
1. Each month, the intercompany transfer and exchange price per ton
for all SPI intercompany transfer and exchange sales of 42-pound Kraft
linerboard, except those sales representing distressed grades as described
above, shall be the midpoint of the unbleached East Kraft liner price range
published in the publication Pulp and Paper Week.
2. Each month, the intercompany transfer and exchange price per ton
for all SPI intercompany transfer and exchange sales of all grades other
than 42-pound Kraft linerboard shall be the sum of the price of 42-pound
Kraft linerboard as set forth in paragraph 1 above plus the respective
upcharge for each such other grade as determined by JSC's Logistics
Department each month.
3. Published prices shall be retroactive to the beginning of the month
in which such price is published.
4. Prices as determined in paragraphs 1 and 2 above shall be reduced
by $10 per ton when the Pulp and Paper Week published price indicates
discounting of list prices has been reported in the market (indicated in
the publication with an asterisk (*) on the selling price, by footnote or
otherwise).
<PAGE>
<PAGE>
AGREEMENT
AGREEMENT, dated as of May 11, 1994, by and between Container Corporation
of America, a Delaware corporation having an office at Jefferson Smurfit Center,
8182 Maryland Avenue, St. Louis, Missouri 63105 ("CCA"), Smurfit Paperboard,
Inc., a Delaware corporation having an office at Jefferson Smurfit Centre, 8182
Maryland Avenue, St. Louis, Missouri 63105 ("SPI"), Smurfit International B.V.,
a Netherlands corporation having its legal seat at Amsterdam and an office at
Strawinskylaan 2001, 1077 ZZ Amsterdam, The Netherlands ("SIBV"), Bankers Trust
Company, a New York banking corporation having an office at 130 Liberty Street,
New York, New York 10006 ("Bankers Trust"), as collateral trustee (in such
capacity, the "Collateral Trustee") for the 1989 Secured Parties (as hereinafter
defined), and Chemical Bank, a New York banking corporation having an office at
10 South LaSalle Street, Chicago, Illinois 60603-1907 ("Chemical"), as
collateral agent (in such capacity, the "Collateral Agent") for the 1994 Secured
Parties (as hereinafter defined).
WITNESSETH:
A. CCA and SPI have entered into an Operating Agreement, dated as of April
30, 1992 (the "Operating Agreement"), pursuant to which CCA provides certain
services to SPI with respect to the SPI Assets (as defined therein), including
the No. 2 linerboard machine located at CCA's paperboard mill in Fernandina
Beach, Florida (the "Mill").
B. CCA, SPI and the Collateral Trustee have entered into a Rights
Agreement, dated as of April 30, 1992 (the "Rights Agreement"), with respect to
the Mill and the SPI Assets. As security for the performance by SPI of its
obligations under the Rights Agreement, SPI and the Collateral Trustee have
entered into a Security Agreement, dated as of April 30, 1992 (the "SPI Security
Agreement").
C. In connection with the foregoing transactions, SIBV has entered into a
letter agreement, dated as of April 30, 1992 (the "SIBV Guarantee" and, together
with the Operating Agreement, the Rights Agreement and the SPI Security
Agreement, the "Fernandina Agreements"), in favor of the Collateral Trustee.
<PAGE>
<PAGE>
2
D. On or about the date hereof, a series of transactions are being effected
which include, among other things, the following (the agreements referred to in
clauses (i), (iii) and (iv) below being dated as of the date hereof): (i) CCA,
Jefferson Smurfit Corporation, a Delaware corporation formerly named SIBV/MS
Holdings, Inc. ("JSC"), and Jefferson Smurfit Corporation (U.S.), a Delaware
corporation formerly named Jefferson Smurfit Corporation (together with CCA, the
"Borrowers"), are entering into a Credit Agreement (as it may be amended or
restated from time to time, the "1994 Credit Agreement") with the Collateral
Agent and the lenders, agents and fronting banks named therein (the "1994
Secured Parties"),(ii) borrowing under the 1994 Credit Agreement and certain
other funds are being used to refinance (the "Refinancing"), among other
indebtedness, all indebtedness outstanding under (x) the Second Amended and
Restated Credit Agreement, dated as of November 9, 1989, as amended, among JSC,
the Borrowers, the lenders named therein, Bankers Trust as agent and Chemical
and Bank of America National Trust and Savings Association as co-agents and (y)
the Amended and Restated Note Purchase Agreement, dated as of December 14, 1989,
as amended, among the Borrowers and the purchasers of the senior secured notes
issued thereunder (the lenders referred to in clause (x) and the purchasers
referred to in clause (y), collectively, the "1989 Secured Parties"), (iii) CCA,
as mortgagor, and the Collateral Agent, are entering into a Term Loan and
Revolving Credit Mortgage, Assignment of Rents, Security Agreement and Fixture
Filing (as it may be amended from time to time, the "1994 CCA Mortgage") with
respect to the Mill and (iv) CCA and certain of its affiliates, as grantors, and
the Collateral Agent, are entering into a Security Agreement (as it may be
amended from time to time, the "1994 Security Agreement") with respect to
certain collateral, including all of CCA's rights in and to the Operating
Agreement and the Rights Agreement.
E. In connection with the actions referred to in paragraph D above, (i) the
parties to the Fernandina Agreements desire to amend the Fernandina Agreements
in certain respects and (ii) the Collateral Trustee desires to assign to the
Collateral Agent all of its rights, and the Collateral Agent desires to assume
all of the Collateral Trustee's obligations, under the Fernandina Agreements as
so amended, upon the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
1. Effectiveness. This Agreement shall be deemed to take effect immediately
prior to the Refinancing.
<PAGE>
<PAGE>
3
2. General Provisions.
(a) Any reference in any of the Fernandina Agreements to the Rights
Agreement or to any other Fernandina Agreement shall be deemed to refer to the
applicable Fernandina Agreement as amended and, with respect to the rights and
obligations of the Collateral Trustee, assigned hereby.
(b) When used in the Fernandina Agreements, the term "Collateral
Trustee" shall be deemed to refer to the Collateral Agent as the Collateral
Trustee's assignee. Any reference in any of The Fernandina Agreements to any of
the 1989 Secured Parties shall be deemed to refer to the 1994 Secured Parties.
(c) The notice provision in each of the Operating Agreement, Rights
Agreement and the SPI Security Agreement is hereby amended by deleting the
information with respect to Bankers Trust and Cahill Gordon & Reindel and
inserting the following in its place:
"Chemical Bank, as Collateral Agent
10 South LaSalle Street
23rd Floor
Chicago, IL 60603-1907
Attention: Jonathan E. Twichell
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Attention: C. Allen Parker"
(d) SPI's address in the notice provision in each of the Operating
Agreement, Rights Agreement and SPI Security Agreement is hereby amended to read
as follows:
"Smurfit Paperboard, Inc.
c/o Smurfit Packing Corporation
Jefferson Smurfit Centre
8182 Maryland Avenue
St. Louis, Missouri 63105
Attention: James B. Malloy"
<PAGE>
<PAGE>
4
3. Other Amendments to Operating Agreement.
(a) Section 5.01 of the Operating Agreement is hereby amended by
deleting the term "Organization Agreement" and inserting the following in its
place: "Stockholders Agreement, dated as of May 3, 1994, by and among Smurfit
International B.V., a Netherlands corporation, The Morgan Stanley Leveraged
Equity Fund II, L.P., a Delaware limited partnership, Jefferson Smurfit
Corporation, a Delaware corporation formerly named SIBV/MS Holdings, Inc., and
the other parties thereto (as it may be amended from time to time)."
(b) The last sentence of Section 5.05 of the Operating Agreement is
herby amended by (i) deleting the term "Class B" immediately prior to the word
"Directors" and (ii) deleting the phrase", the Credit Agreement or the note
Purchase Agreement" and inserting the following in its place: "or the Credit
Agreement, dated as of May 11, 1994, among Jefferson Smurfit Corporation, a
Delaware corporation formerly named SIBV/MS Holdings, Inc., Jefferson Smurfit
Corporation (U.S.), a Delaware corporation formerly named Jefferson Smurfit
Corporation, CCA and the lenders and other parties thereto (as it may be amended
or restated from time to time)."
(c) Section 7.04 of the Operating Agreement, and the penultimate
sentence of Section 8.08 of the Operating Agreement, are each hereby amended to
insert the following phrase immediately after the term "Organization Agreement":
"(as though such agreement were still in effect)".
4. Other Amendments to Rights Agreement.
(a) Each reference in the Rights Agreement (i) to the "CCA Mortgage",
shall be deemed to refer to the 1994 CCA Mortgage, (ii) to the "CCA Security
Agreement", shall be deemed to refer to the 1994 Security Agreement, (iii) to
the "Credit Agreement", shall be deemed to refer to the 1994 Credit Agreement
and (iv) to the "Agents", shall be deemed to refer to Chemical as administrative
agent under the 1994 Credit Agreement.
(b) The fourth sentence of Section 1.2 of the Rights Agreement is hereby
amended and restated in its entirety, and a new sentence is inserted immediately
thereafter, to read as follows:
"Contemporaneously with the delivery of the Option Notice, SPI
shall pay to the Collateral Trustee for deposit in a segregated,
interest-bearing escrow account
<PAGE>
<PAGE>
5
to be maintained by Collateral Trustee on terms reasonably
satisfactory to SPI (the "Collateral Account"), $1,000,000 in cash,
representing a downpayment (the "Downpayment") for the purchase of
the Mill. Without limiting the generality of the foregoing, the
Escrow Account shall (i) under no circumstances be commingled with
any funds of Collateral Trustee or any other person; (ii) be
maintained at the expense of CCA; (iii) be subject to instructions
requiring that the funds on deposit therein be disbursed in
accordance with (and only in accordance with) the terms of this
Agreement; and (iv) be subject to a lien in favor of SPI to the
extent of SPI's interest therein."
(c) Section 1.6 of the Rights Agreement is hereby amended by deleting
the name "Cahill Gordon & Reindel" and inserting the following in its place:
"Cravath, Swaine & Moore".
(d) Section 1.8 of the Rights Agreement is hereby amended by deleting
the term "Eurodollar Rate" and inserting the following in its place: "LIBO
Rate".
(e) The first sentence of Section 3.4 of the Rights Amendment is hereby
amended by deleting from the end thereof the words "as provided in the
Collateral Trust Agreement" and substituting therefor the word "thereon".
(f) Section 3.5 of the Rights Agreement is hereby amended by deleting
from the thirtieth and thirty-first lines thereof the words "as provided in the
Collateral Trust Agreement" and substituting therefor the word "thereon".
(g) Section 3.6 of the Rights Agreement is hereby amended and restated
in its entirety to read as follows:
"3.6 Proceeds of Transfer of Mill and/or SPI Property to
Collateral Trustee or Secured Party. In the event that all of the
Mill and the SPI Property is Transferred to Collateral Trustee or
any Secured Party (or any agent or nominee of Collateral Trustee or
any Secured Party) pursuant to the exercise by Collateral Trustee
of its rights or remedies under the CCA Mortgage, the CCA Security
Agreement, the SPI Security
<PAGE>
<PAGE>
6
Agreement and/or this Agreement, Collateral Trustee shall (a)
promptly upon the receipt thereof, deposit the aggregate proceeds
of such Transfer less reasonable costs and expenses payable by
Collateral Trustee in connection with any such Transfer in the
Collateral Account (it being understood that the portion of the
Transfer proceeds described in the following clause (b) shall be
held for the sole benefit of SPI), and (b) promptly upon the
determination of the Sale Value, in accordance with the provisions
of this subsection and Section 5, pay to SPI an amount equal to the
Sale Value, together with SPI's pro rara portion of any investment
earnings that may have accrued thereon; provided, however, that the
SPI Property shall not also be Transferred with the Mill pursuant
to this subsection 3.6 unless at the time of such Transfer, SPI
receives adequate security that it shall be paid, in respect of
such Transfer, the Sale Value (together with any interest earnings
thereon). Notwithstanding anything herein to the contrary, in the
event that all or any portion of the Mill (but not the SPI
Property) is Transferred to Collateral Trustee or any Secured Party
(or any agent or nominee of Collateral Trustee or any Secured
Party) pursuant to the exercise by Collateral Trustee of its rights
or remedies under the CCA Mortgage and/or the CCA Security
Agreement, then (a) Collateral Trustee shall deliver, or cause to
be delivered, to SPI simultaneously with such Transfer a quit claim
deed, in substantially the form of the Realty Deed, with respect to
the Realty Improvements, if any (whereupon the term "SPI Property"
shall be deemed to include the Realty Improvements, if any), and (b)
all provisions of this Agreement with respect to the SPI Property
(including, without limitation, subsections 3.2 and 3.4) shall
thereafter continue in full force and effect. To the extent possible, the
reconveyance of any such Realty Improvements shall be treated as a
rescission of the original conveyance from SPI to CCA."
<PAGE>
<PAGE>
7
(h) Section 5.3 of the Rights Agreement is hereby amended and restated
in its entirety to read as follows:
"5.3. Assumptions Applicable to Other Transfers Under Section
3. In the event there has been any Transfer of the character
specified in subsection 3.5, the Appraisers (taking into account
the Appraisal Assumptions and the standards set forth in subsection
5.2 to the extent appropriate) shall determine the respective
values of all the property so Transferred and the Realty
Improvements, if any, so Transferred (it being understood that to
the extent that the Realty Improvements, if any, are comprised of
Mill Improvements, the value thereof shall be deemed to be the
depreciated book value (but not the depreciated value for tax
purposes) of the Mill Improvements so Transferred). Each value
referred to in this subsection 5.3 and each value referred to in
subsection 5.2 with respect to any Transfer covered thereby, shall
be an `Appraised Value.'"
(i) Section 6.1(d) of the Rights Agreement is hereby amended and
restated in its entirety to read as follows;
"(d) By acceptance of the benefits provided under the
Agreement, SPI acknowledges that Chemical Bank is acting as a
lender and agent under the Credit Agreement, and SPI agrees that
Chemical Bank (or any successor in its capacity as lender or agent)
may perform all its obligations and take any action hereunder as
though it were not a lender and agent under the Credit Agreement."
(j) Section 6.3(a) of the Rights Agreement is hereby amended by deleting
from the second and third lines thereof the words "or of any of the trusts
created by the Collateral Trustee Agreement".
(k) The first sentence of Section 6.3(b) of the Rights Agreement is
hereby amended by deleting from the eighth line thereof the words "Trust Estate"
and substituting therefor the words "Collateral Account".
<PAGE>
<PAGE>
8
(l) Section 6.3(c) of the Rights Agreement is hereby amended by deleting
from the penultimate and last lines thereof the words ", the Collateral Trust
Agreement".
(m) Section 6.4 of the Rights Agreement is hereby amended and restated
in its entirety to read as follows:
"6.4 Limitations on Duties of Collateral Trustee. Except as
herein otherwise expressly provided, neither Collateral Trustee nor
the Agents shall be under any obligation to take any action which
Collateral Trustee or the Agents shall have the right to take or
forbear from taking in their discretion under the provisions hereof
or of any Security Document (as defined in the Credit Agreement).
(n) Section 6.5 of the Rights Agreement is hereby amended by (i)
deleting from the fourth line thereof the words "and the Collateral Trust
Agreement" and (ii) deleting from the last line thereof the words "and therein".
(o) Section 6.6 of the Rights Agreement is hereby deleted in its
entirety and the words "[Intentionally Omitted]" substituted therefor.
(p) Section 6.7 of the Rights Agreement is hereby amended by (i)
inserting in the third line thereof, the words "and subsection 8.1" immediately
after the words "subsection 3.10" and (ii) deleting from the fourth and fifth
lines therrof the words "trust created by the Collateral Trust Agreement" and
substituting therefor the words "Collateral Account".
(q) Section 8.1 of the Rights Agreement is hereby amended and restated
in it entirety to read as follows:
"8.1 Certain Damages. In the event of a breach of this
Agreement by Collateral Trustee, SPI agrees that it shall not have
and hereby waives any right to seek specific performance and that
it shall be entitled only to money damages in respect of any such
breach; provided, however, that in no event shall the amount of
such money damages exceed the sum of (i) the funds (if any) then on
deposit in the Collateral Account plus (ii) the aggregate proceeds
(other than
<PAGE>
<PAGE>
9
those referred to in clause (i) realized by Collateral Trustee on
behalf of the Secured Parties pursuant to the exercise of its
remedies under or with respect to the Security Documents (as
defined in the Credit Agreement), plus (iii) in each such case, any
investment earnings that may have accrued thereon."
(r) Section 8.2 of the Rights Agreement is hereby amended and restated
in its entirety to read as follows:
"8.2 Time Periods. At the request of SPI, Collateral Trustee
(acting at the direction of the Required Lenders (as defined in the
Credit Agreement)) shall be entitled to extend any time periods set
forth in this Agreement for delivery of any item or the performance
of any condition required under this Agreement."
(s) Section 8.13 of the Rights Agreement is hereby amended by deleting
from the seventh and eighth lines thereof the words "Collateral Trust Agreement"
and substituting therefor the words "Credit Agreement".
5. Other Amendments to SPI Security Agreement.
(a) Section 1.2 of the SPI Security Agreement is hereby amended by (i)
deleting the comma in the eighth line thereof and substituting the word "and"
therefor and (ii) deleting from the eighth and ninth lines thereof the words
"and the Collateral Trust Agreement".
(b) Section 3.4 of the SPI Security Agreement is hereby amended by (i)
deleting from the fourth line thereof the words "and Collateral Trust Agreement"
and (ii) deleting from the seventh and eighth lines thereof the words "and in
Sections 3.3 and 4.1 of the "Collateral Trust Agreement."
6. Assignment and Assumption.
(a) The Collateral Trustee hereby assigns to the Collateral Agent all of
the Collateral Trustee's rights in and under the Fernandina Agreements as
amended hereby. The Collateral Trustee hereby assigns to the Collateral Agent,
and the Collateral Agent hereby assumes all liability with respect to and agrees
to be solely responsible for, the Collateral Trustee's respective obligations to
be performed or observed under each of the Fernandina Agreements as amended
hereby and
<PAGE>
<PAGE>
10
each of SPI, SIBV and CCA hereby releases Bankers Trust, individually and as
Collateral Trustee, from all such obligations.
(b) The Collateral Agent covenants and agrees that it will duly perform
and observe all obligations assumed by it hereunder. In the event that the
Collateral Agent shall fail to perform or observe any of the obligations assumed
by it hereunder, SPI or, in the case of the SIBV Guarantee, SIBV, may proceed
directly against the Collateral Agent for the enforcement thereof.
(c) SPI and CCA, in the case of the Fernandina Agreements other than the
SIBV Guarantee, hereby consent to the aforementioned assignment and assumption
and agree to perform the Fernandina Agreements to which they are parties for the
benefit of the Collateral Agent and the 1994 Secured Parties. SIBV, in the case
of the SIBV Guarantee, hereby (i) consents to the aforementioned assignment and
assumption, (ii) to the extent necessary under applicable law, confirms and
repeats its obligations thereunder as if the SIBV Guarantee were repeated and
incorporated herein verbatim as amended by the provisions of Section 2 hereof
and expressly addressed to the Collateral Agent, and (iii) agrees to perform the
SIBV Guarantee as so amended for the benefit of the Collateral Agent and the
1994 Secured Parties.
7. Miscellaneous.
(a) All filings and recordings reasonably requested by the Collateral
Agent with respect to this Agreement and the Fernandina Agreements will be made
promptly following the date hereof. It is intended that this Agreement be
recorded in the land records of Nassau County, Florida and recorded or filed in
all other places necessary to perfect or confirm the rights herein conferred
upon the parties hereto.
(b) Except as expressly set forth herein, this Agreement shall not, by
implication or otherwise, limit, constitute a waiver of or otherwise affect the
rights and remedies of the Collateral Agent or the other parties to the
Fernandina Agreements, nor shall this Agreement alter, modify, amend or in any
way affect any of the terms, conditions, obligations, covenants or agreements
contained therein, and each of the Fernandina Agreements shall continue in full
force and effect in accordance with the provisions thereof.
<PAGE>
<PAGE>
11
(c) This Agreement may be executed in individual counterparts, each of
which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
(d) THE PROVISIONS OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
(e) This Agreement may be modified only by an agreement in writing
signed by the parties hereto or their respective successors in interest.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the date first written above.
Signed, sealed and delivered CONTAINER CORPORATION OF
in the presence of: AMERICA, a Delaware corporation
/s/ Richard P. Marra By: /s/ Patrick J. Moore
- --------------------------------- ----------------------------------
Name: Richard P. Marra Name: Patrick J. Moore
Title: Vice President
/s/ Michael E. Tierney
- ---------------------------------
Name: Michael E. Tierney (CORPORATE SEAL)
Signed, sealed and delivered SMURFIT PAPERBOARD, INC.,
in the presence of: a Delaware corporation
By:
- --------------------------------- ----------------------------------
Name: Name:
Title:
- ---------------------------------
Name: (CORPORATE SEAL)
<PAGE>
<PAGE>
STATE OF ____________ )
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me the 11 day of May,
1994, by Patrick J. Moore, the VP of CONTAINER CORPORATION OF AMERICA, a
Delaware corporation, on behalf of the corporation. He/she is personally known
to me or has produced Drivers Licence as identification.
/s/ Christini Egan
----------------------------------
Name:
Title:
Serial No.
STATE OF ____________ )
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me the __ day of ________,
1994, by ____________________, the __________ of SMURFIT PAPERBOARD, INC., a
Delaware corporation, on behalf of the corporation. He/she is personally known
to me or has produced _______________ as identification.
----------------------------------
Name:
Title:
Serial No.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the date first written above.
Signed, sealed and delivered CONTAINER CORPORATION OF
in the presence of: AMERICA, a Delaware corporation
By:
- --------------------------------- ----------------------------------
Name: Name:
Title:
- ---------------------------------
Name: (CORPORATE SEAL)
Signed, sealed and delivered SMURFIT PAPERBOARD, INC.,
in the presence of: a Delaware corporation
/s/ Mary Duda By: /s/ James B. Malloy
- --------------------------------- ----------------------------------
Name: Mary Duda Name: James B. Malloy
Title: Chairman and President
/s/ Michael E. Tierney
- ---------------------------------
Name: Michael E. Tierney (CORPORATE SEAL)
<PAGE>
<PAGE>
Signed and delivered SMURFIT INTERNATIONAL B.V.,
in the presence of: a Netherlands corporation
/s/ Illegible /s/ Rokin Corporate Services B.V.
- ---------------------------------- -----------------------------------
Name: Illegible Name: M. de Boer, N. Scholtens
Title: Directors
/s/ S. Plat
- ----------------------------------
Name: S. Plat
Seen for legalisation by me, Hajo Bart Hendrik Kraak, civil law notary,
officiating in Amsterdam, of the signatures of Messrs. Muus de Boer and Nicolaas
Scholtens, personally known to me, who are jointly authorized to sign for and on
behalf of Rokin Corporate Services B.V., with registered seat in Amsterdam,
being a managing director of Smurfit International B.V. ("the Company"),
Strawinskylaan 2001, 1077 ZZ Amsterdam, the Netherlands, and as such authorized
to sign for and on behalf of the Company.
Amsterdam, May 6, 1994
[NOTARY SEAL]
<PAGE>
<PAGE>
STATE OF ____________ )
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me the __ day of ________,
1994, by ________________, the _________ of CONTAINER CORPORATION OF AMERICA, a
Delaware corporation, on behalf of the corporation. He/she is personally known
to me or has produced _______________ as identification.
----------------------------------
Name:
Title:
Serial No.
STATE OF Missouri )
COUNTY OF St. Louis )
The foregoing instrument was acknowledged before me the 9th day of May,
1994, by James B. Malloy, the Chmn. & Pres. of SMURFIT PAPERBOARD, INC., a
Delaware corporation, on behalf of the corporation. He/she is personally known
to me or has produced _______________ as identification.
/s/ Jacqueline C. Brockelmeyer
----------------------------------
Name: Jacqueline C. Brockelmeyer
Title: Notary
[NOTARY SEAL]
<PAGE>
<PAGE>
Signed, sealed and delivered BANKERS TRUST COMPANY, a New
in the presence of: York banking corporation,
as Collateral Trustee for the
1989 Secured Parties
/s/ Illegible By: /s/ Mary Zadroga
- --------------------------------- ----------------------------------
Name: Name: Mary Zadroga
Title: Vice President
/s/ Illegible
- ---------------------------------
Name: (CORPORATE SEAL)
Signed, sealed and delivered CHEMICAL BANK, a New York
in the presence of: banking corporation, as
Collateral Agent for the
1994 Secured Parties
By:
- --------------------------------- ----------------------------------
Name: Name:
Title:
- ---------------------------------
Name: (CORPORATE SEAL)
<PAGE>
<PAGE>
STATE OF New York )
COUNTY OF New York )
The foregoing instrument was acknowledged before me the 10th day of May,
1994, by Mary Zadroga, the VP of BANKERS TRUST COMPANY, a New York banking
corporation, on behalf of the corporation. He/she is personally known
to me or has produced _______________ as identification.
/s/ Peter Z. Sivere
----------------------------------
Name:
Title:
Serial No.
[NOTARY SEAL]
STATE OF __________ )
COUNTY OF _________ )
The foregoing instrument was acknowledged before me the ___ day of _______,
1994, by _______________, the _____________ of CHEMICAL BANK, a New York banking
corporation, on behalf of the corporation. He/she is personally known
to me or has produced _______________ as identification.
----------------------------------
Name:
Title:
Serial No.
<PAGE>
<PAGE>
Signed, sealed and delivered BANKERS TRUST COMPANY, a New
in the presence of: York banking corporation,
as Collateral Trustee for the
1989 Secured Parties
By:
- --------------------------------- ----------------------------------
Name: Name:
Title:
- ---------------------------------
Name: (CORPORATE SEAL)
Signed, sealed and delivered CHEMICAL BANK, a New York
in the presence of: banking corporation, as
Collateral Agent for the
1994 Secured Parties
/s/ Illegible By: /s/ Illegible
- --------------------------------- ----------------------------------
Name: Name:
Title:
/s/ Illegible
- ---------------------------------
Name: (CORPORATE SEAL)
<PAGE>
<PAGE>
STATE OF ____________ )
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me the __ day of ________,
1994, by ________________, the _________ of BANKERS TRUST COMPANY, a New York
banking corporation, on behalf of the corporation. He/she is personally known
to me or has produced _______________ as identification.
----------------------------------
Name:
Title:
Serial No.
STATE OF New York )
COUNTY OF New York )
The foregoing instrument was acknowledged before me the 10th day of May,
1994, by Brian Comiskey, the Vice President of CHEMICAL BANK, a New York banking
corporation, on behalf of the corporation. He/she is personally known
to me or has produced _______________ as identification.
/s/ Frank J. Forlenza
----------------------------------
Name:
Title:
Serial No.
[NOTARY SEAL]
<PAGE>
<PAGE>
AGREEMENT
AGREEMENT, dated as of March 24, 1998 by and between Jefferson
Smurfit Corporation (U.S.), a Delaware corporation having an office at Jefferson
Smurfit Centre, 8182 Maryland Avenue, St. Louis, Missouri 63105 (as successor to
a merger with Container Corporation of America) ("JSCUS"), Smurfit Paperboard,
Inc., a Delaware corporation having an office at Jefferson Smurfit Centre, 8182
Maryland Avenue, St. Louis, Missouri 63105 ("SPI"), Smurfit International B.V.,
a Netherlands corporation having its legal seat in Amsterdam and an office at
Strawinskylaan 2001, 1007 22 Amsterdam, The Netherlands ("SIBV") and The Chase
Manhattan Bank ("Chase"), a New York banking corporation having an office at 10
South LaSalle Street, Chicago, Illinois 60603-1907 (as successor to a merger
with Chemical Bank), as collateral agent (in such capacity, the "1994 Collateral
Agent") for the 1994 Secured Parties (as defined in the 1994 Amendment Agreement
referred to below) and as collateral agent (in such capacity, the "1998
Collateral Agent") for the 1998 Secured Parties (as hereinafter defined).
WITNESSETH:
A. JSCUS and SPI are party to an Operating Agreement, dated as of
April 30, 1992 (as amended, the "Operating Agreement") pursuant to which JSCUS
provides certain services to SPI with respect to the SPI Assets (as defined
therein), including the No. 2 linerboard machine located at JSCUS's paperboard
mill in Fernandina Beach, Florida (the "Mill").
B. JSCUS, SPI and the 1994 Collateral Agent are party to a Rights
Agreement, dated as of April 30, 1992 (as amended, the "Rights Agreement"), with
respect to the Mill and the SPI Assets. As security for the performance by SPI
of its obligations under the Rights Agreement, SPI and the 1994 Collateral Agent
are party to a Security Agreement, dated as of April 30, 1992 (as amended, the
"SPI Security Agreement").
C. In connection with the foregoing transaction, SIBV has entered
into a letter agreement, dated as of April 30, 1992 (the "SIBV Guarantee" and,
together with the Operating Agreement, the Rights Agreement and the SPI Security
Agreement, the "Fernandina Agreements"), in favor of the 1994 Collateral Agent.
<PAGE>
<PAGE>
D. JSCUS, SPI, SIBV, the 1994 Collateral Agent and Bankers Trust
Company, as collateral trustee (the "Collateral Trustee"), entered into an
Agreement dated as of May 11, 1994 (the "1994 Amendment Agreement") pursuant to
which, among other things, the Collateral Trustee assigned to the 1994
Collateral Agent all of the Collateral Trustee's rights in, and liabilities with
respect to, the Fernandina Agreements.
E. On the date hereof, (i) JSCUS, Jefferson Smurfit Corporation,
a Delaware corporation ("JSC"), and JSCE, Inc., a Delaware corporation ("JSCE"),
are entering into a Credit Agreement (as it may be amended or restated from time
to time, the "1998 Credit Agreement") with the 1998 Collateral Agent and the
lenders, managing agents, senior managing agents, fronting banks, swingline
leader and administrative agent named therein (collectively, the "1998 Secured
Parties") pursuant to which borrowings under the 1998 Credit Agreement are being
used to refinance (the "Refinancing") all indebtedness outstanding under the
Amended and Restated Credit Agreement, dated as of May 17, 1996, as amended,
among JSC, JSCUS, JSCE, the lenders, agents, and fronting banks named therein,
and Chase, as administrative agent; (ii) JSCUS, as mortgagor, and the 1998
Collateral Agent, are entering into a Term Loan and Revolving Credit Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing (as it may be amended
or restated from time to time, the "1998 Mortgage") with respect to the Mill;
and (iii) JSCUS and certain of its affiliates, as grantors, and the 1998
Collateral Agent, are entering into a Security Agreement (as it may be amended
or restated from time to time, the "1998 Security Agreement") with respect to
certain collateral, including all of JSCUS's rights in and to the Operating
Agreement and the Rights Agreement.
F. In connection with the actions referred to in paragraph E
above, (i) the parties to the Fernandina Agreements desire to amend the
Fernandina Agreements in certain respects and (ii) the 1994 Collateral Agent
desires to assign to the 1998 Collateral Agent all of its rights, and the 1998
Collateral Agent desires to assume all of the 1994 Collateral Agent's
obligations under the Fernandina Agreements as so amended, upon the terms and
subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
1. Effectiveness. This Agreement shall be deemed to take effect
immediately prior to the Refinancing.
2
<PAGE>
<PAGE>
2. General Provisions.
(a) Any reference in any of the Fernandina Agreements to the
Rights Agreement or to any other Fernandina Agreement shall be deemed to refer
to the applicable Fernandina Agreement as amended and, with respect to the
rights and obligations of the Collateral Trustee (or, as set forth in the 1994
Amendment Agreement, "Collateral Agent"), assigned hereby.
(b) When used in the Fernandina Agreements, the term "Collateral
Trustee" (or, as set forth in the 1994 Amendment Agreement, "Collateral Agent")
shall be deemed to refer to the 1998 Collateral Agent as the 1994 Collateral
Agent's assignee. Any reference in any of the Fernandina Agreements to any of
the 1989 Secured Parties (or, as set forth in the 1994 Amendment Agreement, the
1994 Secured Parties) shall be deemed to refer to the 1998 Secured Parties.
(c) The notice provision in each of the Operating Agreement,
Rights Agreement and SPI Security Agreement is hereby amended by deleting the
information with respect to Chemical Bank and Cravath, Swaine & Moore and
inserting the following in its place:
"The Chase Manhattan Bank,
as Collateral Agent
10 South LaSalle Street
23rd Floor
Chicago, IL 60603-1907
Attention: Jonathan E. Twichell
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Attention: Michael S. Goldman"
3
<PAGE>
<PAGE>
3. Other Amendments to Operating Agreement.
(a) The last sentence of Section 5.05 of the Operating Agreement
is hereby amended by deleting the phrase "or the Credit Agreement, dated as of
May 11, 1994, among Jefferson Smurfit Corporation, a Delaware corporation
formerly named SIBV/MS Holdings, Inc., Jefferson Smurfit Corporation (U.S.), a
Delaware corporation formerly named Jefferson Smurfit Corporation, CCA and the
lenders and other parties thereto (as it may be amended or restated from time to
time," and inserting the following in its place: "or the Credit Agreement, dated
as of March 24, 1998, among Jefferson Smurfit Corporation, a Delaware
corporation, Jefferson Smurfit Corporation (U.S.), a Delaware corporation, JSCE,
Inc., a Delaware corporation, the lenders, fronting banks, managing agents,
senior managing agents and other parties thereto (as it may be amended,
modified, restated or otherwise supplemented from time to time)."
4. Other Amendments to Rights Agreement.
(a) Each reference in the Rights Agreement (i) to the "CCA
Mortgage" (or, as set forth in the 1994 Amendment Agreement, the "1994 CCA
Mortgage"), shall be deemed to refer to the 1998 Mortgage, (ii) to the "CCA
Security Agreement" (or, as set forth in the 1994 Amendment Agreement, the "1994
Security Agreement"), shall be deemed to refer to the 1998 Security Agreement,
(iii) to the "Credit Agreement" (or, as set forth in the 1994 Amendment
Agreement, the "1994 Credit Agreement"), shall be deemed to refer to the 1998
Credit Agreement and (iv) to the "Agents" (or, as set forth in the 1994 Credit
Agreement, Chemical), shall be deemed to refer to Chase as administrative agent
under the 1998 Credit Agreement.
5. Assignment and Assumption.
(a) The 1994 Collateral Agent hereby assigns to the 1998
Collateral Agent all of the 1994 Collateral Agent's rights in and under the
Fernandina Agreements as amended hereby. The 1994 Collateral Agent hereby
assigns to the 1998 Collateral Agent, and the 1998 Collateral Agent hereby
assumes all liability with respect to and agrees to be solely responsible for,
the 1994 Collateral Agent's respective obligations to be performed or observed
under each of the Fernandina Agreements as amended hereby.
(b) The 1998 Collateral Agent covenants and agrees that it will
duly perform and observe all obligations assumed by it hereunder. In the event
that the Collateral Agent shall fail to perform or observe any of the
obligations
4
<PAGE>
<PAGE>
assumed by it hereunder, SPI or, in the case of the SIBV Guarantee, SIBV, may
proceed directly against the 1998 Collateral Agent for the enforcement thereof.
(c) SPI and JSCUS, in the case of the Fernandina Agreements other
than the SIBV Guarantee, hereby consent to the aforementioned assignment and
assumption and agree to perform the Fernandina Agreements to which they are
parties for the benefit of the 1998 Collateral Agent and the 1998 Secured
Parties. SIBV, in the case of the SIBV Guarantee, hereby (i) consents to the
aforementioned assignment and assumption, (ii) to the extent necessary under
applicable law, confirms and repeats it obligations thereunder as if the SIBV
Guarantee were repeated and incorporated herein verbatim as amended by the
provisions of Section 2 hereof and expressly addressed to the 1998 Collateral
Agent, and (iii) agrees to perform the SIBV Guarantee as so amended for the
benefit of the 1998 Collateral Agent and the 1998 Secured Parties.
6. Miscellaneous.
(a) All filings and recordings reasonably requested by the 1998
Collateral Agent with respect to this Agreement and the Fernandina Agreements
will be made promptly following the date hereof. It is intended that this
Agreement be recorded in the land records of Nassau County, Florida and recorded
or filed in all other places necessary to perfect or confirm the rights herein
conferred upon the parties hereto.
(b) Except as expressly set forth herein, this Agreement shall
not, by implication or otherwise, limit, constitute a waiver of or otherwise
affect the rights and remedies of the Collateral Agent or the other parties to
the Fernandina Agreements, nor shall this Agreement alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or
agreements contained therein, and each of the Fernandina Agreements shall
continue in full force and effect in accordance with the provisions thereof.
