<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly period ended September 30, 1994
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________________ to __________________.
Commission file number 1-3439
STONE CONTAINER CORPORATION
- - - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2041256
- - - - ---------------------------------------- ------------------------------
(State or other jurisdiction of incorporation (I.R.S. employer
or organization) identification no.)
150 North Michigan Avenue, Chicago, Illinois 60601
- - - - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 312-346-6600
------------
Indicate by check mark (X) whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.
Yes X No
___ ___
Number of common shares outstanding as of October 31, 1994: 90,394,599
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
(in millions) 1994* 1993
- - - - ------------------------------------------------------------------ ---------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . $ 139.6 $ 247.4
Accounts and notes receivable (less allowances of $22.8 and $19.3) 787.7 622.3
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . 693.0 719.4
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216.4 164.1
- - - - ------------------------------------------------------------------ ------------------------
Total current assets. . . . . . . . . . . . . . . . . . . 1,836.7 1,753.2
- - - - ------------------------------------------------------------------ ------------------------
Property, plant and equipment. . . . . . . . . . . . . . . . . . 5,375.2 5,240.7
Accumulated depreciation and amortization. . . . . . . . . . . . (2,059.3) (1,854.3)
- - - - ------------------------------------------------------------------ ------------------------
Property, plant and equipment--net. . . . . . . . . . . . 3,315.9 3,386.4
Timberlands. . . . . . . . . . . . . . . . . . . . . . . . . . . 88.2 83.9
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . 890.3 910.5
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629.4 702.7
- - - - ------------------------------------------------------------------ ------------------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,760.5 $ 6,836.7
------------------------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of senior and subordinated long-term debt . . $ 272.9 $ 22.6
Current maturities of non-recourse debt of consolidated affiliates 21.8 290.5
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 307.9 297.1
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 47.7 47.6
Accrued and other current liabilities. . . . . . . . . . . . . . 350.4 285.7
- - - - ------------------------------------------------------------------ ------------------------
Total current liabilities . . . . . . . . . . . . . . . . 1,000.7 943.5
- - - - ------------------------------------------------------------------ ------------------------
Senior long-term debt. . . . . . . . . . . . . . . . . . . . . . 2,094.4 2,338.0
Subordinated debt. . . . . . . . . . . . . . . . . . . . . . . . 1,159.6 1,257.8
Non-recourse debt of consolidated affiliates . . . . . . . . . . 896.0 672.6
Other long-term liabilities. . . . . . . . . . . . . . . . . . . 317.6 270.3
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . 350.3 470.6
Redeemable preferred stock of consolidated affiliate . . . . . . 47.5 42.3
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . 226.8 234.5
Commitments and contingencies. . . . . . . . . . . . . . . . . .
Stockholders' equity:
Series E preferred stock. . . . . . . . . . . . . . . . . . . 115.0 115.0
Common stock (90.4 and 71.2 shares outstanding) . . . . . . . 849.0 574.3
Retained earnings (accumulated deficit) . . . . . . . . . . . (136.2) 101.6
Foreign currency translation adjustment . . . . . . . . . . . (154.9) (179.0)
Unamortized expense of restricted stock plan. . . . . . . . . (5.3) (4.8)
- - - - ------------------------------------------------------------------ ------------------------
Total stockholders' equity. . . . . . . . . . . . . . . . 667.6 607.1
- - - - ------------------------------------------------------------------ ------------------------
Total liabilities and stockholders' equity . . . . . . . . . . . $ 6,760.5 $ 6,836.7
------------------------
------------------------
</TABLE>
*Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
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STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
(in millions except per share) 1994 1993 1994 1993
- - - - -------------------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,482.2 $ 1,242.6 $ 4,127.3 $ 3,816.5
Cost of products sold. . . . . . . . . . . . . . . . . . . . 1,183.4 1,058.9 3,367.4 3,179.4
Selling, general and administrative expenses . . . . . . . . 147.7 135.6 418.1 402.9
Depreciation and amortization. . . . . . . . . . . . . . . . 89.7 81.2 267.5 257.1
Equity loss from affiliates. . . . . . . . . . . . . . . . . .4 1.9 6.1 5.6
Other operating (income) expense-net . . . . . . . . . . . . 1.0 .4 (32.4) 3.3
Other (income) expense-net . . . . . . . . . . . . . . . . . (21.3) 4.2 (13.2) 1.1
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
Income (loss) before interest expense, income taxes,
minority interest, extraordinary losses and cumulative
effects of accounting changes. . . . . . . . . . . . . . . 81.3 (39.6) 113.8 (32.9)
Interest expense . . . . . . . . . . . . . . . . . . . . . . (113.9) (107.2) (338.1) (311.3)
- - - - ------------------------------------------------------------- ------------ ------------ ------------ -------------
Loss before income taxes, minority interest, extraordinary
losses and cumulative effects of accounting changes. . . . (32.6) (146.8) (224.3) (344.2)
Credit for income taxes. . . . . . . . . . . . . . . . . . . 5.4 48.7 65.4 113.4
Minority interest. . . . . . . . . . . . . . . . . . . . . . (1.7) (1.1) .3 (2.7)
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
Loss before extraordinary losses and cumulative effect of
accounting changes . . . . . . . . . . . . . . . . . . . . (28.9) (99.2) (158.6) (233.5)
Extraordinary losses from early extinguishments of debt
(net of $26.6 and $36.5 income tax benefits) . . . . . . . (44.8) -- (61.6) --
Cumulative effect of change in accounting for
postemployment benefits (net of $9.5 income tax benefit) . -- -- (14.2) --
Cumulative effect of change in accounting for
postretirement benefits (net of $23.3 income tax benefit). -- -- -- (39.5)
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . (73.7) (99.2) (234.4) (273.0)
Preferred stock dividends. . . . . . . . . . . . . . . . . . (2.0) (2.0) (6.0) (6.0)
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
Net loss applicable to common shares . . . . . . . . . . . . $ (75.7) $ (101.2) $ (240.4) $ (279.0)
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
Retained earnings (accumulated deficit),
beginning of period. . . . . . . . . . . . . . . . . . . . $ (72.8) $ 318.2 $ 101.6 $ 496.0
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . (73.7) (99.2) (234.4) (273.0)
Cash dividends on preferred stock. . . . . . . . . . . . . . -- -- (8.0) (4.0)
Unrealized gain on marketable equity security
(net of income tax benefit). . . . . . . . . . . . . . . . 10.3 -- 4.6 --
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
Retained earnings (accumulated deficit), end of period . . . $ (136.2) $ 219.0 $ (136.2) $ 219.0
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Per share of common stock:
Loss before extraordinary losses and cumulative effects
of accounting changes. . . . . . . . . . . . . . . . . . . $ (.34) $ (1.42) $ (1.89) $ (3.36)
Extraordinary losses from early extinguishments of debt. . . (.50) -- (.70) --
Cumulative effect of change in accounting for
postemployment benefits. . . . . . . . . . . . . . . . . . -- -- (.16) --
Cumulative effect of change in accounting for
postretirement benefits. . . . . . . . . . . . . . . . . . -- -- -- (.56)
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . $ (.84) $ (1.42) $ (2.75) $ (3.92)
- - - - ------------------------------------------------------------- ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Common shares and common share equivalents
outstanding (weighted average, in millions). . . . . . . . 90.4 71.2 87.5 71.2
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
2
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STONE CONTAINER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
(in millions) 1994 1993 1994 1993
- - - - ---------------------------------------------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . $ (73.7) $ (99.2) $ (234.4) $ (273.0)
Adjustments to reconcile net loss to net cash
used in operating activities:
Extraordinary losses from early extinguishments of
debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 44.8 -- 61.6 --
Cumulative effect of change in accounting for
postemployment benefits . . . . . . . . . . . . . . . . . -- -- 14.2 --
Cumulative effect of change in accounting for
postretirement benefits . . . . . . . . . . . . . . . . . -- -- -- 39.5
Depreciation and amortization. . . . . . . . . . . . . . . 89.7 81.2 267.5 257.1
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . (10.9) (37.9) (75.1) (97.5)
Other--net . . . . . . . . . . . . . . . . . . . . . . . . (3.7) (12.0) (45.6) (12.4)
Changes in current assets and liabilities-net of
adjustments for dispositions:
Increase in accounts and notes receivable--net . . . . . (68.6) (33.2) (150.0) (35.9)
(Increase) decrease in inventories . . . . . . . . . . . (26.5) 29.6 30.3 32.1
Decrease (increase) in other current assets. . . . . . . 7.2 24.2 (29.6) 14.8
Increase (decrease) in accounts payable and
other current liabilities . . . . . . . . . . . . . . . 35.5 (63.4) 56.6 (37.4)
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
Net cash used in operating activities. . . . . . . . . . . . (6.2) (110.7) (104.5) (112.7)
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 74.1 418.7 825.5 552.3
Payments made on debt. . . . . . . . . . . . . . . . . . . . (3.6) (251.2) (920.5) (300.7)
Payments by consolidated affiliates on non-recourse
debt . . . . . . . . . . . . . . . . . . . . . . . . . . . (16.9) (10.9) (47.7) (21.6)
Proceeds from issuance of common stock, net. . . . . . . . . -- -- 276.3 --
Refund of letter of credit . . . . . . . . . . . . . . . . . -- -- (20.6) --
Cash dividends . . . . . . . . . . . . . . . . . . . . . . . -- -- (8.0) (4.0)
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
Net cash provided by financing activities. . . . . . . . . . 53.6 156.6 105.0 226.0
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . (67.0) (40.1) (133.2) (103.6)
Proceeds from sales of assets. . . . . . . . . . . . . . . . -- 11.5 18.9 14.7
Other--net . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 (15.1) 2.7 (42.8)
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
Net cash used in investing activities. . . . . . . . . . . . (59.1) (43.7) (111.6) (131.7)
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
Effect of exchange rate changes on cash. . . . . . . . . . . 1.2 1.2 3.3 .7
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents . . . . (10.5) 3.4 (107.8) (17.7)
Cash and cash equivalents, beginning of period . . . . . . . 150.1 37.8 247.4 58.9
- - - - ------------------------------------------------------------- ---------- ---------- ---------- ----------
Cash and cash equivalents, end of period . . . . . . . . . . $ 139.6 $ 41.2 $ 139.6 $ 41.2
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See Note 11 regarding non-cash investing and financing activities and
supplemental cash flow information.
Unaudited; subject to year-end audit
The accompanying notes are an integral part of these statements.
3
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STONE CONTAINER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
Pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC") for Form 10-Q, the financial statements, footnote disclosures and other
information normally included in the financial statements prepared in accordance
with generally accepted accounting principles have been condensed. These
financial statements, footnote disclosures and other information should be read
in conjunction with the financial statements and the notes thereto included in
Stone Container Corporation's (the "Company's") latest Annual Report on Form
10-K. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to fairly present the
Company's financial position as of September 30, 1994 and the results of
operations and cash flows for the three and nine month periods ended September
30, 1994 and 1993.
NOTE 2: RESTATEMENTS
Certain prior year amounts in the Company's Consolidated Statements of
Operations and Retained Earnings (Accumulated Deficit) and Consolidated
Statements of Cash Flows have been restated to conform with the current year
presentation.
NOTE 3: SUBSEQUENT EVENT
On October 12, 1994, the Company sold $500 million principal amount of 10 3/4
percent First Mortgage Notes due October 1, 2002 ("the 10 3/4 percent First
Mortgage Notes") and $200 million principal amount of 11 1/2 percent Senior
Notes due October 1, 2004 ("the 11 1/2 percent Senior Notes") (hereafter
referred together as the "October 1994 Offering"). The 10 3/4 percent First
Mortgage Notes and the 11 1/2 percent Senior Notes are redeemable by the Company
after September 30, 1999 and interest is payable semi-annually on April 1 and
October 1, commencing April 1, 1995. Net proceeds from the sale of the
securities were approximately $679.1 million.
Concurrent with the October 1994 Offering, the Company (i) entered into a
new credit agreement (the "Credit Agreement") consisting of a $400 million
senior secured term loan maturing April 1, 2000, a $450 million senior secured
revolving credit facility commitment maturing May 15, 1999 and a $25 million
swing-line sub-facility maturing May 15, 1999 (any borrowings under the swing-
line sub-facility would reduce the borrowing availability under the revolving
credit facility), (ii) repaid all of the outstanding indebtedness and
commitments under its bank credit agreements which included two term loan
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facilities, two revolving credit facilities and an additional term loan (the
"1989 Credit Agreement") which were then terminated, (iii) merged the Company's
93 percent owned subsidiary Stone Savannah River Pulp & Paper Corporation
("Stone Savannah") into a wholly-owned subsidiary of the Company and, (iv) as
described below, repaid or acquired Stone Savannah's outstanding indebtedness,
preferred stock and common stock (collectively, the "October 1994 Related
Transactions"). In connection with the Stone Savannah merger, the Company (i)
repaid all the indebtedness outstanding under and terminated Stone Savannah's
bank credit agreement, (ii) called for redemption the $130 million principal
amount of Stone Savannah's 14 1/8 percent Senior Subordinated Notes due 2000 at
a redemption price equal to the applicable premium percentage of the principal
amount plus accrued interest, (iii) called for redemption the 425,243
outstanding shares of Series A Cumulative Redeemable Exchangeable Preferred
Stock of Stone Savannah not owned by the Company for approximately $52 million,
equal to the applicable premium percentage of the principal amount plus accrued
and unpaid dividends, which will be paid by the Company on November 14, 1994 and
(iv) acquired the 72,346 outstanding shares of common stock of Stone Savannah
not owned by the Company. The completion of the October 1994 Offering, together
with the October 1994 Related Transactions, has extended the scheduled
amortization obligations and final maturities of more than $1 billion of the
Company's indebtedness and improved the Company's liquidity and financial
flexibility by, among other things, providing for the $450 million senior
secured revolving credit facility commitment under the Credit Agreement. At
October 31, 1994, the Company had borrowing availability of approximately $343
million under its revolving credit facility inclusive of a letter of credit of
approximately $61 million securing certain obligations with a respect to the
Company's Florence, South Carolina cogeneration facility issued under the
revolving credit facility.
As a result of the completion of the October 1994 Offering and the October
1994 Related Transactions, the Company's 1994 third quarter results reflect a
charge of $44.8 million, net of income tax benefit, for the write-off of
unamortized deferred debt issuance costs and other costs associated with the
debt that was repaid. Such charge is reflected as an extraordinary loss from the
early extinguishment of debt in the Company's Consolidated Statement of
Operations and Retained Earnings (Accumulated Deficit) for the three and nine
month periods ended September 30, 1994.
Borrowings under the Credit Agreement are secured by a significant portion
of the assets of the Company. The Credit Agreement contains covenants that
include, among other things, the maintenance of certain financial tests and
ratios consisting of an indebtedness ratio and a minimum interest coverage ratio
and certain restrictions and limitations, including those on capital
expenditures, changes in control, payment of dividends, sales of assets, lease
payments, investments, additional borrowings, liens, repurchases or prepayment
of certain indebtedness, guarantees of indebtedness, mergers and purchases of
stock and assets. The
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Credit Agreement also contains cross-default provisions to the indebtedness of
$10 million or more of the Company and certain subsidiaries, as well as cross-
acceleration provisions to the non-recourse debt of $10 million or more of
Stone-Consolidated, Inc. ("Stone-Consolidated"), Seminole Kraft Corporation
("Seminole") and Stone Venepal Consolidated Pulp Inc. ("SVCPI"). Additionally,
the term loan portion of the Credit Agreement provides for mandatory prepayments
from sales of certain assets, certain debt financings and a percentage of excess
cash flow (as defined). The amortizations for each semi-annual period is 1/2 of
1 percent of the principal amount of the outstanding term loans and all
mandatory and voluntary prepayments are allocated against the term loan
amortizations in inverse order of maturity. Mandatory prepayments from sales of
collateral, unless replacement collateral is provided, will be applied ratably
to the term loan and revolving credit facility, permanently reducing the loan
commitments under the Credit Agreement. Further, the Credit Agreement limits,
except in certain specific circumstances, any additional investments by the
Company in Stone-Consolidated, Seminole and SVCPI.
Under the Credit Agreement, the Company may choose among various interest
rate options for the revolving credit facility and the term loan and specify the
interest rate period to which the interest rate options are to apply, subject to
certain parameters. The applicable interest rates will be: (i) under the
revolving credit facility (a) the higher of (1) Bankers Trust Company's prime
rate and (2) the Federal Funds Effective Rate plus 1/2 of 1 percent (the
alternative base rate ("ABR")), plus, in the case of (1) or (2), 1 5/8 percent
per annum or (b) the London Interbank Offered Rate ("LIBOR") plus 2 5/8 percent
per annum; (ii) under the swing-line sub-facility, ABR plus 1 5/8 percent per
annum and (iii) under the term loan, ABR plus 2 1/8 percent per annum or LIBOR
plus 3 1/8 percent per annum. Upon achievement of specified indebtedness ratios
and cash flow coverage ratios or other performance related tests, the interest
rate margins for the revolving credit facility (including the swing-line sub-
facility) will be reduced. Additionally, the Company will pay a 1/2 percent
commitment fee on the unused portions of the revolving credit facility. Further,
the Company will pay a fee on letters of credit issued under the revolving
credit facility at a rate equal to the greater of (i) the spread over LIBOR
applicable to the revolving credit facility minus 1/2 percent and (ii) 1 percent
plus a negotiated facing fee to the financial institution issuing the letter of
credit.
NOTE 4: ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits" ("SFAS
112"), which requires accrual accounting for the estimated costs of providing
certain benefits to former or inactive employees and the employees'
beneficiaries and dependents after employment but before retirement. Upon
adoption of SFAS 112, the Company recorded the catch-up obligation
(approximately $24 million) by recognizing a one-time, non-cash charge of $14.2
million, net of
6
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income tax benefit, as a cumulative effect of an accounting change in its 1994
first quarter Consolidated Statement of Operations and Retained Earnings
(Accumulated Deficit).
In accordance with the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS 115"), the Company, at September 30, 1994, recorded a $4.6
million credit directly to stockholders' equity to reflect an unrealized gain on
an investment in an equity security, net of income tax. The aggregate fair value
and carrying value of the investment in the equity security at September 30,
1994, was approximately $28.1 million and $21.1 million (exclusive of the
unrealized gain), respectively.
NOTE 5: INSURANCE MATTERS
In the 1994 second quarter, a digester vessel ruptured at the Company's pulp and
paperboard mill in Panama City, Florida causing extensive damage to certain of
the facility's assets. As a result of this occurrence, the Company's results for
the nine months ended September 30, 1994 include a $22 million pretax
involuntary conversion gain (approximately $13.7 million after taxes). The
Company is seeking recovery for both the losses to property and the losses as a
result of business interruption arising from the Panama City occurrence.
A partial recovery of $20 million has already been received by the Company from
certain carriers and claims of approximately $66 million covering the major
portion of such losses are still pending. The insurance carrier providing boiler
and machinery coverage for the Company has denied the Company's claim; the
Company has not accepted such denial. In addition, the all-risks insurance
carriers, which would cover the losses not covered under the boiler and
machinery coverage, have reserved their rights with respect to the Company's
claim in order to investigate the application of coverage without prejudicing
their rights. Management believes the receivable recorded on its financial
statements is fully recoverable.
NOTE 6: FINANCING ACTIVITIES
In February 1994, the Company sold $710 million principal amount of 9 7/8
percent Senior Notes due February 1, 2001 and 18.97 million shares of common
stock for an additional $289.3 million at $15.25 per common share (the "February
1994 Offerings"). The net proceeds from the February 1994 Offerings of
approximately $962 million, were used as follows: (i) approximately $652 million
was used to prepay all of the 1995 and portions of the 1996 and 1997 scheduled
amortizations under the Company's 1989 Credit Agreement including the ratable
amortization payment under the revolving credit facilities of the 1989 Credit
Agreement; (ii) approximately $98 million principal amount, plus accrued
interest to the redemption date was used to redeem the Company's 13 5/8 percent
Subordinated Notes due 1995 at a price equal to par; (iii) approximately $136
million was used to repay the outstanding borrowings under the Company's
revolving credit facilities without reducing the commitments thereunder; and
(iv) provided incremental liquidity in the form of cash.
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The 9 7/8 percent Senior Notes are redeemable by the Company on or after
February 1, 1999. Interest is payable semi-annually commencing August 1, 1994
and continuing each February 1 and August 1 until maturity.
In the first quarter of 1994, the Company incurred a charge to earnings of
$16.8 million related to unamortized debt issuance costs, net of income tax
benefit, as a result of the debt prepayments related to the February 1994
Offerings described above. Such non-cash charge is included in the total
extraordinary losses from the early extinguishments of debt reflected in the
Company's Consolidated Statement of Operations and Retained Earnings
(Accumulated Deficit) for the nine months ended September 30, 1994.
NOTE 7: LIQUIDITY MATTERS
Due to industry conditions during the past few years and due principally to
depressed product prices and significant interest costs attributable to the
Company's highly leveraged capital structure, the Company incurred net losses in
each of the last three years and for the first nine months of 1994 and will
report a net loss for the 1994 fiscal year. Such net losses have significantly
impaired the Company's liquidity and available sources of liquidity.
The Company improved its liquidity and financial flexibility through the
completion of: (i) the October 1994 Offering and the October 1994 Related
Transactions; and (ii) the February 1994 Offerings. Notwithstanding these
improvements in the Company's liquidity and financial flexibility, the Company
will be required in the future to generate sufficient cash flows to fully meet
the Company's debt service requirements. In the event the Company cannot
maintain its current price levels, the Company may deplete a substantial portion
of its cash resources and borrowing availability under the revolving credit
facilities of the Credit Agreement. In such event, the Company would be required
to pursue other alternatives to improve liquidity, including further cost
reductions, additional sales of assets, the deferral of certain capital
expenditures and/or obtaining additional sources of funds. There can be no
assurance that such measures, if required, would generate the liquidity required
by the Company to operate its business and service its indebtedness. Beginning
in 1997 (assuming successful refinancing of the Company's two existing accounts
receivable securitization programs) and continuing thereafter, the Company will
be required to make significant amortization payments on its existing
indebtedness which will require the Company to raise sufficient funds from
operations and/or other sources and/or refinance or restructure maturing
indebtedness. No assurance can be given that the Company will be successful in
doing so.
8
<PAGE>
The financial resources of certain of the Company's consolidated affiliates
are not available to the Company due to restrictive financial covenants
contained in debt instruments of such affiliates and are also limited in
availability by tax and other considerations. Such financial covenants have not
been satisfied to date and are not likely to be satisfied in 1994. There can be
no assurance that such financial covenants will be met in the future.
Pursuant to an output purchase agreement entered into in 1986 with
Seminole, the Company is obligated to purchase from Seminole and Seminole is
obligated to sell to the Company all of Seminole's linerboard production.
Seminole produces 100 percent recycled linerboard and is dependent upon an
adequate supply of recycled fiber, in particular old corrugated containers
("OCC"). Under the agreement, the Company paid fixed prices for linerboard,
which generally exceeded market prices, until June 3, 1994. Subsequent to this
date, the Company began purchasing linerboard at market prices and will continue
to do so for the remainder of the agreement. Because market prices for
linerboard were less than the fixed prices previously in effect under the output
purchase agreement and due to recent significant increases in the cost of
recycled fiber, Seminole did not comply with certain financial covenants at
September 30, 1994 and accordingly, has received waivers and amendments with
respect to such covenants from its bank lenders for periods up to and including
June 30, 1995. There can be no assurance that Seminole will not require
additional waivers in the future or, if required, that the lenders will grant
them. Furthermore, in the event that management determines that it is probable
that Seminole will not be able to comply with any covenant contained in the
Seminole credit agreement within twelve months after the waiver of a violation
of such covenant, then certain Seminole debt would be reclassified as short-term
debt under the provisions of Emerging Issues Task Forces Issue No. 86-30
"Classification of Obligations When a Violation is Waived By the Creditor."
Depending upon the level of market prices and the cost and supply of recycled
fiber, Seminole may need to undertake additional measures to meet its financial
covenants and its debt service requirements, including obtaining additional
sources of funds or liquidity, postponing or restructuring of debt service
payments or refinancing the indebtedness. In the event that such measures are
required and are not successful, and such indebtedness is accelerated by the
respective lenders to Seminole, the lenders to the Company under the Credit
Agreement and various other of its debt instruments would be entitled to
accelerate the indebtedness owed by the Company.
As a result of the February 1994 Offerings, the "dividend pool" established
by the restrictions on payment of dividends under the Senior Subordinated
Indenture dated March 15, 1992 relating to the Company's 10 3/4 percent Senior
Subordinated Notes due June 15, 1997, its 11 percent Senior Subordinated Notes
due August 15, 1999 and its 10 3/4 percent Senior Subordinated Debenture due
April 1, 2002 was replenished from the sale of the common shares. On May 16,
1994, the Company paid both a regular quarterly cash dividend of $.4375 per
share and a cumulative cash dividend of $1.3125 per share on the Company's $1.75
Series E Cumulative Convertible Exchangeable Preferred Stock ("Series E
Cumulative Preferred
9
<PAGE>
Stock"), to stockholders of record on April 15, 1994. The cumulative cash
dividend fully satisfied all accumulated dividends in arrears on the Series E
Cumulative Preferred Stock at that time. As a result of net losses, the dividend
pool has been subsequently depleted and, accordingly, the Company's Board of
Directors did not declare the scheduled August 15, 1994 or the November 15, 1994
quarterly dividends on the Series E Cumulative Preferred Stock. In the event the
Company has six quarterly dividends which remain unpaid on the Series E
Cumulative Preferred Stock, the holders of the Series E Cumulative Preferred
Stock would have the right to elect two members to the Company's Board of
Directors until the accumulated dividends on such Series E Cumulative Preferred
Stock have been declared and paid or set apart for payment. The dividend pool
under the Credit Agreement will be calculated from October 1, 1994. Irrespective
of the amount of the dividend pool under the Credit Agreement, the Credit
Agreement permits dividends to be paid on the Series E Cumulative Preferred
Stock if there is available dividend pool under the Senior Subordinated
Indenture dated March 15, 1992.
The Company is continuing to pursue its financial strategy of enhancing its
liquidity and financial flexibility by evaluating certain alternatives related
to certain of its non-core assets, including the U.S. wood products business. As
an initial step in achieving this objective, the Company on September 27, 1994,
announced the closure of three wood products facilities in the Pacific
Northwest. The operations of the closed facilities had been consolidated with
other wood product operations of the Company in the Northwest. The impact of
such closures did not have a material effect on the Company's 1994 third quarter
results of operations.
NOTE 8: INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
September 30, December 31,
(in millions) 1994 1993
- - - - --------------------------------------------------- ---------- ----------
<S> <C> <C>
Raw materials and supplies . . . . . . . . . . . . $ 330.2 $ 333.8
Paperstock*. . . . . . . . . . . . . . . . . . . . 246.3 284.2
Work in process. . . . . . . . . . . . . . . . . . 20.0 16.8
Finished products--converting facilities . . . . . 111.2 99.5
- - - - --------------------------------------------------- ----------- -----------
707.7 734.3
Excess of current cost over LIFO inventory value . (14.7) (14.9)
----------- -----------
Total inventories. . . . . . . . . . . . . . . . . $ 693.0 $ 719.4
----------- -----------
----------- -----------
<FN>
*Includes linerboard, corrugating medium, kraft paper, newsprint, market pulp
and groundwood paper.
</TABLE>
10
<PAGE>
At September 30, 1994 and December 31, 1993, the percentage of total
inventories costed by the LIFO, FIFO and average cost methods were as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
---------- -----------
<S> <C> <C>
LIFO . . . . . . . . . . . . 40% 44%
FIFO . . . . . . . . . . . . 7% 6%
Average Cost . . . . . . . . 53% 50%
</TABLE>
NOTE 9: CURRENT MATURITIES OF LONG-TERM DEBT
Current maturities of long-term debt at September 30, 1994 and December 31, 1993
consisted of the following components:
<TABLE>
<CAPTION>
September 30, December 31,
(in millions) 1994 1993
- - - - -------------------------------------------------- ---------- ----------
<S> <C> <C>
Senior debt. . . . . . . . . . . . . . . . . . . . $ 272.9 $ 17.7
Subordinated debt. . . . . . . . . . . . . . . . . -- 4.9
Non-recourse debt of consolidated affiliates . . . 21.8 290.5
- - - - ---------------------------------------------------- ---------- ----------
Total current maturities of long-term debt . . . . $ 294.7 $ 313.1
---------- ----------
---------- ----------
</TABLE>
Stone Savannah debt, which was classified as current at December 31, 1993
in accordance with Emerging Issues Task Force Issue No. 86-30, "Classification
of Obligations when a Violation is Waived by the Creditor", is classified as
long-term at September 30, 1994 as such debt has been refinanced as described in
Note 3. The current maturities at September 30, 1994 include borrowings
outstanding under the Company's two accounts receivable securitization programs
which are scheduled to mature on September 15, 1995. The Company is currently
planning to refinance its two existing accounts receivable securitization
programs. The proposed refinancing transaction is currently contemplated to
approximate at least $300 million of receivables financing which would have a 5
year maturity. The proposed refinancing is subject to execution of definitive
documentation and the selling of notes by a financial subsidiary of the Company
to provide funding for such receivables financing. There can be no assurance
such financing transaction will be consummated.
11
<PAGE>
NOTE 10: SUMMARY FINANCIAL INFORMATION FOR STONE SOUTHWEST CORPORATION
Shown below is consolidated, summarized financial information for Stone
Southwest, Inc. (formerly known as Southwest Forest Industries, Inc.). The
summarized financial information for Stone Southwest, Inc. does not include
purchase accounting adjustments or the impact of the debt incurred to finance
the acquisition of Stone Southwest, Inc.:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
(in millions) 1994 1993 1994 1993
- - - - --------------------------------- -------- -------- ------- --------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . $ 444.4 $ 409.2 $1,272.3 $1,256.5
Cost of products sold and
depreciation . . . . . . . . . 359.8 354.1 1,073.3 1,052.4
Income (loss) before cumulative
effects of accounting
changes. . . . . . . . . . . . 14.5 (6.4) 21.4 (3.9)
Cumulative effect of change in
accounting for postemployment
benefits (net of $2.5 income
tax benefit) . . . . . . . . . -- -- (3.9) --
Cumulative effect of change in
accounting for postretirement
benefits (net of $5.2 income
tax benefit) . . . . . . . . . -- -- -- (8.3)
Net income (loss). . . . . . . . 14.5 (6.4) 17.5 (12.2)
<CAPTION>
September 30, December 31,
(in millions) 1994 1993
- - - - ---------------------------------------------------- ---------- ----------
<S> <C> <C>
Current assets . . . . . . . . . . . . . . . . . . $ 370.7 $ 360.9
Noncurrent assets* . . . . . . . . . . . . . . . . 1,629.3 1,600.5
Current liabilities. . . . . . . . . . . . . . . . 154.3 141.3
Noncurrent liabilities and obligations . . . . . . 404.0 395.8
<FN>
*Includes $879.6 and $857.4 due from the Company at September 30, 1994 and
December 31, 1993, respectively.
</TABLE>
12
<PAGE>
NOTE 11: ADDITIONAL CASH FLOW STATEMENT INFORMATION
The Company's non-cash investing and financing activities and cash payments for
interest and income taxes were as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
(in millions) 1994 1993 1994 1993
- - - - ------------------------------------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Non-cash investing and financing activities:
Unrealized gain on an investment in an
equity security (net of income
tax expense) . . . . . . . . . . . . . . . $ 10.3 $ -- $ 4.6 $ --
Preferred stock dividends issued by a
consolidated affiliate . . . . . . . . . . 4.9 1.9 4.9 4.8
Other . . . . . . . . . . . . . . . . . . . -- -- (1.3) .2
Cash paid (refunded) during the periods for:
Interest (net of capitalization). . . . . . $ 108.4 $ 89.6 $ 299.1 $ 277.9
Income taxes. . . . . . . . . . . . . . . . (20.9) (28.4) (18.3) (20.7)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
NOTE 12: COMMITMENTS AND CONTINGENCIES
Pursuant to an agreement with Venezolana de Pulpa y Papel ("Venepal") in
conjunction with the Company's and Venepal's partnership in SVCPI, a 50 percent
owner of a Castlegar, British Columbia market pulp mill, Venepal has the right,
under certain circumstances, to exchange its interest in SVCPI for Series F
Cumulative Exchangeable Convertible Preferred Stock ("Series F Preferred Stock")
of the Company. The Series F Preferred Stock, which would be granted in exchange
for the SVCPI interest, is valued at approximately $23.0 million. In the event
of an Exchange Event and an election by Venepal to effect the Exchange, the
Company has the option of paying cash in lieu of issuing shares of Series F
Preferred Stock. Venepal currently has the right to exchange its interest in
SVCPI. At this time, the Company has not been informed of Venepal's decision of
whether or not Venepal will exercise its right. In the event such exercise
occurs, SVCPI would be consolidated with the Company.
13
<PAGE>
STONE CONTAINER CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended September 30,
-----------------------------------------------
1994 1993
--------------------- ----------------------
Percent of Percent of
(dollars in millions) Amount net sales Amount net sales
- - - - --------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . $1,482.2 100.0% $1,242.6 100.0%
Cost of products sold. . . . . . . . . . . . . 1,183.4 79.8 1,058.9 85.2
Selling, general and administrative expenses . 147.7 10.0 135.6 10.9
Depreciation and amortization. . . . . . . . . 89.7 6.1 81.2 6.5
Equity loss from affiliates. . . . . . . . . . .4 -- 1.9 .2
Other operating (income) expense-net . . . . . 1.0 -- .4 --
Other (income) expense-net . . . . . . . . . . (21.3) (1.4) 4.2 .4
--------- --------- ---------- ---------
Income (loss) before interest expense, income
taxes, minority interest, extraordinary loss
and cumulative effects of accounting
changes . . . . . . . . . . . . . . . . . . . 81.3 5.5 (39.6) (3.2)
Interest expense . . . . . . . . . . . . . . . (113.9) (7.7) (107.2) (8.6)
--------- --------- --------- ---------
Loss before income taxes, minority interest,
extraordinary loss and cumulative effects of
accounting changes. . . . . . . . . . . . . . (32.6) (2.2) (146.8) (11.8)
Credit for income taxes. . . . . . . . . . . . 5.4 .4 48.7 3.9
Minority interest. . . . . . . . . . . . . . . (1.7) (.1) (1.1) (.1)
--------- --------- --------- ---------
Loss before extraordinary loss and cumulative
effects of accounting changes . . . . . . . . (28.9) (1.9) (99.2) (8.0)
Extraordinary loss from early extinguishment of
debt (net of $26.6 income tax benefit). . . . (44.8) (3.0) -- --
Cumulative effect of change in accounting for
postemployment benefits . . . . . . . . . . . -- -- -- --
Cumulative effect of change in accounting for
postretirement benefits . . . . . . . . . . . -- -- -- --
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . . $ (73.7) (4.9) $ (99.2) (8.0)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
14
<PAGE>
RESULTS OF OPERATIONS (continued)
<TABLE>
<CAPTION>
Nine months ended September 30,
-----------------------------------------------
1994 1993
--------------------- ----------------------
Percent of Percent of
(dollars in millions) Amount net sales Amount net sales
- - - - --------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . $4,127.3 100.0% $3,816.5 100.0%
Cost of products sold. . . . . . . . . . . . . 3,367.4 81.6 3,179.4 83.3
Selling, general and administrative expenses . 418.1 10.1 402.9 10.6
Depreciation and amortization. . . . . . . . . 267.5 6.5 257.1 6.8
Equity loss from affiliates. . . . . . . . . . 6.1 .1 5.6 .1
Other operating (income) expense-net . . . . . (32.4) (.8) 3.3 .1
Other (income) expense-net . . . . . . . . . . (13.2) (.3) 1.1 --
--------- --------- --------- ---------
Income (loss) before interest expense, income
taxes, minority interest, extraordinary losses
and cumulative effect of accounting changes . 113.8 2.8 (32.9) (.9)
Interest expense . . . . . . . . . . . . . . . (338.1) (8.2) (311.3) (8.1)
--------- --------- --------- ---------
Loss before income taxes, minority interest,
extraordinary losses and cumulative effects
of accounting changes . . . . . . . . . . . . (224.3) (5.4) (344.2) (9.0)
Credit for income taxes. . . . . . . . . . . . 65.4 1.6 113.4 2.9
Minority interest. . . . . . . . . . . . . . . .3 -- (2.7) --
Loss before extraordinary losses and --------- --------- --------- ---------
cumulative effects of accounting changes. . . (158.6) (3.8) (233.5) (6.1)
Extraordinary losses from early extinguishment
of debt (net of $36.5 income tax benefit) . . (61.6) (1.5) -- --
Cumulative effect of change in accounting for
postemployment benefits (net of $9.5 income
tax benefit). . . . . . . . . . . . . . . . . (14.2) (.4) -- --
Cumulative effect of change in accounting for
postretirement benefits (net of $23.3 income
tax benefit). . . . . . . . . . . . . . . . . -- -- (39.5) (1.0)
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . . $ (234.4) (5.7) $ (273.0) (7.1)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
15
<PAGE>
The Company incurred a loss before an extraordinary loss from the early
extinguishment of debt of $28.9 million, or $.34 per share of common stock, for
the three months ended September 30, 1994. The Company recorded an extraordinary
loss from the early extinguishment of debt (see Note 3) of $44.8 million, or
$.50 per share common stock, resulting in a net loss for the 1994 third quarter
of $73.7 million, or $.84 per share of common stock. The Company incurred a net
loss of $99.2 million, or $1.42 per share of common stock, for the third quarter
of 1993.
For the nine months ended September 30, 1994, the loss before the
extraordinary losses from the early extinguishments of debt and the cumulative
effect of a change in the accounting for postemployment benefits ("SFAS 112")
was $158.6 million, or $1.89 per share of common stock. The Company recorded
extraordinary losses from the early extinguishments of debt totalling $61.6
million, net of income tax benefit, or $.70 per share of common stock and a one-
time, non-cash charge of $14.2 million, net of income tax benefit, or $.16 per
share of common stock, to reflect the cumulative effect of adopting of SFAS 112,
resulting in a net loss for the nine months ended September 30, 1994 of $234.4
million, or $2.75 per share of common stock. For the nine months ended September
30, 1993, the loss before the cumulative effect of a change in the accounting
for postretirement benefits other than pensions ("SFAS 106") was $233.5 million,
or $3.36 per share of common stock. The adoption of SFAS 106 resulted in a one-
time, non-cash cumulative effect charge of $39.5 million, net of income tax
benefit, or $.56 per share of common stock, resulting in a net loss of $273.0
million, or $3.92 per share of common stock, for the nine months ended September
30, 1993.
Net sales for the three and nine month periods ended September 30, 1994
increased 19.3 percent and 8.1 percent, respectively, over the comparable prior
year periods. Net sales for the first nine months of 1993 included sales of the
Company's European folding carton operations, which in the early part of 1993
were merged into a joint venture, and accordingly are now accounted for under
the equity method of accounting. Sales from these operations were approximately
$60 million for the nine months ended September 30, 1993. Excluding the effect
of the folding carton operations, sales for the first nine months of 1994
increased 9.9 percent over the prior year period.
The increase in net sales for the 1994 third quarter, as compared to the
prior year period, primarily resulted from increased sales of corrugated
containers, paperboard, newsprint, market pulp and paper bags and sacks. The
sales increases for corrugated containers and paperboard reflect both increased
sales volume and higher average selling prices. The sales increase for market
pulp reflect higher average selling prices. The increase in newsprint sales was
primarily a result of increased sales volume, with higher average selling prices
also contributing to the increase. Sales of paper bags and sacks reflect
improved average selling prices for retail bags and increased multi-wall bag
sales volume.
16
<PAGE>
Net sales for the nine months ended September 30, 1994 increased, as
compared to the 1993 period, due to sales increases for corrugated containers,
paperboard, newsprint, market pulp and paper bags and sacks. The increase in
sales of corrugated containers reflect both increased sales volume and higher
average selling prices. The sales increases for paperboard and newsprint mainly
reflect higher volume. Market pulp sales increased as a result of significantly
higher average selling prices coupled with improved sales volume. The sales
increase for paper bags and sacks resulted from volume increases.
Shipments of corrugated containers, including the Company's proportionate
share of the shipments by its foreign affiliates, were 14.3 billion square feet
for the third quarter of 1994, compared with 13.6 billion square feet for the
comparable prior year period. For the first nine months of 1994, the Company
shipped 40.4 billion square feet of corrugated containers, compared with 39.8
billion square feet shipped during the first nine months of 1993. The 1993
shipments included 49 percent of the shipments by the Company's previously owned
non-consolidated affiliate Empaques de Carton Titan, S.A. ("Titan"). The Company
sold its 49 percent equity interest in Titan in December 1993. Excluding
shipments from Titan, the Company's shipments of corrugated containers for the
third quarter and for the first nine months of 1994 increased 1.1 billion square
feet, or 8.4 percent, and 2.1 billion square feet, or 5.4 percent, respectively,
over the comparable 1993 periods. Shipments of paper bags and sacks were 164
thousands tons and 486 thousand tons for the three and nine month periods ended
September 30, 1994, respectively, compared with 156 thousand tons and 459
thousand tons shipped during the comparable 1993 periods.
Production of containerboard and kraft paper for the three and nine month
periods ended September 30, 1994, including 100 percent of the production at
Seminole Kraft Corporation ("Seminole") and Stone Savannah River Pulp & Paper
Corporation ("Stone Savannah"), was 1.29 million tons and 3.88 million tons,
respectively, compared to 1.17 million tons and 3.58 million tons produced
during the comparable prior year periods. Excluding the proportionate share of
the 1993 production of Titan, production of containerboard and kraft paper for
the three and nine month periods ended September 30, 1994 increased 140 thousand
tons, or 12.1 percent, and 338 thousand tons, or 9.6 percent, respectively,
compared to the prior year periods.
Production of newsprint, market pulp and groundwood paper for the three and
nine month periods ended September 30, 1994, including 100 percent of the
production at Stone-Consolidated Inc. ("Stone-Consolidated"), the Company's 74.6
percent owned Canadian subsidiary, and 25 percent of the production at the
Company's affiliated market pulp mill in British Columbia, was 650 thousand tons
and 1.92 million tons, respectively, compared with 611 thousand tons and 1.86
million tons produced during the comparable prior year periods.
17
<PAGE>
Earnings before interest expense and the credit for income taxes increased
$120.9 million and $146.7 million for the three months and nine months ended
September 30, 1994, respectively, over the comparable prior year periods. The
increase for the third quarter of 1994 primarily reflects improved product
pricing for corrugated containers, paperboard, market pulp and newsprint, which
more than offset an increase in recycled fiber costs of approximately $36
million. The increase for the nine months ended September 30, 1994 over the
comparable prior year period primarily reflects improved product pricing for
corrugated containers and market pulp, which more than offset an increase in
recycled fiber costs of approximately $60 million. The results for the first
nine months of 1994 include a $22 million pre-tax involuntary conversion gain
associated with a digester rupture at the Company's Panama City, Florida pulp
and paperboard mill in the second quarter of 1994 (see "Outlook").
Additionally, the Company's results include foreign currency transaction gains
of $12.2 million and foreign currency transaction losses of $3.7 million for the
third quarter and first nine months of 1994, respectively, as compared with
foreign currency transaction losses of $7.7 million and $12.8 million,
respectively, for the comparable prior year periods. Partially offsetting the
improvement in earnings before interest expense and income taxes for these
periods, however, were higher interest expense and a decrease in the credit for
income taxes.
FINANCIAL CONDITION AND LIQUIDITY
The Company's working capital ratio was 1.8 to 1 at September 30, 1994 and 1.9
to 1 at December 31, 1993. The Company's long-term debt to total capitalization
ratio was 76.3 percent at September 30, 1994 and 75.9 percent at December 31,
1993. Capitalization, for purposes of this ratio, includes long-term debt (which
includes debt of certain consolidated affiliates which is non-recourse to the
Company), deferred income taxes, redeemable preferred stock, minority interest
and stockholders' equity.
The Company's primary capital requirements consist of debt service and
capital expenditures, including capital investment for compliance with certain
environmental legislation requirements and ongoing maintenance expenditures and
improvements. After giving effect to the October 1994 Offering and the October
1994 Related Transactions, as described in Note 3, the Company continues to be
highly leveraged and will continue to incur substantial ongoing interest
expense. No significant debt amortization obligations are due until June 1997
other than for the September 1995 maturities of Stone Financial Corporation
("Stone Fin") and Stone Fin II Receivables Corporation ("Stone Fin II"), which
the Company plans to refinance.
18
<PAGE>
Concurrent with the October 1994 Offering, the Company (i) entered into a
new credit agreement (the "Credit Agreement") consisting of a $400 million
senior secured term loan maturing April 1, 2000, a $450 million senior secured
revolving credit facility commitment maturing May 15, 1999 and a $25 million
swing-line sub-facility maturing May 15, 1999 (any borrowings under the swing-
line sub-facility would reduce the borrowing availability under the revolving
credit facility), (ii) repaid all of the outstanding indebtedness and
commitments under its bank credit agreements which included two term loan
facilities, two revolving credit facilities and an additional term loan (the
"1989 Credit Agreement") which were then terminated, (iii) merged the Company's
93 percent owned subsidiary Stone Savannah River Pulp & Paper Corporation
("Stone Savannah") into a wholly-owned subsidiary of the Company and, (iv) as
described below, repaid or acquired Stone Savannah's outstanding indebtedness,
preferred stock and common stock (collectively, the "October 1994 Related
Transactions"). In connection with the Stone Savannah merger, the Company (i)
repaid all the indebtedness outstanding under and terminated Stone Savannah's
bank credit agreement, (ii) called for redemption the $130 million principal
amount of Stone Savannah's 14 1/8 percent Senior Subordinated Notes due 2000 at
a redemption price equal to the applicable premium percentage of the principal
amount plus accrued interest, (iii) called for redemption the 425,243
outstanding shares of Series A Cumulative Redeemable Exchangeable Preferred
Stock of Stone Savannah not owned by the Company for approximately $52 million,
equal to the applicable premium percentage of the principal amount plus accrued
and unpaid dividends, which will be paid by the Company on November 14, 1994
and (iv) acquired the 72,346 outstanding shares of common stock of Stone
Savannah not owned by the Company. The completion of the October 1994
Offering, together with the October 1994 Related Transactions, has extended
the scheduled amortization obligations and final maturities of more than $1
billion of the Company's indebtedness and improved the Company's liquidity and
financial flexibility by, among other things, providing for the $450 million
senior secured revolving credit facility commitment under the Credit Agreement.
At October 31, 1994, the Company had borrowing availability of approximately
$343 million under its revolving credit facility inclusive of a letter of
credit of approximately $61 million securing certain obligations with a respect
to the Company's Florence, South Carolina cogeneration facility issued under the
revolving credit facility. For the nine months ended September 30, 1994, the
term loans (other than the Additional Term Loan) and the revolving credit
facilities under the 1989 Credit Agreement had weighted average interest rates
of 9.4 percent and 7.3 percent, respectively. The weighted average interest rate
on the Additional Term Loan was 7.0 percent for the nine months ended September
30, 1994. The weighted average rates as reflected above do not include the
effect of the amortization of deferred debt issuance costs.
19
<PAGE>
Borrowings under the Credit Agreement are secured by a significant portion
of the assets of the Company. The Credit Agreement contains covenants that
include, among other things, the maintenance of certain financial tests and
ratios consisting of an indebtedness ratio and a minimum interest coverage ratio
and certain restrictions and limitations, including those on capital
expenditures, changes in control, payment of dividends, sales of assets, lease
payments, investments, additional borrowings, liens, repurchases or prepayment
of certain indebtedness, guarantees of indebtedness, mergers and purchases of
stock and assets. The Credit Agreement also contains cross-default provisions to
the indebtedness of $10 million or more of the Company and certain subsidiaries,
as well as cross-acceleration provisions to the non-recourse debt of $10 million
or more of Stone-Consolidated, Seminole and Stone Venepal Consolidated Pulp Inc.
("SVCPI"). Additionally, the term loan portion of the Credit Agreement provides
for mandatory prepayments from sales of certain assets, certain debt financings
and a percentage of excess cash flow (as defined). The amortizations for each
semi-annual period is 1/2 of 1 percent of the principal amount of the
outstanding term loans and all mandatory and voluntary prepayments are allocated
against the term loan amortizations in inverse order of maturity. Mandatory
prepayments from sales of collateral, unless replacement collateral is provided,
will be applied ratably to the term loan and revolving credit facility,
permanently reducing the loan commitments under the Credit Agreement. Further,
the Credit Agreement limits, except in certain specific circumstances, any
additional investments by the Company in Stone-Consolidated, Seminole, and
SVCPI.
Pursuant to an output purchase agreement entered into in 1986 with
Seminole, the Company is obligated to purchase from Seminole and Seminole is
obligated to sell to the Company all of Seminole's linerboard production.
Seminole produces 100 percent recycled linerboard and is dependent upon an
adequate supply of recycled fiber, in particular old corrugated container
("OCC"). Under the agreement, the Company paid fixed prices for linerboard,
which generally exceeded market prices, until June 3, 1994. Subsequent to this
date, the Company began purchasing linerboard at market prices and will continue
to do so for the remainder of the agreement. Because market prices for
linerboard were less than the fixed prices previously in effect under the output
purchase agreement and due to recent significant increases in the cost of
recycled fiber, Seminole did not comply with certain financial covenants at
September 30, 1994 and accordingly, has received waivers and amendments with
respect to such covenants from its bank lenders for periods up to and including
June 30, 1995. There can be no assurance that Seminole will not require
additional waivers in the future or, if required, that the lenders will grant
them. Furthermore, in the event that management determines that it is probable
that Seminole will not be able to comply with any covenant contained in the
Seminole credit agreement within twelve months after the waiver of a violation
of such covenant, then certain Seminole debt would be reclassified as short-term
debt under the provision of Emerging Issues Task Forces Issue No. 86-30
"Classification of Obligations When a Violation is Waived By the Creditor."
Depending upon the level of market prices and the cost supply of recycled fiber,
Seminole may need to undertake additional measures to meet
20
<PAGE>
its financial covenants and its debt service requirements, including obtaining
additional sources of funds or liquidity, postponing or restructuring of debt
service payments or refinancing the indebtedness. In the event that such
measures are required and are not successful, and such indebtedness is
accelerated by the respective lenders to Seminole, the lenders to the Company
under the Credit Agreement and various other of its debt instruments would be
entitled to accelerate the indebtedness owed by the Company.
The financial resources of certain of the Company's consolidated affiliates
are not available to the Company due to restrictive financial covenants
contained in debt instruments of such affiliates and are also limited in
availability by tax and other considerations. Such financial covenants have not
been satisfied to date and are not likely to be satisfied in 1994. There can be
no assurance that such financial covenants will be met in the future.
The Company is currently planning to refinance its two existing accounts
receivable securitization programs. The proposed refinancing transaction is
currently contemplated to approximate at least $300 million of receivables
financing, which would have a 5 year maturity. The proposed refinancing is
subject to execution of definitive documentation and the selling of notes by a
financial subsidiary of the Company to provide funding for such receivables
financing. There can be no assurance such financing transaction will be
consummated.
OPERATING ACTIVITIES:
Net cash used in operating activities was $104.5 million for the nine months
ended September 30, 1994, compared with $112.7 million for the comparable period
of 1993. This improvement in operating cash flows primarily reflects the
favorable effects from the decrease in the loss (before the extraordinary losses
and the non-cash, cumulative effects of accounting changes), an increase in
accounts payable and other current liabilities, a decrease in the credit for
deferred taxes and proceeds received from insurance claims. Partially offsetting
these favorable effects were increases in accounts and notes receivable and
other current assets as compared with the prior year period.
FINANCING ACTIVITIES:
In February 1994, the Company sold $710 million principal amount of 9 7/8
percent Senior Notes due February 1, 2001 and 18.97 million shares of common
stock for an additional $289.3 million at $15.25 per common share (the "February
1994 Offerings"). The net proceeds from the February 1994 Offerings of
approximately $962 million, were used as follows: (i) approximately $652 million
was used to prepay all of the 1995 and portions of the 1996 and 1997 scheduled
amortizations under the Company's 1989 Credit Agreement including the ratable
amortization payment under the revolving credit facilities of the 1989 Credit
Agreement; (ii) approximately $98 million principal amount, plus accrued
interest to the redemption date
21
<PAGE>
was used to redeem the Company's 13 5/8 percent Subordinated Notes due 1995 at
a price equal to par; (iii) approximately $136 million was used to repay the
outstanding borrowings under the Company's revolving credit facilities without
reducing the commitments thereunder; and (iv) provided incremental liquidity in
the form of cash. The 9 7/8 percent Senior Notes are redeemable by the Company
on or after February 1, 1999. Interest is payable semi-annually commencing
August 1, 1994 and continuing each February 1 and August 1 until maturity.
As a result of the February 1994 Offerings, the "dividend pool" established
by the restrictions on payment of dividends under the Senior Subordinated
Indenture dated March 15, 1992 relating to the Company's 10 3/4 percent Senior
Subordinated Notes due June 15, 1997, its 11 percent Senior Subordinated Notes
due August 15, 1999 and its 10 3/4 percent Senior Subordinated Debenture due
April 1, 2002 was replenished from the sale of the common shares. On May 16,
1994, the Company paid both a regular quarterly cash dividend of $.4375 per
share and a cumulative cash dividend of $1.3125 per share on the Company's $1.75
Series E Cumulative Convertible Exchangeable Preferred Stock ("Series E
Cumulative Preferred Stock"), to stockholders of record on April 15, 1994. The
cumulative cash dividend fully satisfied all accumulated dividends in arrears on
the Series E Cumulative Preferred Stock at that time. As a result of net losses,
the dividend pool has been subsequently depleted and, accordingly, the Company's
Board of Directors did not declare the scheduled August 15, 1994 or the November
15, 1994 quarterly dividends on the Series E Cumulative Preferred Stock. In the
event the Company has six quarterly dividends which remain unpaid on the Series
E Cumulative Preferred Stock, the holders of the Series E Cumulative Preferred
Stock would have the right to elect two members to the Company's Board of
Directors until the accumulated dividends on such Series E Cumulative Preferred
Stock have been declared and paid or set apart for payment. The dividend pool
under the Credit Agreement will be calculated from October 1, 1994. Irrespective
of the amount of the dividend pool under the Credit Agreement, the Credit
Agreement permits dividends to be paid on the Series E Cumulative Preferred
Stock if there is available dividend pool under the Senior Subordinated
Indenture dated March 15, 1992.
INVESTING ACTIVITIES:
Capital expenditures for the nine months ended September 30, 1994 totalled
$133.2 million.