(c) This Agreement may be executed in individual counterparts,
each of which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
(d) THE PROVISIONS OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
5
<PAGE>
<PAGE>
(e) This Agreement may be modified only by an agreement in
writing signed by the parties hereto or their respective successors in interest.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
<PAGE>
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first written above.
Signed, sealed and delivered JEFFERSON SMURFIT CORPORATION,
in the presence of: a Delaware corporation
- ---------------------------- By:_________________________________
Name: Name:
Title:
- ----------------------------
Name: (CORPORATE SEAL)
Signed, sealed and delivered SMURFIT PAPERBOARD, INC.,
in the presence of: a Delaware corporation
- ---------------------------- By:_________________________________
Name: Name:
Title:
- ----------------------------
Name: (CORPORATE SEAL)
7
<PAGE>
<PAGE>
Signed, sealed and delivered SMURFIT INTERNATIONAL, B.V.,
in the presence of: a Netherlands corporation
- -----------------------
Name: By: ROKIN CORPORATE
SERVICES, B.V.,
Managing Director
- -----------------------
Name:
By:___________________________
Name:
Title:
8
<PAGE>
<PAGE>
STATE OF______________)
COUNTY OF____________)
The foregoing instrument was acknowledged before me the 24th
day of March, 1998, by _____________________, the ___________________of
JEFFERSON SMURFIT CORPORATION, a Delaware corporation, on behalf of the
corporation. He/she is personally known to me or has produced __________ as
identification.
----------------------------------
Name:
Title:
STATE OF______________)
COUNTY OF____________)
The foregoing instrument was acknowledged before me the 24th
day of March, 1998, by ________________________, ________________ of SMURFIT
PAPERBOARD, INC., a Delaware corporation, on behalf of the corporation. He/she
is personally known to me or has produced _________________ as identification.
----------------------------------
Name:
Title:
9
<PAGE>
<PAGE>
Signed, sealed and delivered THE CHASE MANHATTAN BANK,
in the presence of: a New York banking corporation,
as 1994 Collateral Agent for the
1994 Secured Parties
- ------------------------------- By:_____________________________
Name: Name:
Title:
- -------------------------------
Name: (CORPORATE SEAL)
Signed, sealed and delivered THE CHASE MANHATTAN BANK,
in the presence of: a New York banking corporation, as
1998 Collateral Agent for the
1998 Secured Parties
- ----------------------------- By:_____________________________
Name: Name:
Title:
- -----------------------------
Name: (CORPORATE SEAL)
10
<PAGE>
<PAGE>
STATE OF_____________ )
COUNTY OF____________ )
The foregoing instrument was acknowledged before me the 24th
day of March, 1998, by _____________________, the ___________________of THE
CHASE MANHATTAN BANK, a New York banking corporation, on behalf of the
corporation. He/she is personally known to me or has produced __________ as
identification.
----------------------------------
Name:
Title:
Serial No.
STATE OF_____________ )
COUNTY OF____________ )
The foregoing instrument was acknowledged before me the 24th
day of March, 1998, by _____________________, the ___________________of THE
CHASE MANHATTAN BANK, a New York banking corporation, on behalf of the
corporation. He/she is personally known to me or has produced __________ as
identification.
----------------------------------
Name:
Title:
Serial No.
11
<PAGE>
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Dated as of March 24, 1998,
among
JEFFERSON SMURFIT CORPORATION,
JEFFERSON SMURFIT CORPORATION (U.S.),
JSCE, INC.,
THE LENDERS AND FRONTING BANKS NAMED HEREIN,
THE MANAGING AGENTS NAMED HEREIN,
BANKERS TRUST COMPANY,
as Senior Managing Agent
and
THE CHASE MANHATTAN BANK,
as Administrative Agent and Senior Managing Agent
----------------------------------------------------------
BT ALEX. BROWN INCORPORATED,
as Arranger and Syndication Agent
and
CHASE SECURITIES INC.,
as Arranger
----------------------------------------------------------
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
----
I. DEFINITIONS 2
SECTION 1.01. Defined Terms 2
SECTION 1.02. Terms Generally 29
II. THE CREDITS 30
SECTION 2.01. Commitments 30
SECTION 2.02. Loans 30
SECTION 2.03. Notice of Borrowings 32
SECTION 2.04. Repayment of Loans; Evidence of Debt 33
SECTION 2.05. Fees 33
SECTION 2.06. Interest on Loans 34
SECTION 2.07. Default Interest 36
SECTION 2.08. Alternate Rate of Interest 36
SECTION 2.09. Termination and Reduction of Commitments 37
SECTION 2.10. Conversion and Continuation of Borrowings 37
SECTION 2.11. Repayment of Term Borrowings 39
SECTION 2.12. Optional Prepayments 41
SECTION 2.13. Mandatory Prepayments 41
SECTION 2.14. Reserve Requirements; Change in
Circumstances; Increased Costs 44
SECTION 2.15. Change in Legality 47
SECTION 2.16. Indemnity 47
SECTION 2.17. Pro Rata Treatment 48
SECTION 2.18. Sharing of Setoffs 48
SECTION 2.19. Payments 49
SECTION 2.20. Taxes 49
SECTION 2.21. Duty to Mitigate; Assignment of
Commitments under Certain
Circumstances 53
SECTION 2.22. Swingline Loans 53
III. LETTERS OF CREDIT 55
<PAGE>
<PAGE>
SECTION 3.01. Issuance of Letters of Credit 55
SECTION 3.02. Participations; Unconditional Obligations 56
SECTION 3.03. LC Fee 57
SECTION 3.04. Agreement to Repay LC Disbursements 57
SECTION 3.05. Letter of Credit Operations 58
SECTION 3.06. Termination of LC Commitment 58
SECTION 3.07. Fronting Bank Fees 59
SECTION 3.08. Resignation or Removal of the Fronting
Bank 59
SECTION 3.09. Cash Collateralization 60
SECTION 3.10. Additional Fronting Banks 60
IV. REPRESENTATIONS AND WARRANTIES 60
SECTION 4.01. Organization; Powers 60
SECTION 4.02. Authorization 61
SECTION 4.03. Enforceability 61
SECTION 4.04. Governmental Approvals 61
SECTION 4.05. Financial Statements 62
SECTION 4.06. No Material Adverse Change 62
SECTION 4.07. Title to Properties; Possession Under
Leases 62
SECTION 4.08. Subsidiaries 63
SECTION 4.09. Litigation; Compliance with Laws 63
SECTION 4.10. Agreements 63
SECTION 4.11. Federal Reserve Regulations 63
SECTION 4.12. Investment Company Act; Public Utility
Holding Company Act 63
SECTION 4.13. Use of Proceeds 64
SECTION 4.14. Tax Returns 64
SECTION 4.15. No Material Misstatements 64
SECTION 4.16. Employee Benefit Plans 64
SECTION 4.17. Environmental and Safety Matters 65
SECTION 4.18. Solvency 66
SECTION 4.19. Security Documents 67
SECTION 4.20. Labor Matters 68
SECTION 4.21. Location of Real Property 68
<PAGE>
<PAGE>
SECTION 4.22 Patents, Trademarks, etc. 69
V. CONDITIONS 69
SECTION 5.01. All Credit Events 69
SECTION 5.02. Closing Date 70
VI. AFFIRMATIVE COVENANTS 74
SECTION 6.01. Existence; Businesses and Properties 74
SECTION 6.02. Insurance 74
SECTION 6.03. Obligations and Taxes 74
SECTION 6.04. Financial Statements, Reports, etc. 75
SECTION 6.05. Litigation and Other Notices 77
SECTION 6.06. ERISA 77
SECTION 6.07. Maintaining Records; Access to
Properties and Inspections 78
SECTION 6.08. Use of Proceeds 78
SECTION 6.09. Compliance with Law 78
SECTION 6.10. Further Assurances 78
SECTION 6.11. Material Contracts 80
SECTION 6.12. Environmental Matters 81
SECTION 6.13. Distribution of Gross Export Revenues 81
VII. NEGATIVE COVENANTS 81
SECTION 7.01. Indebtedness 81
SECTION 7.02. Liens 83
SECTION 7.03. Sale/Leaseback Transactions 84
SECTION 7.04. Investments, Loans and Advances 84
SECTION 7.05. Mergers, Consolidations, Sales of
Assets and Acquisitions 85
SECTION 7.06. Restricted Junior Payments 86
SECTION 7.07. Transactions with Stockholders and
Affiliates 86
<PAGE>
<PAGE>
SECTION 7.08. Business 87
SECTION 7.09. Limitations on Debt Prepayments 87
SECTION 7.10. Amendment of Certain Documents 88
SECTION 7.11. Limitation on Dispositions of Subsidiary
Stock; Creation of Subsidiaries 89
SECTION 7.12. Restrictions on Ability of Subsidiaries
to Pay Dividends 89
SECTION 7.13. Capital Expenditures 90
SECTION 7.14. Consolidated EBITDA 90
SECTION 7.15. Interest Coverage Ratio 90
SECTION 7.16. Disposition of Collateral and other
Assets 91
SECTION 7.17. Disposition of Mortgaged Property 92
SECTION 7.18. Fiscal Year 93
VIII. EVENTS OF DEFAULT 94
IX. THE ADMINISTRATIVE AGENT, THE COLLATERAL
AGENT, THE SENIOR MANAGING AGENTS AND
THE FRONTING BANK 98
X. MISCELLANEOUS 101
SECTION 10.01. Notices 101
SECTION 10.02. Survival of Agreement 102
SECTION 10.03. Binding Effect 102
SECTION 10.04. Successors and Assigns 102
SECTION 10.05. Expenses; Indemnity 106
SECTION 10.06. Right of Setoff 107
SECTION 10.07. Applicable Law 107
SECTION 10.08. Waivers; Amendment 107
SECTION 10.09. Interest Rate Limitation 109
SECTION 10.10. Entire Agreement 109
SECTION 10.11. Waiver of Jury Trial 109
SECTION 10.12. Severability 109
SECTION 10.13. Counterparts 110
SECTION 10.14. Headings 110
SECTION 10.15. Confidentiality 110
SECTION 10.16. Jurisdiction; Consent to Service of
Process 111
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<PAGE>
SECTION 10.17. Receivables Program 111
SECTION 10.18. Florida Real Property 111
EXHIBITS
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Exhibit A Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Guarantee Agreement
Exhibit D Form of Mortgage
Exhibit E Form of Pledge Agreement
Exhibit F Form of Security Agreement
Exhibit G Form of Patent, Trademark and Copyright Security Agreement
Exhibit H Form of SNC Security Agreement
Exhibit I-1 Form of Opinion of Michael Tierney, Esq.
Exhibit I-2 Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit I-3 Form of Opinion of Local Counsel
SCHEDULES
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Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Material Contracts
Schedule 1.01(c) Material Subsidiaries
Schedule 1.01(d) Mills
Schedule 1.01(e) Mortgaged Property
Schedule 1.01(f) Receivables Program Documents
Schedule 2.01 Commitments
Schedule 4.04 Governmental Approvals
Schedule 4.08 Subsidiaries
Schedule 4.09 Litigation
Schedule 4.17 Environmental Matters
Schedule 4.19(b) UCC Filing Offices
Schedule 4.19(c) Mortgage Filing Offices
Schedule 4.19(d) Trademark Filing Offices
Schedule 4.19(e) UCC Filing Offices (SNC)
Schedule 4.20 Labor Matters
Schedule 4.21(a) Owned Real Properties
Schedule 4.21(b) Leased Real Properties
Schedule 4.21(c) Timberland
Schedule 5.02(a) Local Counsel
Schedule 7.01(a) Certain Existing Indebtedness
Schedule 7.04 Existing Investments
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<PAGE>
CREDIT AGREEMENT dated as of March 24, 1998,
among JEFFERSON SMURFIT CORPORATION, a Delaware
corporation ("JSC"); JSCE, INC., a Delaware
corporation ("JSCE"); JEFFERSON SMURFIT
CORPORATION (U.S.), a Delaware corporation (the
"Borrower"); the Lenders (as defined in Article I
the Managing Agents (as defined in Article I); the
Fronting Banks (as defined in Article I); BANKERS
TRUST COMPANY, a New York banking corporation
("BTCo"), and THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase"), as senior managing
agents (in such capacity, each a "Senior Managing
Agent") for the Lenders; and Chase, as
administrative agent (in such capacity, the
"Administrative Agent") and collateral agent (in
such capacity, the "Collateral Agent") for the
Lenders, and as swingline lender (in such
capacity, the "Swingline Lender").
The Borrower has requested the Lenders to extend credit in the form of (a)
Tranche A Term Loans (such term and each other capitalized term used but not
defined in this introductory statement having the meaning assigned to it in
Article I) on the Closing Date, in an aggregate principal amount not in excess
of $400,000,000, (b) Tranche B Term Loans on the Closing Date in an aggregate
principal amount not in excess of $350,000,000 and (c) Revolving Loans at any
time and from time to time prior to the Revolving Credit Maturity Date, in an
aggregate principal amount at any time outstanding not in excess of
$550,000,000. The Borrower has requested the Swingline Lender to extend credit,
at any time and prior to the Revolving Credit Maturity Date, in the form of
Swingline Loans. The Borrower has requested the Fronting Bank to issue letters
of credit, in an aggregate face amount at any time outstanding not in excess of
$150,000,000.
The proceeds of the Term Loans, together with a portion of the Revolving
Loans to be made on the Closing Date, will be used by the Borrower solely to (a)
repay in full all principal outstanding, and interest, fees, costs and other
amounts due, under the Existing Credit Agreement and (b) pay related fees and
expenses. The proceeds of the Revolving Loans (other than the Revolving Loans
used for the purposes specified in the preceding sentence) and the Swingline
Loans are to be used for the sole purpose of providing working capital for the
Borrower and its Subsidiaries and for other general corporate purposes,
including the repurchase or refinancing of other Indebtedness, to the extent
permitted hereunder. Letters of Credit will be used to support obligations of
the Borrower and its Subsidiaries incurred in the ordinary course of their
business.
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2
Accordingly, JSC, JSCE, the Borrower, the Lenders, the Managing Agents, the
Senior Managing Agents, the Fronting Bank, the Swingline Lender, the
Administrative Agent and the Collateral Agent agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Borrowing" shall mean a Borrowing comprised of ABR
RevolvingLoans.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Spread" shall mean (a) with respect to Tranche A Term Loans and
Revolving Loans, 0.50% per annum, subject to adjustment pursuant to Section
2.06(c) and (b) with respect to Tranche B Term Loans, 1.00% per annum, subject
to adjustment pursuant to Section 2.06(c).
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate in
effect for such Interest Period and (b) Statutory Reserves. For purposes hereof,
the term "LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate appearing on Page 3750 of the Dow Jones Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days
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3
prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
with respect to such Eurodollar Borrowing for such Interest Period shall be the
average of the respective rates per annum at which dollar deposits approximately
equal in principal amount to the Administrative Agent's portion of such
Eurodollar Borrowing and for a maturity comparable to such Interest Period are
offered to the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Administrative Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative Questionnaire
in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified. For purposes of this definition, neither any Lender nor any Affiliate
of a Lender shall be deemed to be an Affiliate of JSC or any of its Subsidiaries
solely by reason of its ownership of or right to vote any Indebtedness of JSC or
any of its Subsidiaries.
"After-Acquired Mortgage Property" shall have the meaning assigned to such
term in Section 6.05(d).
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof, the term "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective on the date such change is publicly
announced as being effective. The term "Base CD Rate" shall mean the sum of (a)
the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves
and (b) the Assessment Rate. The term "Three-Month Secondary CD Rate" shall
mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board through the public
information telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day) or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New
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4
York City received at approximately 10:00 a.m., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding Business
Day) by the Administrative Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient quotations
in accordance with the terms thereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, of the first sentence
of this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
"Applicable Percentage" of any Participating Lender shall mean the
percentage of the aggregate Revolving Credit Commitments represented by such
Participating Lender's Revolving Credit Commitment.
"Assessment Rate" shall mean for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then-current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.
"Asset Sale" shall mean the sale, transfer or other disposition by any Loan
Party or any of its Subsidiaries to any Person other than any Loan Party of (a)
any capital stock other than Margin Stock; (b) substantially all the assets of
any geographic or other division or line of business of any Loan Party or any of
its Subsidiaries; or (c) any Real Property or a portion of any Real Property or
any other asset or assets (excluding any assets manufactured, constructed or
otherwise produced or purchased for sale to others in the ordinary course of
business and any Program Receivables) of any Loan Party or any of its
Subsidiaries, provided that (i) any asset sale or series of related asset sales
described in clause (c) above having a value not in excess of $1,000,000 shall
not be deemed an "Asset Sale" for purposes of this Agreement and (ii) the term
"Asset Sale" shall not include any sale of assets in connection with any
Permitted Equipment Financing or any Permitted Timber Financing.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee and, to the extent required by Section
10.04(b), accepted by the Borrower, the Administrative Agent, the Swingline
Lender and the Fronting Bank, in the form of Exhibit B or such other form as
shall be approved by the Administrative Agent.
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5
"Basic Agreements" shall mean the SIBV Agreement, the Financial Services
Agreement, the 1992 Holdings Agreement, the Registration Rights Agreement, the
Stockholders' Agreement and the 1992 Stock Option Plan.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Borrower's Portion of Excess Cash Flow" shall mean, at any date of
determination, the cumulative amount of Excess Cash Flow for each full fiscal
year of JSC commencing on or after January 1, 1998, and ending prior to the date
of determination that (a) was not or is not required to be applied to the
prepayment of Loans or the reduction of Commitments, in each case as described
in Section 2.13(c), and (b) has not been utilized on or prior to the date of
determination (i) to make Consolidated Capital Expenditures pursuant to the
proviso in the first sentence of Section 7.13, (ii) to pay dividends pursuant to
Section 7.06(b) or (iii) to prepay Indebtedness pursuant to Section 2.12(a) or
7.09(a).
"Borrowing" shall mean a group of Loans of a single Type made by the
Lenders on a single date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a Saturday, Sunday or legal
holiday in the State of New York) on which banks are open for business in New
York City; provided, however, that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"Capital Lease" shall have the meaning given such term in the definition of
the term "Capital Lease Obligations".
"Capital Lease Obligations" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof (each, a "Capital Lease"), which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"Cash Proceeds" shall mean, with respect to any Asset Sale, cash payments
received from such Asset Sale, including any cash received by way of deferred
payment pursuant to a note receivable or otherwise (other than the portion of
such deferred payment constituting interest, which shall be deemed not to
constitute Cash Proceeds).
A "Change in Control" shall be deemed to have occurred if (a) JSG and its
Affiliates shall cease to own or control shares representing at least 35% of the
aggregate ordinary
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6
voting power represented by the issued and outstanding capital stock of JSC; (b)
any person or group (within the meaning of Rule 13d-5 of the Securities and
Exchange Act of 1934, as in effect on the date hereof) other than JSG and MS
Group and their respective Affiliates shall own, directly or indirectly,
beneficially or of record, shares representing more than 20% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
JSC; or (c) JSC shall cease to own, directly or indirectly, beneficially and of
record, 100% of the issued and outstanding capital stock of the Borrower.
"Change of Law" shall have the meaning given such term in Section 2.20(f).
"Closing Date" shall mean the date of the first Credit Event.
"Code" shall mean the Internal Revenue Code of 1986, or any successor
statute thereto, as the same may be amended from time to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"Commitment" shall mean, with respect to each Lender, such Lender's
Revolving Credit Commitment, Tranche A Commitment or Tranche B Commitment.
"Commitment Fee" shall have the meaning assigned to such term in Section
2.05(a).
"Commitment Fee Percentage" shall mean 0.375% per annum, subject to
adjustment in accordance with Section 2.06(c).
"Common Stock" shall mean the common stock, par value $0.01 per share, of
JSC.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated February 1998.
"Consolidated Capital Expenditures" shall mean, for any period, the sum of
(a) all amounts that would be included as additions to property, plant and
equipment and other capital expenditures on a consolidated statement of cash
flows for JSC and its Subsidiaries during such period in accordance with GAAP
and (b) all amounts in respect of additions to Timberland Property during such
period identified as investment activities in accordance with GAAP (in each
case, excluding capitalized interest and Permitted Acquisitions but including
the amount of assets leased under any Capital Lease).
"Consolidated Current Assets" shall mean, as at any date of determination,
the total assets (other than cash and cash equivalents) of JSC and its
Subsidiaries on a consolidated basis that may properly be classified as current
assets in conformity with GAAP.
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7
"Consolidated Current Liabilities" shall mean, as at any date of
determination, the total liabilities of JSC and its Subsidiaries on a
consolidated basis that may properly be classified as current liabilities in
conformity with GAAP, provided that the current maturities of long-term
Indebtedness for money borrowed of JSC and its Subsidiaries, any Indebtedness
permitted under Section 7.01 that is classified as a current liability in
conformity with GAAP and any taxes payable solely as a result of Asset Sales
shall be excluded from the definition of Consolidated Current Liabilities.
"Consolidated EBITDA" for any period shall mean (a) the sum of (i)
Consolidated Net Income for such period, (ii) all Federal, state, local and
foreign taxes deducted in determining such Consolidated Net Income, (iii) total
interest expense deducted in determining such Consolidated Net Income and (iv)
depreciation, depletion, amortization of intangibles and other non-cash charges
or non-cash losses deducted in determining such Consolidated Net Income, less
(b) any non-cash income or non-cash gains included in determining such
Consolidated Net Income.
"Consolidated Interest Expense" shall mean, for any period, the gross
interest expense of JSC and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, excluding any fees and expenses
payable or amortized during such period by JSC and its consolidated Subsidiaries
in connection with the amortization of deferred debt issuance costs. For
purposes of the foregoing, gross interest expense shall be determined after
giving effect to any net payments made or received by JSC and its consolidated
Subsidiaries with respect to Rate Protection Agreements.
"Consolidated Net Income" shall mean, for any period, the net income (or
loss) of JSC and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period determined in conformity with GAAP, provided that
the net income (or loss) of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded.
"Control" of a Person shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Article V.
"Currency Agreement" shall mean any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement entered into in the
ordinary course of business by the Borrower designed to protect the Borrower or
any of its Subsidiaries against fluctuations in currency values.
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8
"Default" shall mean any event or condition that upon notice, lapse of time
or both would constitute an Event of Default.
"Default Rate" shall have the meaning assigned to such term in Section
2.07.
"dollars" or "$" shall mean lawful money of the United States.
"Domestic Subsidiary" shall mean any Subsidiary organized under the laws of
the United States or any political subdivision thereof.
"8-Year Senior Note Indenture" shall mean the Indenture dated as of May 1,
1994, among the Borrower, as issuer, JSCE, as guarantor, and The Bank of New
York, as trustee, relating to the 8-Year Senior Notes.
"8-Year Senior Notes" shall mean the Borrower's 10-3/4% Senior Notes Due
2002, in an aggregate principal amount outstanding on the date hereof of
$100,000,000.
"Environmental Laws" shall mean all current and future Federal, state,
local and foreign laws, rules or regulations, codes, ordinances, orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder or other requirements of Governmental Authorities or the common law,
relating to health, safety, or pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances, or wastes into the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances, or wastes, or
underground storage tanks and emissions therefrom.
"Equity Fund II" shall mean Morgan Stanley Leveraged Equity Fund II L.P., a
Delaware limited partnership.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, or
any successor statute, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that (a) is a member of a group of which JSC, JSCE or the Borrower
is a member and (b) is treated as a single employer under Section 414 of the
Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Term Loan or Eurodollar
Revolving Loan.
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9
"Eurodollar Revolving Borrowing" shall mean a Borrowing comprised of
Eurodollar Revolving Loans.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised of Eurodollar
Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in Article
VIII.
"Excess Cash Flow" shall mean, for any period, the excess of (a) the sum,
without duplication, of (i) Consolidated Net Income during such period, (ii) the
amount of depreciation, depletion, amortization of intangibles, deferred taxes,
accreted and zero coupon bond interest and other non-cash expenses, losses or
other charges that, pursuant to GAAP, were deducted in determining such
Consolidated Net Income, (iii) the proceeds of any Capital Leases of the
Borrower and its Subsidiaries on a consolidated basis, (iv) reductions, other
than reductions attributable solely to Asset Sales, to working capital for such
period (i.e., the decrease in Consolidated Current Assets minus Consolidated
Current Liabilities from the beginning to the end of such period), (v)
Indebtedness of the Borrower and its consolidated Subsidiaries created, incurred
or assumed in respect of the purchase or construction of property and (vi) the
net increase, if any, in the aggregate amount of borrowings by JSF in connection
with the Receivables Program during such period, over (b) the sum, without
duplication, of (i) the amount of all non-cash gains, income or other credits
included in determining Consolidated Net Income, (ii) additions to working
capital for such period (i.e., the increase in Consolidated Current Assets minus
Consolidated Current Liabilities from the beginning to the end of such period),
(iii) the Term Loan Repayment Amounts paid during such period, (iv) optional
prepayments of Term Loans described in Section 2.12(b) during such period, (v)
scheduled and optional payments or prepayments of the principal of permitted
Indebtedness other than the Loans (except to the extent financed with the
proceeds of additional permitted Indebtedness), but only to the extent that such
payments or prepayments cannot by their terms be reborrowed or redrawn and do
not occur in connection with a refinancing of all or any portion of such
permitted Indebtedness and are otherwise permitted hereby, (vi) Consolidated
Capital Expenditures for such period, (vii) cash payments made during such
period of expenses relating to the Borrower's 1993 operational restructuring
(including employee severance, manufacturing facility consolidation,
environmental and litigation expense) that were previously accrued as a non-cash
charge in
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10
fiscal 1993, (viii) Restricted Junior Payments not prohibited hereunder made
during such period and (ix) the net decrease, if any, in the aggregate amount of
borrowings by JSF in connection with the Receivables Program during such period;
provided, however, that none of the following shall be included in a
determination of Excess Cash Flow: (x) amounts expended for any Investments
permitted under Section 7.04 and any proceeds from the subsequent sale or other
disposition of any such Investments and (y) the proceeds of any issuance of debt
or equity securities not otherwise prohibited hereunder.
"Existing Credit Agreement" shall mean the Credit Agreement dated as of May
11, 1994, as amended and restated as of May 17, 1996, as further amended as of
September 30, 1996 and June 15, 1997, among JSC, JSCE, the Borrower and the
lenders, the managing agents, the senior managing agents, the fronting banks,
the administrative agent, the collateral agent and the swingline lender named
therein.
"Existing Letter of Credit" shall mean each standby letter of credit that
(a) was issued under the Existing Credit Agreement for the account of the
Borrower, (b) is outstanding on the Closing Date and (c) is listed on Schedule
1.01(a).
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by it.
"Fees" shall mean the Administrative Fees, the Commitment Fees, the LC
Fees, the fees specified in Section 2.05 and the fees specified in Section 3.07.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, treasurer or assistant treasurer of such
corporation.
"Financial Services Agreement" shall mean the Financial Advisory Services
Agreement dated September 12, 1989, by and among MSI, SIBV and JSC, as amended
to the date hereof and as the same may be further amended or modified in
accordance with the terms thereof and hereof.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"Fronting Bank" shall mean, as the context may require, (a) (i) BTCo, with
respect to Letters of Credit issued by BTCo, (ii) with respect to each Existing
Letter of Credit, the issuer thereof, and (ii) any other Lender that may become
a Fronting Bank pursuant to Section 3.08 or 3.10, with respect to Letters of
Credit issued by such Lender, or (b) collectively, all the foregoing.
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11
"GAAP" shall mean generally accepted accounting principles in the United
States, applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" of or by any Person shall mean any obligation, contingent or
otherwise (whether or not denominated as a guarantee), of such Person
guaranteeing any Indebtedness or any other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness (or
other obligation) or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness (or other obligation), (b)
to purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness (or other obligation) of the payment of such
Indebtedness (or other obligation) or (c) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness (or other
obligation); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit, in either case in the ordinary course of
business.
"Guarantee Agreement" shall mean the Guarantee Agreement, substantially in
the form of Exhibit C, made by the Guarantors in favor of the Collateral Agent
for the benefit of the Secured Parties.
"Guarantors" shall mean JSC, JSCE and each Material Subsidiary.
"Hazardous Materials" shall have the meaning assigned to such term in
Section 4.17(d).
"Inactive Subsidiary" at any time shall mean any Subsidiary of JSC that (a)
has assets with a total market value not in excess of $1,000 and (b) has not
conducted any business or other operations during the prior 12-month period.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, other than deposits or advances in the ordinary course of
business, (b) all obligations of such Person evidenced by bonds, debentures,
notes or similar instruments, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to assets
purchased by such Person, (d) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (excluding trade accounts
payable and accrued expenses arising in the ordinary course of business), (e)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
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12
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed by such Person, (f) all Guarantees
by such Person, (g) all Capital Lease Obligations of such Person, (h) all
obligations of such Person in respect of Rate Protection Agreements, Currency
Agreements or other interest or exchange rate hedging arrangements (such
obligations to be equal at any time to the termination value of such Agreements
or other arrangements that would be payable by such Person at such time) and (i)
all obligations of such Person as an account party to reimburse any bank or any
other Person in respect of letters of credit. The Indebtedness of any Person
shall include the Indebtedness of any partnership in which such Person is a
general partner, except to the extent such Indebtedness is expressly
non-recourse to such Person.
"Indemnitee" shall have the meaning assigned to such term in Section
10.05(b).
"Intercompany Indebtedness" shall mean any Indebtedness of any of JSC, JSCE
or the Borrower or any of their respective Subsidiaries that is owing to any
Loan Party.
"Intercompany Note" shall mean a promissory note evidencing Intercompany
Indebtedness pledged to the Collateral Agent pursuant to the Pledge Agreement
and which, unless otherwise provided herein or in any of the Receivables Program
Documents, shall be a senior obligation of the obligor thereon, payable on
demand to the obligee and in form and substance satisfactory to the Senior
Managing Agents.
"Interest Payment Date" shall mean (a) with respect to any Loan, the last
day of the Interest Period applicable to the Borrowing of which such Loan is a
part, (b) with respect to any Swingline Loan, the last day of the Interest
Period applicable to such Swingline Loan and (c) with respect to any Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
that would have been an Interest Payment Date had successive Interest Periods of
three months' duration been applicable to such Borrowing.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing or on the last day of the immediately
preceding Interest Period applicable to such Borrowing, as the case may be, and
ending on the numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6
months thereafter, as the Borrower thereof may elect, (b) as to any ABR
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the earlier of (i) the next succeeding March
31, June 30, September 30 or December 31, and (ii) the Revolving Credit Maturity
Date, the Tranche A Maturity Date or the Tranche B Maturity Date, as applicable,
and (c) as to any Swingline Loan, the period commencing on the date such
Swingline Loan is made or on the last day of the immediately preceding Interest
Period applicable to such Swingline Loan, as the case may be, and ending on the
earlier of (i) the next succeeding March 31, June 30, September 30 or December
31, and (ii) the Revolving Credit Maturity Date; provided, however, that, if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be
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13
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"Investment" shall mean, as applied to any Person (the "Investor"), any
direct or indirect purchase or other acquisition by the Investor of, or a
beneficial interest in, stock or other securities of any other Person other than
a wholly owned Domestic Subsidiary of the Investor, including any exchange of
equity securities for Indebtedness, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or capital
contribution by the Investor to any other Person other than a wholly owned
Domestic Subsidiary of the Investor, including all Indebtedness and accounts
receivable owing to the Investor from that other Person that did not arise from
sales or services rendered to that other Person in the ordinary course of the
Investor's business. The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto, without any adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment minus any amounts (a) realized upon the
disposition of assets comprising an Investment or (b) constituting repayments of
Investments that are loans or advances; provided, however, that the term
"Investment" shall not include the purchase in the open market of shares of JSG
in an aggregate amount which, together with the aggregate purchase price of all
MIP Shares and all MIP Options (each as defined in Section 7.06(d)) purchased
pursuant to Section 7.06(d) in any fiscal year, does not exceed $15,000,000 in
such fiscal year of the Borrower, purchased exclusively for subsequent
distribution as additional compensation to employees of the Borrower pursuant to
its management incentive program.
"Investor" shall have the meaning given such term in the definition of the
term "Investment".
"JSC International" shall mean JSC International Sales, Inc., a corporation
formed under the laws of Barbados and a wholly owned Subsidiary of the Borrower.
"JSF" shall mean Jefferson Smurfit Finance Corporation, a Delaware
corporation and a wholly owned Subsidiary of the Borrower, formed in connection
with the Receivables Program.
"JSG" shall mean Jefferson Smurfit Group plc, a corporation organized and
existing under the laws of the Republic of Ireland.
"LC Commitment" shall mean at any time an amount equal to the lesser of (a)
$150,000,000, as the same may be reduced from time to time pursuant to Section
3.06, and (b) the Revolving Credit Commitment at such time.
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14
"LC Disbursement" shall mean any payment or disbursement made by the
Fronting Bank under or pursuant to a Letter of Credit.
"LC Exposure" shall mean, at any time of determination, the sum of (a) the
Trade LC Exposure and (b) the Standby LC Exposure.
"LC Fee" shall have the meaning given such term in Section 3.03.
"LC Maturity Date" shall mean the 30th Business Day prior to the Revolving
Credit Maturity Date.
"Lenders" shall mean the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance. Unless the context clearly indicates otherwise,
the term "Lenders" shall include the Swingline Lender.
"Letter of Credit Application" shall mean a commercial or standby letter of
credit application, as applicable, in the Fronting Bank's customary form, as
such form may be modified from time to time by the Fronting Bank.
"Letters of Credit" shall mean Trade Letters of Credit and Standby Letters
of Credit.
"LIBOR Spread" shall mean (a) with respect to Tranche A Term Loans and
Revolving Loans, 1.50% per annum, subject to adjustment pursuant to Section
2.06(c), and (b) with respect to Tranche B Term Loans, 2.00% per annum, subject
to adjustment pursuant to Section 2.06(c).
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, assignment for security (whether collateral or otherwise),
hypothecation, encumbrance, lease, sublease, charge or security interest in or
on such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, Capital Lease or title retention agreement relating to such
asset and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Security Documents and the Guarantee Agreement, and each amendment, restatement,
supplement, modification or waiver of, to or in respect of any such document.
"Loan Parties" shall mean JSC, JSCE, the Borrower and each Material
Subsidiary.
"Loans" shall mean the Revolving Loans and the Term Loans.
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15
"Machine No. 2" shall mean the No. 2 linerboard machine and related
structures, equipment and other property located at the Fernandina Beach,
Florida Mill and owned by SPI.
"Managing Agents" shall mean the Lenders whose names appear as managing
agents on the signature pages to this Agreement.
"Margin Stock" shall have the meaning given such term under Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect on the
business, assets, operations, properties, prospects or condition (financial or
otherwise) of JSC and its Subsidiaries, taken as a whole, (b) material
impairment of the ability of JSC or any Material Subsidiary to perform any of
its obligations under any Loan Document to which it is or will be a party or (c)
material impairment of the rights of or benefits available to the Administrative
Agent, the Collateral Agent, the Fronting Bank, the Swingline Lender or the
Lenders under any Loan Document.
"Material Contracts" shall mean the contracts set forth on Schedule 1.01(b)
and any future contracts to which JSCE or the Borrower or any of their
respective Subsidiaries becomes a party providing for payments by or to JSCE or
the Borrower or any of their Subsidiaries in excess of $50,000,000 per year and
the duration of which shall be in excess of twelve months.
"Material Investments" shall mean all Investments by JSC or any of its
Subsidiaries having a value in excess of $1,000,000.
"Material Subsidiary" means each Domestic Subsidiary of JSC, JSCE, the
Borrower or their successors now existing or hereafter acquired or formed by
JSC, JSCE, the Borrower or such successors that (a) for the most recent fiscal
year of JSC, JSCE, the Borrower or such successors, accounted for more than 10%
of the consolidated revenues of JSC, JSCE, the Borrower or such successors, as
the case may be, (b) as at the end of such fiscal year, was the owner of more
than 10% of the consolidated assets of JSC, JSCE, the Borrower or such
successors as shown on the consolidated financial statements of JSC, JSCE, the
Borrower or such successors, as the case may be, for such fiscal year or (c) is
designated as a Material Subsidiary on Schedule 1.01(c) or is otherwise
irrevocably designated as a Material Subsidiary in a writing by a Loan Party to
the Administrative Agent. Notwithstanding the foregoing, JSF shall not be a
Material Subsidiary for purposes hereof.
"Mills" shall mean the paper product manufacturing facilities identified on
Schedule 1.01(d).
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16
"Mortgaged Properties" shall mean the owned real properties of the Borrower
specified on Schedule 1.01(e).
"Mortgages" shall mean the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, modifications and other security documents
delivered pursuant to Section 6.10 or Section 7.11, each substantially in the
form of Exhibit D, as the same may be amended, restated, supplemented, modified
or waived from time to time.
"MS Group" shall mean Morgan Stanley Dean Witter Discover & Co., a Delaware
corporation.
"MSI" shall mean Morgan Stanley & Co. Incorporated, a Delaware corporation.
"Multiemployer Plan" shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate (other than
one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Section 414 of the Code) is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale or
Permitted Timber Financing, the Cash Proceeds, net of (i) costs of sale
(including payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness (other than Loans) required to be
repaid under the terms thereof as a result of such Asset Sale), (ii) taxes paid
or payable in the year such Asset Sale occurs or in the following year as a
result thereof and (iii) amounts provided as a reserve, in accordance with GAAP,
against any liabilities under any indemnification obligations associated with
such Asset Sale (provided that, to the extent and at the time any such amounts
are released from such reserve, such amounts shall constitute Net Cash
Proceeds); provided, however, that, with respect to any Asset Sale or Permitted
Timber Financing, if the Borrower shall deliver a certificate of a Financial
Officer to the Administrative Agent at the time of such Asset Sale or Permitted
Timber Financing, as the case may be, setting forth the Borrower's intent to
reinvest up to $250,000,000 of the proceeds of any such Asset Sale and up to
$250,000,000 of the proceeds of any such Permitted Timber Financing, as the case
may be, in other productive assets to be used in the business of the Borrower
and the Subsidiaries within 360 days of receipt of such proceeds and no Default
shall have occurred and shall be continuing at the time of such certificate or
at the proposed time of the application of such proceeds, such proceeds shall
not constitute Net Cash Proceeds, except to the extent not so used within such
360-day period, at which time such proceeds shall be deemed to constitute Net
Cash Proceeds, (b) with respect to any issuance of debt securities, the cash
proceeds thereof, net of underwriting commissions or placement fees and expenses
directly incurred in connection therewith and (c) with respect to any Taking or
Destruction (as such terms are defined in the Mortgages), the Net Proceeds or
Net Award (as such terms are defined in the Mortgages).
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"1992 Holdings Agreement" shall mean the 1992 Agreement dated as of August
26, 1992, among JSC, Equity Fund II and SIBV, as amended to the date hereof and
as the same may be further amended or modified in accordance with the terms
thereof and hereof.
"1992 Stock Option Plan" shall mean the JSC 1992 Stock Option Plan, as
amended to the date hereof and as the same may be further amended or modified in
accordance with the terms thereof and hereof.
"1993 Senior Note Indenture" shall mean the Indenture dated as of April 15,
1993, among the Borrower, as issuer, JSCE, as guarantor, and The Bank of New
York, as trustee, relating to the 1993 Senior Notes, as amended by the
Supplemental Indenture dated as of April 8, 1994, and as the same may from time
to time be further amended or modified in accordance with the terms thereof and
hereof.
"1993 Senior Notes" shall mean the Borrower's 9-3/4% Senior Notes due 2003.
"Obligations" shall mean all obligations of every nature, including amounts
drawn under outstanding Letters of Credit, of Loan Parties from time to time
owed to the Administrative Agent, the Senior Managing Agents, the Managing
Agents, the Swingline Lender, the Fronting Bank and the Lenders, or any of them,
under the Loan Documents.
"Operating Agreement" shall mean the Operating Agreement dated as of April
30, 1992, by and between SPI and the Borrower relating to the operation of
Machine No. 2, all schedules and exhibits thereto and all agreements executed in
connection therewith, as amended as of May 11, 1994, and as of February 1, 1998,
and as such documents may be further modified or supplemented from time to time
in accordance with the terms thereof and hereof.
"Outstanding Letters of Credit" shall mean at any time the Letters of
Credit outstanding at such time.
"Outstanding Standby Letters of Credit" shall mean at any time the Standby
Letters of Credit outstanding at such time.
"Outstanding Trade Letters of Credit" shall mean at any time the Trade
Letters of Credit outstanding at such time.
"Participating Lender" shall mean at any time any Lender with a Revolving
Credit Commitment at such time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
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"Perfection Certificate" shall mean the Perfection Certificate,
substantially in the form of Annex 1 to the Security Agreement.
"Permitted Acquisition" shall mean any non-hostile acquisition of all or
substantially all the assets of, or 100% of the capital stock or other equity
interests in, any Person so long as (a) in the case of any acquisition of
capital stock of other equity interests in any Person, such Person is organized
under the laws of, and has its principal place of business in, the United States
or any political subdivision thereof, (b) in the case of an acquisition of
assets, all or substantially all such assets are to be located in the United
States, (c) the assets to be acquired are to be used, or the Person so acquired
is engaged, in the same line of business as the Borrower, (d) the Borrower shall
have delivered to the Administrative Agent a certificate of a Financial Officer
certifying that at the time of and immediately after giving effect to such
Permitted Acquisition, no Default or Event of Default shall have occurred and be
continuing, (e) none of the Loan Parties or any of their respective Subsidiaries
shall assume or otherwise become liable for any Indebtedness in connection with
such acquisition, except for Indebtedness permitted by Section 7.01, and (f)
simultaneously with any such acquisition and subject to the provisions of
Section 6.10, the Collateral Agent, for the benefit of the Secured Parties,
shall be granted a first-priority security interest in all real and personal
property (including capital stock and other securities or interests, subject to
customary and reasonable permitted encumbrances) acquired by the Borrower as
part of such acquisition, and the Borrower shall, and shall cause any applicable
subsidiary to, execute any documents (including supplements to the Guarantee
Agreement, the Security Agreement and the Pledge Agreement, as applicable),
financing statements, agreements and instruments, and take all action (including
filing financing statements and obtaining and providing consents, title
insurance, surveys and legal opinions) that may be required under applicable law
or as the Collateral Agent may request, in order to grant, preserve, protect and
perfect such security interest.
"Permitted Equipment Financing" shall mean any financing transaction by the
Borrower or any of its Material Subsidiaries secured by equipment, or a
Sale/Leaseback Transaction in which the subject property consists of equipment,
in each case owned or leased by such Person for more than 90 days prior to such
financing transaction or Sale/Leaseback Transaction, so long as such financing
transaction or Sale/Leaseback Transaction (a) (x) in the case of any such
transaction entered into by the Borrower or any of its Material Subsidiaries on
or prior to the second anniversary of the Closing Date, does not have a final
maturity or final payment date in respect thereof on or prior to the seventh
anniversary of the date of such transaction and (y) in the case of any such
transaction entered into by the Borrower or any of its Material Subsidiaries
after the second anniversary of the Closing Date, does not have a final maturity
or final payment date in respect thereof on or prior to the Tranche B Maturity
Date or a weighted average life to stated maturity shorter than the
then-outstanding Term Loans, (b) results in net cash proceeds to the Borrower or
one of its Material Subsidiaries in excess of 60% of the fair market value
(determined, on the basis of an assumed arms-length sale of such property, by a
nationally recognized appraisal or
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19
valuation firm experienced in valuing equipment) at the date of such
financing transaction or sale/leaseback of the equipment that is the subject
property of such financing transaction or Sale/Leaseback Transaction, and (c)
contains covenants no more restrictive than those contained in this Agreement
(except that covenants that relate solely to the subject property may be more
restrictive).
"Permitted Investments" shall mean (a) any evidence of indebtedness,
maturing not more than one year after the acquisition thereof, issued by the
United States of America, or any instrumentality or agency thereof and
guaranteed fully as to principal, interest and premium, if any, by the United
States of America, (b) any certificate of deposit, maturing not more than one
year after the date of purchase, issued by a commercial banking institution that
has long-term debt rated "A" or higher by Moody's Investors Service, Inc. or
Standard & Poor's Ratings Services and which has a combined capital and surplus
and undivided profits of not less than $500,000,000, (c) commercial paper (i)
maturing not more than 270 days after the date of purchase and (ii) issued by
(x) a corporation (other than a Loan Party or any Affiliate of a Loan Party)
with a rating, at the time as of which any determination thereof is to be made,
of "P-1" or higher by Moody's Investors Service, Inc. or "A-1" or higher by
Standard & Poor's Ratings Services or (y) either Senior Managing Agent, (d)
demand deposits with any bank or trust company, (e) any Investments consisting
of (i) any contract pursuant to which a Loan Party obtains the right to cut,
harvest or otherwise acquire timber on property owned by any other Person,
whether or not the Loan Party's obligations under such contract are evidenced by
a note or other instrument, or (ii) loans or advances to customers of a Loan
Party, including leases of personal property of such Loan Party to such
customers, provided that the contracts, loans and advances constituting
Permitted Investments pursuant to this clause (e) shall not exceed $10,000,000
at any time outstanding, (f) any Investment consisting of an exchange of equity
securities of any Loan Party for Indebtedness of any other Loan Party and (g)
Guarantees of a Person or Persons other than a Loan Party consisting of
tax-exempt industrial development or pollution control revenue bonds (either
through Capital Lease Obligations or installment purchase obligations in respect
of facilities to be acquired by a Loan Party and to be financed by such bonds,
and including a direct Guarantee of such bonds) to the extent any such
Indebtedness of a Loan Party or such Person and any Lien arising in connection
therewith are not prohibited by Section 7.01 or 7.02, as applicable.
"Permitted Liens" shall mean:
(a) the Liens arising under this Agreement or the Security Documents
in favor of the Collateral Agent;
(b) with respect to any Person, Liens for taxes not yet due and
payable or which are being contested in good faith by appropriate
proceedings diligently pursued, provided that (i) any proceedings commenced
for the enforcement of such Liens shall have been duly suspended and (ii)
full provision for the payment of all such taxes
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known to such Person has been made on the books of such Person if and
to the extent required by GAAP;
(c) with respect to any Person, mechanics', materialmen's, carriers',
warehousemen's and similar Liens arising by operation of law and in the
ordinary course of business and securing obligations of such Person that
are not overdue for a period of more than 60 days or are being contested in
good faith by appropriate proceedings diligently pursued, provided that in
the case of any such contest (i) any proceedings commenced for the
enforcement of such Liens shall have been duly suspended and (ii) full
provision for the payment of such Liens has been made on the books of such
Person if and to the extent required by GAAP;
(d) with respect to any Person, Liens arising in connection with
worker's compensation, unemployment insurance, old age pensions and social
security benefits that are not overdue or are being contested in good faith
by appropriate proceedings diligently pursued, provided that in the case of
any such contest (i) any proceedings commenced for the enforcement of such
Liens shall have been duly suspended and (ii) full provision for the
payment of such Liens has been made on the books of such Person if and to
the extent required by GAAP;
(e) with respect to any Person, (i) Liens incurred or deposits made in
the ordinary course of business to secure the performance of bids, tenders,
statutory obligations, fee and expense arrangements with trustees and
fiscal agents (exclusive of obligations incurred in connection with the
borrowing of money or the payment of the deferred purchase price of
property) and (ii) Liens securing surety, indemnity, performance, appeal
and release bonds, in the case of either clause (i) or clause (ii),
securing such bonds in an amount not to exceed individually or in the
aggregate $25,000,000 at any time outstanding, provided that full provision
for the payment of all such obligations has been made on the books of such
Person if and to the extent required by GAAP;
(f) imperfections of title, covenants, restrictions, easements and
other encumbrances on real property that (i) do not arise out of the
incurrence of any Indebtedness for money borrowed and (ii) do not interfere
with or impair in any material respect the utility, operation, value or
marketability of the real property on which such Lien is imposed;
(g) Liens upon real and/or tangible personal property acquired by
purchase, construction or otherwise by a Person, each of which Liens was
created solely for the purpose of securing Indebtedness permitted by
Section 7.01 representing, or incurred to finance, the cost (including the
cost of construction) of the respective property, provided that (i) no such
Lien shall extend to or cover any property of such Person other than the
respective property so acquired and improvements thereon and (ii) the
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21
principal amount of Indebtedness secured by any such Lien shall at no time
exceed 100% of the fair value (as determined in good faith by the board of
directors of such Person) of the respective property at the time it was so
acquired;
(h) any Lien renewing, extending or refunding any Lien permitted by
clause (g) above, provided that the principal amount of Indebtedness
secured by such Lien immediately prior thereto is not increased and such
Lien is not extended to any other property;
(i) any Lien specifically permitted to be suffered or incurred under
any applicable Security Document;
(j) any Lien consisting of a lease of personal property of such Person
to customers of such Person, if such lease constitutes a Permitted
Investment under clause (e)(ii) of the definition of Permitted Investments;
and
(k) any Lien consisting of a lease of real property (including
buildings), and subleases thereof, to Persons for the purpose of placing
cellular antenna towers (and/or similar antenna equipment) on such
property, provided that such Liens do not interfere with or impair in any
material respect, the utility, operation, value or marketability of the
property on which such Lien is imposed.
"Permitted Timber Financing" means any financing transaction by the
Borrower or any of its Material Subsidiaries secured by timber or timberland, or
a Sale/Leaseback Transaction in which the subject property consists of timber or
timberland, in each case owned or leased by such Person for more than 90 days
prior to such financing transaction or Sale/Leaseback Transaction, so long as
such financing transaction or Sale/Leaseback Transaction (a) does not have a
final maturity or final payment date in respect thereof on or prior to the
latest of the Tranche A Maturity Date, the Tranche B Maturity Date and the
Revolving Credit Maturity Date, (b) results in net cash proceeds to the Borrower
or one of its Material Subsidiaries in excess of 60% of the fair market value
(determined, on the basis of an assumed arms-length sale of such property, by a
nationally recognized appraisal or valuation firm experienced in valuing timber
or timberland) at the date of such financing transaction or sale/leaseback of
the timber or timberland that is the subject property of such financing
transaction or Sale/Leaseback Transaction, (c) has at the time of incurrence a
weighted average life to stated maturity at least one year longer than the
blended weighted average life to stated maturity of the then-outstanding Term
Loans and (d) contains covenants no more restrictive than those contained in
this Agreement (except that covenants that relate solely to the subject property
may be more restrictive).
"Person" shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
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"Plan" shall mean any pension plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code that
is maintained for employees of JSC, JSCE, the Borrower or any ERISA Affiliate.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in the
form of Exhibit E, among JSC, JSCE, the Borrower, the Subsidiaries party thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Program Receivables" shall mean all trade receivables and related contract
and other rights and property (including all general intangibles, collections
and other proceeds relating thereto, all security therefor and any goods that
have been repossessed in connection with any thereof) sold or contributed by the
Borrower to JSF prior to the commencement of a Liquidation Period (as defined in
the Receivables Program Documents) pursuant to the Receivables Program Documents
(including property of SNC sold to the Borrower for sale or contribution by the
Borrower to JSF pursuant to the Receivables Program Documents).
"P.U.I." shall mean Packaging Unlimited, Inc., a corporation organized
under the laws of the State of Delaware and qualified to do business in the
Commonwealth of Puerto Rico.
"Rate Protection Agreements" shall mean interest rate cap agreements,
interest rate swap agreements and other agreements or arrangements entered into
in the ordinary course of business by the Borrower or its Subsidiaries and
designed to protect the Borrower or its Subsidiaries against fluctuations in
interest rates or to obtain the benefit of floating interest rates.
"Real Properties" shall mean each parcel of real property (including any
Timberland Property), including any Mill or converting facility thereon and any
leasehold interest therein, identified on Schedule 4.21(a), together with all
fixtures thereon.
"Receivables Program" shall mean that certain trade receivables
securitization program conducted pursuant to the Receivables Program Documents.
"Receivables Program Documents" shall mean the documents listed on Schedule
1.01(f), and all non-material documentation entered into pursuant to such
documentation, as such documents may be amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof.
"Registration Rights Agreement" shall mean that certain Registration Rights
Agreement dated as of May 3, 1994, by and among Equity Fund II, SIBV, JSC, and
the other parties identified on the signature pages thereto, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof and thereof.
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23
"Regulation G" shall mean Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Reportable Event" shall mean any reportable event as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).
"Required Lenders" shall mean, at any time, Lenders holding Loans, a share
of the used LC Commitments and unused Commitments representing greater than 50%
of the sum of (a) the aggregate principal amount of the Loans at such time, (b)
the LC Exposure at such time and (c) the aggregate unused Commitments at such
time.
"Responsible Officer" of any corporation shall mean any executive officer
or Financial Officer of such corporation and any other officer or similar
official thereof responsible for the administration of the obligations of such
corporation in respect of this Agreement.
"Restricted Junior Payment" shall mean (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of JSC, JSCE or the Borrower or any of their respective Subsidiaries, now or
hereafter outstanding, except a dividend payable solely in shares of that class
of stock to the holders of that class, (b) any redemption, retirement, sinking
fund or similar payment, purchase, exchange or other acquisition for value,
direct or indirect, of any shares of any class of stock of JSC, JSCE or the
Borrower or any of their respective Subsidiaries, now or hereafter outstanding,
and (c) whether in cash or additional securities, any payment or prepayment of
principal of, premium, if any, or interest on, redemption, purchase, exchange,
retirement, defeasance, sinking fund or similar payment with respect to, any
Subordinated Indebtedness, provided that the term "Restricted Junior Payment"
shall not include any mandatory payments of principal, premium, if any, or
interest with respect to Subordinated Indebtedness.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of Revolving
Loans.
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24
"Revolving Credit Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Revolving Loans hereunder as set forth on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Credit Commitment, as applicable, as the same may be (a)
reduced from time to time pursuant to Section 2.09 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 10.04.
"Revolving Credit Maturity Date" shall mean March 31, 2005.
"Revolving Credit Utilization" shall mean, at any time of determination,
the sum of (a) the aggregate principal amount of Revolving Loans outstanding at
such time, (b) the aggregate principal amount of Swingline Loans outstanding at
such time and (c) the LC Exposure at such time.
"Revolving Loans" shall mean the revolving loans made by the Lenders to the
Borrower pursuant to Section 2.01(c). Each Revolving Loan shall be a Eurodollar
Revolving Loan or an ABR Revolving Loan.
"Rights Agreement" shall mean the Rights Agreement dated as of April 30,
1992, by and among SPI, the Borrower and the Collateral Agent relating to
Machine No. 2, as amended on May 11, 1994, and on March 24, 1998, and as the
same may be further amended, modified or supplemented from time to time in
accordance with the terms thereof and hereof.
"Sale/Leaseback Transaction" shall mean an arrangement, direct or indirect,
whereby JSC, JSCE or the Borrower or any of their respective Subsidiaries shall
sell or transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property that it intends to use for substantially the same
purpose or purposes as the property sold or transferred.
"Secured Obligations" shall have the meaning assigned to such term in the
Mortgages.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially in
the form of Exhibit F, among JSC, JSCE, the Borrower, the other guarantors and
grantors party thereto and the Collateral Agent for the Secured Parties
"Security Documents" shall mean the Mortgages, the Security Agreement, the
SNC Security Agreement, the Trademark Security Agreement, the Pledge Agreement
and each of the security agreements, mortgages and other instruments and
documents executed and delivered pursuant to any of the foregoing or pursuant
to Section 6.10 or 7.11.
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25
"Senior Note Indentures" shall mean the 8-Year Senior Note Indenture and
the 10-Year Senior Note Indenture.
"Senior Notes" shall mean the 8-Year Senior Notes and the 10-Year Senior
Notes.
"SIBV" shall mean Smurfit International B.V., a Netherlands corporation.
"SIBV Agreement" shall mean that certain SIBV Agreement dated as of
September 12, 1989, and amended as of October 22, 1989 and as of December 11,
1989, between JSC and SIBV, and as the same may be further amended or modified
in accordance with the terms thereof and hereof.
"SNC" shall mean Smurfit Newsprint Corporation, a Delaware corporation and
a direct wholly owned Subsidiary of the Borrower.
"SNC Security Agreement" shall mean the SNC Security Agreement,
substantially in the form of Exhibit H, between SNC and the Collateral Agent for
the Secured Parties.
"SPI" shall mean Smurfit Paperboard Inc., a Delaware corporation and an
indirect wholly owned Subsidiary of JSG.
"Standby LC Exposure" shall mean, at any time of determination, the sum of
(a) the aggregate undrawn amount of all Outstanding Standby Letters of Credit
and (b) the aggregate amount that has been drawn under any Standby Letters of
Credit but for which the Fronting Bank or the Lenders, as the case may be, have
not been reimbursed by the Borrower at such time.
"Standby Letter of Credit" shall mean (a) each irrevocable letter of credit
issued pursuant to Section 3.01(a) under which the Fronting Bank agrees to make
payments for the account of the Borrower, on behalf of the Borrower, in respect
of obligations of the Borrower incurred pursuant to contracts made or
performances undertaken or to be undertaken or like matters relating to
contracts to which the Borrower is or proposes to become a party in the ordinary
course of the Borrower's business and (b) each Existing Letter of Credit.
"Statutory Reserves" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum applicable reserve percentages, including
any marginal, special, emergency or supplemental reserves (expressed as a
decimal) established by the Board and any other banking authority to which the
Administrative Agent is subject (a) with respect to the Base CD Rate (as such
term is used in the definition of the term "Alternate Base Rate") for new
negotiable nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months and (b) with respect to the Adjusted LIBO
Rate, for
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26
Eurocurrency Liabilities (as defined in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to Regulation D of the Board.
Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Stockholders' Agreement" shall mean the Stockholders' Agreement dated as
of May 3, 1994, among SIBV, Equity Fund II, JSC, and the other parties
identified on the signature pages thereto, as such Stockholders' Agreement may
be amended or modified from time to time in accordance with the terms thereof
and hereof.
"Subordinated Indebtedness" shall mean Indebtedness of the Borrower
subordinated in right of payment to the Obligations pursuant to documentation
containing interest rates, payment terms, maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material terms
in form and substance satisfactory to the Required Lenders.
"Subsidiary" shall mean, with respect to any Person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more than 50%
of the general partnership interests are, at the time any determination is being
made, owned, controlled or held by, or otherwise Controlled by, the parent or
one or more Subsidiaries of the parent or by the parent and one or more
Subsidiaries of the parent; provided, however, that the term "Subsidiary" shall
not include any Inactive Subsidiary.
"Substitute Parcel" shall mean those parcels of real property that the
Borrower may, from time to time, acquire in exchange for a parcel of Timberland
Property in accordance with the provisions of Section 7.16(b).
"Swingline Loans" shall mean the swingline loans made by the Swingline
Lender pursuant to Section 2.22.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as of
November 9, 1989, among JSC, JSCE and the Borrower, as the same may be amended
from time to time pursuant to the terms thereof and hereof.
"10-Year Senior Note Indenture" shall mean the Indenture dated as of May 1,
1994, among the Borrower, as issuer, JSCE, as guarantor, and The Bank of New
York, as trustee, relating to the 10-Year Senior Notes.
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27
"10-Year Senior Notes" shall mean the Borrower's 11-1/4% Senior Notes Due
2004, in an aggregate principal amount outstanding on the date hereof of
$300,000,000.
"Term Borrowing" shall mean a Borrowing comprised of Tranche A Term Loans
or Tranche B Term Loans.
"Term Loan Commitments" shall mean the Tranche A Commitments and the
Tranche B Commitments.
"Term Loan Repayment Amounts" shall mean, for any period, the aggregate of
all Tranche A Term Loan Repayment Amounts and Tranche B Term Loan Repayment
Amounts payable during such period.
"Term Loan Repayment Dates" shall mean the Tranche A Term Loan Repayment
Dates and the Tranche B Term Loan Repayment Dates.
"Term Loans" shall mean Tranche A Term Loans and Tranche B Term Loans.
"Timber" shall have the meaning assigned to such term in the Mortgages.
"Timberland Property" shall mean each parcel of realty identified as such
on Schedule 4.21(c).
"Trade LC Exposure" shall mean, at any time of determination, the sum of
(a) the aggregate undrawn amount of all Outstanding Trade Letters of Credit and
(b) the aggregate amount that has been drawn under any Trade Letters of Credit
but for which the Fronting Bank or the Lenders, as the case may be, have not
been reimbursed by the Borrower at such time.
"Trade Letter of Credit" shall mean each commercial documentary letter of
credit issued by the Fronting Bank for the account of the Borrower pursuant to
Section 3.01(a) for the purchase of goods in the ordinary course of business.
"Trademark Security Agreement" shall mean the Patent, Trademark and
Copyright Security Agreement, substantially in the form of Exhibit G, among the
grantors named therein and the Collateral Agent for the benefit of the Secured
Parties.
"Tranche A Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Tranche A Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Term Loan Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
10.04.
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28
"Tranche A Maturity Date" shall mean March 31, 2005.
"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche A
Term Loans.
"Tranche A Term Loan Repayment Amount" shall have the meaning set forth in
Section 2.11(a)(i).
"Tranche A Term Loan Repayment Date" shall have the meaning set forth in
Section 2.11(a)(i).
"Tranche A Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to Section 2.01(a). Each Tranche A Term Loan shall be either a
Eurodollar Term Loan or an ABR Term Loan.
"Tranche B Commitment" shall mean with respect to each Lender, the
commitment of such Lender to make Tranche B Term Loans hereunder as set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Term Loan Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
10.04.
"Tranche B Lenders" shall mean Lenders having Tranche B Commitments or
outstanding Tranche B Term Loans.
"Tranche B Maturity Date" shall mean March 31, 2006.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche B
Term Loans.
"Tranche B Term Loan Repayment Amount" shall have the meaning set forth in
Section 2.11(a)(ii).
"Tranche B Term Loan Repayment Date" shall have the meaning set forth in
Section 2.11(a)(ii).
"Tranche B Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to Section 2.01(b). Each Tranche B Term Loan shall be either a
Eurodollar Term Loan or an ABR Term Loan.
"Transactions" shall have the meaning assigned to such term in Section
4.02.
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29
"Type", when used in respect of any Loan or Borrowing, shall refer to the
Rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined. For purposes hereof, the term "Rate" shall include the
Adjusted LIBO Rate and the Alternate Base Rate.
"wholly owned Domestic Subsidiary" shall mean any wholly owned Subsidiary
that is a Domestic Subsidiary.
"wholly owned Subsidiary" of a Person shall mean any Subsidiary of such
Person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed to be
references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement unless the context shall otherwise require. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP as in effect
from time to time, applied on a basis consistent with the application used in
the financial statements referred to in Section 4.05; provided, however, that
for purposes of making any determination required by Section 2.06(c), 2.13(c) or
Article VII, all accounting terms used herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
application used in the financial statements referred to in Section 4.05.
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30
ARTICLE II
The Credits
SECTION 2.01. Commitments. On the terms and subject to the conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees severally and not jointly (a) to make Tranche A Term Loans to the
Borrower on the Closing Date in a principal amount not to exceed its Tranche A
Commitment, (b) to make Tranche B Term Loans to the Borrower on the Closing Date
in a principal amount not to exceed its Tranche B Commitment and (c) to make
Revolving Loans to the Borrower, at any time and from time to time on or after
the Closing Date and prior the earlier of the Revolving Credit Maturity Date and
the termination of the Revolving Credit Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time outstanding
not to exceed (after giving effect to all Revolving Loans repaid, and all
reimbursements of LC Disbursements made, concurrently with the making of any
Revolving Loans) an amount equal to the difference between (i) the Revolving
Credit Commitment set forth opposite such Lender's name on Schedule 2.01, as the
same may be reduced from time to time pursuant to Section 2.09, and (ii) such
Lender's Applicable Percentage of the sum of (A) the aggregate principal amount
of Swingline Loans outstanding at such time and (B) the LC Exposure at such
time. Within the limits set forth in clause (c) of the preceding sentence, the
Borrower may borrow, pay or prepay and reborrow Revolving Loans on or after the
Closing Date and prior to the Revolving Credit Maturity Date, on the terms and
subject to the conditions and limitations set forth herein. Amounts paid or
prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
respective Tranche A Commitments, Tranche B Commitments or Revolving Credit
Commitments, as the case may be; provided, however, that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) an integral multiple of $500,000 and, in
the case of a Eurodollar Borrowing, not less than $1,000,000 or (ii) an
aggregate principal amount equal to the remaining available balance of the
applicable Commitments.
(b) Each Borrowing shall be comprised entirely of ABR Loans or Eurodollar
Loans, as the Borrower may request pursuant to Section 2.03. Each Lender may at
its option fulfill its Commitment with respect to any Eurodollar Loan by causing
any domestic or foreign branch or Affiliate of such Lender to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time; provided,
however, that the Borrower shall not be entitled to request any Borrowing that,
if made, would result in an aggregate of more than ten separate Eurodollar
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31
Loans of any Lender being outstanding hereunder at any one time. For purposes of
the foregoing, Loans having different Interest Periods, regardless of whether
they commence on the same date, shall be considered separate Loans.
(c) Subject to paragraph (e) below, each Lender shall make a Loan in the
amount of its pro rata portion, as determined under Section 2.17, of each
Borrowing hereunder on the proposed date thereof by wire transfer of immediately
available funds to the Administrative Agent in New York, New York, not later
than 2:00 p.m., New York City time, and the Administrative Agent shall by 3:00
p.m., New York City time, credit the amounts so received to the general deposit
account of the Borrower or, if a Borrowing shall not occur on such date because
any condition precedent specified herein shall not have been met, return the
amounts so received to the respective Lenders. Unless the Administrative Agent
shall have received notice from a Lender prior to the date of any Borrowing (or,
in the case of an ABR Revolving Borrowing, prior to 2:00 p.m., New York City
time on the date of such Borrowing) that such Lender will not make available to
the Administrative Agent such Lender's portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
this paragraph (c) and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Lender shall not have made such portion available
to the Administrative Agent, such Lender and the Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
be deemed to constitute such Lender's Loan as part of such Borrowing for
purposes of this Agreement.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request any Interest Period with respect to a Revolving
Credit Borrowing, Tranche A Term Borrowing or Tranche B Term Borrowing that
would end after the Revolving Credit Maturity Date, the Tranche A Maturity Date
or the Tranche B Maturity Date, respectively.
(e) If the Fronting Bank has not received from the Borrower the payment
required by Section 3.04(a) within two hours after the Borrower shall have
received notice from the Fronting Bank that payment of a draft presented under
any Letter of Credit will be made or, if the Borrower shall have received such
notice later than 10:00 a.m., New York City time, on any Business Day, not later
than 10:00 a.m., New York City time, on the immediately following Business Day,
as provided in Section 3.04(a), the Fronting Bank will promptly notify the
Administrative Agent of the LC Disbursement and the Administrative Agent will
promptly notify each Participating Lender of such LC Disbursement and its
Applicable
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32
Percentage thereof. Each Participating Lender will pay to the Administrative
Agent not later than 4:00 p.m., New York City time, on such date (or, if the
Participating Lenders shall have received such notice later than 2:00 p.m., New
York City time, on any day, not later than 10:00 a.m., New York City time, on
the immediately following Business Day) an amount equal to such Participating
Lender's Applicable Percentage of such LC Disbursement (it being understood that
such amount shall be deemed to constitute an ABR Revolving Loan of such
Participating Lender), and the Administrative Agent will promptly pay such
amount to the Fronting Bank. The Administrative Agent will promptly remit to
each Participating Lender its Applicable Percentage of any amounts subsequently
received by the Administrative Agent from the Borrower in respect of such LC
Disbursement. If any Lender shall not have made its Applicable Percentage of
such LC Disbursement available to the Fronting Bank as provided above, such
Lender agrees to pay interest on such amount, for each day from and including
the date such amount is required to be paid in accordance with this subsection
to but excluding the date an amount equal to such amount is paid to the
Administrative Agent for prompt payment to the Fronting Bank at, for the first
such day, the Federal Funds Effective Rate, and for each day thereafter, the
Alternate Base Rate.
(f) Notwithstanding any other provision of this Agreement, all Borrowings
made on the Closing Date and during the period ending 90 days thereafter shall
be made as (i) Eurodollar Borrowings with Interest Periods of one month's
duration or (ii) ABR Borrowings.
SECTION 2.03. Notice of Borrowings. The Borrower shall give the
Administrative Agent written or telecopy notice (or telephone notice promptly
confirmed in writing or by telecopy) (a) in the case of a Eurodollar Borrowing,
not later than 11:00 a.m., New York City time, three Business Days before a
proposed borrowing, (b) in the case of an ABR Term Borrowing, not later than
11:00 a.m., New York City time, one Business Day before a proposed borrowing and
(c) in the case of an ABR Revolving Borrowing, not later than 11:00 a.m., New
York City time, on the day of a proposed borrowing. Such notice shall be
irrevocable and shall in each case refer to this Agreement and specify the
following information: (i) whether the Borrowing then being requested is to be a
Term Borrowing or a Revolving Credit Borrowing, and whether such Borrowing is to
be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day) and the amount thereof; (iii) if such Borrowing
is to be a Eurodollar Borrowing, the Interest Period with respect thereto; and
(iv) the number and location of the account to which funds are to be disbursed;
provided, however, that, notwithstanding any contrary specification in any such
notice, each requested Borrowing shall comply with the requirements set forth in
Section 2.02. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall promptly advise
the Lenders of any notice given pursuant to this Section 2.03, and of each
Lender's portion of the requested Borrowing.
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SECTION 2.04. Repayment of Loans; Evidence of Debt. (a) The outstanding
principal balance of each Loan or Swingline Loan shall be payable (i) in the
case of a Revolving Loan or Swingline Loan, on the Revolving Credit Maturity
Date, (ii) in the case of a Tranche A Term Loan, as provided in Section
2.11(a)(i) and (iii) in the case of a Tranche B Term Loan, as provided in
Section 2.11(a)(ii). Each Loan shall bear interest from and including the date
made on the outstanding principal balance thereof as set forth in Section 2.06.
(b) Each Lender and the Swingline Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness to such
Lender or the Swingline Lender resulting from each Loan or Swingline Loan,
respectively, from time to time, including the amounts of principal and interest
payable and paid such Lender or the Swingline Lender from time to time under
this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan and Swingline Loan made hereunder, the Type
of each Loan and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender and the Swingline Lender hereunder and (iii) the amount
of any sum received by the Administrative Agent hereunder from the Borrower or
any Guarantor and each Lender's or the Swingline Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) of this Section 2.04 shall, to the extent permitted by applicable laws
be prima facie evidence of the existence and amounts of the obligations therein
recorded; provided, however, that the failure of any Lender, the Swingline
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans and the Swingline Loans in accordance with their terms.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender, through
the Administrative Agent, on each March 31, June 30, September 30 and December
31 and on each date on which the Commitments of such Lender shall expire or be
terminated as provided herein, a commitment fee (a "Commitment Fee") equal to
the Commitment Fee Percentage on the average daily unused amount of the
Commitments of such Lender during the preceding quarter (or other period
commencing on the date hereof or ending with the Revolving Credit Maturity Date
or the date on which any of such Commitments of such Lender shall expire or be
terminated). The Commitment Fee due to each Lender shall commence to accrue on
and including the date hereof and shall cease to accrue on, but excluding, the
date on which such Commitments of such Lender shall expire or be terminated as
provided herein. For purposes of calculating Commitment Fees, any portion of the
Revolving Credit Commitments unavailable due to outstanding Swingline Loans or
due to outstanding or unreimbursed unsecured letters of credit permitted by
Section 7.01(g) shall be
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34
deemed to be unused amounts of the Commitments. All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, administration fees (the "Administrative Fees") at the times and in the
amounts to be agreed upon between the Borrower and the Administrative Agent.
(c) The Borrower agrees to pay to the Fronting Bank, for its own account,
the fees specified in Section 3.07.
(d) All Fees (other than the fees payable to the Fronting Bank under
Section 3.07) shall be paid on the dates due, in immediately available funds, to
the Administrative Agent for distribution, if and as appropriate, among the
Lenders. Once paid, none of the Fees shall be refundable under any circumstances
(other than corrections of errors in payment).
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of Section
2.07, the Loans comprising each ABR Borrowing shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, when the Alternate Base Rate is determined by reference to
the Prime Rate and over a year of 360 days at all other times) at a rate per
annum equal to the Alternate Base Rate plus the ABR Spread in effect at such
time with respect to such Loans. Swingline Loans shall bear interest at the rate
applicable to ABR Revolving Loans.
(b) Subject to the provisions of Section 2.07, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to the
Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the
LIBOR Spread in effect at such time with respect to such Loans.