OUTLOOK:
Due to industry conditions during the past few years and due principally to
depressed product prices and significant interest costs attributable to the
Company's highly leveraged capital structure, the Company incurred net losses in
each of the last three years and for the first nine months of 1994 and will
report a net loss for the 1994 fiscal year. Such net losses have significantly
impaired the Company's liquidity and available sources of liquidity.
22
<PAGE>
The Company's product lines generally experienced declining product prices
from 1990 through the third quarter of 1993. Since October 1, 1993, the Company
has been successful in implementing price increases for most of its products.
Prices for the Company's products continued to improve throughout 1994 with
significant price improvements occurring across its product lines. While
there can be no assurance that prices will continue to increase or even be
maintained at present levels, the Company believes that the supply/demand
characteristics for its product lines have improved which could allow for
further price increases for these product lines. Although certain competitors in
the containerboard industry have announced plans for some future capacity
increases, the Company does not believe that such capacity increases will
significantly affect the favorable supply/demand characteristics.
Wood fiber and recycled fiber, the principal raw materials in the
manufacture of the Company's products, are purchased in highly competitive,
price sensitive markets. These raw materials have historically exhibited price
and demand cyclicality. In addition, the supply and price of wood fiber, in
particular, is dependent upon a variety of factors over which the Company has no
control, including environmental and conservation regulations, natural
disasters, such as forest fires and hurricanes, and weather.
The Company purchases or cuts a variety of species of timber from which the
Company utilizes wood fiber depending upon the product being manufactured and
each mill's geographic location. A decrease in the supply of wood fiber has
caused, and will likely continue to cause, higher wood fiber costs in some of
the regions in which the Company procures wood. In addition, the increase in
demand for products manufactured, in whole or in part, from recycled fiber had
caused a shortage of recycled fiber, particularly OCC used in the manufacture
of premium priced recycled containerboard and related products. The Company's
paperboard and paper packaging products use a large volume of recycled fiber.
In 1993, the Company processed approximately 1.9 million tons of recycled
fiber. The Company used approximately 1.25 million tons of OCC in its products
in 1993.
During the second and third quarters of 1994, costs of recycled fiber had
increased significantly primarily reflecting a shortage of OCC. While recycled
fiber costs are declining from the third quarter levels, such costs for the 1994
fourth quarter are expected to remain higher than those incurred during the
comparable period of 1993. There can be no assurance that recycled fiber costs
will not again escalate in the future. Additionally, while the Company has not
experienced any significant difficulty in obtaining wood fiber and recycled
fiber in economic proximity to its mills, there can be no assurances that this
will continue to be the case for any or all of its mills.
23
<PAGE>
The Company improved its liquidity and financial flexibility through the
completion of: (i) the October 1994 Offering and the October 1994 Related
Transactions as described in Note 3; and (ii) the February 1994 Offerings.
Notwithstanding these improvements in the Company's liquidity and financial
flexibility, the Company will be required in the future to generate sufficient
cash flows to fully meet the Company's debt service requirements. In the event
the Company cannot maintain its current price levels, the Company may deplete a
substantial portion of its cash resources and borrowing availability under the
revolving credit facilities of the Credit Agreement. In such event, the Company
would be required to pursue other alternatives to improve liquidity, including
further cost reductions, additional sales of assets, the deferral of certain
capital expenditures and/or obtaining additional sources of funds. There can be
no assurance that such measures, if required, would generate the liquidity
required by the Company to operate its business and service its indebtedness.
Beginning in 1997 (assuming successful refinancing of the Company's two existing
accounts receivable securitization programs) and continuing thereafter, the
Company will be required to make significant amortization payments on its
existing indebtedness which would require the Company to raise sufficient funds
from operations and/or other sources and/or refinance or restructure maturing
indebtedness. No assurance can be given that the Company will be successful in
doing so.
The Company is continuing to pursue its financial strategy of enhancing its
liquidity and financial flexibility by evaluating certain alternatives related
to certain of its non-core assets, including the U.S. wood products business. As
an initial step in achieving this objective, the Company on September 27, 1994,
announced the closure of three wood products facilities in the Pacific
Northwest. The operations of the closed facilities had been consolidated with
other wood product operations of the Company in the Northwest. The impact of
such closures did not have a material effect on the Company's 1994 third quarter
results of operations.
In the 1994 second quarter, a digester vessel ruptured at the Company's pulp and
paperboard mill in Panama City, Florida causing extensive damage to certain of
the facility's assets. As a result of this occurrence, the Company's results for
the nine months ended September 30, 1994 include a $22 million pretax
involuntary conversion gain (approximately $13.7 million after taxes). The
Company is seeking recovery for both the losses to property and the losses as a
result of business interruption arising from the Panama City occurrence.
A partial recovery of $20 million has already been received by the Company from
certain carriers and claims of approximately $66 million covering the major
portion of such losses are still pending. The insurance carrier providing
boiler and machinery coverage for the Company has denied the Company's claim;
the Company has not accepted such denial. In addition, the all-risks insurance
carriers, which would cover the losses not covered under the boiler and
machinery coverage, have reserved their rights with respect to the Company's
claim in order to investigate the application of coverage without prejudicing
their rights. Management believes the receivable recorded on its financial
statements is fully recoverable.
24
<PAGE>
Pursuant to an agreement with Venezolana de Pulpa y Papel ("Venepal") in
conjunction with the Company's and Venepal's partnership in SVCPI, a 50 percent
owner of a Castlegar, British Columbia market pulp mill, Venepal has the right,
under certain circumstances, to exchange its interest in SVCPI for Series F
Cumulative Exchangeable Convertible Preferred Stock ("Series F Preferred Stock")
of the Company. The Series F Preferred Stock, which would be granted in exchange
for the SVCPI interest, is valued at approximately $23.0 million. In the event
of an Exchange Event and an election by Venepal to effect the Exchange, the
Company has the option of paying cash in lieu of issuing shares of Series F
Preferred Stock. Venepal currently has the right to exchange its interest in
SVCPI. At this time, the Company has not been informed of Venepal's decision of
whether or not Venepal will exercise its right. In the event such exercise
occurs, SVCPI would be consolidated with the Company.
25
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As a result of the April 13, 1994 digester vessel rupture at the Company's
pulp and paperboard mill in Panama City, Florida resulting in the deaths of
three employees and injuries to other employees and causing extensive damage to
certain of the facilities assets, the Occupational Safety and Health
Administration ("OSHA") conducted an investigation which on September 30, 1994,
resulted in the issuance by OSHA of citations with fines totalling $1,072,000.
The Company met informally with OSHA representatives on October 18, 1994 to
discuss the citations and related fines. The Company has determined, as a result
of this meeting, to formally protest the citations and the related fines. The
Company is not able at this time to predict the outcome of its protest.
On September 30, 1994, the Company received an Administrative Order from
Region IV of the Environmental Protection Agency ("EPA") requiring the Company
to perform a Facility Investigation at its Panama City, Florida pulp and paper
mill under the Resources Conservation and Recovery Act ("RCRA"). The Company has
challenged EPA's jurisdiction to require such an investigation and has filed a
protest and requested a hearing. The Facility Investigation would require the
Company to conduct extensive soil and groundwater testing. The Company believes
that the Panama City facility is not a RCRA facility. The Company does not know
at this time the likelihood of success in challenging EPA's order.
Notwithstanding the Company's success in challenging EPA, an owner of property
adjacent to the Panama City mill is currently subject to extensive clean-up
under RCRA and the EPA is empowered to require clean-up for materials discharged
which have travelled beyond such facilities' boundaries. The Company does not
yet know the extent, if any, of such adjacent property owner's responsibility to
remediate contamination, if any, at the Panama City mill site.
ITEM 2. CHANGES IN SECURITIES
(b) Due to restrictive covenants in certain instruments evidencing
indebtedness of the Company, the Company's Board of Directors did not declare
the scheduled $.4375 August 15, 1994 and November 15, 1994 quarterly dividends
on the Company's 4.6 million outstanding shares of $1.75 Series E Cumulative
Convertible Exchangeable Preferred Stock (the "Series E Cumulative Preferred
Stock"). In the event the Company has six quarterly dividends which remain
unpaid on the Series E Cumulative Preferred Stock, the holders of the Series E
Cumulative Preferred Stock would have the right to elect two members to the
Company's Board of Directors until the accumulated dividends thereon have been
declared and paid or set aside for payment.
26
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(b) The response to Part II Item 2(b) is incorporated by reference herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
4(a) Credit Agreement dated as of October 12, 1994 among Stone Container
Corporation, the financial institutions signatory thereto, Bankers Trust
Company, as agent, and Bank of America National Trust & Savings Association, The
Bank of New York, The Bank of Nova Scotia, Caisse Nationale de Credit Agricole,
Chemical Bank, The Chase Manhattan Bank, N.A., Dresdner Bank AG-Chicago and
Grand Caymon Branches, The First National Bank of Chicago, The Long-Term Credit
Bank of Japan, Ltd., Nationsbank of North Carolina, N.A., The Sumitomo Bank,
Ltd., Chicago Branch and The Toronto-Dominion Bank, as co-agents.
4(b) Indenture dated as of October 12, 1994 between Stone Container
Corporation and Norwest Bank Minnesota, N.A., as Trustee, relating to the 10 3/4
percent First Mortgage Notes due October 1, 2002.
4(c) Indenture dated as of October 12, 1994 between Stone Container
Corporation and The Bank of New York, as Trustee, relating to the 11 1/2 percent
Senior Notes due October 1, 2004.
27 Financial Data Schedule for the nine months ended September 30, 1994.
(b) REPORTS ON FORM 8-K
1. None.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
STONE CONTAINER CORPORATION
By: Thomas P. Cutilletta
-----------------------------------
Thomas P. Cutilletta
Senior Vice President and Corporate
Controller
(Principal Accounting Officer)
Date: November 14, 1994
28
<PAGE>
- - - - -------------------------------------------------------------------------------
- - - - -------------------------------------------------------------------------------
STONE CONTAINER CORPORATION
$850,000,000
CREDIT AGREEMENT
DATED AS OF OCTOBER 12, 1994
WITH
THE FINANCIAL INSTITUTIONS SIGNATORY HERETO,
BANKERS TRUST COMPANY,
AS AGENT,
AND
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
THE BANK OF NEW YORK,
THE BANK OF NOVA SCOTIA,
CAISSE NATIONALE DE CREDIT AGRICOLE,
CHEMICAL BANK,
THE CHASE MANHATTAN BANK, N.A.,
DRESDNER BANK AG-CHICAGO AND GRAND CAYMAN BRANCHES,
THE FIRST NATIONAL BANK OF CHICAGO,
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
NATIONSBANK OF NORTH CAROLINA, N.A.,
THE SUMITOMO BANK, LTD., CHICAGO BRANCH AND
THE TORONTO-DOMINION BANK,
AS CO-AGENTS
- - - - -------------------------------------------------------------------------------
- - - - -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . 2
Section 1.1 Definitional Appendix . . . . . . . . . . . . . . . 2
Section 1.2 Accounting Terms; Financial Statements. . . . . . . 2
ARTICLE II
LOAN PROVISIONS . . . . . . . . . . . . . . 3
Section 2.1 Loan Commitments. . . . . . . . . . . . . . . . . . 3
(a) Term Loan . . . . . . . . . . . . . . . . . . . . . 3
(b) Revolving Loans . . . . . . . . . . . . . . . . . . 3
Section 2.2 Obligations; Notes. . . . . . . . . . . . . . . . . 3
(a) Term Loan Obligations . . . . . . . . . . . . . . . 3
(b) Revolving Loan Obligations. . . . . . . . . . . . . 4
(c) Swing Line Loan Obligations . . . . . . . . . . . . 5
Section 2.3 Borrowing Options . . . . . . . . . . . . . . . . . 6
Section 2.4 Minimum Amount of Each Borrowing. . . . . . . . . . 6
Section 2.5 Notice of Borrowing . . . . . . . . . . . . . . . . 7
Section 2.6 Conversion or Continuation. . . . . . . . . . . . . 7
Section 2.7 Disbursement of Funds . . . . . . . . . . . . . . . 8
Section 2.8 Interest. . . . . . . . . . . . . . . . . . . . . . 9
(a) Prime Rate Revolving Loans. . . . . . . . . . . . . 9
(b) Eurodollar Rate Revolving Loans . . . . . . . . . . 9
(c) Prime Rate Term Loans . . . . . . . . . . . . . . . 10
(d) Eurodollar Rate Term Loans. . . . . . . . . . . . . 10
(e) Swing Line Loans. . . . . . . . . . . . . . . . . . 10
(f) Default Rate Interest . . . . . . . . . . . . . . . 10
(g) Accrual and Payment of Interest . . . . . . . . . . 10
(h) Notification of Rate. . . . . . . . . . . . . . . . 11
(i) Maximum Interest. . . . . . . . . . . . . . . . . . 11
(j) Reference Banks . . . . . . . . . . . . . . . . . . 11
Section 2.9 Interest Rate Adjustments . . . . . . . . . . . . . 12
Section 2.10 Interest Periods. . . . . . . . . . . . . . . . . . 12
Section 2.11 Swing Line Loans. . . . . . . . . . . . . . . . . . 12
(a) Swing Line Commitment . . . . . . . . . . . . . . . 12
(b) Procedure for Swing Line Borrowing. . . . . . . . . 13
(c) Refunding of Swing Line Loans . . . . . . . . . . . 13
(d) Participation in Swing Line Loans . . . . . . . . . 13
(e) Obligations Unconditional . . . . . . . . . . . . . 14
Section 2.12 Letters of Credit . . . . . . . . . . . . . . . . . 15
(a) Issuance by Facing Agent. . . . . . . . . . . . . . 15
(b) Participation of Revolving Lenders. . . . . . . . . 15
(c) Requests for Issuance . . . . . . . . . . . . . . . 16
(d) Reimbursement of Drawings . . . . . . . . . . . . . 17
(e) Failure to Reimburse. . . . . . . . . . . . . . . . 17
(f) Letter of Credit Fees . . . . . . . . . . . . . . . 18
(g) Reimbursement Obligation Unconditional. . . . . . . 19
(h) Increased Costs . . . . . . . . . . . . . . . . . . 20
<PAGE>
(i) Indemnification . . . . . . . . . . . . . . . . . . 21
(j) Letter of Credit Beneficiaries. . . . . . . . . . . 21
(k) Facing Agent. . . . . . . . . . . . . . . . . . . . 22
(l) No Indemnification for Certain Acts . . . . . . . . 22
Section 2.13 Increased Costs, Illegality, Etc. . . . . . . . . . 22
Section 2.14 Replacement of Affected Lenders . . . . . . . . . . 25
Section 2.15 Change of Lending Office. . . . . . . . . . . . . . 26
Section 2.16 Funding Losses. . . . . . . . . . . . . . . . . . . 26
Section 2.17 Pro Rata Borrowings . . . . . . . . . . . . . . . . 27
Section 2.18 Florence Letters of Credit. . . . . . . . . . . . . 27
ARTICLE III
TERMINATION OF COMMITMENTS, PREPAYMENTS
AND FEES . . . . . . . . . . . . . . . . 27
Section 3.1 Mandatory Revolving Loan and Swing Line Loan
Prepayments and Commitment Reductions . . . . . . . 27
Section 3.2 Voluntary Prepayments . . . . . . . . . . . . . . . 27
Section 3.3 Voluntary Commitment Reductions . . . . . . . . . . 28
Section 3.4 Mandatory Prepayments . . . . . . . . . . . . . . . 29
(a) Prepayments From Excess Cash Flow . . . . . . . . . 29
(b) Prepayments From Incurrence of Indebtedness . . . . 29
(c) Prepayments From Asset Sales. . . . . . . . . . . . 30
Section 3.5 Other Provisions With Respect to the Loans. . . . . 31
Section 3.6 Order of Prepayment and Payment . . . . . . . . . . 32
Section 3.7 Commitment Fees . . . . . . . . . . . . . . . . . . 34
Section 3.8 Closing Fees. . . . . . . . . . . . . . . . . . . . 34
Section 3.9 Agent's Fees. . . . . . . . . . . . . . . . . . . . 34
Section 3.10 Agent's Administrative Fee. . . . . . . . . . . . . 34
Section 3.11 Payments. . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 37
Section 4.1 Due Organization and Standing . . . . . . . . . . . 37
Section 4.2 Power and Authority . . . . . . . . . . . . . . . . 37
Section 4.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . 38
Section 4.4 No Violation of Agreements. . . . . . . . . . . . . 38
Section 4.5 Due Authorization, etc. . . . . . . . . . . . . . . 39
Section 4.6 Indebtedness for Money Borrowed . . . . . . . . . . 40
Section 4.7 Fiscal Quarters and Year. . . . . . . . . . . . . . 40
Section 4.8 Title to and Conditions of Properties . . . . . . . 40
Section 4.9 Litigation, Proceedings, Licenses, Permits. . . . . 40
Section 4.10 Governmental Consents, etc. . . . . . . . . . . . . 41
Section 4.11 Financial Statements. . . . . . . . . . . . . . . . 41
Section 4.12 No Material Adverse Change. . . . . . . . . . . . . 43
-ii-
<PAGE>
Section 4.13 Tax Returns and Payments. . . . . . . . . . . . . . 43
Section 4.14 Patents, etc. . . . . . . . . . . . . . . . . . . . 43
Section 4.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . 44
Section 4.16 Governmental Regulation . . . . . . . . . . . . . . 45
Section 4.17 Federal Reserve Regulations . . . . . . . . . . . . 46
Section 4.18 Transaction Documents . . . . . . . . . . . . . . . 46
Section 4.19 Solvency of the Borrower. . . . . . . . . . . . . . 46
Section 4.20 Certain Fees. . . . . . . . . . . . . . . . . . . . 46
Section 4.21 Environmental Matters . . . . . . . . . . . . . . . 47
Section 4.22 Disclosure. . . . . . . . . . . . . . . . . . . . . 48
Section 4.23 Survival of Warranties; Covenant Regarding
Disclosure. . . . . . . . . . . . . . . . . . . . . 48
ARTICLE V
COVENANTS. . . . . . . . . . . . . . . . 49
Section 5.1 Affirmative Covenants of the Borrower . . . . . . . 49
5.1.1 Financial Data. . . . . . . . . . . . . . . . . . . 49
5.1.2 Discharge of Taxes, etc.. . . . . . . . . . . . . . 53
5.1.3 Corporate Existence; Business . . . . . . . . . . . 54
5.1.4 Compliance With Laws. . . . . . . . . . . . . . . . 54
5.1.5 Performance of Basic Agreements . . . . . . . . . . 54
5.1.6 Inspection of Books and Properties. . . . . . . . . 54
5.1.7 Maintenance of Books and Records. . . . . . . . . . 55
5.1.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . 55
5.1.9 Insurance . . . . . . . . . . . . . . . . . . . . . 57
5.1.10 Maintenance of Properties . . . . . . . . . . . . . 57
5.1.11 Use of Proceeds . . . . . . . . . . . . . . . . . . 57
5.1.12 Lender Meeting. . . . . . . . . . . . . . . . . . . 58
5.1.13 Redemption of Senior Subordinated Notes and Stone
Savannah Stock. . . . . . . . . . . . . . . . . . . 58
5.1.14 Environmental Notification. . . . . . . . . . . . . 58
5.1.15 Environmental Compliance. . . . . . . . . . . . . . 59
5.1.16 Additional Subsidiary Guarantees. . . . . . . . . . 59
5.1.17 Delayed Collateral. . . . . . . . . . . . . . . . . 60
5.1.18 Merger of Stone Southwest.. . . . . . . . . . . . . 61
Section 5.2 Negative Covenants of the Borrower. . . . . . . . . 61
5.2.1 Liens . . . . . . . . . . . . . . . . . . . . . . . 61
5.2.2 Indebtedness for Money Borrowed . . . . . . . . . . 61
5.2.3 Guarantees. . . . . . . . . . . . . . . . . . . . . 67
5.2.4 Affiliate Transactions. . . . . . . . . . . . . . . 68
5.2.5 Dividends . . . . . . . . . . . . . . . . . . . . . 68
5.2.6 Negative Debt Covenants . . . . . . . . . . . . . . 70
5.2.7 Investments . . . . . . . . . . . . . . . . . . . . 71
5.2.8 Mergers . . . . . . . . . . . . . . . . . . . . . . 73
5.2.9 Purchase of Stock or Assets . . . . . . . . . . . . 75
5.2.10 Prepayment of Indebtedness; Certain Amendments. . . 76
5.2.11 Capital Expenditures. . . . . . . . . . . . . . . . 77
5.2.12 Sale of Assets. . . . . . . . . . . . . . . . . . . 78
5.2.13 Sale of Accounts Receivable . . . . . . . . . . . . 79
5.2.14 Subsidiaries. . . . . . . . . . . . . . . . . . . . 80
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<PAGE>
5.2.15 Lease Payments. . . . . . . . . . . . . . . . . . . 80
5.2.16 Accounts Receivable Financing Program . . . . . . . 80
Section 5.3 Financial Covenants of the Borrower . . . . . . . . 81
5.3.1 Interest Coverage Ratio . . . . . . . . . . . . . . 81
5.3.2 Indebtedness Ratio. . . . . . . . . . . . . . . . . 81
ARTICLE VI
CONDITIONS OF CREDIT . . . . . . . . . . . . . 82
Section 6.1 Conditions Precedent to the Initial Borrowing.. . . 82
Section 6.2 Conditions Precedent to all Credit Events . . . . . 85
(a) Representations and Warranties. . . . . . . . . . . 86
(b) No Default. . . . . . . . . . . . . . . . . . . . . 86
(c) Notice of Borrowing; Letter of Credit Request . . . 86
(d) Other Information . . . . . . . . . . . . . . . . . 86
ARTICLE VII
EVENTS OF DEFAULT. . . . . . . . . . . . . . 86
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . 86
(a) Payments. . . . . . . . . . . . . . . . . . . . . . 86
(b) Representations and Warranties. . . . . . . . . . . 87
(c) Certain Covenants . . . . . . . . . . . . . . . . . 87
(d) Other Covenants . . . . . . . . . . . . . . . . . . 87
(e) Bankruptcy. . . . . . . . . . . . . . . . . . . . . 87
(f) Involuntary Proceedings . . . . . . . . . . . . . . 87
(g) Indebtedness for Money Borrowed . . . . . . . . . . 88
(h) Judgments . . . . . . . . . . . . . . . . . . . . . 88
(i) Basic Agreements. . . . . . . . . . . . . . . . . . 88
(j) ERISA . . . . . . . . . . . . . . . . . . . . . . . 89
(k) Other ERISA . . . . . . . . . . . . . . . . . . . . 89
(l) Cross-Defaults. . . . . . . . . . . . . . . . . . . 89
(m) Change of Control . . . . . . . . . . . . . . . . . 89
Section 7.2 Remedies. . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE VIII
THE AGENT . . . . . . . . . . . . . . . . 91
Section 8.1 Appointment . . . . . . . . . . . . . . . . . . . . 91
Section 8.2 Nature of Duties. . . . . . . . . . . . . . . . . . 91
Section 8.3 Rights, Exculpation, Etc. . . . . . . . . . . . . . 92
Section 8.4 Employment of Agents and Counsel. . . . . . . . . . 93
Section 8.5 Reliance. . . . . . . . . . . . . . . . . . . . . . 93
Section 8.6 Indemnification . . . . . . . . . . . . . . . . . . 93
Section 8.7 Notice of Default . . . . . . . . . . . . . . . . . 94
Section 8.8 The Agent . . . . . . . . . . . . . . . . . . . . . 94
Section 8.9 Resignation by the Agent. . . . . . . . . . . . . . 94
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<PAGE>
Section 8.10 Holders of Obligations. . . . . . . . . . . . . . . 95
Section 8.11 Co-Agents . . . . . . . . . . . . . . . . . . . . . 95
ARTICLE IX
MISCELLANEOUS. . . . . . . . . . . . . . . 95
Section 9.1 No Waiver; Modifications in Writing . . . . . . . . 95
Section 9.2 Amendments. . . . . . . . . . . . . . . . . . . . . 95
Section 9.3 Certain Other Amendments. . . . . . . . . . . . . . 97
Section 9.4 Notices, etc. . . . . . . . . . . . . . . . . . . . 97
Section 9.5 Costs, Expenses and Taxes . . . . . . . . . . . . . 97
Section 9.6 Indemnification . . . . . . . . . . . . . . . . . . 98
Section 9.7 Special Expenditures. . . . . . . . . . . . . . . . 100
Section 9.8 Confirmations . . . . . . . . . . . . . . . . . . . 100
Section 9.9 Adjustment. . . . . . . . . . . . . . . . . . . . . 100
Section 9.10 Right of Setoff . . . . . . . . . . . . . . . . . . 101
Section 9.11 Execution in Counterparts . . . . . . . . . . . . . 102
Section 9.12 Binding Effect; Assignment. . . . . . . . . . . . . 102
Section 9.13 Release of Collateral . . . . . . . . . . . . . . . 106
Section 9.14 Consent to Jurisdiction . . . . . . . . . . . . . . 108
Section 9.15 Governing Law . . . . . . . . . . . . . . . . . . . 109
Section 9.16 Severability of Provisions. . . . . . . . . . . . . 109
Section 9.17 Headings. . . . . . . . . . . . . . . . . . . . . . 109
Section 9.18 Time. . . . . . . . . . . . . . . . . . . . . . . . 109
Section 9.19 Further Assurances. . . . . . . . . . . . . . . . . 109
Section 9.20 Florida Real Property . . . . . . . . . . . . . . . 109
Section 9.21 Treatment of Seminole Kraft . . . . . . . . . . . . 110
DEFINITIONAL APPENDIX. . . . . . . . . . . . . . . . Appendix-Page 1
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<PAGE>
INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 1.1(a) - Form of Stone Container Security Agreement
Exhibit 1.1(b)-A - Form of Stone Savannah Security Agreement
Exhibit 1.1(b)-B - Form of Stone Southwest Security Agreement
Exhibit 1.1(c) - Form of Subsidiary Guarantee
Exhibit 1.1(d)-A - Form of Mortgage
Exhibit 1.1(d)-B - Form of Leasehold Mortgage
Exhibit 1.1(e) - Recourse Receivables Financings
Exhibit 2.2(a) - Form of Term Note
Exhibit 2.2(b) - Form of Revolving Note
Exhibit 2.2(c) - Form of Swing Line Note
Exhibit 2.5 - Form of Notice of Borrowing
Exhibit 2.6 - Form of Notice of Conversion or Continuation
Exhibit 2.11(d) - Form of Swing Line Loan Participation Certificate
Exhibit 2.12 - Form of Request for Issuance/Amendment
of Letter of Credit
Exhibit 3.11(c) - Form of Tax Certificate
Exhibit 4.11(b) - Pro Forma Consolidated Balance Sheet
Exhibit 4.11(c) - Forecasts
Exhibit 5.1.1 - Form of Officer's Certificate pursuant to Section
5.1.1
Exhibit 6.1(h) - Form of Opinion of Sidley & Austin
Exhibit 6.1(m) - Form of Certificate of Responsible Officer pursuant
to Section 6.1(m)
Exhibit 6.1(o)-A - Form of Gelco Corporation L/C Agreement Amendment
Exhibit 6.1(o)-B - Form of Westinghouse Electric Corporation L/C
Agreement Amendment
Exhibit 9.12(d) - Form of Assignment Agreement
SCHEDULES
Schedule 1.1(a) - Loan Commitments
Schedule 1.1(b) - Performance Tests
Schedule 1.1(c) - Mortgaged Properties
Schedule 1.1(d) - Permitted Liens
Schedule 3.4 - Existing Contractual Restrictions
Schedule 4.3 - Subsidiaries of the Borrower
Schedule 4.4 - Consents and Approvals
Schedule 4.6 - Indebtedness for Money Borrowed
Schedule 4.8 - Title to and Conditions of Properties
Schedule 4.10 - Governmental Consents
Schedule 4.11(d) - Material Liabilities
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<PAGE>
Schedule 4.12 - Public Filings
Schedule 4.15 - Pension Liabilities Relating to Stone-
Canada and Subsidiaries of Stone-
Canada
Schedule 4.21 - Environmental Matters
Schedule 5.2.2 - IRBs and IRB Put Contracts
Schedule 5.2.3 - Guarantees
Schedule 5.2.4 - Affiliate Transactions
Schedule 5.2.6 - Encumbrances and Restrictions
Schedule 5.2.7 - Investments
Schedule 5.2.7-A - Commitments and Contracts
Schedule 6.1(g) - Title Insurance relating to Mortgaged
Properties
Schedule 9.13(a) - Collateral Subject to Release Upon
Revolver Termination
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<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of October 12, 1994 and is made by
and among Stone Container Corporation, a Delaware corporation (the "BORROWER"),
the undersigned financial institutions in their capacities as lenders hereunder
(hereinafter collectively, the "LENDERS," and each individually, a "LENDER"),
Bankers Trust Company, as agent (the "AGENT") for the Lenders hereunder, and
Bank of America National Trust & Savings Association, The Bank of New York, The
Bank of Nova Scotia, Caisse Nationale de Credit Agricole, Chemical Bank, The
Chase Manhattan Bank, N.A., Dresdner Bank AG-Chicago and Grand Cayman Branches,
The First National Bank of Chicago, The Long-Term Credit Bank of Japan, Ltd.,
NationsBank of North Carolina, N.A., The Sumitomo Bank, Ltd., Chicago Branch and
The Toronto-Dominion Bank, as co-agents for the Lenders (collectively, the "CO-
AGENTS," and each individually, a "CO-AGENT").
RECITALS:
A. The Borrower has requested the Lenders to make a Term Loan to the
Borrower in the aggregate principal amount of $400,000,000 and to make available
Revolving Loans to the Borrower under a revolving credit facility (including a
letter of credit subfacility and a swing line facility), subject to certain
restrictions set forth herein, in an aggregate principal amount not to exceed
$450,000,000 at any time outstanding.
B. The proceeds of the Term Loan, Revolving Loans, Letters of Credit
and Swing Line Loans made or issued hereunder will be used by the Borrower (i)
to provide all or a portion of the funds necessary to repay in full all of the
indebtedness outstanding under the U.S. Credit Agreement on the Closing Date;
(ii) to make loans and/or capital contributions on the Closing Date to Stone-
Canada, which will, concurrently therewith, repay all of the indebtedness
outstanding under the Canadian Credit Agreements; (iii) to provide all or a
portion of the funds necessary to repay all of the indebtedness outstanding
under the Stone Savannah Credit Agreement on the Closing Date and to consummate
the Stone Savannah Transactions; (iv) in the case of Letters of Credit, to meet
the ordinary course of business letter of credit needs of the Borrower and its
Subsidiaries; and (v) for ongoing working capital and general corporate purposes
of the Borrower and its Subsidiaries.
C. The Lenders are willing to make the Term Loan and to extend
commitments to make the Revolving Loans and Swing Line Loans, and to issue or
participate, as the case may be, in Letters of Credit, to the Borrower, in each
case for the respective purposes stated above on the terms and subject to the
conditions hereinafter set forth.
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<PAGE>
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 DEFINITIONAL APPENDIX. Unless the context otherwise
requires, each capitalized term used herein, including the preamble and recitals
above, and defined in the attached Definitional Appendix (which shall be deemed
to be a part of this Agreement) shall have the meaning ascribed to such term in
the Definitional Appendix.
Section 1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS. All accounting
terms used herein and not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with generally accepted
accounting principles in the United States of America or Canada, as applicable,
as in effect on the date hereof (as applicable, the "AGREEMENT ACCOUNTING
PRINCIPLES"); and except as otherwise expressly provided herein, all
computations and determinations for purposes of determining compliance with the
financial requirements of this Agreement shall be made in accordance with such
generally accepted accounting principles. Notwithstanding the foregoing
sentence, the financial statements required to be delivered pursuant to SECTION
5.1.1 shall be prepared in accordance with generally accepted accounting
principles in the United States or Canada, as applicable, as in effect on the
respective dates of their preparation. Where the Handbook of the Canadian
Institute of Chartered Accountants includes a statement on a method of
accounting relating to a Canadian Subsidiary of the Borrower, such statement
shall be regarded as the only generally accepted accounting principle in effect
in Canada applicable to the circumstances that it covers. Notwithstanding the
foregoing, other than for purposes of the financial statements referenced in
SECTIONS 5.1.1(b)(i) and 5.1.1(c)(i), in all computations of Capital
Expenditures, Consolidated Current Assets, Consolidated Current Liabilities,
Consolidated Net Income, Consolidated Net Loss, Consolidated Net Worth,
Consolidated Tangible Net Worth, Total Consolidated Indebtedness for Borrowed
Money and all other "consolidated" amounts, and in all computations referred to
in the third sentence of SECTION 5.1.1(b) and clause (z) of the second sentence
of SECTION 5.1.1(c), the assets, liabilities, income, losses, net worth and
other relevant amounts concerning Seminole Kraft, S-CC and SVCPI shall not be
consolidated but shall instead, as applicable, be excluded or accounted for
utilizing the equity method.
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<PAGE>
ARTICLE II
LOAN PROVISIONS
Section 2.1 LOAN COMMITMENTS.
(a) TERM LOAN. Each Term Lender severally, and for itself alone,
hereby agrees, on the terms and subject to the conditions hereinafter set forth
and in reliance upon the representations and warranties set forth herein and in
the other Loan Documents, to make a loan to the Borrower on the Closing Date to,
but not including, the Term Loan Maturity Date, in an aggregate principal amount
equal to the Term Loan Commitment of such Lender. Each Term Lender's Term Loan
Commitment shall expire immediately and without further action on the Closing
Date if the Term Loan is not made on the Closing Date. The Borrower may only
make a Borrowing under the Term Loan Commitments on the Closing Date. No amount
of the Term Loan which is repaid or prepaid by the Borrower may be reborrowed
hereunder. The Term Loan shall be a Prime Rate Loan unless and until converted,
in whole or in part, to a Eurodollar Rate Loan pursuant to this Agreement;
PROVIDED, HOWEVER, that Eurodollar Rate Term Loans shall only have Interest
Periods of one month during the first ninety (90) days following the date
hereof.
(b) REVOLVING LOANS. Each Revolving Lender severally, and for itself
alone, agrees, on the terms and subject to the conditions hereinafter set forth
and in reliance upon the representations and warranties set forth herein and in
the other Loan Documents, to make loans to the Borrower on a revolving basis
from time to time from and after the Closing Date to, but not including, the
Revolver Termination Date, in its Revolving Loan Pro Rata Share of such
aggregate amount as the Borrower may request, but not exceeding in an aggregate
principal amount at any one time outstanding (giving effect to the
contemporaneous application of any Revolving Loan proceeds to the payment of any
L/C Obligations, Florence L/C Obligations or Swing Line Loans) the applicable
Revolving Loan Commitment of such Revolving Lender at such time MINUS (i) such
Revolving Lender's Revolving Loan Pro Rata Share of the L/C Obligations
outstanding at such time, (ii) such Revolving Lender's Revolving Loan Pro Rata
Share of Florence L/C Obligations outstanding at such time and (iii) such
Revolving Lender's Revolving Loan Pro Rata Share of Swing Line Loans outstanding
at such time. Prior to the Revolver Termination Date, Revolving Loans may be
repaid and reborrowed by the Borrower in accordance with the provisions hereof.
Section 2.2 OBLIGATIONS; NOTES
(a) TERM LOAN OBLIGATIONS. The Borrower's obligation to each Term
Lender to repay the principal of, and interest on, the Term Loan made hereunder
shall be evidenced by a promissory note (each a "TERM NOTE" and collectively the
"TERM NOTES") duly
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executed and delivered by the Borrower substantially in the form of EXHIBIT
2.2(a) hereto, the terms of which are incorporated herein by reference in their
entirety and made a part hereof and shall (i) be payable to the order of each
Term Lender (except in the case of a Registered Note which shall be made payable
to such Term Lender or registered assigns) in the amount of such Lender's Term
Loan Commitment, (ii) be dated the Closing Date, (iii) provide that the Term
Loan evidenced thereby shall mature on the Term Loan Maturity Date, (iv) bear
interest as provided in this Agreement and (v) have attached thereto a principal
payments schedule substantially in the form of the Schedule to EXHIBIT 2.2(a).
Each Term Lender shall, and is hereby authorized to, make a notation on the
principal payments schedule of the date and the amount of any principal
payments. Such schedules as maintained by each Term Lender shall, absent
manifest error, constitute PRIMA FACIE evidence of the amount outstanding under
the Term Loan. Notwithstanding the foregoing, the failure to make a notation
with respect to any principal payment shall not limit or otherwise affect the
obligation of the Borrower hereunder or under any Term Note with respect to the
Term Loan and payments of principal or interest by the Borrower shall not be
affected by the failure by any Term Lender to make a notation thereof on the
principal payments schedule nor shall such failure or error affect any rights of
the Borrower hereunder or under applicable law. Subject to the earlier
acceleration or prepayment of the Term Loan as permitted or required by this
Agreement, the Borrower shall repay the outstanding principal balance of the
Term Loan in semi-annual installments payable to the order of the respective
Term Lenders (according to their Term Loan Pro Rata Shares) on the dates and in
the respective aggregate amounts as follows:
<TABLE>
<CAPTION>
Payment Date Amount
------------ ------
<S> <C>
April 1, 1995 $2,000,000
October 1, 1995 $2,000,000
April 1, 1996 $2,000,000
October 1, 1996 $2,000,000
April 1, 1997 $2,000,000
October 1, 1997 $2,000,000
April 1, 1998 $2,000,000
October 1, 1998 $2,000,000
April 1, 1999 $2,000,000
October 1, 1999 $190,000,000
April 1, 2000 $192,000,000
</TABLE>
(b) REVOLVING LOAN OBLIGATIONS. The Borrower's obligations to each
Revolving Lender to repay the principal of, and interest on, all of the
Revolving Loans made by each Revolving Lender hereunder shall be evidenced by a
promissory note (each a "REVOLVING NOTE" and collectively the "REVOLVING NOTES")
duly executed and delivered by the Borrower substantially in the form of EXHIBIT
2.2(b) hereto, the terms of which are incorporated herein by reference in their
entirety and made a part hereof and shall (i)
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<PAGE>
be payable to the order of each Revolving Lender in the amount of such Lender's
Revolving Loan Commitment, (ii) be dated the Closing Date, (iii) provide that
each Revolving Loan evidenced thereby shall be repaid on the Revolver
Termination Date as provided herein, (iv) bear interest as provided in this
Agreement and (v) have attached thereto a principal payments schedule
substantially in the form of the Schedule to EXHIBIT 2.2(b). On the Closing
Date and at the time of the making of each Revolving Loan or principal payment,
as the case may be, such Revolving Lender shall, and is hereby authorized to,
make a notation on the principal payments schedule with respect to such Lender's
Revolving Note of the date and the amount of each Revolving Loan or payment, as
the case may be. Such schedule as maintained by each Revolving Lender shall,
absent manifest error, constitute PRIMA FACIE evidence of the amounts
outstanding under the Revolving Loans. Notwithstanding the foregoing, the
failure by any Revolving Lender to make a notation with respect to any Revolving
Loan shall not limit or otherwise affect the obligation of the Borrower
hereunder or under such Lender's Revolving Note with respect to such Revolving
Loan and payments of principal by the Borrower shall not be affected by the
failure to make a notation thereof on the principal payments schedule nor shall
such failure or error affect any rights of the Borrower hereunder or under
applicable law. Although the Revolving Notes shall be dated the Closing Date,
interest in respect thereof shall be payable only for the periods during which
the Revolving Loans evidenced thereby are outstanding and although the stated
amount of the Revolving Notes shall be equal to each Revolving Lender's
Revolving Loan Commitment, each Revolving Note shall be enforceable with respect
to the Borrower's obligation to pay the principal amount thereof only to the
extent of the unpaid principal amount of the Revolving Loans at the time
evidenced thereby. Subject to the earlier acceleration or prepayment of the
Revolving Loans as permitted or required by this Agreement, the Borrower shall
repay all Revolving Loans then outstanding on the Revolver Termination Date.
(c) SWING LINE LOAN OBLIGATIONS. The Borrower's obligation to the
Swing Line Lender to repay the principal of, and interest on, all of the Swing
Line Loans made by the Swing Line Lender hereunder shall be evidenced by a
promissory note (the "SWING LINE NOTE") duly executed and delivered by the
Borrower substantially in the form of EXHIBIT 2.2(c) hereto, the terms of which
are incorporated herein by reference in their entirety and made a part hereof
and shall (i) be payable to the order of the Swing Line Lender in the amount of
the Swing Line Commitment, (ii) be dated the Closing Date, (iii) provide that
each Swing Line Loan evidenced thereby shall be repaid as provided herein, (iv)
bear interest as provided in this Agreement and (v) have attached thereto a
principal payments schedule substantially in the form of the schedule to EXHIBIT
2.2(c). On the Closing Date and at the time of the making of each Swing Line
Loan or principal payment, as the case may be, the Swing Line Lender shall, and
is hereby authorized to, make a notation on the principal payments schedule
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<PAGE>
to the Swing Line Note of the date and the amount of each Swing Line Loan or
payment, as the case may be. Such schedule as maintained by the Swing Line
Lender shall, absent manifest error, constitute PRIMA FACIE evidence of the
amounts outstanding under the Swing Line Loans. Notwithstanding the foregoing,
the failure by the Swing Line Lender to make a notation with respect to any
Swing Line Loan shall not limit or otherwise affect the obligation of the
Borrower hereunder or under the Swing Line Lender's Swing Line Note with respect
to such Swing Line Loan and payments of principal by the Borrower shall not be
affected by the failure to make a notation thereof on the principal payments
schedule nor shall such failure or error affect any rights of the Borrower
hereunder or under applicable law. Although the Swing Line Note shall be dated
the Closing Date, interest in respect thereof shall be payable only for the
periods during which the Swing Line Loans evidenced thereby are outstanding and
although the stated amount of the Swing Line Note shall be equal to the Swing
Line Commitment, the Swing Line Note shall be enforceable with respect to the
Borrower's obligation to pay the principal amount thereof only to the extent of
the unpaid principal amount of the Swing Line Loans at the time evidenced
thereby. Subject to the earlier acceleration or prepayment of the Swing Line
Loans as permitted or required by this Agreement, the Borrower shall repay all
Swing Line Loans outstanding on the Revolver Termination Date.
Section 2.3 BORROWING OPTIONS. The Term Loan and the Revolving
Loans shall, at the option of the Borrower and except as otherwise provided in
this Agreement, consist of (i) Prime Rate Loans, (ii) Eurodollar Rate Loans or
(iii) part Prime Rate Loans and part Eurodollar Rate Loans, provided that all
Loans made pursuant to the same Borrowing shall be of the same Type. As to any
Eurodollar Rate Loan, any Lender may, if it so elects, fulfill its commitment to
make such Loan by causing a foreign branch or affiliate of such Lender to make
or continue such Loan, provided that in such event such Lender's Revolving Loan
Pro Rata Share or Term Loan Pro Rata Share, as the case may be, of the Loan
shall, for purposes of this Agreement, be considered to have been made by such
Lender and the obligation of the Borrower to repay such Lender's Revolving Loan
Pro Rata Share or Term Loan Pro Rata Share, as the case may be, of the Loan
shall nevertheless be to such Lender and shall be deemed held by such Lender for
the account of such branch or affiliate.
Section 2.4 MINIMUM AMOUNT OF EACH BORROWING. The aggregate
principal amount of each Borrowing by the Borrower hereunder shall be not less
than $5 million ($1 million in the case of Swing Line Loans) and, in each case,
if greater, shall be in an integral multiple of $1 million above such minimum;
PROVIDED, HOWEVER, that (i) any Borrowing consisting of Revolving Loans made
pursuant to SECTION 2.11(c) may be in the amount of the Swing Line Loan(s)
refunded thereby and (ii) such Revolving Loans shall be Prime Rate Revolving
Loans unless and until converted into
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<PAGE>
Eurodollar Rate Revolving Loans pursuant to the terms of SECTION 2.6.
Section 2.5 NOTICE OF BORROWING. Whenever the Borrower desires to
make a Borrowing hereunder, it shall give the Agent at its office located at One
Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006 at least one
(1) Business Day's prior written notice (or telephonic notice promptly confirmed
in writing) of each Prime Rate Loan, and at least (3) three Business Days' prior
written notice (or telephonic notice promptly confirmed in writing) of each
Eurodollar Rate Loan, to be made hereunder. In each case such notice shall be
given prior to 1:00 p.m. (New York City time) on the date specified. Each such
notice (a "NOTICE OF BORROWING"), which shall be in the form of EXHIBIT 2.5
hereto, shall be irrevocable, shall be deemed a representation by the Borrower
that all conditions precedent to such Borrowing have been satisfied and shall
specify (i) the aggregate principal amount of the Loans to be made pursuant to
such Borrowing, (ii) the date of Borrowing (which shall be a Business Day) and
(iii) whether the Loans being made pursuant to such Borrowing are to be Prime
Rate Loans or Eurodollar Rate Loans and, with respect to Eurodollar Rate Loans,
the Interest Period to be applicable thereto. The Agent shall as promptly as
practicable give each Revolving Lender written notice (or telephonic notice
confirmed in writing) of each proposed Borrowing with respect to the Revolving
Loans, of such Revolving Lender's Revolving Loan Pro Rata Share thereof and of
the other matters covered by the Notice of Borrowing. Without in any way
limiting the Borrower's obligation to confirm in writing any telephonic notice,
the Agent may act without liability upon the basis of telephonic notice believed
by the Agent in good faith to be from the Borrower prior to receipt of written
confirmation, with the Agent's records being, absent manifest error, conclusive
and binding on all parties hereto.
Section 2.6 CONVERSION OR CONTINUATION. The Borrower may elect (i)
at any time to convert Prime Rate Loans or any portion thereof to Eurodollar
Rate Loans and (ii) at the end of any Interest Period with respect thereto, to
convert Eurodollar Rate Loans or any portion thereof into Prime Rate Loans or to
continue such Eurodollar Rate Loans or any portion thereof for an additional
Interest Period; PROVIDED, HOWEVER, that the aggregate principal amount of the
Eurodollar Rate Loans for each Interest Period therefor must be in an aggregate
principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof. Each conversion or continuation of Term Loans shall be allocated among
the Term Loans of the Term Lenders in accordance with their respective Term Loan
Pro Rata Shares. Each conversion or continuation of Revolving Loans shall be
allocated among the Revolving Loans of the Revolving Lenders in accordance with
their respective Revolving Loan Pro Rata Shares. Each such election shall be in
substantially the form of EXHIBIT 2.6 hereto (a "NOTICE OF CONVERSION OR
CONTINUATION") and shall be made by giving the Agent at least three Business
Days' prior written notice thereof,
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given not later than 1:00 p.m. (New York City time) on such third prior Business
Day, specifying (i) the amount and type of conversion or continuation, (ii) in
the case of a conversion to or a continuation of Eurodollar Rate Loans, the
Interest Period therefor, and (iii) in the case of a conversion, the date of
conversion (which date shall be a Business Day and, if a conversion from
Eurodollar Rate Loans, shall also be the last day of the Interest Period
therefor). The Agent shall promptly notify each Revolving Lender or Term
Lender, as applicable, of its receipt of a Notice of Conversion or Continuation
and of the contents thereof. Notwithstanding the foregoing, no conversion in
whole or in part of Prime Rate Loans to Eurodollar Rate Loans, and no
continuation in whole or in part of Eurodollar Rate Loans upon the expiration of
any Interest Period therefor, shall be permitted at any time at which an
Unmatured Event of Default or an Event of Default shall have occurred and be
continuing. If, within the time period required under the terms of this SECTION
2.6, the Agent does not receive a Notice of Conversion or Continuation from the
Borrower containing a permitted election to continue any Eurodollar Rate Loans
for an additional Interest Period or to convert any such Loans, then, upon the
expiration of the Interest Period therefor, such Loans will automatically
convert to Prime Rate Loans. Each Notice of Conversion or Continuation shall be
irrevocable.
Section 2.7 DISBURSEMENT OF FUNDS. No later than 12:00 noon (New
York City time) on the date specified in the applicable Notice of Borrowing, so
long as the Agent has notified such Lender of such Notice of Borrowing, each
Lender will make available its Revolving Loan Pro Rata Share or Term Loan Pro
Rata Share, as the case may be, of the Borrowing requested to be made on such
date in Dollars and in immediately available funds, at the office (the "PAYMENT
OFFICE") of the Agent located at One Bankers Trust Plaza, 130 Liberty Street,
New York, New York 10006 (for the account of such non-U.S. office of the Agent
as the Agent may direct in the case of Eurodollar Rate Loans), and the Agent
will promptly make available to the Borrower at the Payment Office the aggregate
of the amounts so made available by the applicable Lenders. Unless the Agent
shall have been notified by any Lender prior to the date of a Borrowing that
such Lender does not intend to make available to the Agent such Lender's
Revolving Loan Pro Rata Share or Term Loan Pro Rata Share, as the case may be,
of such Borrowing, the Agent may assume that such Lender has made such amount
available to the Agent on such date of Borrowing and the Agent may, in reliance
upon such assumption, make available to the Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Lender on the date of Borrowing, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not pay
such corresponding amount forthwith upon the Agent's demand therefor, the Agent
shall promptly notify the Borrower and the Borrower shall immediately pay such
corresponding amount to the Agent. The Agent shall also be entitled to recover
from the Borrower interest on such corresponding amount, in respect of each
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day from the date such corresponding amount was made available by the Agent to
the Borrower to but excluding the date such corresponding amount is recovered by
the Agent, at a rate per annum equal to the rate applicable to Prime Rate Loans
or Eurodollar Rate Loans, as the case may be, applicable during the period in
question and, upon payment of such amounts to the Agent, the Borrower shall be
entitled to recover such amounts from such Lender. Any amounts due hereunder to
the Agent from the Lenders which are not paid when due shall bear interest
payable by such Lender, from the date due until the date paid, at the Federal
Funds Rate for the first three days after the date such amount is due and
thereafter at the Prime Rate, together with the Agent's standard interbank
processing fee. Further, such Lender shall be deemed to have assigned any and
all payments of principal and interest made on its Loans, amounts due with
respect to Letters of Credit (or its participations therein) and any other
amounts due to it hereunder first to the Agent to fund any outstanding Loans
made available on behalf of such Lender by the Agent pursuant to this SECTION
2.7 until such Loans have been funded (as a result of such assignment or
otherwise) and then to fund Loans of all Lenders other than such Lender until
each Lender has outstanding Loans equal to its Revolving Loan Pro Rata Share or
Term Loan Pro Rata Share, as the case may be, of all Loans (as a result of such
assignment or otherwise). Such Lender shall not have recourse against the
Borrower with respect to any amounts paid to the Agent or any Lender with
respect to the preceding sentence; PROVIDED, HOWEVER, that such Lender shall
have full recourse against the Borrower to the extent of the amount of such
Loans it has so been deemed to have made. Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill its Commitment hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any default by such Lender hereunder.
Section 2.8 INTEREST.
(a) PRIME RATE REVOLVING LOANS. The Borrower agrees to pay interest
in respect of the unpaid principal amount of each Prime Rate Revolving Loan from
the date the proceeds thereof are made available to the Borrower (whether
pursuant to a new Borrowing or upon a conversion pursuant to SECTION 2.6) until
maturity (whether by acceleration or otherwise) of such Prime Rate Revolving
Loan or until such Prime Rate Revolving Loan is converted into a Eurodollar Rate
Revolving Loan, at a rate per annum equal to the Prime Rate in effect from time
to time plus a Borrowing Margin of 1-5/8%, as such Borrowing Margin may from
time to time be adjusted pursuant to SECTION 2.9.
(b) EURODOLLAR RATE REVOLVING LOANS. The Borrower agrees to pay
interest in respect of the unpaid principal amount of each Eurodollar Rate
Revolving Loan from the date the proceeds thereof are made available to the
Borrower (whether pursuant to a new Borrowing or upon a conversion pursuant to
SECTION 2.6) until maturity (whether by acceleration or otherwise) of such
Eurodollar
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Rate Revolving Loan at a rate per annum equal to the relevant Eurodollar Rate
plus a Borrowing Margin of 2-5/8%, as such Borrowing Margin may from time to
time be adjusted pursuant to SECTION 2.9.
(c) PRIME RATE TERM LOANS. The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Prime Rate Term Loan from the
date the proceeds thereof are made available to the Borrower (whether pursuant
to a new Borrowing or upon a conversion pursuant to SECTION 2.6) until maturity
(whether by acceleration or otherwise) of such Prime Rate Term Loan or until
such Prime Rate Term Loan is converted into a Eurodollar Rate Term Loan, at a
rate per annum equal to the Prime Rate in effect from time to time plus a
Borrowing Margin of 2-1/8%.
(d) EURODOLLAR RATE TERM LOANS. The Borrower agrees to pay interest
in respect of the unpaid principal amount of each Eurodollar Rate Term Loan from
the date the proceeds thereof are made available to the Borrower (whether
pursuant to a new Borrowing or upon a conversion pursuant to SECTION 2.6) until
maturity (whether by acceleration or otherwise) of such Eurodollar Rate Term
Loan at a rate per annum equal to the relevant Eurodollar Rate plus a Borrowing
Margin of 3-1/8%.
(e) SWING LINE LOANS. The Borrower agrees to pay interest in respect
of the unpaid principal amount of each Swing Line Loan from the date the
proceeds thereof are made available to the Borrower until maturity (whether by
acceleration or otherwise) of such Swing Line Loan or until such Swing Line Loan
is converted to a Revolving Loan at a rate per annum equal to the Prime Rate in
effect from time to time plus a Borrowing Margin of 1-5/8%, as such Borrowing
Margin may from time to time be adjusted pursuant to SECTION 2.9.
(f) DEFAULT RATE INTEREST. Overdue principal and (to the extent
permitted by applicable law) overdue interest in respect of each Loan shall bear
interest, payable on demand, after as well as before judgment, at a rate per
annum equal to (i) if such Loan is a Prime Rate Loan, the Prime Rate plus the
applicable Borrowing Margin set forth in SECTION 2.8(a), (c) OR (e) (as the same
may be adjusted pursuant to SECTION 2.9), as the case may be, plus 2% per annum
or (ii) if such Loan is a Eurodollar Rate Loan, the Eurodollar Rate then in
effect plus the applicable Borrowing Margin set forth in SECTION 2.8(b) OR (d)
(as the same may be adjusted pursuant to SECTION 2.9), as the case may be, plus
2% per annum (any such applicable rate of interest in the foregoing clauses (i)
and (ii) being the "DEFAULT RATE").