(c) So long as no Event of Default shall have occurred and be continuing,
on each occasion that, as of the last day of any fiscal quarter ending after the
date that is six months after the Closing Date, the ratio (the "Consolidated
Leverage Ratio") of (i) the Indebtedness of JSC and its consolidated
Subsidiaries on such date to (ii) Consolidated EBITDA for the period of four
consecutive fiscal quarters ending on such date shall fall within one of the
Categories set forth on the table below, the Commitment Fee Percentage, the ABR
Spread and the LIBOR Spread in respect of Tranche A Term Loans, Tranche B Term
Loans and Revolving Loans shall be automatically changed, if necessary, to
reflect the percentages indicated for such Category on the table below under the
caption "Tranche A/Revolver ABR Spread", "Tranche A/Revolver LIBOR Spread",
"Tranche B ABR Spread", "Tranche B LIBOR Spread" or "Commitment Fee Percentage",
as the case may be, with any such change to be effective (x) in the case of the
Commitment Fee Percentage, with respect to the unused amounts of the Commitments
on and after the date of delivery to the Administrative Agent of the certificate
described in Section 6.04(d) relating to such fiscal quarter, (y) in the case
<PAGE>
<PAGE>
35
of the applicable ABR Spread, with respect to all ABR Loans outstanding on and
after the date of delivery to the Administrative Agent of such certificate and
(z) in the case of the applicable LIBOR Spread, with respect to all Loans made
on and after the date of delivery to the Administrative Agent of such
certificate.
<TABLE>
<CAPTION>
Consolidated
Leverage Tranche A/ Tranche A/
Ratio Revolver Revolver Tranche B Tranche B Commitment
Category 1 ABR Spread LIBOR Spread ABR Spread LIBOR Spread Percentage
- ---------- ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Greater than or
equal to 4.50 to
1.00 0.75% 1.75% 1.25% 2.25% 0.500%
- --------------------------------------------------------------------------------------
Category 2
Greater than or
equal to 4.25 to
1.00 but less than
4.50 to 1.00 0.50% 1.50% 1.00% 2.00% 0.375%
- --------------------------------------------------------------------------------------
Category 3
Greater than or
equal to 4.00 to
1.00 but less than
4.25 to 1.00 0.25% 1.25% 0.75% 1.75% 0.375%
- --------------------------------------------------------------------------------------
Category 4
Greater than or
equal to 3.25 to
1.00 but less than
4.00 to 1.00 0.25% 1.00% 0.75% 1.75% 0.250%
- --------------------------------------------------------------------------------------
Category 5
Less than 3.25 to
1.00 0.00% 0.75% 0.50% 1.50% 0.250%
- --------------------------------------------------------------------------------------
</TABLE>
The applicable Category in the table above at any time will be the Category
with the lowest percentages for which the Consolidated Leverage Ratio is
satisfied at such time. In the event that any condition that gives rise to
any change in a Category pursuant to the first sentence of this Section
2.06(c) is no longer satisfied as of the end of any subsequent fiscal
quarter, on and after the date of delivery to the Administrative Agent of
the
<PAGE>
<PAGE>
36
certificate described in Section 6.04(d) relating to such subsequent fiscal
quarter, the Commitment Fee Percentage, the applicable ABR Spread and the
applicable LIBOR Spread shall be automatically changed to reflect the
Category indicated by such certificate, with any such change to be
effective (x) in the case of the Commitment Fee Percentage, with respect to
the unused amounts of the Commitments on and after the date of delivery to
the Administrative Agent of the certificate described in Section 6.04(d)
relating to such fiscal quarter, (y) in the case of the applicable ABR
Spread, with respect to all ABR Loans outstanding on and after the date of
delivery to the Administrative Agent of such certificate and (z) in the
case of the applicable LIBOR Spread, with respect to all Loans made on and
after the date of delivery to the Administrative Agent of such certificate.
Notwithstanding the foregoing, at any time during which JSC has failed to
deliver the certificate described in Section 6.04(d) with respect to a
fiscal quarter in accordance with the provisions thereof, or at any time
after the occurrence and during the continuance of an Event of Default, the
Consolidated Leverage Ratio shall be deemed to be in Category 1 for
purposes of determining the Commitment Fee Percentage, the applicable ABR
Spread and the applicable LIBOR Spread.
(d) Interest on each Loan and each Swingline Loan shall be payable on the
Interest Payment Dates applicable to such Loan or Swingline Loan, as the case
may be, except as otherwise provided in this Agreement. The applicable ABR
Spread or LIBOR Spread for each Interest Period or day within an Interest
Period, as the case may be, shall be determined by the Administrative Agent, and
such determination shall be presumptively correct absent manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or Swingline Loan or any
other amount becoming due hereunder or under any Security Document, by
acceleration or otherwise, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount to but
excluding the date of actual payment (after as well as before judgment or
bankruptcy) at a rate per annum (the "Default Rate") (computed on the basis of
the actual number of days elapsed over a year of 360 days) equal to (a) in the
case of any Loan or any Swingline Loan, the rate that would be applicable under
Section 2.06 to such Loan or Swingline Loan, plus 2% per annum, and (b) in the
case of any other amount, the rate that would be applicable under Section 2.06
to a Tranche B Term Loan that is an ABR Loan, plus 2% per annum.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to Lenders having Commitments
representing at least 20% of the total Commitments of making or maintaining
their Eurodollar Loans during such Interest Period, or that reasonable means do
not exist for ascertaining the Adjusted LIBO Rate, the
<PAGE>
<PAGE>
37
Administrative Agent shall, as soon as practicable thereafter, give written or
telecopy notice of such determination to the Borrower and the Lenders. In the
event of any such determination, any request by the Borrower for a Eurodollar
Borrowing pursuant to Section 2.03 or 2.10 shall, until the Administrative Agent
shall have advised the Borrower and the Lenders that the circumstances giving
rise to such notice no longer exist, be deemed to be a request for an ABR
Borrowing. Each determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The Term Loan
Commitments shall be automatically terminated at 5:00 p.m., New York City time,
on the Closing Date. The Revolving Credit Commitments and the LC Commitment
shall be automatically terminated at 5:00 p.m., New York City time, on the
Revolving Credit Maturity Date and the LC Maturity Date, respectively.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Commitments; provided, however, that (i) each partial reduction of the
Commitments shall be in an integral multiple of $1,000,000 and in a minimum
principal amount of $5,000,000 and (ii) the Borrower shall not be permitted to
terminate or reduce the Revolving Credit Commitments if, as the result of such
termination or reduction, (A) the LC Commitment would exceed the aggregate
remaining Revolving Credit Commitments or (B) the Revolving Credit Utilization
would exceed the aggregate remaining Revolving Credit Commitments. The LC
Commitment may be voluntarily terminated or reduced by the Borrower, as provided
in Section 3.06.
(c) The Revolving Credit Commitments shall be permanently reduced by the
amount of any mandatory prepayments applied to Swingline Loans or Revolving
Credit Borrowings pursuant to Section 2.13(f).
(d) Each reduction in the Commitments hereunder shall be made ratably among
the applicable Lenders in accordance with their respective applicable
Commitments. The Borrower shall pay to the Administrative Agent for the account
of the applicable Lenders, on the date of each termination or reduction, the
Commitment Fees on the amount of the Commitments so terminated or reduced
accrued to, but excluding, the date of such termination or reduction.
(e) Nothing in this Section 2.09 shall prejudice any rights that the
Borrower may have against any Lender that fails to lend as required hereunder
prior to the date of termination of any Commitment.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower shall
have the right at any time upon prior irrevocable notice to the Administrative
Agent (i) not later than 11:00 a.m., New York City time, one Business Day prior
to conversion, to convert any Eurodollar Borrowing into an ABR Borrowing, (ii)
not later than 11:00 a.m., New York City time, three Business Days prior to
conversion or continuation, to convert any ABR Borrowing
<PAGE>
<PAGE>
38
into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a
Eurodollar Borrowing for an additional Interest Period and (iii) not later than
11:00 a.m., New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Borrowing to another
permissible Interest Period, subject in each case to the following:
(a) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
(b) if less than all the outstanding principal amount of any Borrowing
shall be converted or continued, the aggregate principal amount of such
Borrowing converted or continued shall be an integral multiple of
$1,000,000 and not less than $10,000,000;
(c) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the new
Loan of such Lender resulting from such conversion and reducing the Loan
(or portion thereof) of such Lender being converted by an equivalent
principal amount; accrued interest on any Eurodollar Loan (or portion
thereof) being converted shall be paid by the Borrower at the time of the
conversion;
(d) if any Eurodollar Borrowing is converted at a time other than the
end of the Interest Period applicable thereto, the Borrower shall pay, upon
demand, any amounts due to the Lenders pursuant to Section 2.16;
(e) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Borrowing;
(f) any portion of a Eurodollar Borrowing that cannot be converted
into or continued as a Eurodollar Borrowing by reason of subparagraph (e)
above shall be automatically converted at the end of the Interest Period in
effect for such Borrowing into an ABR Borrowing; and
(g) no Interest Period may be selected for any Eurodollar Term
Borrowing comprised of Tranche A Term Loans or Tranche B Term Loans that
would end later than the Tranche A Term Loan Repayment Date or the Tranche
B Term Loan Repayment Date, as the case may be, occurring on or after the
first day of such Interest Period if, after giving effect to such
selection, the aggregate outstanding amount of (i) the Eurodollar Term
Borrowings comprised of Tranche A Term Loans or Tranche B Term Loans, as
the case may be, with Interest Periods ending on or prior to such Tranche A
Term Loan Repayment Date or Tranche B Term Loan Repayment Date,
respectively, and (ii) the ABR Term Borrowings comprised of Tranche A Term
Loans or Tranche B Term Loans, as the case may be, would not be at least
equal to the principal amount of Term Borrowings to be paid on such Term
Loan Repayment Date.
<PAGE>
<PAGE>
39
Each notice pursuant to this Section 2.10 shall be irrevocable and shall
refer to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued and whether such Borrowing
is comprised of Tranche A Term Loans, Tranche B Term Loans or Revolving Loans,
(ii) whether such Borrowing is to be converted to or continued as a Eurodollar
Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and (iv) if such
Borrowing is to be converted to or continued as a Eurodollar Borrowing, the
Interest Period with respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a Eurodollar
Borrowing, the Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Administrative Agent shall advise the other Lenders of
any notice given pursuant to this Section 2.10 and of each Lender's portion of
any converted or continued Borrowing. If the Borrower shall not have given
notice in accordance with this Section 2.10 to continue any Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) (i) The Borrower shall pay
to the Administrative Agent, for the account of the Lenders, on the dates set
forth below, or if any such date is not a Business Day, on the next succeeding
Business Day (each such date being a "Tranche A Term Loan Repayment Date"), a
principal amount of the Tranche A Term Loans (such amount, as adjusted from time
to time pursuant to Sections 2.12 and 2.13(f), being called the "Tranche A Term
Loan Repayment Amount") equal to the amount set forth below for such date,
together in each case with accrued and unpaid interest on the principal amount
to be paid to but excluding the date of such payment:
Date Amount
---- ------
March 31, 1999 $ 12,500,000
September 30, 1999 12,500,000
March 31, 2000 25,000,000
September 30, 2000 25,000,000
March 31, 2001 25,000,000
September 30, 2001 25,000,000
March 31, 2002 25,000,000
September 30, 2002 25,000,000
March 31, 2003 25,000,000
September 30, 2003 25,000,000
March 31, 2004 37,500,000
September 30, 2004 37,500,000
<PAGE>
<PAGE>
40
Tranche A Maturity Date 100,000,000
On each Tranche A Term Loan Repayment Date, the Administrative Agent shall apply
the Tranche A Term Loan Repayment Amount paid to the Administrative Agent to pay
the Tranche A Term Loans in accordance with Section 2.19(a).
(ii) The Borrower shall pay to the Administrative Agent, for the account of
the Lenders, on the dates set forth below or, if any such date is not a Business
Day, on the next succeeding Business Day (each such date being a "Tranche B Term
Loan Repayment Date"), a principal amount of the Tranche B Term Loans (such
amount, as adjusted from time to time pursuant to Sections 2.12 and 2.13(f),
being called the "Tranche B Term Loan Repayment Amount") equal to the amount set
forth below for such date, together in each case with accrued and unpaid
interest on the principal amount to be paid to but excluding the date of such
payment:
Date Amount
---- ------
March 31, 1999 $ 1,750,000
September 30, 1999 1,750,000
March 31, 2000 1,750,000
September 30, 2000 1,750,000
March 31, 2001 1,750,000
September 30, 2001 1,750,000
March 31, 2002 1,750,000
September 30, 2002 1,750,000
March 31, 2003 1,750,000
September 30, 2003 1,750,000
March 31, 2004 1,750,000
September 30, 2004 1,750,000
March 31, 2005 1,750,000
September 30, 2005 162,750,000
Tranche B Maturity Date 164,500,000
On each Tranche B Term Loan Repayment Date, the Administrative Agent shall apply
the Tranche B Term Loan Repayment Amount paid to the Administrative Agent to pay
the Tranche B Term Loans in accordance with Section 2.19(a).
(b) To the extent not previously paid, (i) all Tranche A Term Loans shall
be due and payable on the Tranche A Maturity Date and (ii) all Tranche B Term
Loans shall be due and payable on the Tranche B Maturity Date, in each case
together with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of payment.
<PAGE>
<PAGE>
41
(c) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Optional Prepayments. (a) The Borrower shall have the right
at any time and from time to time to prepay any Borrowing, in whole or in part,
upon written or telecopy notice (or telephone notice promptly confirmed by
written or telecopy notice) delivered to the Administrative Agent (i) by 11:00
a.m., New York City time, at least three Business Days prior to the date
designated for such prepayment, in the case of any prepayment of a Eurodollar
Borrowing, or (ii) by 11:00 a.m., New York City time, on the date designated for
such prepayment in the case of any prepayment of an ABR Borrowing; provided,
however, that each partial payment shall be in an amount that is an integral
multiple of $1,000,000 and, in the case of a Eurodollar Borrowing, not less than
$10,000,000 (or, in each case, the entire amount of the Borrowing being
prepaid).
(b) Optional prepayments of Term Loans made by the Borrower pursuant to
paragraph (a) above shall be allocated among the Tranche A Term Loans and the
Tranche B Term Loans (and to the remaining scheduled installments of principal
with respect to any such Term Loans) in a manner determined at the discretion of
the Borrower.
(c) Each notice of prepayment shall specify the amount to be prepaid, the
prepayment date, whether the related prepayment relates to a Revolving Credit
Borrowing or a Term Borrowing and the principal amount of each Revolving Credit
Borrowing or Term Borrowing (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrower to prepay such obligations by the
amount specified therein on the date specified therein. All prepayments pursuant
to this Section 2.12 shall be subject to Section 2.16, but shall otherwise be
without premium or penalty.
(d) No optional prepayment of Term Loans made by the Borrower pursuant to
this Section 2.12 shall reduce the Borrower's obligation to make mandatory
prepayments pursuant to Section 2.13(b), (c), (d) or (e).
SECTION 2.13. Mandatory Prepayments. (a) On the date of any termination or
reduction of the Revolving Credit Commitments pursuant to Section 2.09, the
Borrower shall pay or prepay so much of the then-outstanding Swingline Loans and
the then-outstanding Revolving Credit Borrowings as shall be necessary in order
that the aggregate principal amount of the Swingline Loans and Revolving Loans
outstanding at such time will not exceed the aggregate Revolving Credit
Commitments (after giving effect to such termination or reduction and after
giving effect to each deemed reduction to the Revolving Credit Commitments in
connection with the making of a Swingline Loan) less the aggregate LC Exposure
at such time.
(b) With respect to (i) any Asset Sale that is an Asset Sale at the time of
such sale or other disposition and (ii) any Asset Sale not described in clause
(i) that becomes an Asset Sale due to the operation of the first proviso
contained in the definition of the term "Asset Sale", the
<PAGE>
<PAGE>
42
Borrower shall apply not later than the third Business Day following the
determination of the amount of Net Cash Proceeds received in respect thereof
(but in no event later than 60 days after the initial receipt by any Loan Party
or any of their respective Subsidiaries of such Net Cash Proceeds) an amount
equal to 100% of the Net Cash Proceeds received therefrom to prepay outstanding
Loans and Swingline Loans in accordance with Section 2.13(f).
(c) No later than the earlier of (i) 90 days after the end of each fiscal
year of JSC, commencing with the fiscal year ending on December 31, 1998, and
(ii) the date on which the financial statements with respect to such period are
delivered pursuant to Section 6.04(a), the Borrower shall prepay outstanding
Loans and Swingline Loans in accordance with Section 2.13(f) in an aggregate
principal amount equal to 50% of Excess Cash Flow for the fiscal year then
ended; provided, however, that the provisions of this Section 2.13(c) shall not
apply after the date that the Borrower shall have repaid or prepaid at least
$350,000,000 of the aggregate principal amount of the Term Loans.
(d) In the event that any Loan Party or any Subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance or other disposition of
Indebtedness for money borrowed of any Loan Party or any Subsidiary of a Loan
Party (other than Indebtedness for money borrowed permitted pursuant to Section
7.01 (other than clause (k) thereof)), including pursuant to any Permitted
Equipment Financing or any Permitted Timber Financing, then the Borrower shall
substantially simultaneously with (and in any event not later than the third
Business Day next following) the receipt of such Net Cash Proceeds by such Loan
Party or Subsidiary, apply an amount equal to 100% of such Net Cash Proceeds to
prepay outstanding Loans and Swingline Loans in accordance with Section 2.13(f).
(e) In the event that there shall occur any Taking or Destruction (as such
terms are defined in the Mortgages) of any Mortgaged Property and pursuant to
the provisions of the applicable Mortgage amounts payable with respect thereto
are to be applied to the Secured Obligations, the Borrower shall apply an amount
equal to 100% of the Net Cash Proceeds therefrom to prepay the outstanding Loans
and Swingline Loans in accordance with Section 2.13(f).
(f) Mandatory prepayments of outstanding obligations under this Agreement
made by the Borrower pursuant to paragraphs (b), (c), (d) and (e) above first,
shall be allocated pro rata between the then-outstanding Tranche A Term Loans
and Tranche B Term Loans and, subject to paragraph (i) below, applied pro rata
against the remaining scheduled installments of principal due in respect of
Tranche A Term Loans and Tranche B Term Loans under Sections 2.11(a)(i) and
(ii), respectively, and second, if the Term Loans shall have been repaid in
full, shall be applied to permanently reduce existing Revolving Credit
Commitments; provided, however, that (i) subject to paragraph (i) below, up to
$50,000,000, in the case of prepayments of the Tranche A Term Loans, of any
prepayment required to be made pursuant to Section 2.13(c) may be allocated
between the Tranche A Term Loans and the Tranche B Term Loans (and to the
remaining scheduled installments of principal with respect to any such Term
Loans) in a manner
<PAGE>
<PAGE>
43
determined at the discretion of the Borrower and (ii) subject to paragraph (i)
below, the amount of any such prepayment required to be made pursuant to Section
2.13(c) in excess of $50,000,000, together, in the case of prepayments of the
Tranche A Term Loans, with the amount of any prepayments rejected by Tranche B
Lenders pursuant to paragraph (i) below, may be applied by the Borrower against
the remaining scheduled installments of principal with respect to the Term Loans
required to be paid within 24 months of the date of such prepayment.
(g) The Borrower shall deliver to the Administrative Agent, (i) at the time
of each prepayment by the Borrower required under paragraph (b), (c), (d) or (e)
above, a certificate signed by a Financial Officer of the Borrower setting forth
in reasonable detail the calculation of the amount of such prepayment and (ii)
at least three Business Days prior to the time of each prepayment required under
this Section 2.13, a notice of such prepayment. Each notice of prepayment shall
specify the prepayment date, the Type of each Loan being prepaid and the
principal amount of each Loan or Swingline Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings and Swingline Loans under this Section
2.13 shall be subject to Section 2.16, but shall otherwise be without premium or
penalty.
(h) Amounts to be applied pursuant to this Section 2.13 to the prepayment
of Term Loans and Revolving Loans shall be applied, as applicable, first to
reduce outstanding ABR Term Loans and ABR Revolving Loans. Any amounts remaining
after each such application shall, at the option of the Borrower, be applied to
prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as the case may be,
immediately and/or shall be deposited in the Prepayment Account (as defined
below). The Administrative Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Term Loans to prepay Eurodollar Term Loans
and (ii) allocable to Revolving Loans to prepay Eurodollar Revolving Loans, in
each case on the last day of their respective Interest Periods (or, at the
direction of the Borrower, on any earlier date) until all outstanding Term Loans
or Revolving Loans, as the case may be, have been prepaid or until all the
allocable cash on deposit with respect to such Loans has been exhausted. For
purposes of this Agreement, the term "Prepayment Account" shall mean an account
established by the Borrower with the Administrative Agent and over which the
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal for application in accordance with this paragraph
(h). The Administrative Agent will, at the request of the Borrower, invest
amounts on deposit in the Prepayment Account in Permitted Investments that are
described in clause (a), (b), (c) or (d) of the definition of such term and that
mature prior to the last day of the applicable Interest Periods of the
Eurodollar Term Borrowings or Eurodollar Revolving Borrowings to be prepaid, as
the case may be; provided, however, that (i) the Administrative Agent shall not
be required to make any investment that, in its sole judgment, would require or
cause the Administrative Agent to be in, or would result in any, violation of
any law, statute, rule or regulation and (ii) the Administrative Agent shall
have no obligation to invest amounts on deposit in the Prepayment Account if a
Default or Event of Default shall have occurred and be continuing. The Borrower
shall indemnify the Administrative Agent for any losses relating to the
investments so that the amount available to prepay Eurodollar Borrowings on the
last day of the applicable Interest Period is not less than the amount that
would have been available had no investments
<PAGE>
<PAGE>
44
been made pursuant thereto. Other than any interest earned on such investments,
the Prepayment Account shall not bear interest. Interest or profits, if any, on
such investments shall be deposited in the Prepayment Account and reinvested and
disbursed as specified above. If the maturity of the Loans has been accelerated
pursuant to Article VIII, the Administrative Agent may, in its sole discretion,
apply all amounts on deposit in the Prepayment Account to satisfy any of the
Obligations. The Borrower hereby grants to the Administrative Agent, for its
benefit and the benefit of the Fronting Bank, the Swingline Lender and the
Lenders, a security interest in the Prepayment Account to secure the
Obligations.
(i) Notwithstanding paragraph (f) above, with respect to the amount of any
mandatory prepayment described therein that is allocated to the then-outstanding
Tranche B Term Loans (such amounts, the "Prepayment Amount"), the Borrower may,
not less than 10 nor more than 20 Business Days prior to the date specified
therein for such prepayment (the "Mandatory Prepayment Date"), provide to each
Tranche B Lender a written notice (each, a "Prepayment Option Notice"), which
shall refer to this Section 2.13(i) and shall (i) set forth the Prepayment
Amount and the portion thereof that the applicable Tranche B Lender (each, a
"Prepayment Lender") will be entitled to receive if it accepts such mandatory
prepayment in accordance with this paragraph (i), (ii) request such Prepayment
Lender to notify the Borrower and the Administrative Agent in writing no later
than the Business Day prior to the Mandatory Prepayment Date of such Prepayment
Lender's acceptance or rejection (in each case, in whole and not in part) of its
share of the Prepayment Amount and (iii) inform such Prepayment Lender that
failure by such Prepayment Lender to accept in writing its share of the
Prepayment Amount on or before the Business Day prior to the Mandatory
Prepayment Date shall be deemed a rejection of such amount. Each Prepayment
Option Notice shall be given by telecopy, confirmed by hand delivery, overnight
courier service or registered or certified mail, in each case addressed as
provided in Section 10.01. On the Mandatory Prepayment Date, the Borrower shall
apply the aggregate amount necessary to prepay that portion of the Prepayment
Amount in respect of which such Prepayment Lenders have accepted prepayment as
described above (such Prepayment Lenders, the "Accepting Lenders") pro rata
against the remaining installments of principal due in respect of the Tranche B
Term Loans of the Accepting Lenders under Section 2.11(a)(ii). The remaining
portion of the Prepayment Amount shall be applied (i) in the case of any
Prepayment Amount payable pursuant to Section 2.13(c), in accordance with
Section 2.13(f) and (ii) in all other cases, against the remaining scheduled
installments of principal due in respect of such Tranche A Term Loans under
Section 2.11(a)(i) in the order of maturity.
SECTION 2.14. Reserve Requirements; Change in Circumstances; Increased
Costs. (a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender, the Swingline
Lender or the Fronting Bank of the principal of or interest on any Eurodollar
Loan made by such Lender or any Letter of Credit obligations, Fees or other
amounts payable hereunder (other than changes in respect of income and franchise
taxes imposed on such Lender,
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the Swingline Lender or the Fronting Bank by the jurisdiction in which such
Lender, the Swingline Lender or the Fronting Bank is organized or has its
principal or lending office or by any political subdivision or taxing authority
thereof or therein), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of or credit extended by such Lender, the Swingline Lender or the
Fronting Bank (except any such reserve requirement that is reflected in the
Adjusted LIBO Rate or in the Alternate Base Rate) or shall impose on such
Lender, the Swingline Lender or the Fronting Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made by such
Lender, and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan or to reduce the amount
of any sum received or receivable by such Lender, the Swingline Lender or the
Fronting Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender, the Swingline Lender or the Fronting Bank to be
material, then the Borrower will pay to such Lender, the Swingline Lender or the
Fronting Bank following receipt of a certificate of such Lender, the Swingline
Lender or the Fronting Bank to such effect in accordance with Section 2.14(c)
such additional amount or amounts as will compensate such Lender, the Swingline
Lender or the Fronting Bank on an after-tax basis for such additional costs
incurred or reduction suffered. Notwithstanding any other provision in this
paragraph (a), none of any Lender, the Swingline Lender or the Fronting Bank
shall be entitled to demand compensation pursuant to this paragraph (a) if it
shall not be the general practice of such Lender, the Swingline Lender or the
Fronting Bank, as applicable, to demand such compensation in similar
circumstances under comparable provisions of other comparable credit agreements.
(b) If any Lender, the Swingline Lender or the Fronting Bank shall have
determined that the adoption after the date hereof of any law, rule, regulation,
agreement or guideline regarding capital adequacy, or any change in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender), the Swingline Lender or the Fronting Bank or any
Lender's, the Swingline Lender's or the Fronting Bank's holding company, if any,
with any request or directive regarding capital adequacy issued under any law,
rule, regulation or guideline (whether or not having the force of law) of any
such Governmental Authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's, the Swingline
Lender's or the Fronting Bank's capital or on the capital of such Lender's, the
Swingline Lender's or the Fronting Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by such Lender, the Swingline
Loans made by the Swingline Lender or the Letters of Credit issued by the
Fronting Bank pursuant hereto to a level below that which such Lender, the
Swingline Lender or the Fronting Bank or such Lender's, the Swingline Lender's
or the Fronting Bank's holding company, if any, could have achieved but for such
applicability, adoption, change or compliance (taking into consideration such
Lender's, the Swingline Lender's or the Fronting Bank's policies and the
policies of such Lender's, the Swingline Lender's or the Fronting Bank's holding
company, if any, with respect to capital adequacy) by an amount deemed by such
Lender, the Swingline Lender or the Fronting Bank to be material, then from time
to time the Borrower
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46
shall pay to such Lender, the Swingline Lender or the Fronting Bank following
receipt of a certificate of such Lender, the Swingline Lender or the Fronting
Bank to such effect in accordance with Section 2.14(c) such additional amount or
amounts as will compensate such Lender, the Swingline Lender or the Fronting
Bank or such Lender's, the Swingline Lender's or the Fronting Bank's holding
company, if any, on an after-tax basis for any such reduction suffered.
Notwithstanding any other provision in this paragraph (b), none of any Lender,
the Swingline Lender or the Fronting Bank shall be entitled to demand
compensation pursuant to this paragraph (b) if it shall not be the general
practice of such Lender, the Swingline Lender or the Fronting Bank, as
applicable, to demand such compensation in similar circumstances under
comparable provisions of other comparable credit agreements.
(c) A certificate of each Lender, the Swingline Lender or the Fronting Bank
setting forth such amount or amounts as shall be necessary to compensate such
Lender, the Swingline Lender or the Fronting Bank or its holding company, if
any, as specified in paragraph (a) or (b) above, as the case may be, and setting
forth in reasonable detail an explanation of the basis of requesting such
compensation in accordance with paragraph (a) or (b) above, including
calculations in reasonable detail, shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall pay each Lender, the
Swingline Lender or the Fronting Bank the amount shown as due on any such
certificate delivered by it within 10 days after its receipt of the same.
(d) Failure on the part of any Lender, the Swingline Lender or the Fronting
Bank to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Lender's, the Swingline Lender's or
the Fronting Bank's right to demand compensation with respect to such period or
any other period, except that none of any Lender, the Swingline Lender or the
Fronting Bank shall be entitled to compensation under this Section 2.14 for any
costs incurred or reduction suffered with respect to any date unless such
Lender, the Swingline Lender or the Fronting Bank, as applicable, shall have
notified the Borrower that it will demand compensation for such costs or
reductions under paragraph (c) above, not more than six months after the later
of (i) such date and (ii) the date on which such Lender, the Swingline Lender or
the Fronting Bank, as applicable, shall have become aware of such costs or
reductions. The protection of this Section 2.14 shall be available to each
Lender, the Swingline Lender or the Fronting Bank regardless of any possible
contention of the invalidity or inapplicability of the law, rule, regulation,
guideline or other change or condition that shall have occurred or been imposed.
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SECTION 2.15. Change in Legality. (a) Notwithstanding any other provision
herein, if after the date hereof any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrower for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR
Loan unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under subparagraph (i) or (ii)
above, all payments and prepayments of principal that would otherwise have been
applied to repay the Eurodollar Loans that would have been made by such Lender
or the converted Eurodollar Loans of such Lender shall instead be applied to
repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan, if lawful, on the last day
of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender against
any loss or expense that such Lender may sustain or incur with respect to
Eurodollar Loans as a consequence of (a) any failure by the Borrower to fulfill
on the date of any Borrowing hereunder the applicable conditions set forth in
Article V, (b) any failure by the Borrower to borrow or to refinance, convert or
continue any Loan hereunder after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to Section 2.03
or 2.10, (c) any payment, prepayment or conversion of a Eurodollar Loan required
or permitted by any other provision of this Agreement or otherwise, or any
assignment of a Eurodollar Loan required by Section 2.21(b), in each case made
or deemed made on a date other than the last day of the Interest Period
applicable thereto or (d) any default in payment or prepayment of the principal
amount of any Loan or any part thereof or interest accrued thereon, as and when
due and payable (at the due date thereof, whether at scheduled maturity, by
acceleration, irrevocable notice of prepayment or otherwise), including, in each
such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall be equal to the sum of (a) such
Lender's actual costs and expenses
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incurred (other than any lost profits) in connection with, or by reason of, any
of the foregoing events and (b) an amount equal to the excess, if any, as
reasonably determined by such Lender of (i) its cost of obtaining the funds for
the Loan being paid, prepaid, converted or not borrowed, converted or continued
(assumed to be the Adjusted LIBO Rate applicable thereto) for the period from
and including the date of such payment, prepayment, conversion or failure to
borrow, convert or continue to but excluding the last day of the Interest Period
for such Loan (or, in the case of a failure to borrow, convert or continue, the
Interest Period for such Loan that would have commenced on the date of such
failure) over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in reemploying the funds so paid,
prepaid, converted or not borrowed, converted or continued for such period or
Interest Period, as the case may be. A certificate of any Lender setting forth
any amount or amounts, including calculations in reasonable detail, that such
Lender is entitled to receive pursuant to this Section 2.16 shall be delivered
to the Borrower and shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section 2.15 or
permitted under Section 2.12(b) or Sections 2.13(f) and (i), each Borrowing,
each payment or prepayment of principal of any Borrowing, each payment of
interest on the Loans, each payment of the Commitment Fees, each payment of the
LC Fees, each reduction of the Commitments and each refinancing of any Borrowing
with, conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective applicable Commitments (or, if such Commitments
shall have expired or been terminated, in accordance with the respective
principal amounts of their outstanding Loans). Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing, computed in accordance with Section 2.01, to the next higher or
lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
any Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain
payment (voluntary or involuntary) in respect of any Loan or Loans or LC
Exposure as a result of which the unpaid principal portion of its Loans or its
LC Exposure shall be proportionately less than the unpaid principal portion of
the Loans of any other Lender or any other Lender's LC Exposure, such Lender
shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a
participation in the Loans of such other Lender or the LC Exposure of such other
Lender, so that the aggregate unpaid principal amount of the Loans, LC Exposure
and participations in Loans and LC Exposure held by each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all Loans and LC
Exposure then outstanding as the principal amount of such Lender's Loans and LC
Exposure prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all Loans and LC Exposure outstanding
prior to
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such exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. JSC, JSCE and the Borrower expressly
consent to the foregoing arrangements and agree that any Lender holding a
participation in a Loan or LC Exposure deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Loan Parties to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower in
the amount of such participation.
SECTION 2.19. Payments. (a) Except as provided in Sections 2.05(d) and
3.04(a) and (b), the Loan Parties shall make each payment (including principal
of or interest on any Loan or Swingline Loan or any Fees or other amounts)
hereunder and under any other Loan Document not later than 12:00 noon, New York
City time, on the date when due in immediately available dollars, without
defense, setoff or counterclaim. Each such payment (other than (i) the payments
specified in Sections 3.04(a), 3.04(b) and 3.07, which shall be paid directly to
the Fronting Bank, and (ii) principal of and interest on Swingline Loans, which
shall be paid directly to the Swingline Lender) shall be made to the
Administrative Agent at its office at 270 Park Avenue, New York, New York.
Payments made directly to the Fronting Bank shall be made to such account of the
Fronting Bank as the Fronting Bank shall specify by notice to the Borrower.
Payments made directly to the Swingline Lender shall be made to such account of
the Swingline Lender as the Swingline Lender shall specify by notice to the
Borrower. Any payments received by the Administrative Agent, the Fronting Bank
or the Swingline Lender after the specified time for receipt of such payment on
any day shall be deemed to have been received on the next Business Day. The
Administrative Agent shall distribute to the applicable Lenders all payments
received by the Administrative Agent for their respective accounts, promptly
following receipt thereof.
(b) Whenever any payment (including principal of or interest on any
Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by the Loan Parties hereunder
shall be made, in accordance with Section 2.19, free and clear of and without
deduction for any and all current or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on the net income of the Administrative Agent, the Collateral
Agent, the Fronting Bank or the Swingline Lender or any Lender (or any
transferee or assignee thereof, including a participation holder (any such
entity being called a "Transferee")) and franchise taxes imposed on the
Administrative Agent, the Collateral Agent, the Fronting Bank or the Swingline
Lender or any Lender (or Transferee) by the United States or any jurisdiction
under the laws of which the Administrative Agent, the Collateral Agent, the
Fronting Bank, the
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Swingline Lender or any such Lender (or Transferee) is organized or has its
principal office or lending office or any political subdivision or taxing
authority thereof or therein (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Taxes are required to be deducted from or in respect of any
sum payable hereunder to any Lender (or any Transferee), the Administrative
Agent, the Collateral Agent, the Swingline Lender or the Fronting Bank, (i) the
sum payable shall be increased by the amount necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.20) such Lender (or Transferee), the Administrative Agent,
the Collateral Agent, the Swingline Lender or the Fronting Bank (as the case may
be) shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) JSC, JSCE or the Borrower, as applicable, shall make
such deductions and (iii) JSC, JSCE or the Borrower, as applicable, shall pay
the full amount deducted to the relevant taxing authority or other Governmental
Authority in accordance with applicable law; provided, however, that no
Transferee of any Lender shall be entitled to receive any greater payment under
this paragraph (a) than such Lender would have been entitled to receive with
respect to the rights assigned, participated or otherwise transferred unless (x)
such assignment, participation or transfer shall have been made at a time when
the circumstances (including a Change of Law) giving rise to such greater
payment did not exist or had not yet occurred or (y) such assignment,
participation or transfer shall have been at the request of the Borrower.