(g) ACCRUAL AND PAYMENT OF INTEREST. Interest shall accrue from and
including the date of any Borrowing (whether pursuant to a new Borrowing or upon
a conversion pursuant to SECTION 2.6) to but excluding the date of any repayment
thereof. Interest on Eurodollar Rate Loans shall be payable by the Borrower
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in arrears on the last day of each Interest Period and, in the case of an
Interest Period in excess of three months, at intervals of every three months
after the initial date of such Interest Period. Notwithstanding the above,
interest shall be due and payable on any amount repaid or reborrowed, as the
case may be, on the date of such repayment or reborrowing, as the case may be,
and upon final maturity of such Loan (whether by acceleration or otherwise) and
after such maturity, on demand. Interest on Prime Rate Loans shall be due and
payable quarterly in arrears on the Quarterly Payment Date of each year, on the
date on which such Prime Rate Loan is converted to a Eurodollar Rate Loan, on
the date of any voluntary or mandatory repayment, on maturity (whether by
acceleration or otherwise) and after such maturity, on demand. Interest on all
Eurodollar Rate Loans shall be computed on the basis of a year consisting of 360
days and actual days elapsed. Interest on all Prime Rate Loans shall be
computed on the basis of a year consisting of 365 or 366 days, as the case may
be, and actual days elapsed.
(h) NOTIFICATION OF RATE. The Agent, upon determining the Eurodollar
Rate for any Interest Period, shall promptly give the Borrower and the other
Lenders written or telephonic notice thereof. Such determination shall, absent
manifest error and subject to the provisions of SECTION 2.13, be final,
conclusive and binding upon all parties hereto.
(i) MAXIMUM INTEREST. If any interest payment or other charge or fee
payable hereunder exceeds the maximum amount then permitted by applicable law,
the Borrower shall be obligated to pay the maximum amount then permitted by
applicable law and the Borrower shall continue to pay the maximum amount from
time to time permitted by applicable law until all such interest payments and
other charges and fees otherwise due hereunder (in the absence of such restraint
imposed by applicable law) have been paid in full.
(j) REFERENCE BANKS. If any Reference Bank shall for any reason no
longer have a Commitment or a Loan, such Reference Bank shall thereupon cease to
be a Reference Bank, and if, as a result thereof, there shall only be one
Reference Bank remaining, the Borrower and the Agent (after consultation with
the Lenders) shall, by notice to the Lenders, designate another Lender as a
Reference Bank so that there shall at all time be at least two Reference Banks.
Each Reference Bank shall use its best efforts to furnish quotations of rates to
the Agent as contemplated hereby. If any of the Reference Banks shall be unable
or shall otherwise fail to supply such rates to the Agent upon its request, the
rate of interest shall, subject to the provisions of SECTION 2.13, be determined
on the basis of the quotations of the remaining Reference Banks.
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Section 2.9 INTEREST RATE ADJUSTMENTS.
(a) Subject to SECTION 2.9(b), the Borrowing Margins set forth in
SECTIONS 2.8(a), (b) AND (e) shall be subject to adjustment pursuant to the
terms and conditions set forth on SCHEDULE 1.1(b) hereto. Subject to SECTION
2.9(b), any such upward or downward adjustment shall be effective immediately
upon receipt by the Lenders of the officer's certificate delivered pursuant to
SECTION 5.1.1(b) OR (c) which gives rise to such adjustment.
(b) The Borrowing Margin for any Eurodollar Rate Revolving Loan shall
be the Borrowing Margin in effect on the first day of the Interest Period with
respect to such Eurodollar Rate Revolving Loan. The Borrowing Margin for any
Eurodollar Rate Revolving Loan shall not change during the Interest Period
applicable to such Borrowing.
Section 2.10 INTEREST PERIODS. At the time it gives any Notice of
Borrowing or a Notice of Conversion or Continuation with respect to Eurodollar
Rate Loans, the Borrower shall elect, by giving the Agent written notice, the
interest period (each an "INTEREST PERIOD") applicable to the related Eurodollar
Rate Borrowing, which Interest Period shall, at the option of the Borrower, be a
one, two, three or six month period, provided that: (i) the Interest Period for
any Eurodollar Rate Loan shall commence on the date of such Borrowing and each
Interest Period occurring thereafter in respect of a continuation of such
Eurodollar Rate Loan shall commence on the day on which the immediately
preceding Interest Period for such Loan expires; (ii) if any Interest Period
would otherwise expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day, PROVIDED, HOWEVER, that
if any Interest Period in respect of a Eurodollar Rate Loan would otherwise
expire on a day which is not a Business Day and after which no Business Day
occurs in the same month, such Interest Period shall expire on the immediately
preceding Business Day; (iii) if an Interest Period begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period),
such Interest Period shall end on the last Business Day of the first, second,
third or sixth, as applicable, succeeding calendar month; and (iv) no Interest
Period shall extend beyond the Revolver Termination Date for any Revolving Loans
or the Term Loan Maturity Date for the Term Loan.
Section 2.11 SWING LINE LOANS.
(a) SWING LINE COMMITMENT. Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make swing line loans ("SWING LINE
LOANS") to the Borrower on any Business Day from time to time from and after the
Closing Date to, but not including, the Revolver Termination Date in an
aggregate principal amount at any one time outstanding not to exceed
$25,000,000; PROVIDED, HOWEVER, that in no event may the amount of any Borrowing
of Swing
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Line Loans cause the outstanding Revolving Loans of any Lender (other than the
Swing Line Lender), when added to such Lender's Revolving Loan Pro Rata Share of
the then outstanding Swing Line Loans, L/C Obligations and Florence L/C
Obligations (after giving effect to the use of proceeds of such Swing Line
Loans) to exceed such Lender's Revolving Loan Commitment. Amounts borrowed by
the Borrower under this SECTION 2.11(a) may be repaid and, to but excluding the
Revolver Termination Date, reborrowed.
(b) PROCEDURE FOR SWING LINE BORROWING. The Swing Line Loans shall
be made and maintained as Prime Rate Loans and, notwithstanding SECTION 2.6,
shall not be entitled to be converted into Eurodollar Rate Loans. The Borrower
shall give the Agent and the Swing Line Lender irrevocable notice (which notice
must be received by the Agent and the Swing Line Lender prior to 1:00 p.m., New
York City time), on the requested borrowing date (which shall be a Business Day)
specifying the amount of each requested Swing Line Loan, which shall be in a
minimum amount of $1,000,000 or an integral multiple thereof. The proceeds of
each Swing Line Loan will then be made available to the Borrower by the Swing
Line Lender by crediting the account of the Borrower on the books of the office
of the Swing Line Lender specified in SECTION 2.7 with such proceeds.
(c) REFUNDING OF SWING LINE LOANS. The Swing Line Lender, at any
time in its sole and absolute discretion, may on behalf of the Borrower (which
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a
Revolving Loan in an amount equal to such Revolving Lender's Revolving Loan Pro
Rata Share of the principal amount of the Swing Line Loans (the "REFUNDED SWING
LINE LOANS") outstanding on the date such notice is given. Unless any of the
events described in SECTION 7.1(e) OR 7.1(f) shall have occurred (in which event
the procedures of paragraph (d) of this SECTION 2.11 shall apply) and regardless
of whether the conditions precedent set forth in this Agreement to the making of
a Revolving Loan are then satisfied, each Revolving Lender shall make the
proceeds of its Revolving Loan available to the Agent at its office specified in
SECTION 2.7 prior to 1:00 p.m., New York City time, in funds immediately
available on the Business Day next succeeding the date such notice is given.
The proceeds of such Revolving Loans shall be made immediately available to the
Swing Line Lender and immediately applied to repay the Refunded Swing Line
Loans, and, until converted into Eurodollar Rate Loans, shall constitute Prime
Rate Revolving Loans.
(d) PARTICIPATION IN SWING LINE LOANS. If, prior to the making of a
Prime Rate Revolving Loan pursuant to paragraph (c) of this SECTION 2.11, one of
the events described in SECTIONS 7.1(e) OR 7.1(f) shall have occurred, then,
subject to the provisions of clause (e) below, each Revolving Lender will, on
the date such Revolving Loan was to have been made, purchase from the Swing Line
Lender an undivided participating interest in the Refunded Swing
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Line Loan in an amount equal to its Revolving Loan Pro Rata Share of such
Refunded Swing Line Loan. Upon request, each Revolving Lender will immediately
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation and upon receipt thereof the Swing Line Lender will deliver to
such Lender a Swing Line Loan Participation Certificate dated the date of
receipt of such funds and in such amount.
(e) OBLIGATIONS UNCONDITIONAL. Each Revolving Lender's obligation to
make Revolving Loans in accordance with clause (c) above and to purchase
participating interests in accordance with clause (d) above shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Lender may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of any Event of Default or Unmatured Event of Default; (iii) any adverse change
in the condition (financial or otherwise) of the Borrower or any other Person;
(iv) any breach of this Agreement by the Borrower or any other Person; (v) any
inability of the Borrower to satisfy the conditions precedent to Borrowing set
forth in this Agreement on the date upon which such participating interest is to
be purchased or (vi) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. If any Revolving Lender does
not make available to the Swing Line Lender the amount required pursuant to
clause (c) or (d) above, as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Lender, together with
interest thereon for each day from the date of non-payment until such amount is
paid in full at the Federal Funds Rate for the first three days and at the Prime
Rate thereafter. Notwithstanding the foregoing provisions of this SECTION
2.11(e), no Revolving Lender shall be required to make a Revolving Loan to the
Borrower for the purpose of refunding a Swing Line Loan pursuant to clause (c)
above or to purchase a participating interest in a Swing Line Loan pursuant to
clause (d) above if an Event of Default or Unmatured Event of Default has
occurred and is continuing and, prior to the making by the Swing Line Lender of
such Swing Line Loan, the Swing Line Lender has received written notice from
such Revolving Lender specifying that such Event of Default or Unmatured Event
of Default has occurred and is continuing, describing the nature thereof and
stating that, as a result thereof, such Revolving Lender shall cease to make
such Refunded Swing Line Loans and purchase such participating interests, as the
case may be; PROVIDED, HOWEVER, that the obligation of such Revolving Lender to
make such Refunded Swing Line Loans and to purchase such participating interests
shall be reinstated upon the earlier to occur of (i) the date upon which such
Revolving Lender notifies the Swing Line Lender that its prior notice has been
withdrawn and (ii) the date upon which the Event of Default or Unmatured Event
of Default specified in such notice no longer is continuing.
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Section 2.12 LETTERS OF CREDIT.
(a) ISSUANCE BY FACING AGENT. Subject to the terms and conditions
hereof and provided that no Event of Default or Unmatured Event of Default shall
have occurred and be continuing, the Borrower may request, in accordance with
this SECTION 2.12, that the Facing Agent issue on behalf of the Revolving
Lenders Letters of Credit denominated in Dollars for the account of the Borrower
with the face amount of each Letter of Credit in a minimum amount of $250,000 or
such lesser amount as the Facing Agent may approve; PROVIDED, HOWEVER, that (i)
each Letter of Credit shall be issued in favor of a Permitted Beneficiary; (ii)
the Borrower shall not request the Facing Agent to issue any Letter of Credit
if, after giving effect to such issuance, the sum of the aggregate Stated
Amounts and unreimbursed drawings of the Letters of Credit then outstanding
would exceed $50,000,000 or if the face amount of such requested Letter of
Credit exceeds the Total Available Revolving Commitment then in effect, and
(iii) in no event shall the Facing Agent issue any Letter of Credit having an
expiration date later than one year from the date of issuance (or in any event
later than thirty (30) days prior to the Revolver Termination Date), provided
that any such Letter of Credit may be automatically extended to a date not later
than one year from its expiration date (but in no event later than thirty (30)
days prior to the Revolver Termination Date) on an annual basis upon the
satisfaction of the applicable conditions set forth in SECTIONS 6.2(a),(b) and
(d) hereof with respect to the issuance of any Letter of Credit, which
satisfaction the Facing Agent may require the Borrower to certify in writing as
a condition of any such extension. For each such automatic extension of a
Letter of Credit, the Borrower shall deliver a written request to the Facing
Agent (with a copy to the Agent) no earlier than 150 days and no later than 120
days prior to the expiration date thereof. Such request shall affirm that as of
the date thereof the conditions for the issuance of a Letter of Credit set forth
in SECTION 6.2 are satisfied. After receipt by the Facing Agent of such
extension request, each such Letter of Credit shall be automatically extended
under the terms and conditions provided above. Each request for an issuance of,
or an amendment to, a Letter of Credit shall be in the form of EXHIBIT 2.12
hereto, appropriately completed. The issuance of a Letter of Credit pursuant to
this SECTION 2.12 shall be deemed (A) to be a Borrowing for purposes of, without
limitation, the satisfaction of the applicable conditions set forth in
ARTICLE VI hereof and (B) to reduce availability under the Revolving Loan
Commitments of the Revolving Lenders (except for purposes of SECTION 3.7 with
respect to the calculation of Commitment Fees) then in effect by an amount equal
to the sum of the aggregate Stated Amounts and unreimbursed drawings of such
Letter of Credit until such time as such Letter of Credit is no longer
outstanding and any amounts drawn thereunder have been reimbursed.
(b) PARTICIPATION OF REVOLVING LENDERS. Immediately upon the
issuance of each Letter of Credit, each Revolving Lender
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shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Facing Agent a participation in such Letter of Credit and drawings thereunder in
an amount equal to such Lender's Revolving Loan Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder. The
Facing Agent shall give the Agent written notice of the issuance or amendment of
a Letter of Credit on the date of issuance or amendment thereof and provide the
Agent with a copy of each Letter of Credit and amendment thereto. The Agent
shall give each Revolving Lender written notice of the issuance and amendment of
a Letter of Credit within five (5) Business Days after each such Letter of
Credit has been issued or amended pursuant to the terms hereof.
(c) REQUESTS FOR ISSUANCE. Whenever the Borrower desires the
issuance or extension (other than an automatic extension) of a Letter of Credit,
it shall deliver to the Facing Agent and the Agent (with a duplicate copy to the
Agent's Letter of Credit department at One Bankers Trust Plaza, 130 Liberty
Street, New York, New York 10006, Attn: Commercial Loan Division, Standby L/C
Unit, 14th Floor for Standby Letters of Credit and to the Agent's Global Assets
Letter of Credit Division, 130 Liberty Street, New York, New York 10006, Attn:
Trade Letter of Credit, 12th Floor for Commercial Letters of Credit) a written
notice in the form of EXHIBIT 2.12 hereto no later than 1:00 p.m., (New York
City time) at least five (5) Business Days (or such shorter period as may be
agreed to by the Facing Agent in any particular instance) in advance of the
proposed date of issuance or extension. That notice shall specify (i) the
proposed date of issuance or extension (which shall be a Business Day), (ii) the
type of Letter of Credit, (iii) the Stated Amount of the Letter of Credit, (iv)
the expiration date of the Letter of Credit, (v) the name and address of the
beneficiary (which shall be a Permitted Beneficiary) and (vi) such other
information as the Facing Agent may reasonably request. Prior to the date of
issuance, the Borrower shall specify a precise description of the documents and
the verbatim text of any certificate to be presented by the beneficiary which,
if presented by the beneficiary on or prior to the expiration date of the Letter
of Credit, would require the Facing Agent to make payment under the Letter of
Credit; PROVIDED, HOWEVER, that the Facing Agent, in its sole judgment, may
require changes in any such documents and certificates. In determining whether
to pay under any Letter of Credit, the Facing Agent shall be responsible only to
determine that the documents and certificates required to be delivered under
that Letter of Credit have been delivered and that they comply on their face
with the requirements of that Letter of Credit. In the event that any terms or
conditions of such written notice of issuance or amendment or any other document
delivered in connection therewith are inconsistent with the terms and conditions
of this Agreement, the terms and conditions of this Agreement shall control.
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(d) REIMBURSEMENT OF DRAWINGS. In the event of any request for
drawing under any Letter of Credit by the beneficiary thereof, the Facing Agent
shall notify the Borrower, the Agent and the Revolving Lenders prior to the date
on which the Facing Agent intends to honor such drawing, and the Borrower shall
reimburse the Facing Agent on the day on which such drawing is honored in an
amount in same day funds equal to the amount of such drawing, provided that,
anything contained in this Agreement to the contrary notwithstanding, (i) unless
the Borrower shall have notified the Facing Agent and the Agent prior to 1:00
p.m. (New York City time) one Business Day prior to such drawing that the
Borrower intends to reimburse the Facing Agent for the amount of such drawing
with funds other than the proceeds of Revolving Loans, the Borrower shall be
deemed to have timely given a Notice of Borrowing to the Agent requesting the
Revolving Lenders to make a Prime Rate Revolving Loan on the date on which such
drawing is honored in an amount equal to the amount of such drawing, and (ii)
subject to satisfaction or waiver of the conditions specified in SECTION 6.2,
the Revolving Lenders shall, on the date of such drawing, make a Prime Rate
Revolving Loan in the amount of such drawing, the proceeds of which shall be
made available to the Facing Agent by the Agent and applied directly by the
Facing Agent for the amount of such drawing; and PROVIDED FURTHER, that, if for
any reason, proceeds of Revolving Loans are not received by the Facing Agent on
such date in an amount equal to the amount of such drawing, the Borrower shall
reimburse the Facing Agent, on the Business Day immediately following the date
of such drawing, in an amount in same day funds equal to the excess of the
amount of such drawing over the amount of such Revolving Loans, if any, which
are so received, plus accrued interest on such amount at the rate set forth in
SECTION 2.12(f)(iii).
(e) FAILURE TO REIMBURSE. In the event that the Borrower shall fail
to reimburse the Facing Agent as provided in SECTION 2.12(d) in an amount equal
to the amount of any drawing honored by the Facing Agent under a Letter of
Credit issued by it, the Facing Agent shall promptly notify the Agent and each
Revolving Lender of the unreimbursed amount of such drawing and of such Lender's
respective participation therein. Each Revolving Lender shall make available to
the Agent for distribution to the Facing Agent an amount equal to its respective
participation in same day funds at the office of the Agent specified in such
notice not later than 1:00 p.m. (New York City time) on the Business Day after
the date notified by the Facing Agent. In the event that any Revolving Lender
fails to make available to the Facing Agent the amount of such Lender's
participation in such Letter of Credit as provided in this SECTION 2.12(e), the
Agent shall be entitled on behalf of the Facing Agent to recover such amount on
demand from the Lender together with interest at the Federal Funds Rate until
three days after the date on which the Facing Agent gives notice of payment and
at the Prime Rate for each day thereafter until such amount is paid. Further,
such Lender shall be deemed to have assigned any and all payments made of
principal and interest on its Loans,
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amounts due with respect to its Letters of Credit and any other amounts due to
it hereunder to the Facing Agent to fund the amount of any drawn Letter of
Credit which such Lender was required to fund pursuant to this SECTION 2.12(e)
until such amount has been funded (as a result of such assignment or otherwise).
The failure of any Lender to make funds available to the Facing Agent of such
amount shall not relieve any other Lender of its obligation hereunder to make
funds available to the Facing Agent pursuant to this SECTION 2.12(e). The
Agent shall distribute to each Revolving Lender which has paid all amounts
payable by it under this SECTION 2.12(e) with respect to any Letter of Credit
issued by the Facing Agent such Lender's Revolving Loan Pro Rata Share of all
payments received by the Facing Agent from the Borrower in reimbursement of
drawings honored by the Facing Agent under such Letter of Credit when such
payments are received.
(f) LETTER OF CREDIT FEES. The Borrower agrees to pay to the Agent
or the Facing Agent, as specified below, the following amounts with respect to
each Letter of Credit issued by the Facing Agent:
(i) a facing fee to the Facing Agent in an amount separately
agreed to by the Borrower and the Facing Agent;
(ii) a Letter of Credit fee (the "LETTER OF CREDIT FEE") per
annum to the Agent equal to the greater of (A) the applicable
Borrowing Margin for Eurodollar Rate Revolving Loans determined
pursuant to SECTION 2.8(b) and SECTION 2.9 as in effect from time to
time MINUS one-half percent (1/2%) per annum, and (B) one percent
(1%) per annum, of the Stated Amount of such Letter of Credit,
payable quarterly in arrears on each Quarterly Payment Date (or if
such day is not a Business Day, then on and through the immediately
preceding Business Day), on the expiration date and after the
expiration date, on demand, commencing on the first such day of the
issuance of such Letter of Credit, and calculated on the basis of a
360-day year and the actual number of days elapsed;
(iii) to the Agent with respect to drawings made under any such
Letter of Credit, interest, payable on demand, on the amount paid by
the Facing Agent in respect of each such drawing from the date of the
drawing through the date such amount is reimbursed by the Borrower
(including any such reimbursement out of the proceeds of Revolving
Loans pursuant to SECTION 2.1(b)) at a rate that is at all times equal
to 2.0% per annum in excess of the greatest interest rate otherwise
payable under this Agreement for Prime Rate Loans as then in effect;
and
(iv) to the Facing Agent with respect to the issuance, amendment
or transfer of any such Letter of
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Credit and each drawing made thereunder, documentary and processing
charges in accordance with the Facing Agent's standard schedule for
such charges in effect at the time of such issuance, amendment,
transfer or drawing, as the case may be.
Promptly upon receipt by the Agent of any amount described in clause
(ii) or (iii) of this SECTION 2.12(f), the Agent shall distribute to each
Revolving Lender its Revolving Loan Pro Rata Share of such amount; PROVIDED,
HOWEVER, that amounts described in clause (iii) above that accrue prior to the
date upon which Revolving Lenders are required (x) to fund Prime Rate Revolving
Loans pursuant to SECTION 2.12(d)(ii) or (y) to make available to the Facing
Agent the amount of such Lender's participation in such Letter of Credit, as the
case may be, in respect of any unreimbursed drawings under any Letter of Credit
may be retained by the Agent.
(g) REIMBURSEMENT OBLIGATION UNCONDITIONAL. The obligation of the
Borrower to reimburse the Facing Agent for drawings made under the Letters of
Credit issued by the Facing Agent shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement under all
circumstances including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
the Borrower may have at any time against a beneficiary or any transferee
of any Letter of Credit (or any persons or entities for whom any such
transferee may be acting), the Facing Agent or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between the
Borrower or one of its Subsidiaries and the beneficiary for which the
Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document presented
under any 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;
(iv) payment by the Facing Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does
not comply with the terms of such Letter of Credit, provided that such
payment does not constitute gross negligence or willful misconduct of the
Facing Agent;
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(v) any other circumstance or happening whatsoever which is similar
to any of the foregoing; or
(vi) the fact that an Event of Default shall have occurred and be
continuing.
(h) INCREASED COSTS. If, after the date of this Agreement, by reason
of (i) any change in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (ii) compliance by the Facing Agent, the Agent or any Revolving
Lender with any direction, request or requirement (whether or not having the
force of law) of any governmental or monetary authority including, without
limitation, Regulation D:
(A) the Facing Agent, the Agent or any Revolving Lender shall be
subject to any tax, levy, charge or withholding of any nature or to any
variation thereof or to any penalty with respect to the maintenance or
fulfillment of its obligations under this SECTION 2.12, whether
directly or by such being imposed on or suffered by the Facing Agent, the
Agent or such Revolving Lender (except for (x) changes in the rate of tax
on, or determined by reference to, the net income or profits of such Lender
imposed by the jurisdiction in which such Lender's principal office or
applicable lending office is located and (y) United States withholding
taxes, which shall be governed by the provisions of SECTION 3.11);
(B) any reserve, deposit or similar requirement of any Governmental
Authority is or shall be applicable, imposed or modified in respect of any
Letters of Credit issued by the Facing Agent and participated in by the
Revolving Lenders; or
(C) there shall be imposed on the Facing Agent by any Governmental
Authority any other condition regarding any Letter of Credit issued
pursuant to this SECTION 2.12;
and the result of the foregoing is to directly or indirectly increase the cost
to the Facing Agent, the Agent or any Revolving Lender of issuing, making or
maintaining any Letter of Credit, or to reduce the amount receivable in respect
thereof by the Facing Agent, the Agent or any Revolving Lender, then and in any
case the Agent may, notify the Borrower and the Borrower shall pay on demand
such amounts as the Agent may reasonably specify to be necessary to compensate
the Facing Agent, the Agent or any Revolving Lender for such additional cost or
reduced receipt together with interest on such amount from the date demanded
until payment in full thereof at a rate equal at all times to the Default Rate.
The determination by the Facing Agent, the Agent or any Revolving Lender of any
amount due pursuant to this SECTION 2.12(h) shall be set forth in a certificate
delivered to the Agent (which certificate the Agent shall promptly deliver to
the Borrower) setting forth the
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calculation thereof in reasonable detail, and shall, in the absence of manifest
error, be final, conclusive and binding on all of the parties hereto.
(i) INDEMNIFICATION. In addition to amounts payable as elsewhere
provided in this SECTION 2.12, the Borrower hereby agrees to protect, indemnify,
pay and hold the Facing Agent, the Agent and the Revolving Lenders harmless from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) which the Facing Agent, the Agent and the Revolving Lenders
may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of or payment of any drawing under, any Letter of Credit, other than as
a result of the gross negligence or willful misconduct of the Facing Agent, the
Agent or any Revolving Lender as determined by a court of competent
jurisdiction, or (ii) the failure of the Facing Agent to honor a drawing under
any Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future DE JURE or DE FACTO government or
governmental authority (all such acts or omissions herein called "GOVERNMENT
ACTS").
(j) LETTER OF CREDIT BENEFICIARIES. As between (i) the Borrower and
(ii) the Facing Agent, the Agent and the Revolving Lenders, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by the Facing Agent by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, the Facing Agent
shall not be responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of such Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) for failure of any such Letter of Credit to comply fully with
conditions required in order to draw on such Letter of Credit; (D) for errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(E) for errors in interpretation of technical terms; (F) for any loss or delay
in the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof; (G) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (H) for any consequences arising
from causes beyond the control of the Facing Agent including, without
limitation, any Government Acts, in each case other than as a result of the
gross negligence or willful misconduct of the Facing Agent. None of the above
shall affect,
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impair, or prevent the vesting of any of the Facing Agent's rights or powers
hereunder.
(k) FACING AGENT. In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action taken or omitted by
the Facing Agent under or in connection with the Letters of Credit issued by it
or the related certificates, if taken or omitted in good faith and not with
gross negligence or willful misconduct as determined by a court of competent
jurisdiction, shall not put the Facing Agent under any resulting liability to
the Borrower or any Revolving Lender.
(l) NO INDEMNIFICATION FOR CERTAIN ACTS. Notwith-standing anything
to the contrary contained in this SECTION 2.12, the Borrower shall have no
obligation to indemnify the Agent, the Facing Agent or any Revolving Lender in
respect of any liability incurred by the Agent, the Facing Agent or any
Revolving Lender arising out of the gross negligence or willful misconduct of
the Agent, the Facing Agent or any Revolving Lender, as determined by a court of
competent jurisdiction, or out of the wrongful dishonor by the Facing Agent of a
proper demand for payment made under the Letters of Credit issued by it.
Section 2.13 INCREASED COSTS, ILLEGALITY, ETC.
(a) In the event that any Lender shall have determined (which
determination shall, absent manifest error, be final, conclusive and binding
upon all parties hereto but, with respect to clause (i) below, may be made only
by the Agent):
(i) on any Interest Rate Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, any Lender shall incur increased costs or reduction
in the amounts received or receivable hereunder with respect to any
Eurodollar Rate Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payments to any Lender of the principal of or interest on the
Obligations or any other amounts payable hereunder (except for (a) changes
in the rate of tax on, or determined by reference to, the net income or
profits of such Lender imposed by the jurisdiction in which its principal
office or applicable lending office is located and (b) United States
withholding
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taxes, which shall be governed by the provisions of SECTION 3.11) or (B) a
change in official reserve requirements (but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate) and/or (y) other circumstances since
the date of this Agreement affecting such Lender or the interbank
Eurodollar market or the position of such Lender in such market (excluding,
however, differences in a Lender's cost of funds from those of the Agent
which are solely the result of credit differences between such Lender and
the Agent); or
(iii) at any time, that the making or continuance of any Eurodollar
Rate Loan has been made (x) unlawful by any law or governmental rule,
regulation or order, (y) impossible by compliance by any Lender in good
faith with any governmental request (whether or not having force of law) or
(z) impracticable as a result of a contingency occurring after the date of
this Agreement which materially and adversely affects the interbank
Eurodollar market in general;
then, and in any such event, such Lender (or the Agent, in the case of clause
(i) above) shall promptly give notice (by telephone confirmed in writing) to the
Borrower and, except in the case of clause (i) above, to the Agent of such
determination (which notice the Agent shall promptly transmit to each of the
other Lenders). Thereafter (x) in the case of clause (i) above, Eurodollar Rate
Loans shall no longer be available until such time as the Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice by
the Agent no longer exist,and any Notice of Borrowing or Notice of Conversion or
Continuation given by the Borrower with respect to Eurodollar Rate Loans which
have not yet been incurred (including by way of conversion) shall be deemed
rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower
shall pay to such Lender, upon written demand therefore, such additional amounts
(in the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Lender shall determine) as shall be required to
compensate such Lender for such increased costs or reductions in amounts
received or receivable hereunder (a written notice as to the additional amounts
owed to such Lender, showing the basis for the calculation thereof in reasonable
detail, submitted to the Borrower by such Lender shall, absent manifest error,
be final and conclusive and binding on all the parties hereto; PROVIDED,
HOWEVER, that the failure to give any such notice (unless the respective Lender
has intentionally withheld or delayed such notice, in which case the respective
Lender shall not be entitled to receive additional amounts pursuant to this
SECTION 2.13(a)(y) for periods occurring prior to the 180th day before the
giving of such notice) shall not release or diminish the Borrower's obligations
to pay additional amounts pursuant to this SECTION 2.13(a)(y), and (z) in the
case of clause (iii) above, the Borrower shall take one of the actions specified
in SECTION 2.13(b) as promptly as possible and, in any event, within the time
period
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required by law. In determining such additional amounts pursuant to clause (y)
of the immediately preceding sentence, each Lender shall act reasonably and in
good faith and will, to the extent the increased costs or reductions in amounts
receivable relate to such Lender's loans in general and are not specifically
attributable to a Loan hereunder, use averaging and attribution methods which
are reasonable and which cover all loans similar to the Loans made by such
Lender whether or not the loan documentation for such other loans permits the
Lender to receive increased costs of the type described in this SECTION 2.13(a).
(b) At any time that any Eurodollar Rate Loan is affected by the
circumstances described in SECTION 2.13(a)(ii) OR (iii), the Borrower may (and
in the case of a Eurodollar Rate Loan affected by the circumstances described in
SECTION 2.13(a)(iii) shall) either (i) if the affected Eurodollar Rate Loan is
then being made initially or pursuant to a conversion, by giving the Agent
telephonic notice (confirmed in writing) on the same date that the Borrower was
notified by the affected Lender or the Agent pursuant to SECTION 2.13(a)(ii) OR
(iii), cancel the respective Borrowing, or (ii) if the affected Eurodollar Rate
Loan is then outstanding, upon at least three Business Days' written notice to
the Agent, require the affected Lender to convert such Eurodollar Rate Loan into
a Prime Rate Loan, PROVIDED that if more than one Lender is affected at any
time, then all affected Lenders must be treated the same pursuant to this
SECTION 2.13(b).
(c) CAPITAL REQUIREMENTS. If at any time after the date hereof, any
Lender determines that the introduction of or any change in any applicable law
or governmental rule, regulation, order, guideline or request (whether or not
having the force of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Lender or any corporation
controlling such Lender based on the existence of such Lender's Commitments or
Loans hereunder or its obligations hereunder, then the Borrower shall pay to
such Lender, upon its written demand therefor, such additional amounts as shall
be required to compensate such Lender or such other corporation for the
increased cost to such Lender or such other corporation or the reduction in the
rate of return to such Lender or such other corporation as a result of such
increase of capital. In determining such additional amounts, each Lender will
act reasonably and in good faith and will use averaging and attribution methods
which are reasonable and which will, to the extent the increased costs or
reduction in the rate of return relates to such Lender's commitments or
obligations in general and are not specifically attributable to the Commitments,
Loans and obligations hereunder, cover all commitments and obligations similar
to the Commitments, Loans and obligations of such Lender hereunder whether or
not the loan documentation for such other commitments or obligations permits the
Lender to make the determination specified
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in this SECTION 2.13(c), and such Lender's determination of compensation owing
under this SECTION 2.13(c) shall, absent manifest error, be final, conclusive
and binding on all the parties hereto. Each Lender, upon determining that any
additional amounts will be payable pursuant to this SECTION 2.13(c), will give
prompt written notice thereof to the Agent and the Borrower, which notice shall
show the basis for calculation of such additional amounts in reasonable detail,
although the failure to give any such notice (unless the respective Lender has
intentionally withheld or delayed such notice, in which case the respective
Lender shall not be entitled to receive additional amounts pursuant to this
SECTION 2.13(c) for periods occurring prior to the 180th day before the giving
of such notice) shall not release or diminish any of the Borrower's obligations
to pay additional amounts pursuant to this SECTION 2.13(c). The obligations of
the Borrower under this SECTION 2.13(c) shall survive payment in full of the
Obligations and termination of this Agreement.
Section 2.14 REPLACEMENT OF AFFECTED LENDERS. If any Lender is
owed increased costs under SECTION 2.13(a)(ii) OR (iii), SECTION 2.13(c),
SECTION 2.12(h) or SECTION 3.11 materially in excess of those of the other
Lenders, the Borrower shall have the right, if no Unmatured Event of Default or
Event of Default then exists, to replace such Lender (the "REPLACED LENDER")
with one or more other Eligible Assignee or Assignees (collectively, the
"REPLACEMENT LENDER") reasonably acceptable to the Agent, PROVIDED that (i) at
the time of any replacement pursuant to this SECTION 2.14, the Replacement
Lender shall enter into one or more Assignment Agreements pursuant to which the
Replacement Lender shall acquire all of the Commitments and outstanding Loans
of, and participation in Letters of Credit and Swing Line Loans by, the Replaced
Lender and all rights and obligations under any participation agreements to
which the Replaced Lender is a party with respect to the L/C Agreement, and (ii)
all obligations of the Borrower owing to the Replaced Lender (including, without
limitation, such increased costs and excluding those specifically described in
clause (i) above in respect of which the assignment purchase price has been, or
is concurrently being paid) shall be paid in full to such Replaced Lender
concurrently with such replacement. Upon the execution of the respective
assignment documentation and the payment of amounts referred to in clauses (i)
and (ii) above, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall be released from its obligations under the Loan Documents
and shall cease to constitute a Lender hereunder, except with respect to
indemnification provisions under this Agreement, which shall survive as to such
Replaced Lender. Notwithstanding anything to the contrary contained above,
neither the Facing Agent nor the Swing Line Lender may be replaced hereunder at
any time while it has Letters of Credit or Swing Line Loans, respectively,
outstanding hereunder unless arrangements satisfactory to the Facing Agent or
Swing Line Lender (including the furnishing of a standby letter of credit in
form and substance, and issued by an issuer satisfactory to the
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Facing Agent or the furnishing of collateral of a kind, in amounts and pursuant
to arrangements satisfactory to the Facing Agent) have been made with respect to
such outstanding Letters of Credit or Swing Line Loans.
Section 2.15 CHANGE OF LENDING OFFICE. Each Lender agrees that it
will use reasonable efforts to designate an alternate Lending Office with
respect to any of its Eurodollar Rate Loans affected by the matters or
circumstances described in SECTION 2.13 to reduce the liability of the Borrower
or avoid the results described thereunder, so long as such designation is not
financially disadvantageous to such Lender as determined by such Lender in its
sole discretion and will not result in the imposition upon the Borrower of an
increased liability for Taxes pursuant to SECTION 2.13(a) OR 3.11(a).
Section 2.16 FUNDING LOSSES. The Borrower shall compensate each
Lender, upon its written request (which request shall set forth the basis for
requesting such amounts in reasonable detail and which request shall, absent
manifest error, be final, conclusive and binding upon all of the parties
hereto), for all losses, expenses and liabilities (including, without
limitation, any interest paid by such Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Rate Loans to the extent not recovered by such
Lender in connection with the liquidation or re-employment of such funds and
including the compensation payable by such Lender to a Person to which the
Lender has participated all or a portion of such Borrowing) and any loss
sustained by such Lender in connection with the good faith liquidation or good
faith re-employment of such funds (including, without limitation, a return on
such liquidation or re-employment that would result in such Lender receiving
less than it would have received had such Eurodollar Rate Loan remained
outstanding until the last day of the Interest Period applicable to such
Eurodollar Rate Loans) which the Lender may sustain as a result of: (i) for any
reason (other than a default by such Lender or the Agent) a Borrowing of, or
conversion from or into or continuation of, Eurodollar Rate Loans does not occur
on a date specified therefor in a Notice of Borrowing or Notice of Conversion or
Continuation (whether or not withdrawn); (ii) any payment, prepayment or
conversion or continuation of any of its Eurodollar Rate Loans occurring for any
reason whatsoever on a date which is not the last day of an Interest Period
applicable thereto; (iii) any repayment of any of its Eurodollar Rate Loans not
being made on the date specified in a notice of payment given by the Borrower;
or (iv) (A) any other failure by the Borrower to repay its Eurodollar Rate Loans
when required by the terms of this Agreement or (B) an election made by the
Borrower pursuant to SECTION 2.14. A written notice as to additional amounts
owed such Lender under this SECTION 2.16 and delivered to the Borrower and the
Agent by such Lender shall, absent manifest error, be final, conclusive and
binding for all purposes.
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Section 2.17 PRO RATA BORROWINGS. All Borrowings of Term Loans and
Revolving Loans under this Agreement shall be loaned by the Term Lenders or
Revolving Lenders pro rata on the basis of their Term Loan Pro Rata Share or
Revolving Loan Pro Rata Share, as the case may be. No Lender shall be
responsible for any default by any other Lender in its obligation to make Loans
hereunder and each Lender shall be obligated to make the Loans provided to be
made by it hereunder, regardless of the failure of any other Lender to fulfill
its Commitment hereunder.
Section 2.18 FLORENCE LETTERS OF CREDIT. As soon as practicable
after the Closing Date, the Agent shall cause the current expiration date of the
Florence Letters of Credit to be extended to the Revolver Termination Date as
contemplated in Section 3 of each of the L/C Agreement amendments executed by
Gelco Corporation and Westinghouse Electric Corporation as of the Closing Date.
ARTICLE III
TERMINATION OF COMMITMENTS, PREPAYMENTS
AND FEES
Section 3.1 MANDATORY REVOLVING LOAN AND SWING LINE LOAN
PREPAYMENTS AND COMMITMENT REDUCTIONS.
(a) If at any time the sum of (i) the aggregate principal amount of
all Revolving Loans and Swing Line Loans outstanding plus (ii) the aggregate
amount of L/C Obligations and Florence L/C Obligations outstanding exceeds the
aggregate of the Revolving Loan Commitments of the Revolving Lenders then in
effect, the Borrower shall immediately prepay the Revolving Loan Obligations in
an aggregate principal amount equal to such excess together with any accrued but
unpaid interest with respect to such excess. If at any time the aggregate
principal amount of all Swing Line Loans outstanding exceeds the Swing Line
Commitment of the Swing Line Lender then in effect, the Borrower shall
immediately prepay the Swing Line Loan Obligations in an aggregate principal
amount equal to such excess together with any accrued but unpaid interest with
respect to such excess.
(b) If an Event of Default shall have occurred and the Agent shall
have notified the Borrower of the election of the Required Lenders to take any
action specified in SECTION 7.2, the Revolving Loan Commitment of each Revolving
Lender and the Swing Line Commitment of the Swing Line Lender shall, subject to
reinstatement pursuant to SECTION 7.2, be automatically reduced to $0 without
any action on the part of or the giving of notice to the Borrower by any Lender.
Section 3.2 VOLUNTARY PREPAYMENTS. The Borrower may repay
Revolving Loans, Terms Loans and Swing Line Loans in whole at
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any time or in part from time to time, without penalty or premium, on the
following terms and conditions: (i) the Borrower shall give the Agent written
notice (or telephonic notice promptly confirmed in writing) of its intent to
prepay the Loans, the amount of such prepayment and, in the case of Eurodollar
Rate Loans, the specific Borrowing or Borrowings pursuant to which made, which
notice shall be given by Borrower at least one Business Day prior to the date of
such prepayment (or by 11:00 a.m. (New York City time) on the date of prepayment
in the case of a prepayment of Swing Line Loans) and which notice shall promptly
be transmitted by the Agent to each of the Lenders; (ii) each partial prepayment
of any Borrowing (other than a Borrowing of Swing Line Loans) shall be in an
aggregate principal amount of at least $5,000,000 and in integral multiples of
$1,000,000 above such minimum and each partial prepayment of a Swing Line Loan
shall be an aggregate principal amount of at least $1,000,000 and in integral
multiples of $1,000,000 above such minimum; PROVIDED, HOWEVER, that no partial
prepayment of Eurodollar Rate Loans made pursuant to a single Borrowing under
the Term Loan or the Revolving Loan shall reduce the outstanding Loans made
pursuant to such Borrowing to an amount less than the minimum borrowing amount
as set forth in SECTION 2.4; (iii) any repayment of a Eurodollar Rate Loan on a
day other than the last day of an Interest Period applicable thereto shall be
subject to the provisions of SECTION 2.16; and (iv) each prepayment in respect
of any Loans made pursuant to a Borrowing shall be applied pro rata among such
Loans. The notice provisions, the provisions with respect to the minimum amount
of any prepayment and the provisions requiring prepayments in integral multiples
above such minimum amount of this SECTION 3.2 are for the benefit of the Agent
and may be waived unilaterally by the Agent.
Section 3.3 VOLUNTARY COMMITMENT REDUCTIONS. After the Closing
Date, the Borrower shall have the right, upon at least five (5) Business Days'
prior written notice to the Agent and the Revolving Lenders given prior to
10:00 a.m. (New York City time) on the fifth Business Day preceding the proposed
reduction date, without premium or penalty, to permanently reduce or terminate
the unutilized portion of the aggregate of the Total Revolving Loan Commitments
in whole at any time or in part from time to time, in a minimum amount of
$5,000,000 (unless the Total Revolving Loan Commitment at such time is less than
$10,000,000, in which case, in an amount equal to the Total Revolving Loan
Commitment at such time) and, if such reduction is greater than $5,000,000, in
integral multiples of $1,000,000 above such minimum; PROVIDED, HOWEVER, that no
such reduction or termination of the Revolving Loan Commitments shall be
permitted if, after giving effect thereto and to any prepayment or payment of
the Revolving Loans and Swing Line Loans on the proposed reduction date, the
then outstanding aggregate principal amount of Revolving Loans and Swing Line
Loans plus the then aggregate amount of L/C Obligations and Florence L/C
Obligations would exceed the aggregate Revolving Loan Commitments of the
Revolving Lenders then in effect; and PROVIDED FURTHER, that all prepayments of
Eurodollar Rate Loans shall be subject to
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SECTION 2.16. Any such reduction shall apply proportionately to the Revolving
Loan Commitments of the Revolving Lenders based on such Lender's Revolving Loan
Pro Rata Share. Simultaneously with each reduction or termination of the
Revolving Loan Commitments, the Borrower shall pay to the Agent for the account
of each Revolving Lender the Commitment Fee accrued on the amount of the
Revolving Loan Commitments so reduced or terminated through the date thereof.
Any reduction in the Revolving Loan Commitment of the Swing Line Lender below
$25,000,000 shall, without any further action on the part of the Borrower, cause
a dollar for dollar reduction in the Swing Line Commitment of the Swing Line
Lender. Notwithstanding the foregoing, the Borrower shall not be entitled to
terminate the Total Revolving Loan Commitment in full unless, concurrently
therewith, the Borrower terminates the Florence Letters of Credit (whether by
obtaining a replacement letter of credit therefor, repaying the Florence Bonds
or otherwise) such that no Florence L/C Obligations remain outstanding.
Section 3.4 MANDATORY PREPAYMENTS. Subject in each case to the
provisions of SECTION 3.5:
(a) PREPAYMENTS FROM EXCESS CASH FLOW. Within five (5) Business Days
after the delivery to the Agent of any Excess Cash Flow Schedule pursuant to
SECTION 5.1.1(c), beginning with the Excess Cash Flow Schedule delivered in 1995
with respect to Fiscal Year 1994, the Borrower shall prepay the Term Loan in
accordance with SECTION 3.6 if the Excess Cash Flow disclosed on such Excess
Cash Flow Schedule with respect to the preceding Fiscal Year (i) is positive and
(ii) is greater than $50 million. Any mandatory prepayment pursuant to this
SECTION 3.4(a) shall be in an amount equal to (A) the amount of such positive
Excess Cash Flow in excess of $50 million MULTIPLIED by (B) 50% or such lesser
Excess Cash Flow Percentage in effect at such time.
(b) PREPAYMENTS FROM INCURRENCE OF INDEBTEDNESS. If the Borrower or
any Wholly-Owned Subsidiary of the Borrower receives any proceeds (whether in
cash or marketable securities) attributable to the issuance and sale or other
disposition of any Indebtedness for Money Borrowed described in clause (i) of
the definition of Indebtedness for Money Borrowed of the Borrower or any Wholly-
Owned Subsidiary of the Borrower or any rights to acquire any such Indebtedness
for Money Borrowed described in clause (i) of the definition of Indebtedness for
Money Borrowed (other than (i) Indebtedness permitted by SECTION 5.2.2 other
than SECTION 5.2.2(g), (l) or (p), (ii) proceeds received by a Person which
cannot be remitted to the Borrower or a Subsidiary of the Borrower as a result
of any legal or contractual restriction applicable to such Person existing on
the date of this Agreement and identified on SCHEDULE 3.4 hereto and any legal
or contractual restriction contained in any Indebtedness which refinances any
Indebtedness referenced on SCHEDULE 3.4 provided that the terms thereof are no
more onerous to the Borrower or any Subsidiary than those existing on the date
hereof, (iii) Indebtedness permitted by
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SECTION 5.2.2(p) which is not by the terms of such Section required to be used
to prepay the Loans and (iv) Indebtedness for Money Borrowed of Seminole Kraft),
then the Borrower shall prepay the Term Loan Obligations promptly (but in any
event within five Business Days after receipt of such proceeds) to the extent of
all of such proceeds from debt or debt securities (net of any costs or expenses
incurred in connection with the issuance or sale or other disposition thereof).
(c) PREPAYMENTS FROM ASSET SALES. If the Borrower or any Wholly-
Owned Subsidiary of the Borrower receives any Material Sale Proceeds, then the
Borrower shall prepay the Obligations, to the extent of such proceeds, promptly
(but in any event within five Business Days) after the first date on which such
Persons have received Material Sale Proceeds totalling an aggregate amount of $5
million or more and within five Business Days after each date thereafter when
such Persons have received additional Material Sale Proceeds totalling an
aggregate of $5 million or more; PROVIDED, HOWEVER, that during the pendency of
an Event of Default all Material Sales Proceeds shall be payable upon the demand
of the Agent. "MATERIAL SALE PROCEEDS" means, without duplication, (i) the
cash or cash equivalent proceeds or marketable securities resulting from the
sale or other disposition (including, without limitation, by a sale-leaseback
transaction) of (A) assets or other tangible or intangible property or rights
("ASSETS") not constituting CP&L Property, Collateral or Mortgaged Property
(unless Substitute Collateral has been provided pursuant to SECTION 9.13(c)) and
having an aggregate fair market value in excess of $1 million for each separate
transaction or series of related transactions involving the same seller or (B)
any Collateral or Mortgaged Property (and including any Net Awards and Net
Proceeds required to be paid to the Agent pursuant to the terms of the
Mortgages), LESS (ii) the amount of income taxes payable and any direct costs or
expenses incurred in connection with such sale or disposition, LESS (iii) the
amount of indebtedness secured by such Assets that are sold, which indebtedness
is required to be and is repaid upon such sale, but Material Sales Proceeds
shall not include: (A) proceeds of inventory sold or otherwise disposed of in
the ordinary course of business; (B) subject to the giving of notice to and
deposit of funds with the Agent as provided below, proceeds of Assets not
constituting Collateral or Mortgaged Property (unless Substitute Collateral has
been provided pursuant to SECTION 9.13(c)), sold or exchanged to the extent such
proceeds are utilized in connection with the replacement thereof within 180 days
of the sale or exchange of such assets; (C) proceeds of Permitted Investments;
(D) proceeds received by a Person which cannot be remitted to the Borrower or a
Subsidiary of the Borrower as a result of any legal or contractual restriction
applicable to such Person existing on the date of this Agreement and identified
on SCHEDULE 3.4 hereto and any legal or contractual restriction contained in any
Indebtedness which refinances any Indebtedness referenced on SCHEDULE 3.4
provided that the terms thereof are no more onerous to the Borrower or any
Subsidiary than those existing
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on the date hereof; (E) proceeds resulting from the payment of insurance with
respect to such Assets provided such proceeds are used for the replacement of
such Assets or are required to be applied to a purpose specified in a legal
instrument applicable to such Assets or from the payment of business
interruption insurance; (F) proceeds resulting from the sale or other
disposition of Assets between the Borrower and any Wholly-Owned Subsidiary
(other than a Restricted Subsidiary) of the Borrower or Stone-Canada or between
any Wholly-Owned Subsidiaries (other than Restricted Subsidiaries) of the
Borrower or Stone-Canada; (G) up to an aggregate amount of $200 million of net
proceeds from the sale or other disposition of Assets not constituting
Collateral or Mortgaged Property or Assets constituting Collateral or Mortgaged
Property for which Substitute Collateral has been provided pursuant to SECTION
9.13(c), designated by the Borrower in writing to the Agent as being excluded
from the prepayment requirements of this Section (any amount so designated being
"EXCLUDED SALE PROCEEDS"); (H) proceeds received by Seminole Kraft; or (I)
proceeds from the sale or other disposition of any Assets constituting
collateral which secures the Indebtedness under the First Mortgage Note
Documents. The cash, cash equivalent proceeds or marketable securities
resulting from the repayment or other liquidation of the investments permitted
by SECTION 5.2.7(i) shall be included within the meaning of "MATERIAL SALE
PROCEEDS." Proceeds described in subpart (B) of the exclusion from the
definition of Material Sale Proceeds shall be so excluded only if, within five
(5) Business Days after such proceeds are received, the Borrower gives the Agent
written notice of its intent to utilize such proceeds for replacement purposes
and (to the extent such proceeds have not already been so utilized) delivers
such proceeds to the Agent to be held in an account as security for the
Obligations pursuant to documentation satisfactory to the Agent. During the
period ending on the 180th day after receipt of such proceeds by the Borrower or
one of its Subsidiaries, the Borrower may, so long as no Event of Default or
Unmatured Event of Default shall have occurred and be continuing, withdraw funds
from such account to pay or reimburse itself for such replacement costs. Funds
in such account shall be held and invested in the manner prescribed for
Deposited Monies pursuant to SECTION 3.5. All amounts remaining in such account
at the conclusion of such 180 day period shall, subject to SECTION 3.6(f), be
applied on such date as a prepayment pursuant to this Section and SECTIONS 3.5
and 3.6 as if constituting Material Sale Proceeds received on such date.
Section 3.5 OTHER PROVISIONS WITH RESPECT TO THE LOANS. Subject to
the obligations of the Agent provided for in this SECTION 3.5 and if no Event of
Default or Unmatured Event of Default shall have occurred and be continuing, any
monies otherwise required to be used to prepay a Eurodollar Rate Loan pursuant
to SECTION 3.4 on a date other than the last day of the Interest Period
applicable thereto shall be paid to the Agent (the "DEPOSITED MONIES") when due
but, until the earlier of the occurrence of an Event of Default and the end of
the applicable Interest Period when the Deposited Monies shall be applied to
make
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such prepayment, shall be held in an account by the Agent for the benefit of the
Lenders and the Borrower shall have no right to or interest in such funds and
such funds shall be used to prepay such Eurodollar Rate Loan upon the earlier of
the occurrence of an Event of Default or at the end of the applicable Interest
Period; PROVIDED, HOWEVER, that any funds held in such account shall be invested
by the Agent (to the extent the Agent is reasonably able to do so) on behalf of
the Borrower at the direction of the Borrower in Permitted Investments selected
by the Borrower and having a maturity not exceeding the Business Day prior to
the end of the relevant Interest Period. Interest on the applicable Loans shall
continue to accrue until the Deposited Monies are applied to the prepayment
thereof. Any such investments shall be held by the Agent or under the control
of the Agent. The interest accruing on such investments and any profits
realized from such investments shall be, after giving effect to such repayment
of such Loans with the Deposited Monies, paid to the Borrower; PROVIDED,
HOWEVER, that any loss resulting from such investments shall be charged to and
be immediately payable by the Borrower upon demand of the Agent.
Section 3.6 ORDER OF PREPAYMENT AND PAYMENT.
(a) All prepayments of principal of Revolving Loans made by the
Borrower pursuant to SECTIONS 3.1 AND 3.2 shall be made with interest on such
repaid Revolving Loans and with respect to each Revolving Lender, in
proportional amounts equal to such Revolving Lender's Revolving Loan Pro Rata
Share of such payment and, shall be applied (i) first to the payment of Prime
Rate Revolving Loans and second to the payment of Eurodollar Rate Revolving
Loans, and (ii) with respect to Eurodollar Rate Revolving Loans, pro rata in
order of the maturity of such Loans.
(b) All prepayments of principal of the Term Loan made by the
Borrower pursuant to SECTIONS 3.2 OR 3.4 (other than prepayments made under
SECTION 3.4(c) with any Material Sale Proceeds derived from the sale of any
Collateral or Mortgaged Property) shall be applied (i) to the unpaid principal
amount of the Term Loan in the inverse order of the remaining regularly
scheduled principal installments set forth in SECTION 2.2(a), together with
accrued interest on such prepaid principal amount and with respect to each Term
Lender, in proportional amounts equal to such Term Lender's Term Loan Pro Rata
Share; and (ii) first to the payment of Prime Rate Term Loans and second to the
payment of Eurodollar Rate Term Loans, and within such Eurodollar Rate Term
Loans, pro rata in order of the maturity of such Loans.
(c) All prepayments of principal made by the Borrower pursuant to
SECTION 3.4(c) out of Material Sale Proceeds derived from the sale of Collateral
or Mortgaged Property (other than Collateral or Mortgaged Property for which
Substitute Collateral is provided in accordance with SECTION 9.13(c)) shall be
applied on a pro rata basis (relative to the outstanding principal amount of the
Term Loan and the aggregate amount of the Revolving Loan
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Commitments) to the unpaid principal amount of the Term Loan and to the unpaid
principal amount of the Revolving Loans (to the extent thereof), and
contemporaneously with such prepayment there shall be a permanent reduction of
the aggregate outstanding Revolving Loan Commitments (and with respect to each
Revolving Lender, based on such Lender's Revolving Loan Pro Rata Share)in an
amount equal to such Revolving Loan pro rata portion of such Material Sale
Proceeds (the "REVOLVING PORTION"). In the event that any Material Sale
Proceeds relative to the Revolving Portion remain after the prepayment of
Revolving Loans, any excess shall be deposited with the Agent to cash
collateralize any L/C Obligations then outstanding, but only to the extent and
in the aggregate amount of such Obligations; PROVIDED, HOWEVER, that the
Borrower shall only be required to deposit such excess proceeds if and for so
long as an Unmatured Event of Default or an Event of Default has occurred and is
continuing at such time or if and to the extent the aggregate outstanding
Revolving Loan Commitments have, pursuant to the preceding sentence, been
reduced to an amount less than the L/C Obligations then outstanding.
Prepayments of Loans described in this SECTION 3.6(c) shall be applied first to
the payment of Prime Rate Loans and second to the payment of Eurodollar Rate
Loans, and, within such Eurodollar Rate Loans, pro rata in order of the maturity
of such Loans. All prepayments of principal of the Term Loan pursuant to this
SECTION 3.6(c) shall be applied to the unpaid principal amount of the Term Loan
in the inverse order of the remaining installments set forth in SECTION 2.2(a).
(d) All regularly scheduled principal installments on the Term Loan
Obligations shall be applied first to the payment of Prime Rate Loans and second
to the payment of Eurodollar Rate Loans.
(e) During the pendency of an Event of Default, all payments in
respect of the Obligations shall be applied first to interest, fees, costs,
expenses and other amounts (other than principal) then owing, and second to
principal; PROVIDED, HOWEVER, that proceeds of collateral realized pursuant to
the exercise of remedies under any security instrument securing the Obligations
shall be applied as specified in such security instrument.
(f) Notwithstanding anything in SECTION 3.4, 3.6 OR 9.2 to the
contrary, at the request of the Borrower any Term Lender may waive its right to
receive all or any part of such Lender's portion of any mandatory prepayment of
the Term Loan required to be made under SECTION 3.4 (such portion, "WAIVED
PROCEEDS") by delivering such waiver in writing to the Agent and the Borrower,
signed by an authorized officer of such Lender and in form satisfactory to the
Agent. Upon receipt of such written waiver, the Borrower shall be relieved of
its obligation to prepay such amount and may apply such Waived Proceeds to
Permitted Uses. Any request by the Borrower for a waiver of any prepayment
pursuant to this SECTION 3.6(f) shall be in writing and shall be delivered to
the Agent, which shall promptly distribute such request to the Term Lenders.
Each Term
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Lender shall use reasonable efforts to respond to such waiver request within
five Business Days following receipt of a written request therefor. Any failure
by a Term Lender to respond to such waiver request within such period shall be
deemed to be an election by such Lender not to waive its right to receive its
portion of such mandatory prepayment and shall in no event give rise to any
obligation or liability of any kind on the part of such Term Lender.
Section 3.7 COMMITMENT FEES.
(a) The Borrower shall pay to the Agent for pro rata distribution to
each Revolving Lender (based on its Revolving Loan Pro Rata Share) a commitment
fee (the "COMMITMENT FEE") for the period commencing on the date of this
Agreement to the Revolver Termination Date or the earlier termination of the
Revolving Loan Commitments, computed at a rate equal to 1/2 of 1% per annum on
the average daily unused portion of the aggregate Revolving Loan Commitments of
the Revolving Lenders in effect at the time under this Agreement; PROVIDED,
HOWEVER, that solely for purposes of computing Commitment Fees, all outstanding
Swing Line Loans, L/C Obligations and Florence L/C Obligations shall at all
times be deemed to be an unused portion of the aggregate Revolving Loan
Commitments.
(b) Unless otherwise specified herein, accrued Commitment Fees
payable under SECTION 3.7(a) shall be due and payable (i) quarterly on the
Quarterly Payment Dates of each year, (ii) on the Revolver Termination Date and
(iii) upon any reduction or termination in whole or in part of the Revolving
Loan Commitments. The Commitment Fees shall be computed on the basis of a year
consisting of 360 days and actual days elapsed.
Section 3.8 CLOSING FEES.
(a) On the Closing Date the Borrower shall pay to the Agent for
distribution to the Lenders the separately negotiated closing fee (the "FACILITY
FEE").
(b) On the Closing Date the Borrower shall pay to the Agent for
distribution to the Lenders the separately negotiated commitment fee (the
"ADDITIONAL COMMITMENT FEE").
Section 3.9 AGENT'S FEES. Without duplication as to any fees
expressly set forth in this Agreement, the Borrower shall pay the separately
negotiated Agent's fees (the "AGENT'S FEES") as and when required by the
separate agreement between the Borrower and the Agent.
Section 3.10 AGENT'S ADMINISTRATIVE FEE. The Borrower shall pay to
the Agent for its own account a separately negotiated annual fee payable in
arrears in equal semi-annual installments as
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required by the separate agreement between the Borrower and the Agent (the
"AGENT'S ADMINISTRATIVE FEE").
Section 3.11 PAYMENTS.
(a) All payments by the Borrower under this Agreement or under any
Loan Document shall be made without setoff, counterclaim or other defense and in
such amounts as may be necessary in order that all such payments (after
deduction or withholding for or on account of any present or future taxes
(withholding or otherwise), levies, imposts, duties, assessments or other
charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority thereof, other than any franchise tax or tax
imposed on or measured by the income of a Lender pursuant to the income tax laws
of the United States of America or the jurisdictions where such Lender's
principal or lending offices are located (collectively the "TAXES")) shall not
be less than the amounts otherwise specified to be paid under this Agreement.
The Borrower shall indemnify and hold the Agent, the Facing Agent and the
Lenders harmless against any and all such Taxes together with all interest or
penalties owing in respect thereof. A certificate as to any additional amount
payable to a Lender under this Section submitted to the Borrower and the Agent
by such Lender shall show in reasonable detail the amount payable and the
calculations used to determine in good faith such amount, and shall, absent
manifest error, be final, conclusive and binding upon all parties hereto. With
respect to each deduction or withholding for or on account of any Taxes, the
Borrower shall promptly furnish to each Lender such certificates, receipts and
other documents as may be reasonably required (in the judgment of such Lender)
to establish any tax credit to which such Lender may be entitled.
(b) All payments (including prepayments) to be made by the Borrower
on account of principal or interest on any of its Obligations shall be made to
the Agent at its Payment Office for the ratable account of the Revolving
Lenders, the Term Lenders or for the Swing Line Lender or the Facing Agent, as
the case may be, not later than 12:00 noon (New York City time) on the date when
due, in each case in lawful money of the United States of America and in
immediately available funds. Except as required under SECTION 2.12(h) AND (i),
2.13, 2.16, 3.11(a), 9.5 and 9.6 or as permitted under SECTION 3.6(f), all
payments (including prepayments) received by the Agent on account of principal
or interest on the Obligations or Letter of Credit Fees or Commitment Fees shall
be deemed made, and shall be distributed by the Agent to the Revolving Lenders,
the Term Lenders, the Swing Line Lender or the Facing Agent, as the case may be,
and with respect to any such payments to the Revolving Lenders or the Term
Lenders, distributed by the Agent to the Revolving Lenders and the Term Lenders
in accordance with their Revolving Loan Pro Rata Shares and Term Loan Pro Rata
Shares, respectively, and, as among all Lenders (including the Swing Line Lender
and the Facing Agent), be applied ratably according to the amount of principal,
interest, Letter of Credit
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Fees and Commitment Fees then due and owing to such Revolving Lenders, Term
Lenders or the Swing Line Lender or the Facing Agent, at the time such payment
is received. If any payment hereunder becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding
Business Day (PROVIDED, HOWEVER, that if a payment in respect of a Eurodollar
Rate Loan would otherwise be made on a day which is not a Business Day and after
which no Business Day occurs in the same month, such payment shall be made on
the next preceding Business Day), and, with respect to payments on principal
and, to the extent permitted by law, interest thereon, interest thereon shall be
payable at the then applicable rate during such extension. Payments received
after noon (New York City time) on any date shall be deemed received on the next
succeeding Business Day.
(c) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code), shall submit to the Borrower within
31 days after it becomes a Lender hereunder duly completed and signed copies of
(i) Internal Revenue Service ("IRS") Form 1001 (relating to such Lender and
entitling it to a complete exemption from United States withholding on all
amounts to be received by such Lender at any Lending Office designated by such
Lender, including fees, under this Agreement) and, if necessary to prevent
backup withholding, IRS Form W-8 (relating to the foreign status exemption from
United States federal income tax backup withholding), (ii) IRS Form 4224
(relating to all amounts to be received by such Lender at any Lending Office
designated by such Lender, including fees, under this Agreement) and, if
necessary to prevent backup withholding, IRS Form W-9 (certification of taxpayer
identification number) or (iii) IRS Form W-8 (relating to the exemption from
United States federal income tax withholding on payments of portfolio interest
under Section 871(h) or Section 881(c) of the Code) together with a certificate
substantially in the form of EXHIBIT 3.11(c) hereto. Thereafter and from time
to time, each such Lender, to the extent legally entitled to do so, shall submit
to the Borrower such additional duly completed and signed copies of the
previously provided forms (or such successor forms as shall be adopted from time
to time by the relevant United States taxing authorities) as may be (i)
requested by the Borrower from such Lender and (ii) required under then-current
United States law or regulations to avoid United States withholding taxes on
payment in respect of amounts to be received by such Lender at any Lending
Office designated by such Lender, including fees, under this Agreement. Upon
the request of the Borrower, each Lender that is a United States person (as such
term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower
a certificate to the effect that it is such a United States person. If any
Lender determines that it is unable to submit to the Borrower any form or
certificate that such Lender is obligated to submit pursuant to this Section, or
that such Lender is required to withdraw or cancel any such form or certificate
previously submitted, such Lender shall promptly notify the Borrower of such
fact. Any amount that would otherwise
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have been required to be paid by the Borrower in respect of United States
withholding Taxes pursuant to this Section shall not be payable by the Borrower
to any Lender that (i) is neither (a) entitled to submit the form or forms
required by the first sentence of this SECTION 3.11(c) (or said successor forms)
other than on account of a change in applicable law or regulations or in any
treaty after the date hereof nor (b) a United States person (as such term is
defined in Section 7701(a)(30) of the Code), or (ii) has failed to submit any
form or certificate that it was required to file pursuant to this Section and
entitled to file under applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent, the Co-Agents and the Lenders to enter
into this Agreement and the other Loan Documents and to make the Loans, and
issue (or participate in) the Letters of Credit as provided herein, the Borrower
makes the following representations and warranties as of the Closing Date (both
before and after giving effect to the consummation of the Related Transactions)
and as of the date of each subsequent Credit Event, all of which shall survive
the execution and delivery of this Agreement and the other Loan Documents and
the making of the Loans and issuance of the Letters or Credit, with the
occurrence of each Credit Event on or after the Closing Date being deemed to
constitute a representation and warranty that the matters specified in this
ARTICLE IV are true and correct on and as of the Closing Date and on and as of
the date of each such Credit Event, PROVIDED that any representation or warranty
which by its terms is made as of a specified date shall be required to be true
and correct on the date of each Credit Event but only as of such specified date:
Section 4.1 DUE ORGANIZATION AND STANDING. The Borrower and each
Subsidiary of the Borrower is a corporation duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of incorporation.
The Borrower and each Subsidiary of the Borrower is duly qualified and in good
standing as a foreign corporation, and is duly authorized to do business, in
each jurisdiction in which the ownership or leasing of its or their properties
or the conduct of its or their business requires such qualification, except
where the failure to be so qualified would not have a Material Adverse Effect,
either individually or in the aggregate.
Section 4.2 POWER AND AUTHORITY. The Borrower and each Subsidiary
of the Borrower has all requisite corporate power and authority to own, operate
and encumber its property and assets and to carry on its business as presently
conducted and as proposed to be conducted. Each of the Borrower and its
Subsidiaries has all requisite power and authority (corporate and otherwise) (i)
to
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execute, deliver and perform its obligations under each of the Basic Agreements
to which it is a party, (ii) to assign and grant a security interest or mortgage
in the Collateral and the Mortgaged Property in the manner and for the purpose
contemplated by the Security Agreements and the Mortgages, respectively, to
which it is a party, and (iii) to execute, deliver and perform its obligations
under all other agreements and instruments executed and delivered by it pursuant
to or in connection with any Basic Agreement to which it is a party or bound
thereby.
Section 4.3 SUBSIDIARIES. SCHEDULE 4.3 attached hereto is a
complete and correct list of all Subsidiaries of the Borrower as of the date
hereof and as of the Closing Date. Except as set forth on SCHEDULE 4.3, all of
the issued and outstanding shares of capital stock of each such Subsidiary other
than directors' qualifying shares, if any, are owned directly or indirectly by
the Borrower as of the date hereof and as of the Closing Date. As of the date
hereof and as of the Closing Date, all shares of capital stock of each
Subsidiary of the Borrower have been validly issued, are fully paid and non-
assessable and all such shares owned directly or indirectly by the Borrower are
owned free and clear of all Liens other than Permitted Liens. Except as set
forth on SCHEDULE 4.3, as of the date hereof and as of the Closing Date, no
authorized but unissued or treasury shares of capital stock of 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 4.3, as of the date
hereof and as of the Closing Date, the Borrower has no Subsidiaries other than
Wholly-Owned Subsidiaries.
Section 4.4 NO VIOLATION OF AGREEMENTS. The execution, delivery
and performance by each of the Borrower and its Subsidiaries of each of the
Basic Agreements to which it is a party and all other agreements and instruments
to be executed and delivered by the Borrower or any of its Subsidiaries pursuant
hereto or thereto or in connection herewith or therewith, the assignment of, and
the grant of a security interest or mortgage in, the Collateral or on the
Mortgaged Property in the manner and for the purpose contemplated by the
Security Agreements and the Mortgages, respectively, do not and will not (i)
violate in any material respect any provisions of any law, statute, rule,
regulation (including, without limitation, Regulations G, T, U or X of the
Board), order, license, permit, writ, judgment, decree, determination or award
presently in effect having applicability to the Borrower or any of its
Subsidiaries, (ii) conflict with or result in a breach of or constitute a
tortious interference with or constitute a default under the certificate of
incorporation or by-laws, or other organizational documents, as the case may be,
of either the Borrower or any of its Subsidiaries or any indenture or loan or
credit agreement, or any other material agreement or instrument, to which the
Borrower or any of its Subsidiaries is a party or by which the Borrower or any
of its Subsidiaries or any of their respective properties are bound or affected,
or any
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governmental permit, license or order, (iii) result in or require the creation
or imposition of any Lien (except for Permitted Liens) of any nature upon or
with respect to any of the properties now owned or hereafter acquired by the
Borrower or any of its Subsidiaries, or (iv) require any approval of
stockholders or any approval or consent of any Person which have not been
obtained on or prior to the date hereof, except for such approvals and consents
referred to on SCHEDULE 4.4 hereto. Neither the Borrower nor any Subsidiary of
the Borrower is in default under or in violation of any such law, statute, rule,
regulation, judgment, decree, license, order or permit described above or any
indenture, mortgage, deed of trust, agreement or other instrument described
above or under its charter or by-laws, in each case the consequences of which
default or violation, either in any one case or in the aggregate, would have a
Material Adverse Effect.
Section 4.5 DUE AUTHORIZATION, ETC. The execution, delivery and
performance (or filing, as the case may be) of each of the Basic Agreements, and
the consummation of the transactions contemplated thereby, have been duly
authorized by all requisite corporate action on the part of the Borrower or its
applicable Subsidiaries party to such Basic Agreements and no other corporate
proceedings on the part of the Borrower or its applicable Subsidiaries are
necessary to authorize any of the Basic Agreements. Each of the Basic
Agreements to which it is a party and each other agreement or instrument
executed and delivered by the Borrower or any of its Subsidiaries pursuant
hereto or thereto or in connection herewith or therewith has been duly executed
and delivered (or filed, as the case may be) by the Borrower or such Subsidiary
and constitutes or will constitute a legal, valid and binding obligation of the
Borrower or such Subsidiary, enforceable against the Borrower or such Subsidiary
in accordance with its respective terms (subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other similar laws affecting the
enforcement of creditors' rights generally and general equitable principles).
Each of the Basic Agreements is in full force and effect and the Borrower and
the other parties thereto (other than the Lenders) have performed and complied
in all material respects with all the terms, provisions, agreements and
conditions set forth therein and required to be performed or complied with by
such parties on or before the Closing Date, and no default by the Borrower or
any Subsidiary of the Borrower or, to the best knowledge of the Borrower, any of
the other parties thereto (other than the Lenders), exists thereunder. From and
after the Closing Date, the Security Agreements will give the Agent for the
benefit of the Lenders, as security for the repayment of the obligations secured
thereby, assuming proper filings and recordations are made, a valid and
perfected first priority lien (which priority is subject only to prior Liens
permitted by such agreements) upon and security interest in the Collateral, and
each of the Mortgages will give the Agent for the benefit of the Lenders, as
security for the repayment of the obligations secured thereby, assuming proper
filings and recordations are made, a valid and first priority lien
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(which priority is subject only to prior Liens permitted by the respective
Mortgages) upon and security interest in the respective Mortgaged Property,
subject to Permitted Liens.
Section 4.6 INDEBTEDNESS FOR MONEY BORROWED. Attached hereto as
SCHEDULE 4.6 is a complete and correct list of all Indebtedness for Money
Borrowed, exclusive of intercompany Indebtedness for Money Borrowed owing
between and among the Borrower and its Wholly-Owned Subsidiaries, of the
Borrower and each Subsidiary of the Borrower outstanding as of the date hereof
and as of the Closing Date, showing the aggregate principal amount which will be
outstanding on the Closing Date after giving effect to the Related Transactions
and the making of the Loans hereunder. The Borrower has delivered or caused to
be delivered to the Agent a true and complete copy of the form of each
instrument evidencing Indebtedness for Money Borrowed listed on SCHEDULE 4.6 and
of each instrument pursuant to which such Indebtedness for Money Borrowed was
issued. All Indebtedness of the Borrower to the Agent or the Lenders under any
Basic Agreement constitutes Senior Indebtedness. No Indebtedness of the
Borrower to any party is senior in priority of payment to the Obligations.
Section 4.7 FISCAL QUARTERS AND YEAR. The fiscal quarters (the
"FISCAL QUARTERS") of the Borrower and its Subsidiaries begin on the first day
of January, April, July and October and end on the last day of March, June,
September and December, respectively, of each year. The fiscal year (the
"FISCAL YEAR") of the Borrower and each of its Subsidiaries commences on January
1 and ends on December 31 of each calendar year.
Section 4.8 TITLE TO AND CONDITIONS OF PROPERTIES. Except as
disclosed on SCHEDULE 4.8 hereto, as of the date hereof and as of the Closing
Date, the Borrower or one of its Subsidiaries has valid, legal and marketable
title to, or a subsisting leasehold interest in, all material items of real and
personal property reflected on the Balance Sheet or acquired after the date of
the Balance Sheet except for assets sold, transferred or otherwise disposed of
in the ordinary course of business since the date of the Balance Sheet, in each
case (except as to leasehold interests) free and clear of all Liens, except
Permitted Liens. As of the date hereof and as of the Closing Date,
substantially all items of real and material personal property owned by, leased
to or used by the Borrower and/or each Subsidiary of the Borrower are in
adequate operating condition and repair, ordinary wear and tear excepted, are
free and clear of any known defects except such defects as do not substantially
interfere with the continued use thereof in the conduct of normal operations,
and are able to serve the function for which they are currently being used.
Section 4.9 LITIGATION, PROCEEDINGS, LICENSES, PERMITS. There is
no action, suit or proceeding, or any governmental investigation or any
arbitration pending or, to the knowledge of the Borrower, threatened against the
Borrower or any
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of its Subsidiaries or any material property of any thereof before any court or
arbitrator or any governmental or administrative body, agency or official (i)
which asserts the invalidity, or seeks to enjoin, or otherwise materially
interferes with, the performance or consummation, of any Basic Agreement, or
(ii) which is reasonably likely to have a Material Adverse Effect. Neither the
Borrower nor any of its Subsidiaries (A) is in default with respect to any order
of any court, arbitrator or governmental body or is subject to or party to any
order of any court or governmental authority arising out of any action, suit or
proceeding against it under any statute or other law respecting antitrust,
monopoly, restraint of trade, unfair competition or similar matters or (B) has
violated or is in violation of any statute, rule or regulation of any
governmental authority in each case where such violation or default would have a
Material Adverse Effect. The Borrower and each of its Subsidiaries have been
and are current and in good standing with respect to all governmental approvals,
permits, certificates, licenses, inspections, consents and franchises necessary
to continue to conduct their respective businesses in accordance with applicable
laws, rules and regulations and to own or lease and operate their respective
properties, except where the failure to be so would not have a Material Adverse
Effect.
Section 4.10 GOVERNMENTAL CONSENTS, ETC. Except to the extent not
required to be obtained prior to the date hereof (or, with respect to any future
date, required to be obtained as of such date), and except as disclosed on
SCHEDULE 4.10 hereto, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or any
securities exchange or any other Person is required in connection with the
execution, delivery and performance by the Borrower and its Subsidiaries of any
Basic Agreement or the assignment of, and the grant of a security interest in or
mortgage on the Collateral or the Mortgaged Property, in the manner and for the
purposes contemplated by the Security Agreements or the Mortgages, respectively,
and all of such consents shall have been obtained prior to, and shall remain in
full force and effect on, and any requirements described on SCHEDULE 4.10 shall
have been met on or prior to, the date hereof.
Section 4.11 FINANCIAL STATEMENTS.
(a) The Borrower has heretofore caused to be delivered to each Lender
complete and correct copies of consolidated balance sheets of the Borrower and
its Subsidiaries for the fiscal year ended December 31, 1993 and as at June 30,
1994 (such consolidated balance sheet and the notes thereto as at June 30, 1994
being herein referred to as the "BALANCE SHEET"), and consolidated statements of
income and consolidated statements of cash flows for such year then ended,
certified by Price Waterhouse, whose report thereon is incorporated by reference
therein, together with unaudited consolidated statements of income and
consolidated
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statements of cash flows for the three months and six months ended June 30,
1994. As of the date hereof and as of the Closing Date, the consolidated
balance sheets and the notes thereto fairly present the assets, liabilities and
financial condition of the Borrower and its Subsidiaries as at the respective
dates thereof, and the consolidated statements of income and consolidated
statements of cash flows and the notes thereto fairly present the results of
operations of the Borrower and its Subsidiaries for the respective periods
therein referred to, all in accordance with generally accepted accounting
principles consistently applied throughout the respective periods involved and
the prior periods, except as stated therein or in the notes thereto.
(b) The Borrower has furnished to the Agent the pro forma
consolidated balance sheet (the "PRO FORMA") of the Borrower and its
Subsidiaries attached hereto as EXHIBIT 4.11(b). As of the date hereof and as
of the Closing Date, the Pro Forma is complete and accurate in all material
respects and fairly presents the Borrower's assets, liabilities and financial
condition, on a consolidated basis, taking into account the transactions
contemplated by the Basic Agreements, the Related Transactions and the making of
the Loans hereunder based on the assumptions set forth in the notes to the Pro
Forma.
(c) The Borrower has furnished to the Agent initial Forecasts for the
Borrower dated as of the date hereof and attached hereto as EXHIBIT 4.11(c).
For purposes of this Agreement, "FORECASTS" shall mean forecasted balance sheets
for the forthcoming five (5) years, year-by-year; forecasted cash flow
statements (including proposed Capital Expenditures) for the forthcoming five
(5) years, year-by-year; forecasted profit and loss statements for the
forthcoming five (5) years, year-by-year, and for the forthcoming Fiscal Year,
quarter-by-quarter, together with appropriate supporting details consistent with
EXHIBIT 4.11(c). The initial Forecasts have been prepared by the Borrower on
the basis of the assumptions set forth therein and represent, as of the date
hereof and as of the Closing Date, the good faith estimate of the Borrower
regarding the course of the Borrower's business for the periods covered thereby.
The Borrower believes in good faith on the date hereof and on the Closing Date
that the assumptions set forth in the initial Forecasts are reasonable.
(d) Except as set forth on SCHEDULE 4.11(d) hereto, neither the
Borrower nor any of its Subsidiaries has any material liabilities or obligations
of any nature, whether absolute, accrued, contingent or otherwise, or any
material unsatisfied judgments or any leases for a period in excess of five (5)
years which either individually or in the aggregate are material (herein called
"MATERIAL LIABILITIES"), except (a) Material Liabilities which are fully
reflected or reserved against on (i) the Pro Forma, with respect to the period
from the date hereof until the delivery of the initial Most Recent Balance Sheet
in Fiscal Year 1995 and
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(ii) the Most Recent Balance Sheet, with respect to all periods thereafter, and
(b) Material Liabilities incurred subsequent to the date of the Pro Forma or the
Most Recent Balance Sheet, as the case may be, in the ordinary course of
business consistent with past practice. The reserves, if any, reflected on the
Pro Forma or the Most Recent Balance Sheet, as the case may be, for all Material
Liabilities referred to in clause (a) above are appropriate and reasonable as of
the date of the Pro Forma or Most Recent Balance Sheet, as the case may be.
Section 4.12 NO MATERIAL ADVERSE CHANGE. Except for the
transactions specifically contemplated by the Basic Agreements or reflected on
the Pro Forma and matters disclosed in the public filings identified on SCHEDULE
4.12 hereto, since December 31, 1993 there has been no material adverse change
in the condition (financial or otherwise), business, assets, liabilities,
prospects or results of operations of the Borrower and its Subsidiaries taken as
a whole.
Section 4.13 TAX RETURNS AND PAYMENTS. The Borrower and each of its
Subsidiaries has timely filed or caused to be filed all tax returns which are
required to be filed, and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other material taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than those the amount or validity of which
is being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with generally accepted accounting principles have
been provided on the books of the Borrower or such Subsidiary, as the case may
be); and no tax liens have been filed and no claims are being asserted with
respect to any such taxes, fees or other charges (other than such liens or
claims, the amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with generally accepted accounting principles have been provided).
Section 4.14 PATENTS, ETC. The Borrower and each of its
Subsidiaries own, are licensed or otherwise have the lawful right to use, or
have all permits and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how and processes used in or necessary for
the conduct of their businesses except where the failure to own or have the
right to use will not have a Material Adverse Effect. To the best of Borrower's
knowledge, the use of such permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and processes by the
Borrower and each of 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 the Borrower or any of its
Subsidiaries which has or is reasonably likely to have a Material Adverse
Effect. The consummation of the transactions contemplated
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by the Basic Agreements will not impair the ownership of or rights under (or the
license or other right to use, as the case may be) any permits, governmental
approvals, patents, trademarks, trade names, copyrights, technology, know-how or
processes by the Borrower or any of its Subsidiaries in any manner which has or
is reasonably likely to have a Material Adverse Effect.
Section 4.15 ERISA.
(a) With respect to the Borrower and its Subsidiaries (other than
Stone-Canada and its Subsidiaries except to the extent that a Plan of Stone-
Canada or any Subsidiary of Stone-Canada is subject to ERISA):
(i) No termination since September 2, 1974 of any Plan of the
Borrower or any of its Subsidiaries or any ERISA Affiliate has resulted in
any material liability of the Borrower or any of its Subsidiaries. All
Plans of the Borrower or any of its Subsidiaries have been operated and
administered in a manner so as not to result in any material liability for
failure to comply with ERISA, and if intended to qualify under Section
401(a) or 403(a) of the Code, in a manner so as not to result in any
material liability for failure to comply with the applicable provisions
thereof. Neither the Borrower nor any of its Subsidiaries or any ERISA
Affiliate has engaged in any transaction in connection with which any such
entity could be subjected to either a material civil penalty assessed
pursuant to Section 502(i) of ERISA or a material tax imposed by Section
4975 of the Code. Full payment has been made on a timely basis of all
amounts which the Borrower or any of its Subsidiaries or any ERISA
Affiliate is required under the terms of each Plan to have paid as a
contribution to such Plan. None of the Plans which is subject to Part 3 of
Subtitle B of Title 1 of ERISA or Section 412 of the Code has an
accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived. Neither the Borrower nor
any of its Subsidiaries or ERISA Affiliates has any contingent liability
under Section 4069 of ERISA. No material liability to the PBGC has been or
is expected by the Borrower to be incurred with respect to any Plan by the
Borrower or any of its Subsidiaries or any ERISA Affiliate; and there has
been no Reportable Event, and no event or condition, which presents a
material risk of termination of any such Plan by the PBGC which would
result in material liability of the Borrower or any of its Subsidiaries or
any ERISA Affiliate. No material liability has been or is expected to be
incurred by the Borrower or any of its Subsidiaries or any ERISA Affiliate
resulting from any withdrawal by the Borrower, any of its Subsidiaries or
any ERISA Affiliate from a plan in which it was a substantial employer
(within the meaning of Section 4001 (a)(2) of ERISA). Assuming that no
portion of the Loan proceeds to be advanced
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hereunder is attributable, directly or indirectly, to the assets of any
employee benefit plan (within the meaning of Section 3(3) of ERISA) or plan
(within the meaning of Section 4975(e) of the Code), the execution,
performance and delivery of the Basic Agreements by any party thereto will
not involve any prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code for which an exemption therefrom is not
available. The aggregate fair market value of the assets of the Plans
exceeds the aggregate present value of accrued benefits under such Plans
and, with respect to any Plan the fair market value of the assets of which
does not exceed the present value of accrued benefits thereunder (an
"UNDERFUNDED PLAN"), the amount by which the present value of accrued
benefits under each Underfunded Plan exceeds the fair market value of the
assets of such Underfunded Plan is not material to the Borrower and its
Subsidiaries taken as a whole.
(ii) No material liability has been or is expected to be incurred by
the Borrower or any of its Subsidiaries or any ERISA Affiliate with respect
to any Multiemployer Plan except for future contributions to any
Multiemployer Plan pursuant to the terms of any applicable collective
bargaining agreement. Full payment has been made of all amounts which the
Borrower or any ERISA Affiliate is required under the terms of any
Multiemployer Plan to have paid as a contribution to such Multiemployer
Plan as of the last day of the most recent fiscal year of such
Multiemployer Plan, except for any contribution which might be required and
is unpaid because of mathematical error in the calculation of such amount.
(iii) No liability which would have a Material Adverse Effect has been
or is expected to be incurred by the Borrower or any of its Subsidiaries or
any ERISA Affiliate for failure to comply with the health coverage
continuation requirements enacted under the Consolidated Omnibus Budget
Reconciliation Act of 1986.
(b) With respect to Stone-Canada and its Subsidiaries, except as set
forth on SCHEDULE 4.15, there are no unfunded liabilities arising out of any
pension plan or under any benefit plan to which Stone-Canada or any Subsidiary
of Stone-Canada is a party or by which either is bound and all employer
contributions required thereunder to date have been made.
Section 4.16 GOVERNMENTAL REGULATION. Neither the Borrower nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, the
Investment Company Act of 1940 or any other federal or state statute or
regulation such that its ability to incur indebtedness is limited or its ability
to
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consummate the transactions contemplated hereby is materially impaired.
Section 4.17 FEDERAL RESERVE REGULATIONS. Neither the Borrower nor
any Subsidiary of the Borrower is engaged, directly or indirectly, principally,
or as one of its important activities, in the business of extending, or
arranging for the extension of, credit for the purpose of purchasing or carrying
any Margin Stock, within the meaning of Regulation G, U or X of the Board.
Following application of the proceeds of each Loan, not more than 25% of the
value of the assets (either of the Borrower only or of the Borrower and its
Subsidiaries on a consolidated basis) will be Margin Stock.
Section 4.18 TRANSACTION DOCUMENTS. The Borrower has delivered to
the Agent true, complete and correct copies of the Transaction Documents
(including all schedules, exhibits, annexes, amendments and all other documents
delivered pursuant thereto or in connection therewith). The Transaction
Documents as originally executed and delivered by the parties thereto have not
been amended, waived, supplemented or modified without the consent of the
Required Lenders. Neither the Borrower nor any other party thereto is in
default in the performance or compliance with any provisions thereof. The
Transaction Documents are in material compliance with all applicable laws and
the transactions effected thereunder were consummated in accordance with
applicable laws and regulations.
Section 4.19 SOLVENCY OF THE BORROWER. As of the date hereof and as
of the Closing Date, no obligation shall have been incurred by the Borrower or
any Subsidiary of the Borrower with intent to hinder, delay, disturb or defraud
creditors of the Borrower or any Subsidiary of the Borrower and the Borrower and
each of its Subsidiaries (i) shall not be "insolvent" (within the meaning of
Section 101(29) of The Bankruptcy Code of 1978, as amended, Section 2 of the
Uniform Fraudulent Conveyance Act or Section 2 of the Uniform Fraudulent
Transfer Act) and will not become "insolvent" (after giving effect to the
financing contemplated hereby or any application of the proceeds of the Loans or
the proceeds from the Transaction Documents) as a result of the incurrence of
any such obligations; (ii) shall not be engaged in any business or transaction
with unreasonably small capital (after giving effect to the financing
contemplated hereby); and (iii) shall be able to perform its contingent
obligations and other commitments as they mature in the normal course of
business.
Section 4.20 CERTAIN FEES. Other than as set forth in the
Transaction Documents or in the documentation relating to the public debt
financing contemplated thereby, no broker's or finder's fees or commissions were
paid or will be payable by the Borrower or any Subsidiary of the Borrower with
respect to the transactions contemplated by the Basic Agreements. No similar
fees or commissions were paid or will be payable by the Borrower or any
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Subsidiary of the Borrower for any other services rendered to the Borrower or
any Subsidiary of the Borrower in connection with the transactions contemplated
hereby. The Borrower covenants that it will indemnify the Agent, the Co-Agents
and each Lender against and hold the Agent, the Co-Agents and each Lender
harmless from any claim, demand or liability for broker's or finder's fees or
similar fees or commissions alleged to have been incurred in connection with any
such issuance or offer, issue and sale, or the transactions contemplated hereby.
The obligations of the Borrower under this Section shall survive the termination
of this Agreement and the discharge of the Borrower's obligations hereunder and
under the Obligations.
Section 4.21 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE
4.21, (i) the operations of and the real property associated with the Borrower
and each of its Subsidiaries is in compliance with all applicable Environmental
Laws except where the failure to so comply could not be expected to have a
Material Adverse Effect; (ii) the Borrower and each of its Subsidiaries has
obtained and maintains all material environmental, health and safety permits,
certificates, licenses, approvals and authorizations necessary for their
respective operations under all applicable Environmental Laws (collectively,
"ENVIRONMENTAL PERMITS"), and all such Environmental Permits are in good
standing and the Borrower and its Subsidiaries are in material compliance with
all terms and conditions of such Environmental Permits; (iii) neither the
Borrower nor any of its Subsidiaries nor any of their present or past properties
or operations (whether owned or leased) are subject to: (A) any written claim,
request for information, judgment, order, decree or agreement from or with any
Governmental Authority or private party related to any material violation of or
material non-compliance with Environmental Laws or Environmental Permits, (B)
any pending or, to the knowledge of the Borrower, threatened judicial or
administrative proceeding, action, suit or investigation related to any
Environmental Laws or Environmental Permits which, if determined adversely to
the Borrower or any of its Subsidiaries, could have a Material Adverse Effect,
or (C) any liabilities, obligations or costs arising from any Remedial Action
or any Release or threatened Release of a Contaminant into the environment
regardless of whether the Release or threatened Release is occurring on the
Borrower's or any Subsidiaries present or past properties or at any other
location, in each case where such Remedial Action, Release or threatened Release
would have a Material Adverse Effect; and (iv) except as disclosed on SCHEDULE
4.21 hereto, as of the date hereof and as of the Closing Date, neither the
Borrower nor any of its Subsidiaries has received any written notice or claim to
the effect that the Borrower or any of its Subsidiaries is or may be liable to
any Person for an amount in excess of $500,000 as a result of the Release or
threatened Release of a Contaminant into the environment.
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Section 4.22 DISCLOSURE. No statement, fact, representation or
warranty of the Borrower or its Subsidiaries contained in the Basic Agreements,
the Note Prospectus or any other document furnished to the Lenders by or on
behalf of the Borrower or any Subsidiary for use in connection with the
transactions contemplated by the Basic Agreements contains any untrue statement
of a material fact nor do such documents taken as a whole omit to state a
material fact necessary in order to make the statements contained herein or
therein, as the case may be, not misleading when made. The pro forma forecasts,
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by the Borrower to be
reasonable at the time made, it being recognized by the Lenders that such pro
forma forecasts and projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
pro forma forecasts and projections will differ from the forecasted or projected
results. As of the date of this Agreement there is no fact known to the
Borrower (other than matters of a general economic nature not peculiar to the
Borrower, or its Subsidiaries) which materially and adversely affects the
condition (financial or otherwise), properties, business, prospects or
operations of the Borrower and its Subsidiaries taken as a whole which has not
been disclosed herein or in such other documents, certificates and statements
furnished to the Lenders for use in connection with the transactions
contemplated hereby.
Section 4.23 SURVIVAL OF WARRANTIES; COVENANT REGARDING DISCLOSURE.
All representations and warranties contained in this Agreement and the other
Basic Agreements shall survive the execution and delivery of this Agreement and
such other Basic Agreements, as the case may be, and the termination hereof and
thereof. The Borrower may from time to time propose in writing to the Agent and
Lenders modifications or supplements to the disclosures contained herein or the
disclosure schedules attached to this Agreement in order to maintain the
accuracy thereof; PROVIDED, HOWEVER, that any modifications or supplements to
the disclosures contained in this Agreement or the disclosure schedules attached
to this Agreement and provided by the Borrower after the date hereof shall not
be deemed a part of this Agreement until accepted in writing by the Required
Lenders, PROVIDED that a Lender shall be deemed to have accepted any such
proposed modification or supplement if such Lender fails to give written notice
of the rejection thereof within 30 days after receipt from the Borrower of such
proposed modification or supplement expressly requesting acceptance thereof
under this SECTION 4.23.
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ARTICLE V
COVENANTS
Section 5.1 AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees that for so long as this Agreement is in effect and until
the Obligations and all other obligations incurred hereunder or under any other
Loan Document, whether or not matured, are paid in full and all Commitments have
terminated, the Borrower will, unless first having procured the written consent
of the Required Lenders:
5.1.1 FINANCIAL DATA. Furnish to the Agent and each Lender:
(a) Within five (5) Business Days after an Executive Officer of the
Borrower shall have obtained knowledge of the occurrence of an Event of
Default and/or an Unmatured Event of Default, the written statement of the
chief executive officer, chief operating officer, chief financial officer
or treasurer of the Borrower setting forth the details of each such Event
of Default or Unmatured Event of Default which has occurred and is
continuing and the action which the Borrower proposes to take with respect
thereto.
(b) Within forty-five (45) days (or in the case of the financial
statements referenced in SECTIONS 5.1.1(b)(ii), sixty (60) days) after the
end of each Fiscal Quarter (except the last Fiscal Quarter) of each Fiscal
Year of the Borrower, (i) unaudited financial statements consisting of a
consolidated balance sheet of the Borrower and its Subsidiaries as at the
end of such quarter and a consolidated statement of income and a
consolidated statement of cash flows of the Borrower and its Subsidiaries
for such quarter and for the portion of the fiscal year through such
quarter, all in reasonable detail and certified (subject to normal year-end
audit adjustments) on behalf of the Borrower by the chief executive
officer, chief financial officer, chief accounting officer or treasurer of
the Borrower as having been prepared in accordance with generally accepted
accounting principles consistently applied and (ii) unaudited financial
statements consisting of a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such quarter and a consolidated statement
of income and a consolidated statement of cash flows of the Borrower and
its Subsidiaries for such quarter and for the portion of the fiscal year
through such quarter, all in reasonable detail and certified (subject to
normal year-end audit adjustments) on behalf of the Borrower by the chief
executive officer, chief operating officer, chief financial officer, chief
accounting officer or treasurer of the Borrower as having been prepared in
accordance with generally accepted accounting principles consistently
applied
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(except that in such statements Seminole Kraft and S-CC shall be accounted
for utilizing the equity method). The financial statements delivered
pursuant to SECTION 5.1.1(b)(i) shall be accompanied by a certificate from
such officer addressed to the Lenders substantially in the form of EXHIBIT
5.1.1, to the extent applicable, stating that no Event of Default and no
Unmatured Event of Default has come to his attention which was continuing
at the end of such quarter or on the date of his certificate, or if such an
Event of Default or Unmatured Event of Default has come to his attention
and was continuing at the end of such quarter or on the date of his
certificate, indicating the nature of such Event of Default or Unmatured
Event of Default and the action which the Borrower proposes to take with
respect thereto. Such certificate shall also detail the amount of any
Discretionary Funds originating during such Fiscal Quarter, any utilization
of Discretionary Funds during such Fiscal Quarter, the amount of the
Discretionary Funds Basket and the Dividend Basket as of the end of such
Fiscal Quarter, the amount of any Debt Basket Proceeds remaining in the
Discretionary Funds Basket after any utilization thereof and any
utilization of the Dividend Basket for Investments, Acquisitions or Capital
Expenditures during such Fiscal Quarter and shall set forth detailed
computations as to the Borrower's compliance with the covenants set forth
in SECTIONS 5.2.1 (WITH RESPECT TO CLAUSE (o) OF THE DEFINITION OF
PERMITTED LIENS), 5.2.2, 5.2.3, 5.2.5, 5.2.7, 5.2.9, 5.2.11, 5.2.12,
5.2.15, 5.3.1 and 5.3.2 and detailed computations showing whether an
adjustment of Borrowing Margins pursuant to SECTION 2.9 is required. To
the extent that the accounting principles utilized in the preparation of
any financial statements delivered by the Borrower pursuant to SECTION
5.1.1(b) OR (c) are at variance with the Agreement Accounting Principles
(other than accounting for Seminole Kraft and S-CC utilizing the equity
method for purposes of the financial statements delivered pursuant to
SECTIONS 5.1.1(b)(ii) and 5.1.1(c)(ii)), such financial statements shall be
accompanied by a statement detailing the nature of such variance. In
addition to the consolidated financial statements delivered pursuant to
SECTION 5.1.1 (b)(i), the Borrower will provide, as soon as available and
in any event within sixty (60) days after the end of each Fiscal Quarter
(except the last Fiscal Quarter) of each Fiscal Year of each of Seminole
Kraft and S-CC, respectively, unaudited financial statements consisting of
a balance sheet and statement of stockholders' equity of each of Seminole
Kraft and S-CC as at the end of such quarter and a statement of income and
cash flows of each of Seminole Kraft and S-CC for such quarter and for the
portion of the fiscal year through such quarter, all in reasonable detail
and certified (subject to normal year-end audit adjustments) on
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behalf of Seminole Kraft or S-CC, as the case may be, by the chief
executive officer, chief operating officer, chief financial officer or
treasurer of Seminole Kraft or S-CC, as the case may be, as having been
prepared in accordance with generally accepted accounting principles
consistently applied. Reporting requirements for separate S-CC financial
information under this subsection and SUBSECTIONS 5.1.1(c),(d) and (e)
shall terminate when and if S-CC ceases to be a Subsidiary.
(c) Within ninety (90) days after the end of each Fiscal Year of the
Borrower, (i) financial statements consisting of a consolidated balance
sheet and statement of stockholders' equity of the Borrower and its
Subsidiaries as at the end of such fiscal year and a consolidated statement
of income and a consolidated statement of cash flows of the Borrower and
its Subsidiaries for such fiscal year, setting forth in comparative form
the corresponding figures for the preceding fiscal year, certified without
qualification as to scope of audit by independent public accountants of
recognized national standing and reputation selected by the Borrower, (ii)
unaudited financial statements, consisting of a consolidated balance sheet
of the Borrower and its Subsidiaries as at the end of such fiscal year and
a consolidated statement of income and a consolidated statement of cash
flows of the Borrower and its Subsidiaries for such fiscal year, all in
reasonable detail and certified on behalf of the Borrower by the chief
executive officer, chief financial officer, chief accounting officer or
treasurer of the Borrower as having been prepared in accordance with
generally accepted accounting principles consistently applied (except that
in such statements Seminole Kraft and S-CC shall be accounted for utilizing
the equity method) and (iii) a schedule setting forth the computation of
Excess Cash Flow for the fiscal year then ended (an "EXCESS CASH FLOW
SCHEDULE"). The financial statements delivered pursuant to SECTION
5.1.1(c)(i) shall be accompanied by a certificate from the chief executive
officer, chief operating officer, chief financial officer, chief accounting
officer or treasurer of the Borrower to the Lenders substantially in the
form of EXHIBIT 5.1.1, to the extent applicable, (x) stating that no Event
of Default and no Unmatured Event of Default has come to his attention
which was continuing at the end of such fiscal year or on the date of his
certificate, or, if such an Event of Default or Unmatured Event of Default
has come to his attention which was so continuing, the certificate shall
indicate the nature of such Event of Default or Unmatured Event of Default
and the action which the Borrower proposes to take with respect thereto,
(y) setting forth detailed computations showing whether an adjustment of
Borrowing Margins pursuant to SECTION 2.9(a) is required, and (z) setting
forth computations as to the Borrower's compliance for the preceding fiscal
year with the covenants set forth in SECTIONS 5.2.1 (WITH RESPECT TO CLAUSE
(o) OF THE DEFINITION
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OF PERMITTED LIENS), 5.2.2, 5.2.3, 5.2.5, 5.2.7, 5.2.9, 5.2.11, 5.2.12,
5.2.15, 5.3.1 and 5.3.2. Such certificate shall also detail the amount of
any Discretionary Funds originating during the final Fiscal Quarter of the
preceding Fiscal Year, any utilization of Discretionary Funds during such
Fiscal Quarter, the amount of the Discretionary Funds Basket and the
Dividend Basket as of the end of such Fiscal Quarter, the amount of any
Debt Basket Proceeds remaining in the Discretionary Funds Basket after any
utilization thereof and any utilization of the Dividend Basket for
Investments, Acquisitions or Capital Expenditures during such Fiscal
Quarter. In addition to the consolidated financial statements delivered
pursuant to SECTION 5.1.1(c)(i), the Borrower will provide, as soon as
available and in any event within one hundred twenty (120) days after the
end of each fiscal year of Seminole Kraft and S-CC, respectively, audited
financial statements consisting of a balance sheet and statement of
stockholders' equity of each of Seminole Kraft and S-CC as at the end of
such fiscal year and a statement of income and cash flows of each of
Seminole Kraft and S-CC for such fiscal year, setting forth in comparative
form the corresponding figures for the preceding fiscal year, certified
without qualification as to scope of audit by independent public
accountants of recognized national standing and reputation elected by
Seminole Kraft or S-CC, as the case may be.
(d) Within ninety (90) days after the end of each fiscal year of the
Borrower, projections for the Borrower and its Subsidiaries (except for
Seminole Kraft and S-CC, which shall be accounted for utilizing the equity
method) for the next five Fiscal Years (on a quarter-by-quarter basis for
the next succeeding fiscal year and on a year-by-year basis for the
duration of such five year period), except with respect to the first
projections to be delivered in 1995, which shall be for the next six Fiscal
Years, consisting of forecasted consolidated balance sheets, statements of
income and statements of cash flow, together with appropriate supporting
details and a statement of underlying assumptions, all in substantially the
form of EXHIBIT 4.11(c) hereto; PROVIDED, HOWEVER, that in no event shall
the Borrower be required to deliver projections covering any period
subsequent to the last day of the calendar year following the year during
which the Term Loan Maturity is scheduled to occur.
(e) Within ninety (90) days after the end of each Fiscal Year of the
Borrower, a year to year variance analysis which sets forth a reasonably
detailed reconciliation of the actual consolidated (except for Seminole
Kraft and S-CC, which shall be accounted for utilizing the equity method)
financial results of the Borrower for such year and the projections of
results for such year previously delivered by the Borrower pursuant to
SECTION 5.1.1(d).
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(f) Promptly upon any Executive Officer of the Borrower obtaining
knowledge thereof, notice of any action, suit, proceeding or investigation
pending or threatened against or affecting the Borrower or any Subsidiary
of the Borrower or any of its or their respective properties before any
court, governmental agency or regulatory authority (Federal, provincial,
state or local) which is reasonably likely to have a Material Adverse
Effect.
(g) Promptly upon their distribution, copies of financial statements,
reports, notices and proxy statements sent by the Borrower or any publicly-
held Subsidiary of the Borrower to their respective security holders
generally (in their capacity as security holders only) and all regular and
periodic reports and final registration statements or other official
statements (and all amendments or supplements thereto) required to be filed
by the Borrower or any publicly-held Subsidiary of the Borrower with the
Securities and Exchange Commission, any competent securities regulatory
authority in Canada or with any national securities exchange on which any
of its securities are listed with respect to its securities outstanding or
to be outstanding and copies of all press releases and other statements
made available generally by the Borrower or any publicly-held Subsidiary of
the Borrower to the public concerning material developments in the business
of the Borrower or any publicly-held Subsidiary of the Borrower.
(h) Such other information respecting the properties, business
affairs, financial condition and/or operations of the Borrower or any
Subsidiary of the Borrower as any Lender through the Agent may from time to
time reasonably (with respect to frequency as well as scope) request.
5.1.2 DISCHARGE OF TAXES, ETC. Pay and cause each of its
Subsidiaries to pay (i) all taxes, assessments and governmental charges or
levies imposed upon it or any of them or upon its or any of their income,
profits or property prior to the date on which penalties attach thereto, and
(ii) all claims for labor, material or supplies which, if unpaid, might become a
Lien upon the property of the Borrower or any Subsidiary prior to the time they
are overdue and may become a Lien upon any such property, except to the extent
that the aggregate of all such taxes, assessments, governmental charges, levies,
penalties and claims referred to in (i) and (ii) above not so paid, does not
exceed $25 million at any time outstanding for the Borrower and its Subsidiaries
taken as a whole; PROVIDED, HOWEVER, that neither the Borrower nor any
Subsidiary of the Borrower shall be required to pay or discharge any such tax,
assessment, charge, levy or claim while the same is being contested by it in
good faith and by appropriate proceedings and so long as the Borrower or such
Subsidiary, as the case may be, shall have set aside on its books reserves
(segregated to the
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extent required by generally accepted accounting principles) reasonably deemed
by it to be adequate with respect thereto.
5.1.3 CORPORATE EXISTENCE; BUSINESS.
(a) Except for the Mergers, except as otherwise permitted by SECTION
5.2.8 and except that any Subsidiary may be liquidated, dissolved, wound up,
merged or amalgamated (other than Seminole Kraft with respect to any merger,
unless, in the case of Seminole Kraft, such merger is permitted by SECTION
5.2.8) where such liquidation, dissolution, merger, winding-up or amalgamation
will not have a Material Adverse Effect, (i) preserve and maintain, and cause
each of its Subsidiaries to preserve and maintain, its corporate existence,
rights and franchises and (ii) qualify and remain qualified, and cause each of
its Subsidiaries to qualify and remain qualified, as a foreign corporation
authorized to do business in each other jurisdiction in which the failure to so
qualify or remain qualified would have a Material Adverse Effect.
(b) Maintain and operate, and cause each of its Subsidiaries to
maintain and operate, its business in substantially the manner in which it is
currently conducted and operated.
5.1.4 COMPLIANCE WITH LAWS. Comply, and cause each of its
Subsidiaries to comply, with all laws, rules, regulations and governmental
orders (foreign, federal, provincial, state and local) having applicability to
any of them or to the business or businesses at any time conducted by any of
them, where the failure to so comply would have a Material Adverse Effect.
5.1.5 PERFORMANCE OF BASIC AGREEMENTS. Duly and punctually pay
and perform its obligations and cause each of its Subsidiaries to pay and
perform its obligations under the Basic Agreements in all material respects in
accordance with the terms thereof and without breach of the terms of each
thereof.
5.1.6 INSPECTION OF BOOKS AND PROPERTIES.
(a) Permit, and cause each of its Subsidiaries to permit, any Lender
or its respective representatives (including without limitation any accounting
and/or financial advisor or other similar professional retained by or on behalf
of the Agent pursuant to SECTION 9.5), at any reasonable time during regular
business hours, and from time to time upon reasonable written notice of such
Lender to the Borrower, to visit and inspect its and their respective
properties, to examine and make copies of and take abstracts from its and their
respective records and books of account, and to discuss its and their respective
affairs, finances and accounts with its and their respective principal officers
and, with the written consent of the Borrower (which consent shall not be
required if an Event of Default has occurred and is continuing),
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their respective independent public accountants, in all cases acting reasonably
both as to frequency and as to scope.
(b) The Agent and each Lender agree that all materials and
information (other than publicly available material and information) obtained by
or provided to the Agent or such Lender pursuant to the foregoing provisions of
this Section which are identified or designated by the Borrower in writing as
confidential and which was not previously in the possession of or known to the
recipient thereof on a non-confidential basis shall be held in confidence and
that the Agent or such Lender, as the case may be, will use its best efforts not
to disclose any such information unless the same has previously been made
public, PROVIDED that nothing in this Agreement shall prohibit the Agent or such
Lender, as the case may be, from, or subject the Agent or such Lender to
liability for, disclosing any of such information (i) pursuant to any order,
writ, judgment, decree, injunction or ruling of any governmental body (including
any bank regulators) to whose jurisdiction the Agent or such Lender may be
subject, (ii) pursuant to any applicable requirement of law or regulation, (iii)
to the auditors, attorneys and other advisors of the Agent or such Lender to the
extent required in connection with their services to the Agent or such Lender
with respect to this Agreement, (iv) to the extent necessary in the enforcement
of rights hereunder or under the Basic Agreements during the continuance of an
Unmatured Event of Default or Event of Default, (v) to actual or prospective
Assignees or participants as permitted by SECTION 9.12(g) or to any Lender
hereunder.
5.1.7 MAINTENANCE OF BOOKS AND RECORDS. Keep, or cause to be
kept, and cause each of its Subsidiaries to keep or cause to be kept, proper
books of record and account, in which complete and accurate entries are made
reflecting its and their business and financial transactions.