(b) The Borrower agrees to pay any current or future stamp, intangible or
documentary taxes or any other excise or property taxes, charges or similar
levies (including, without limitation, mortgage recording taxes and similar
fees) that arise from any payment made hereunder or from the execution, delivery
or registration of, or otherwise with respect to, this Agreement, any Assignment
and Acceptance entered into at the request of the Borrower or any other Loan
Document (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender (or Transferee), the
Administrative Agent, the Collateral Agent, the Swingline Lender and the
Fronting Bank for the full amount of Taxes and Other Taxes (including any Taxes
or Other Taxes on amounts payable under this Section 2.20) paid by such Lender
(or Transferee), the Administrative Agent, the Collateral Agent, the Swingline
Lender or the Fronting Bank, as the case may be, and any liability (including
penalties, interest and reasonable expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted by the relevant taxing authority or other Governmental Authority. Such
indemnification shall be made within 30 days after the date any Lender (or
Transferee), the Administrative Agent, the Collateral Agent, the Swingline
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Lender or the Fronting Bank, as the case may be, makes written demand therefor
(which demand shall identify the nature and amount of Taxes and Other Taxes for
which indemnification is being sought and shall include a copy of the relevant
portion of any written assessment from the relevant taxing authority demanding
payment of such Taxes or Other Taxes, unless the Lender (or Transferee), the
Administrative Agent, the Collateral Agent, the Swingline Lender or the Fronting
Bank, as the case may be, determines, in its sole discretion, that such portion
of any such assessment is confidential). If a Lender (or Transferee), the
Administrative Agent, the Swingline Lender or the Fronting Bank shall become
aware that it is entitled to receive a refund in respect of Taxes or Other Taxes
as to which it has been indemnified by the Borrower pursuant to this Section
2.20, it shall promptly notify the Borrower of the availability of such refund
and shall, within 30 days after receipt of a request by the Borrower, apply for
such refund at the Borrower's expense. If any Lender (or Transferee), the
Administrative Agent, the Swingline Lender or the Fronting Bank receives a
refund in respect of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower pursuant to this Section 2.20, it shall promptly
notify the Borrower of such refund and shall, within 30 days of receipt, repay
such refund (to the extent of amounts that have been paid by the Borrower under
this Section 2.20 with respect to such refund and not previously reimbursed) to
the Borrower, net of all reasonable out-of-pocket expenses of such Lender, the
Administrative Agent, the Swingline Lender or the Fronting Bank and without
interest (other than the interest, if any, included in such refund net of any
Taxes payable with respect to receipt of such refund), provided that the
Borrower, upon the request of such Lender (or Transferee), the Administrative
Agent, the Swingline Lender or the Fronting Bank, agree to return such refund
(plus penalties, interest or other charges) to such Lender (or Transferee), the
Administrative Agent, the Swingline Lender or the Fronting Bank in the event
such Lender (or Transferee), the Administrative Agent, the Swingline Lender or
the Fronting Bank is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other Taxes
withheld by JSC, JSCE or the Borrower in respect of any payment to any Lender
(or Transferee), the Administrative Agent, the Collateral Agent, the Swingline
Lender or the Fronting Bank, JSC, JSCE or the Borrower, as the case may be, will
furnish to the Administrative Agent, at its address referred to in Section
10.01, the original or a certified copy of a receipt evidencing payment thereof
or other evidence reasonably satisfactory to such Lender (or Transferee), the
Administrative Agent, the Collateral Agent, the Swingline Lender or the Fronting
Bank, as the case may be.
(e) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.20 shall
survive the payment in full of the principal of and interest on all Loans made
hereunder.
(f) Each of the Administrative Agent, the Fronting Bank, the Swingline
Lender and any Lender (or Transferee) that is not incorporated or otherwise
formed under the laws of the United States of America or a state thereof (a
"Non-U.S. Person") agrees that it shall on the date it becomes a Lender (or
Transferee), the Administrative Agent, a Fronting Bank or Swingline Lender
hereunder, deliver to the Borrower and the Administrative Agent (i) one duly
completed copy of United States Internal Revenue Service Form 1001 or 4224, or
(ii) in the case of Lenders (or Transferees) exempt from United States Federal
withholding tax pursuant to Sections 871(h) or 881(c) of the Code, one duly
completed copy of a United States Internal Revenue Service Form W-8 and a
certificate representing that such Non-U.S. Person is not a bank for purposes of
Section 881(c) of the Code, or any successor applicable form of any thereof,
certifying in each case that such Lender (or Transferee), the Administrative
Agent, the Fronting Bank or the
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Swingline Lender is entitled to receive payments hereunder payable to it without
deduction or withholding of any United States Federal income taxes, or subject
to a reduced rate thereof. Each of the Administrative Agent, the Fronting Bank
or the Swingline Lender or any Lender (or Transferee) that delivers to the
Borrower and the Administrative Agent any such form or certification further
undertakes to deliver to the Borrower and the Administrative Agent further
copies of any such form or certification or other manner of certification
reasonably satisfactory to the Borrower on or before the date that any such form
or certification expires or becomes obsolete or of the occurrence of any event
requiring a change in the most recent form or certification previously delivered
by it to the Borrower or the Administrative Agent, and such extensions or
renewals thereof as may reasonably be requested by the Borrower or the
Administrative Agent, certifying that the Administrative Agent, Fronting Bank,
Swingline Lender or such Lender (or Transferee), as the case may be, is entitled
to receive payments hereunder without deduction or withholding of any United
States Federal income taxes, or subject to a reduced rate thereof. If at any
time there has occurred, on or prior to the date on which any delivery of any
such form or certification would otherwise be required, any change in law, rule,
regulation, treaty, convention or directive, or any change in the interpretation
or application of any thereof ("Change of Law"), that renders all such forms or
certification inapplicable or which would prevent the Administrative Agent,
Fronting Bank, Swingline Lender or such Lender (or Transferee), as the case may
be, from duly completing and delivering any such form or certification with
respect to it, the Administrative Agent, Fronting Bank, Swingline Lender or such
Lender (or Transferee), as the case may be, shall advise the Borrower that under
applicable law it shall be subject to withholding of United States Federal
income tax at the full statutory rate, a reduced rate of withholding or without
deduction or withholding. A Non-U.S. Person shall be required to furnish any
such form or certification only if it is entitled to claim an exemption from or
a reduced rate of withholding. Each of the Administrative Agent, the Fronting
Bank, the Swingline Lender and any Lender that is a Non-U.S. Person and that is
a party hereto as of the date hereof hereby represents and warrants that, as of
the date hereof, payments made to it hereunder are exempt from withholding of
United States Federal income taxes (i) because such payments are effectively
connected with a United States trade or business conducted by such Non-U.S.
Person; (ii) pursuant to the terms of an income tax treaty between the United
States and such Non-U.S. Person's country of residence; or (iii) because such
payments are portfolio interest exempt pursuant to Section 871(h) or 881(c) of
the Code. Notwithstanding any provision of paragraph (a) above to the contrary,
none of JSC, JSCE or the Borrower shall have any obligation to pay any Taxes or
Other Taxes or to indemnify any Lender (or Transferee), the Administrative
Agent, the Swingline Lender or the Fronting Bank for such Taxes or Other Taxes
pursuant to Section 2.20 to the extent that such Taxes or Other Taxes result
from (i) the failure of any Lender (or Transferee), the Administrative Agent,
the Fronting Bank or the Swingline Bank to comply with its obligations pursuant
to this paragraph (f) or (ii) any representation made on any such form or
certification (or successor applicable form or certification) by the Lender (or
Transferee), the Administrative Agent, the Fronting Bank, or the Swingline
Lender incurring such Taxes or Other Taxes proving to have been incorrect, false
or misleading in any material respect when so made or deemed to be made.
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SECTION 2.21. Duty to Mitigate; Assignment of Commitments under Certain
Circumstances. (a) Any of the Administrative Agent, the Fronting Bank, the
Swingline Lender or any Lender (or Transferee) claiming any additional amounts
payable pursuant to Section 2.14 or Section 2.20 or exercising its rights under
Section 2.15 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document requested by the Borrower or
to change the jurisdiction of its applicable lending office if the making of
such filing or change would avoid the need for or reduce the amount of any such
additional amounts that may thereafter accrue or avoid the circumstances giving
rise to such exercise and would not, in the sole determination of such Lender
(or Transferee), the Administrative Agent, the Fronting Bank or the Swingline
Lender, as the case may be, require it to incur additional costs or be otherwise
disadvantageous to such Lender (or Transferee), the Administrative Agent, the
Fronting Bank or the Swingline Lender.
(b) In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.14 or 2.15, or the Borrower shall be required
to make additional payments to any Lender under Section 2.20, the Borrower shall
have the right, but not the obligation, at its own expense (including with
respect to the processing and recordation fee referred to in Section 10.04(b)),
upon notice to such Lender and the Administrative Agent, to replace such Lender
with an assignee (in accordance with and subject to the restrictions contained
in Section 10.04(b)) approved by the Administrative Agent (which approval shall
not be unreasonably withheld), and such Lender hereby agrees to transfer and
assign without recourse (in accordance with and subject to the restrictions
contained in Section 10.04(b)) all its interests, rights and obligations under
this Agreement to such assignee; provided, however, that no Lender shall be
obligated to make any such assignment unless (i) such assignment shall not
conflict with any law or any rule, regulation or order of any Governmental
Authority, (ii) such assignee shall pay to the affected Lender in immediately
available funds on the date of such assignment the principal of the Loans made
by such Lender hereunder and (iii) the Borrower shall pay to the affected Lender
in immediately available funds on the date of such assignment the interest
accrued to the date of payment on the Loans made by such Lender hereunder and
all other amounts accrued for such Lender's account or owed to it hereunder.
SECTION 2.22. Swingline Loans. (a) On the terms and subject to the
conditions and relying upon the representations and warranties herein set forth,
the Swingline Lender agrees, at any time and from time to time from and
including the Closing Date to but excluding the earlier of the Revolving Credit
Maturity Date and the termination of the Revolving Credit Commitments, in
accordance with the terms hereof, to make Swingline Loans to the Borrower in an
aggregate principal amount at any time outstanding not to exceed the lesser of
(i) $25,000,000 and (ii) the difference between (x) the aggregate Revolving
Credit Commitments at such time and (y) the sum of (A) the aggregate principal
amount of Revolving Loans outstanding at such time and (B) the LC Exposure at
such time. Each Swingline Loan shall be in a principal amount that is an
integral multiple of $250,000. The Swingline Lender shall make each Swingline
Loan available to the Borrower by means of a credit to the general deposit
account of the Borrower with the Swingline Lender by 3:00 p.m. on the date such
Swingline Loan is requested to be made pursuant to
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paragraph (b) below. Within the limits set forth in the first sentence of this
paragraph, the Borrower may borrow, pay or prepay and reborrow Swingline Loans
prior to the Revolving Credit Maturity Date on the terms and subject to the
conditions and limitations set forth herein.
(b) The Borrower shall give the Administrative Agent telephonic, written or
telecopy notice (in the case of telephonic notice, such notice shall be promptly
confirmed by telecopy) not later than 11:00 a.m., New York City time, on the day
of a proposed borrowing. Such notice shall be delivered on a Business Day, shall
be irrevocable and shall refer to this Agreement and shall specify the requested
date (which shall be a Business Day) and amount of such Swingline Loan. The
Administrative Agent shall promptly advise the Swingline Lender of any notice
received from the Borrower pursuant to this paragraph (b).
(c) The Swingline Lender may by written or telecopy notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any
Business Day require the Lenders to purchase all or any portion of the Swingline
Loans outstanding. Such notice shall specify the aggregate amount of Swingline
Loans to be purchased and the Administrative Agent shall promptly upon receipt
of such notice give notice to each Lender, specifying in such notice to each
Lender such Lender's pro rata percentage (based on the percentage that such
Lender's Revolving Credit Commitment bears to the aggregate amount of the
Revolving Credit Commitments on the date of such notice) of such Swingline Loan
or Swingline Loans. Each Lender shall pay to the Administrative Agent, not later
than 2:00 p.m., New York City time, on the date of such notice, such Lender's
pro rata percentage (determined as aforesaid) of the principal amount of such
Swingline Loan or Swingline Loans. Each such payment shall for all purposes
hereunder be deemed to be an ABR Revolving Loan (it being understood that (i)
each Lender's obligation to make such payment is absolute and unconditional and
shall not be affected by any event or circumstance whatsoever, including the
occurrence of any Default or Event of Default hereunder or the failure of any
condition precedent set forth in Article V to be satisfied, and (ii) each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever). The Administrative Agent shall promptly advise the Borrower of any
notice received from the Swingline Lender pursuant to this paragraph (c).
(d) The Borrower may prepay any Swingline Loan in whole or in part at any
time without premium or penalty, provided that the Borrower shall have given the
Administrative Agent written or telecopy notice (or telephone notice promptly
confirmed in writing or by telecopy) of such prepayment not later than 11:00
a.m., New York City time, on the Business Day designated by the Borrower for
such prepayment.
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ARTICLE III
Letters of Credit
SECTION 3.01. Issuance of Letters of Credit. (a) The Fronting Bank agrees,
upon the receipt of an appropriately completed and properly authorized Letter of
Credit Application, in a form and containing terms and conditions that are
reasonably acceptable to the Fronting Bank and consistent with the terms hereof,
and on the terms and subject to the conditions hereinafter set forth, to issue
Letters of Credit for the account of the Borrower, at any time and from time to
time on and after the Closing Date until the earlier of (i) the LC Maturity Date
and (ii) the termination of the LC Commitment in accordance with the terms
hereof; provided, however, that any Letter of Credit shall be issued only if,
and each request by the Borrower for the issuance of any Letter of Credit shall
be deemed a representation and warranty of the Borrower that, immediately
following the issuance of any such Letter of Credit, (x) the LC Exposure at such
time shall not exceed the LC Commitment in effect at such time and (y) the
aggregate principal amount of Revolving Loans and Swingline Loans outstanding at
such time plus the LC Exposure at such time shall not exceed the aggregate
Revolving Credit Commitments in effect at such time.
(b) No Letter of Credit shall be issued with a stated expiration date later
than the earlier of (i) the close of business on the LC Maturity Date and (ii)
the close of business on the date that is (x) 270 days after the date of
issuance of such Letter of Credit, in the case of a Trade Letter of Credit and
(y) 12 months after the date of issuance of such Letter of Credit, in the case
of a Standby Letter of Credit. Each Letter of Credit shall provide for payments
of drawings in dollars.
(c) Each Trade Letter of Credit shall, among other things, provide for the
payment of sight drafts when presented for honor thereunder, or of time drafts
with a maturity date occurring not later than the earlier of (i) 120 days after
the presentation thereof and (ii) the LC Maturity Date, in each case in
accordance with the terms thereof and when accompanied by the required documents
or when such documents are presented to the Fronting Bank.
(d) Each Standby Letter of Credit may, in the absolute discretion of the
Fronting Bank, include a provision whereby such Standby Letter of Credit shall
be renewed automatically for additional consecutive periods of 12 months or less
(but not beyond the LC Maturity Date) unless the Fronting Bank notifies the
beneficiary thereof at least 60 days prior to the then-applicable expiry date
that such Standby Letter of Credit will not be renewed.
(e) The Borrower may request the extension or renewal of a Standby Letter
of Credit that is not automatically renewed in accordance with the terms
contained therein by giving written notice to the Fronting Bank at least three
Business Days prior to the then-current expiry date of such Standby Letter of
Credit (provided that the Fronting Bank may accommodate requests on shorter
notice in its sole discretion). If no Default or Event of Default has occurred
and is continuing, the Fronting Bank shall promptly issue such extension or
renewal; provided, however,
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that the Fronting Bank shall have no obligation to extend or renew any Standby
Letter of Credit (i) for a period in excess of 12 months or (ii) to an expiry
date beyond the LC Maturity Date.
(f) Each request for the issuance of a Letter of Credit shall be made by a
written or facsimile authenticated Letter of Credit Application from the
Borrower to the Fronting Bank specifying whether such Letter of Credit is to be
a Trade Letter of Credit or a Standby Letter of Credit (and if such Letter of
Credit is to be a Standby Letter of Credit, the date on which such Standby
Letter of Credit is to be issued), the date on which such Letter of Credit is to
expire, the amount of such Letter of Credit, the name and address of the
beneficiary of such Letter of Credit and such other information as may be
necessary or desirable to complete such Letter of Credit. The Fronting Bank will
provide the Administrative Agent on the first Business Day of each week (or on a
more frequent basis if reasonably requested by the Administrative Agent) a
statement setting forth the aggregate face amount of the Outstanding Standby
Letters of Credit issued by it and the aggregate face amount of the Outstanding
Trade Letters of Credit for each day since the end of the period covered by the
prior such statement, together with such other information regarding the
Outstanding Letters of Credit as may be reasonably requested by the
Administrative Agent.
SECTION 3.02. Participations; Unconditional Obligations. (a) By the
issuance of a Letter of Credit and without any further action on the part of the
Fronting Bank or the Participating Lenders in respect thereof, the Fronting Bank
hereby grants to each Participating Lender, and each Participating Lender hereby
agrees to acquire from the Fronting Bank, a participation in such Letter of
Credit equal to such Participating Lender's Applicable Percentage of the face
amount of such Letter of Credit effective upon the issuance of such Letter of
Credit. In addition, the Fronting Bank hereby grants to each Participating
Lender, and each Participating Lender hereby acquires from the Fronting Bank, a
participation in each Existing Letter of Credit equal to such Participating
Lender's Applicable Percentage of the face amount of such Existing Letter of
Credit, effective on the Closing Date. In consideration and in furtherance of
the foregoing, each Participating Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, on behalf of the Fronting Bank, in
accordance with Section 2.02(e), such Participating Lender's Applicable
Percentage of each LC Disbursement made by the Fronting Bank; provided, however,
that the Participating Lenders shall not be obligated to make any such payment
to the Fronting Bank with respect to any wrongful payment or disbursement made
under any Letter of Credit as a result of the gross negligence or wilful
misconduct of the Fronting Bank.
(b) Each Participating Lender acknowledges and agrees that its obligation
to acquire participations pursuant to paragraph (a) above in respect of Letters
of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or Event of Default hereunder or the termination of the LC Commitment or the
Commitments, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
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SECTION 3.03. LC Fee. The Borrower agrees to pay to the Administrative
Agent for the account of the Participating Lenders for each calendar quarter (or
shorter period commencing with the date hereof or ending with the first date on
which the LC Commitment shall have expired or been terminated and there shall be
no Outstanding Letters of Credit) a fee (the "LC Fee") on the average daily
amount of the aggregate Outstanding Letters of Credit issued for the account of
the Borrower during such quarter or shorter period at a rate per annum equal to
the higher of (i) the weighted average LIBOR Spread applicable to Eurodollar
Revolving Loans during such period minus 1/2 of 1% and (ii) 1%. The LC Fee shall
be computed on the basis of the actual number of days elapsed over a year of 360
days. The Administrative Agent agrees to disburse to each Participating Lender
its pro rata portion of such LC Fee promptly upon receipt. The LC Fee shall be
paid in arrears on each March 31, June 30, September 30 and December 31 and on
the LC Maturity Date (or the first date on which the LC Commitment shall have
expired or been terminated and there shall be no Outstanding Letters of Credit,
if earlier). Once paid, the LC Fee shall not be refundable in any circumstances
(other than corrections of error in payment).
SECTION 3.04. Agreement to Repay LC Disbursements. (a) If the Fronting Bank
shall pay any draft presented under a Letter of Credit, the Borrower shall pay
to the Fronting Bank an amount equal to the amount of such draft not later than
two hours after the Borrower shall have received notice from the Fronting Bank
that payment of such draft will be made or, if the Borrower shall have received
such notice later than 10:00 a.m., New York City time, on any Business Day, not
later than 10:00 a.m., New York City time, on the immediately following Business
Day.
(b) The Borrower's obligation to repay the Fronting Bank for LC
Disbursements made by the Fronting Bank under the Outstanding Letters of Credit
for the account of the Borrower shall be absolute, unconditional and irrevocable
under any and all circumstances and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right that
the Borrower or any other Person may at any time have against the
beneficiary under any Letter of Credit, the Fronting Bank, the
Administrative Agent, any Lender or any other Person (other than the
defense of payment in accordance with the terms of this Agreement or a
defense based on the gross negligence or wilful misconduct of the Fronting
Bank) in connection with this Agreement or any other agreement or
transaction;
(iii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect, provided
that payment by the Fronting Bank under such Letter of Credit against
presentation of such draft or document shall not have constituted gross
negligence or wilful misconduct of the Fronting Bank;
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(iv) payment by the Fronting Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of such Letter of Credit, provided that such payment shall not have
constituted gross negligence or wilful misconduct of the Fronting Bank; and
(v) any other circumstance or event whatsoever, whether or not similar
to any of the foregoing, provided that such circumstance or event shall not
have been the result of gross negligence or wilful misconduct of the
Fronting Bank.
It is understood that in making any payment under a Letter of Credit (i)
the Fronting Bank's exclusive reliance on the documents presented to it under
such Letter of Credit as to any and all matters set forth therein, including
reliance on the amount of any draft presented under such Letter of Credit,
whether or not the amount due to the beneficiary equals the amount of such draft
and whether or not any document presented pursuant to such Letter of Credit
proves to be insufficient in any respect, if such document on its face appears
to be in order, and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be forged or invalid or
any statement therein proves to be inaccurate or untrue in any respect
whatsoever, and (ii) any noncompliance in any immaterial respect of the
documents presented under a Letter of Credit with the terms thereof shall, in
each case, not be deemed wilful misconduct or gross negligence of the Fronting
Bank.
SECTION 3.05. Letter of Credit Operations. The Fronting Bank shall, within
a reasonable time after its receipt thereof, examine all documents purporting to
represent a demand for payment under an Outstanding Letter of Credit to
ascertain that the same appear on their face to be in conformity with the terms
and conditions of such Outstanding Letter of Credit. The Fronting Bank shall as
promptly as possible give electronic or facsimile notification or telephonic
notification, promptly confirmed by electronic or facsimile notice, to the
Borrower of such demand for payment and of the determination by the Fronting
Bank as to whether such demand for payment was in conformity with such terms and
conditions, and shall as promptly as possible give prior telephonic notification
to the Borrower of the determination by the Fronting Bank as to whether such
demand for payment was in accordance with the terms and conditions of such
Outstanding Letter of Credit and whether the Fronting Bank has made or will make
an LC Disbursement thereunder, provided that the failure to give such notice
shall not relieve the Borrower of its obligation to reimburse the Fronting Bank
with respect to any such LC Disbursement.
SECTION 3.06. Termination of LC Commitment. The Borrower may permanently
terminate, or from time to time in part permanently reduce, the LC Commitment,
in each case upon at least three Business Days' prior written or facsimile
notice to the Administrative Agent and the Fronting Bank, provided that, after
giving effect to such termination or reduction, the LC Commitment shall not be
less than the LC Exposure at such time or greater than the available Revolving
Credit Commitments at such time.
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SECTION 3.07. Fronting Bank Fees. (a) The Borrower shall pay to the
Fronting Bank, for its own account, such commissions, issuance fees, transfer
fees and other fees and charges in connection with the issuance or
administration of each Letter of Credit as the Borrower and the Fronting Bank
shall agree upon.
(b) The Borrower shall pay to the Fronting Bank, for its own account, a
fronting fee on the average daily aggregate maximum amount available to be drawn
(assuming compliance with all conditions to drawing) under all Outstanding
Letters of Credit issued by the Fronting Bank, at a rate per annum agreed upon
by the Borrower and the Fronting Bank, payable in arrears on each March 31, June
30, September 30 and December 31, and on the LC Maturity Date. Such fronting and
origination fees shall be computed on the basis of the actual number of days
elapsed over a year of 360 days.
SECTION 3.08. Resignation or Removal of the Fronting Bank. (a) The Fronting
Bank may resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Fronting Bank, the Administrative Agent
and the Lenders. Upon any such resignation or removal, the Borrower shall
(within 180 days after such notice of resignation or removal) either (i) appoint
a Lender (with the consent of such Lender) as successor or (ii) terminate the
unutilized LC Commitment; provided, however, that if the Borrower elects to
terminate the unutilized LC Commitment, the Borrower may at any time thereafter
that the Revolving Credit Commitments are in effect reinstate the LC Commitment,
by notice to the Administrative Agent and the Lenders, in connection with the
appointment of a Lender as successor Fronting Bank. Subject to paragraph (b)
below, upon the acceptance of any appointment as the Fronting Bank hereunder by
a successor Fronting Bank, such successor shall succeed to and become vested
with all the interests, rights and obligations of the retiring Fronting Bank and
the retiring Fronting Bank shall be discharged from its obligations to issue
additional Letters of Credit hereunder. At the time such removal or resignation
shall become effective, the Borrower shall pay all accrued and unpaid fees
pursuant to Section 2.05(c). The acceptance of any appointment as the Fronting
Bank hereunder by a successor Lender shall be evidenced by an agreement entered
into by such successor, in a form satisfactory to the Borrower and the
Administrative Agent, and, from and after the effective date of such agreement,
(i) such successor Lender shall have all the rights and obligations of the
previous Fronting Bank under this Agreement and the other Loan Documents and
(ii) references herein and in the other Loan Documents to the term "Fronting
Bank" shall be deemed to refer to such successor or to any previous Fronting
Bank, or to such successor and all previous Fronting Banks, as the context shall
require.
(b) After the resignation or removal of the Fronting Bank hereunder, the
retiring Fronting Bank shall remain a party hereto and shall continue to have
all the rights and obligations of the Fronting Bank under this Agreement and the
other Loan Documents with respect to Letters of Credit issued by it prior to
such resignation or removal, but shall not be required to issue additional
Letters of Credit.
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SECTION 3.09. Cash Collateralization. If any Event of Default shall occur
and be continuing, the Borrower shall, on the Business Day it receives notice
from the Administrative Agent or the Required Lenders (or, if the maturity of
the Loans has been accelerated, Participating Lenders holding participations in
Outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all Outstanding Letters of Credit) thereof and the amount to
be deposited, deposit in an account with the Collateral Agent, for the benefit
of the Participating Lenders, an amount in cash equal to the LC Exposure as of
such date. Such deposit shall be held by the Collateral Agent as collateral for
the payment and performance of the Obligations. The Collateral Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the investment of such
deposits in Permitted Investments, which investments shall be made at the option
and sole discretion of the Collateral Agent, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall accumulate in
such account. Moneys in such account shall (a) automatically be applied by the
Administrative Agent to reimburse the Fronting Bank for LC Disbursements for
which it has not been reimbursed, (b) be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time and
(c) if the maturity of the Loans has been accelerated (but subject to the
consent of Participating Lenders holding participations in Outstanding Letters
of Credit representing greater than 50% of the aggregate undrawn amount of all
Outstanding Letters of Credit), be applied to satisfy the Obligations. If the
Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.
SECTION 3.10. Additional Fronting Banks. The Borrower may, at any time and
from time to time with the consent of the Senior Managing Agents (which consent
shall not be unreasonably withheld) and such Lender, designate one or more
additional Lenders to act as a fronting bank under the terms of this Agreement.
Any Lender designated as a fronting bank pursuant to this Section 3.10 shall be
deemed to be the "Fronting Bank" (in addition to being a Lender) in respect of
Letters of Credit issued or to be issued by such Lender, and, with respect to
such Letters of Credit, such term shall thereafter apply to the Fronting Bank
and such Lender.
ARTICLE IV
Representations and Warranties
Each of JSC, JSCE and the Borrower represents and warrants to each of the
Lenders, the Administrative Agent, the Senior Managing Agents, the Managing
Agents, the Fronting Bank and the Swingline Lender that:
SECTION 4.01. Organization; Powers. Each of the Loan Parties (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its
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organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted, (c) is qualified to do
business in every jurisdiction where such qualification is required by the
nature of its business, the character and location of its property, business or
customers, or the ownership or leasing of its properties, except for such
jurisdictions in which the failure so to qualify, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or instrument
contemplated thereby to which it is or will be a party and, in the case of the
Borrower, to borrow hereunder.
SECTION 4.02. Authorization. The execution, delivery and performance by
each of the Loan Parties of each of the Loan Documents to which it is a party,
the Borrowings hereunder, the issuance of the Letters of Credit, the use of the
proceeds of the Loans, the Swingline Loans and the Letters of Credit, the
creation of the security interests contemplated by the Security Documents and
the other transactions contemplated by the Loan Documents (all the foregoing,
collectively, the "Transactions") (a) have been duly authorized by all requisite
corporate and, if required, stockholder action and (b) will not (i) violate (A)
any provision of law, statute, rule or regulation, other than any law, statute,
rule or regulation the violation of which could not reasonably be expected to
result in a Material Adverse Effect, or of the certificate of incorporation or
other constitutive documents or by-laws of any Loan Party or any of their
respective Subsidiaries, (B) any order of any Governmental Authority or (C) any
provision of any indenture or other material agreement or other material
instrument to which any Loan Party or any of their respective Subsidiaries is a
party or by which any of them or any of their property is or may be bound, (ii)
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or (iii) result in the creation or
imposition of any Lien (other than any Lien created hereunder or under the
Security Documents) upon or with respect to any property or assets now owned or
hereafter acquired by any Loan Party or any of their respective Subsidiaries.
SECTION 4.03. Enforceability. This Agreement has been duly executed and
delivered by the Borrower, JSC and JSCE and constitutes, and each other Loan
Document when executed and delivered by JSC, JSCE and the Borrower and each Loan
Party party thereto will constitute, a legal, valid and binding obligation of
JSC, JSCE, the Borrower and the Loan Parties, as applicable, enforceable against
each of them in accordance with its terms (a) except as the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) subject to general principles of equity.
SECTION 4.04. Governmental Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
or will be required in connection with the Transactions, except for (a) the
filing of Uniform Commercial Code financing statements and filings with the
United States Patent and Trademark Office and the United States Copyright Office
to perfect the security interests that can be perfected by such filings, (b)
recordation of the Mortgages, (c) such actions, consents, approvals,
registrations and filings set
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forth on Schedule 4.04 and (d) such actions, consents, approvals, registrations
and filings as have been made or obtained and are in full force and effect.
SECTION 4.05. Financial Statements. Each of JSC, JSCE and the Borrower has
delivered to the Lenders the audited financial statements of such Person for the
fiscal year ended December 31, 1997, together with such Person's annual report
on Form 10-K, if any, filed with the Securities and Exchange Commission. All
financial statements set forth or referred to in the materials specified in the
preceding sentence were prepared in conformity with GAAP. All such financial
statements fairly present the consolidated financial position of such Person and
its Subsidiaries as at the date thereof and the consolidated results of
operations and changes in financial position of such Person and its Subsidiaries
for each of the periods covered thereby. Except as disclosed in such financial
statements, none of JSC, JSCE or the Borrower or any of their respective
Subsidiaries had, at the date of such financial statements or on the Closing
Date, as the case may be, any material contingent obligation, material
contingent liability or material liability for taxes, long-term lease or unusual
forward or long-term commitment or obligations to retired employees for medical
or other employee benefits that is not reflected in the foregoing financial
statements or the notes thereto.
SECTION 4.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, properties, prospects or
condition (financial or otherwise) of JSC and its consolidated Subsidiaries,
taken as a whole, since December 31, 1997.
SECTION 4.07. Title to Properties; Possession Under Leases. (a) Each of
JSC, JSCE and the Borrower and their respective Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its material
properties and assets, except for minor defects in title that do not interfere
in any material respect with its ability to conduct its business as currently
conducted. All such title to, or leasehold interest in, material properties and
assets are free and clear of Liens, other than Liens expressly permitted by
Section 7.02 (none of which is superior to the Liens created hereunder or under
the Security Documents) and Liens with respect to which the Collateral Agent has
received on or prior to the Closing Date duly executed releases and termination
statements in connection therewith.
(b) Each of JSC, JSCE and the Borrower and their respective Subsidiaries
has complied with all obligations under all material leases to which it is a
party and enjoys peaceful and undisturbed possession under all such material
leases necessary in any material respect for the operation of their respective
properties and assets.
SECTION 4.08. Subsidiaries. Schedule 4.08 sets forth as of the date hereof
a list of all the Subsidiaries of JSC, JSCE and the Borrower, their jurisdiction
of organization and the percentage ownership interest of each of them and any
other Subsidiary therein. The capital stock of each of the Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and, except as set
forth on Schedule 4.08, is owned free and clear of all Liens other than
nonconsensual Permitted Liens arising other than as a result of a voluntary act
of JSC, JSCE or
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the Borrower. No authorized but unissued treasury shares of capital stock of the
Borrower or any such Subsidiary are subject to any option, warrant, right to
call or commitment of any kind or character except as set forth on Schedule
4.08.
SECTION 4.09. Litigation; Compliance with Laws. (a) Except as set forth in
Schedule 4.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of JSC, JSCE or the Borrower, threatened against or affecting JSC,
JSCE or the Borrower or any of their respective Subsidiaries or any business or
property of any such Person that (i) involve any Loan Document or the
Transactions or (ii) could reasonably be expected to, individually or in the
aggregate, result in a Material Adverse Effect.
(b) Neither JSC, JSCE, the Borrower and their respective Subsidiaries nor
any of their respective properties or assets is (i) in violation of, nor will
the continued operation of their properties and assets as currently conducted
violate, any law, rule, regulation, statute (including any zoning, building,
environmental and safety law, ordinance, code or approval or any building
permits) or any restrictions of record or agreements affecting the Mortgaged
Properties, where such violations could reasonably be expected to have a
material adverse effect on the value, use or operation of any such Mortgaged
Property or (ii) in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority, where such defaults, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. The issuance of the Letters of Credit will not violate any
applicable law or regulation or violate or be prohibited by any judgment, writ,
injunction, decree or order of any Governmental Authority.
SECTION 4.10. Agreements. None of JSC, JSCE or the Borrower or any of their
respective Subsidiaries is in default under any provision of any indenture or
other agreement or instrument evidencing Indebtedness, or any other agreement or
instrument to which it is a party or by which it or any of its properties or
assets are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
SECTION 4.11. Federal Reserve Regulations. (a) None of JSC, JSCE or the
Borrower or any of their respective Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock. (b) No part of the proceeds of
any Letter of Credit or any Loan or Swingline Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose or (ii) for any purpose that entails a violation of,
or is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, T, U or X.
SECTION 4.12. Investment Company Act; Public Utility Holding Company Act.
None of JSC, JSCE or the Borrower or any of their respective Subsidiaries (a) is
an "investment
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company" as defined in, or is subject to regulation under, the
Investment Company Act of 1940 or (b) is a "holding company" as defined in, or
is subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 4.13. Use of Proceeds. The Borrower will use the proceeds of the
Loans and will request the issuance of Letters of Credit only for the purposes
specified in the preamble to this Agreement.
SECTION 4.14. Tax Returns. Each of JSC, JSCE and the Borrower and their
respective Subsidiaries has filed or caused to be filed all Federal, state and
local income and other material tax returns required to have been filed by it or
with respect to it and has paid or caused to be paid all taxes shown to be due
and payable on such returns or on any assessments received by it or with respect
to it, except taxes that are being contested in good faith by appropriate
proceedings and for which it has set aside on its books adequate reserves in
accordance with GAAP.
SECTION 4.15. No Material Misstatements. The information provided by or on
behalf of the Loan Parties and contained in the Confidential Information
Memorandum (including all attachments and exhibits thereto), as supplemented,
and as supplemented further by information heretofore provided in writing by or
on behalf of the Loan Parties to the Lenders and any other materials, documents
and information that the Loan Parties or any of their respective Affiliates may
have furnished to the Lenders, was as of the date of such Confidential
Information Memorandum, the dates otherwise specified therein or the dates upon
which such information was provided, accurate in all material respects and does
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, taken as a whole, not misleading,
provided that to the extent any such information therein was based upon or
constitutes a forecast or projection, JSC, JSCE and the Borrower represent only
that they acted in good faith and utilized reasonable assumptions, due and
careful consideration and the information actually known to Responsible Officers
at the time in the preparation of such information.
SECTION 4.16. Employee Benefit Plans. Each of JSC, JSCE and the Borrower
and their respective ERISA Affiliates is in compliance in all material respects
with the applicable provisions of ERISA and the Code and the regulations and
published interpretations thereunder. No Reportable Event has occurred in
respect of any Plan of JSC, JSCE or the Borrower or any ERISA Affiliate. The
present value of all benefit liabilities under each Plan (based on those
assumptions used to fund such Plan) did not, as of the last annual valuation
date applicable thereto, exceed by more than $25,000,000 the value of the assets
of such Plan, and the present value of all benefit liabilities of all
underfunded Plans (based on those assumptions used to fund each such Plan) did
not, as of the last annual valuation dates applicable thereto, exceed by more
than $25,000,000 the value of the assets of all such underfunded Plans. None of
JSC, JSCE or the Borrower or any ERISA Affiliate has incurred any Withdrawal
Liability that could result in a Material Adverse Effect. None of JSC, JSCE or
the Borrower or any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization or has been terminated
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within the meaning of Title IV of ERISA and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated where such reorganization
or termination has resulted or could reasonably be expected to result, through
increases in the contributions required to be made to such Plan or otherwise, in
a Material Adverse Effect.
SECTION 4.17. Environmental and Safety Matters. Except as set forth on
Schedule 4.17:
(a) Each of JSC, JSCE and the Borrower and each of their respective
Subsidiaries has obtained all permits, licenses and other authorizations
that are required and material with respect to the operation of the
business of JSC and its Subsidiaries, taken as a whole, under any
Environmental Law, and each such permit, license and authorization is in
full force and effect.