5.1.8 ERISA.
(a) Other than with respect to Stone-Canada and its Subsidiaries
(except to the extent that a Plan of Stone-Canada or any Subsidiary of Stone-
Canada is subject to ERISA), (i) within ten (10) days, after it or any of its
Subsidiaries or any ERISA Affiliate knows that a Reportable Event has occurred
with respect to any Plan or Multiemployer Plan (whether or not the requirement
for notice of such Reportable Event has been waived by the PBGC), deliver, or
cause such Subsidiary or any ERISA Affiliate to deliver to the Agent in
sufficient quantity for distribution to each Lender a certificate of a
Responsible Officer of the Borrower or such Subsidiary or any ERISA Affiliate,
as the case may be, setting forth the details of such Reportable Event;
PROVIDED, HOWEVER, that with respect to any Reportable Event described in ERISA
Section 4043(b)(3) this clause (i) shall not apply if the PBGC has waived the
requirement that notice of the Reportable Event be given to the
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PBGC and if this clause (i) shall apply to any Reportable Event described in
ERISA Section 4043(b)(3) then the ten (10)-day period of time referred to above
shall be extended to thirty days; (ii) upon the request of the Agent or any
Lender made from time to time and promptly confirmed in writing, deliver to the
Agent in sufficient quantity for distribution to each Lender a copy of the most
recent available actuarial report and annual report completed with respect to
any Plan; (iii) within ten (10) days, after it or any of its Subsidiaries or any
ERISA Affiliate knows that any of the following have occurred with respect to
any Plan: (A) any such Plan has been terminated, (B) the Plan Sponsor initiates
any action to terminate any such Plan, or (C) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to terminate any such Plan,
deliver, or cause such Subsidiary or ERISA Affiliate to deliver, to the Agent
and each Lender a written notice thereof; (iv) within ten (10) days, after it or
any of its Subsidiaries or any ERISA Affiliate knows that any of them has caused
a complete withdrawal or partial withdrawal (within the meaning of Sections 4203
and 4205, respectively, of ERISA) from any Multiemployer Plan or a withdrawal
from a Plan in which any such entity was a substantial employer within the
meaning of Section 4001(a)(2) of ERISA (or a deemed withdrawal within the
meaning of Section 4062(e) of ERISA with respect to an Underfunded Plan)
deliver, or cause such Subsidiary or ERISA Affiliate to deliver, to the Agent in
sufficient quantity for distribution to each Lender a written notice thereof;
and (v) within ten (10) days after it or any of its Subsidiaries or any ERISA
Affiliate knows that a prohibited transaction (within the meaning of Section 406
of ERISA) with respect to any Employee Benefit Plan has occurred and knows such
transaction will result in a material liability to such entity under Section
4975 of the Code or otherwise, if such transaction is not corrected, deliver, or
cause such Subsidiary or ERISA Affiliate to deliver, to the Agent in sufficient
quantity for distribution to each Lender a certificate of an Executive Officer
of the Borrower or such Subsidiary or ERISA Affiliate, as the case may be,
setting forth the details of such prohibited transaction and such entity's
proposed response thereto. For purposes of this Section, the Borrower, any of
its Subsidiaries and any ERISA Affiliate shall be deemed to have knowledge of
all facts known by the Plan Administrator of any Plan of which such entity is
the Plan Sponsor; PROVIDED, HOWEVER, that with respect to any Multiemployer
Plan, the Borrower, any of its Subsidiaries and any ERISA Affiliate shall not be
deemed to have any knowledge other than the actual knowledge of their respective
officers.
(b) With respect to Stone-Canada and its Subsidiaries, except for
Europa Carton, A.G., within ten (10) days after the Borrower or any of its
Subsidiaries knows that Stone-Canada or any of its Subsidiaries has unfunded
liabilities which exceed the liabilities set forth on SCHEDULE 4.15 arising out
of any pension plan to which Stone-Canada or any of its Subsidiaries is a party
or by which either is bound, deliver to the Agent in sufficient
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quantity for distribution to each Lender a certificate of a Responsible Officer
of the Borrower or such Subsidiary disclosing such unfunded liabilities.
5.1.9 INSURANCE. Maintain, and cause each of its Subsidiaries to
maintain, such insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by Persons similarly situated to the
extent that such insurance is available at commercially reasonable rates, and
furnish to the Agent in sufficient quantity for distribution to each Lender,
upon written request, information as to the insurance carried by the Borrower or
any Subsidiary of the Borrower. The provisions of this SECTION 5.1.9 shall be
deemed to be supplemental to, but not duplicative of, the provisions of any of
the other Loan Documents that require the maintenance of insurance with respect
to the Collateral and Mortgaged Property.
5.1.10 MAINTENANCE OF PROPERTIES. Except as to equipment no longer
used or useful to the business of the Borrower and its Subsidiaries, keep and
maintain all material properties, equipment and other assets (and shall cause
its Subsidiaries to keep and maintain their respective material properties,
equipment and other assets) in good repair, working order and condition
(ordinary wear and tear excepted) and shall make all necessary replacements
thereof and renewals and repairs thereto so that the value thereof and the
operating efficiency of the Borrower and its Subsidiaries shall at all times be
maintained and preserved in a manner consistent with past practices of the
Borrowers' and its Subsidiaries' business. With respect to all items of leased
equipment, the Borrower shall, and shall cause its Subsidiaries to, keep,
maintain, repair, replace and operate such leased properties, equipment and
other assets in accordance with the terms of the applicable lease, in either
case, to the extent failure to do so would result in a Material Adverse Effect.
5.1.11 USE OF PROCEEDS. (i) Use the proceeds of the Term Loan,
Revolving Loans, Letters of Credit and Swing Line Loans (A) to provide all or a
portion of the funds necessary to repay in full all of the indebtedness
outstanding under the U.S. Credit Agreement on the Closing Date, (B) to make
loans and/or capital contributions on the Closing Date to Stone-Canada, which
will, on the Closing Date, repay all of the indebtedness outstanding under the
Canadian Credit Agreements, (C) to repay in whole or in part the indebtedness
outstanding under the Stone Savannah Credit Agreement and to fund the Stone
Savannah Transactions, (D) in the case of Letters of Credit, for general
corporate purposes and (E) for ongoing working capital and general corporate
purposes; and (ii) not use any part of the proceeds of any Loan or Letter of
Credit hereunder for any purpose other than as set forth in this Section,
including without limitation, to purchase or carry any Margin Stock or to extend
credit to others for such purpose in violation of Regulation G, U or X of the
Board.
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5.1.12 LENDER MEETING. Cause a meeting open to all Lenders to be
held at least once in each fiscal year for the purpose of having officers of the
Borrower describe generally the Borrower's business, financial results and
prospects and respond to inquiries from the Lenders regarding such matters.
5.1.13 REDEMPTION OF SENIOR SUBORDINATED NOTES AND STONE SAVANNAH
STOCK. On or prior to December 30, 1994, (i) cause the amounts deposited with
the trustee under the Stone Savannah Senior Subordinated Note Indenture on the
Closing Date to be used to redeem in full all of the Stone Savannah Senior
Subordinated Notes at par (plus stated premium), together with accrued and
unpaid interest thereon, (ii) redeem in full or otherwise purchase, (A) all of
the outstanding Stone Savannah Preferred Stock at par (plus stated premium),
together with accrued and unpaid dividends thereon, and (B) all of the issued
and outstanding Stone Savannah Common Stock not owned by the Borrower and (iii)
cause Stone Savannah to merge into the Borrower or make other arrangements
satisfactory to the Required Lenders with respect to the Collateral and
Mortgaged Property owned by Stone Savannah. The redemptions and purchases
described in (i) and (ii) of this SECTION 5.1.13 are collectively referred to as
the "STONE SAVANNAH TRANSACTIONS".
5.1.14 ENVIRONMENTAL NOTIFICATION.
(a) Notify the Agent, in writing, promptly, and in any event within
twenty (20) days after a Responsible Officer learns thereof, of any: (A)
written notice or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person in an amount in excess of
$1,000,000 as a result of the Release or threatened Release of any
Contaminant into the environment; (B) written notice that the Borrower or
any of its Subsidiaries is subject to investigation by any governmental
authority evaluating whether any Remedial Action involving potential claims
or costs to the Borrower or its Subsidiaries in excess of $1,000,000 is
needed to respond to any material Release or threatened Release of any
Contaminant into the environment; or (C) notice of violation to the
Borrower or any of its Subsidiaries of conditions which result in a notice
of violation of any Environmental Laws or Environmental Permits, which
could reasonably be expected to have a Material Adverse Effect.
(b) Upon written request by the Agent, the Borrower shall promptly
submit to the Agent and the Lenders a report providing an update of the
status of each environmental, health or safety compliance, hazard or
liability issue identified in any notice or report required pursuant to
clause (i) above and any other environmental, health and safety compliance
obligation, remedial obligation or liability that could reasonably be
expected to have a Material Adverse Effect.
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5.1.15 ENVIRONMENTAL COMPLIANCE. The Borrower shall, and shall
cause each of its Subsidiaries, in the exercise of its reasonable business
judgment, to take prompt and appropriate action to respond to any material non-
compliance with Environmental Laws or Environmental Permits or to any
unpermitted Release or threatened Release of a Contaminant, and shall regularly
report to the Agent on such response. Without limiting the generality of the
foregoing, whenever the Agent or any Lender has a reasonable basis to believe
that the Borrower is not in material compliance with all Environmental Laws or
Environmental Permits or that any property of the Borrower or its Subsidiaries,
or any property to which Contaminants generated by Borrower or its Subsidiaries
have come to be located ("OFFSITE PROPERTY") has or may become contaminated or
subject to an order or decree such that any such non-compliance, contamination
or order or decree could reasonably be expected to have a Material Adverse
Effect then the Borrower agrees to, at the Agent's request and the Borrower's
expense: (a) cause a qualified environmental engineer reasonably acceptable to
the Agent to assess the site where the alleged or actual noncompliance
contamination has occurred and prepare and deliver to the Agent, the Lenders and
the Borrower a report reasonably acceptable to Agent setting forth the results
of such assessments, a proposed plan and schedule for responding to any
environmental problems described therein, and an estimate of the costs thereof;
and (b) provide the Agent, the Lenders and the Borrower a supplemental report of
such engineer whenever the scope of the environmental problems or the Borrower's
response thereto or the estimated costs thereof, shall change in any material
respect; or, as an alternative to subparagraphs (a) and (b) above, the Borrower,
upon the Agent's or any Lender's request, shall allow the Agent or such Lender,
as the case may be, or an agent or representative of the Agent or such Lender,
to enter onto the property to conduct any desired environmental audits and tests
at the Borrower's expense. The Agent and the Lenders hereby covenant and agree
that any reports, records, notices, estimates or other information they receive
in connection with this subsection shall be kept strictly confidential, and
shall not be disclosed to or used by any Person (other than the Agent's or any
Lender's authorized representatives for the purpose of reviewing or enforcing
the Agent's or such Lender's rights hereunder, which persons shall also be bound
by this sentence) unless and only to the extent that disclosure is required
pursuant to any Environmental Laws, Environmental Permits, or order of a court
of competent jurisdiction, in which case the Agent or such Lender, as the case
may be, shall promptly notify the Borrower in writing of such requirement and
the nature and extent of the required disclosure.
5.1.16 ADDITIONAL SUBSIDIARY GUARANTEES. Upon the request of the
Agent, the Borrower shall cause any domestic Subsidiary (other than Seminole
Kraft and StoneSub) from time to time having assets with a fair market value in
excess of $25 million to execute a Subsidiary Guarantee; PROVIDED, HOWEVER, that
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in the event the Borrower acquires, directly or indirectly, a domestic
Subsidiary in an Acquisition after the Closing Date, such Subsidiary shall not
be required to execute a Subsidiary Guarantee so long as (i) all of the funds
used by the Borrower, directly or indirectly, to acquire such Subsidiary were
Discretionary Funds and (ii) neither the Borrower nor any other Subsidiary shall
make any loans or advances to, or any Investments in (other than the initial
Investment therein), such Subsidiary, or assume, guarantee or endorse or
otherwise become directly or contingently liable in respect of, any obligation
of such Subsidiary until a Subsidiary Guarantee is so delivered.
5.1.17 DELAYED COLLATERAL.
(a) The parties acknowledge that as a result of delays associated
with title and survey matters, third party consent requirements and other
matters (i) with respect to certain converting plants it has been impractical to
consummate on the Closing Date the mortgaging of the interests of the Borrower
or a Subsidiary, as applicable, in the Mortgaged Property (the "DELAYED
PROPERTIES") marked with an asterisk on SCHEDULE 1.1(c), and (ii) with respect
to certain of the Mortgaged Properties that are being mortgaged on the Closing
Date, certain title, survey, local counsel opinions and other documents
("ANCILLARY DOCUMENTS") may not be available on the Closing Date.
(b) As soon as practicable, but in any event on or prior to January
31, 1995, the Borrower shall, or, as applicable, shall cause its applicable
Subsidiaries to, execute and deliver, or cause to be delivered, to the Agent (i)
Mortgages with respect to the Delayed Properties together with all fixed assets
and inventory located at such facilities and including such environmental
information and studies, leases, title reports, title insurance (with all
requirements for the issuance thereof having been satisfied), lien searches,
opinions of counsel, evidence of recordation and payment of applicable taxes as
the Agent may reasonably request and (ii) such Ancillary Documents as the Agent
may reasonably request. The Borrower shall also take or cause to be taken all
actions reasonably requested by the Agent in order to perfect or protect the
Liens of the Mortgages with respect to the Delayed Properties. Without limiting
the foregoing, the Borrower shall use its best non-financial efforts to secure
such landlord consents, waivers and similar documents as the Agent may
reasonably request in connection with leasehold mortgages and related mortgages
or pledges of the Delayed Properties.
(c) To the extent that the Agent shall, in its sole discretion,
determine that in light of environmental, legal or other considerations it would
be adverse to the interests of the Lenders or impractical to accept as
collateral one or more of the Delayed Properties, it may in writing release the
Borrower from its obligations to pledge any of such Delayed Properties, provided
that
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the Borrower shall provide, or cause to be provided, such alternative collateral
of reasonably comparable value as may be acceptable to the Agent. Such
additional collateral shall be granted pursuant to such documentation and within
such time period as may be satisfactory to the Agent.
(d) To the extent that the Borrower or an applicable Subsidiary is
contractually prohibited from granting a leasehold mortgage or mortgage on any
Delayed Property which is leased or subject to an industrial revenue bond
financing and the Borrower has complied with the last sentence of SECTION
5.1.17(b), the Borrower shall be released from its obligation to grant a
leasehold mortgage or mortgage thereupon but shall not be released from its
obligation to pledge the fixed assets or inventory located at such Delayed
Property unless the Borrower or its applicable Subsidiary is contractually
prohibited from doing so in the relevant lease.
5.1.18 MERGER OF STONE SOUTHWEST. The Borrower shall cause Stone
Southwest to be merged with and into the Borrower promptly after the earlier of
(i) at such time as when such merger would no longer cause a violation or breach
of the terms and conditions of the Stone Southwest Indenture or any other
material agreement or indenture to which Stone Southwest is a party and (ii)
such time as all Indebtedness issued under the Stone Southwest Indenture and
such other agreements and indentures has been paid in full and such merger is no
longer restricted thereby.
Section 5.2 NEGATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees that for so long as this Agreement is in effect and until
the Obligations and all other obligations incurred hereunder, whether or not
matured, are paid in full and all Commitments have terminated, without the prior
written consent of the Required Lenders, the Borrower will not nor will it
permit any Subsidiary of the Borrower to:
5.2.1 LIENS. Except for Permitted Liens, create, incur, assume or
permit to exist any Lien on any of its or any of its Subsidiaries' existing or
future properties, assets (including stock of any Subsidiaries), income or
rights in any thereof whether now owned or hereafter acquired.
5.2.2 INDEBTEDNESS FOR MONEY BORROWED. Create, incur, assume or
suffer to exist any Indebtedness for Money Borrowed except for:
(a) the Obligations under the Loan Documents;
(b) Indebtedness for Money Borrowed as shown on SCHEDULE 4.6 hereto;
(c) Indebtedness for Money Borrowed incurred by Europa Carton, A.G.,
Ston Forestal, S.A., Stone de Mexico, Stone
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Venepal, Cartomills, S.A. or Societe Emballages de Cevennes, S.A., Seminole
Kraft or any Subsidiary thereof which is not guaranteed by and is non-
recourse to the Borrower or any Subsidiary of the Borrower;
(d) intercompany loans and advances (i) made in the ordinary course
of business to the Borrower or Wholly-Owned Subsidiaries of the Borrower
and, in the case of non-Wholly-Owned Subsidiaries, Indebtedness arising out
of Investments permitted by SECTION 5.2.7; or (ii) made to StoneSub in an
aggregate principal amount at any time outstanding not in excess (together
with any unreimbursed capital contributions made pursuant to SECTION
5.2.7(h)) of (A) the amounts contemplated from time to time by the terms of
the respective Receivables Financings and (B) those amounts, up to an
aggregate at any one time outstanding of $5 million for each $100 million
(on a pro-rated basis) of Receivables Financings which have been
established and are in existence at such time, which may be advanced to
StoneSub in order to cure or remedy, or otherwise avoid the commencement
of, liquidation, termination or similar events in connection with the
Receivables Financings; PROVIDED, HOWEVER, that, except as otherwise
expressly permitted under this Agreement, this clause (d) shall not be
deemed to permit intercompany Indebtedness for Money Borrowed made to SVCPI
(other than pursuant to contractual agreements permitted by this Agreement
and as in effect on the date hereof), Seminole Kraft or to S-CC or any of
S-CC's Subsidiaries other than Indebtedness for Money Borrowed made between
S-CC and its Subsidiaries or between Subsidiaries of S-CC;
(e) the Indebtedness for Money Borrowed of any Person at the time
such Person becomes a Subsidiary, or is merged or consolidated with or into
the Borrower or a Subsidiary of the Borrower, so long as such Indebtedness
for Money Borrowed was not created in anticipation of or as a result of
such Person becoming a Subsidiary of the Borrower or of such merger or
consolidation;
(f) refinancings of Indebtedness for Money Borrowed due to
remarketing provisions, to provisions relating to computing a variable rate
of interest or to provisions providing for the fixing of interest rates on
theretofore variable rate obligations as provided for in the instruments
pursuant to which such Indebtedness for Money Borrowed was issued as in
effect on the date hereof or assumed pursuant to SECTION 5.2.2(e), PROVIDED
that the principal amount of such Indebtedness for Money Borrowed is not
increased thereby except to the extent necessary to finance the fees and
costs of such refinancing;
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(g) Indebtedness for Money Borrowed all the net proceeds of which are
used promptly (but in no event more than five Business Days) after the date
of the incurrence of such Indebtedness for Money Borrowed to effect the
prepayments as set forth in SECTIONS 3.4 AND 3.6 so long as (i) such
Indebtedness for Money Borrowed is not secured by any Lien (other than
Permitted Liens described in clause (h) of the definition of Permitted
Liens), (ii) such Indebtedness has an average life which is at least equal
to one year greater than the remaining average life of the Term Loan and
(iii) such Indebtedness has a maturity which is at least one year after the
latest date (taking into account the application of all previous
prepayments) on which any regularly scheduled principal installment is at
the time due to be paid on the Term Loan;
(h) Indebtedness for Money Borrowed (i) in respect of tax-exempt
financings or (ii) all of the net proceeds of which are used to effect a
prepayment or defeasance of any IRB identified on SCHEDULE 5.2.2 hereto (A)
in the event that amendments to the Code are enacted which would require
that the Borrower prepay or defease such IRB, (B) which is put to the
Borrower pursuant to presently existing contractual arrangements identified
on SCHEDULE 5.2.2 hereto and which the Borrower is not able to resell at a
market interest rate without effecting a "reissuance" thereof for tax
purposes, or (C) which is being refinanced on terms requiring repayment of
such Indebtedness for Money Borrowed at times no earlier than and in
amounts no greater (except to the extent necessary to finance the fees and
costs of such refinancing) than required by the present amortization
schedule for the IRB being refinanced and subject to covenants, defaults
and other terms which are not materially more restrictive upon or
disadvantageous to the obligor than the existing terms;
(i) Indebtedness for Money Borrowed consisting of Financing Lease
Obligations (including, without limitation, Indebtedness under the Florence
Agreements); PROVIDED, HOWEVER, that the amount of such obligations
incurred after the date hereof and payable prior to the Term Loan Maturity
Date shall not exceed $100 million;
(j) Indebtedness for Money Borrowed constituting guarantees by the
Borrower or any Subsidiary permitted by SECTION 5.2.3;
(k) Indebtedness for Money Borrowed of the Borrower or a Subsidiary
of the Borrower, as the case may be, issued, incurred or assumed in respect
of the purchase price of property which is not secured by any Lien other
than a Lien referred to in clause (b) of the definition of Permitted Liens;
PROVIDED, HOWEVER, that not more than $100 million in
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aggregate principal amount of such Indebtedness for Money Borrowed shall
mature prior to the Term Loan Maturity Date;
(l) Subordinated Debt;
(m) Indebtedness for Money Borrowed consisting of an unsecured line
of credit not exceeding at any time outstanding $50 million in aggregate
principal amount by Stone-Canada or any Subsidiary of Stone-Canada (other
than S-CC);
(n) Indebtedness for Money Borrowed as defined in clause (vi) of the
definition of such term contained in the Definitional Appendix;
(o) Indebtedness for Money Borrowed incurred in respect of (i)
foreign exchange, interest rate swap, interest rate cap insurance, hedging
agreements or similar arrangements entered into in the ordinary course of
business by the Borrower in connection with the Obligations with a notional
amount of such agreements not exceeding the aggregate principal amount of
the Obligations, (ii) foreign exchange or currency swap agreements or
similar arrangements entered into in the ordinary course of business by the
Borrower or any Subsidiary to protect the Borrower or any Subsidiary
against fluctuations in currency values and (iii) one or more unsecured
interest rate swap or similar hedging arrangements entered into in the
ordinary course of business by the Borrower pursuant to which the fixed
interest rate payment obligations up to $500 million aggregate principal
amount of Indebtedness for Money Borrowed at any time outstanding would be
converted to floating interest rate payment obligations;
(p) Indebtedness for Money Borrowed of the Borrower as permitted by
the penultimate sentence of SECTION 5.2.13; and Indebtedness for Money
Borrowed by StoneSub from the Issuer pursuant to Receivables Financings
which in the aggregate shall not permit StoneSub to incur Indebtedness for
Money Borrowed in excess of, subject to the third proviso of the
penultimate sentence of SECTION 5.2.13, $500 million at any one time
outstanding (and in the event that the Accounts Receivable Financing
Program includes Canadian dollar Receivables of Subsidiaries organized
under Canadian laws, without giving effect to increases in such amount
after the date of the incurrence of such Indebtedness for Money Borrowed,
or portion thereof, solely as the result of subsequent fluctuations in the
exchange rate between U.S. and Canadian dollars); PROVIDED, HOWEVER, that
if (i) the Borrower either (A) acquires any Subsidiaries not in existence
as of the date hereof (other than through the formation of Subsidiaries in
the ordinary course of business to conduct existing lines of business) or
(B) enters into any lines of business in which it is not engaged as of the
date hereof and
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(ii) the Borrower and/or StoneSub engages in a Receivables Financing or
financing permitted by the penultimate sentence of SECTION 5.2.13, in each
case with respect to the Receivables of the Subsidiary so acquired or the
line of business so acquired (each such financing, solely to the extent
relating to such new Subsidiary or new line of business, a "NEW
RECEIVABLES FINANCING") then, in such event, the initial proceeds to the
Borrower or StoneSub (as applicable) of such New Receivables Financing,
net of the amount of any initial deposit to, the applicable cash
collateral spread account and of the fees and expenses of the Borrower or
StoneSub incurred in establishing such New Receivables Financing and net
of any amounts required to refinance then existing New Receivables
Financings, shall be used (following remittance to the Borrower or the
Participating Subsidiary, as applicable, for the purchase of Receivables
therefrom) to make a mandatory prepayment as required by SECTION 3.4(b) in
the order required by SECTION 3.6(b) and (ii) in the case of any New
Receivables Financing structured as a borrowing by StoneSub (or deemed to
be a borrowing pursuant to the terms hereof), StoneSub shall borrow (A) on
the initial date of any New Receivables Financing, the maximum borrowings
then available to it (based on the initial amount of Receivables
transferred) under such New Receivables Financing (except that such initial
maximum borrowings may be reduced by no more than $2 million for each New
Receivables Financing for reasons of administrative practicality) and (B)
after such initial date, in the reasonable business judgment of StoneSub,
the maximum borrowings practicable under such New Receivables Financings
which have been established and are continuing. For purposes of this
Agreement, (i) in the event that the terms of any New Receivables
Financing are amended to increase the potential borrowings or sales
thereunder, the initial borrowing or sale by StoneSub under such amended
program shall be deemed to constitute a borrowing or sale under an
additional New Receivables Financing to the extent of such increase,
PROVIDED that this clause (i) shall not apply in the event that the
increase in the potential borrowings or sales under such New Receivables
Financing is being made solely to finance additional purchases of
Receivables from then existing business lines of Participating
Subsidiaries whose Receivables with respect to such business line or lines
have grown or are expected to grow as the result of price increases,
greater sales or similar changes in general business lines, (ii) in the
event that any sale or purported sale of Receivables to StoneSub by
the Borrower or any Participating Subsidiary is required to be
recharacterized as a loan, the resulting obligations of the Borrower or
such Participating Subsidiary shall not be deemed to be Indebtedness for
Money Borrowed and (iii) any Receivables Financing structured as a sale
of Receivables by StoneSub to the Issuer shall, for all purposes of this
Agreement, and
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regardless of the treatment thereof by the Borrower on its financial
statements, be deemed to be an incurrence by StoneSub of Indebtedness for
Money Borrowed in respect of the financing of the Receivables involved and
not as a sale of such Receivables by StoneSub;
(q) Indebtedness for Money Borrowed constituting refinancings of
Indebtedness for Money Borrowed identified on SCHEDULE 4.6 hereto or in
SECTION 5.2.2(v); PROVIDED, HOWEVER, that no such refinancing shall shorten
the final maturity or average loan life of the refinanced Indebtedness,
increase the collateral, if any, securing any such refinanced Indebtedness
(provided that any collateral securing such refinanced Indebtedness may be
substituted with other property or assets so long as the fair market value
thereof does not exceed the fair market value of the collateral being
substituted at the time of such substitution), be on terms which, taken as
a whole, are materially more adverse to the obligor or modify in any way
adverse to the Lenders any subordination provisions applicable to such
Indebtedness and, to the extent the refinanced Indebtedness is non-recourse
to the Borrower and its other Subsidiaries and is not otherwise permitted
to be recourse Indebtedness, such Indebtedness shall be non-recourse to the
Borrower and its other Subsidiaries;
(r) Indebtedness for Money Borrowed the net proceeds of which are
used to pay annual premiums for property and casualty insurance policies
maintained by the Borrower or its Subsidiaries and other prepaid amounts in
respect of goods or services purchased by the Borrower or its Subsidiaries
in the ordinary course of business, which Indebtedness at no time exceeds
$40 million in aggregate outstanding principal amount, is unsecured (except
for Liens described in clause (n) of the definition of Permitted Liens) and
is incurred on terms and pursuant to documentation satisfactory to the
Agent;
(s) from and after the date on which the Borrower has repaid all
outstanding Revolving Loan Obligations and Swing Line Obligations, has
terminated the Swing Line Commitment and all Revolving Loan Commitments,
and has caused the Florence Letters of Credit to be terminated, and there
exists no L/C Obligations or Florence L/C Obligations, Indebtedness for
Money Borrowed under a replacement revolving credit facility in an
aggregate principal amount not to exceed $450 million, all of the proceeds
of which (net of issuance costs) are used for general corporate purposes
(including without limitation repayment of Revolving Loans and Swing Line
Loans), PROVIDED that such Indebtedness for Money Borrowed shall be on
terms not materially more adverse to the Borrower than those existing
hereunder;
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(t) secured or unsecured Indebtedness for Money Borrowed in an
aggregate principal amount not to exceed $200 million for general corporate
purposes; PROVIDED, HOWEVER, that (i) the terms of such Indebtedness for
Money Borrowed and the documentation relating thereto shall be reasonably
satisfactory to the Required Lenders, (ii) to the extent such Indebtedness
for Money Borrowed is secured, such Liens are permitted by clause (o) of
the definition of Permitted Liens and the Indebtedness secured thereby
shall not be less than 66% of the value of the collateral securing such
Indebtedness as of the date which such Indebtedness is incurred, as such
value is evidenced by appraisals or other information delivered to the
Agent by the Borrower and reasonably acceptable to the Required Lenders,
and (iii) in no event shall any Subsidiary incur Indebtedness pursuant to
this subsection that is recourse to the Borrower or any other Subsidiary if
such Indebtedness refinances Indebtedness that is non-recourse to the
Borrower and its other Subsidiaries and is not otherwise permitted to be
recourse to the Borrower and its other Subsidiaries;
(u) Indebtedness for Money Borrowed of S-CC and Subsidiaries of S-CC
to the extent permitted by the S-CC Debt Documents. Any such Indebtedness
for Money Borrowed shall be non-recourse to the Borrower or any of its
other Subsidiaries (except S-CC and its Subsidiaries); and
(v) Indebtedness for Money Borrowed incurred pursuant to the Senior
Notes and the First Mortgage Notes.
Any Indebtedness for Money Borrowed used in the calculation of any threshold
amount specified in any clause of this SECTION 5.2.2 shall not be used to
calculate the threshold amounts specified in another of such clauses.
5.2.3 GUARANTEES. Assume, guarantee or endorse, or otherwise
become directly or contingently liable in respect of, any obligation of any
Person, except, without duplication:
(a) subject to SECTION 5.3.2, the Borrower may assume, guarantee or
endorse, or otherwise become directly or contingently liable in respect of,
any obligation of any Person, PROVIDED that notwithstanding the foregoing
the Borrower shall not be permitted to assume, guarantee or otherwise take
any of the foregoing actions with respect to any Indebtedness for Money
Borrowed incurred by S-CC, Seminole Kraft, StoneSub, SVCPI or any
Subsidiary of any of such entities except as set forth on SCHEDULE 5.2.3
hereto;
(b) by way of endorsement of negotiable instruments for deposit or
collection and similar transactions;
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(c) guarantees identified on SCHEDULE 5.2.3 hereto;
(d) guarantees by any Subsidiary of the Borrower of Indebtedness for
Money Borrowed constituting Financing Lease Obligations of any of its
Subsidiaries (other than S-CC, Seminole Kraft, SVCPI, or any of their
respective Subsidiaries) permitted by SECTION 5.2.2;
(e) guarantees by a Subsidiary of the Borrower (other than Seminole
Kraft, S-CC or any of their Subsidiaries) in the ordinary course of
business of such Subsidiary of Indebtedness of any Person not exceeding in
principal amount $75 million in the aggregate for the Subsidiaries of the
Borrower taken as a whole (excluding Seminole Kraft, S-CC and any of their
Subsidiaries) at any time outstanding;
(f) as contemplated by Section 10.01 of the Leveraged Lease;
(g) guarantees by a Subsidiary of the Borrower in effect at the time
of its becoming a Subsidiary of the Borrower and not created in
contemplation thereof; and
(h) to the extent not otherwise permitted by this Section, guarantees
by and other contingent liabilities of S-CC and Subsidiaries of S-CC to the
extent permitted by the S-CC Debt Documents.
5.2.4 AFFILIATE TRANSACTIONS. Enter into or engage in any
material transaction or contract (other than (i) agreements existing on the date
hereof and identified on SCHEDULE 5.2.4 hereto, (ii) transactions or contracts
with affiliates permitted by SECTION 5.2.3, 5.2.7, 5.2.8 or 5.2.9 and (iii)
agreements between S-CC and any of its Subsidiaries or between Subsidiaries of
S-CC) with any Affiliate other than Wholly-Owned Subsidiaries of the Borrower
(except for the Restricted Subsidiaries of the Borrower), on a basis less
favorable to the Borrower or such Subsidiary of the Borrower than those that
could be obtained at the time in a comparable good faith arms length transaction
with an unrelated third party. Except as specified on SCHEDULE 5.2.4 or as
otherwise specifically permitted under this Agreement, the Borrower shall not
permit any contract identified on SCHEDULE 5.2.4 to be directly or indirectly
amended or extended without the prior consent of the Required Lenders; PROVIDED,
HOWEVER, that any such contract may be amended without the prior consent of the
Required Lenders if the applicable amendment is not materially adverse to the
Borrower or its applicable Subsidiary and if a copy of the amendment is
delivered to the Agent within five Business Days after its execution.
5.2.5 DIVIDENDS. Declare or pay any dividend or distribution, or
purchase or redeem any shares of any class of
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capital stock of the Borrower or any Subsidiary of the Borrower, or make any
other payment or distribution on or in respect of any class of capital stock of
the Borrower or any of its Subsidiaries, or set aside any amounts for any such
purposes, except that:
(a) any Subsidiary may pay dividends or make distributions
(including, without limitation, distributions in the form of the redemption
or purchase for cancellation of shares or in connection with the reduction
of capital) to the Borrower or to any Wholly-Owned Subsidiary of the
Borrower;
(b) the Borrower may pay cash dividends, make distributions on its
capital stock or make purchases or redemptions of its capital stock to the
extent that the aggregate amount of all such dividends, distributions,
purchases and redemptions from October 1, 1994 to the date of the proposed
dividend, distribution, purchase or redemption (after giving effect to such
proposed dividend, distribution, purchase or redemption) would not exceed
the sum of (A) an amount equal to (1) 75% of the Consolidated Net Income of
the Borrower for the period from October 1, 1994 to the date of payment of
such proposed dividend, distribution, purchase or redemption MINUS (2) 100%
of the Consolidated Net Loss of the Borrower for the period from October 1,
1994 to the date of payment of such proposed dividend, distribution,
purchase or redemption PLUS (B) 100% of the cash proceeds (net of the pro
rata fees, costs and expenses of sale and underwriting discounts and
commissions) of sales of common stock and Permitted Preferred Stock of the
Borrower from the Closing Date to the date of payment of such proposed
dividend, distribution, purchase or redemption MINUS (C) the sum of the
amount of Investments made pursuant to SECTION 5.2.7(g), and Capital
Expenditures made pursuant to subsection (ii) of the penultimate sentence
of SECTION 5.2.11; PROVIDED, HOWEVER, that without respect to the foregoing
limitations, the Borrower shall be permitted to pay cash dividends and to
make distributions with respect to its Permitted Preferred Stock
outstanding as of the date hereof (but not with respect to its common stock
or subsequently issued preferred stock) to the extent such dividends or
distributions are at the time permitted by the terms of the Borrower's
Indenture to the Bank of New York, as trustee, dated as of March 15, 1992;
and PROVIDED FURTHER, that if all of the conditions to the declaration of a
dividend or distribution set out in this subsection are satisfied at the
time such dividend or distribution is declared, then, subject to the
proviso which follows SECTION 5.2.5(h), such dividend or distribution may
be paid or made within forty-five (45) days after such declaration even if
the payment of such dividend, the making of such distribution or the
declaration thereof would not have been permitted under this SECTION
5.2.5(b) at any time after such declaration; and PROVIDED FURTHER, that
solely for
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purposes of computing Consolidated Net Income and Consolidated Net Loss
pursuant to clause (A) of this SECTION 5.2.5(b), there shall be excluded
from the computation thereof fees and other charges or write-offs incurred
or accrued (including, without limitation, the write-off of previously
unamortized debt issuance costs related to the Debt Refinancing) in respect
of Indebtedness incurred or repaid in connection with the consummation of
this Agreement, the Related Transactions and the Stone Savannah
Transactions;
(c) the Borrower may distribute shares of its common stock to holders
of the same or another class of its common stock as a stock dividend or in
connection with a stock split;
(d) the Borrower may distribute rights to purchase for cash Permitted
Preferred Stock or common stock to the holders of its capital stock;
(e) the Borrower may exchange shares of its common stock or Permitted
Preferred Stock for any outstanding shares of its capital stock other than
preferred stock which is not Permitted Preferred Stock;
(f) the Borrower may acquire the capital stock of Stone Savannah as
contemplated by SECTION 5.1.13;
(g) the Borrower or any Subsidiary of the Borrower may make any
Investment permitted by SECTION 5.2.7; and
(h) S-CC and its Subsidiaries may pay dividends on their respective
capital stock to the extent not prohibited by the terms of the S-CC Debt
Documents;
PROVIDED, HOWEVER, that in the case of clause (b) above no Event of Default or
Unmatured Event of Default (except in the case of regular quarterly dividends on
the Borrower's common stock, and/or Permitted Preferred Stock which do not
exceed the amount of the regular quarterly dividend paid by the Borrower on its
common stock and/or Permitted Preferred Stock for the calendar quarter ending
prior to such proposed dividend, in which case an Unmatured Event of Default
relating to a payment default only) shall have occurred and be continuing before
or after giving effect to any such proposed dividend.
5.2.6 NEGATIVE DEBT COVENANTS. Except for (i) instruments
evidencing Indebtedness for Money Borrowed set out in SCHEDULE 4.6 hereto, (ii)
instruments set out in SCHEDULE 3.4, 4.3, 5.2.2 or 5.2.4 hereto, in either case
as in effect on the date hereof, (iii) agreements to which Seminole Kraft is a
party as permitted by SECTION 5.2.2(m), (iv) agreements to which StoneSub is or
becomes a party pursuant to the Accounts Receivable Financing Program, (v) the
S-CC Debt Documents and other agreements to which
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S-CC or any Subsidiary of S-CC is a party or (vi) in the case of any Person
becoming a Subsidiary after the date hereof, agreements in existence at the time
it becomes a Subsidiary to the extent they were not entered into in anticipation
of such Person becoming a Subsidiary, directly or indirectly, voluntarily create
or otherwise voluntarily cause or suffer to exist or become effective any
encumbrance or restriction (other than encumbrances or restrictions existing on
the date hereof and referenced on SCHEDULE 3.4 and any encumbrances or
restrictions contained in any Indebtedness which refinances any Indebtedness
referenced on SCHEDULE 3.4 provided that the terms thereof are no more onerous
to the Borrower or any Subsidiary than those existing on the date hereof) on the
ability of any Subsidiary of the Borrower to: (A) pay dividends or make any
other distributions on its capital stock; (B) make loans or advances to the
Borrower; or (C) repay loans or advances from the Borrower. In addition, the
Borrower shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly, voluntarily create or otherwise voluntarily cause or suffer to exist
or become effective any encumbrance or restriction upon its ability to encumber
any of its property to secure the Obligations or any Subsidiary Guarantee or to
guaranty the Obligations and encumber its property to secure such guaranty
except for (1) encumbrances or restrictions set forth on SCHEDULE 5.2.6 hereto,
(2) encumbrances or restrictions upon StoneSub created in connection with the
Accounts Receivable Financing Program, (3) in the case of any Person becoming a
Subsidiary after the date hereof, encumbrances or restrictions existing at the
time it becomes a Subsidiary to the extent they were not created in anticipation
of such Person becoming a Subsidiary, (4) Permitted Liens or (5) encumbrances or
restrictions on S-CC or Subsidiaries of S-CC to the extent not prohibited by the
S-CC Debt Documents.
5.2.7 INVESTMENTS. Have or make any Investment in any Subsidiary
or other Affiliate or any other Person except for:
(a) existing Investments and commitments to make Investments set
forth on SCHEDULE 5.2.7 hereto and existing Investments and Investments to
be made in the future pursuant to the existing commitments or contracts of
the Borrower and its Subsidiaries set forth on SCHEDULE 5.2.7-A hereto, but
in no event in excess of the amounts specified on such SCHEDULE 5.2.7-A;
(b) Permitted Investments;
(c) Investments in Wholly-Owned Subsidiaries of the Borrower other
than Investments in StoneSub, S-CC or any of S-CC's Subsidiaries (except as
specifically permitted by clause (j) of this Section) and other than
additional Investments in Seminole Kraft or SVCPI made after the date, if
any, on which such Person has become a Wholly-Owned Subsidiary of the
Borrower;
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(d) in Fiscal Year 1994 and each Fiscal Year thereafter, Investments
in an amount equal to 15% of Capital Expenditures permitted in such year by
SECTION 5.2.11 (excluding Capital Expenditures permitted by the final two
sentences thereof but including Capital Expenditure amounts carried over
from year to year so long as the Borrower had positive Consolidated Net
Income in the Fiscal Year in which such carryover amount originates);
PROVIDED, HOWEVER, that the amount of such Investments shall be reduced by
the amount of any Investments made by the Borrower or its Subsidiaries
during Fiscal Year 1994 and thereafter and identified on SCHEDULE 5.2.7-A
(other than the Belgium Cartomills Investment) and shall also be reduced by
the amount of any Acquisitions pursuant to SECTION 5.2.9(e)(i).
(e) Investments by the Borrower in Persons as permitted by SECTION
5.2.9;
(f) loans or advances of a type included in the definition of
Investments and made by the Borrower or any Subsidiary of the Borrower in
the ordinary course of the Borrower's or such Subsidiary's business;
(g) Investments (including Investments in S-CC, Seminole Kraft and
SVCPI) in amounts not exceeding the amount of the Dividend Basket
immediately prior to the making of such Investment;
(h) Investments in StoneSub not in excess (together with outstanding
Indebtedness for Money Borrowed under SECTION 5.2.2(d)(ii)) of (i) the
amounts contemplated from time to time by the terms of the respective
Receivables Financings and (ii) those amounts, up to an aggregate at any
one time outstanding, of $5 million for each $100 million (on a pro-rated
basis) of Receivables Financings which have been established and are in
existence at such time, which may be advanced to StoneSub in order to cure
or remedy, or otherwise avoid the commencement of, liquidation, termination
or similar events in connection with the Receivables Financings;
(i) Investments made by the Borrower or any Subsidiary of the Borrower
in respect of debt or equity securities to the extent received in a
transaction permitted by SECTION 5.2.8(b) or 5.2.12;
(j) Investments by S-CC in its Subsidiaries and other Investments by
S-CC and its Subsidiaries to the extent not prohibited by the S-CC Debt
Documents;
(k) Investments by Europa Carton, A.G. out of the proceeds of
Indebtedness incurred by Europa Carton, A.G. pursuant to SECTION 5.2.2(c);
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(l) additional Investments (other than Investments in Seminole Kraft,
S-CC, SVCPI or any of their respective Subsidiaries) out of Discretionary
Funds (other than any Discretionary Funds resulting from any Debt Basket
Proceeds) in an amount not to exceed the Discretionary Funds Basket made at
a time when no Event of Default or Unmatured Event of Default shall have
occurred and be continuing;
(m) Investments in Stone Savannah on the Closing Date as contemplated
by SECTIONS 5.1.13 AND 6.1(l);
(n) Investments consisting of securities or notes received in
settlement of accounts receivable incurred in the ordinary course of
business from a customer which the Borrower has reasonably determined is
unable to make cash payments in accordance with the terms of such account
receivable; and
(o) additional Investments in amounts and pursuant to the terms and
conditions set forth on SCHEDULE 1.1(b) hereto.
Except as specifically provided in the foregoing clauses (d) (with respect to
SVCPI only), (g) and (j) neither the Borrower nor any Subsidiary shall be
permitted to make additional Investments in Seminole Kraft, S-CC, SVCPI or any
of their respective Subsidiaries (other than pursuant to contractual agreements
permitted by this Agreement and as in effect on the date hereof and set forth on
SCHEDULE 5.2.7-A).
5.2.8 MERGERS. Merge into or consolidate or amalgamate with any
Person except that:
(a) any Wholly-Owned Subsidiary of the Borrower (except for StoneSub
and any Restricted Subsidiary) may merge, consolidate or amalgamate with or
into the Borrower or another Wholly-Owned Subsidiary of the Borrower
(except for StoneSub and any Restricted Subsidiary) and any corporation
that is a StoneSub may merge or consolidate with any other corporation that
is a StoneSub; PROVIDED, HOWEVER, that Seminole Kraft may merge or
consolidate with or into the Borrower only if Seminole Kraft has no
Indebtedness for Money Borrowed outstanding at the time of such merger or
consolidation except for any Indebtedness for Money Borrowed the terms and
conditions of which have been approved by the Required Lenders and PROVIDED
FURTHER, that StoneSub may merge with and into the Borrower in order to
consummate a refinancing of the Receivables Financings existing on the date
hereof so long as (i) the Borrower immediately contributes and transfers
all or a substantial portion of the assets of StoneSub into a newly formed
StoneSub in connection with such refinancing and (ii) all Indebtedness of
the StoneSub which has been merged with and into the Borrower is
immediately repaid in full with the proceeds of such refinancing;
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(b) any Subsidiary of the Borrower may merge with a third party in a
transaction for which the Borrower or one of its Wholly-Owned Subsidiaries
receives less than $50 million in aggregate consideration or in a
transaction in which the Borrower or one of its Wholly-Owned Subsidiaries
receives $50 million or more in aggregate consideration and receives (i) at
least 70% of such consideration for such merger in cash or cash equivalents
and readily marketable securities, (ii) non-cash consideration for such
merger consisting 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 debt obligation shall be either (A) a note which is not by its
terms or the terms of any related instrument subordinate to any other
indebtedness or (B) a note or debt obligation secured by a first priority
security interest in the assets of the Subsidiary of the Borrower so merged
subject only to the Permitted Liens described in subsections (c) and (f) of
the definition of Permitted Liens;
(c) any Wholly-Owned Subsidiary of the Borrower may merge with a
third party in a transaction in which the only consideration paid by the
Borrower or such Subsidiary of the Borrower is common stock of the Borrower
or Permitted Preferred Stock;
(d) a Wholly-Owned Subsidiary may be liquidated and its assets
distributed to one or more Wholly-Owned Subsidiaries and/or the Borrower;
(e) the Borrower may merge or consolidate with any Person (except for
StoneSub, SVCPI and any Restricted Subsidiaries and Wholly-Owned
Subsidiaries that borrow independently on a non-recourse basis) so long as
(i) the Borrower is the surviving entity, (ii) the Consolidated Tangible
Net Worth of the Borrower immediately following such merger or
consolidation is greater than or equal to the Consolidated Tangible Net
Worth of the Borrower immediately prior to such merger or consolidation and
(iii) at the time of such merger or consolidation and immediately
thereafter no Event of Default or Unmatured Event of Default shall have
occurred and be continuing; and
(f) any Wholly-Owned Subsidiary of S-CC may merge with S-CC or with
any other Wholly-Owned Subsidiary of S-CC to the extent not prohibited by
the S-CC Debt Documents.
The Borrower shall cause any equity interest or other non-cash consideration
received by the Borrower or any of its Subsidiaries in consideration of any
transaction permitted by this Section and involving aggregate consideration of
$50 million or more to be pledged by the Borrower or such Subsidiary, as
applicable, to the Agent for the benefit of the Lenders pursuant to a
Supplemental
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Pledge Agreement. For purposes of this Section, the use of the terms "merge"
and "merger" shall be deemed to include, in the case of Canadian Subsidiaries of
the Borrower, the terms "amalgamate" and "amalgamation," respectively.
5.2.9 PURCHASE OF STOCK OR ASSETS. Acquire any assets, capital
stock or debt securities of any Person (an "ACQUISITION") except that:
(a) the Borrower and its Subsidiaries may acquire assets other than
capital stock in the ordinary course of business;
(b) the Borrower or any Subsidiary of the Borrower may purchase
assets or capital stock of a Person for a consideration consisting in whole
of common stock or Permitted Preferred Stock of the Borrower so long as no
Event of Default or Unmatured Event of Default shall have occurred and be
continuing after giving effect to such Investment;
(c) the Borrower or any Subsidiary of the Borrower may make any
Investment permitted by SECTION 5.2.7 hereof;
(d) the Borrower may purchase the Facility pursuant to Section 10.01,
10.04 or 19.09 of the Leveraged Lease;
(e) the Borrower or any Subsidiary of the Borrower may make
Acquisitions for cash consideration or property, PROVIDED that the
aggregate cash consideration or property paid by the Borrower and its
Subsidiaries for such Acquisition shall not exceed (i) the maximum amount
of Investments then permitted pursuant to SECTION 5.2.7(d) PLUS (ii) after
such maximum amount has been reduced to zero, and so long as no Event of
Default or Unmatured Event of Default shall have occurred and be
continuing, an amount of Discretionary Funds (other than any Discretionary
Funds resulting from any Debt Basket Proceeds) not exceeding the
Discretionary Funds Basket;
(f) the Borrower or any Subsidiary may make Acquisitions for cash
consideration or property PROVIDED that the cash consideration or property
paid by the Borrower and its Subsidiaries for any Acquisition shall not
exceed the amount of the Dividend Basket immediately prior to the making of
such Acquisition;
(g) Capital Expenditures permitted by SECTION 5.2.11 hereof and
expenditures of the type described in subsections (i)-(v) of the definition
of Capital Expenditures may be made;
(h) Seminole Kraft may acquire shares of its common stock pursuant to
put, call and option agreements pursuant to the Securities Purchase
Agreement dated as of October 31, 1986
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among Seminole Kraft, the Borrower and certain Purchasers named therein;
(i) the Borrower or any Subsidiary of the Borrower may acquire assets
in connection with the asset exchanges permitted by the first proviso to
the first sentence of SECTION 5.2.12;
(j) the Borrower or any Subsidiary of the Borrower may acquire
capital stock or debt securities to the extent permitted by SECTION 5.2.10;
(k) StoneSub may purchase or otherwise acquire an interest in
Receivables (with cash or by means of the issuance of Indebtedness for
Money Borrowed permitted by SECTION 5.2.2(d)(ii)) pursuant to the Accounts
Receivable Financing Program; and
(l) S-CC may make Acquisitions to the extent not prohibited by the S-
CC Debt Documents.
Any acquisition or purchase counted for purposes of any of SECTIONS 5.2.9(a)-(l)
shall not be counted for the purposes of any other such subsection.
5.2.10 PREPAYMENT OF INDEBTEDNESS; CERTAIN AMENDMENTS.
(a) Make any voluntary purchase or prepayment of or defease any
Indebtedness for Money Borrowed or purchase, voluntarily redeem or
otherwise voluntarily acquire any preferred or preference stock of the
Borrower or any of its Subsidiaries, except (i) the Obligations (to the
extent otherwise permitted hereby); (ii) a prepayment or defeasance of the
IRBs as permitted in SECTION 5.2.2(h); (iii) the redemption, purchase,
defeasance or voluntary prepayments of any Indebtedness of the Borrower
arising under or in connection with the Florence Agreements; (iv) repayment
of the unsecured lines of credit permitted by SECTION 5.2.2(m) or of
intercompany loans or advances permitted by SECTION 5.2.2(d); (v) the
redemption or purchase of preferred or preference stock of Stone-Canada or
any of its Wholly-Owned Subsidiaries; (vi) refinancings permitted by
SECTION 5.2.2; (vii) a purchase or acquisition permitted under SECTION
5.2.7; (viii) S-CC or any Subsidiary of S-CC may voluntarily purchase,
prepay or defease any of its Indebtedness for Money Borrowed; (ix) so long
as no Event of Default or Unmatured Event of Default shall have occurred
and be continuing, the prepayment of any maturity or maturities of debt
securities of the Borrower (including the payment of principal, stated
premium, if any, and interest thereon) out of Discretionary Funds in an
amount not to exceed the Discretionary Funds Basket; (x) the Debt
Refinancing and the Stone Savannah Transactions, all of which
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shall occur on the Closing Date, except as otherwise provided in SECTION
5.1.13, as a Related Transaction pursuant to the Transaction Documents;
(xi) transactions permitted by SECTION 5.2.10(b); and (xii) prepayments of
Indebtedness for Money Borrowed utilizing the proceeds of Indebtedness
permitted by SECTION 5.2.2(t);
(b) Amend, modify, cancel or issue any securities (except for debt
securities which are otherwise permitted by SECTION 5.2.2) in exchange for
any Indebtedness for Money Borrowed or any preferred or preference stock of
the Borrower or any of its Subsidiaries, except (i) that the Borrower may
issue its common stock or Permitted Preferred Stock in exchange for
Indebtedness for Money Borrowed; (ii) that Stone-Canada or any of its
Wholly-Owned Subsidiaries may issue common, preferred or preference stock
to any other Wholly-Owned Subsidiary in exchange for inter-company debt;
(iii) that Stone-Canada may issue common and/or preferred shares of capital
stock to the Borrower in exchange for intercompany debt of Stone-Canada to
the Borrower or in exchange for preferred shares of capital stock of Stone-
Canada held by the Borrower; and (iv) with respect to S-CC or any of its
Subsidiaries, to the extent not prohibited by the S-CC Debt Documents; or
(c) Materially amend, modify or grant any material waiver (for
purposes hereof any amendment, modification or waiver with respect to
subordination provisions, increasing the principal amount, increasing the
interest rate or shortening maturity shall be deemed material) with respect
to any indenture (including, without limitation, the Senior Subordinated
Note Indenture), note or other instrument (including, without limitation,
the Continental Guaranty) evidencing or creating such Indebtedness for
Money Borrowed or preferred stock of the Borrower or any Subsidiary (other
than Permitted Preferred Stock which remains Permitted Preferred Stock
after giving effect to any such amendment, modification or waiver) or
pursuant to which any such Indebtedness for Money Borrowed or preferred
stock was issued, PROVIDED that this clause (c) shall not apply to
agreements for Indebtedness for Money Borrowed of Seminole Kraft, S-CC or
any Subsidiary of S-CC which Indebtedness is nonrecourse to the Borrower or
any other Subsidiary of the Borrower (other than Seminole Kraft or S-CC or
any Subsidiary of S-CC, as the case may be).
5.2.11 CAPITAL EXPENDITURES. Expend or incur any Capital
Expenditure in any Fiscal Year if the aggregate amount of the Capital
Expenditures expended or incurred by the Borrower and its Subsidiaries
(exclusive of Seminole Kraft, S-CC and Subsidiaries of S-CC) in such Fiscal Year
would exceed the following amounts, as such amounts may be increased in any
Fiscal
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Year pursuant to the terms and conditions set forth on SCHEDULE 1.1(b):
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1994 $225 million
1995 $225 million
1996 and each Fiscal $275 million
Year thereafter
</TABLE>
Each of the foregoing amounts established for Fiscal Years commencing with and
including 1994 may be carried forward from one year to the next to the extent
not used for Capital Expenditures (or for Investments pursuant to SECTION
5.2.7(d)) during any prior Fiscal Year. Capital Expenditures permitted above
(i) shall be reduced for any Fiscal year by the amount of Investments made
during such Fiscal Year pursuant to SECTION 5.2.7(d) and by the amount of
expenditures made during such Fiscal Year pursuant to SECTION 5.2.9(e), (ii) at
the option of the Borrower, may be increased at any time or from time to time by
an amount not exceeding the amount of the Dividend Basket immediately prior to
the making of such Capital Expenditure, and (iii) at the option of the Borrower,
so long as no Event of Default or Unmatured Event of Default shall have occurred
and be continuing, may be increased at any time or from time to time by an
amount of Discretionary Funds (other than any Discretionary Funds resulting from
any Debt Basket Proceeds) not exceeding the Discretionary Funds Basket.