(b) Each of JSC, JSCE and the Borrower and each of their respective
Subsidiaries is in compliance with all material terms and conditions of the
permits, licenses and authorizations specified in Section 4.17(a), and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Law applicable to it and its
business, assets, operations and properties, including those arising under
the Resource Conservation and Recovery Act of 1976, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("CERCLA"), the Federal Water Pollution Control Act, the Federal Clean
Air Act, and the Toxic Substances Control Act and any analogous or
comparable state laws, except for such instances of noncompliance that
could not reasonably be expected to result in a Material Adverse Effect.
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the
knowledge of JSC, JSCE or the Borrower or any of their respective
Subsidiaries, after inquiry, threatened against JSC, JSCE or the Borrower
or any of their respective Subsidiaries under any Environmental Law that
could reasonably be expected to result in a Material Adverse Effect.
(d) None of JSC, JSCE, the Borrower or any of their respective
Subsidiaries has received notice that it has been identified as a
potentially responsible party under CERCLA or any comparable state law, nor
has JSC, JSCE, the Borrower or any of their respective Subsidiaries
received any notification that any hazardous substances or any pollutant or
contaminant, as defined in CERCLA and its implementing regulations, or any
toxic substance, hazardous waste, hazardous constituents, hazardous
materials, asbestos or asbestos containing material, polychlorinated
biphenyls, petroleum, including crude oil and any fractions thereof, or
other wastes, chemicals, substances or materials regulated by any
Environmental Laws (collectively, "Hazardous Materials") that it or any of
their
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respective predecessors in interest has used, generated, stored, tested,
handled, transported or disposed of, has been found at any site at
which any Governmental Authority or private party is conducting a remedial
investigation or other action pursuant to any Environmental Law, except in
each case for any such notices received after the date hereof that,
individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(e) There have been no releases or threatened releases (in each case
as defined in CERCLA) of Hazardous Materials by JSC, JSCE, the Borrower or
any of their respective Subsidiaries on, upon, into or from any of the Real
Properties, which releases or threatened releases could reasonably be
expected to result in a Material Adverse Effect. To the best knowledge of
JSC, JSCE, the Borrower and each of their respective Subsidiaries, there
have been no such releases or threatened releases on, upon, under or into
any real property in the vicinity of any of the Real Properties that,
through soil, surface water or groundwater migration or contamination, may
be located on, in or under such Real Properties and which could reasonably
be expected to result in a Material Adverse Effect.
(f) To the best knowledge of JSC, JSCE, the Borrower or any of their
respective Subsidiaries, there is no asbestos in, on, or at any Real
Properties or any facility or equipment of JSC, JSCE, the Borrower, or any
of their respective Subsidiaries, except to the extent that the presence of
such material could not reasonably be expected to result in a Material
Adverse Effect.
(g) To the best knowledge of JSC, JSCE, the Borrower and each of their
respective Subsidiaries after due inquiry, none of the Real Properties of
JSC, JSCE, the Borrower or any of their respective Subsidiaries is (i)
listed or proposed for listing on the National Priorities List under CERCLA
or (ii) listed in the Comprehensive Environmental Response, Compensation,
Liability Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any Governmental Authority.
(h) There are no past or current events, conditions, circumstances,
activities, practices, incidents, actions or plans that could reasonably be
anticipated to interfere with or prevent compliance with any Environmental
Law, or which may give rise to liability under any Environmental Law, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing or notice of violation, study or investigation, based on or related
to the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport, shipping or handling, or the emission,
discharge, release or threatened release into the environment, of any
Hazardous Material that could reasonably be expected to result in a
Material Adverse Effect.
SECTION 4.18. Solvency. After giving effect to the Transactions to occur on
the Closing Date, (a) the fair salable value of the assets of JSC, JSCE and the
Borrower and their respective Subsidiaries, on a consolidated basis, will exceed
the amount that will be required to be paid on
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or in respect of the existing debts and other liabilities (including contingent
liabilities) of JSC, JSCE and the Borrower and their respective Subsidiaries, on
a consolidated basis, as they mature, (b) the assets of JSC, JSCE and the
Borrower and their respective Subsidiaries, on a consolidated basis, will not
constitute unreasonably small capital to carry out their businesses as conducted
or as proposed to be conducted, including the capital needs of JSC, JSCE and the
Borrower and their respective Subsidiaries, on a consolidated basis (taking into
account the particular capital requirements of the businesses conducted by such
entities and the projected capital requirements and capital availability of such
businesses) and (c) none of JSC, JSCE or the Borrower intend to, nor do they
intend to permit any of their respective Subsidiaries to, and do not believe
that any of them or any such Subsidiary will, incur debts beyond its ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be received by each of them or any such Subsidiary and the amounts to be
payable on or in respect of its obligations).
SECTION 4.19. Security Documents. (a) The Pledge Agreement creates in favor
of the Collateral Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral (as defined in
the Pledge Agreement) and proceeds thereof and constitutes a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the Loan Parties party thereto, as applicable, in such Collateral and the
proceeds thereof, in each case prior and superior in right to any other Person.
(b) The Security Agreement creates in favor of the Collateral Agent, for
the ratable benefit of the Secured Parties, a legal, valid and enforceable
security interest in the Collateral (as defined in the Security Agreement) and
proceeds thereof, and assuming that financing statements in appropriate form
have been filed in the offices specified on Schedule 4.19(b), the Lien created
under the Security Agreement constitutes a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof (except insofar as the perfection of a Lien
on, and security interest in, such Collateral is obtained as described in
paragraph (d) below), in each case prior and superior in right to any other
Person.
(c) The Mortgages create in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable Lien on all of
the Borrower's right, title and interest in and to the Mortgaged Properties
thereunder and the proceeds thereof, and when the Mortgages are filed in the
offices specified on Schedule 4.19(c), the Mortgages will constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Borrower in such Mortgaged Properties and the proceeds thereof, in each case
prior and superior in right to any other Person.
(d) The Trademark Security Agreement creates in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Trademark
Security Agreement) and the proceeds thereof, and assuming the recordation of
such Trademark Security Agreement with the United States Patent and Trademark
Office and the United States Copyright Office, together with financing
statements in appropriate form filed in the offices specified on Schedule
4.19(d), the Liens created under the Trademark Security Agreement constitute a
fully perfected Lien on, and security interest in, all
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right title and interest of the Loan Parties in the Collateral and the proceeds
thereof in which a security interest may be perfected by filing in the United
States and its territories and possessions, in each case prior and superior in
right to any other Person (it being understood that subsequent recordings in the
United States Patent and Trademark Office and the United States Copyright Office
may be necessary to perfect a Lien on registered trademarks, trademark
applications and copyrights acquired by the Loan Parties after the date hereof).
(e) The SNC Security Agreement creates in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, a legal, valid and enforceable
security interest in the Collateral (as defined in the SNC Security Agreement)
and proceeds thereof, and assuming that financing statements in appropriate form
have been filed in the offices specified on Schedule 4.19(e), the Lien created
under the SNC Security Agreement constitutes a fully perfected Lien on, and
security interest in, all right, title and interest of SNC in such Collateral,
in each case prior and superior in right to any other Person.
SECTION 4.20. Labor Matters. As of the date hereof and the Closing Date,
there are no strikes, lockouts or slowdowns against JSC, JSCE or the Borrower or
any of their respective Subsidiaries pending or, to the knowledge of JSC, JSCE
or the Borrower, threatened, except as set forth on Schedule 4.20. The hours
worked by and payment made to employees of JSC, JSCE or the Borrower have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters, where such
violations could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect. The consummation of the Transactions will
not give rise to a right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which JSC, JSCE or the
Borrower or any of their respective Subsidiaries is a party or by which JSC,
JSCE or the Borrower or any of their respective Subsidiaries is bound on the
Closing Date.
SECTION 4.21. Location of Real Property. (a) Schedule 4.21(a) sets forth
completely and correctly as of the date hereof and the Closing Date all material
real property owned by JSC, JSCE or the Borrower or any of their respective
Subsidiaries, the addresses thereof and the county or counties in which such
properties are situated. All the real property set forth on Schedule 4.21(a) is
owned in fee by JSC, JSCE or the Borrower or their respective Subsidiaries.
(b) Schedule 4.21(b) sets forth completely and correctly as of the date
hereof and the Closing Date all material real property leased by JSC, JSCE or
the Borrower or any of their respective Subsidiaries, the addresses thereof and
the county or counties in which such properties are situated. JSC, JSCE or the
Borrower or one of their respective Subsidiaries has a valid lease in all the
Real Property set forth on Schedule 4.21(b).
(c) Schedule 4.21(c) sets forth completely and correctly as of the date
hereof and the Closing Date all material Timberland, if any, owned by JSC, JSCE
or the Borrower or any of their respective Subsidiaries, the county or counties
in which such Timberland is situated and the approximate acreage of such
Timberland in such county or counties. All the Timberland set forth
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on Schedule 4.21(c) is owned in fee by JSC, JSCE or the Borrower or their
respective Subsidiaries.
SECTION 4.22. Patents, Trademarks, etc. Each of JSC, JSCE and the Borrower
and each of their respective Subsidiaries owns, or is licensed to use, all
patents, trademarks, trade names, copyrights, technology, know-how and
processes, service marks and rights with respect to the foregoing that are (a)
used in or necessary for the conduct of their respective businesses as currently
conducted and (b) material to the business, assets, operations, properties,
prospects or condition (financial or otherwise) of such Person and its
Subsidiaries taken as a whole. The use of such patents, trademarks, trade names,
copyrights, technology, know-how, processes and rights with respect to the
foregoing by such Person and its Subsidiaries does not infringe on the rights of
any Person, subject to such claims and infringements as do not, in the
aggregate, give rise to any liability on the part of any such Person and its
respective Subsidiaries that is material to such Person and its Subsidiaries,
taken as a whole. To the best knowledge of each of JSC, JSCE and the Borrower,
its rights and the rights of its Subsidiaries to sell, franchise or license
under such brand names then being used may be transferred in connection with any
sale of assets or stock of the related business by such Person or any of its
Subsidiaries with only such exceptions as would not be material to the Borrower
and its Subsidiaries, in each case, taken as a whole.
ARTICLE V
Conditions
The obligation of each Lender to make Loans hereunder, the obligation of
the Swingline Lender to make Swingline Loans hereunder and the obligation of the
Fronting Bank to issue, amend, extend or renew any Letter of Credit hereunder
(each, a "Credit Event") is subject to the satisfaction of the following
conditions:
SECTION 5.01. All Credit Events. On the date of each Credit Event (other
than any Revolving Loan made pursuant to Section 2.02(e)):
(a) The Administrative Agent and, where applicable, the Fronting Bank
or the Swingline Lender shall have received a notice of such Credit Event
as required by Section 2.03, Section 3.01(f) and Section 2.22(b),
respectively.
(b) The representations and warranties set forth in Article IV hereof
shall be true and correct in all material respects on and as of the date of
such Credit Event with the same effect as though made on and as of such
date, except to the extent that such representations and warranties
expressly relate to an earlier date.
(c) At the time of and immediately after such Credit Event, no Default
or Event of Default shall have occurred and be continuing.
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Each Credit Event shall be deemed to constitute a representation and warranty by
JSC, JSCE and the Borrower on the date of such Credit Event as to the matters
specified in paragraphs (b) and (c) of this Section 5.01.
SECTION 5.02. Closing Date. On the Closing Date:
(a) The Lenders shall have received a favorable written opinion of
each of (i) Michael Tierney, Vice President, Secretary and General Counsel
of JSC, JSCE, SNC and the Borrower, substantially in the form of Exhibit
I-1, (ii) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for JSC, JSCE,
SNC and the Borrower, substantially in the form of Exhibit I-2, and (iii)
each local counsel listed on Schedule 5.02(a), substantially in the form of
Exhibit I-3, in each case (A) dated the Closing Date, (B) addressed to the
Senior Managing Agents, the Administrative Agent, the Managing Agents, the
Fronting Bank, the Lenders, the Swingline Lender and the Collateral Agent
and (C) covering such other matters relating to the Loan Documents and the
Transactions as the Senior Managing Agents shall reasonably request. JSC,
JSCE and the Borrower hereby instruct such counsel to deliver such
opinions.
(b) All legal matters incident to this Agreement and the Borrowings
hereunder shall be satisfactory to the Lenders and to Cravath, Swaine &
Moore, counsel for the Administrative Agent and the Senior Managing Agents.
(c) The Lenders shall have received (i) a copy of the certificate of
incorporation, including all amendments thereto, of each Loan Party,
certified as of a recent date by the Secretary of State of the state of its
organization, and a certificate as to the good standing of each Loan Party
as of a recent date, from such Secretary of State; (ii) a certificate of
the Secretary or Assistant Secretary of each Loan Party dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy
of the by-laws of such Loan Party, as in effect on the Closing Date and at
all times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by such Loan Party, authorizing the execution,
delivery and performance of the Loan Documents to which such Loan Party is
or will be a party and, in the case of the Borrower, the borrowings
hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect as of the Closing Date, (C) that
the certificate of incorporation of such Loan Party has not been amended
since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to clause (i) above and (D) as to the
incumbency and specimen signature of each officer executing any Loan
Document or any other document delivered in connection herewith on behalf
of such Loan Party; (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to clause (ii) above; and (iv) such
other
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documents as the Lenders or Cravath, Swaine & Moore, counsel for the
Administrative Agent and the Senior Managing Agents, may reasonably
request.
(d) The Lenders shall have received a certificate, dated the Closing
Date and signed by a Financial Officer of each of the Loan Parties,
confirming compliance with the conditions precedent set forth in paragraphs
(b) and (c) of Section 5.01.
(e) The Senior Managing Agents and the Administrative Agent shall have
received all Fees and other amounts due and payable on or prior to the
Closing Date.
(f) The Guarantee Agreement shall have been duly executed by the
Guarantors and delivered to the Collateral Agent, and shall be in full
force and effect.
(g) The Pledge Agreement shall have been duly executed by the Loan
Parties and the Collateral Agent and shall be in full force and effect, all
the outstanding capital stock of JSCE, the Borrower and each other Material
Subsidiary of JSC shall have been duly and validly pledged thereunder to
the Collateral Agent for the ratable benefit of the Secured Parties and
certificates representing such shares, accompanied by stock powers endorsed
in blank, shall be in the actual possession of the Collateral Agent;
provided, however, that JSC need only pledge 65% of the capital stock of
JSC International and the Borrower need only pledge 65% of the capital
stock of CCA de Baja California SA de CV.
(h) Each of the Security Agreement, the SNC Security Agreement and the
Trademark Security Agreement shall have been duly executed by the Loan
Parties thereto and the Collateral Agent and shall be in full force and
effect, and each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the Collateral Agent
to be filed, registered or recorded in order to create in favor of the
Collateral Agent for the benefit of the Secured Parties a valid and
perfected first-priority security interest in or lien on the Collateral
described in each of such agreements shall have been delivered to the
Collateral Agent.
(i) The Collateral Agent shall have received the results of a search
of the Uniform Commercial Code filings (or equivalent filings) made with
respect to the Loan Parties in the states (or other jurisdictions) in which
the chief executive offices of such Persons are located and in the other
jurisdictions in which Uniform Commercial Code filings (or equivalent
filings) are to be made pursuant to Section 5.01(h), together with copies
of the financing statements (or similar documents) disclosed by such
search, and accompanied by evidence satisfactory to the Senior Managing
Agents that the Liens indicated in any such financing statement (or similar
document) would be permitted under Section 7.02 or have been released.
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(j) The Collateral Agent shall have received a Perfection Certificate
with respect to each Loan Party dated the Closing Date and duly executed by
a Financial Officer and the chief legal officer of JSC, JSCE, SNC and the
Borrower.
(k) (i) Each of the Mortgages and the other Security Documents, in
form and substance satisfactory to the Lenders, relating to each of the
Mortgaged Properties shall have been duly executed by the parties thereto
and delivered to the Collateral Agent and shall be in full force and
effect, (ii) none of such Mortgaged Properties shall be subject to any Lien
other than those permitted under Section 7.02, (iii) each of such Security
Documents shall have been filed and recorded in the recording office as
specified on Schedule 4.19(b) (or a lender's title insurance policy, in
form and substance acceptable to the Senior Managing Agents, insuring such
Security Document as a first lien on such Mortgaged Property, shall have
been received by the Lenders) and, in connection therewith, the Senior
Managing Agents shall have received evidence satisfactory to them of each
such filing and recordation and (iv) the Collateral Agent shall have
received such other documents, including policies of title insurance issued
by nationally recognized title insurance companies, together with such
endorsements, coinsurance and reinsurance as may be requested by the Senior
Managing Agents and the other Lenders, insuring the Mortgages as valid
first liens on the Mortgaged Properties, free of Liens other than those
permitted under Section 7.02, together with such surveys, abstracts,
appraisals and legal opinions required to be furnished pursuant to the
terms of the Mortgages or as reasonably requested by the Senior Managing
Agents or the other Lenders.
(l) The Collateral Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies of the Loan
Parties and their respective Subsidiaries satisfying the requirements of
Section 6.02 and the applicable provisions of the Security Documents, each
of which shall be endorsed or otherwise amended to include a lender's loss
payable endorsement (except in the case of liability policies) and to name
the Collateral Agent as an additional insured, in form and substance
reasonably satisfactory to the Collateral Agent.
(m) The Borrower shall have repaid in full the principal of all loans
outstanding, and other amounts due under, the Existing Credit Agreement and
under each agreement related thereto (other than the Existing Letters of
Credit), all commitments to lend thereunder shall have been permanently
terminated, all security interests related thereto shall have been
discharged and the Senior Managing Agents shall have received duly executed
documentation either evidencing or necessary for such repayment,
termination and discharge, in form satisfactory to the Senior Managing
Agents.
(n) After giving effect to the Transactions on the Closing Date, no
Loan Party shall have any Indebtedness other than (i) Indebtedness under
the Loan Documents, (ii) the 1993 Senior Notes, (iii) the Senior Notes and
(iv) other Indebtedness permitted under Section 7.01.
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(o) The Lenders shall be satisfied as to the amount and nature of any
environmental and employee health and safety exposures to which any Loan
Party or any Subsidiary of a Loan Party may be subject and the plans of any
such Person with respect thereto.
(p) All requisite Governmental Authorities and third parties (in each
case to the extent required) shall have approved or consented to the
Transactions contemplated hereby to the extent required, and there shall be
no governmental or judicial action, actual or threatened, that has or would
have a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the Transactions.
(q) There shall be no litigation or administrative proceedings or
other legal or regulatory developments, actual or threatened, that, in the
judgment of the Lenders, would reasonably to be expected to have a material
adverse effect on the business, assets, liabilities, operations,
properties, prospects or condition (financial or otherwise) of or relating
to (i) the Loan Parties and their respective Subsidiaries, taken as a
whole, (ii) the ability of the Loan Parties or any of their respective
Subsidiaries to perform their obligations under the Loan Documents, (iii)
the ability of the parties to consummate the Transactions or (iv) the
validity or enforceability of any of the Loan Documents or the rights,
remedies and benefits available to the Senior Managing Agents, the
Administrative Agent, the Managing Agents, the Fronting Bank, the Swingline
Lender, the Collateral Agent and the Lenders under the Loan Documents, or
which would be materially inconsistent with the assumptions underlying the
projections contained in the Confidential Information Memorandum.
(r) The consummation of the Transactions will not (i) violate any
applicable law, statute, rule or regulation or (ii) conflict with, or
result in a default or event of default under, (A) any indenture relating
to any existing Indebtedness of the Borrower or any of its Subsidiaries
that is not being repaid, repurchased or redeemed in full on or prior to
the Closing Date or (B) any other agreement of the Borrower or any of its
Subsidiaries and the Lenders shall have received one or more legal opinions
to such effect, on terms satisfactory to the Lenders, from counsel to the
Borrower.
(s) There shall not have occurred or become known to JSC, JSCE or the
Borrower any material adverse condition affecting, or material adverse
change with respect to, the condition (financial or otherwise), operations,
business, assets, liabilities (including contingent liabilities) or
prospects of the Borrower and its subsidiaries, taken as a whole, since
December 31, 1997.
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ARTICLE VI
Affirmative Covenants
Each of JSC, JSCE and the Borrower covenants and agrees with each Lender,
the Administrative Agent, each Senior Managing Agent and Managing Agent, the
Fronting Bank and the Swingline Lender that, so long as this Agreement shall
remain in effect, the LC Exposure shall not equal zero or the principal of or
interest on any Loan or Swingline Loan or any LC Disbursement, Fees or any other
expenses or amounts payable under any Loan Document shall be unpaid, unless the
Required Lenders shall otherwise consent in writing, it will, and will cause
each of its Subsidiaries to:
SECTION 6.01. Existence; Businesses and Properties. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise permitted under Section 7.05.
(b) Do or cause to be done all things necessary to preserve, renew and keep
in full force and effect the rights, licenses, permits, trademarks, trade names,
privileges and franchises necessary or desirable in the normal conduct of its
business, except for any trademarks, trade names or franchises that are not
material to the business of the Borrower and its Subsidiaries taken as a whole;
maintain and operate such business in substantially the manner in which it is
currently conducted and operated; and at all times keep all property useful and
necessary in its business in good, working order and condition to the extent
required by sound business practices.
SECTION 6.02. Insurance. Keep its insurable properties adequately insured
at all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies of
established repute in the same general area engaged in the same or similar
businesses, including public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it or the use of
any products sold by it; and maintain such other insurance as may be required by
law and, with respect to the Mortgaged Properties, as is required by the
Mortgages.
SECTION 6.03. Obligations and Taxes. Pay and discharge promptly when due
all taxes, assessments and governmental charges or levies imposed upon it or
upon or in respect of its property or assets, as well as all claims for labor,
materials and supplies or otherwise that, if unpaid, might give rise to a Lien
upon such properties or any part thereof; provided, however, that such payment
and discharge shall not be required with respect to any such obligation, tax,
assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith by appropriate proceedings and it shall have
set aside on its books, in accordance with GAAP, adequate reserves with respect
thereto and such contest operates to suspend enforcement
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of a Lien and, in the case of a Mortgaged Property or other material property or
asset, there is no material risk of forfeiture of such property.
SECTION 6.04. Financial Statements, Reports, etc. Furnish to the
Administrative Agent, the Senior Managing Agents, the Managing Agents, the
Fronting Bank, the Swingline Lender and each Lender:
(a) in the case of JSC, within 90 days after the end of each fiscal
year, its consolidated balance sheets and related statements of operations,
stockholders' equity and cash flows, showing the financial condition of
such Person and its consolidated Subsidiaries as of the close of such
fiscal year and the results of its operations and the operations of such
Subsidiaries during such year, all audited by Ernst & Young LLP or other
independent auditors of recognized national standing acceptable to the
Required Lenders and accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the effect that such
consolidated financial statements fairly present the financial condition
and results of operations of such Person on a consolidated basis in
accordance with GAAP;
(b) in the case of JSC, within 45 days after the end of each of the
first three fiscal quarters of each fiscal year, (i) its consolidated
balance sheets and related statements of operations, stockholders' equity
and cash flows, showing the financial condition of such Person and its
consolidated Subsidiaries as of the close of such fiscal quarter and the
results of its operations and the operations of such Subsidiaries during
such fiscal quarter and the then-elapsed portion of the fiscal year and
(ii) a narrative discussion of the results of operations of JSC in a form
reasonably satisfactory to the Senior Managing Agents (it being understood
that, in the case of clause (i) above, such information shall be in
reasonable detail and certified by a Financial Officer of JSC, as fairly
presenting the financial condition and results of operations of JSC on a
consolidated basis in accordance with GAAP, subject to normal year-end
audit adjustments);
(c) in the case of JSC, within 30 days after the end of each month
(other than the last month of any fiscal quarter), its consolidated balance
sheets and related statements of operations, stockholders' equity and cash
flows, showing the financial condition of such Person and its consolidated
Subsidiaries as of the close of such month and the results of its
operations and the operations of such Subsidiaries during such month and
the then-elapsed portion of the fiscal year;
(d) concurrently with any delivery of financial statements of JSC
under paragraph (a) or (b) above, a certificate of a Financial Officer of
such Person (i) certifying that, after due investigation and reasonable
inquiry, no Default or Event of Default has occurred or, if such a Default
or Event of Default has occurred, specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with respect
thereto and (ii) setting forth computations in reasonable detail
satisfactory to the Senior
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Managing Agents of the ratios contemplated by Section 2.06(c) and
demonstrating compliance with the covenants contained in Sections 7.01,
7.02, 7.03, 7.04, 7.06, 7.13, 7.14 and 7.15;
(e) concurrently with any delivery of financial statements under
paragraph (a) above, a certificate of the accounting firm opining on such
statements (which certificate may be limited to accounting matters and
disclaim responsibility for legal interpretations) certifying (i) whether
in connection with its audit examination any Default or Event of Default
has come to its attention and, if such event has come to its attention, the
nature and extent thereof and (ii) that based on its audit examination,
nothing has come to its attention that leads it to believe that the
information contained in the certificate delivered therewith pursuant to
paragraph (d) above is not correct;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials (other
than (i) the exhibits to registration statements and (ii) any registration
statements on Form S-8 or its equivalent) filed by JSC, JSCE, the Borrower
or SNC or any of their respective Subsidiaries with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any of or
all the functions of such Commission, or with any national securities
exchange, or distributed to any such Person's shareholders (other than JSC,
JSCE, or the Borrower), as the case may be;
(g) as soon as available, and in any event no later than 60 days after
each fiscal year, a consolidated annual plan, prepared in accordance with
JSC's normal accounting procedures applied on a consistent basis, for the
next fiscal year of JSC;
(h) upon the earlier of (i) 90 days after the end of each fiscal year
of JSC and (ii) the date on which the financial statements of JSC are
delivered pursuant to paragraph (a) above, a certificate of a Financial
Officer of JSC setting forth, in detail satisfactory to the Senior Managing
Agents, the amount of Excess Cash Flow, if any, for such fiscal year;
(i) promptly from time to time, such other information regarding the
operations, business affairs and financial condition of JSC, JSCE, the
Borrower or SNC, or compliance with the terms of any Loan Document, as the
Administrative Agent, the Senior Managing Agents, the Managing Agents, the
Fronting Bank, the Swingline Lender or any Lender may reasonably request;
and
(j) a copy of all notices (other than notices regarding any scheduled
or mandatory repayments), certificates, financial statements and reports,
as and when delivered by or on behalf of the Borrower to the holders of any
Subordinated Indebtedness, Senior Notes or 1993 Senior Notes.
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SECTION 6.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Senior Managing Agents, the Managing Agents, the
Fronting Bank, the Swingline Lender, the Collateral Agent and each Lender prompt
written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
(b) the filing or commencement of, or any notice to any Loan Party or
any Subsidiary thereof of the intention of any Person to file or commence,
any action, suit or proceeding (whether at law or in equity or by or before
any Governmental Authority or any arbitrator, against any Loan Party or any
Subsidiary thereof) that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect;
(c) any development that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect; and
(d) any transaction, event or development that results in any Loan
Party or any Subsidiary thereof owning a parcel (or adjoining parcels) of
real property or Timberland Property that (i) is not a Mortgaged Property
and (ii) has a fair market value, as reasonably determined in good faith by
the board of directors of such Loan Party (such property being referred to
herein as "After-Acquired Mortgage Property"), in excess of $500,000.
SECTION 6.06. ERISA. (a) Comply in all material respects with the
applicable provisions of ERISA and (b) furnish to the Administrative Agent, the
Senior Managing Agents, the Managing Agents, the Fronting Bank, the Swingline
Lender and each Lender (i) as soon as possible after, and in any event within 30
days after any Responsible Officer of JSC, JSCE or the Borrower or any ERISA
Affiliate either knows or has reason to know that any Reportable Event has
occurred that alone or together with any other Reportable Event could reasonably
be expected to result in liability of JSC, JSCE or the Borrower or any of their
respective Subsidiaries to the PBGC in an aggregate amount exceeding $5,000,000,
a copy of the notice of such event required to be given to the PBGC or, if
notice is not so required, a statement of a Financial Officer of JSC, JSCE or
the Borrower, as the case may be, setting forth in reasonable detail the nature
of such event and the action proposed to be taken with respect thereto, (ii)
promptly after receipt thereof, a copy of any notice JSC, JSCE or the Borrower
or any ERISA Affiliate may receive from the PBGC relating to the intention of
the PBGC to terminate any Plan or Plans (other than a Plan maintained by an
ERISA Affiliate that is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code) or to appoint a trustee to
administer any Plan or Plans, (iii) within 10 days after the due date for filing
with the PBGC pursuant to Section 412(n) of the Code of a notice of failure to
make a required installment or other payment with respect to a Plan, a copy of
such notice and a statement of a Financial Officer of JSC, JSCE or the Borrower,
as the case may be, setting forth in reasonable detail the nature of such
failure and the action proposed to be taken with respect thereto and (iv)
promptly and in
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any event within 30 days after receipt thereof by JSC, JSCE or the Borrower or
any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each
notice received by JSC, JSCE or the Borrower or any ERISA Affiliate concerning
(A) the imposition of Withdrawal Liability or (B) a determination that a
Multiemployer Plan is, or is expected to be, terminated or in reorganization, in
each case within the meaning of Title IV of ERISA.
SECTION 6.07. Maintaining Records; Access to Properties and Inspections.
Maintain all financial records in accordance with GAAP and permit any
representatives designated by the Administrative Agent, the Senior Managing
Agents, the Managing Agents, the Fronting Bank, the Swingline Lender, the
Collateral Agent or any Lender to visit and inspect the properties and financial
records of the Loan Parties and any Subsidiary thereof at reasonable times and
upon reasonable notice and as often as reasonably requested and to make extracts
from and copies of such financial records, and permit any representatives
designated by the Administrative Agent, the Senior Managing Agents, the Managing
Agents, the Fronting Bank, the Swingline Lender, the Collateral Agent or any
Lender to discuss at such reasonable times and at such reasonable intervals as
may be reasonably requested the affairs, finances and condition of any Loan
Party or any Subsidiary thereof or any properties of any Loan Party or any
Subsidiary thereof with the officers thereof and independent accountants
therefor.
SECTION 6.08. Use of Proceeds. Use the proceeds of the Loans and the
Letters of Credit solely for the purposes set forth in the introductory
statement to this Agreement.
SECTION 6.09. Compliance with Law. Comply with the requirements of all
applicable laws, rules, regulations, court orders and decrees, and orders of any
Governmental Authority, that are applicable to it or to any of its properties,
except where noncompliance could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 6.10. Further Assurances. (a) Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust), that may be required under applicable
law or which the Required Lenders, the Administrative Agent, either Senior
Managing Agent or the Collateral Agent may reasonably request, in order to
effectuate the transactions contemplated by the Loan Documents and in order to
grant, preserve, protect and perfect the validity and first priority of the
security interests created or intended to be created by the Security Documents.
(b) In addition, from time to time, the Loan Parties, at their cost and
expense, will promptly secure the Obligations by pledging or creating, or
causing to be pledged or created, perfected security interests with respect to
such of their assets and properties as the Administrative Agent, either Senior
Managing Agent or the Required Lenders shall designate (it being understood that
it is the intent of the parties that the Obligations shall be secured by, among
other things, substantially all the assets of the Loan Parties and their
respective Subsidiaries (including real and other properties acquired after the
date hereof, but excluding (i) Program
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Receivables and (ii) the real properties and fixtures owned on the date hereof
by SNC). Such security interests and Liens will be created under the Security
Documents or such other security agreements, mortgages, deeds of trust and other
instruments and documents as are satisfactory to the Required Lenders, and JSC,
JSCE or the Borrower shall deliver or cause to be delivered to the Lenders all
such instruments and documents (including legal opinions, title insurance
policies, surveys and lien searches) as the Administrative Agent, either Senior
Managing Agent or the Required Lenders shall reasonably request to evidence
compliance with this Section 6.10. JSC, JSCE or the Borrower agree to provide
such evidence as the Administrative Agent, either Senior Managing Agent or the
Required Lenders shall reasonably request as to the perfection and priority
status of each such security interest and Lien.
(c) Notwithstanding the provisions of paragraph (b) above, (i) no
After-Acquired Mortgage Property with a fair market value (as determined by the
Collateral Agent in its reasonable judgment, it being understood that the
purchase price shall be indicative thereof) (the "Fair Market Value") of less
than $1,000,000 shall be subject to the provisions of paragraph (b) above and
(ii) each item of After-Acquired Mortgage Property with a fair market value of
at least $1,000,000 but less than $10,000,000 shall not be subject to the
provisions of paragraph (b) above unless and until the aggregate Fair Market
Value of all items of After-Acquired Mortgage Property described in this clause
(ii) acquired after the Closing Date and not pledged to the Collateral Agent
pursuant to the next sentence equals or exceeds $50,000,000. On each occasion
that the Fair Market Value of all items of After-Acquired Mortgage Property
described in clause (ii) of the immediately preceding sentence shall equal or
exceed $50,000,000, all such property (and not merely the portion of the
property in excess of $50,000,000) shall be pledged to the Collateral Agent for
the benefit of the Secured Parties pursuant to paragraph (b) above and, after
such pledge, the provisions of such clause (ii) shall apply to subsequently
acquired After-Acquired Mortgage Property described in such clause.
(d) Except with respect to the Material Subsidiaries contemplated by
Section 7.11(d), cause (i) each Material Subsidiary organized under the laws of
the United States or any political subdivision thereof created or acquired by it
from time to time and (ii) each Subsidiary or Inactive Subsidiary prior to
becoming such a Material Subsidiary, to undertake the obligation of and to
become a Guarantor pursuant to the Guarantee Agreement and a party to the
applicable Security Documents to which it is not then a party pursuant to one or
more instruments or agreements satisfactory in form and substance to the
Collateral Agent. In addition, JSC, JSCE or the Borrower, shall, or shall cause
its Subsidiaries to, pledge the capital stock of any such Subsidiary to the
Collateral Agent for the benefit of the Secured Parties pursuant to a Pledge
Agreement (or supplement to a Pledge Agreement) satisfactory in form and
substance to the Collateral Agent. Furthermore, in the event that any Loan Party
makes a Material Investment, the Investor shall promptly pledge such Investment
to the Collateral Agent pursuant to a Pledge Agreement (or supplement to a
Pledge Agreement) satisfactory in form and substance to the Collateral Agent.
Notwithstanding the foregoing, no Person shall be obligated to pledge more than
65% of the capital stock of any Subsidiary that is organized outside the United
States or a political subdivision thereof.
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(e) In the event that any survey of Mortgaged Property discloses any matter
(including any encroachment or violation of an existing easement or restrictive
covenant) the effect of which is to detract materially from the value of the
property subject thereto or to interfere in any material respect with the
ordinary conduct of the business of any Loan Party or any of their respective
Subsidiaries, such Loan Party shall, upon request by the Administrative Agent,
use reasonable efforts (or cause its Subsidiary that is the user or owner of the
Mortgaged Property in question to use reasonable efforts) to cause such matter
to be corrected or otherwise resolved to the reasonable satisfaction of the
Administrative Agent.
(f) Within 90 days following the Closing Date, (i) each of the Security
Documents, in form and substance satisfactory to the Senior Managing Agents,
relating to the Mortgaged Properties located at (x) 817 East 27th Street, Pierce
County, Tacoma, Washington, (y) 6385 Cochran Road, Cuyahoga County, Solon, Ohio,
and (z) 6701 South Freeway, Tarrant County, Fort Worth, Texas, shall have been
duly executed by the parties thereto and delivered to the Collateral Agent and
shall be in full force and effect, (ii) each of such Mortgaged Properties shall
not be subject to any Lien other than those permitted under Section 7.02, (iii)
each of such Security Documents shall have been filed and recorded in the
recording office as specified on Schedule 4.19(c) (or a lender's title insurance
policy, in form and substance acceptable to the Collateral Agent, insuring such
Security Document as a first lien on such Mortgaged Property (subject to any
Lien permitted by Section 7.02) shall have been received by the Collateral
Agent) and, in connection therewith, the Collateral Agent shall have received
evidence satisfactory to it of each such filing and recordation, (iv) the
Collateral Agent shall have received such other documents, including a policy or
policies of title insurance issued by a nationally recognized title insurance
company, together with such endorsements, coinsurance and reinsurance as may be
requested by the Collateral Agent and the Lenders, insuring the Mortgages as
valid first liens on the Mortgaged Properties, free of Liens other than those
permitted under Section 7.02, together with such surveys, abstracts, appraisals,
environmental assessments and legal opinions required to be furnished pursuant
to the terms of the Mortgages or as reasonably requested by the Collateral Agent
or the Lenders and (v) the Administrative Agent shall have received, on behalf
of itself, the Senior Managing Agents, the Lenders, the Swingline Lender and the
Fronting Bank, a favorable written opinion of local counsel in each jurisdiction
in which any Mortgaged Property is located, substantially to the effect set
forth in Exhibit H-3, in each case addressed to the Senior Managing Agents, the
Administrative Agent, the Managing Agents, the Fronting Bank, the Lenders, the
Swingline Lender and the Collateral Agent.
SECTION 6.11. Material Contracts. Maintain in full force and effect
(including exercising any available renewal option), and without amendment or
modification, each Material Contract, unless the failure so to maintain any such
Material Contract (or any amendment or modification thereto) could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
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SECTION 6.12. Environmental Matters. (a) Promptly give notice to the Senior
Managing Agents upon becoming aware of (i) any violation of any Environmental
Law, (ii) any claim, inquiry, proceeding, investigation or other action,
including a request for information or a notice of potential environmental
liability, by or from any Governmental Authority or any third party claimant or
(iii) the discovery of the release of any Hazardous Material at, on, under or
from any of the Real Properties or any facility or equipment thereat in excess
of reportable or allowable standards or levels under any Environmental Law, or
in a manner or amount that could reasonably be expected to result in liability
under any Environmental Law, in each case that could reasonably be expected to
result in a Material Adverse Effect.
(b) Upon discovery of the presence on any of the Real Properties of any
Hazardous Material that is in violation of, or that could reasonably be expected
to result in liability under, any Environmental Law, in each case that could
result in a Material Adverse Effect, take all necessary steps to initiate and
expeditiously complete all remedial, corrective and other action to eliminate
any such adverse effect, and keep the Senior Managing Agents informed of such
actions and the results thereof.
SECTION 6.13. Distribution of Gross Export Revenues. In the case of the
Borrower, cause JSC International to distribute the gross export revenues
received by JSC International from the Borrower (a) to the Borrower in an amount
equal to the portion of gross export revenues that is not tax-exempt under
Section 922 et seq. of the Code as a repayment of the Borrower's advance to JSC
International to the extent thereof, and as a dividend to the extent that such
non-tax-exempt gross export revenues exceed the Borrower's advance to JSC
International, and (b) to the Borrower, as a dividend, in an amount equal to the
portion of gross export revenues that is tax-exempt under the Code, in each case
on the same Business Day that such gross export revenues are received by JSC
International, and in no event later than the next Business Day.
ARTICLE VII
Negative Covenants
Each of JSC, JSCE and the Borrower covenants and agrees with each Lender,
the Administrative Agent, each Senior Managing Agent and Managing Agent, the
Fronting Bank and the Swingline Lender that, so long as this Agreement shall
remain in effect, the LC Exposure shall not equal zero or the principal of or
interest on any Loan or Swingline Loan or any LC Disbursement, Fees or any other
expenses or amounts payable under any Loan Document shall be unpaid, unless the
Required Lenders shall otherwise consent in writing, it will not, and will not
cause or permit any of its Subsidiaries to:
SECTION 7.01. Indebtedness. Create, incur, assume or permit to exist any
Indebtedness, except, without duplication:
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(a) the 1993 Senior Notes, the Senior Notes and Guarantees in respect
of each thereof, the other Indebtedness existing on the date hereof and set
forth on Schedule 7.01(a) and Indebtedness of JSF incurred pursuant to the
Receivables Program Documents;
(b) in the case of the Borrower, Indebtedness created hereunder and
under the Loan Documents;
(c) in the case of each Guarantor, its Guarantee of the Obligations
pursuant to the Guarantee Agreement;
(d) Indebtedness the net proceeds of which are used substantially
concurrently to refinance Indebtedness described in paragraph (a) above so
long as (i) such refinancing Indebtedness is in an aggregate principal
amount not greater than the aggregate principal amount of the Indebtedness
being refinanced plus the amount of any premiums required to be paid
thereon, (ii) such Indebtedness has a later final maturity than the Tranche
B Maturity Date and a longer weighted average life than the Term Loans and
(iii) each of the covenants, events of default and other provisions thereof
(including any Guarantees thereof) shall be no more adverse to the Lenders
than those contained in the Indebtedness being refinanced unless each of
such provisions is approved in writing by the Required Lenders; provided,
however, that, if the proceeds of Revolving Loans are used to repurchase or
redeem any 10-Year Senior Notes, the Borrower may incur Indebtedness
otherwise meeting the requirements of this paragraph (d) (as if such
Indebtedness were used to refinance such 10-Year Senior Notes) to repay
such Revolving Loans;
(e) in the case of the Borrower and its Material Subsidiaries, Capital
Lease Obligations in an amount not to exceed $300,000,000 when added to the
amount of (i) all other Capital Lease Obligations then existing (other than
Capital Lease Obligations described in paragraph (a) above), (ii) all
outstanding Indebtedness (other than Indebtedness incurred under this
Agreement) created, incurred or assumed in respect of the purchase or
construction price of property and (iii) all outstanding bonds described in
paragraph (i) below;
(f) Indebtedness of the Borrower and the Subsidiaries created,
incurred or assumed in respect of the purchase or construction of property
of the Borrower and the Subsidiaries and any refinancings thereof, provided
that (i) the amount of such Indebtedness, when added to the amount of (x)
all other Indebtedness (other than Indebtedness incurred under this
Agreement) of the Borrower then existing that was created, incurred or
assumed in respect of the purchase or construction of property, (y) all
then-existing Capital Lease Obligations (other than Capital Lease
Obligations described in paragraph (a) above) and (z) all outstanding bonds
described in paragraph (i) below, does not exceed $300,000,000; (ii) such
Indebtedness to be created, incurred or assumed
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in respect of the purchase or construction price of property shall be
so created, incurred or assumed substantially contemporaneously with such
purchase or construction (and in any event not later than 90 days after the
earlier to occur of either the placement in service of, or the final
payment on, such property); and (iii) such Indebtedness is not secured by
any Lien other than a Lien permitted by Section 7.02(a)(vi);
(g) Indebtedness of the Borrower evidencing obligations to make
payments in respect of rights to cut, harvest or otherwise acquire timber
on property owned by any other Person, provided that the aggregate amount
of such Indebtedness shall not exceed $10,000,000 at any time outstanding;
(h) letters of credit that are not secured by any of the Collateral
not exceeding in the aggregate $25,000,000 at any time;
(i) Indebtedness of the Borrower consisting of industrial development
bonds and pollution control bonds, provided that the amount of any such
bonds shall not at any time exceed $300,000,000 when added to the amount of
(i) all other outstanding industrial development bonds and pollution
control bonds, (ii) all then-existing Capital Lease Obligations (other than
Capital Lease Obligations described in paragraph (a) above) and (iii) all
outstanding Indebtedness created, incurred or assumed in respect of the
purchase or construction price of property;
(j) Rate Protection Agreements and Currency Agreements;
(k) Indebtedness incurred in connection with (i) Permitted Equipment
Financings in an aggregate principal amount of up to $100,000,000 or (ii)
Permitted Timber Financings;
(l) Guarantees by JSCE of Indebtedness of the Borrower permitted under
this Section 7.01;
(m) Guarantees of obligations or Indebtedness not otherwise provided
for above, to the extent that such Indebtedness is incurred in the ordinary
course of business and does not exceed $25,000,000 in the aggregate at any
time outstanding;
(n) intercompany loans and advances permitted by Section 7.04; and
(o) Indebtedness of the Borrower to JSF arising because any sale or
purported sale of Program Receivables to JSF is required to be
recharacterized as a loan.
SECTION 7.02. Liens. (a) Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any Person)
now owned or hereafter acquired by it or on any income or revenues or rights in
respect of any thereof, except:
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(i) any Lien created under the Loan Documents;
(ii) Liens securing any Permitted Equipment Financing and any
Permitted Timber Financing;
(iii) the Liens granted pursuant to the Receivables Program Documents;
(iv) Liens securing Indebtedness of P.U.I. not in excess of
$15,000,000 at any time outstanding;
(v) Liens securing Capital Lease Obligations pursuant to Capital
Leases existing on the date hereof;
(vi) Permitted Liens; and
(vii) Liens securing Capital Lease Obligations permitted by Section
7.01(e); provided, however, that any such Lien shall only cover the
property subject to the applicable Capital Lease Obligation.
(b) Enter into any agreement prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired,
except (i) with respect to specific property encumbered to secure payment of
particular Indebtedness permitted hereunder and Margin Stock and (ii) the Senior
Note Indentures and the 1993 Senior Note Indenture.
SECTION 7.03. Sale/Leaseback Transactions. Enter into any Sale/Leaseback
Transaction other than (a) Permitted Equipment Financings in an aggregate
principal amount of up to $100,000,000 or (b) any Permitted Timber Financing.
SECTION 7.04. Investments, Loans and Advances. Have outstanding or make
any loan or advance to or have or make any Investment in any other Person or
suffer to exist any such loan or advance or Investment, except as set forth on
Schedule 7.04 and except:
(a) Permitted Investments;
(b) loans or advances made by the Borrower or any Subsidiary of the
Borrower to any Domestic Subsidiary of the Borrower and evidenced by an
Intercompany Note, or made by any Subsidiary of the Borrower to the
Borrower, in each case in the ordinary course of business and in an
aggregate amount not to exceed $25,000,000 at any time;
(c) any loans or advances to, or Investments in, any Foreign
Subsidiary and Guarantees provided by the Borrower of obligations of such
Foreign Subsidiary, in the case of this clause (c) in an aggregate amount
not to exceed $25,000,000 at any time;
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(d) loans or advances evidenced by an Intercompany Note and made by
any Loan Party to any other Loan Party;
(e) loans or advances made to each of the Material Subsidiaries
permitted to be created pursuant to Section 7.11(d), provided that (i)
neither of such Material Subsidiaries may hold cash or cash equivalents in
an aggregate amount exceeding $10,000,000 each at any time and (ii) all
such cash and cash equivalents of such Material Subsidiaries shall be
maintained in accounts with one or more Lenders;
(f) Investments consisting of non-cash consideration received in
connection with a sale of assets permitted under Sections 7.05 and 7.16;
and
(g) Investments not described in clauses (a) through (f) above and not
exceeding in the aggregate $200,000,000.
SECTION 7.05. Mergers, Consolidations, Sales of Assets and Acquisitions.
Merge into or consolidate with any other Person, or permit any other Person to
merge into or consolidate with it, or sell, transfer, assign, lease, sublease or
otherwise dispose of (in one transaction or in a series of transactions) all or
substantially all its assets, or purchase, lease or otherwise acquire (in one
transaction or a series of transactions) all or any substantial part of the
assets of any other Person except:
(a) if at the time thereof and immediately after giving effect thereto
no Default or Event of Default shall have occurred and be continuing, (i)
any wholly owned Domestic Subsidiary of JSC may merge into or consolidate
with the Borrower in a transaction in which the Borrower is the surviving
corporation and (ii) any wholly owned Domestic Subsidiary of JSC (other
than JSCE or the Borrower) may merge into or consolidate with any other
wholly owned Domestic Subsidiary of JSC in a transaction in which the
surviving entity is a wholly owned Domestic Subsidiary of JSC, provided
that, in each case, (x) no Person other than JSC or a wholly owned Domestic
Subsidiary of JSC receives any consideration and (y) in the event that any
Loan Party is a party to such merger or consolidation and is not the
surviving entity, the surviving entity shall, simultaneously with such
merger or consolidation, assume all the obligations of such Loan Party
hereunder and under the other Loan Documents;
(b) purchases of inventory, equipment and real property in the
ordinary course of business;
(c) acquisitions constituting Consolidated Capital Expenditures
permitted by Section 7.13;
(d) acquisitions constituting Investments permitted by Section 7.04;
and
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(e) the acquisition of assets from, or capital stock or other equity
interests in, any Person (in each case, other than those permitted by
clauses (a) through (d) above) in connection with a Permitted Acquisition
for aggregate consideration of not more than $250,000,000 for all Permitted
Acquisitions made pursuant to this clause (e) during the term of this
Agreement.
SECTION 7.06. Restricted Junior Payments. (a) Declare or make, directly or
indirectly, any Restricted Junior Payment or set aside any amount for any such
purpose, except that any Subsidiary of a Loan Party may declare and pay
dividends or make other distributions to such Loan Party (other than JSC).
(b) Notwithstanding the provisions of Section 7.06(a), (i) JSCE may pay
dividends to JSC, if and to the extent permitted by applicable law, if, at the
time of such payment and immediately after giving effect thereto, (x) no Default
or Event of Default shall have occurred and be continuing and (y) the aggregate
amount of such dividends, together with the aggregate amount of all other cash
dividends paid by JSCE in the fiscal year in which the dividend is proposed to
be paid, shall not exceed the least of (A) the Borrower's Portion of Excess Cash
Flow, (B) 25% of Consolidated Net Income for the fiscal year preceding the year
in which the dividend is proposed to be paid and (C) $22,200,000 and (ii) JSC
may pay dividends to the holders of its Common Stock substantially
contemporaneously with the payment of and out of the proceeds of the dividends
referred to in clause (i) above. The limitations of this Section 7.06 shall not
prohibit JSCE or JSC from paying a dividend within 60 days after declaration
thereof if, on the declaration date, such dividend could have been paid in
compliance with this Section 7.06.
(c) Notwithstanding the provisions of Section 7.06(a), the Borrower may
purchase in the open market shares of Common Stock ("MIP Shares") or options to
purchase shares of Common Stock ("MIP Options"), provided that (i) the sum of
(x) the aggregate purchase price of all MIP Shares (whether purchased directly
in the open market or upon the exercise of MIP Options) and (y) the aggregate
purchase price of all MIP Options, together with the aggregate purchase price of
all shares of JSG purchased and excluded from the term "Investments", in each
case in such fiscal year shall not exceed $15,000,000, (ii) MIP Shares,
including those purchased upon the exercise of MIP Options, shall be purchased
exclusively for subsequent distribution as additional compensation to employees
of the Borrower pursuant to its management incentive program, (iii) the Borrower
shall not knowingly purchase any MIP Shares from any Affiliate (acting as
principal in such transaction) of the Borrower and (iv) at the time of any such
purchase and immediately after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing.
SECTION 7.07. Transactions with Stockholders and Affiliates. Except to the
extent specifically permitted by the terms of this Agreement, directly or
indirectly enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity securities of such
Person or with any Affiliate of such Person or of any such holder, on terms that
are less favorable
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to such Person than those that could be obtained at the time from Persons who
are not such a holder or Affiliate, provided that the foregoing restriction
shall not apply to (a) any transaction between such Person and any of its
Material Subsidiaries or between any of its Material Subsidiaries, (b) customary
fees paid to members of the Board of Directors of such Person and its
Subsidiaries, (c) customary compensation (including salaries and bonuses) paid
to officers and employees of such Person, (d) payments made pursuant to the Tax
Sharing Agreement, (e) management and financial services provided by the
Borrower to its Subsidiaries and other entities in which the Borrower has
Investments to the extent that such services are provided by the Borrower in the
ordinary course of its business and senior management of the Borrower has
determined that the providing of such services is in the best interests of the
Borrower, (f) the performance by the Borrower of the Operating Agreement and the
Rights Agreement and the transactions contemplated thereby, and (g) the
transactions contemplated by the Receivables Program Documents, the 1992
Holdings Agreement, the Registration Rights Agreement and the 1992 Stock Option
Plan.
SECTION 7.08. Business. (a) Engage at any time in any business or business
activity other than the business currently conducted by it and its Subsidiaries
and business activities reasonably related thereto. Without limiting the
foregoing, neither JSC nor JSCE shall engage in any business or conduct any
activity other than holding, directly or indirectly, the capital stock of its
Subsidiaries, and activities reasonably related thereto.
(b) In the case of JSC International, engage in any business or business
activity, have any liabilities or hold any assets except that JSC International
may (i) maintain a bank account with a banking institution reasonably acceptable
to the Administrative Agent, (ii) engage in activities consistent with its being
a "Foreign Sales Corporation" as such term is defined in Section 922 of the
Code, and the regulations promulgated thereunder and (iii) receive advances from
the Borrower equal to the gross export revenues of the Borrower.
SECTION 7.09. Limitations on Debt Prepayments. (a) Optionally prepay,
repurchase or redeem or otherwise defease or segregate funds with respect to any
Indebtedness for borrowed money (other than Indebtedness under the Loan
Documents) of JSC, JSCE, the Borrower or any of their respective Subsidiaries;
provided, however, that the foregoing shall not prevent the Borrower from (i)
making any payment pursuant to Section 2.12 or 2.13, (ii) refinancing all or any
portion of the 1993 Senior Notes, the 8-Year Senior Notes or the 10-Year Senior
Notes on terms permitted by Section 7.01(d), (iii) repurchasing all or any
portion of the 10-Year Senior Notes pursuant to the call provision of the
10-Year Senior Note Indenture or (iv) optionally prepaying, redeeming or
repurchasing in the open market any Indebtedness for borrowed money of the
Borrower or any of its Subsidiaries not otherwise permitted under clause (i),
(ii) or (iii) above in an aggregate amount not to exceed $200,000,000.
(b) Permit any amendment, waiver or modification to the terms of the Senior
Note Indentures, the 1993 Senior Note Indenture, the Senior Notes or the 1993
Senior Notes or any agreement of the Borrower entered into in connection with
the foregoing if the effect of such amendment or modification is to impose
additional or increased scheduled or mandatory
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repayment, retirement, repurchase or redemption obligations in respect of such
Indebtedness or to require any scheduled or mandatory payment to be made in
respect of such Indebtedness prior to the date that such payment would otherwise
be due.
SECTION 7.10. Amendment of Certain Documents. (a) Amend, modify, cancel or
grant any waiver with respect to any indenture, note or any other instrument
evidencing Indebtedness for money borrowed or preferred or preference stock or
pursuant to which any Indebtedness for money borrowed or such stock was issued
or issue any securities in exchange for any Indebtedness for money borrowed or
any preferred or preference stock; provided, however, that such Person may
amend, modify or grant a waiver with respect to any such indenture, note or
other instrument if such amendment, modification or waiver does not have the
effect of (i) increasing the amounts due in respect of any such indenture, note
or other instrument or any interest rate thereunder, (ii) subjecting any
property of such Person or any property of any Subsidiary of such Person to any
Lien to which it was not so subject immediately prior to any such amendment,
modification or waiver, (iii) shortening the maturity or average life of any
such Indebtedness for borrowed money or (iv) creating or changing any covenant
or similar restriction or event of default having application to such Person to
make any such covenant or similar restriction more restrictive on such Person.
(b) Cause or suffer to exist any amendment or modification to or supplement
of the certificate of incorporation or by-laws of such Person, any Loan Document
or any Basic Agreement, without the prior written consent of the Required
Lenders, unless such amendment, modification or supplement is not adverse to the
interests of the Lenders hereunder or under the other Loan Documents.
(c) Permit, cause or suffer to exist any direct or indirect amendment,
modification or supplement to any of the Receivables Program Documents unless
such amendment, modification or supplement is in form and substance satisfactory
to the Senior Managing Agents, provided that (i) any proposed amendment,
modification or supplement to the Receivables Program Documents shall first be
submitted by the Borrower to the Senior Managing Agents in writing and no such
amendment, modification or supplement that, in the opinion of the Senior
Managing Agents, has an adverse effect on the Lenders shall be effected unless
the prior written consent of the Required Lenders shall have been obtained and
(ii) no consent of the Senior Managing Agents or the Required Lenders shall be
required for any waiver by the Receivables Program lenders of their rights under
the Receivables Program Documents that is not detrimental in any respect to the
Borrower or JSF and that is not more restrictive, in any respect, on the
Borrower or JSF than the Receivables Program Documents without giving effect to
such waiver.
(d) Permit or cause or suffer to exist any direct or indirect termination
or cancellation of, or amendment, modification or supplement to, any of the
Operating Agreement or the Rights Agreement unless such amendment, modification
or supplement is in form and substance satisfactory to the Required Lenders.
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SECTION 7.11. Limitation on Dispositions of Subsidiary Stock; Creation of
Subsidiaries. (a) Directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of, or permit any of its Subsidiaries to issue to any other
Person, any shares of capital stock or other equity securities of (or warrants,
rights or options to acquire shares or other equity securities of) any of its
Subsidiaries, except (i) to the extent permitted by the Security Documents and
(ii) to qualify directors if and to the extent required by applicable law.
(b) Subject to paragraphs (c) and (d) below, have or create any Subsidiary
not identified on Schedule 4.08; provided, however, that JSCE or the Borrower
may create one or more new Subsidiaries organized under the laws of the United
States or any political subdivision thereof if (i) each such Subsidiary is a
wholly owned Subsidiary and is designated by JSCE or the Borrower as a Material
Subsidiary and (ii) JSCE, the Borrower and each such Subsidiary complies with
the applicable provisions of Section 6.10.
(c) Notwithstanding paragraph (b) above, if at the time thereof and
immediately after giving effect thereto no Default or Event of Default shall
have occurred and be continuing, JSCE or the Borrower may create or cause to be
created one or more Foreign Subsidiaries provided that (i) each such Subsidiary
is a wholly owned Subsidiary and (ii) JSCE, the Borrower and each such
Subsidiary complies with the applicable provisions of Section 6.10 (it being
understood that (x) no Foreign Subsidiary shall be required to become a party to
the Guarantee Agreement or to any Security Document and (y) JSCE or the
Borrower, as the case may be, shall not be required to pledge more than 65% of
the capital stock of any Foreign Subsidiary pursuant to the Pledge Agreement).
(d) Notwithstanding paragraph (b) above, if at the time thereof and
immediately after giving effect thereto no Default or Event of Default shall
have occurred and be continuing, JSC may create or cause to be created a wholly
owned Subsidiary to be incorporated in the State of Indiana and/or a wholly
owned Subsidiary to be incorporated in the State of Alabama, in each case to own
and operate certain assets of the Loan Parties located in such states, so long
as, upon the incorporation of any such Subsidiary, (i) JSC shall designate or
shall cause to be designated each such Subsidiary as a Material Subsidiary and
shall cause each such Subsidiary to become a grantor party to the applicable
Security Documents with respect to all its assets, (ii) JSC shall pledge or
cause to be pledged to the Collateral Agent for the benefit of the Secured
Parties all the capital stock of each such Subsidiary pursuant to the Pledge
Agreement and (iii) JSC shall cause to be delivered to the Senior Managing
Agents and the Collateral Agent such documents and opinions of counsel in
connection with the foregoing as may be reasonably requested by the Senior
Managing Agents or the Collateral Agent or their counsel.
SECTION 7.12. Restrictions on Ability of Subsidiaries to Pay Dividends.
Permit their respective Subsidiaries to, directly or indirectly, voluntarily
create or otherwise voluntarily cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary of such Person to
(a) pay dividends or make any other distributions on its capital stock or any
other interest or (b) make or repay loans or advances to such Person except, in
each case,
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for encumbrances or restrictions under this Agreement, the 1993 Senior Note
Indenture, the Senior Note Indentures and, with respect to JSF, the Receivables
Program Documents.
SECTION 7.13. Capital Expenditures. Incur Consolidated Capital Expenditures
in any fiscal year in excess of $200,000,000; provided, however, that such
amount in respect of any fiscal year may be increased by an amount equal to the
Borrower's Portion of Excess Cash Flow. In addition, the amount of Consolidated
Capital Expenditures in any fiscal year may be further increased by an amount
equal to the excess of (a) $200,000,000 over (b) the amount of Consolidated
Capital Expenditures actually made in the immediately preceding fiscal year;
provided, however, that amounts so available under this sentence in any fiscal
year or years that are not so expended, up to a maximum of $75,000,000 on a
cumulative basis, shall be available for any subsequent fiscal year and the
amount of Consolidated Capital Expenditures made in any fiscal year shall first
be applied against the $200,000,000 amount permitted for such year and
thereafter applied to the amount available from prior years. The parties agree
that, for purposes of the preceding sentence, the Borrower shall be deemed on
the Closing Date to have $75,000,000 in unused Consolidated Capital Expenditures
from prior years available for use on and after the Closing Date.
SECTION 7.14. Consolidated EBITDA. Permit Consolidated EBITDA for any four
fiscal quarter period ending during any period set forth below to be less than
the amount set forth opposite such period:
Period Amount
------ ------
From and including the Closing Date through
and including June 30, 1998 $235,000,000
From and including September 30, 1998
through and including December 31, 1998 $285,000,000
From and including March 31, 1999
through and including December 31, 1999 $375,000,000
Thereafter $425,000,000
SECTION 7.15. Interest Coverage Ratio. Permit the ratio of (a) Consolidated
EBITDA to (b) Consolidated Interest Expense for any four fiscal quarter period
ending during any period set forth below to be less than the ratio set forth
opposite such period:
Period Ratio
------ -----
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From and including the Closing Date through
and including June 30, 1998 1.25 to 1
From and including September 30, 1998
through and including December 31, 1998 1.50 to 1
From and including March 31, 1999 through
and including December 31, 1999 2.00 to 1
Thereafter 2.25 to 1
SECTION 7.16. Disposition of Collateral and other Assets. (a) Sell, lease,
assign, transfer or otherwise dispose of any asset or assets constituting all or
substantially all the Collateral.
(b) Sell, lease, assign, transfer or otherwise dispose of any portion of a
discrete parcel of Timberland Property (other than pursuant to any Permitted
Equipment Financing or any Permitted Timber Financing or to any Material
Subsidiary), unless (i) the fair market value of such parcel of Timberland
Property is less than $10,000,000 and (ii) the aggregate fair market value of
all Timberland Property previously disposed of pursuant to this Section 7.16(b)
is less than $50,000,000; provided, however, that the Borrower may exchange any
portion of a discrete parcel of Timberland Property for a Substitute Parcel if
(A) the fair market value of the Substitute Parcel is at least as great as the
fair market value of the parcel of Timberland Property so exchanged, (B) the
release of such exchanged Timberland Property complies in all respects with the
provisions of Section 7.17 and (C) the Borrower complies in all respects with
the applicable provisions of Section 6.10 with respect to the Substitute Parcel.
(c) Permit any third parties the privilege of entry upon the Mortgaged
Property for cutting and removal of Timber, except under contracts pursuant to
which such third parties are granted the privilege of cutting or removing Timber
for sale, consumption or processing at commercially reasonable rates, provided
that (i) as to any single contract, the gross proceeds to be paid in any
calendar year shall not exceed $10,000,000, (ii) as to the aggregate of all such
contracts from time to time in effect, such gross proceeds shall not exceed
$50,000,000 in any calendar year, and (iii) the Borrower may exchange Timber for
other timber ("Substitute Timber") if (x) the fair market value of the
Substitute Timber is at least as great as the fair market value of the Timber so
exchanged, (y) the release of such Timber complies in all respects with the
provisions of Section 7.17 and (z) the Borrower complies in all respects with
the applicable provisions of Section 6.10 with respect to the Substitute Timber.
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(d) Except for the sale of Program Receivables as permitted by the
Receivables Program Documents, sell, lease, assign, transfer or otherwise
dispose of any asset or assets (other than to a Material Subsidiary), in a
single transaction or a series of related transactions, having a fair market
value in excess of $5,000,000 unless (i) at least 80% of the consideration
received by JSC and its Subsidiaries in connection therewith shall be in cash or
cash equivalents and readily marketable securities, (ii) any non-cash
consideration shall consist of debt obligations of the purchaser and (iii) if
any consideration to be received consists of a note or other debt obligation,
such note or other debt obligation shall, either (x) (A) be senior and secured
by a first priority security interest in the asset so sold and (B) shall be
pledged to the Collateral Agent for the benefit of the Lenders to secure the
Obligations pursuant to a written instrument satisfactory to the Collateral
Agent or (y) in the case of any portion of any such consideration consisting of
readily marketable securities, be sold within 30 days of receipt thereof.
SECTION 7.17. Disposition of Mortgaged Property. (a) Sell, lease, assign,
transfer or otherwise dispose of (other than to a Material Subsidiary) any
interest in any Mortgaged Property, including any interest in any Timberland
Property (each, a "Release Transaction"), except (i) in compliance with this
Section 7.17, Section 7.05 and Section 7.16 and (ii) in connection with any
Permitted Equipment Financing or any Permitted Timber Financing. Upon such
compliance, the Borrower shall be entitled to receive from the Collateral Agent
an instrument, in form and substance satisfactory to the Collateral Agent (each,
a "Release"), releasing (or, at the option of the Borrower assigning) the Lien
of any applicable Mortgaged Property. The Borrower shall exercise its rights
under this Section 7.17 by delivery to the Collateral Agent of a notice (each, a
"Release Notice"), which shall refer to this Section 7.17, describe with
particularity the items of property proposed to be covered by the Release and be
accompanied by a counterpart of the release fully executed and acknowledged by
all parties thereto other than the Collateral Agent and be in form for execution
by the Collateral Agent, and a certificate of a Responsible Officer of the
Borrower certifying as to the satisfaction of the Release Conditions. The
Collateral Agent shall execute, acknowledge (if applicable) and deliver to the
Borrower such counterpart within a reasonable time after receipt by the
Collateral Agent of a Release Notice and the satisfaction of the Release
Conditions. The obligation of the Collateral Agent to deliver any Release, and
the Borrower's rights to consummate any sale, lease, assignment, transfer or
other disposition of any interest in Mortgaged Property, shall be subject to the
following conditions (collectively, the "Release Conditions"):
(i) no Default or Event of Default shall have occurred and be
continuing;
(ii) if such Release relates to only a portion of a discrete parcel of
Mortgaged Property, following such sale, transfer or other disposition and
release of the Lien of any applicable Mortgage with respect thereto, the
affected Mortgaged Property shall have sufficient utility services and
sufficient access to public roads, rail spurs, harbors, canals, terminal
and other transportation structures for the continued use of such
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Mortgaged Property in substantially the manner carried on by the Borrower
prior to such Release;
(iii) if such Release relates to only a portion of a discrete parcel
of Mortgaged Property, following such sale, transfer or other disposition,
the affected Mortgaged Property shall comply in all material respects with
applicable laws, rules, regulations and ordinances relating to
environmental protection, zoning, land use and building and work place
safety;
(iv) if such Release relates to only a portion of a discrete parcel of
Mortgaged Property, following such sale, transfer or other disposition, the
value of the affected Mortgaged Property following such Release (exclusive
of the value of the released Mortgaged Property) plus the value of the
proceeds received for such released Mortgaged Property shall not be less
than the value of such Mortgaged Property prior to such Release;
(v) if such Release relates to only a portion of a discrete parcel of
Mortgaged Property (other than Timberland Property), the title insurance
company that issued the title insurance relating to the affected Mortgaged
Property shall have committed to issue an endorsement to such title
insurance policy confirming that after such Release the Lien of the
applicable Mortgage continues unimpaired as a first priority Lien upon the
remaining Mortgaged Property, subject only to Liens permitted by the terms
of the applicable Mortgage to be prior thereto; and
(vi) except with respect to Timberland Property, the Borrower shall
have delivered to the Collateral Agent a survey showing the property
proposed to be released.
(b) In connection with any Release Transaction, the Borrower shall (i)
execute, deliver and cause to be recorded, and obtain and deliver, such
instruments as the Collateral Agent may reasonably request, including amendments
to the Security Documents and this Agreement, and (ii) deliver to the Collateral
Agent such evidence of the satisfaction of the Release Conditions as the
Collateral Agent may reasonably require. Without limiting the provisions of
Section 10.05, the Borrower shall reimburse the Collateral Agent, the
Administrative Agent and the Lenders upon demand for all costs or expenses,
including attorneys' fees and disbursements, incurred by each of them in
connection with any action contemplated by this Section 7.17.
SECTION 7.18. Fiscal Year. Cause its fiscal year to end on a date other
than December 31.
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ARTICLE VIII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in any Loan
Document, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other
instrument furnished pursuant to any Loan Document, shall prove to have
been false or misleading in any material respect when so made, deemed made
or furnished;
(b) default shall be made in the payment of any principal of any Loan
or Swingline Loan or LC Disbursement when and as the same shall become due
and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan
or Swingline Loan or any Fee or any other amount (other than an amount
referred to in paragraph (b) above) due under any Loan Document, when and
as the same shall become due and payable, and such default shall continue
unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance by JSC,
JSCE or the Borrower of any covenant, condition or agreement contained in
Section 6.01, 6.05(a), 6.08 or in Article VII;
(e) default shall be made in the due observance or performance by any
Loan Party or any of their respective Subsidiaries of any covenant,
condition or agreement contained in any Loan Document (other than those
defaults specified in paragraph (b), (c) or (d) above) and such default
shall continue unremedied for a period of 30 days after written notice
thereof from the Administrative Agent or any Lender to the Borrower;
(f) any Loan Party or any of their respective Subsidiaries shall (i)
fail to pay any principal or interest, regardless of amount, due in respect
of any Indebtedness in a principal amount in excess of $5,000,000, when and
as the same shall become due and payable (after giving effect to any
applicable grace period), or (ii) fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness (after giving
effect to any applicable grace period), if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a
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trustee on its or their behalf to cause, such Indebtedness to become due
prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of JSC, JSCE or the Borrower or any of their respective
Material Subsidiaries, or of a substantial part of the property or assets
of JSC, JSCE or the Borrower or any such Material Subsidiary, under Title
11 of the United States Code, as now constituted or hereafter amended, or
any other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for JSC, JSCE or the Borrower
or any such Material Subsidiary or for a substantial part of the property
or assets of JSC, JSCE or the Borrower or any such Material Subsidiary or
(iii) the winding-up or liquidation of JSC, JSCE or the Borrower or any
such Material Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(h) JSC, JSCE or the Borrower or any of their respective Material
Subsidiaries shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in paragraph (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for JSC, JSCE or
the Borrower or any such Material Subsidiary or for a substantial part of
the property or assets of JSC, JSCE or the Borrower or any such Material
Subsidiary, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due
or (vii) take any action for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 in any one case or $15,000,000 in the
aggregate in all such cases (in each case to the extent not adequately
covered by insurance as to which the insurance company has acknowledged
coverage pursuant to a writing reasonably satisfactory to the Collateral
Agent) shall be rendered against JSC, JSCE or the Borrower or any of their
respective Subsidiaries or any combination thereof and the same shall
remain undischarged for a period of 10 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally
taken by a judgment creditor to levy upon assets or properties of JSC, JSCE
or the Borrower or any Subsidiary to enforce any such judgment;
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(j) a Reportable Event or Reportable Events, or a failure to make a
required installment or other payment (within the meaning of Section
412(n)(l) of the Code), shall have occurred with respect to any Plan or
Plans that reasonably could be expected to result in liability of JSC, JSCE
or the Borrower or any of their respective Subsidiaries to the PBGC or to a
Plan in an aggregate amount exceeding $25,000,000 and, within 30 days after
the reporting of any such Reportable Event to the Administrative Agent
pursuant to Section 6.06(b)(i)(A) or after the receipt by the
Administrative Agent of the statement required pursuant to Section
6.06(b)(iii), the Administrative Agent shall have notified the Borrower in
writing that (i) the Required Lenders have reasonably determined that, on
the basis of such Reportable Event or Reportable Events or the failure to
make a required payment, there are reasonable grounds (A) for the
termination of such Plan or Plans by the PBGC, (B) for the appointment by
the appropriate United States District Court of a trustee to administer
such Plan or Plans or (C) for the imposition of a lien in favor of a Plan
and (ii) as a result thereof an Event of Default exists hereunder; or a
trustee shall be appointed by a United States District Court to administer
any such Plan or Plans; or the PBGC shall institute proceedings to
terminate any Plan or Plans;
(k) (i) JSC, JSCE or the Borrower or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) JSC, JSCE or the
Borrower or such ERISA Affiliate does not have reasonable grounds for
contesting such Withdrawal Liability or is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner and (iii) the
amount of the Withdrawal Liability specified in such notice, when
aggregated with all other amounts required to be paid to Multiemployer
Plans in connection with Withdrawal Liabilities (determined as of the date
or dates of such notification), exceeds $25,000,000;
(l) JSC, JSCE or the Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, if solely as a result of such reorganization or
termination the aggregate contributions of the Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in reorganization or
have been or are being terminated have been or will be increased over the
amounts required to be contributed to such Multiemployer Plans for their
most recently completed plan years by an amount exceeding $25,000,000;
(m) there shall have occurred a Change in Control;
(n) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by JSC, JSCE or the
Borrower or any Guarantor not to be, a valid, perfected, first priority
(except as otherwise expressly provided in this Agreement or such Security
Document) security interest in Collateral with a fair market value or book
value (whichever is greater) in excess, individually or in the
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aggregate, of $35,000,000, except to the extent that any such loss of
perfection or priority results from the failure of the Collateral Agent to
maintain possession of certificates representing securities pledged under
the Pledge Agreement or otherwise take any action within its control
(including the filing of Uniform Commercial Code continuation statements);
(o) any Loan Document shall not be for any reason, or shall be
asserted by the Loan Party or any Guarantor party thereto (except as
otherwise expressly provided in this Agreement or such Loan Document) not
to be, in full force and effect and enforceable in all material respects in
accordance with its terms;
(p) the Obligations and the Guarantees thereof pursuant to the
Guarantee Agreement shall cease to constitute, or shall be asserted by any
Loan Party (except as otherwise expressly provided in this Agreement or
such Loan Document) not to constitute, senior indebtedness under the
subordination provisions of any Subordinated Indebtedness, or any such
subordination provisions shall be invalidated or otherwise cease to be a
legal, valid and binding obligation of the parties thereto, enforceable in
accordance with its terms; or
(q) there shall be present on, at, or under any of the Mortgaged
Properties any Hazardous Materials that could reasonably be expected to
result in any liability or obligation under any Environmental Laws,
including costs of remediation, fines, penalties, natural resource damages
or other damages, in an aggregate amount in excess of $50,000,000;
then, and in every such event (other than an event with respect to the Borrower
or any Guarantor described in paragraph (g) or (h) above), and at any time
thereafter during the continuance of such event, the Administrative Agent may
and, at the request of the Required Lenders, shall, by notice to the Borrower,
take any of or all the following actions, at the same or different times: (i)
terminate forthwith the Commitments and the LC Commitment, (ii) declare the
Loans and the Swingline Loans then outstanding to be forthwith due and payable
in whole or in part, whereupon the principal of the Loans and the Swingline
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the Loan Parties
accrued hereunder and under any other Loan Document, shall become forthwith due
and payable, without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by JSC, JSCE and the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding and (iii) exercise any remedies available under any Loan
Document or otherwise; and in any event with respect to the Borrower or a
Guarantor described in paragraph (g) or (h) above, the Commitments and the LC
Commitment shall automatically terminate and the principal of the Loans and the
Swingline Loans then outstanding, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Loan Parties accrued
hereunder and under any other Loan Document, shall
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automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by JSC,
JSCE and the Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding.