Notwithstanding the foregoing limitations on Capital Expenditures in this
SECTION 5.2.11, the Borrower and its Subsidiaries may make Cluster Expenditures.
5.2.12 SALE OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of any Asset (other than cash or Permitted Investments) or related group
of Assets, including shares of capital stock, to a Person which is not the
Borrower or a Wholly-Owned Subsidiary of the Borrower (other than a Restricted
Subsidiary) except sales or other dispositions of inventory in the ordinary
course of business for cash or represented by accounts receivable, unless the
transaction (i) is a disposition permitted by SECTION 5.2.13, (ii) is a
disposition of Collateral or Mortgaged Property and is for consideration
consisting solely of cash, cash equivalents or readily marketable securities,
(iii) is a disposition not involving Collateral or Mortgaged Property and is for
aggregate consideration of not more than $50 million or (iv) is a disposition
not involving Collateral or Mortgaged Property and is for aggregate
consideration in excess of $50 million, of which at least 70% consists of cash
or cash equivalents and readily marketable securities and any non-cash
consideration consists of debt obligations of the purchaser which are either in
the form of (A) a note which is not by its terms or the terms of any related
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instrument subordinate to any other indebtedness or (B) a note or debt
obligation secured by a first priority security interest in the assets of the
purchaser purchased in such transaction subject only to the Permitted Liens
described in subsections (c) and (f) of the definition of Permitted Liens;
PROVIDED, HOWEVER, that mills and plant facilities and leasehold interests
therein not constituting Collateral or Mortgaged Property may be exchanged for
like-kind assets on an arms-length basis; PROVIDED FURTHER, that S-CC and any
Subsidiary of S-CC may sell, lease, assign, transfer or otherwise dispose of
assets to the extent not prohibited by, and in accordance with the requirements
of, the S-CC Debt Documents; PROVIDED FURTHER, that in no event may the Borrower
sell, lease, assign or otherwise transfer any Collateral or Mortgaged Property
to any Subsidiary unless Substitute Collateral is provided in accordance with
SECTION 9.13(c), except (x) to the extent provided in the Security Agreements
and Mortgages and (y) that the Borrower may transfer Collateral or Mortgaged
Property not exceeding $10 million in aggregate fair market value to one or more
Subsidiaries so long as each such Subsidiary takes such transferred property
subject to the Liens under the applicable Loan Documents. The Borrower shall
cause any equity interest or other non-cash consideration received by the
Borrower or any of its Subsidiaries in consideration of any transaction
permitted by this Section and involving aggregate consideration of $50 million
or more to be pledged by the recipient thereof to the Agent for the benefit of
the Lenders pursuant to a Supplemental Pledge Agreement; PROVIDED, HOWEVER, that
such requirement shall not apply if (i) the Assets disposed of are subject to a
Lien and such equity interest or other non-cash consideration is required to be
and is pledged or paid over to the holder of such Lien or (ii) such
consideration constitutes Excluded Sale Proceeds.
5.2.13 SALE OF ACCOUNTS RECEIVABLE. Sell or otherwise dispose of
any account receivable, including any sale or transfer to any Subsidiary of the
Borrower, except that (a) any Subsidiary of the Borrower may sell or transfer
any of its accounts receivable to the Borrower, (b) the Borrower or any
Subsidiary of the Borrower may sell its accounts receivable in the ordinary
course of business consistent with the Borrower's or such Subsidiaries'
collection practices as in effect from time to time and not as part of a
financing and (c) the Borrower or any Participating Subsidiary may sell or
otherwise grant an interest in its Receivables to StoneSub, and StoneSub may
sell or otherwise grant an interest in its Receivables to other Persons, in each
case pursuant to the Accounts Receivable Financing Program. In addition to the
foregoing, the Borrower or any Subsidiary eligible to be a Participating
Subsidiary may directly sell interests in Receivables to a financial institution
or other Person (whether on a revolving purchase basis or in a one-time
transaction); PROVIDED, HOWEVER, that all such sales shall be on terms
(considered as a whole) not materially more onerous to the Borrower and the
Lenders than those permitted for sales by StoneSub to the Issuer under the
Receivables
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Financings in existence on the date hereof; and PROVIDED FURTHER, that any such
sales of receivables shall, for all other purposes of this Agreement, and
regardless of the treatment thereof by the Borrower on its financial statements,
be deemed to be an incurrence by the Borrower of Indebtedness for Money Borrowed
in respect of the financing of the receivables involved and not as a sale of
such receivables; and PROVIDED FURTHER, that the aggregate of the Indebtedness
for Money Borrowed deemed to have been incurred and at any time outstanding
pursuant to this sentence shall reduce on a dollar-for-dollar basis the
aggregate principal amount of Indebtedness for Money Borrowed which StoneSub is
permitted to have outstanding at any time under SECTION 5.2.2(p) pursuant to
Receivables Financings. Notwithstanding anything in this Section to the
contrary, S-CC and its Subsidiaries shall be permitted to dispose of any account
receivable to the extent not prohibited by the S-CC Debt Documents.
5.2.14 SUBSIDIARIES. (a) Other than non-Wholly-Owned Subsidiaries
in existence on the date hereof, Seminole Kraft, S-CC and Subsidiaries of S-CC,
permit to exist Subsidiaries which are not Wholly-Owned Subsidiaries; or (b)
permit any Subsidiary which was a Wholly-Owned Subsidiary on the date hereof to
cease to be a Wholly-Owned Subsidiary, except in either case as otherwise
permitted by SECTIONS 5.2.8, or 5.2.12, as a result of honoring the existing
contractual commitments referenced on SCHEDULE 5.2.7-A or, in the case of clause
(b), as a result of a transaction otherwise permitted hereby whereby such entity
ceases to be a Subsidiary.
5.2.15 LEASE PAYMENTS. Except for lease payments arising in
connection with the Leveraged Lease or any Financing Lease, incur, assume or
suffer to exist or permit any of its Subsidiaries to incur, assume or suffer to
exist, any obligation for rental payments as lessee, whether directly or as
guarantor, if after giving effect thereto, the aggregate amount of lease
payments required to be made by the Borrower and its Subsidiaries (other than
Seminole Kraft, S-CC and Subsidiaries of S-CC) will exceed $150 million during
any calendar year, PROVIDED, HOWEVER, that S-CC and its Subsidiaries may incur,
assume or suffer to exist any obligations for rental payments, as lessee,
whether directly or as guarantor, to the extent not prohibited by the S-CC Debt
Documents.
5.2.16 ACCOUNTS RECEIVABLE FINANCING PROGRAM. Enter into any
initial documentation in connection with a Receivables Financing or any sales of
receivables permitted by the penultimate sentence of SECTION 5.2.13 unless such
documentation (i) has been approved by the Required Lenders or is on terms and
conditions which, taken as a whole, are not materially more adverse to the
Borrower and the Lenders than the documentation in existence on the date hereof
with respect to existing Receivables Financings or (ii) is non-material
documentation entered into pursuant to such approved documentation or amend or
modify in any material respect any of such documentation unless such amendment
or modification has
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been so approved or otherwise satisfies the conditions of clause (i) above.
Section 5.3 FINANCIAL COVENANTS OF THE BORROWER. The
Borrower covenants and agrees that for so long as this Agreement is in effect
and until the Obligations and all other obligations incurred hereunder whether
or not matured, are paid in full, the Borrower will, unless first having
procured the written consent of the Required Lenders:
5.3.1 INTEREST COVERAGE RATIO. As of the end of each Fiscal
Quarter, calculated for the most recently completed four Fiscal Quarters (but if
four fiscal quarters have not been completed since the date hereof, then for the
number of Fiscal Quarters that have been completed since the date hereof),
maintain an Interest Coverage Ratio for such period ending on a date set forth
below of not less than the amount set forth opposite such date:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
December 31, 1994 1.00 to 1
March 31, 1995 1.15 to 1
June 30, 1995 1.25 to 1
September 30, 1995 1.35 to 1
December 31, 1995 1.50 to 1
March 31, 1996 1.65 to 1
June 30, 1996 1.75 to 1
September 30, 1996 1.85 to 1
December 31, 1996 2.00 to 1
March 31, 1997 2.00 to 1
June 30, 1997 2.00 to 1
September 30, 1997 2.25 to 1
and thereafter
</TABLE>
5.3.2 INDEBTEDNESS RATIO. Have an Indebtedness Ratio of not more than
the following amounts as of the end of each Fiscal Quarter ending on a date set
forth below:
<TABLE>
<CAPTION>
Date Ratio
---- -----
<S> <C>
December 31, 1994 through
March 31, 1996 .85 to 1
June 30, 1996 through
September 30, 1996 .80 to 1
December 31, 1996 through
September 30, 1997 .77 to 1
December 31, 1997 through
September 30, 1998 .72 to 1
December 31, 1998 through
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September 30, 1999 .67 to 1
December 31, 1999 and
thereafter .62 to 1
</TABLE>
ARTICLE VI
CONDITIONS OF CREDIT
Section 6.1 CONDITIONS PRECEDENT TO THE INITIAL BORROWING. The
right of the Borrower to make the initial Borrowing and the obligation of the
Lenders to make the Initial Loans under this Agreement shall be subject to the
fulfillment, at or prior to the time of the making of such Initial Loans, of
each of the following conditions:
(a) The Borrower shall have duly executed and delivered to the Agent,
with a signed counterpart for each Lender, this Agreement and, subject to
SECTION 5.1.17, all of the other Loan Documents, all of which shall be in full
force and effect.
(b) All of the other Basic Agreements shall have been duly executed
and delivered in form and substance satisfactory to the Agent and shall be in
full force and effect.
(c) No Event of Default or Unmatured Event of Default shall have
occurred and be continuing or will occur after giving effect to the making of
the Initial Loans and the consummation of the transactions contemplated by the
Basic Agreements.
(d) The Mergers shall have been consummated in compliance with the
Merger Documents and with all applicable laws. The Agent shall have received
duly executed copies of the Merger documents as filed with the Secretary of the
State of Delaware.
(e) The Agent shall have received proof that the applicable Loan
Documents and appropriate financing statements and other documents required by
the applicable Loan Documents have been filed and/or recorded in such
jurisdictions as the Agent shall have specified or arrangements for such filing
or recording satisfactory to the Agent have been made; PROVIDED, HOWEVER, that
with respect to the recordations of the Mortgages in the real estate records of
any jurisdictions, proof of recordation shall not be required if the Agent
receives the title insurance or binders to assure the same in accordance with
this SECTION 6.1.
(f) The Agent shall have received copies of searches of financing
statements filed under the Uniform Commercial Code, lien and judgment searches
and title searches, as appropriate, with respect to the Collateral and the
Mortgaged Property which searches are reasonably satisfactory to the Agent.
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(g) Subject to SECTION 5.1.17, the Agent shall have received binding
policies of mortgagee's title insurance (with such co-insurance and/or
reinsurance arrangements as are satisfactory to the Agent and with such special
endorsements as the Agent shall require, all in form reasonably satisfactory to
the Agent), together with such surveys as the Agent shall require, on each
parcel of the Mortgaged Property specified by the Agent pursuant to policies on
the applicable ALTA form which will insure that the mortgagees thereunder will
have a valid first mortgage lien (subject to Permitted Liens) in the amounts
specified on SCHEDULE 6.1(g) hereto, subject to such exceptions as are provided
for in the Mortgages.
(h) The Agent shall have received the signed opinion of Sidley &
Austin, counsel to the Borrower and its Subsidiaries, dated the Closing Date and
addressed to the Agent, the Co-Agents and all of the Lenders in substantially
the form set forth on EXHIBIT 6.1(h) hereto, with such changes (if any) therein
as shall be acceptable to the Agent and as to such other matters as the Agent
may reasonably request, and the Agent shall have received the signed opinions
addressed to all of the Lenders of such local counsel reasonably satisfactory to
the Agent as the Agent may reasonably request.
(i) The Agent shall have received a copy of all resolutions (in form
and substance reasonably satisfactory to the Agent) adopted by the Board of
Directors of each of the Borrower and those Subsidiaries (including, without
limitation, each of the Stone Merger Subsidiaries and Stone Southwest Merger
Subsidiaries) as reasonably deemed necessary by the Agent, authorizing or
relating to (i) the execution, delivery and performance of the Basic Agreements
and the other documents and instruments provided for therein, (ii) the
consummation of the Mergers, and (iii) the consummation of the transactions
contemplated hereby and thereby, (iv) the granting and confirmation of the
liens, pledges, mortgages and security interests pursuant to the Security
Agreements, and the Mortgages by the Borrower and its applicable Subsidiaries,
together with by-laws of the Borrower and such Subsidiaries, all certified by
the Secretary or a Vice-President of the Borrower and such Subsidiary. Such
certificate shall be dated the Closing Date and shall state that the resolutions
set forth therein have not been amended, modified, revoked or rescinded as of
such date and are at such date in full force and effect.
(j) The Agent shall have received certified copies of the charters of
each of the Borrower and those Subsidiaries as reasonably deemed necessary by
the Agent in their respective jurisdictions of incorporation and evidence of
their good standing therein.
(k) The Agent shall have received a certificate of the Secretary or a
Vice-President of the Borrower, dated the Closing
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Date as to the incumbency and signature of the officers of the Borrower and any
applicable Subsidiary executing any Basic Agreement and any certificate or other
document or instrument to be delivered pursuant thereto by or on behalf of the
Borrower or such Subsidiary, together with evidence of the incumbency of such
Secretary or Vice-President, as the case may be.
(l) Contemporaneously with the funding of the Initial Loans, the
Borrower shall have (i) paid in full all outstanding indebtedness under the U.S.
Credit Agreement, the U.S. Credit Agreement shall have been terminated and all
Liens existing pursuant thereto shall have been released and terminated, (ii)
made loans and/or capital contributions to Stone-Canada, the proceeds of which
Stone-Canada shall have used to pay in full all outstanding indebtedness under
the Canadian Credit Agreements such that the Canadian Credit Agreements shall
have been terminated and all Liens existing pursuant thereto shall have been
released and terminated, (iii) caused the payment in full of all outstanding
indebtedness under the Stone Savannah Credit Agreement such that the Stone
Savannah Credit Agreement shall have been terminated and all Liens existing
pursuant thereto shall have been released and terminated, and (iv) shall have
given irrevocable notice of redemption to the trustee of the Stone Savannah
Senior Subordinated Note Indenture with respect to all outstanding Stone
Savannah Senior Subordinated Notes and shall have caused to be deposited with
such trustee funds sufficient to redeem in full all of the Stone Savannah Senior
Subordinated Notes at par (plus stated premium), together with interest accrued
and to accrue through the date of redemption, which shall be on or prior to
December 30, 1994. All of the foregoing shall be pursuant to documentation
reasonably satisfactory to the Agent.
(m) The Agent shall have received a certificate executed by a
Responsible Officer on behalf of the Borrower, dated the Closing Date and in the
form of EXHIBIT 6.1(m) hereto.
(n) All outstanding participations in the Florence Letters of Credit
shall have been terminated and all Revolving Lenders (other than BT) shall have
entered into a Participation Agreement with respect to its Revolving Loan Pro
Rata share of the Florence L/C Obligations.
(o) Each of Westinghouse Electric Corporation, Gelco Corporation and
BT shall have entered into amendments to the L/C Agreement in substantially the
forms of EXHIBITS 6.1(o)-A AND B hereto.
(p) Contemporaneously with the funding of the Initial Loans, the
Borrower shall have paid in full all accrued Commitment Fees and the Facility
Fee.
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(q) The Borrower shall have paid the Agent the Agent's Fees due on
the date of this Agreement.
(r) The Agent shall have received a Notice of Borrowing by 3:00 p.m.
New York time on the Business Day prior to the Closing Date with respect to its
Initial Loans hereunder.
(s) The Agent shall have received the Environmental Study, the
results of which shall be acceptable to the Agent.
(t) The Agent shall have received certificates of insurance
evidencing insurance required to be maintained pursuant to SECTION 5.1.9 and the
other Loan Documents, evidence of full payment of premiums thereon and loss
payable endorsements, all as required by this Agreement and the other Loan
Documents.
(u) The Borrower shall have realized gross proceeds of $700 million
from the issuance and sale of the Senior Notes and the First Mortgage Notes and
the Agent shall have received a duly executed copy of each of the Senior Note
Documents and the First Mortgage Note Documents, the terms, conditions,
representations, warranties, covenants, events of default and other provisions
of which shall be satisfactory in all respects to the Agent.
(v) The Borrower shall have entered into a letter agreement with the
Facing Agent providing for Letter of Credit fees, in form and substance
satisfactory to the Facing Agent.
(w) All corporate and other proceedings taken in connection with the
transactions hereunder at or prior to the Closing Date and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Agent.
(x) The Agent shall have received such other documents or legal
opinions as the Agent or the Required Lenders may reasonably request, all in
form and substance satisfactory to the Agent. The Borrower shall have furnished
to the Agent or the Lenders such additional copies or executed counterparts of
the documents referred to above as the Agent or any Lender may request.
Section 6.2 CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The right
of the Borrower to make any Borrowing or to have issued any Letter of Credit,
and the obligation of each Lender to make a Loan (including the Loans made on
the Closing Date and Swing Line Loans) in respect of any such Borrowing and the
obligation of the Facing Agent to issue or any Revolving Lender to participate
in any Letter of Credit shall, in each case, be subject to the fulfillment at or
prior to the time of the making of such Borrowing, or the issuance of such
Letter of Credit, as the case may be, of each of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in ARTICLE IV of this Agreement and in the other Loan
Documents shall each be true and correct in all material respects at and as of
such time, as though made on and as of such time except to the extent such
representations and warranties are expressly made as of a specified date in
which event such representation and warranty shall be true and correct as of
such specified date.
(b) NO DEFAULT. No Event of Default shall have occurred and shall
then be continuing on such date or will occur after giving effect to such
Borrowing (including without limitation the use of proceeds requirements set
forth in SECTION 5.1.11).
(c) NOTICE OF BORROWING; LETTER OF CREDIT REQUEST.
(i) Prior to the making of each Loan, the Agent shall have received a
Notice of Borrowing meeting the requirements of SECTION 2.5.
(ii) Prior to the issuance of each Letter of Credit, the Agent and the
Facing Agent shall have received a request for the issuance of a Letter of
Credit meeting the requirements of SECTION 2.12(c).
(d) OTHER INFORMATION. The Agent shall have received such other
instruments and documents as the Agent or the Required Lenders may reasonably
request in connection with the Loans and Letters of Credit and all such
instruments and documents shall be reasonably satisfactory in form and substance
to the Agent.
The acceptance of the benefits of each such Credit Event by the
Borrower shall be deemed to constitute a representation and warranty by it to
the effect of paragraphs (a), (b) and (c) of this SECTION 6.2.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an "EVENT OF DEFAULT":
(a) PAYMENTS. The Borrower (i) shall fail to pay when due (whether
at maturity, upon acceleration, by mandatory prepayment or otherwise) any
payment of principal on any Obligation or (ii) shall default in the payment of
interest on any Obligation or default in the payment of any fee or other amount
owing hereunder or under any other Loan Document when due and, in the case of
this clause (ii), such default in payment shall continue for a period of five
(5) Business Days; or
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(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
on the part of the Borrower contained in, or incorporated by reference in, any
Basic Agreement or any document, instrument or certificate delivered pursuant
thereto shall have been incorrect in any material respect when made or deemed to
have been made; or
(c) CERTAIN COVENANTS. The Borrower shall default in the performance
or observance of any term, covenant, condition or agreement on its part to be
performed or observed under SECTION 5.1 (except SECTIONS 5.1.1(b)-(h), 5.1.2,
5.1.3(b), 5.1.4, 5.1.5 (giving effect to any cure or remedy periods in the
documents referred to in such Sections), 5.1.6, 5.1.7, 5.1.8, 5.1.9, 5.1.12 and
5.1.15), 5.2 (except for SECTION 5.2.1 with respect to non-contractual Liens) or
5.3; or
(d) OTHER COVENANTS. The Borrower shall default in the performance
or observance of any term, covenant, condition or agreement on its part to be
performed or observed hereunder or under any Basic Agreement (and not
constituting an Event of Default under any other clause of this SECTION 7.1)
and, with respect only to such defaults as are capable of being remedied, such
default shall continue unremedied for a period of thirty (30) days after written
or telephonic (promptly confirmed in writing) notice thereof has been given to
the Borrower by the Agent or any Lender; or
(e) BANKRUPTCY. The Borrower or any of its Subsidiaries shall become
insolvent or generally fail to pay, or admit in writing its inability to pay,
its debts as they become due, or shall voluntarily commence any proceeding or
file any petition under any bankruptcy, insolvency or similar law or seeking
dissolution or reorganization or the appointment of a receiver, trustee,
custodian or liquidator for it or a substantial portion of its property, assets
or business or to effect a plan or other arrangement with its creditors, or
shall file any answer admitting the jurisdiction of the court and the material
allegations of an involuntary petition filed against it in any bankruptcy,
insolvency or similar proceeding, or shall be adjudicated bankrupt, or shall
make a general assignment for the benefit of creditors, or shall consent to, or
acquiesce in the appointment of, a receiver, trustee, custodian or liquidator
for a substantial portion of its property, assets or business; or
(f) INVOLUNTARY PROCEEDINGS. Involuntary proceedings or an
involuntary petition shall be commenced or filed against the Borrower or any of
its Subsidiaries under any bankruptcy, insolvency or similar law or seeking the
dissolution or reorganization of it or the appointment of a receiver, trustee,
custodian or liquidator for it or of a substantial part of its property, assets
or business, or any writ, judgment, warrant of attachment, execution or similar
process shall be issued or levied
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against a substantial part of its property, assets or business, and such
proceedings or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded, within sixty (60) days after commencement, filing or levy, as the
case may be, or any order for relief shall be entered in any such proceeding; or
(g) INDEBTEDNESS FOR MONEY BORROWED. (i) The Borrower or any of its
Subsidiaries shall default in the payment when due, whether at stated maturity
or otherwise, of any Indebtedness for Money Borrowed having an aggregate
principal amount of $10 million or more, (ii) an event of default as defined in
any mortgage, indenture, agreement or instrument under which there may be
issued, or by which there may be secured or evidenced, any such Indebtedness for
Money Borrowed shall occur which permits any holder thereof to cause any such
Indebtedness for Money Borrowed of the Borrower or any of its Subsidiaries to
become due and payable prior to the stated maturity or due date thereof, or
(iii) any event or condition shall occur which with notice or lapse of time or
both permits such Indebtedness for Money Borrowed of the Borrower or any of its
Subsidiaries to be declared due and payable prior to its stated maturity or due
date; PROVIDED, HOWEVER, that solely with respect to S-CC, SVCPI, Seminole Kraft
or any of their Subsidiaries, (A) any event described in subsection (i) above
shall constitute an Event of Default only if the payment default relates to the
final maturity of the relevant Indebtedness for Money Borrowed and the holder
thereof has commenced legal action in respect of such default and (B) any event
described in subsection (ii) or (iii) above shall constitute an Event of Default
only if the relevant "event of default", "event" or "condition" results in any
such Indebtedness for Money Borrowed being declared due and payable prior to its
stated maturity or due date; or
(h) JUDGMENTS. One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries involving, individually or in
the aggregate, a liability of $10 million or more and a sufficient number of
such judgments or decrees shall not have been vacated, discharged, satisfied or
stayed pending appeal within thirty (30) days from the entry thereof so as to
bring the aggregate below the $10 million threshold set forth above; or
(i) BASIC AGREEMENTS. (i) Any of the Basic Agreements shall cease
for any reason to be in full force and effect (other than termination in
accordance with its terms) or the obligor thereunder shall disavow or seek to
discontinue its obligations thereunder, or shall contest the validity or
enforceability of any thereof; or (ii) any Lien purported to be granted pursuant
to the Security Agreements or the Mortgages for any reason shall cease to be a
legal, valid or enforceable lien and security interest in the Collateral or the
Mortgaged Property, as the case may be; or
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(j) ERISA. Either (i) any Reportable Event which constitutes
reasonable grounds for the termination of any Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer or liquidate any Plan shall have occurred; (ii) a trustee shall be
appointed by a United States District Court to administer any Plan; (iii) the
PBGC shall institute proceedings to terminate any Plan; (iv) any Plan shall be
terminated; or (v) the Borrower, any of its Subsidiaries or any ERISA Affiliate
shall become liable to the PBGC pursuant to ERISA Sections 4063 or 4064; AND the
aggregate outstanding liability of the Borrower, all of its Subsidiaries, and
all ERISA Affiliates with respect to the Plan (assuming the Plan had terminated)
and all other Plans as to which any of the events (i) through (v) has occurred
exceeds $10 million or a contribution failure occurs with respect to any Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; or
(k) OTHER ERISA. Either (i) a trustee shall be appointed by a
United States District Court to administer any Multiemployer Plan; (ii) the PBGC
shall institute proceedings to terminate any Multiemployer Plan; (iii) the
Borrower, any of its Subsidiaries or any ERISA Affiliates shall become liable
to any Multiemployer Plan pursuant to ERISA Section 4201; or (iv) any
Multiemployer Plan shall be terminated; AND the aggregate out-standing liability
of the Borrower, all of its Subsidiaries, and all ERISA Affiliates with respect
to the Multiemployer Plan (assuming the Multiemployer Plan had terminated if
either (i) or (ii) has occurred) and all other Multiemployer Plans as to which
any of the events (i) through (iv) has occurred exceeds $20 million; or
(l) CROSS-DEFAULTS. Any default or event of default shall occur
under any of the Subsidiary Guarantees, the Security Agreements, the Mortgages,
any other Basic Agreement, the L/C Agreement or the Continental Guaranty;
PROVIDED, HOWEVER, that for purposes of this Section and SECTION 7.1(g), no
Default or Event of Default shall be deemed to have occurred under the
Continental Guaranty to the extent that such Default or Event of Default arises
solely out of a cross-default under the Continental Guaranty to the debt
instruments of SVCPI, S-CC or Seminole Kraft and Continental has neither sought
to enforce any remedies under the Continental Guaranty in respect thereof nor
given the Borrower written notice of its intent to do so upon the passage of
time or the occurrence or non-occurrence of specified events; or
(m) CHANGE OF CONTROL. There shall have occurred a Change of
Control.
Section 7.2 REMEDIES. If an Event of Default shall occur and be
continuing, the Agent may and, at the direction of the Required Lenders shall,
take one or more of the following actions: (a) by written or oral or telephonic
notice (in the case of oral or
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telephonic notice confirmed in writing promptly thereafter) to the Borrower
declare the Total Maximum Commitment to be terminated whereupon the Total
Maximum Commitment shall forthwith terminate, (b) by written or oral or
telephonic notice (in the case of oral or telephonic notice confirmed in writing
promptly thereafter) to the Borrower declare all sums then owing by the Borrower
hereunder to be forthwith due and payable, whereupon all such sums shall become
and be immediately due and payable without presentment, demand, protest or
notice of any kind (except as expressly provided for herein), all of which are
hereby expressly waived by the Borrower, or (c) exercise any remedies available
under any Loan Document or otherwise. In the case of the occurrence of any
Event of Default described in clause (e) or (f) of SECTION 7.1, the Total
Maximum Commitment shall forthwith terminate and the Obligations, together with
accrued interest thereon, shall become due and payable forthwith without the
requirement of any such acceleration or request, and without presentment,
demand, protest or other notice of any kind, all of which are expressly waived,
and other amounts payable by the Borrower hereunder shall also become
immediately due and payable, all without notice of any kind.
If the maturity of the Obligations has been accelerated pursuant to
the preceding paragraph, the Borrower shall, on the Business Day it receives
notice from the Agent or the Required Lenders thereof, deposit in an account
with the Agent, for the benefit of the Revolving Lenders, an amount in cash
equal to the L/C Obligations as of such date. Such deposit shall be held by the
Agent as collateral for the payment and performance of the L/C Obligations. The
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 Agent, such deposits shall not
bear interest. Interest or profits, if any, on such investments shall
accumulate in such account. Monies in such account shall (i) automatically be
applied by the Agent to reimburse the Facing Agent and BT for any Letter of
Credit disbursement, (ii) be held for the satisfaction of the reimbursement
obligations of the Borrower at such time and (iii) be applied to satisfy the
Obligations. If the Borrower is required to provide an amount of cash
collateral hereunder as a result of an acceleration of the Obligations, 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 and the acceleration has been rescinded and annulled as provided in
the succeeding paragraph.
Anything in this SECTION 7.2 to the contrary notwithstanding, the
Agent shall, if requested by the Required Lenders (or all the Lenders if
required by the terms of SECTION 9.2), within thirty (30) days of (a) the
delivery to the Borrower of a notice of acceleration of the Obligations or (b)
an automatic acceleration of the Obligations by reason of the occurrence of any
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Event of Default described in clause (e) or (f) of SECTION 7.1, rescind and
annul any acceleration of the Obligations; PROVIDED, HOWEVER, that at the time
such acceleration is so rescinded and annulled (i) all past due interest and
principal, if any, on the Obligations and all other sums payable under this
Agreement and the other Loan Documents (except any principal and interest on any
Obligations which has become due and payable by reason of such acceleration
pursuant to this SECTION 7.2) shall have been duly paid and (ii) no other Event
of Default or Unmatured Event of Default shall have occurred and be continuing
and the Agent shall have received the certificate of an Executive Officer of the
Borrower to such effect. If any reduction in commitments has occurred pursuant
to this SECTION 7.2 in connection with any such acceleration, then upon the
rescission and annulment of such acceleration pursuant to this SECTION 7.2, the
Revolving Loan Commitment of each Revolving Lender and Swing Line Commitment
shall be reinstated to the respective amounts thereof which would have been in
effect on the date of such rescission and annulment had no commitment reduction
occurred pursuant to this SECTION 7.2.
ARTICLE VIII
THE AGENT
In this ARTICLE VIII, the Lenders agree among themselves as follows:
Section 8.1 APPOINTMENT. The Lenders hereby appoint BT as Agent
hereunder and under each other Loan Document as herein specified. Each Lender
hereby irrevocably authorizes and each holder of any Obligation by the
acceptance thereof shall be deemed irrevocably to authorize the Agent to take
such action on its behalf under the provisions of this Agreement and the other
Basic Agreements (including, without limitation, to give notices and take such
actions on behalf of the Required Lenders as are consented to in writing by the
Required Lenders) and any other instruments, documents and agreements referred
to herein and therein and to exercise such powers hereunder and thereunder as
are specifically delegated to the Agent by the terms hereof and thereof and such
other powers as are reasonably incidental thereto. The Agent may perform any of
their respective duties hereunder, or under the Loan Documents, by or through
their respective agents or employees.
Section 8.2 NATURE OF DUTIES. The Agent shall not have any duties
or responsibilities, express or implied, except those expressly set forth in
this Agreement and the other Loan Documents. The duties of the Agent shall be
mechanical and administrative in nature. The Agent shall not have by reason of
this Agreement a fiduciary relationship in respect of any Lender, any Co-Agent
or the Borrower. Nothing in this Agreement or any of the Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in
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respect of this Agreement or any of the Loan Documents except as expressly set
forth herein or therein. Each Lender shall make its own independent
investigation of the financial condition and affairs of the Borrower and its
Subsidiaries in connection with the making and the continuance of the Loans and
the issuance of Letters of Credit hereunder, and shall make its own appraisal of
the creditworthiness of the Borrower. The Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before making of the Loans or at any time or times thereafter.
The Agent will promptly notify each Lender at any time that the Required Lenders
have instructed it to act or refrain from acting pursuant to ARTICLE VII.
Section 8.3 RIGHTS, EXCULPATION, ETC. Neither the Agent nor any of
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted by it hereunder or under any of the Loan Documents,
or in connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. Neither the Agent nor any of its officers,
directors, employees or agents shall be responsible to any Lender for or have
any duty to ascertain, inquire into, or verify (i) any recitals, statements,
representations or warranties made in connection with any Loan Document or any
Borrowing hereunder, (ii) the performance or observance of any of the covenants
or agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender, (iii) the satisfaction of any condition specified in ARTICLE VI, except
receipt of items required to be delivered to the Agent, or (iv) the execution,
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of any of the Loan Documents or the financial condition of the
Borrower or any of its Subsidiaries. The Agent shall not be required to make
any inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of any of the Loan Documents or the financial condition
of the Borrower or any of its Subsidiaries, or the existence or possible
existence of any Unmatured Event of Default or Event of Default unless requested
to do so by the Required Lenders. The Agent shall have no duty to disclose to
the Co-Agents or the Lenders information that is not required to be furnished by
the Borrower to the Agent at such time, but is voluntarily furnished by the
Borrower to the Agent (either in its capacity as Agent or in its individual
capacity). The Agent may at any time request instructions from the Lenders with
respect to any actions or approvals which by the terms of any of the Loan
Documents the Agent is permitted or required to take or to grant, and if such
instructions are requested, the Agent shall be absolutely entitled to refrain
from taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or
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withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Required Lenders. Any such instructions and
any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or
refraining from acting under any of the Loan Documents in accordance with the
instructions of the Required Lenders. The Lenders hereby acknowledge that the
Agent shall be under no 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.
Section 8.4 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may
execute any of its duties as Agent hereunder and under any other Loan Document
by or through employees, agents and attorneys-in-fact and shall not be
answerable to the Lenders or the Co-Agents, except as to money or securities
received by it or its authorized agents, for the default or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. The Agent
shall be entitled to advice of counsel concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Loan
Document.
Section 8.5 RELIANCE. The Agent shall be entitled to rely upon any
written notice, statement, certificate, order or other document or any telephone
message reasonably believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person, and, with respect to all matters
pertaining to any of the Loan Documents and its duties hereunder or thereunder,
upon advice of counsel selected by it.
Section 8.6 INDEMNIFICATION. To the extent that the Agent is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent, acting pursuant hereto, in any way relating
to or arising out of any of the Loan Documents or any action taken or omitted by
the Agent, under any of the Loan Documents, in proportion to each Lender's
respective ratable share of the aggregate of the Total Maximum Commitment (or,
if the Commitments have been terminated, in proportion to their Commitments
immediately prior to such termination); PROVIDED, HOWEVER, that no Lender shall
be liable for any fees payable to the Agent pursuant to SECTION 3.9 or for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. The obligations of the Lenders under
this SECTION 8.6 shall survive the
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payment in full of the Obligations and the termination of this Agreement.
Section 8.7 NOTICE OF DEFAULT. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Event of Default or Unmatured
Event of Default hereunder unless the Agent has received written notice from a
Lender or the Borrower referring to this Agreement describing such Event of
Default or Unmatured Event of Default and stating that such notice is a "notice
of default". In the event that the Agent receives such a notice, the Agent
shall give prompt notice thereof to the Lenders.
Section 8.8 THE AGENT INDIVIDUALLY. With respect to its Revolving
Loan Pro Rata Share, Term Loan Pro Rata Share and Maximum Commitment hereunder
and the Loans made or Letters of Credit issued by it, the Agent in its
individual capacity shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender or holder of an Obligation. The
terms "Lenders" or "Required Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity as a Lender, one of the Required Lenders or a holder of an Obligation.
The Agent may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with the Borrower or any Subsidiary of
the Borrower as if they were not acting as Agent pursuant hereto.
Section 8.9 RESIGNATION BY THE AGENT.
(a) The Agent may resign from the performance of all its functions
and duties hereunder at any time by giving 15 Business Days' prior written
notice to the Borrower and the Lenders. Such resignation shall take effect upon
the acceptance by a successor Agent of appointment pursuant to clauses (b) and
(c) below or as otherwise provided below.
(b) Upon any such notice of resignation by the Agent, the Required
Lenders shall appoint a successor Agent who shall be satisfactory to the
Borrower and shall be an incorporated bank or trust company having total assets
in excess of $3 billion (or the foreign currency equivalent thereof).
(c) If a successor Agent shall not have been so appointed within
said 15 Business Day period, the Agent, with the consent of the Borrower, shall
then appoint a successor Agent who shall serve as Agent until such time, if any,
as the Required Lenders, with the consent of the Borrower, appoint a successor
Agent as provided above.
(d) If no successor Agent has been appointed pursuant to clause (b)
or (c) by the 20th Business Day after the date such
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notice of resignation was given by the Agent, the Agent's resignation shall
become effective and the Required Lenders shall thereafter perform all the
duties of the Agent hereunder until such time, if any, as the Required Lenders,
with the consent of the Borrower, appoint a successor Agent as provided above.
Section 8.10 HOLDERS OF OBLIGATIONS. The Agent may deem and treat
the payee of any Obligation as reflected on the books and records of the Agent
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof shall have been filed with the Agent
pursuant to SECTION 9.12(d). Any request, authority or consent of any Person
who, at the time of making such request or giving such authority or consent, is
the holder of any Obligation shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Obligation or of any Obligation or
Obligations granted in exchange therefor.
Section 8.11 CO-AGENTS. None of the Lenders identified on the cover
page or signature pages of this Agreement as a "Co-Agent" shall have any right,
power, obligation, liability, responsibility or duty under this Agreement or any
other Loan Document other than those applicable to all Lenders as such. Each
Lender acknowledges that it has not relied, and will not rely, on any of the
Lenders identified as Co-Agents in deciding to enter into this Agreement or in
taking or refraining from taking any action hereunder or pursuant hereto.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NO WAIVER; MODIFICATIONS IN WRITING. No failure or
delay on the part of the Agent or any Lender in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein and in the other Loan Documents are cumulative
and are not exclusive of any remedies that may be available to the Agent or any
Lender at law, in equity or otherwise.
Section 9.2 AMENDMENTS. No amendment, modification, supplement,
termination or waiver of or to any provision of this Agreement, nor consent to
any departure by the Borrower or any of its Subsidiaries therefrom, shall be
effective unless the same shall be in writing and signed by or on behalf of the
Required Lenders; PROVIDED, HOWEVER, that no such amendment, modification,
supplement, termination, waiver or consent, as the case may be, which (i)
reduces the rate of interest on any Loan or reduces the principal amount of any
Loan or the amount of fees payable by the
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Borrower hereunder, or forgives any such payment or any part thereof; (ii)
extends the Term Loan Maturity Date or the Revolver Termination Date or the
scheduled date for the payment of interest on any Loan; (iii) changes this
SECTION 9.2 or the definitions of the terms "Required Lenders", "Revolving Loan
Pro Rata Share" or "Term Loan Pro Rata Share"; (iv) changes the Maximum
Commitment of any Lender hereunder; (v) releases the Liens created by the Loan
Documents upon all or substantially all of the Collateral and the Mortgaged
Property (except where Substitute Collateral is provided or as otherwise
permitted by SECTION 9.13) or changes the provisions of SCHEDULE 1.1(b) hereto
relating to the release of all of the Collateral and Mortgaged Property; or (vi)
releases or terminates all or substantially all of the Subsidiary Guarantees
shall be effective unless the same shall be signed by or on behalf of (A) in the
case of any changes described in clause (i), (ii) or (iii) (other than changing
the definition of "Required Lenders") above, each Term Lender if amounts payable
to the Term Lenders would be affected by such change or each Revolving Lender if
amounts payable to the Revolving Lenders would be affected by such change, with
each class of Lenders voting as a separate class, and (B) in the case of any
changes described in clause (iv), (v) or (vi) above, each Lender hereunder;
PROVIDED FURTHER, that except as provided in SECTION 3.6(f), no such amendment,
modification, supplement, termination, waiver or consent which changes the
application of any prepayments or scheduled repayments of any Loans, reduces the
amount of or waives any prepayments or scheduled repayments of any Loans, or
extends the time of payment for any prepayments or scheduled repayments of any
Loans, shall be effective unless the same shall be signed by or on behalf of (i)
to the extent such prepayment or repayment applies to the Term Loan, Term
Lenders holding Term loans representing more than 50% of the aggregate
outstanding principal amount of the Term Loan (the "MAJORITY TERM LENDERS"), and
(ii) to the extent such prepayment or repayment applies to the Revolving Loan,
Revolving Lenders holding Revolving Loans and Revolving Loan Commitments, if
any, representing more than 50% of the sum of (x) the aggregate outstanding
principal amount of the Revolving Loans and (y) the Total Available Revolving
Commitment (the "MAJORITY REVOLVING LENDERS"); and PROVIDED FURTHER, that no
such amendment, modification, supplement, termination, waiver or consent, as the
case may be, which has the effect of (i) increasing the duties or obligations of
the Agent hereunder; or (ii) increasing the standard of care or performance
required on the part of the Agent, the Swing Line Lender or any Facing Agent
hereunder, or (iii) reducing or eliminating the fees, indemnities or immunities
to which the Agent, the Swing Line Lender or any Facing Agent is entitled
hereunder (including, without limitation, any amendment or modification of this
Section) shall be effective unless the same shall be signed by or on behalf of
the Agent, the Swing Line Lender or such Facing Agent, as the case may be. Any
amendment, modification or supplement of or to any provision of this Agreement,
any waiver of any provision of this Agreement, and any consent to any departure
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by the Borrower from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
made or given.
Section 9.3 CERTAIN OTHER AMENDMENTS. No amendment which changes
(i) this clause (i) or the definition of "Term Loan Pro Rata Share" shall be
effective unless the same shall be signed by or on behalf of each Term Lender
which at the time has outstanding any portion of the Term Loan or (ii) this
clause (ii) or the definition of "Revolving Loan Pro Rata Share" shall be
effective unless the same shall be signed by or on behalf of each Revolving
Lender which at the time has made or has outstanding a portion of the Revolving
Loan Commitment or the Revolving Loans.
Section 9.4 NOTICES, ETC. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications (collectively, "NOTICES") required or permitted to be
given to or made upon any party hereto or any other Person shall be in writing
and (except for written confirmations of telephonic or telex instructions) shall
be personally delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or by a reputable courier delivery service,
or by prepaid telex, TWX or telegram (with messenger delivery specified in the
case of a telegram), or by telecopier. Notices shall be deemed to be given for
purposes of this Agreement (a) if given by telex, when such telex is transmitted
to the telex number specified in this Section and the appropriate answerback is
received, (b) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid or (c) if
given by any other means (including, without limitation, by air courier), when
delivered at the address specified in this Section; PROVIDED, HOWEVER, that any
Notice of Borrowing to the Agent shall not be effective until received. Unless
otherwise specified in a Notice sent or delivered in accordance with the
foregoing provisions of this Section Notices shall be given to or made upon the
respective parties hereto at their respective addresses (or to their respective
telex, TWX or telecopier numbers) indicated on their signature pages hereto and,
in the case of telephonic instructions or notices, by calling the telephone
number or numbers indicated for such party. Except where notice is specifically
required by this Agreement or any other Basic Agreement, no notice to or demand
on the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
Section 9.5 COSTS, EXPENSES AND TAXES. The Borrower agrees to pay
(without duplication) all reasonable costs and expenses incurred by the Agent in
connection with the negotiation, preparation, reproduction, execution and
delivery of this Agreement and the other Basic Agreements, any amendments,
waivers or modifications of any of the foregoing and any and all other documents
furnished pursuant hereto or thereto or in connection
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herewith or therewith, including the reasonable fees and out-of-pocket expenses
of Winston & Strawn, special counsel to the Agent, any local counsel retained by
the Agent, reasonable attorney's fees and expenses or (but not as well as) the
reasonable allocated costs of staff counsel of the Agent as well as the
reasonable fees and out-of-pocket expenses of additional special counsel,
independent public accountants, investment advisors and other outside experts
retained by or on behalf of the Agent in connection with the administration of
this Agreement or with matters generally relating to this Agreement or any of
the transactions contemplated by this Agreement, and all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses or (but
not as well as) the reasonable allocated costs of staff counsel, if any)
incurred by the Agent or any Lender in connection with the enforcement of this
Agreement, any other Basic Agreement or any other agreement furnished pursuant
hereto or thereto or in connection herewith or therewith. In addition, the
Borrower shall pay any and all stamp, original issue and other similar taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement, any Basic Agreement or the making of any Loan, and
the Borrower agrees to save and hold the Agent, the Co-Agents and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying, or omission to pay, such taxes. Expenses being
reimbursed by the Borrower under this Section include, without limitation, the
cost and expense of obtaining an appraisal of each parcel of real property or
interest in real property described in the Mortgages, which appraisals shall be
in conformity with the applicable requirements of any law or governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any interpretation thereof, including, without limitation, the
provisions of Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, reformed or otherwise modified from time to
time, and any rules promulgated to implement such provisions. Any portion of
the foregoing fees, costs and expenses which remains unpaid more than thirty
(30) days following the Agent's or any Lender's statement and request for
payment thereof shall bear interest from the date of such statement and request
to the date of payment at the Default Rate.
Section 9.6 INDEMNIFICATION. The Borrower will (a) indemnify and
hold harmless each Lender, each Co-Agent and the Agent and each director,
officer, employee, agent or attorney and Affiliate thereof (each such Person an
("INDEMNIFIED PARTY") from and against all losses, claims, damages, expenses or
liabilities to which such Indemnified Party may become subject, insofar as such
losses, claims, damages, expenses or liabilities (or actions, suits or
proceedings including any inquiry or investigation or claims in respect thereof)
arise out of, in any way relate to, or result from the transactions contemplated
by any Basic Agreement or the use by the Borrower of the proceeds of any Loan,
and (b) reimburse each
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Indemnified Party upon their demand, for any reasonable legal or other expenses
(including (but not as well as) the reasonable allocated costs of staff counsel)
incurred in connection with investigating, preparing to defend or defending any
such loss, claim, damage, liability, action or claim; PROVIDED, HOWEVER, that no
such Person shall have the right to be so indemnified hereunder for its own
gross negligence or willful misconduct or bad faith as finally determined by a
court of competent jurisdiction after all appeals and the expiration of time to
appeal. If any action, suit or proceeding arising from any of the foregoing is
brought against the Agent, any Co-Agent, any Lender or any other Person
indemnified or intended to be indemnified pursuant to this SECTION 9.6, the
Borrower will, if requested by the Agent, any Co-Agent, any Lender or any such
indemnified Person, resist and defend such action, suit or proceeding or cause
the same to be resisted and defended by counsel reasonably satisfactory to the
Person or Persons indemnified or intended to be indemnified. Each Indemnified
Party shall, unless the Agent, a Lender or other Indemnified Party has made the
request described in the preceding sentence and such request has been complied
with, have the right to employ its own counsel (or (but not as well as) staff
counsel) to investigate and control the defense of any matter covered by such
indemnity and the reasonable fees and expenses of such counsel shall be at the
expense of the indemnifying party. The obligations of the Borrower under this
SECTION 9.6, under SECTIONS 2.12(h) AND (i) and under SECTION 2.13 shall survive
the termination of this Agreement and the discharge of the Borrower's other
obligations hereunder and under the Obligations.
Excluding any liability arising out of the gross negligence or willful
misconduct of any Indemnified Party, the Borrower further agrees to indemnify
and hold each Indemnified Party harmless from all loss, cost (including
reasonable attorneys' fees), liability and damage whatsoever incurred by any
Indemnified Party by reason of any violation of any Environmental Laws or
Environmental Permits or for the Release or threatened Release of any
Contaminant into the environment for which the Borrower or any of its
Subsidiaries has any liability or which occurs upon the Mortgaged Property or
which is related to any property currently or formerly owned, leased or operated
by or on behalf of the Borrower or any of its Subsidiaries, or by reason of the
imposition of any Environmental Lien or which occurs by a breach of any of the
representations, warranties or covenants relating to environmental matters
contained herein, including, without limitation, by reason of any matters
disclosed in SCHEDULE 4.21, PROVIDED that, with respect to any liabilities
arising from acts or failure to act for which the Borrower or any of its
Subsidiaries is strictly liable under any Environmental Law or Environmental
Permit, the Borrower's obligation to each Indemnified Party under this indemnity
shall likewise be without regard to fault on the part of the Borrower or any
such Subsidiary. If the Borrower shall fail to do any act or thing which it has
covenanted to do hereunder or any representation
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or warranty on the part of the Borrower or any Subsidiary contained herein or in
any other Loan Document shall be breached, the Agent may (but shall not be
obligated to), after requesting the Borrower to do such act or thing and the
failure by the Borrower to immediately undertake such action to the satisfaction
of the Agent, do the same or cause it to be done or remedy any such breach, and
may expend its funds for such purpose, and will use its best efforts to give
prompt written notice to the Borrower that it proposes to take such action. Any
and all amounts so expended by the Agent shall be repaid to it by the Borrower
promptly upon the Agent's demand therefor, with interest at the Default Rate in
effect from time to time during the period including the date so expended by the
Agent to the date of repayment. The obligations of the Borrower under this
SECTION 9.6 shall survive the termination of this Agreement and the discharge of
the Borrower's other Obligations hereunder.
Section 9.7 SPECIAL EXPENDITURES. If the Borrower shall fail to do
any act or thing which it has covenanted to do hereunder or under any other
Basic Agreement or any representation or warranty on the part of the Borrower
contained herein or therein shall be breached, the Agent may (but shall not be
obligated to) do the same or cause it to be done or remedy any such breach, and
may expend its funds for such purpose, and will use its best efforts to give
prompt written notice to the Borrower that it proposes to take such action. Any
and all amounts so expended by the Agent shall be repayable to it by the
Borrower promptly upon the Agent's demand therefor, with interest at the Default
Rate in effect from time to time during the period from the date so expended by
the Agent to the date of repayment.
Section 9.8 CONFIRMATIONS. Each of the Borrower and each holder of
any Obligation agree from time to time, upon written request received by it from
the other, to confirm to the other in writing (with a copy of each such
confirmation to the Agent) the aggregate unpaid principal amount of the Loans
then outstanding in respect of such Obligation; each such holder agrees from
time to time, upon written request received by it from the Borrower, to make the
relevant internal records of such holder maintained by it with respect to such
Obligation available for reasonable inspection by the Borrower at the office of
such holder.
Section 9.9 ADJUSTMENT.
(a) If at any time any Revolving Lender or Term Lender (a "BENEFITTED
LENDER") shall receive any payment (other than (i) a payment received by the
Swing Line Lender in respect of any Swing Line Loan in which no Revolving
Lenders have purchased a participation pursuant to SECTION 2.11(d) and (ii) non-
pro rata payments to the Term Lenders solely as the result of Waived Proceeds
being retained by the Borrower pursuant to SECTION 3.6(f)) of all or part of any
of its Loans, or interest thereon, including
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as the result of SECTION 9.10, in a greater proportion relative to such Lender's
Revolving Loan Pro Rata Share or Term Loan Pro Rata Share, as applicable, than
any such payment to any other Revolving Lender or Term Lender in respect of such
other Lender's Revolving Loan Pro Rata Share or Term Loan Pro Rata Share, as
applicable, or interest thereon, such Benefitted Lender shall purchase for cash
from the other Revolving Lenders or Term Lenders, as the case may be, such
portion of each such other Lender's Loans as shall be necessary to cause such
Benefitted Lender to share the excess payment ratably with each of the Revolving
Lenders or Term Lenders, as the case may be; PROVIDED, HOWEVER, that if all or
any portion of such excess payment or benefits is thereafter recovered from such
Benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Borrower agrees that each Lender so purchasing a portion of another Lender's
Loans may exercise all rights of payment (including, without limitation, rights
of set-off) with respect to such portion as fully as if such Lender were the
direct holder of such portion.
(b) If any Lender (a "COLLATERAL BENEFITTED LENDER") shall at any
time receive any collateral in respect of its Loans (whether voluntary or
involuntary, by set-off, pursuant to events or proceedings of the nature
referred to in SECTION 7.1(e) OR 7.1(f) hereof, or otherwise) in a greater
proportion than any such collateral received by any other Lender in respect of
such other Lender's Loans, such Collateral Benefitted Lender shall provide such
other Lenders with the benefits of any such collateral as shall be necessary to
cause such Collateral Benefitted Lender to share the benefits of such collateral
ratably with each of the Lenders; PROVIDED, HOWEVER, that if all or any portion
of such benefits is thereafter recovered from such Collateral Benefitted Lender,
such benefits shall be returned to the extent of such recovery but without
interest.
Section 9.10 RIGHT OF SETOFF. (a) In addition to any rights and
remedies of the Lenders provided by law, each Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower, upon the occurrence and during the continuance of an Event of
Default, to setoff and apply against any Indebtedness, whether matured or
unmatured, of the Borrower to such Lender, any amount owing from such Lender to
the Borrower, at or at any time after, the occurrence of such Event of Default,
and the aforesaid right of setoff may be exercised by such Lender against the
Borrower or against any trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, receivers, or execution, judgment or attachment
creditor of the Borrower, or against anyone else claiming through or against,
the Borrower or such trustee in bankruptcy, debtor in possession, assignee for
the benefit of creditors, receivers, or execution, judgment or attachment
creditor, notwithstanding the fact that such right of setoff shall
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not have been exercised by such Lender prior to the making, filing or issuance,
or service upon such Lender of, or of notice of, any such petition, assignment
for the benefit of creditors, appointment or application for the appointment of
a receiver, or issuance of execution, subpoena, order or warrant. Each Lender
agrees promptly to notify the Borrower and the Agent after any such setoff and
application made by such Lender, PROVIDED that the failure to give such notice
shall not affect the validity of such setoff and application.
(b) The Borrower expressly agrees that to the extent the Borrower
makes a payment or payments and such payment or payments, or any part thereof,
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or are required to be repaid to a trustee, receiver, or any other party
under any bankruptcy act, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the Indebtedness to the Lenders
or part thereof intended to be satisfied shall be revived and continued in full
force and effect as if said payment or payments had not been made.
Section 9.11 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counter-parts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 9.12 BINDING EFFECT; ASSIGNMENT.
(a) This Agreement shall be binding upon, and inure to the benefit
of, the Borrower, the Agent and the Lenders and their respective successors and
assigns upon the execution by the Borrower, the Agent and all of the Lenders;
PROVIDED, HOWEVER, that the Borrower may not assign its rights or obligations
hereunder or in connection herewith or any interest herein (voluntarily, by
operation of law or otherwise) without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender.
(c) Each Lender may at any time sell to one or more banks or other
entities ("PARTICIPANTS") participating interests in all or any portion of its
Commitment and related outstanding obligations of such Lender hereunder (in
respect of any Lender, its "CREDIT EXPOSURE"); PROVIDED, HOWEVER, that in the
case of a Revolving Lender, it sells it Credit Exposure ratably between its
Revolving Loan Commitment and its participation interest in the Florence Letters
of Credit. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's
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obligations under this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement. The Borrower
agrees that if amounts outstanding under this Agreement or any of the Loan
Documents are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement and the Loan Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any other Loan Document, PROVIDED that
such right of set-off shall be subject to the obligation of such Participant to
share with the Lenders, and the Lenders agree to share with such Participant, as
provided in SECTION 9.9. The Borrower also agrees that each Participant shall
be entitled to the benefits of SECTIONS 2.13 AND 2.16 with respect to its
participation in the Loans and Letters of Credit outstanding from time to time,
PROVIDED that such Participant's benefits under SECTIONS 2.13 AND 2.16 shall be
limited to the benefits that the Lender granting the participation would be
entitled to thereunder with respect to the Credit Exposure so participated.
Each Lender agrees that any agreement between such Lender and any such
Participant in respect of such participating interest shall not restrict such
Lender's right to approve or agree to any amendment, supplement, modification or
waiver to this Agreement or any of the Loan Documents except for any amendment,
supplement, modification or waiver which reduces the rate or amount of
principal, interest or fees payable by the Borrower, extends the Term Loan
Maturity Date, the Revolver Termination Date or the scheduled date for any
payment of interest (but only if such Participant is participating in the Term
Loan or the Revolving Loan, as applicable, affected thereby), or release all or
substantially all of the Collateral and Mortgaged Property (other than when
Substitute Collateral is provided and other than in accordance with SECTION
9.13) or release or terminate all or substantially all of the Subsidiary
Guarantees.
(d) Any Lender may at any time assign to one or more banks or other
entities, including an Affiliate thereof (each an "ASSIGNEE"), all or any part
of its Credit Exposure pursuant to an Assignment Agreement (an "ASSIGNMENT
AGREEMENT") in substantially the form of EXHIBIT 9.12(d) hereto, PROVIDED that
(i) in the case of a Revolving Lender, it assigns its Credit Exposure ratably
between its Revolving Loan Commitment and its participation interest in the
Florence Letters of Credit, (ii) any assignment by a Revolving Lender of all or
any portion of its Revolving Loan Commitment shall require the prior written
consent of each Facing Agent which has issued a Letter of Credit that remains
outstanding at such time (with the consent of such Facing Agent not to be
unreasonably withheld), (iii) at no time shall any Revolving Lender assign any
portion of its Revolving Loan Commitment if after
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giving effect to such assignment the transferor Lender's or the Assignee's
Revolving Loan Commitment shall be less than $15,000,000 (the "REVOLVING MINIMUM
AMOUNT") (except (A) with respect to an assignment of all of such Revolving
Lender's Revolving Loan Commitment and (B) in the event that the Revolving Loan
Commitments have been terminated, then the Revolving Minimum Amount shall refer
to such transferor Lender's Revolving Loan Pro Rata Share of the aggregate
principal amount of Revolving Loans and Swing Line Loans outstanding and the
aggregate L/C Obligations and Florence L/C Obligations outstanding), PROVIDED
that the Revolving Minimum Amount shall automatically reduce PRO RATA based on
any reduction in (x) the Total Revolving Loan Commitments or (y) if the Total
Revolving Loan Commitments have been terminated, the aggregate principal amount
of Revolving Loans and Swing Line Loans outstanding and the aggregate L/C
Obligations and Florence L/C Obligations outstanding, (iv) at no time shall any
Term Lender assign any portion of its Term Loan if after giving effect to such
assignment the transferor Lender's or the Assignee's principal amount of the
Term Loan shall be less than $7,500,000 (the "TERM MINIMUM AMOUNT") (except with
respect to an assignment of all of such Term Lender's Term Loan), PROVIDED that
the Term Minimum Amount shall automatically reduce PRO RATA based on any
reduction in the aggregate principal amount of the Term Loan outstanding, (v)
any assignment shall require the prior written consent of the Agent, which
consent shall not be unreasonably withheld, and (vi) any assignment to an
Assignee other than another Lender, or an Affiliate of the assigning Lender or
another Lender, shall require the prior written consent of the Borrower (with
the consent of the Borrower not to be unreasonably withheld). Upon execution of
an Assignment Agreement and the payment of a nonrefundable assignment fee of
$3,500 in immediately available funds to the Agent at its Payment Office in
connection with each such assignment, each Assignee shall become a party to this
Agreement as a Lender and the Assignee shall have, to the extent of such
assignment, the same rights and benefits as it would have if it were a Lender
hereunder and the holder of the Obligations and, if the Assignee has expressly
assumed, for the benefit of the Borrower, some or all of the transferor Lender's
obligations hereunder, such transferor Lender shall be relieved of its
obligations hereunder to the extent of such assignment and assumption. Such
Assignment Agreement shall be deemed to amend this Agreement and SCHEDULE 1.1(a)
hereto to the extent, and only to the extent, necessary to reflect the addition
of such Assignee as a Lender and the resulting adjustment of all or a portion of
the rights and obligations of such transferor Lender under this Agreement
(including its Revolving Loan Commitment and/or Term Loan Commitment), the
Maximum Commitments, the determination of Revolving Loan Pro Rata Share or Term
Loan Pro Rata Share (rounded to twelve decimal places), the Loans and any
outstanding Letters of Credit and new Notes shall be issued, at the Borrower's
expense, to such Assignee and to the assigning Lender upon the request of such
Assignee or such assigning Lender, such new Notes to be in conformity with the
requirements of SECTION 2.2
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(with the appropriate modifications) to the extent needed to reflect the revised
Commitment of the Assignee and the assigning Lender.
(e) For so long as any Lender shall be in default of its obligation
to fund its Revolving Loan Pro Rata Share of any Revolving Loan, to reimburse
the Facing Agent for any drawings under any Letters of Credit or to fund its
participation in any Swing Line Loan, (i) no Commitment Fees shall be accrued by
or paid to such Lender and (ii) for purposes of the definition of "Required
Lenders," such Lender shall be deemed not to have any Loans or Revolving Loan
Commitment outstanding.
(f) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time pledge or create a security interest in all or any
portion of its rights under this Agreement and the other Loan Documents
(including, without limitation, the Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Federal Reserve Board
without notice to or consent of the Borrower and no such pledge or assignment
shall release the transferor Lender from its obligations hereunder.
(g) A Lender may furnish any information concerning the Borrower or
any of its Subsidiaries in the possession of such Lender from time to time to
Lenders, Assignees and participants (including prospective Assignees and
participants), PROVIDED that with respect to any such information which has been
identified or designated by the Borrower as confidential and which has not
previously been made public, any such Assignee or participant shall have agreed
to hold such information in confidence and not to disclose such information
(subject to the exceptions specified in SECTION 5.1.6 hereof) and any
prospective Assignee or participant shall have agreed to return such information
which is in written form to the Borrower or otherwise destroy such information
if it does not become an actual Assignee or participant.
(h) Any Lender that is not a citizen or resident of the United States
of America, a corporation, partnership or other entity created or organized in
or under the laws of the United States of America, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of the source of its income (a "NON-U.S. LENDER") and that could become
completely exempt from withholding of any Taxes in respect of payment of any
obligations due to such Non-U.S. Lender with respect to the Term Loan if the
Term Notes were in registered form for United States federal income tax purposes
may request the Borrower (through the Agent), and the Borrower agrees thereupon,
to exchange any promissory note(s) evidencing the Term Loan for promissory
note(s) registered as provided in this SECTION 9.12(h) below (each, a
"REGISTERED NOTE"). A Registered Note shall be substantially in the form of
EXHIBIT 2.2(a) except that it shall be made payable to
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such Non-U.S. Lender or registered assigns. Registered Notes shall be deemed to
be and shall be Term Notes for all purposes of this Agreement. Registered Notes
may not be exchanged for promissory notes that are not Registered Notes. Each
Non-U.S. Lender holding a Registered Note (a "REGISTERED NOTEHOLDER") shall
comply with the requirements of SECTION 3.11(c). The Agent shall maintain a
register (the "REGISTER") on which it shall enter the names of the registered
owners of the Term Loan evidenced by Registered Notes. The Agent, acting as an
agent of the Borrower solely with respect to the maintenance of the Register,
shall incur no liabilities with respect to its maintenance of the Register and
recordation of the information therein. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower and the Agent
shall treat each Term Lender in whose name a Term Loan and the Registered Note
evidencing the same is registered as the owner thereof for all purposes of this
Agreement, notwithstanding notice to the contrary. No assignment of a
Registered Note and the Term Loan evidenced thereby shall be effective unless
the Agent has recorded the appropriate Assignment Agreement in the Register and
such assignment otherwise complies with the requirements of SECTION 9.12. Any
assignment or transfer of all or any part of the Term Loan and the Registered
Note(s) evidencing the same shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Registered Note(s)
evidencing the Term Loan, duly endorsed by (or accompanied by a written
instrument of assignment or transfer duly executed by) the Registered Noteholder
thereof, and thereupon one or more new Registered Note(s) in the same aggregate
principal amount shall be issued to the designated assignee(s) or transferee(s).
The Register shall be available at the offices were kept by the Agent for
inspection by the Borrower and any Term Lender at any reasonable time upon
reasonable prior written notice to the Agent.
Section 9.13 RELEASE OF COLLATERAL. The following provisions shall
govern the release of collateral granted by the Borrower to the Agent pursuant
to the Loan Documents.
(a) Upon termination of all Revolving Loan Commitments, the Swing
Line Commitment, the L/C Agreement, the L/C Participation Agreements and
the Florence Letters of Credit, and the payment in full of all outstanding
Revolving Loan Obligations, Swing Line Obligations, L/C Obligations and
Florence L/C Obligations such that no such Commitments, Loan Documents or
Obligations remain outstanding, the Borrower shall be entitled to the
release of the Collateral and Mortgaged Property set forth on SCHEDULE
9.13(a) hereto from the Lien of the Loan Documents upon the request of the
Borrower subject to the following terms and conditions: (i) the Agent shall
have received a certificate from the Borrower's chief executive or chief
financial officer certifying that no Event of Default or Unmatured Event of
Default has occurred and is continuing as of the date on which the Agent
proposes to release such Collateral and Mortgaged
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Property; and (ii) at the Borrower's cost and expense, the Agent shall have
received from one or more independent third parties appraisals and/or
valuations acceptable to, and in form, substance and using methodologies
satisfactory to, the Required Lenders, demonstrating that, after giving
effect to such release, the ratio of (A) the aggregate value of the
remaining Collateral and Mortgaged Property, as such value is determined by
such independent third parties and acceptable to the Required Lenders, to
(B) the Obligations which remain outstanding under the Loan Documents is
not less than 2.50 to 1.00. The determination by the Required Lenders
pursuant to the preceding sentence shall be made by those Term Lenders
constituting the Required Lenders at such time.
(b) Upon receipt by the Borrower and the Agent of an officer's
certificate and such other information delivered pursuant to SECTION
5.1.1(c), beginning with any such officer's certificate and information
delivered after December 31, 1994, the Borrower shall be entitled to the
release of all of the Collateral and Mortgaged Property from the Lien of
the Loan Documents subject to the following terms and conditions: (i) the
Agent shall have received a certificate from the Borrower's chief executive
or chief financial officer certifying that no Event of Default or Unmatured
Event of Default has occurred and is continuing as of the date on which the
Agent proposes to release the Collateral and Mortgaged Property; and (ii)
the officer's certificate delivered pursuant to SECTION 5.1.1(c) satisfies
the terms and conditions set forth on SCHEDULE 1.1(b) hereto.
(c) The Borrower shall be entitled to the release of all or any
portion of the Collateral and/or Mortgaged Property upon the request of the
Borrower subject to the following terms and conditions: (i) the Agent shall
have received a certificate from the Borrower's chief executive or chief
financial officer certifying that no Event of Default or Unmatured Event of
Default has occurred and is continuing as of the date on which the Agent
proposes to release such Collateral and Mortgaged Property; (ii) prior to
the release date of such Collateral and/or Mortgaged Property the Borrower
shall have furnished to the Agent for the benefit of the Lenders substitute
collateral ("SUBSTITUTE COLLATERAL") which (A) is acceptable to the
Required Lenders and (B) has a value as determined by the Required Lenders
at least equal to the aggregate value of the Collateral and/or Mortgaged
Property to be released; and (iii) such Substitute Collateral shall be
provided pursuant to documentation and legal opinions in form and substance
satisfactory to the Agent. Any such Substitute Collateral shall be deemed
to have been granted in consideration of the release of such Collateral
and/or Mortgaged Property.
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(d) The Borrower shall be entitled to the release of any portion of
the Collateral and/or Mortgaged Property which is the subject of any sale,
transfer or other disposition permitted by SECTION 5.2.12 upon the request
of the Borrower subject to the following terms and conditions: (i) at
least ten (10) Business Days prior to the release date of such Collateral
and/or Mortgaged property the Borrower shall have furnished to the Agent in
writing a description of such Collateral and/or Mortgaged Property and the
proposed terms of the sale, transfer or other disposition thereof; (ii) the
Agent shall have received a certificate from the Borrower's chief executive
or chief financial officer certifying that no Event of Default or Unmatured
Event of Default has occurred and is continuing; and (iii) prior to or
contemporaneously with such release, the Agent shall have received any
Material Sale Proceeds derived from such disposition in immediately
available funds pursuant to the terms of SECTION 3.4(c) to be applied as a
prepayment of the Obligations in accordance with SECTION 3.6(c), unless any
such Material Sale Proceeds constitute Waived Proceeds pursuant to the
terms of SECTION 3.6(f), together with a written accounting of all proceeds
from such sale, transfer or other disposition and the determination of
Material Sale Proceeds resulting therefrom, in form and substance
reasonably satisfactory to the Agent; PROVIDED, HOWEVER, that inventory
pledged to the Agent pursuant to the Loan Documents may be sold or disposed
of in the ordinary course of business free and clear of the Liens created
thereby; and PROVIDED FURTHER, that immaterial portions of Collateral or
Mortgaged Property may for purposes of administrative practicality or legal
requirements be released by the Agent pursuant to the provisions, if any,
of the respective Security Agreements or Mortgages.
(e) Upon the satisfaction of the applicable conditions set forth in
SECTION 9.13(a), (b) or (c), the Agent shall within thirty (30) days
deliver to the Borrower all released Collateral and related documents then
in the custody or possession of the Agent and shall prepare and execute
release documents relating to the Collateral and Mortgaged Property to be
released and shall execute and deliver to the Borrower such other documents
and instruments as the Borrower may reasonably request, all without
recourse upon, or warranty whatsoever by, the Agent, and at the cost and
expense of the Borrower.
Section 9.14 CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER BASIC
AGREEMENT, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH UNITED
STATES FEDERAL OR NEW YORK STATE COURT AND THE BORROWER IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
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LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS. AS A METHOD OF SERVICE, THE BORROWER ALSO IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY COURT IN OR OF THE STATE OF NEW YORK BY THE DELIVERY OF COPIES OF
SUCH PROCESS TO THE BORROWER, AT ITS ADDRESS SPECIFIED IN SECTION 9.4 HEREOF OR
BY CERTIFIED MAIL DIRECT TO SUCH ADDRESS.
Section 9.15 GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of said State, without regard to
principles of conflicts of law. Nothing contained in this Agreement and no
action taken by the Agent, any Co-Agent or any Lender pursuant hereto shall be
deemed to constitute the Agent, any Co-Agent or the Lenders a partnership, an
association, a joint venture or other entity.
Section 9.16 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 9.17 HEADINGS. The Table of Contents and Article and
Section headings used in this Agreement are for convenience of reference only
and shall not affect the construction of this Agreement.
Section 9.18 TIME. Time shall be of the essence of this Agreement.
Section 9.19 FURTHER ASSURANCES. The Borrower agrees to do such
further acts and things and to execute and deliver to the Agent such additional
assignments, agreements, powers and instruments as the Agent may reasonably
require or deem advisable to carry into effect the purposes of this Agreement or
to better assure and confirm unto the Agent and the Lenders, their respective
rights, powers and remedies hereunder.
Section 9.20 FLORIDA REAL PROPERTY. The parties hereto hereby
acknowledge that the Revolving Loans and Swing Line 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 as Revolving Loans and
Swing Line Loans shall be deemed to be the portion allocable to the Collateral
and Mortgaged Property consisting of real property located in the State of
Florida, and such portion allocable to such Collateral and Mortgaged Property
shall also be deemed to be the last to be repaid under the terms hereof.
Nothing herein shall limit the Agent's or any Lender's right to recover or
realize from
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the Collateral or Mortgaged Property located in the State of Florida amounts in
excess of that allocated to the Revolving Loans and Swing Line Loans or to apply
amounts so recovered or realized against the Obligations in such order as
required pursuant to the Loan Documents.
Section 9.21 TREATMENT OF SEMINOLE KRAFT. In the event that after
the Closing Date Seminole Kraft becomes a Wholly-Owned Subsidiary and refinances
all outstanding non-recourse Indebtedness with Indebtedness that is recourse to
the Borrower or any other Subsidiary with the consent of the Required Lenders,
then Seminole Kraft shall no longer be deemed a Restricted Subsidiary for
purposes hereof and, except for SECTION 5.2.8, each reference to Seminole Kraft
herein, whether as an inclusion or exclusion from the applicability of a
particular provision or otherwise, shall no longer be effective for purposes of
giving effect to the provisions of this Agreement, it being the intent of the
parties hereto that in such event Seminole Kraft shall be treated similar to any
other Wholly-Owned Subsidiary for purposes of giving effect to the provisions of
this Agreement.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
STONE CONTAINER CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Address:
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Attn: Mr. Arnold F. Brookstone,
Executive Vice President -
Chief Financial and
Planning Officer
Tel. No.: (312) 580-4637
Telecopier No.: (312) 580-4650
S-1
<PAGE>
BANKERS TRUST COMPANY, in its
individual capacity and as Agent
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Address:
Bankers Trust Company
233 South Wacker Drive
Suite 8400
Chicago, IL 60606
Attention: Kevin M. Adeson,
Vice-President
Tel. No.: (312) 993-8143
Telex No.: 210106
(Answerback: BTCI-UR)
Telecopier No.: (312) 993-8218
With a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Gregory S. Murray, Esq.
Tel. No.: (312) 558-5600
Telecopier No.: (312) 558-5700
S-2
<PAGE>
DEFINITIONAL APPENDIX
TO
CREDIT AGREEMENT
As used in this Agreement, unless the context requires a different
meaning, the following terms have the meanings indicated:
"ACCOUNTS RECEIVABLE FINANCING PROGRAM" means a program of sales of,
or transfers of interests in, receivables (whether characterized as sales or as
non-recourse loans) and related contract rights and other property (the
"RECEIVABLES") by the Borrower and its Participating Subsidiaries to StoneSub,
which shall finance such purchases through (i) sales or transfers of Receivables
or borrowings or other debt issuances (which, except as described in EXHIBIT
1.1(e) hereto, shall be non-recourse to the Borrower and its Subsidiaries other
than StoneSub) from one or more limited purpose finance companies, investors
participating in an offering of debt securities, financial institutions or other
Persons not affiliated with the Borrower or through one or more trusts
originated by StoneSub (individually and collectively, the "ISSUER"), (ii)
capital contributions from the Borrower, (iii) subordinated loans from the
Borrower and its applicable Participating Subsidiaries and (iv) collections from
previously purchased Receivables. Each separate financing arrangement within
the Accounts Receivable Financing Program is referred to as a "RECEIVABLES
FINANCING." All Receivables Financings which are in existence at any time shall
together not permit StoneSub to incur more than, subject to the third proviso of
the penultimate sentence of SECTION 5.2.13, $500 million of Indebtedness for
Money Borrowed from the Issuer at any one time outstanding (and, in the event
that the Accounts Receivable Financing Program includes Canadian dollar
Receivables of Canadian Subsidiaries, without giving effect to increases in such
amount after the date of the incurrence of such Indebtedness for Money Borrowed,
or portion thereof, solely as the result of subsequent fluctuations in the
exchange rate between United States Dollars and Canadian dollars) and shall be
on terms (considered as a whole) not materially more onerous to the Borrower and
the Lenders than those of Receivables Financings in existence on the date
hereof. The Lenders hereby acknowledge and agree that any Receivables Financing
purported to be structured as a sale of Receivables to StoneSub by the Borrower
or a Participating Subsidiary and as to which the Borrower has received an
opinion of counsel as to the sale nature thereof shall constitute a sale of such
Receivables and not a loan from StoneSub secured by such Receivables. Nothing
herein shall prevent the Borrower from alternatively structuring a Receivables
Financing as the sale of Receivables by StoneSub to the Issuer, PROVIDED that
any such Receivables Financing shall be subject to clause (iii) of the last
sentence of SECTION 5.2.2(p) for all purposes of this Agreement.
"ACQUISITION" is defined in SECTION 5.2.9.
Appendix - Page 1
<PAGE>
"ACQUIRING PERSON" means any person or group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder as in effect on the date of this Agreement
(the "EXCHANGE ACT")) who or which, together with all affiliates and associates
(as defined in Rule 12b-2 under the Exchange Act) becomes the beneficial owner
of shares of the Borrower having more than 50% of the total number of votes that
may be cast for the election of directors of the Borrower; PROVIDED, HOWEVER, an
Acquiring Person shall not include (i) the Borrower, (ii) any Subsidiary of the
Borrower, (iii) any employee benefit plan of the Borrower or any Subsidiary of
the Borrower or any entity holding common stock of the Borrower for or pursuant
to the terms of any such plan, (iv) any descendant of Joseph Stone or the spouse
of any such descendant, the estate of any such descendant or the spouse of any
such descendant, any trust or other arrangement for the benefit of any such
descendant or the spouse of any such descendant or any charitable organization
established by any such descendant or the spouse of any such descendant
(collectively, the "STONE FAMILY"), or (v) any group which includes any member
or members of the Stone Family and a majority of the common stock held by such
group is beneficially owned by such member or members (such a group is
hereinafter referred to as a "STONE GROUP"). Notwithstanding the foregoing, no
Person shall become an Acquiring Person as the result of an acquisition of
common stock by the Borrower which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to more than 50% or more of the common stock of the Borrower then
outstanding; PROVIDED, HOWEVER, that if a Person shall become the beneficial
owner of more than 50% or more of the common stock of the Borrower then
outstanding by reason of share purchases by the Borrower and shall, after such
share purchases by the Borrower, become the beneficial owner of any additional
common stock of the Borrower, then such Person shall be deemed to be an
Acquiring Person.
"ADDITIONAL COMMITMENT FEE" is defined in SECTION 3.8(b).
"ADJUSTED WORKING CAPITAL" means the difference between Consolidated
Current Assets (excluding cash and marketable securities) and Consolidated
Current Liabilities.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGENT" is defined in the preamble to this Agreement.
"AGENT'S ADMINISTRATIVE FEE" is defined in SECTION 3.10.
"AGENT'S FEE" is defined in SECTION 3.9.
Appendix - Page 2
<PAGE>
"AGREEMENT" means this Credit Agreement, as the same may at any time
be amended, supplemented or otherwise modified in accordance with the terms
hereof and in effect.
"AGREEMENT ACCOUNTING PRINCIPLES" is defined in SECTION 1.2.
"ASSETS" is defined in SECTION 3.4(c).
"ASSIGNEE" is defined in SECTION 9.12(d).
"ASSIGNMENT AGREEMENT" is defined in SECTION 9.12(d).
"AVAILABLE REVOLVING COMMITMENT" means, as to any Revolving Lender at
any time, an amount equal to the excess, if any, of (i) such Lender's Revolving
Loan Commitment over (ii) the sum of (A) the aggregate principal amount then
outstanding of Revolving Loans made by such Lender and (B) such Lender's
Revolving Loan Pro Rata Share of the L/C Obligations, Florence L/C Obligations
and Swing Line Loans then outstanding.
"BALANCE SHEET" is defined in SECTION 4.11(a).
"BASIC AGREEMENTS" means, collectively, the Loan Documents, the
Transaction Documents and all agreements amending any of the foregoing
agreements.
"BENEFITTED LENDER" is defined in SECTION 9.9(a).
"BOARD" means the Board of Governors of the Federal Reserve System.
"BORROWER" is defined in the preamble to this Agreement.
"BORROWING" means the incurrence pursuant and subject to ARTICLE II of
this Agreement of one Type of Loan by the Borrower from all of the Lenders
having a Commitment for the Type of Loan subject to the Borrowing on a PRO RATA
basis on a given date (or resulting from conversions on a given date), having in
the case of Eurodollar Rate Loans, the same Interest Periods; PROVIDED, HOWEVER,
that Prime Rate Loans or Eurodollar Rate Loans incurred pursuant to SECTION
2.13(b) shall be considered part of any related Borrowing of Eurodollar Rate
Loans.
"BORROWING MARGINS" and "BORROWING MARGIN" mean, respectively, (i) the
borrowing margins referred to in SECTIONS 2.8(a), (b), (c), (d) AND (e), and
(ii) any one of such borrowing margins.
"BT" means Bankers Trust Company, a New York banking corporation.
Appendix - Page 3
<PAGE>
"BUSINESS DAY" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall be
in the City of New York or Chicago a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Rate Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.
"CANADIAN CREDIT AGREEMENTS" means the Canadian Revolving Credit
Agreement and the Canadian Term Loan Agreement.
"CANADIAN REVOLVING CREDIT AGREEMENT" means that certain Revolving
Credit Agreement dated as of March 1, 1989, as amended, by and among Stone-
Canada, BT Bank of Canada, as Administrative Agent, The Bank of Nova Scotia, as
Payment Agent, Bankers Trust Company, as Collateral Agent, and the financial
institutions signatory thereto.
"CANADIAN TERM LOAN AGREEMENT" means that certain Credit Agreement
dated as of March 1, 1989, as amended, by and among Stone-Canada, BT, as agent,
Citibank, N.A., Chemical Bank (as successor to Manufacturers Hanover Trust
Company) and The First National Bank of Chicago, as co-agents, and the financial
institutions signatory thereto.
"CAPITAL EXPENDITURES" means, without duplication, with respect to the
Borrower and any Subsidiary of the Borrower (other than S-CC and its
Subsidiaries), any amounts expended or incurred during or in respect of a
period for any purchase, exchange or other acquisition for value of any asset
that is classified on a consolidated balance sheet of the Borrower prepared in
accordance with generally accepted accounting principles as a fixed or capital
asset; PROVIDED, HOWEVER, that in no event shall Capital Expenditures include
amounts (i) expended in respect of replacements and maintenance consistent with
the business practices of the Borrower in respect of plant facilities,
machinery, fixtures and other like capital assets utilized in the ordinary
conduct of business (to the extent such amounts are not capitalized in preparing
a consolidated balance sheet in accordance with generally accepted accounting
principles), (ii) expended in the replacement, repair or reconstruction of any
fixed or capital asset which was destroyed or damaged, in whole or in part, to
the extent of insurance proceeds are receivable or have been received by the
Borrower or any such Subsidiary in respect of such destruction or damage, (iii)
expended in the replacement of any fixed or capital asset within 180 days (or in
the case of a disposition of collateral under the First Mortgage Note Indenture,
within the time permitted for redeployment of the proceeds of the replaced fixed
or capital asset pursuant to Section 1015 of such indenture) of the
Appendix - Page 4
<PAGE>
sale or other disposition of the fixed or capital asset replaced, to the extent
of any cash or cash equivalent proceeds received by the Borrower or such
Subsidiary in connection with such sale or other disposition of the fixed or
capital asset replaced, (iv) expended for the purchase of the Facility pursuant
to Section 10.01, 10.04 or 19.09 of the Leveraged Lease or (v) expended pursuant
to any Financing Lease.
"CASH EQUIVALENTS" means those Permitted Investments included in
clauses (i)-(v) of the definition thereof, with the additional requirement that
any such Permitted Investment must mature not more than 30 days after the date
of its purchase.
"CASH FLOW COVERAGE RATIO" means, for a period of four quarters ending
on the most recent quarter end prior to the date of computation (treating each
such period as a single accounting period) on a consolidated basis, a ratio of
(a) the sum of (i) Consolidated Net Income of the Borrower (before income taxes)
plus (ii) interest expense (net of interest income on Permitted Investments)
during such period plus (iii) depreciation and amortization deducted in
determining Consolidated Net Income for such period minus (iv) Capital
Expenditures of the Borrower other than Capital Expenditures made through the
utilization of Discretionary Funds to (b) interest expense (net of interest
income on Permitted Investments) during such period.
"CB" means Consolidated-Bathurst Inc., a Canadian federal corporation,
and its successors and assigns.
"CERTIFICATES OF OWNERSHIP AND MERGER" means (i) the Certificate of
Ownership and Merger of Stone Container Corporation, a Delaware corporation,
dated as of September 30, 1994, executed by the Borrower and each of Stone
Connecticut Paperboard Corporation, Stone Mill Operating Corporation, Stone Bag
Corporation, Stone Packaging Corporation, Stone-Consolidated Newsprint, Inc. and
Stone Packaging Systems, Inc. (the "STONE MERGER SUBSIDIARIES"), merging the
Stone Merger Subsidiaries with and into the Borrower and filed with the Delaware
Secretary of State on September 30, 1994 and (ii) the Certificate of Ownership
and Merger of Stone Southwest, Inc., a Delaware corporation, dated as of
September 30, 1994, executed by Stone Southwest and each of Stone Hodge, Inc.,
Stone Hopewell, Inc., Manufacturers Folding Carton, Inc. and Stone Corrugated,
Inc. (the "STONE SOUTHWEST MERGER SUBSIDIARIES"), merging the Stone Southwest
Merger Subsidiaries with and into Stone Southwest and filed with the Delaware
Secretary of State on September 30, 1994.
"CHANGE OF CONTROL" means any event by which (i) an Acquiring Person
has become such, or (ii) Continuing Directors cease to comprise a majority of
the members of the board of directors of the Borrower.
Appendix - Page 5
<PAGE>
"CLOSING DATE" means the date of the initial funding of the Loans upon
the satisfaction of the conditions precedent set forth in SECTION 6.1, which
date shall not be later than November 30, 1994.
"CLUSTER EXPENDITURES" means capital expenditures mandated pursuant
to, or made to comply with, the final adopted version, if any, of the proposed
rules promulgated by the Environmental Protection Agency at 58 Fed. Reg. 66078
(December 17, 1993) with respect to Effluent Limitations Guidelines,
Pretreatment Standards, and New Source Performance Standards: Pulp, Paper, and
Paperboard Category; National Emission Standards for Hazardous Air Pollutants
for Source Category: Pulp and Paper Production.
"CO-AGENTS" and "CO-AGENT" have the respective meanings assigned to
such terms in the introduction to this Agreement.
"CODE" means the Internal Revenue Code of 1986, as from time to time
amended, including the regulations proposed or promulgated thereunder, or any
successor or regulation proposed or promulgated thereunder.
"COLLATERAL" has the meaning assigned to that term in the Security
Agreements and shall include the inventory, machinery and equipment of the
Borrower or a Subsidiary, as applicable, located at the Mortgaged Property.
"COLLATERAL BENEFITTED LENDER" is defined in SECTION 9.9(b).
"COMMERCIAL LETTERS OF CREDIT" means the commercial Letters of Credit
issued by the Facing Agent for the account of Borrower pursuant to SECTION 2.12,
each of which is drawable upon presentation of documents evidencing the sale or
shipment of goods purchased by the Borrower or any of its Subsidiaries in the
ordinary course of its business.
"COMMITMENT" means, with respect to each Lender, the aggregate of the
Revolving Loan Commitment and the Term Loan Commitment of such Lender and
"COMMITMENTS" means such commitments of all of the Lenders collectively. For
purposes of this definition, the Revolving Loan Commitment of the Swing Line
Lender shall be deemed to include the Swing Line Commitment of the Swing Line
Lender.
"COMMITMENT FEE" is defined in SECTION 3.7(a).
"CONSOLIDATED CURRENT ASSETS" means, subject to the last sentence of
SECTION 1.2, as at the time any determination thereof is to be made, the amount,
without duplication, that is classified on a consolidated balance sheet of the
Borrower and its
Appendix - Page 6
<PAGE>
Subsidiaries as the consolidated current assets of the Borrower and its
Subsidiaries at such time in accordance with generally accepted accounting
principles; PROVIDED, HOWEVER, that there shall be excluded from the calculation
of Consolidated Current Assets any insurance receivables (net of related
payables) relating to the April, 1994 occurrence at the Panama City Mill.
"CONSOLIDATED CURRENT LIABILITIES" means, subject to the last sentence
of SECTION 1.2, as at the time any determination thereof is to be made, all
Indebtedness of the Borrower and its Subsidiaries, without duplication, that is
included as consolidated current liabilities on a consolidated balance sheet of
the Borrower and its Subsidiaries in accordance with generally accepted
accounting principles, except that there shall be excluded from Consolidated
Current Liabilities (i) fixed sinking fund payments, (ii) mandatory redemption
and other payments of principal outstanding or due (whether as a result of an
acceleration or otherwise), (iii) other mandatory prepayments required to be
made with respect to any Indebtedness for Money Borrowed within one year after
such date of determination, (iv) any other Indebtedness for Money Borrowed
maturing on demand and (v) all outstanding Revolving Loans and Swing Line Loans
under this Agreement.
"CONSOLIDATED NET INCOME" AND "CONSOLIDATED NET LOSS" mean,
respectively, subject to the last sentence of SECTION 1.2, with respect to any
period, the aggregate of the net income (loss) (before taking account of
minority interests) of the Borrower and its Subsidiaries for such period,
determined in accordance with generally accepted accounting principles on a
consolidated basis, PROVIDED that (i) in the case of any Person which is not a
consolidated Subsidiary, the net income (loss) of such Person shall be
disregarded and the amount of cash dividends and distributions paid by such
Person to the Borrower or a consolidated Subsidiary of the Borrower shall be
included in the net income (loss) of the Borrower; and (ii) the net income
(loss) of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded. There shall be
excluded in computing Consolidated Net Income the excess (but not the deficit),
if any, of (A) any gain which must be treated as an extraordinary item under
generally accepted accounting principles or any gain realized upon the sale or
other disposition of any real property or equipment that is not sold in the
ordinary course of business or of any capital stock of the Borrower or a
Subsidiary of the Borrower over (B) any loss which must be treated as an
extraordinary item under generally accepted accounting principles or any loss
realized upon the sale or other disposition of any real property or equipment
that is not sold in the ordinary course of business or of any capital stock of
the Borrower or a Subsidiary of the Borrower.
"CONSOLIDATED NET WORTH" of the Borrower means, subject to the last
sentence of SECTION 1.2, as at the time any determination thereof is made,
without duplication, an amount equal
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to the sum of (i) the Borrower's total common stockholders' equity (excluding
treasury stock, the effects of FASB 115 and excluding the effects of foreign
currency translation adjustments) and (ii) the amount of the Permitted Preferred
Stock.
"CONSOLIDATED TANGIBLE NET WORTH" of the Borrower means, subject to
the last sentence of SECTION 1.2, as at the time any determination thereof is
made, without duplication, an amount equal to (i) the sum of (A) the Borrower's
total common stockholders' equity (excluding treasury stock, the effects of FASB
115 and excluding the effects of foreign currency translation adjustments) and
(B) the amount of the Permitted Preferred Stock, MINUS (ii) the net book value
of all assets of the Borrower and its Subsidiaries which would be treated as
intangibles under generally accepted accounting principles, including, without
limitation, deferred charges, leasehold conversion costs, franchise rights, non-
compete agreements, goodwill, unamortized debt discounts, patents, patent
applications, trademarks, trade names, copyrights and licenses, except for any
such intangibles of Southwest Forest Industries, Inc. or CB created as the
result of the acquisition of either thereof.
"CONTAMINANT" means any pollutant, contaminant (as those terms are
defined in 42 U.S.C. Section 9601(33)), toxic pollutant (as that term is defined
in 33 U.S.C. Section 1362(13)), hazardous substance (as that term is defined in
42 U.S.C. Section 9601(14)), hazardous chemical (as that term is defined by 29
CFR Section 1910.1200(c)), hazardous waste (as that term is defined in 42 U.S.C.
Section 6903(5)), or any state or local equivalent of such laws and regulations,
including, without limitation, radioactive material, special waste,
polychlorinated biphenyls, asbestos, petroleum, including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product
thereof, or any constituent of any such substance or waste.
"CONTINENTAL GUARANTY" means the Guaranty dated as of August 30, 1983
between The Continental Group, Inc., a New York corporation, and the Borrower,
as amended from time to time.
"CONTINUING DIRECTOR" means any member of a board of directors, while
such Person is a member of such board of directors who is not an Acquiring
Person, or an affiliate or associate of an Acquiring Person or a representative
of an Acquiring Person or of any such affiliate or associate and who (i) was a
member of such board of directors prior to the date of this Agreement, or (ii)
subsequently becomes a member of such board of directors and whose nomination
for election or election to such board of directors is recommended or approved
by resolution of a majority of the Continuing Directors or who is included as a
nominee in a proxy statement of the Borrower distributed when a majority of such
board of directors consists of Continuing Directors.
Appendix - Page 8
<PAGE>
"CONVERTIBLE INDENTURE" means the Indenture dated as of June 15, 1993
between the Borrower and Norwest Bank Minnesota, National Association, at
Trustee, as amended, supplemented, restated or otherwise modified from time to
time.
"CONVERTIBLE SUBORDINATED INDENTURE" means the Indenture dated as of
February 15, 1992 between the Borrower and The Bank of New York, as Trustee,
pursuant to which the Borrower issued its 6-3/4% Convertible Subordinated
Debentures due February 15, 2007, as amended, supplemented, restated or
otherwise modified from time to time.
"CP&L PROPERTY" means any intangible property or contract rights of
the Borrower relating to or existing under that certain Electric Power Purchase
Agreement dated as of December 17, 1984, as amended, between the Borrower and
Carolina Power & Light.
"CREDIT EVENT" means the making of any Loan and the issuance of any
Letter of Credit.
"CREDIT EXPOSURE" is defined in SECTION 9.12(c).
"DEBT BASKET PROCEEDS" is defined in the definition of "Discretionary
Funds."
"DEBT REFINANCING" means the termination of the U.S. Credit Agreement,
the Canadian Credit Agreements and the Stone Savannah Credit Agreement and the
repayment in full of all obligations outstanding thereunder.
"DEBT REFINANCING DOCUMENTS" means the documents and instruments
entered into with respect to the termination of the commitments, and the
reimbursement obligations with respect to any letters of credit issued, under
the U.S. Credit Agreement, the Canadian Credit Agreements and the Stone Savannah
Credit Agreement, the repayment of the loans and other obligations thereunder,
the release of all guaranties and security with respect thereto and any consents
required in connection therewith.
"DEFAULT RATE" is defined in SECTION 2.8(f).
"DELAYED COLLATERAL" is defined in SECTION 5.1.17.
"DEPOSITED MONIES" is defined in SECTION 3.5.
"DISCRETIONARY FUNDS" means the sum of (i) the aggregate amount of
Waived Proceeds, PLUS (ii) the aggregate amount of Excluded Sale Proceeds (not
to exceed $200 million), PLUS (iii) the aggregate amount of Indebtedness
incurred pursuant to SECTION 5.2.2(t) (not to exceed $200 million) ("DEBT BASKET
PROCEEDS"), PLUS (iv) the aggregate amount of Excess Cash Flow for each Fiscal
Year of the Borrower commencing with Fiscal Year 1994 which is not
Appendix - Page 9
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required by SECTION 3.4(a) to be utilized as a mandatory prepayment, such amount
to be determined without giving effect to any prepayment waiver pursuant to
SECTION 3.6(f) and such amount with respect to any Fiscal Year becoming
Discretionary Funds only after the delivery of the Excess Cash Flow Schedule for
such Fiscal Year pursuant to SECTION 5.1.1(c).
"DISCRETIONARY FUNDS BASKET" means, at any time, (i) the aggregate
amount of Discretionary Funds less (ii) the aggregate amount of the sum of (A)
Investments made pursuant to SECTION 5.2.7(l), (B) Acquisitions pursuant to
SECTION 5.2.9(e)(ii), (C) prepayments of Indebtedness pursuant to SECTION
5.2.10(a)(ix), and (D) Capital Expenditures made pursuant to SECTION
5.2.11(iii). Any utilization of Discretionary Funds for the purpose specified
in clause (C) above shall first be deemed a utilization of Debt Basket Proceeds
to the extent thereof and then a utilization of other Discretionary Funds.
"DIVIDEND BASKET" means, at any time, the maximum amount of cash
dividends which the Borrower would then be permitted to pay to its shareholders
pursuant to SECTION 5.2.5(b).
"DOLLAR" and "$" shall mean lawful currency of the United States of
America unless a currency of another country is specifically designated.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the
laws of the United States of America, or any State thereof, and having total
assets in excess of $5,000,000,000; (ii) a savings and loan association or
savings bank organized under the laws of the United States of America, or any
State thereof, and having total assets in excess of $5,000,000,000; or (iii) a
commercial bank which is organized under the laws of any other country, and
which has total assets in excess of $5,000,000,000, PROVIDED that such bank is
acting through a branch or agency located in the United States of America.
"EMPLOYEE BENEFIT PLAN" means an "employee benefit plan", as defined
in Section 3(3) of ERISA, which is or has been established or maintained, or to
which contributions are or have been made, by the Borrower or any of its
Subsidiaries or any ERISA Affiliate.
"ENVIRONMENTAL LAWS" means any and all applicable foreign, federal,
state or local laws, statutes, ordinances, codes, rules, regulations, orders,
decrees, judgments, directives and cleanup or action standards, levels or
objectives imposing liability or standards of conduct for or relating to the
protection of health, safety or the environment, including, but not limited to,
the following statutes as now written and amended, and as amended hereafter: the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 ET SEQ., the Clean
Air Act, 42 U.S.C. Section 7401 ET SEQ.,
Appendix - Page 10
<PAGE>
the Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ., the Solid
Waste Disposal Act, 42 U.S.C. Section 6901 ET SEQ., the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
ET SEQ., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 ET SEQ., and the Safe Drinking Water Act, 42 U.S.C.
Section 300f ET SEQ.
"ENVIRONMENTAL LIEN" means a Lien in favor of any governmental
authority for (i) any liability under foreign, federal, state or local
environmental laws or regulations, or (ii) damages arising from, or costs
incurred by such governmental authority in response to, a Release or threatened
Release of a Contaminant into the environment.
"ENVIRONMENTAL PERMITS" is defined in SECTION 4.21.
"ENVIRONMENTAL STUDY" means those certain environmental assessments
and documents upon which such assessments are based of the Facilities prepared
by EnviroClean Midwest, Inc. with regard to the existing and potential liability
of the Borrower with respect to any environmental matters, including a review of
compliance with Environmental Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
from time to time amended.
"ERISA AFFILIATE" means each trade or business (whether or not
incorporated) which together with the Borrower or a Subsidiary of the Borrower
would be deemed to be a "single employer" within the meaning of Section 4001(b)
of ERISA or Section 414 of the Code, excluding any foreign Subsidiary of the
Borrower which is not subject to ERISA.
"EURODOLLAR RATE" means, with respect to each Interest Period to be
applicable to a Eurodollar Rate Loan, the rate per annum obtained by dividing
(i) the arithmetic average (rounded upward to the nearest 1/16th of 1%) of the
offered quotation to first-class banks in the interbank Eurodollar market by
each Reference Bank for U.S. Dollar deposits of an amount in immediately
available funds approximately equal to the principal amount of the Eurodollar
Rate Loan to be made by such Reference Bank for a period approximately equal to
such Interest Period determined as of 10:00 a.m. (New York City time) two (2)
Business Days prior the commencement of such Interest Period, PROVIDED that if
any Reference Bank fails to provide the Agent in a timely fashion with its
aforesaid quotation then the Eurodollar Rate shall be calculated using the
arithmetic average of the quotations provided to the Agent by the other
Reference Bank or Banks by (ii) a percentage equal to 100% minus the stated
maximum rate (expressed as a percentage) as prescribed by the Board of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves and all reserves
Appendix - Page 11
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required to be maintained against "Eurocurrency liabilities" as specified in
Regulation D (or any successor regulation)) applicable on the first day of such
Interest Period to any member bank of the Federal Reserve System in respect of
Eurodollar funding or liabilities. The determination of the Eurodollar Rate by
the Agent shall be conclusive and binding on the Borrower and the Lenders absent
manifest error.
"EURODOLLAR RATE LOAN" means any Loan which bears interest at a rate
determined with reference to the Eurodollar Rate.
"EURODOLLAR RATE REVOLVING LOAN" means a Revolving Loan or any portion
thereof during any period in which it bears interest at the Eurodollar Rate.
"EURODOLLAR RATE TERM LOAN" means the Term Loan or any portion thereof
during any period in which it bears interest at a rate determined with reference
to the Eurodollar Rate.
"EVENT OF DEFAULT" is defined in SECTION 7.1.
"EXCESS CASH FLOW" means, without duplication, for any Fiscal Year, an
amount equal to the sum of (i) Consolidated Net Income (or Consolidated Net
Loss), PLUS (MINUS) (ii) depreciation, depletion, amortization, deferred taxes
and other noncash expenses (revenues) which, pursuant to generally accepted
accounting principles, were deducted (added) in determining the Consolidated Net
Income, MINUS (PLUS) (iii) the increase (decrease) in Adjusted Working Capital
from the last day of the prior Fiscal Year (excluding changes in income taxes
payable), MINUS (iv) Capital Expenditures (other than Capital Expenditures
incurred through the utilization of Indebtedness for Money Borrowed permitted by
SECTION 5.2.2(k) or Discretionary Funds and other than Capital Expenditures of
Seminole Kraft, S-CC and Subsidiaries of S-CC) for such Fiscal Year, MINUS (v)
the amount of any required prepayment (except (A) under this Agreement
(including as the result of mandatory reductions in the Revolving Loan
Commitments) and (B) under the First Mortgage Note Documents in connection with
the sale of any collateral securing the Indebtedness thereunder) or any
regularly scheduled payments of Indebtedness for Money Borrowed (but excluding
Indebtedness for Money Borrowed described in subparagraphs (iv) or (vi) of the
definition of Indebtedness for Money Borrowed) during such year, MINUS (vi) cash
dividends, distributions or other amounts paid by the Borrower to any of its
stockholders with respect to its capital stock during such year, MINUS (vii)
Investments by the Borrower or any Subsidiary of the Borrower (other than
Seminole Kraft, S-CC and Subsidiaries of S-CC) during such year except for
Investments made through the utilization of Discretionary Funds, MINUS (viii)
any portion of Consolidated Net Income attributable to gains (losses) on the
disposition of assets to the extent the proceeds therefrom were
Appendix - Page 12
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used pursuant to SECTION 3.4(c) to prepay the Obligations, MINUS (ix) dividends
paid by non-Wholly-Owned Subsidiaries of the Borrower to minority shareholders
other than the Borrower or Wholly-Owned Subsidiaries of the Borrower, PLUS (x)
the increases in the aggregate principal amount of borrowings by StoneSub from
the Issuer in connection with each Receivables Financing from (A) the later of
(1) the beginning of the year for which the calculation is being made or (2) the
date on which the applicable Receivables Financing commenced (if established
during such year) to (B) the end of such year, MINUS (xi) the decreases in the
aggregate principal amount of borrowings (other than as the result of a
refinancing of such borrowings from a source other than internally generated
cash or Borrowings hereunder) by StoneSub from the Issuer in connection with
each Receivables Financing from (A) the later of (1) the beginning of the year
for which the calculation is being made or (2) the date on which the applicable
Receivables Financing commenced (if established during such year) to (B) the end
of such year.
"EXCESS CASH FLOW PERCENTAGE" means 50% from the date of this
Agreement and continuing thereafter until adjusted pursuant to the terms and
conditions set forth on SCHEDULE 1.1(b) hereto.
"EXCESS CASH FLOW SCHEDULE" is defined in SECTION 5.1.1(c).
"EXCLUDED SALE PROCEEDS" is defined in SECTION 3.4(c).
"EXECUTIVE OFFICER" means from time to time any officer of the
Borrower elected by the board of directors of the Borrower or designated as an
executive officer in any Form 10-K or successor form filed by the Borrower with
the Securities and Exchange Commission.
"FACILITIES" means the owned and leased facilities of the Borrower set
forth on SCHEDULE 1.1(c) hereto.
"FACILITY" has the meaning assigned to that term in the Participation
Agreement.
"FACILITY FEE" is defined in SECTION 3.8(a) of this Agreement.
"FACING AGENT" means BT or such other Revolving Lender as may from
time to time have been designated as such by the Borrower and shall have agreed
in writing to act in such capacity.
"FEDERAL FUNDS RATE" means on any given day, the rate per annum equal
to the weighted average of the rate on overnight Federal funds transactions with
members of the Federal Reserve System only arranged by Federal funds brokers, as
published as of such day by the Federal Reserve Bank of New York, or, if such
rate
Appendix - Page 13
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is not so published, the rate then used by first class banks in extending
overnight loans to other first class banks.
"FINANCING LEASE" means, at the time any determination thereof is to
be made, any lease of property, real or personal, in respect of which the
present value of the minimum rental commitment is capitalized on the balance
sheet of the lessee in accordance with generally accepted accounting principles.
"FINANCING LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a Financing
Lease which would at such time be so required to be capitalized on the lessee's
balance sheet in accordance with generally accepted accounting principles.
"FIRST MORTGAGE NOTE DOCUMENTS" means the First Mortgage Note
Indenture, the First Mortgage Notes, the Security Documents (as such term is
defined in the First Mortgage Note Indenture) and all other documents,
instruments and agreements now or hereafter evidencing or securing all or any
portion of the Borrower's obligations under the First Mortgage Note Indenture
and the First Mortgage Notes, including any documents, instruments or agreements
evidencing or securing the amendment, refinancing, modification, replacement,
renewal, restatement, refunding, deferral, extension, supplement, reissuance or
resale thereof.
"FIRST MORTGAGE NOTE INDENTURE" means the Indenture dated as of
October 12, 1994 between the Borrower and Norwest Bank Minnesota, National
Association, as Trustee, pursuant to which the Borrower issued its First
Mortgage Notes, as amended, supplemented, restated or otherwise modified from
time to time.
"FIRST MORTGAGE NOTES" means the Borrower's 10-3/4% First Mortgage
Notes due October 1, 2002 in the aggregate principal amount of $500 million and
issued pursuant to the First Mortgage Note Indenture, as amended, supplemented,
restated or otherwise modified from time to time.
"FISCAL QUARTERS" is defined in SECTION 4.7.
"FISCAL YEAR" is defined in SECTION 4.7.
"FLORENCE AGREEMENTS" mean, collectively, (i) the Participation
Agreement dated as of March 1, 1985 among the Borrower, as successor in interest
to Stone Container Corporation, an Illinois corporation, the Borrower, as Ground
Lessor, Dart & Kraft Financial Corporation, Irving Trust Company and NCNB
National Lender of North Carolina (as amended and Supplemented by the First
Supplement thereto dated as of June 1, 1986, as further amended and supplemented
by the Second Supplement thereto dated as of June 1, 1987, and as further
amended and supplemented and in effect from time to time, the "D&K Participation
Agreement"), (ii) each of the
Appendix - Page 14
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"Basic Documents" as defined in Appendix A to the D&K Participation Agreement,
(iii) the Participation Agreement dated as of March 1, 1985 among the Borrower,
as successor in interest to Stone Container Corporation, an Illinois
corporation, the Borrower, as Ground Lessor, Westinghouse Credit Corporation
("WCC"), Irving Trust Company and NCNB National Lender of North Carolina (as
amended and supplemented by the First Supplement thereto dated as of June 1,
1986, and as further amended and supplemented by the Second Supplement thereto
dated as of June 1, 1987, and as further amended and supplemented and in effect
from time to time, the "WCC PARTICIPATION AGREEMENT"), (iv) each of the "Basic
Documents" defined in Appendix A to the WCC Participation Agreement, and (v) the
Transfer and Assumption Agreement dated as of March 1, 1987 between D&K
Financial Corporation ("D&K") and WCC, together with such additional documents
as have been executed in connection with the transfer by D&K of a portion of its
interest in the D&K Participation Agreement to WCC.
"FLORENCE BONDS" means the Variable Rate Demand Industrial Revenue
Bonds, Series 1984, issued by Florence County, South Carolina pursuant to the
Trust Indenture dated as of December 15, 1984 as in effect on the date of this
Agreement.
"FLORENCE L/C OBLIGATIONS" means, at any time of determination, the
sum of (i) the aggregate undrawn face amount of the Florence Letters of Credit,
plus (ii) the amount of any drawings under the Florence Letters of Credit which
have not been reimbursed pursuant to the L/C Agreement, plus (iii) the principal
amount of any term loans outstanding under the L/C Agreement.
"FLORENCE LETTERS OF CREDIT" means, individually and collectively,
the letters of credit from time to time issued pursuant to the L/C Agreement.
"FORECASTS" is defined in SECTION 4.11(c).
"GOVERNMENT ACTS" is defined in SECTION 2.12(i).
"GOVERNMENTAL AUTHORITY" means any foreign, Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
"INDEBTEDNESS" means, with respect to any Person, without duplication:
(a) all obligations of such Person which in accordance with generally
accepted accounting principles would be shown on the balance sheet of such
Person as a liability (including, without limitation, obligations for borrowed
money and for the deferred purchase price of property or services, and
obligations evidenced by bonds, debentures, notes or other similar instruments);
Appendix - Page 15
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(b) all obligations under Financing Leases, required to be
capitalized under generally accepted accounting principles;
(c) all guarantees (direct or indirect), all contingent reimbursement
obligations under undrawn letters of credit and other contingent obligations of
such Person in respect of, or obligations to purchase or otherwise acquire or to
assure payment of, Indebtedness of others;
(d) Indebtedness of others secured by any Lien upon property owned by
such Person, whether or not assumed; and
(e) all sinking fund payments or other mandatory redemption or
payments on preferred or preference stock due on or prior to July 15, 2000
(other than preferred or preference shares issued to the Borrower by Stone-
Canada).
"INDEBTEDNESS FOR MONEY BORROWED" means, without duplication, (i) the
principal amount of all Indebtedness of the Borrower or a Subsidiary of the
Borrower, as the case may be, current or funded, secured or unsecured, incurred
in connection with borrowings (including the sale of debt securities), (ii) all
Indebtedness of the Borrower or a Subsidiary of the Borrower, as the case may
be, issued, incurred or assumed in respect of the purchase price of property
except for trade and intercompany accounts payable, (iii) all Financing Lease
Obligations of the Borrower or a Subsidiary of the Borrower, as the case may be,
(iv) any direct or indirect guarantee in respect of Indebtedness of any other
Person of any of the types specified in the preceding clauses (i)-(iii), (v) the
amount of all Indebtedness described in subsection (e) of the definition of
Indebtedness, and (vi) the maximum stated amount from time to time available for
drawing under the letters of credit issued pursuant to the L/C Agreement plus
the amount of any unreimbursed drawings under the letters of credit plus
(without duplication) the amount of any "Term Loans" outstanding under the L/C
Agreement.