ARTICLE IX
The Administrative Agent, the Collateral Agent,
the Senior Managing Agents and the Fronting Bank
In order to expedite the transactions contemplated by this Agreement, (a)
The Chase Manhattan Bank is hereby appointed to act as Administrative Agent and
Collateral Agent for the Fronting Bank, the Swingline Lender and the Lenders and
(b) Bankers Trust Company and The Chase Manhattan Bank are hereby appointed to
act as Senior Managing Agents on behalf of the Managing Agents and the Lenders
(the Administrative Agent, the Collateral Agent, the Senior Managing Agents and
the Managing Agents for purposes of this Article are collectively referred to as
the "Agents"). Each of the Lenders, the Fronting Bank and the Swingline Lender
hereby irrevocably authorizes each Agent to take such actions on their behalf
and to exercise such powers as are specifically delegated to such Agent by the
terms and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders, the Fronting Bank and the
Swingline Lender, without hereby limiting any implied authority, (a) to receive
all Loan Documents on the Closing Date, (b) to receive on behalf of the Lenders,
the Fronting Bank and the Swingline Lender all payments of principal of and
interest on the Loans and the Swingline Loans, all payments in respect of LC
Disbursements and all other amounts due to the Lenders, the Fronting Bank and
the Swingline Lender hereunder, and promptly to distribute to each Lender, the
Fronting Bank and the Swingline Lender its proper share of each payment so
received, (c) to give notice on behalf of each of the Lenders to the Borrower of
any Event of Default specified in this Agreement of which the Administrative
Agent has actual knowledge acquired in connection with its agency hereunder and
(d) to distribute to each Lender, the Fronting Bank and the Swingline Lender
copies of all notices, financial statements and other materials delivered by the
Loan Parties pursuant to this Agreement as received by the Administrative Agent
(including notices of an occurrence of any Event of Default). The Administrative
Agent and the Collateral Agent are hereby expressly authorized to execute any
and all documents (including releases) with respect to the Collateral and the
Program Receivables and the rights of the Secured Parties with respect thereto,
in each case as contemplated by and in accordance with the terms and provisions
of this Agreement and the Security Documents.
None of the Agents or the Fronting Bank or any of their respective
directors, officers, employees or agents shall be liable as such for any action
taken or omitted by any of them except for its, his or her own gross negligence
or wilful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in
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connection herewith, or be required to ascertain or to make any inquiry
concerning the performance or observance by the Loan Parties or any Guarantor of
any of the terms, conditions, covenants or agreements contained in any Loan
Document. The Agents shall not be responsible to the Lenders or the Fronting
Bank or the Swingline Lender for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement, any other Loan Document or
any other instruments or agreements. The Administrative Agent and the Collateral
Agent shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required Lenders
(and the Fronting Bank, with respect to Letters of Credit) and, except as
otherwise specifically provided herein, such instructions and any action or
inaction pursuant thereto shall be binding on all the Lenders, the Fronting Bank
and the Swingline Lender. The Administrative Agent and the Collateral Agent
shall, in the absence of knowledge to the contrary, be entitled to rely on any
instrument or document believed by them in good faith to be genuine and correct
and to have been signed or sent by the proper Person or Persons. None of the
Agents or the Fronting Bank or any of their respective directors, officers,
employees or agents shall have any responsibility to the Loan Parties on account
of the failure of or delay in performance or breach by any Lender (or, in the
case of the Agents, by the Fronting Bank or the Swingline Lender) of any of its
obligations hereunder or to any Lender (or, in the case of the Agents, the
Fronting Bank or the Swingline Lender) on account of the failure of or delay in
performance or breach by any other Lender (or, in the case of the Agents, the
Fronting Bank or the Swingline Lender) or the Loan Parties or any Guarantor of
any of their respective obligations hereunder or under any other Loan Document
or in connection herewith or therewith. Each Agent and the Fronting Bank may
execute any and all duties hereunder by or through agents or employees and shall
be entitled to rely upon the advice of legal counsel selected by any of them
with respect to all matters arising hereunder and shall not be liable for any
action taken or suffered in good faith by any of them in accordance with the
advice of such counsel.
The Lenders, the Fronting Bank and the Swingline Lender hereby acknowledge
that none of the Agents or the Fronting Bank shall be under any duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement unless it shall be requested in writing to do so by the Required
Lenders.
Subject to the appointment and acceptance of a successor Agent as provided
below, any Agent may resign at any time by notifying the Lenders, the Fronting
Bank, the Swingline Lender and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a Lender as the successor. If
no successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice
of its resignation, then the retiring Agent may, on behalf of the Lenders and
the Fronting Bank, appoint a successor Agent, which shall be a bank with an
office in New York, New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent
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shall be discharged from its duties and obligations hereunder. After any
Agent's resignation hereunder, the provisions of this Article and Section 10.05
shall continue in effect for its benefit in respect of any actions taken or
omited to be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, each Agent and the Fronting
Bank, in its individual capacity and not as Agent or Fronting Bank, as the case
may be, shall have the same rights and powers as any other Lender and may
exercise the same as though it were not an Agent or the Fronting Bank, as the
case may be, and each Agent and its Affiliates and the Fronting Bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Loan Parties or any of their respective Subsidiaries
or other Affiliates as if it were not an Agent or the Fronting Bank, as the case
may be.
Each Lender agrees (a) to reimburse each Agent and the Fronting Bank, on
demand, in the amount of such Lender's pro rata share (based on its Commitment
hereunder) of any expenses incurred for the benefit of the Lenders by such Agent
or the Fronting Bank, including fees, disbursements and other charges of counsel
and compensation of agents paid for services rendered on behalf of the Lenders,
that shall not have been reimbursed by the Loan Parties and (b) to indemnify and
hold harmless each Agent and the Fronting Bank and any of their respective
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against it in its capacity as an Agent or the Fronting Bank, as
the case may be, or any of them in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by it or any
of them under this Agreement or any other Loan Document, to the extent the same
shall not have been reimbursed by the Loan Parties, provided that (i) no Lender
shall be liable to any Agent or the Fronting Bank for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence or wilful
misconduct of such Agent or the Fronting Bank, as the case may be, or any of
their respective directors, officers, employees or agents and (ii) each Lender
that does not have a Revolving Credit Commitment (other than through the
termination thereof) shall be under no obligation to reimburse or indemnify the
Fronting Bank under clauses (a) and (b) above.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents, any other Lender, the Fronting Bank or the Swingline Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents,
any other Lender, the Fronting Bank or the Swingline Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
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101
None of the Managing Agents shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders in such capacity. Without limiting the foregoing, none
of the Managing Agents shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, upon any of the Managing Agents in deciding to enter into
this Agreement or in taking or not taking action hereunder or under any other
Loan Document.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Except as otherwise expressly permitted herein,
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed or sent by
telecopy, as follows:
(a) If to either JSC or JSCE, to it in care of Jefferson Smurfit
Corporation (U.S.), Jefferson Smurfit Centre, 8182 Maryland Avenue, St.
Louis, MO 63105, Attention of Treasurer (Telecopy No. (314) 746-1281); with
a copy to Jefferson Smurfit Group plc, Beech Hill, Clonskeagh, Dublin 4,
Ireland, Attention of Treasurer (Telecopy No. (011-353) 1269-4481);
(b) If to the Borrower, to it at Jefferson Smurfit Centre, 8182
Maryland Avenue, St. Louis, MO 63105, Attention of Treasurer (Telecopy No.
(314) 746-1281);
(c) If to BTCo, as Senior Managing Agent, to it at 233 South Wacker
Drive (84th Floor), Chicago, IL 60606, Attention of Loretta Summers and
Albert Chung (Telecopy No. (312) 993-8218);
(d) If to Chase, as Administrative Agent, Collateral Agent, Swingline
Lender or Senior Managing Agent, to it at 10 South LaSalle Street (23rd
Floor), Chicago, IL 60603-1907, Attention of Jonathan Twichell (Telecopy
No. (312) 807-4550); with a copy to The Chase Manhattan Bank, Loan and
Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New
York 10081, Attention of Janet Belden (Telecopy No. (212) 552-5658);
(e) If to the Fronting Bank, at its address (or telecopy number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto; and
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(f) If to a Lender, at its address (or telecopy number) set forth on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy, or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 10.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 10.01. The Administrative Agent shall deliver to the Borrower a copy of
each Administrative Questionnaire received by it.
SECTION 10.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Loan Party herein and by the Loan
Parties and the Guarantors in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Lenders, the
Fronting Bank and the Swingline Lender and shall survive the making by the
Lenders of the Loans, the making by the Swingline Lender of the Swingline Loans
and the issuance of Letters of Credit by the Fronting Bank, regardless of any
investigation made by the Lenders, the Fronting Bank or the Swingline Lender or
on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or Swingline Loan or any Fee or
any other amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments and the LC Commitment have not been terminated.
SECTION 10.03. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Senior Managing Agents and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of JSC, JSCE and the
Borrower, the Administrative Agent, the Senior Managing Agents, the Fronting
Bank, the Swingline Lender and each Managing Agent and Lender and their
respective successors and assigns, except that none of JSC, JSCE or the Borrower
shall have the right to assign its rights hereunder or any interest herein
without the prior consent of all the Lenders (and any attempted assignment by
any such Person shall be void).
SECTION 10.04. Successors and Assigns. (a) Subject to Section 10.03,
whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of JSC, JSCE and the
Borrower, the Senior Managing Agents, the Administrative Agent, the Fronting
Bank, the Swingline Lender, the Managing Agents or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
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(b) Each Lender may assign to one or more assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitments and LC Commitment, the outstanding Letters of Credit
and the Loans at the time owing to it); provided, however, that (i) except in
the case of an assignment to a Lender or an Affiliate of a Lender, each of the
Administrative Agent and the Borrower (and, in the case of an assignment of a
Lender's Revolving Credit Commitment, the Swingline Lender and the Fronting
Bank) must give its prior written consent to such assignment (which consent
shall not be unreasonably withheld) and the Administrative Agent must give
notice to BTCo of any such assignment; provided further, however, that (A) the
consent of the Borrower shall not be required if a Default or an Event of
Default under paragraph (b), (c), (g) or (h) of Article VIII has occurred and is
continuing on the date of the Assignment and Acceptance and (B) the failure of
the Administrative Agent to give notice to BTCo of any such assignment shall not
affect the validity of such assignment, (ii) the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 (or an amount equal to
the remaining balance of such Lender's Commitment), (iii) the parties to each
such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, and a processing and recordation fee of $3,500 and
(iv) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) of this Section 10.04, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof and in no event
shall precede the date of such recording, (i) the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, shall have the rights and obligations of a Lender under this
Agreement and (ii) the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto, but shall continue to be entitled to the benefits of Sections 2.14,
2.16, 2.20 and 10.05, as well as to any Fees accrued for its account and not yet
paid).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the assignee thereunder shall be deemed to confirm to and
agree with each other and the other parties hereto as follows: (i) such
assigning Lender warrants that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim and that its
Commitment and LC Commitment, and the outstanding balances of its Term Loans and
Revolving Loans, in each case without giving effect to assignments thereof that
have not become effective, are as set forth in such Assignment and Acceptance;
(ii) except as set forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto, or the financial condition of
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the Loan Parties or the performance or observance by the Loan Parties of any of
their obligations under this Agreement or under any other Loan Document or any
other instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of any amendments or consents
entered into prior to the date of such Assignment and Acceptance and copies of
the most recent financial statements delivered pursuant to Section 6.04 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (v)
such assignee will independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent, the Senior Managing
Agents, the Managing Agents and the Collateral Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent, the Senior Managing Agent, the Managing
Agents and the Collateral Agent by the terms hereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations that by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments and
LC Commitment of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive in the absence of manifest error and JSC, JSCE
and the Borrower, the Administrative Agent, the Fronting Bank, the Swingline
Lender and the Lenders shall treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by JSC, JSCE, the Borrower, the Fronting Bank, the
Swingline Lender and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, together with an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above and the written consent (to the extent required under
paragraph (b) above), of the Administrative Agent, the Borrower and/or the
Swingline Lender and the Fronting Bank to such assignment, the Administrative
Agent shall (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Lenders, the Fronting Bank and the Swingline Lender. No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (e).
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(f) Each Lender may, without the consent of JSC, JSCE, the Borrower, the
Administrative Agent, the Fronting Bank or the Swingline Lender, sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the benefit of the cost protection provisions contained in Sections
2.14, 2.16, 2.20 and 10.05 to the same extent as if they were Lenders, provided
that, except as expressly provided in Section 2.20(a), the Borrower shall not be
required to reimburse the participating lenders or other entities pursuant to
Section 2.14, 2.16, 2.20 or 10.05 in an amount in excess of the amount that
would have been payable thereunder to such Lender had such Lender not sold such
participation, and (iv) JSC, JSCE, the Borrower, the Administrative Agent, the
Senior Managing Agents, the Managing Agents, the Fronting Bank, the Swingline
Lender and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Loan Parties under the Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement (provided
that the participating bank or other entity may be provided with the right to
approve amendments, modifications or waivers affecting it with respect to (w)
any decrease in the Fees payable hereunder with respect to Loans in which the
participating bank or other entity has purchased a participation, (x) any change
in the amount of principal of, or decrease in the rate at which interest is
payable on, the Loans in which the participating bank or other entity has
purchased a participation, (y) any extension of the final scheduled maturity of
any Loan in which the participating bank or other entity has purchased a
participation or (z) any release of all or substantially all the Collateral).
(g) Notwithstanding the limitations set forth in paragraph (b) above, any
Lender may at any time assign all or any portion of its rights under this
Agreement to a Federal Reserve Bank without the prior written consent of the
Borrower, the Administrative Agent, the Fronting Bank or the Swingline Lender,
provided that no such assignment shall release a Lender from any of its
obligations hereunder or substitute any such Bank for such Lender as a party
hereto. In order to facilitate such an assignment to a Federal Reserve Bank, the
Borrower shall, at the request of the assigning Lender, duly execute and deliver
to the assigning Lender a promissory note or notes evidencing the Loans made to
the Borrower by the assigning Lender hereunder.
(h) Except as provided in Section 3.10 and Section 2.22, respectively,
neither the Fronting Bank nor the Swingline Lender may assign or delegate any of
its respective rights and duties hereunder without the prior written consent of
the Borrower and the Senior Managing Agents.
<PAGE>
<PAGE>
106
SECTION 10.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
out-of-pocket expenses incurred by the Administrative Agent, the Senior Managing
Agents, the Fronting Bank, the Swingline Lender and the Collateral Agent in
connection with the preparation of this Agreement and the other Loan Documents
or in connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Administrative Agent, the Senior Managing
Agents, the Managing Agents, the Fronting Bank, the Swingline Lender, the
Collateral Agent or any Lender in connection with the enforcement or protection
of their rights in connection with this Agreement and the other Loan Documents
or in connection with the Loans made or the Letters of Credit issued hereunder,
including the reasonable fees, disbursements and other charges of Cravath,
Swaine & Moore, counsel for the Administrative Agent, the Collateral Agent and
the Senior Managing Agents, and, in connection with any such enforcement or
protection, the reasonable fees, disbursements and other charges of any other
counsel (including allocated costs of internal counsel) for the Administrative
Agent, the Senior Managing Agents, the Managing Agents, the Fronting Bank, the
Swingline Lender, the Collateral Agent or any Lender. The Borrower further
agrees to indemnify the Administrative Agent, the Senior Managing Agents, the
Managing Agents, the Fronting Bank, the Swingline Lender, the Collateral Agent
and the Lenders from, and hold them harmless against, any documentary taxes,
assessments or similar charges made by any Governmental Authority by reason of
the execution and delivery of this Agreement or any of the other Loan Documents.
(b) The Borrower agrees to indemnify the Administrative Agent, the Senior
Managing Agents, the Managing Agents, the Collateral Agent, the Fronting Bank,
the Swingline Lender and each Lender and each of their respective directors,
officers, employees and agents (each such person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
disbursements and other charges, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
or thereto of their respective obligations hereunder or thereunder or the
consummation of the Transactions and the other transactions contemplated hereby
or thereby, (ii) the use of the Letters of Credit or the proceeds of the Loans
and the Swingline Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses have resulted from the gross negligence or wilful misconduct of
such Indemnitee.
(c) The provisions of this Section 10.05 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans or the Swingline Loans, the invalidity or unenforceability of any term
or provision of this Agreement or any other
<PAGE>
<PAGE>
107
Loan Document, or any investigation made by or on behalf of the Administrative
Agent, the Senior Managing Agents, the Managing Agents, the Fronting Bank, the
Collateral Agent, the Swingline Lender or any Lender. All amounts due under this
Section 10.05 shall be payable on written demand therefor.
SECTION 10.06. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized, in addition to any other
right or remedy that any Lender may have by operation of law or otherwise, at
any time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to exercise its banker's lien or right
of setoff and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of any Loan Party against any
of and all the obligations of the Borrower now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
such Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured.
SECTION 10.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN THE MORTGAGES) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.08. Waivers; Amendment. (a) No failure or delay on the part of
the Administrative Agent, either Senior Managing Agent, the Managing Agents, the
Fronting Bank, the Swingline Lender, the Collateral Agent or any Lender in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuation of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent, the Senior
Managing Agents, the Managing Agents, the Fronting Bank, the Swingline Lender,
the Collateral Agent and the Lenders hereunder and under the other Loan
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Loan Parties therefrom
shall in any event be effective unless the same shall be permitted by paragraphs
(b) or (c) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
the Loan Parties in any case shall entitle the Loan Parties to any other or
further notice or demand in similar or other circumstances.
(b) Neither this Agreement or any of the other Loan Documents nor any
provision hereof or thereof may be waived, amended or modified except (i) in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by JSC, JSCE, the Borrower and the Required Lenders, (ii) in the
case of the Guarantee Agreement,
<PAGE>
<PAGE>
108
pursuant to an agreement or agreements in writing entered into by the Guarantors
and the Collateral Agent and consented to by the Required Lenders, (iii) in the
case of any of the Security Documents, pursuant to an agreement or agreements in
writing entered into by the parties thereto and consented to by the Required
Lenders or (iv) in the case of a Letter of Credit, pursuant to an agreement or
agreements entered into by the Borrower and the Fronting Bank; provided,
however, that no such agreement shall (A) change the principal amount of any
Loan, extend the final scheduled maturity of any Loan, extend the scheduled date
for payment of interest on any Loan, forgive any such payment or any part
thereof or reduce the rate of interest on any Loan, in each case without the
prior written consent of each Lender affected thereby, (B) increase the amount
or extend the termination date of the Commitment or the LC Commitment or reduce
or extend the date for payment of the Fees of any Lender, in each case without
the prior written consent of such Lender, (C) amend or modify the pro rata
requirements of Section 2.17, the provisions of Section 10.03, the provisions of
this Section 10.08(b) or the definition of the term "Required Lenders" without
the prior written consent of each Lender, (D) release all or substantially all
the Collateral, except as expressly permitted by the Security Documents or this
Agreement, without the prior written consent of each Lender, (E) reduce any
Tranche A Term Loan Repayment Amount or extend any Tranche A Term Loan Repayment
Date (other than the Tranche A Maturity Date), in each case without the prior
written consent of Lenders holding Tranche A Term Loans representing at least
75% of the aggregate outstanding principal amount of the Tranche A Term Loans,
(F) reduce any Tranche B Term Loan Repayment Amount or extend any Tranche B Term
Loan Repayment Date (other than the Tranche B Maturity Date), in each case
without the prior written consent of Lenders holding at least 75% of the
aggregate outstanding principal amount of the Tranche B Term Loans, (G) change
the allocation of prepayments to be made pursuant to Section 2.12(b) or 2.13(d)
or (i) without the prior written consent of (1) Lenders holding more than 50% of
the aggregate outstanding principal amount of the Tranche A Term Loans and (2)
Lenders holding more than 50% of the aggregate outstanding principal amount of
the Tranche B Term Loans, (H) change the application of prepayments of Tranche A
Term Loans pursuant to Section 2.12(b) or 2.13(d) or (i) without the prior
written consent of Lenders holding Tranche A Term Loans representing more than
50% of the aggregate outstanding principal amount of the Tranche A Term Loans or
(I) change the application of prepayments of Tranche B Term Loans pursuant to
Section 2.12(b) or 2.13(d) or (i) without the prior written consent of Lenders
holding more than 50% of the aggregate outstanding principal amount of the
Tranche B Term Loans; and provided further, that (I) no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Collateral Agent, the Fronting Bank or the Swingline Lender hereunder
without the prior written consent of the Administrative Agent, the Collateral
Agent, the Fronting Bank or the Swingline Lender, respectively, (II) any
agreement described in clause (E), (F), (G), (H) or (I) above that is consented
to by the requisite Lenders as provided therein shall be effective as to the
matters described in such clauses even if it shall not have been consented to by
the Required Lenders and (III) no such agreement shall release any Guarantor
from its obligations under the Guarantee Agreement, without the prior written
consent of Lenders holding Loans, a share of the used LC
<PAGE>
<PAGE>
109
Commitments and unused Commitments representing at least 75% of the sum of (x)
the aggregate principal amount of the Loans, (y) the LC Exposure and (z) the
aggregate unused Commitments.
SECTION 10.09. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the applicable interest rate, together with all
fees and charges that are treated as interest under applicable law
(collectively, the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender or the Swingline Lender, shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by such Lender or the Swingline Lender in accordance
with applicable law, the rate of interest payable to such Lender or the
Swingline Lender hereunder, together with all Charges payable to such Lender or
the Swingline Lender, shall be limited to the Maximum Rate.
SECTION 10.10. Entire Agreement. This Agreement, the other Loan Documents
and any separate letter agreements with respect to fees payable to the
Administrative Agent or the Senior Managing Agents constitute the entire
contract between the parties relative to the subject matter hereof. Any previous
agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement and the other Loan Documents. Nothing in this
Agreement or in the other Loan Documents, expressed or implied, is intended to
confer upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 10.11. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.
SECTION 10.12. Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
<PAGE>
<PAGE>
110
SECTION 10.13. Counterparts. This Agreement may be executed in two or more
counterparts or counterpart signature pages, each of which shall constitute an
original but all of which when taken together shall constitute but one contract,
and shall become effective as provided in Section 10.03.
SECTION 10.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 10.15. Confidentiality. (a) Each Lender agrees not to disclose to
any Person the Information (as defined below) in accordance with such Lender's
customary procedures for non-disclosure of confidential information of third
parties of this nature and in accordance with safe and sound lending practices
without the prior written consent of the Borrower, which consent shall not be
unreasonably withheld, except that any Lender shall be permitted to disclose
Information (i) to its and its Affiliates' officers, directors, employees,
agents and representatives (including its auditors and counsel) or to any direct
or indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees in writing to be
bound by the provisions of this Section 10.15); (ii) to the extent (A) required
by applicable laws and regulations or by any subpoena or similar legal process
or (B) requested or required by any regulatory authority or The National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio; (iii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Agreement, (B)
becomes available to such Lender on a non-confidential basis from a source other
than a Loan Party or its Affiliates or (C) was available to such Lender on a
non-confidential basis prior to its disclosure to such Lender by a Loan Party or
its Affiliates; (iv) to any actual or prospective assignee of, or prospective
purchaser of a participation in, the rights of such Lender hereunder, in each
case subject to paragraph (c) below; or (v) in connection with any suit, action
or proceeding relating to the enforcement of rights hereunder or under any other
Loan Document or in connection with the transactions contemplated hereby. As
used in this Section 10.15, as to any Lender, the term "Information" shall mean
the Confidential Information Memorandum and any other materials, documents and
information that JSC, JSCE or the Borrower, or any of their Affiliates may have
furnished or may hereafter furnish to any Lender in connection with this
Agreement.
(b) Each Lender agrees that it will use the Information only for purposes
related to the transactions contemplated hereby and by the other Loan Documents,
provided that (i) if the conditions referred to in any of subclauses (A) through
(C) of clause (iii) of paragraph (a) above are met, such Lender may otherwise
use the Information and (ii) if such Lender or any of its Affiliates is
otherwise a creditor of a Loan Party, such Lender or any such Affiliate may use
the Information in connection with its other credits to such Loan Party.
<PAGE>
<PAGE>
111
(c) Each Lender agrees that it will not disclose any of the Information to
any actual or prospective assignee of such Lender or participant in any rights
of such Lender under this Agreement unless such actual or prospective assignee
or participant first executes and delivers to such Lender or the Borrower a
confidentiality letter containing substantially the undertakings set forth in
this Section 10.15.
SECTION 10.16. Jurisdiction; Consent to Service of Process. (a) Each of
JSC, JSCE and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Loan Party or
its properties in the courts of any jurisdiction.
(b) Each of JSC, JSCE and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 10.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
SECTION 10.17. Receivables Program. The Lenders hereby acknowledge and
agree that the transfer of Program Receivables by SNC to the Borrower, and the
transfer of Program Receivables by the Borrower to JSF pursuant to the
Receivables Program, constitute true and valid sales for consideration (or, in
the case of Program Receivables contributed by the Borrower to JSF,
contributions for consideration), and not a borrowing by the Borrower or SNC
from JSF secured by such Program Receivables.
SECTION 10.18. Florida Real Property. The parties hereto hereby acknowledge
that the Revolving Loans are secured by real and personal property located both
inside and outside the State of Florida and hereby agree that for purposes of
calculating intangible taxes due under Section 199.133, Florida Statutes, the
first amounts advanced under the Revolving Facility shall be deemed to be the
portion allocable to the Collateral consisting of Real
<PAGE>
<PAGE>
112
Property located in the State of Florida, and such portion allocable to such
Collateral shall also be deemed to be the last to be repaid under the terms
hereof. Nothing herein shall limit the Secured Parties' right to recover or
realize from the Collateral located in the State of Florida amounts in excess of
that allocated to the Revolving Loans or to apply amounts so recovered or
realized against the Secured Obligations in such order as the Collateral Agent
in its sole discretion shall determine.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the date and year
first above written.
JEFFERSON SMURFIT CORPORATION,
by
----------------------------
Name:
Title:
JEFFERSON SMURFIT CORPORATION
(U.S.),
by
----------------------------
Name:
Title:
JSCE, INC.,
by
----------------------------
Name:
Title:
<PAGE>
<PAGE>
BANKERS TRUST COMPANY,
individually and as Fronting Bank and Senior
Managing Agent,
by /s/ Robert R. Telesca
-----------------------------------------
Name: Robert R. Telesca
Title: Assistant Vice President
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
Collateral Agent and Senior Managing Agent,
by /s/ Dawn Lee Lum
-----------------------------------------
Name: Dawn Lee Lum
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by /s/ Christopher R. Gernhard
-----------------------------------------
Name: Christopher R. Gernhard
Title: Vice President
THE BANK OF NOVA SCOTIA,
by /s/ F.C.H. Ashby
-----------------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operation
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE,
by /s/ Sean Mounier
-----------------------------------------
Name: Sean Mounier
Title: First Vice President
by /s/ Anthony Rock
-----------------------------------------
Name: Anthony Rock
Title: Vice President
<PAGE>
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH,
by /s/ Vladimir Labun
-----------------------------------------
Name: Vladimir Labun
Title: First Vice President-Manager
GENERAL ELECTRIC CAPITAL CORPORATION,
by /s/ Roger M. Burns
-----------------------------------------
Name: Roger M. Burns
Title: Duly Authorized Signatory
NATIONSBANK N.A.,
by /s/ Michael L. Short
-----------------------------------------
Name: Michael L. Short
Title: Senior Vice President
THE BANK OF NEW YORK,
by /s/ William O'Daly
-----------------------------------------
Name: William O'Daly
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
by /s/ William J. Oleferchik
-----------------------------------------
Name: William J. Oleferchik
Title: Authorized Agent
FIRST UNION NATIONAL BANK,
by /s/ Charles W. Lockyer
-----------------------------------------
Name: Charles W. Lockyer
Title: Vice President
<PAGE>
<PAGE>
SOCIETE GENERALE, NEW YORK BRANCH,
by /s/ Georg L. Peters
-----------------------------------------
Name: Georg L. Peters
Title: Vice President
CITIBANK, N.A.,
by /s/ Majorie Futornick
-----------------------------------------
Name: Majorie Futornick
Title: Vice President
TRANSAMERICA BUSINESS CREDIT CORPORATION
by /s/ Perry Vavoules
-----------------------------------------
Name: Perry Vavoules
Title: Senior Vice President
SANWA BUSINESS CREDIT CORPORATION
by /s/ Stanley Kaminski
-----------------------------------------
Name: Stanley Kaminski
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK BRANCH,
by /s/ Teiji Teramoto
-----------------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
THE LONG TERM CREDIT BANK OF JAPAN, LTD.,
by /s/ Armund J. Schoen, Jr.
-----------------------------------------
Name: Armund J. Schoen, Jr.
Title: Senior Vice President
<PAGE>
<PAGE>
MEESPIERSON CAPITAL CORP,
by /s/ John O'Connor
-----------------------------------------
Name: John O'Connor
Title: Managing Director
by /s/ Hendrik J. Vroege
-----------------------------------------
Name: Hendrik J. Vroege
Title: Vice President
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA,
by /s/ Randall M. Kob
-----------------------------------------
Name: Randall M. Kob
Title: Vice President
MERCANTILE BANK N.A.,
by /s/ Sean W. Lee
-----------------------------------------
Name: Sean W. Lee
Title: Assistant Vice President
TORONTO DOMINION (TEXAS), INC.,
by /s/ David G. Parker
-----------------------------------------
Name: David G. Parker
Title: Vice President
DRESDNER BANK AG NEW YORK AND
GRAND CAYMAN BRANCHES,
by /s/ Beverly G. Cason
-----------------------------------------
Name: Beverly G. Cason
Title: Vice President
by /s/ Christopher E. Sarisky
-----------------------------------------
Name: Christopher E. Sarisky
Title: Assistant Treasurer
<PAGE>
<PAGE>
THE MITSUBISHI TRUST AND BANKING CORPORATION,
by /s/ Toshihiro Hayashi
-----------------------------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
THE SAKURA BANK, LIMITED, NEW YORK
by /s/ Yoshikazu Nagura
-----------------------------------------
Name: Yoshikazu Nagura
Title: Vice President
BANK OF IRELAND,
by /s/ Fergus McDonald
-----------------------------------------
Name: Fergus McDonald
Title: Manager
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
by /s/ Gilles Marchand
-----------------------------------------
Name: Gilles Marchand
Title: Authorized Signatory
KZH HOLDING CORPORATION III,
by /s/ Virginia Conway
-----------------------------------------
Name: Virginia Conway
Title: Authorized Agent
KEYPORT LIFE INSURANCE COMPANY,
by /s/ Jeffrey J. Lobo
-----------------------------------------
Name: Jeffrey J. Lobo
Title: Vice President
<PAGE>
<PAGE>
CRESCENT/MACH I PARTNERS, L.P.,
By: TCW Asset Management Company, its
Investment Manager
by /s/ Justin L. Driscoll
-----------------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
THE TRAVELERS INSURANCE COMPANY,
by /s/ Robert M. Mills
-----------------------------------------
Name: Robert M. Mills
Title: Investment Officer
PILGRIM AMERICA PRIME RATE TRUST,
By: PILGRIM AMERICA INVESTMENTS,
INC. AS ITS MANAGER
by /s/ Howard Tiffen
-----------------------------------------
Name: Howard Tiffen
Title: Senior Vice President
OSPREY INVESTMENTS PORTFOLIO,
By: CITIBANK, N.A., AS MANAGER
by /s/ Hans L. Christensen
-----------------------------------------
Name: Hans L. Christensen
Title: Vice President
<PAGE>
<PAGE>
EXHIBIT 12.1
JSCE, INC.
CALCULATION OF HISTORICAL RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- -----
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Income (loss) before income taxes, extraordinary item and cumulative
effect of accounting changes........................................ $ 12 $194 $403 $ 28 $(258)
Add (deduct):
Minority interest share of income (loss)......................... 2 (1) (3)
Interest expense(a).............................................. 190 194 234 269 254
Interest component of rental expense............................. 15 13 12 11 12
---- ---- ---- ---- -----
Earnings available for fixed charges.................................. $217 $401 $651 $307 $ 5
---- ---- ---- ---- -----
---- ---- ---- ---- -----
Fixed charges:
Interest expense(a).............................................. $190 $194 $234 $269 $ 254
Capitalized interest............................................. 5 3 4 4 3
Interest component of rental expense............................. 15 13 12 11 12
---- ---- ---- ---- -----
Total fixed charges......................................... $210 $210 $250 $284 $ 269
---- ---- ---- ---- -----
---- ---- ---- ---- -----
Ratio of earnings to fixed charges.................................... 1.03 1.91 2.60 1.08 (b)
---- ---- ---- ---- -----
---- ---- ---- ---- -----
</TABLE>
- ------------
(a) For the years ended December 31, 1997, 1996, 1995, 1994 and 1993, interest
expense includes amortization of deferred debt issuance costs of $11
million, $13 million, $14 million, $10 million and $8 million,
respectively.
(b) For the year ended December 31, 1993, earnings were inadequate to cover
fixed charges by $264 million.
<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,
-------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- -----
(DOLLAR AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Income (loss) before income taxes, extraordinary item and cumulative
effect of accounting changes........................................ $ 12 $194 $403 $ 28 $(258)
Add (deduct):
Minority interest share of income (loss)......................... (1) (3)
Interest expense(a).............................................. 190 194 234 269 254
Interest component of rental expense............................. 15 13 12 11 12
---- ---- ---- ---- -----
Earnings available for fixed charges.................................. $217 $401 $651 $307 $ 5
---- ---- ---- ---- -----
---- ---- ---- ---- -----
Fixed charges:
Interest expense(a).............................................. $190 $194 $234 $269 $ 254
Capitalized interest............................................. 5 3 4 4 3
Interest component of rental expense............................. 15 13 12 11 12
---- ---- ---- ---- -----
Total fixed charges......................................... $210 $210 $250 $284 $ 269
---- ---- ---- ---- -----
---- ---- ---- ---- -----
Ratio of earnings to fixed charges.................................... 1.03 1.91 2.60 1.08 (b)
---- ---- ---- ---- -----
---- ---- ---- ---- -----
</TABLE>
- ------------
(a) For the years ended December 31, 1997, 1996, 1995, 1994 and 1993, interest
expense includes amortization of deferred debt issuance costs of $11
million, $13 million, $14 million, $10 million and $8 million,
respectively.
(b) For the year ended December 31, 1993, earnings were inadequate to cover
fixed charges by $264 million.
<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. 4 to the Registration Statement (Form S-3, No.
33-52383) and the Post Effective Amendment No. 5 to the Registration Statement
(Form S-3, No. 33-58348), and the related Prospectus 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, 1998 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,
1997.
ERNST & YOUNG LLP
St. Louis, Missouri
April 14, 1998