"INDEBTEDNESS RATIO" means, as at the time any determination thereof
is to be made, a ratio, the numerator of which shall be Total Consolidated
Indebtedness for Money Borrowed and the denominator of which shall be the sum of
(i) Consolidated Net Worth and (ii) Total Consolidated Indebtedness for Money
Borrowed. For purposes of calculating the Indebtedness Ratio, Total
Consolidated Indebtedness for Money Borrowed shall not include the aggregate
principal amount of proceeds from Indebtedness incurred on the Closing Date
which have been deposited and remain in escrow with the trustee of the Stone
Savannah Senior Subordinated Note Indenture pursuant to SECTION 6.1(l)(iv) or
Indebtedness which has been defeased and is no longer treated as Indebtedness
for purposes of generally accepted accounting principles.
Appendix - Page 16
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"INITIAL LOANS" means the Term Loan and, if any Revolving Loans or
Swing Line Loans are requested by the Borrower on the Closing Date, such
Revolving Loans or Swing Line Loans.
"INTEREST COVERAGE RATIO" means, for the period of four quarters
ending on the most recent quarter end prior to the date of computation (treating
each such period as a single accounting period) on a consolidated basis, a ratio
of (a) the sum of (i) Consolidated Net Income of the Borrower (before income
taxes) plus (ii) interest expense (net of interest income on Permitted
Investments) during such period plus (iii) depreciation and amortization
deducted in determining Consolidated Net Income for such period to (b) interest
expense (net of interest income on Permitted Investments) during such period.
"INTEREST PERIOD" means any interest period applicable to a Loan as
determined pursuant to SECTION 2.10.
"INTEREST RATE DETERMINATION DATE" means any date on which the Agent
is required to determine the applicable Eurodollar Rate in connection with a
Notice of Borrowing or Notice of Conversion or Continuation delivered by the
Borrower.
"INVESTMENT" means, with respect to any Person (such Person being
referred to in this definition as the "INVESTOR"), any amount paid by the
Investor, directly or indirectly, or any transfer of property, directly or
indirectly, by the Investor to any other Person for capital stock of, or as a
capital contribution to, or any amount which the Investor has loaned or
advanced, directly or indirectly, to, any other Person, including, in the case
of any Person (other than Seminole Kraft) which becomes a Subsidiary of the
Borrower, the aggregate principal amount of Indebtedness for Money Borrowed of
such Person outstanding at the time such Person becomes a Subsidiary. The
calculation of any Investment shall be exclusive of amounts paid for goods or
services in the ordinary course of business on terms customary for the industry.
"INVESTMENT GRADE RATING" means a rating of the Borrower's senior
unsecured long-term debt outstanding, without third-party enhancement, by
Standard & Poor's Corporation of BBB- or better and by Moody's Investor
Services, Inc. of Baa3 or better.
"IRB" means industrial revenue bonds and other debt instruments set
forth on SCHEDULE 5.2.2 hereto.
"ISSUER" has the meaning assigned to that term in the definition of
Accounts Receivable Financing Program.
"L/C AGREEMENT" means, collectively, the letter of credit agreements
entered into between (i) BT and Gelco Corporation, as
Appendix - Page 17
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successor in interest to D & K Financial Corporation, and (ii) BT and
Westinghouse Electric Corporation, as successor by merger to Westinghouse Credit
Corporation, with respect to the issuance by BT of one or more letters of credit
to secure the Florence Bonds, as such letter of credit agreements may at any
time be amended, modified or restated in accordance with the terms thereof and
in effect.
"L/C OBLIGATIONS" means, at any time, an amount equal to the sum of
(i) the aggregate Stated Amount of the then outstanding Letters of Credit and
(ii) the aggregate amount of drawings under Letters of Credit which have not
been reimbursed and which have not been converted to Revolving Loans pursuant to
SECTION 2.12(e).
"L/C PARTICIPATION AGREEMENTS" means, collectively, the Letter of
Credit Participation Agreements entered into by and between each Revolving
Lender (other than BT) and BT dated as of the date hereof with respect to the
L/C Agreement, as the same may at any time be amended, supplemented, restated or
otherwise modified in accordance with the terms thereof and in effect.
"LENDING OFFICE" means for each Lender, the office specified for such
Lender pursuant to SECTION 9.4 as the office from which its Revolving Loan Pro
Rata Share or Term Loan Pro Rata Share, as the case may be, of any Borrowing
will be made.
"LETTER OF CREDIT FEE" is defined in SECTION 2.12(f)(ii).
"LETTERS OF CREDIT" means the Commercial Letters of Credit and the
Standby Letters of Credit, but shall not include the Florence Letters of Credit.
"LENDERS" and "LENDER" have the respective meanings assigned to those
terms in the preamble to this Agreement and shall include each Assignee and
Eligible Assignee thereof that shall become a party to this Agreement pursuant
to SECTION 9.12. For purposes of this Agreement, the Lenders shall collectively
include all of the Revolving Lenders in their capacities as such, all Term
Lenders in their capacities as such and the Swing Line Lender in its capacity as
such. A Lender may be both a Revolving Lender and a Term Lender hereunder.
"LEVERAGED LEASE" means, collectively, (i) the Lease Agreement dated
as of March 1, 1985 between the Borrower and D&K Financial Corporation as
amended from time to time and (ii) the Lease Agreement dated as of March 1, 1985
between the Borrower and Westinghouse Credit Corporation as amended from time to
time.
"LIEN" means any mortgage, pledge, security interest, adverse claim
(as defined in Section 8.302(2) of the New York Uniform Commercial Code),
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title
Appendix - Page 18
<PAGE>
retention agreement or lease in the nature thereof, any sale of receivables with
recourse against the seller or any Affiliate of the seller, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the Borrower or any of its Subsidiaries under a lease which
is not in the nature of a conditional sale or title retention agreement).
"LOAN" means any of the Term Loan, the Revolving Loans or the Swing
Line Loans and "LOANS" means all of such Loans collectively.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Security Agreements, the Mortgages, the Subsidiary Guarantees, the L/C
Agreement, the L/C Participation Agreement, the Florence Letters of Credit and
all other agreements, assignments, security agreements, instruments and
documents executed in connection with this Agreement or any other Loan Document,
in each case as the same may at any time be amended, supplemented, restated or
otherwise modified and in effect. For purposes of this Agreement, "Loan
Documents" shall also include all guaranties, security agreements, mortgages,
pledge agreements, collateral assignments and other collateral documents in the
nature of any thereof entered into by the Borrower or any Subsidiary of the
Borrower after the date of this Agreement in favor of the Agent for the benefit
of the Lenders in satisfaction of the requirements of this Agreement.
"MAJORITY REVOLVING LENDERS" is defined in SECTION 9.2.
"MAJORITY TERM LENDERS" is defined in SECTION 9.2.
"MARGIN STOCK" has the meaning provided in Regulation U of the Board,
as from time to time in effect or any successor to all or any portion thereof
establishing margin credit restrictions.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
properties, business, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower or any Subsidiary to perform its obligations under any
of the Loan Documents or (iii) the validity or enforceability or any of the Loan
Documents or the rights or remedies of the Agent or the Lenders thereunder.
"MATERIAL LIABILITIES" is defined in SECTION 4.11(d).
"MATERIAL SALE PROCEEDS is defined in SECTION 3.4(c).
"MAXIMUM COMMITMENT" means, when used with reference to any Lender,
the aggregate amount of such Lender's Term Loan Commitment and Revolving Loan
Commitment in the amounts not to
Appendix - Page 19
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exceed those set forth opposite such Lender's name on SCHEDULE 1.1(a) hereto
under the caption "Amount of Maximum Commitment", subject to reduction from time
to time in accordance with the terms of this Agreement. For purposes of this
definition, the Revolving Loan Commitment of the Swing Line Lender shall be
deemed to include the Swing Line Commitment of the Swing Line Lender.
"MERGERS" means the merger of (i) the Stone Merger Subsidiaries with
and into the Borrower, with the Borrower being the surviving corporation and
(ii) Stone Southwest Merger Subsidiaries with and into Stone Southwest, with
Stone Southwest being the surviving corporation.
"MERGER DOCUMENTS" means the Certificates of Ownership and Merger
along with all of the agreements, documents, resolutions, consents, instruments
and certificates executed in order to effect the transactions contemplated by
the Certificates of Ownership and Merger.
"MORTGAGED PROPERTY" means, collectively, all of the properties of the
Borrower and the Subsidiaries of the Borrower defined as "Mortgaged Property" in
each of the respective Mortgages and shall include the fee or leasehold
interests of the Borrower or a Subsidiary in the manufacturing facilities
identified on SCHEDULE 1.1(c) hereto.
"MORTGAGES" means, collectively, (i) the mortgages and leasehold
mortgages in substantially the forms of EXHIBITS 1.1(d)-A AND B hereto (with
such state by state modifications as may be appropriate, and modifications to
provide for pro rata liens as required under the Continental Guaranty and to
reflect the securing of obligations created under Subsidiary Guarantees) as
required by the Agent, each dated as of the date hereof (subject to SECTION
5.1.17) and each by the Borrower or a Subsidiary, as applicable, as mortgagor,
in favor of the Agent for the benefit of the Lenders (or its designee), as
mortgagee, relating to the Mortgaged Property, and (ii) any other mortgage,
leasehold mortgage, deed of trust, collateral assignment of lease or similar
agreement executed by the Borrower or a Subsidiary of the Borrower pursuant to
which such Person shall have granted a mortgage, leasehold mortgage or other
Lien to the Agent for the benefit of the Lenders, as each such agreement may at
any time be amended, supplemented, restated or otherwise modified in accordance
with the terms thereof and in effect.
"MOST RECENT BALANCE SHEET" means the most recent consolidated balance
sheet of the Borrower and its Subsidiaries delivered to the Agent and each
Lender pursuant to SECTION 5.1.1(b)(i).
"MULTIEMPLOYER PLAN" means any plan described in Section 4001(a)(3) of
ERISA and not excluded pursuant to Section 4021(b)
Appendix - Page 20
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thereof to which contributions are or have been made by the Borrower or any of
its Subsidiaries or any ERISA Affiliate.
"NET AWARDS" is defined in the Mortgages.
"NET PROCEEDS" is defined in the Mortgages.
"NEW RECEIVABLES FINANCING" is defined in SECTION 5.2.2(p).
"NON-U.S. LENDER" is defined in SECTION 9.12(h).
"NOTE" means any of the Term Notes, Revolving Notes or the Swing Line
Note and "NOTES" means all of such promissory notes collectively.
"NOTE PROSPECTUS" means the Prospectus for the First Mortgage Notes
and the Senior Notes dated September 29, 1994.
"NOTICE OF BORROWING" is defined in SECTION 2.5.
"NOTICE OF CONVERSION OR CONTINUATION" is defined in SECTION 2.6.
"NOTICES" is defined in SECTION 9.4.
"OBLIGATIONS" means the Term Loan Obligations, the Revolving Loan
Obligations, the Swing Line Loan Obligations, the L/C Obligations and all other
liabilities and obligations of the Borrower and any Subsidiary of the Borrower
now or hereafter arising under this Agreement or any of the other Loan
Documents, whether for principal, interest, reimbursements, fees, expenses,
indemnities or otherwise, and whether primary, secondary, direct, indirect,
contingent, fixed or otherwise (including obligations of performance).
"OFFSITE PROPERTY" is defined in SECTION 5.1.15.
"PARTICIPANTS" is defined in SECTION 9.12(c).
"PARTICIPATING SUBSIDIARY" means any Wholly-Owned Subsidiary of the
Borrower which is a participant in the Accounts Receivable Financing Program
with respect to one or more business lines thereof; PROVIDED, HOWEVER, that in
no event shall Seminole Kraft, S-CC or any of its Subsidiaries or any Wholly-
Owned Subsidiary which is not domiciled in the United States or Canada be a
Participating Subsidiary.
Appendix - Page 21
<PAGE>
"PARTICIPATION AGREEMENTS" means, collectively, the D&K Participation
Agreement and the WCC Participation Agreement (as each of such terms is defined
within the definition of "Florence Agreements") and "PARTICIPATION AGREEMENT"
means either of such Agreements.
"PAYMENT OFFICE" is defined in SECTION 2.7.
"PBGC" means the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA.
"PERMITTED BENEFICIARY" means any insurance company, state workers'
compensation authority, state or Federal environmental agency, related trustee
or surety, local utility, municipality, other domestic or foreign Governmental
Authority, any vendor of goods or services being purchased by the Borrower or
any of its Subsidiaries, any domestic or foreign financial institution, or any
other Person approved by the Facing Agent, in its sole discretion.
"PERMITTED INVESTMENTS" mean (i) any evidence of indebtedness,
maturing not more than one year after the date of issue, 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,
(ii) any certificate of deposit, maturing not more than 360 days after the date
of purchase issued by a commercial banking institution which is a member of the
Federal Reserve System or a Canadian banking institution and which has a
combined capital and surplus and undivided profits of not less than $200
million, (iii) commercial paper, maturing not more than 360 days after the date
of purchase, issued by a corporation (other than the Borrower or any Subsidiary
of the Borrower or any of their respective Affiliates) organized and existing
under the laws of (A) any state within the United States of America with a
rating, at the time of purchase, of "P-2" (or higher) according to Moody's
Investors Service, Inc. or "A-2" (or higher) according to Standard & Poor's
Corporation, or (B) solely with respect to Permitted Investments made by a
foreign Subsidiary, any foreign country with a rating equivalent to that
specified in clause (A) above, (iv) demand deposits with any bank or trust
company, (v) investments in money market funds having a rating from each of
Moody's Investors Service, Inc. and Standard & Poor's Corporation in the highest
investment category granted thereby (including without limitation funds for
which any Lender, the Agent or any Co-Agent is investment manager or adviser),
(vi) reverse repurchase agreements with respect to indebtedness 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, and (vii) in the case of foreign Subsidiaries of the
Borrower, short-term investments comparable to the foregoing.
Appendix - Page 22
<PAGE>
"PERMITTED LIENS" means with respect to any Person:
(a) Liens existing on the date hereof and referenced on SCHEDULE
1.1(d) hereto;
(b) any Lien on any property securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the acquisition,
construction, repair or improvement cost of such property (including any
refinancing thereof), PROVIDED that such Lien does not extend to any other
property;
(c) Liens for taxes or assessments or governmental charges or levies
not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves, if appropriate under
generally accepted accounting principles, are being maintained;
(d) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves, if
appropriate under generally accepted accounting principles, are being
maintained;
(e) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, or progress payments, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(f) easements, rights-of-way, restrictions and other similar charges
or encumbrances not interfering with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(g) Liens existing on any property prior to the acquisition thereof,
prior to the acquisition of the Person which owns such property or prior to the
Person becoming a Subsidiary, by the Borrower or any of its Subsidiaries, in
each case which lien was not created in contemplation of such acquisition;
(h) the rights of collecting banks having a right of setoff,
revocation, refund or chargeback with respect to money or instruments of the
Borrower or its Subsidiaries on deposit with or in the possession of such
Lender;
(i) Liens created by the Loan Documents and any other Liens granted
to the Agent to secure, directly or indirectly, all
Appendix - Page 23
<PAGE>
or any portion of the Obligations or other obligations arising pursuant to the
Loan Documents;
(j) the Lien granting ratable security in certain of the Mortgaged
Properties and Collateral pursuant to the requirements of the Continental
Guaranty;
(k) Liens on the property of Seminole Kraft, S-CC or any Subsidiary of
S-CC securing indebtedness which is non-recourse to the Borrower and each other
Subsidiary of the Borrower (other than Subsidiaries of S-CC in the case of
indebtedness of S-CC or any of its Subsidiaries) and Liens on the property of S-
CC or any Subsidiary of S-CC to the extent permitted by the S-CC Debt Documents;
(l) Liens in favor of any Lender which is a party to a foreign
exchange or interest rate swap or hedging agreement with the Borrower as
permitted by SECTION 5.2.2(o)(i), PROVIDED that such Liens are not senior to
those of the Lenders with respect to such agreements and do not attach to
properties of the Borrower other than those in which the Lenders have a security
interest or mortgage;
(m) Liens on the property of StoneSub securing obligations of
StoneSub incurred pursuant to the Accounts Receivable Financing Program and
Liens in favor of StoneSub granted by the Borrower or any Participating
Subsidiary with respect to Receivables purportedly sold to StoneSub by the
Borrower or any Participating Subsidiary pursuant to the Accounts Receivable
Financing Program in order to evidence the right, title and interest of StoneSub
in and to such Receivables;
(n) Liens for Indebtedness for Money Borrowed permitted by SECTION
5.2.2(r) PROVIDED that such Liens attach only to unearned and return premiums,
dividends and loss payments which reduce the unearned premiums under insurance
policies the premiums of which have been financed with such Indebtedness for
Money Borrowed;
(o) Liens (other than those listed in clauses (a) through (n) above)
securing Indebtedness for Money Borrowed in an aggregate principal amount not to
exceed $175 million at any time outstanding, provided such Liens do not extend
to property securing all or any part of the Obligations;
(p) Liens securing Indebtedness for Money Borrowed permitted by
SECTION 5.2.2(k), PROVIDED that at the time of creation thereof, such Liens do
not extend to property securing all or any part of the Obligations;
Appendix - Page 24
<PAGE>
(q) Liens securing the First Mortgage Notes pursuant to the First
Mortgage Note Documents as in effect on the Closing Date, including
substitutions and replacements permitted thereby;
(r) extensions, renewals or replacements of any Lien referred to in
clauses (a) through (q) above, PROVIDED that the principal amount of the
Indebtedness or obligation secured thereby is not increased and that any such
extension, renewal or replacement is limited to the property originally
encumbered thereby; and
(s) Liens on an account maintained by Stone-Canada or an escrow agent
therefor or Liens on amounts held back by S-CC, in any case for the payment of
certain liabilities identified at the time of the December 1993 transfer of
Stone-Canada's assets to S-CC in compliance with and to the extent required by
the bulk sales provisions of the Civil Code of Lower Canada (Quebec).
"PERMITTED PREFERRED STOCK" means preferred or preference stock of the
Borrower so long as and to the extent that such preferred or preference stock is
not subject to a sinking fund payment or other mandatory redemption or payment
prior to July 15, 2000.
"PERMITTED USES" means (i) for ongoing working capital and general
corporate purposes of the Borrower, (ii) the making or incurrence of Capital
Expenditures and/or Investments in excess of the annual limitations (and without
reduction of the annual permitted basket amounts) set forth in SECTIONS 5.2.7(d)
AND 5.2.11, and (iii) the prepayment of any maturity or maturities of debt
securities of the Borrower, including the payment of principal, stated premium,
if any, and interest thereon.
"PERSON" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"PLAN" means any plan described in Section 4021(a) of ERISA and not
excluded pursuant to Section 4021(b) thereof, which may be or has been
established or maintained, or to which contributions are or have been made, by
the Borrower or any of its Subsidiaries or any ERISA Affiliate, but not
including any Multiemployer Plan.
"PLAN ADMINISTRATOR" has the meaning assigned to the term
"administrator" in Section 3(16)(A) of ERISA.
"PLAN SPONSOR" has the meaning assigned to the term "plan sponsor" in
Section 3(16)(B) of ERISA.
Appendix - Page 25
<PAGE>
"PRIME RATE" means at any time, the greater of (i) the rate which BT
announces from time to time as its prime lending rate, as in effect from time to
time, and (ii) the Federal Funds Rate plus 1/2 of 1% per annum. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. BT may make commercial loans or other loans
at rates of interest at, above or below the Prime Rate.
"PRIME RATE LOAN" means any Loan which bears interest at a rate
determined with reference to the Prime Rate.
"PRIME RATE REVOLVING LOAN" means a Revolving Loan or any portion
thereof during any period in which it bears interest at a rate determined with
reference to the Prime Rate.
"PRIME RATE TERM LOAN" means the Term Loan or any portion thereof
during any period in which it bears interest at a rate determined with reference
to the Prime Rate.
"PRO FORMA" is defined in SECTION 4.11(b).
"QUARTERLY PAYMENT DATE" means the 25th day of March, June, September
and December of each year.
"RECEIVABLES" has the meaning assigned to that term in the definition
of Accounts Receivable Financing Program.
"RECEIVABLES FINANCING" has the meaning assigned to that term in the
definition of Accounts Receivable Financing Program.
"REFERENCE BANKS" means, collectively, BT, Chemical Bank and The First
National Bank of Chicago and any successor reference bank determined pursuant
to SECTION 2.8(j).
"REFUNDED SWING LINE LOANS" is defined in SECTION 2.11(c).
"REGISTER" is defined in SECTION 9.12(h).
"REGISTERED NOTE" is defined in SECTION 9.12(h).
"REGISTERED NOTEHOLDER" is defined in SECTION 9.12(h).
"REGULATION D" means Regulation D of the Board as from time to time in
effect and any successor to all or a portion thereof establishing reserve
requirements.
"RELATED TRANSACTIONS" means, collectively, the execution and delivery
of the Basic Agreements, the consummation of the Mergers pursuant to the Merger
Documents, the issuance and sale of the Senior Notes and First Mortgage Notes
pursuant to the Senior
Appendix - Page 26
<PAGE>
Note Documents and the First Mortgage Note Documents, respectively, the funding
of the Term Loan and each Borrowing under the Revolving Loan and Swing Line Loan
(if any) and each issuance of a Letter of Credit (if any) on the Closing Date,
the consummation of the Debt Refinancing pursuant to the Debt Refinancing
Documents, the Stone Savannah Transactions and the payment of all fees, costs
and expenses associated with all of the foregoing.
"RELEASE" means release, spill, emission, leaking, pumping, pouring,
emptying, dumping, injection, deposit, disposal, discharge, dispersal, escape,
leaching or migration into the indoor or outdoor environment or into or out of
any property of the Borrower or its Subsidiaries, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or property
of the Borrower or its Subsidiaries.
"REMEDIAL ACTION" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent or minimize the Release or threat of Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (iii) perform pre-
remedial studies and investigations and post-remedial monitoring and care.
"REPLACED LENDER" is defined in SECTION 2.14.
"REPLACEMENT LENDER" is defined in SECTION 2.14.
"REPORTABLE EVENT" means a "reportable event" described in Section
4043(b) of ERISA or in the regulations thereunder or receipt of a notice of
withdrawal liability or reorganization with respect to a Multiemployer Plan
pursuant to Section 4202 or 4242 of ERISA.
"REQUIRED LENDERS" means, as of the date of determination thereof, the
Lenders having greater than 50% of the sum of (i) the aggregate principal amount
of loans and other extensions of credit then outstanding under any of the Loan
Documents plus (ii) the aggregate amount of the remaining available commitments
of the Lenders under any of the Loan Documents; PROVIDED, HOWEVER, that for
purposes of determining the amount of a Revolving Lender's Loans, each Revolving
Lender shall be deemed to hold the principal amount of Swing Line Loans and the
amount of L/C Obligations and Florence L/C Obligations equal to its Revolving
Loan Pro Rata Share of the Swing Line Loans, L/C Obligations and Florence
Obligations then outstanding.
"RESPONSIBLE OFFICER" means, with respect to any Person, any of the
chairman of the board of directors, the chief executive officer, chief operating
officer, chief financial officer, any executive vice president, any vice
president, treasurer, secretary or any other similar officer or position of such
Person.
Appendix - Page 27
<PAGE>
"RESTRICTED SUBSIDIARY" means Seminole Kraft and S-CC, individually,
upon the Borrower acquiring all of their respective outstanding shares of
capital stock.
"REVOLVER TERMINATION DATE" means May 15, 1999.
"REVOLVING LENDER" means, at any time, any Lender which then has a
Revolving Loan Commitment or is owed a Revolving Loan.
"REVOLVING LOAN COMMITMENT" means, with respect to any Lender, the
obligation of such Lender to (i) make Revolving Loans to the Borrower, (ii)
participate in Swing Line Loans made by the Swing Line Lender and (iii)
participate in Letters of Credit issued by the Facing Agent for the account of
the Borrower, in an aggregate principal amount and/or Stated Amount at any one
time outstanding not to exceed the amount set forth opposite such Lender's name
on SCHEDULE 1.1(a) hereto under the caption "Amount of Revolving Loan
Commitment." Each Revolving Loan Commitment shall be subject to reduction from
time to time in accordance with the terms of this Agreement.
"REVOLVING LOAN OBLIGATIONS" means the obligations of the Borrower to
repay principal, and pay interest, on the Revolving Loans pursuant to SECTION
2.2(b).
"REVOLVING LOAN PRO RATA SHARE" means, with respect to any Revolving
Lender and any described aggregate or total amount, the amount equal to the
result obtained by multiplying such aggregate or total amount by a fraction, the
numerator of which shall be such Lender's Revolving Loan Commitment in effect at
the time (or, if the Total Revolving Loan Commitments have been terminated, the
principal amount of such Lender's Revolving Loans then outstanding) and the
denominator of which shall be the Total Revolving Loan Commitments in effect at
the time (or, if the Total Revolving Loan Commitments have been terminated, the
aggregate principal amount of all Revolving Loans then outstanding).
"REVOLVING LOANS" means, individually and collectively, each of the
loans by each of the Revolving Lenders to the Borrower in accordance with
SECTION 2.1(b), which Revolving Loans shall from time to time be comprised of
Prime Rate Loans or Eurodollar Rate Loans or any combination of the foregoing.
"REVOLVING NOTE" is defined in SECTION 2.2(b).
"REVOLVING PORTION" is defined in SECTION 3.6(c).
"S-CC" means Stone-Consolidated Corporation, a Canadian federal
corporation.
"S-CC DEBT DOCUMENTS" means the documentation pursuant to which S-CC
has incurred the Indebtedness for Money Borrowed
Appendix - Page 28
<PAGE>
permitted by SECTIONS 5.2.2(u), as such documentation may be amended,
supplemented, restated or otherwise modified from time to time, and including
documentation related to refinancings of such Indebtedness for Money Borrowed
permitted by such Section.
"SECURITY AGREEMENTS" means, collectively, (i) the Security Agreement
in substantially the form of EXHIBIT 1.1 (a) hereto dated as of the Closing Date
between the Borrower and the Agent, (ii) the Security Agreement in substantially
the form of EXHIBIT 1.1(b)-A hereto dated as of the Closing Date between Stone
Savannah and the Agent, (iii) the Security Agreement in substantially the form
of EXHIBIT 1.1(b)-B hereto dated as of the Closing Date between Stone Southwest
and the Agent, (iv) any Security Agreement executed by any Subsidiary of the
Borrower to secure all or any portion of the Obligations after the Closing Date
and (v) any Supplemental Pledge Agreement, in each case, as amended,
supplemented, restated or otherwise modified from time to time.
"SEMINOLE KRAFT" means Seminole Kraft Corporation, a Delaware
corporation.
"SENIOR INDEBTEDNESS" has the meaning assigned to that term in each of
the Senior Subordinated Note Indenture, the Senior Subordinated (11-1/2%)
Indenture, the Convertible Indenture, the Convertible Subordinated Indenture
and, from and after the merger of Stone Southwest with and into the Borrower,
the Stone Southwest Indenture.
"SENIOR NOTE DOCUMENTS" means the Senior Note Indenture, the Senior
Notes and all other documents, instruments and agreements now or hereafter
evidencing all or any portion of the Borrower's obligations under the Senior
Note Indenture and the Senior Notes, including any documents, instruments or
agreements evidencing the amendment, refinancing, modification, replacement,
renewal, restatement, refunding, deferral, extension, supplement, reissuance or
resale thereof.
"SENIOR NOTE INDENTURE" means the Indenture dated as of October 12,
1994 between the Borrower and The Bank of New York, as Trustee, pursuant to
which the Borrower issued its Senior Notes, as amended, supplemented, restated
or otherwise modified from time to time.
"SENIOR NOTES" means, collectively, the Borrower's 11-1/2% Senior
Notes due October 1, 2004 in the aggregate principal amount of $200 millon and
issued pursuant to the Senior Note Indenture, as amended, supplemented, restated
or otherwise modified from time to time.
"SENIOR SUBORDINATED (11-1/2%) INDENTURE" means the Indenture dated as
of September 1, 1989 between the Borrower and
Appendix - Page 29
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Bankers Trust Company, as Trustee, pursuant to which the Borrower issued its 11-
1/2% Senior Subordinated Notes due September 1, 1999, as amended, supplemented,
restated, or otherwise modified from time to time.
"SENIOR SUBORDINATED NOTE INDENTURE" means the Indenture dated as of
March 15, 1992 between the Borrower and The Bank of New York, as Trustee,
pursuant to which the Borrower issued its 10-3/4% Senior Subordinated Notes due
June 15, 1997, its 10-3/4% Senior Subordinated Debentures due April 1, 2002 and
its 11% Senior Subordinated Notes due August 15, 1999, as amended, supplemented,
restated or otherwise modified from time to time.
"STANDBY LETTERS OF CREDIT" means any of the standby Letters of Credit
issued by the Facing Agent for the account of the
Borrower pursuant to SECTION 2.12.
"STATED AMOUNTS" means, with respect to any letter of credit, the
stated or face amount of such letter of credit to the extent available at the
time for drawing (subject to presentment of all requisite documents), as the
same may be increased or decreased from time to time in accordance with the
terms of such Letter of Credit.
"STONE-CANADA" means Stone Container (Canada) Inc., a Canadian federal
corporation and formerly named Stone-Consolidated Inc., and its successors and
assigns.
"STONE MERGER SUBSIDIARIES" is defined in the definition of
Certificates of Ownership and Merger.
"STONE SAVANNAH" means Stone Savannah River Pulp & Paper Corporation,
a Delaware corporation, and any successor thereto.
"STONE SAVANNAH CREDIT AGREEMENT" means the Credit Agreement dated as
of December 9, 1988, as amended, by and among Stone Savannah, Manufacturers
Hanover Trust Company and Citibank, N.A., as co-managers, the financial
institutions signatory thereto and Citibank, N.A., as agent.
"STONE SAVANNAH SENIOR SUBORDINATED NOTES" means the 14.125% Senior
Subordinated Notes due December 15, 2000 of Stone Savannah issued pursuant to
the Stone Savannah Senior Subordinated Notes Indenture.
"STONE SAVANNAH SENIOR SUBORDINATED NOTES INDENTURE" means the
Indenture dated as of December 15, 1988, between Stone Savannah and The Bank of
New York (as successor to Manufacturers Hanover Trust Company), as Trustee, in
respect of the Stone Savannah Senior Subordinated Notes, as amended from time to
time.
Appendix - Page 30
<PAGE>
"STONE SAVANNAH TRANSACTIONS" is defined in SECTION 5.1.13.
"STONE SOUTHWEST" means Stone Southwest, Inc., a Delaware corporation.
"STONE SOUTHWEST INDENTURE" means the Indenture dated as of
September 15, 1983 between Stone Southwest (as successor to Southwest Forest
Industries, Inc.) and National Westminster Bank USA (as successor to Bankers
Trust Company), as Trustee, as amended, restated or otherwise modified from time
to time.
"STONE SOUTHWEST MERGER SUBSIDIARIES" is defined in the definition of
Certificates of Ownership and Merger.
"STONESUB" means, individually and collectively, one or more
corporations organized under the laws of one of the United States of America or
Canada which are special purpose Wholly-Owned Subsidiaries of the Borrower
formed to engage in the Accounts Receivable Financing Program, and including any
Wholly-Owned Subsidiary formed as a holding company, the only assets of which
consist of the capital stock of such subsidiaries formed to engaged in the
Accounts Receivables Financing Program.
"SUBORDINATED DEBT" means (i) the Borrower's 10-3/4% Senior
Subordinated Notes due June 15, 1997, 11% Senior Subordinated Notes due August
15, 1999 and 10-3/4% Senior Subordinated Debentures due April 1, 2002 issued
pursuant to the Senior Subordinated Note Indenture, (ii) the Borrower's 11-1/2%
Senior Subordinated Notes due September 1, 1999 issued pursuant to the Senior
Subordinated (11-1/2%) Indenture, (iii) the Borrower's 12-1/8% Subordinated
Debentures due September 15, 2001 under the Stone Southwest Indenture, (iv) the
Borrower's 8-7/8% Convertible Senior Subordinated Notes due July 15, 2000 issued
pursuant to the Convertible Indenture, (v) the Borrower's 6-3/4% Convertible
Subordinated Debentures due February 15, 2007 issued pursuant to the Convertible
Subordinated Indenture and (vi) any other Indebtedness for Money Borrowed of the
Borrower which is subordinate and junior in right of payment to the prior
payment in full of all amounts owing to the Lenders under the Loan Documents
pursuant to an agreement in form, terms and substance satisfactory to the
Required Lenders.
"SUBSIDIARY" of any Person means any corporation of which such Person,
directly or indirectly, shall at the time own shares of any class or classes
(however designated) having ordinary voting power for the election of at least a
majority of the members of the board of directors (or the governing body) of
such corporation, other than shares having such power only by reason of the
happening of a contingency. Unless otherwise expressly provided, all references
herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
Notwithstanding the foregoing, SVCPI shall not be deemed
Appendix - Page 31
<PAGE>
to be a Subsidiary for any purposes of this Agreement (including without
limitation the definition of "Wholly-Owned Subsidiary") regardless of the fact
that Stone-Canada and/or Affiliates of Stone-Canada may at any time own a
majority or all of the outstanding voting shares of SVCPI, PROVIDED, HOWEVER
that in the event Stone-Canada and/or Affiliates of Stone-Canada become the
owner of a majority of the outstanding voting shares of SVCPI, then (i) SVCPI
shall be deemed to be a Subsidiary for purposes of SECTIONS 5.1.1(f), (g) and
(h), 5.1.6 and 5.1.7 and (ii) for purposes of the financial statements referred
to in SECTIONS 5.1.1(b), (c), (d) and (e), SVCPI shall be accounted for
utilizing the equity method.
"SUBSIDIARY GUARANTEES" means, collectively, (i) the Subsidiary
Guarantees each in substantially the form of EXHIBIT 1.1 (c) hereto dated as of
the Closing Date and executed by Stone Savannah and Stone Southwest in favor of
the Agent and the Lenders and (ii) any Subsidiary Guarantee executed by any
Subsidiary of the Borrower after the Closing Date pursuant to SECTION 5.1.16, in
each case as amended, supplemented, restated or otherwise modified from time to
time.
"SUBSTITUTE COLLATERAL" is defined in SECTION 9.13(c).
"SUPPLEMENTAL PLEDGE AGREEMENT" means a pledge or security agreement
in a form reasonably acceptable to the Agent pursuant to which the recipient of
any equity interest or other non-cash consideration described in the penultimate
sentence of SECTION 5.2.8 or the last sentence of SECTION 5.2.12 pledges or
hypothecates such equity interest or non-cash consideration to the Agent for the
benefit of the Lenders to secure the "Obligations" (as defined in the Security
Agreements).
"SVCPI" means Stone Venepal Consolidated Pulp Inc., a Canadian federal
corporation.
"SWING LINE LENDER" means BT.
"SWING LINE COMMITMENT" means, with respect to the Swing Line Lender
at any date, the obligation of the Swing Line Lender to make Swing Line Loans
pursuant to SECTION 2.11 in the amount referred to therein.
"SWING LINE LOANS" is defined in SECTION 2.11(a).
"SWING LINE LOAN OBLIGATIONS" means the obligations of the Borrower to
repay principal, and pay interest, on the Swing Line Loans pursuant to SECTION
2.2(c).
"SWING LINE LOAN PARTICIPATION CERTIFICATE" means a certificate,
substantially in the form of EXHIBIT 2.11(d).
Appendix - Page 32
<PAGE>
"SWING LINE NOTE" is defined in SECTION 2.2(c).
"TAXES" is defined in SECTION 3.11(a).
"TERM LENDER" means, at any time, any Lender which then has a Term
Loan Commitment or is owed any portion of the Term Loan.
"TERM LOAN" means, individually and collectively, the loans made by
each of the Term Lenders to the Borrower in accordance with SECTION 2.1(a),
which Term Loan shall from time to time be comprised of Prime Rate Loans or
Eurodollar Rate Loans or any combination of the foregoing.
"TERM LOAN COMMITMENT" means, with respect to each Term Lender, the
principal amount set forth opposite such Term Lender's name on SCHEDULE 1.1(a)
hereto under the caption "Amount of Term Loan Commitment."
"TERM LOAN MATURITY DATE" means April 1, 2000.
"TERM LOAN OBLIGATIONS" means the obligations of the Borrower to repay
principal, and pay interest, on the Term Loan pursuant to SECTION 2.2(a).
"TERM LOAN PRO RATA SHARE" means, with respect to any Term Lender and
any described aggregate or total amount, the amount equal to the result obtained
by multiplying such described aggregate or total amount by a fraction, the
numerator of which shall be the portion of the Term Loan made by such Lender and
outstanding at the time and the denominator of which shall be the aggregate
amount of the Term Loan made by all of the Term Lenders and outstanding at the
time.
"TERM NOTE" is defined in SECTION 2.2(a).
"TOTAL AVAILABLE REVOLVING COMMITMENT" means, at the time any
determination thereof is made, the sum of the respective Available Revolving
Commitments of the Revolving Lenders at such time.
"TOTAL CONSOLIDATED INDEBTEDNESS FOR MONEY BORROWED" means, subject to
the last sentence of SECTION 1.2, the total of all Indebtedness for Money
Borrowed of the Borrower and its Subsidiaries.
"TOTAL MAXIMUM COMMITMENT" means, at the time any determination
thereof is to be made, the sum of the respective Maximum Commitments of the
Lenders at such time.
"TOTAL REVOLVING LOAN COMMITMENTS" means, at any time any
determination thereof is to be made, the sum of the respective Revolving Loan
Commitments of the Revolving Lenders at such time.
Appendix - Page 33
<PAGE>
"TRANSACTION DOCUMENTS" means the Merger Documents, the Senior Note
Documents, the First Mortgage Note Documents, the Debt Refinancing Documents and
any other document, instrument or agreement executed and/or delivered in
connection with the consummation of the Related Transactions.
"TYPE" means any type of Loan, namely a Prime Rate Loan or a
Eurodollar Rate Loan (whether a Term Loan or Revolving Loan).
"UNDERFUNDED PLAN" is defined in SECTION 4.15(a).
"UNMATURED EVENT OF DEFAULT" means an event, act or occurrence which,
with the giving of notice or the lapse of time (or both), would become an Event
of Default.
"U.S. CREDIT AGREEMENT" means that certain Credit Agreement dated as
of March 1, 1989, executed as of October 25, 1993 and effective as an amended
and restated agreement effective as of December 17, 1993, as further amended, by
and among the Borrower, BT, as Agent, Citibank, N.A., Chemical Bank (as
successor to Manufacturers Hanover Trust Company) and The First National Bank of
Chicago, as Co-Agents, and certain financial institutions signatory thereto.
"WAIVED PROCEEDS" is defined in SECTION 3.6(f).
"WHOLLY-OWNED SUBSIDIARY" means, with respect to any Person, at any
time any Subsidiary of such Person, all of the outstanding shares of capital
stock of which (other than qualifying shares required to be owned by directors)
are at the time owned directly by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person. Unless otherwise expressly provided, all
references herein to a "Wholly-Owned Subsidiary" shall mean a Wholly-Owned
Subsidiary of the Borrower.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. The words "herein", "hereof"
and words of similar import as used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision in this Agreement.
Unless specifically stated to the contrary, all references to "Sections,"
"subsections," "paragraphs," "Exhibits" and "Schedules" in this Agreement shall
refer to Sections, subsections, paragraphs, Exhibits and Schedules of this
Agreement unless otherwise expressly provided; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
Appendix - Page 34
<PAGE>
Appendix - Page 35
<PAGE>
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
STONE CONTAINER CORPORATION,
as Issuer
TO
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
_________
Indenture
Dated as of October 12, 1994
____________
up to $500,000,000
10 3/4% First Mortgage Notes due 2002
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
<PAGE>
STONE CONTAINER CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of October 12, 1994
Trust Indenture Indenture Section
Act Section
Section 310(a)(1) . . . . . . . . . . . . . 609
(a)(2). . . . . . . . . . . . . . . . . . 609
(a)(3). . . . . . . . . . . . . . . . . . Not Applicable
(a)(4). . . . . . . . . . . . . . . . . . Not Applicable
(a)(5). . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . . . 608, 610
(c) . . . . . . . . . . . . . . . . . . . Not Applicable
Section 311(a). . . . . . . . . . . . . . . 613
(b) . . . . . . . . . . . . . . . . . . . 613
(b)(2). . . . . . . . . . . . . . . . . . 703(a), 703(b)
Section 312(a). . . . . . . . . . . . . . . 701, 702(a)
(b) . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . . 703(b)
(c) . . . . . . . . . . . . . . . . . . . 703(a), 703(b)
(d) . . . . . . . . . . . . . . . . . . . 703(b
Section 314(a)(1) . . . . . . . . . . . . . 704
(a)(2). . . . . . . . . . . . . . . . . 704
(a)(3). . . . . . . . . . . . . . . . . 704
(a)(4). . . . . . . . . . . . . . . . . 1011
(b) . . . . . . . . . . . . . . . . . . 1302
(c)(1). . . . . . . . . . . . . . . . . . 102
(c)(2). . . . . . . . . . . . . . . . . . 102
(c)(3). . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . 1009, 1015,
. . . . . . . . . . . . . . . . . . . 1305(b), 1610
(e) . . . . . . . . . . . . . . . . . . . 102
(f) . . . . . . . . . . . . . . . . . . . Not Applicable
Section 315(a). . . . . . . . . . . . . . . 601(a)
(b) . . . . . . . . . . . . . . . . . . . 602, 703(a)
(c) . . . . . . . . . . . . . . . . . . . 601(b)
(d) . . . . . . . . . . . . . . . . . . . 601(c)
(d)(1). . . . . . . . . . . . . . . . . . 601(a), 601(c)
(d)(2). . . . . . . . . . . . . . . . . . 601(c)
(d)(3). . . . . . . . . . . . . . . . . . 601(c)
(e) . . . . . . . . . . . . . . . . . . . 514
Section 316(a). . . . . . . . . . . . . . 101
(a)(1)(A) . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . 502, 513
(a)(2). . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . 508
____________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
Section 317(a)(1) . . . . . . . . . . . . . 503
(a)(2). . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . 1003
(c) . . . . . . . . . . . . . . . . . . . 104(c)
Section 318(a). . . . . . . . . . . . . . . 107
____________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
______________
Page
Parties
Recitals of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions:
1991 Indenture . . . . . . . . . . . . . . . . . . . . . . . 2
Acquiring Person . . . . . . . . . . . . . . . . . . . . . . 2
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Asset Disposition. . . . . . . . . . . . . . . . . . . . . . 3
Asset Disposition Offer. . . . . . . . . . . . . . . . . . . 3
Asset Disposition Offer Amount . . . . . . . . . . . . . . . 3
Asset Disposition Payment Date . . . . . . . . . . . . . . . 3
Authenticating Agent . . . . . . . . . . . . . . . . . . . . 4
Authority. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . 4
Board of Directors . . . . . . . . . . . . . . . . . . . . . 4
Board Resolution . . . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 4
Capitalized Lease Obligation . . . . . . . . . . . . . . . . 4
Cash Collateral Account. . . . . . . . . . . . . . . . . . . 4
Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . 4
Castlewood Agreement . . . . . . . . . . . . . . . . . . . . 5
Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Change of Control. . . . . . . . . . . . . . . . . . . . . . 5
Change of Control Date; Change of
Control Offer; Change of Control
Payment Date . . . . . . . . . . . . . . . . . . . . . . . 5
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 5
Collateral Asset Disposition . . . . . . . . . . . . . . . . 5
Collateral Loss Event. . . . . . . . . . . . . . . . . . . . 6
Collateral Properties. . . . . . . . . . . . . . . . . . . . 6
Commission . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commodities Agreement. . . . . . . . . . . . . . . . . . . . 6
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
____________________
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of this Indenture.
i
<PAGE>
Page
Company Request; Company Order . . . . . . . . . . . . . . . 7
Condemnation . . . . . . . . . . . . . . . . . . . . . . . . 7
Condemnation Proceeds. . . . . . . . . . . . . . . . . . . . 7
Consolidated Amortization Expense. . . . . . . . . . . . . . 7
Consolidated Cash Flow Available for
Fixed Charges. . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Depreciation Expense. . . . . . . . . . . . . . 7
Consolidated Free Cash Flow. . . . . . . . . . . . . . . . . 7
Consolidated Income Tax Expense. . . . . . . . . . . . . . . 7
Consolidated Interest Coverage Ratio . . . . . . . . . . . . 8
Consolidated Interest Expense. . . . . . . . . . . . . . . . 8
Consolidated Net Income. . . . . . . . . . . . . . . . . . . 8
Consolidated Net Worth . . . . . . . . . . . . . . . . . . . 9
Contaminant. . . . . . . . . . . . . . . . . . . . . . . . . 9
Continental Guaranty . . . . . . . . . . . . . . . . . . . . 9
Continuing Director. . . . . . . . . . . . . . . . . . . . . 9
Corporate Trust Office . . . . . . . . . . . . . . . . . . . 10
corporation. . . . . . . . . . . . . . . . . . . . . . . . . 10
Co-Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 10
covenant defeasance. . . . . . . . . . . . . . . . . . . . . 10
Credit Agreements. . . . . . . . . . . . . . . . . . . . . . 10
Currency Agreement . . . . . . . . . . . . . . . . . . . . . 10
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . 11
defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 11
Deficiency Amount. . . . . . . . . . . . . . . . . . . . . . 11
Deficiency Date. . . . . . . . . . . . . . . . . . . . . . . 11
Deficiency Offer . . . . . . . . . . . . . . . . . . . . . . 11
Deficiency Offer Amount. . . . . . . . . . . . . . . . . . . 11
Deficiency Payment Date. . . . . . . . . . . . . . . . . . . 11
dollars; $ . . . . . . . . . . . . . . . . . . . . . . . . . 11
Environment. . . . . . . . . . . . . . . . . . . . . . . . . 11
Environmental Laws . . . . . . . . . . . . . . . . . . . . . 11
Event of Default . . . . . . . . . . . . . . . . . . . . . . 12
Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . 12
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . 12
First Mortgage Notes . . . . . . . . . . . . . . . . . . . . 12
First Mortgage Note Offer. . . . . . . . . . . . . . . . . . 12
First Mortgage Note Offer Price. . . . . . . . . . . . . . . 12
First Mortgage Note Payment Date . . . . . . . . . . . . . . 12
Five Year Treasury Rate. . . . . . . . . . . . . . . . . . . 12
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Holder; Securityholder . . . . . . . . . . . . . . . . . . . 13
Improvements . . . . . . . . . . . . . . . . . . . . . . . . 13
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 13
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Independent Appraiser. . . . . . . . . . . . . . . . . . . . 15
Independent Director . . . . . . . . . . . . . . . . . . . . 15
ii
<PAGE>
Page
Independent Financial Adviser. . . . . . . . . . . . . . . . 15
Initial Interest Rate. . . . . . . . . . . . . . . . . . . . 15
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . 15
Interest Payment Date. . . . . . . . . . . . . . . . . . . . 15
Interest Swap Obligations. . . . . . . . . . . . . . . . . . 15
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . . 16
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Legal Requirements . . . . . . . . . . . . . . . . . . . . . 16
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Minimum Subordinated Capital Base. . . . . . . . . . . . . . 16
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Net Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 16
New Credit Agreement . . . . . . . . . . . . . . . . . . . . 17
Non-Cash Consideration . . . . . . . . . . . . . . . . . . . 17
Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Officer's Certificate. . . . . . . . . . . . . . . . . . . . 17
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 17
Ordinary Course of Business Liens. . . . . . . . . . . . . . 17
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . 19
Partial Collateral Loss Event. . . . . . . . . . . . . . . . 20
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . 20
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Permitted Collateral Liens . . . . . . . . . . . . . . . . . 20
Permitted Existing Indebtedness of an
Acquired Person. . . . . . . . . . . . . . . . . . . . . . 21
Permitted Indebtedness . . . . . . . . . . . . . . . . . . . 21
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . 24
Permitted Refinancing Indebtedness . . . . . . . . . . . . . 28
Permitted Stone Canada
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 28
Permitted Subordinated Indebtedness. . . . . . . . . . . . . 29
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Place of Payment . . . . . . . . . . . . . . . . . . . . . . 29
Predecessor First Mortgage Note. . . . . . . . . . . . . . . 29
Rate Determination Period. . . . . . . . . . . . . . . . . . 30
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . 30
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . 30
Redeemable Stock . . . . . . . . . . . . . . . . . . . . . . 30
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . 30
Redemption Price . . . . . . . . . . . . . . . . . . . . . . 30
Register; Registrar. . . . . . . . . . . . . . . . . . . . . 30
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Remedial Action. . . . . . . . . . . . . . . . . . . . . . . 30
Replacement Collateral . . . . . . . . . . . . . . . . . . . 31
Reset Date . . . . . . . . . . . . . . . . . . . . . . . . . 31
Reset Rate . . . . . . . . . . . . . . . . . . . . . . . . . 31
Responsible Officer. . . . . . . . . . . . . . . . . . . . . 31
Restoration; Restore . . . . . . . . . . . . . . . . . . . . 31
iii
<PAGE>
Page
Restricted Payment . . . . . . . . . . . . . . . . . . . . . 32
Restricted Subsidiary. . . . . . . . . . . . . . . . . . . . 32
Security Documents . . . . . . . . . . . . . . . . . . . . . 32
Seminole . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . 32
Seven Year Treasury Rate . . . . . . . . . . . . . . . . . . 32
Southshore Agreement . . . . . . . . . . . . . . . . . . . . 33
Special Record Date. . . . . . . . . . . . . . . . . . . . . 33
Specified Bank Debt. . . . . . . . . . . . . . . . . . . . . 33
Stated Maturity. . . . . . . . . . . . . . . . . . . . . . . 34
Stone Canada . . . . . . . . . . . . . . . . . . . . . . . . 34
Stone Canada Group . . . . . . . . . . . . . . . . . . . . . 34
Stone Southwest. . . . . . . . . . . . . . . . . . . . . . . 34
Subordinated Capital Base. . . . . . . . . . . . . . . . . . 34
Subordinated Indebtedness. . . . . . . . . . . . . . . . . . 35
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 35
Ten Year Treasury Rate . . . . . . . . . . . . . . . . . . . 35
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . 36
Two Year Treasury Rate . . . . . . . . . . . . . . . . . . . 36
U.S. Government Obligations. . . . . . . . . . . . . . . . . 37
Unrestricted Subsidiary. . . . . . . . . . . . . . . . . . . 37
Vice President . . . . . . . . . . . . . . . . . . . . . . . 37
Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 102. Compliance Certificates and Opinions . . . . . . . . . . . . 37
Section 103. Form of Documents Delivered
to Trustee . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . 39
Section 105 Notices, etc., to Trustee and Company. . . . . . . . . . . . 40
Section 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . 40
Section 107. Conflict with Trust Indenture Act. . . . . . . . . . . . . . 41
Section 108. Effect of Headings and
Table of Contents. . . . . . . . . . . . . . . . . . . . . 41
Section 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . 42
Section 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . 42
Section 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . 42
Section 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 42
iv
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Page
Section 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . 42
Section 114. No Recourse Against Others . . . . . . . . . . . . . . . . . 42
Section 115. Incorporation by Reference
to Trust Indenture Act . . . . . . . . . . . . . . . . . . 43
ARTICLE TWO
First Mortgage Note Forms
Section 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . 43
Section 202. Form of Face of First Mortgage Note. . . . . . . . . . . . . 44
Section 203. Form of Reverse of First Mortgage Note . . . . . . . . . . . 45
Section 204. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . . . . . . . . 52
Section 205. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE THREE
The First Mortgage Notes
Section 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . 52
Section 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . 53
Section 303. Execution, Authentication, Delivery
and Dating . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 304. Temporary First Mortgage Notes . . . . . . . . . . . . . . . 54
Section 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . . . . . . . . 55
Section 306. Mutilated, Destroyed, Lost and Stolen
First Mortgage Notes . . . . . . . . . . . . . . . . . . . 56
Section 307. Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . 58
Section 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 310. Computation of Interest. . . . . . . . . . . . . . . . . . . 59
v
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Page
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 402. Application of Trust Money . . . . . . . . . . . . . . . . . 60
ARTICLE FIVE
Remedies
Section 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . 61
Section 502. Acceleration of Maturity; Rescission
and Annulment. . . . . . . . . . . . . . . . . . . . . . . 64
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . . . . . . . . . 65
Section 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . 66
Section 505. Trustee May Enforce Claims Without
Possession of First Mortgage Notes . . . . . . . . . . . . 66
Section 506. Application of Money Collected . . . . . . . . . . . . . . . 67
Section 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . 67
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 509. Restoration of Rights and Remedies . . . . . . . . . . . . . 68
Section 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . 69
Section 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . 69
Section 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . 69
Section 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . 69
Section 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . 70
Section 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . 70
vi
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Page
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities
of the Trustee . . . . . . . . . . . . . . . . . . . . . . 71
Section 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . 71
Section 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . 71
Section 604. Not Responsible for Recitals or
Issuance of First Mortgage Notes . . . . . . . . . . . . . 72
Section 605. May Hold First Mortgage Notes. . . . . . . . . . . . . . . . 73
Section 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . 73
Section 607. Compensation and Reimbursement . . . . . . . . . . . . . . . 73
Section 608. Disqualification; Conflicting
Interests. . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 609. Corporate Trustee Required;
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . 75
Section 610. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 611. Acceptance of Appointment by
Successor. . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 612. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . 77
Section 613. Preferential Collection of Claims
Against Company. . . . . . . . . . . . . . . . . . . . . . 78
Section 614. Appointment of Authenticating Agent. . . . . . . . . . . . . 78
Section 615. Appointment of Separate Trustee or
Co-Trustee . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . . . . . . . . . . 81
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Page
Section 702. Preservation of Information;
Communications to Holders. . . . . . . . . . . . . . . . . 81
Section 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . 82
Section 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE EIGHT
Consolidation, Merger, Lease, Sale or Transfer
Section 801. When Company May Merge, etc. . . . . . . . . . . . . . . . . 84
Section 802. First Mortgage Notes to Be Secured in
Certain Events . . . . . . . . . . . . . . . . . . . . . . 85
Section 803. Officer's Certificate;
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 86
Section 804. Successor Corporation Substituted. . . . . . . . . . . . . . 86
ARTICLE NINE
Supplements and Amendments to the
Indenture and Security Documents
Section 901. Supplemental Indentures and Amendments to
Security Documents Without Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 902. Supplemental Indentures and Amendments to
Security Documents with Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 903. Execution of Supplemental Indentures and
Amendments to Security Documents . . . . . . . . . . . . . 89
Section 904. Effect of Supplemental Indentures
and Amendments . . . . . . . . . . . . . . . . . . . . . . 89
Section 905. Conformity with Trust Indenture Act. . . . . . . . . . . . . 90
Section 906. Reference in First Mortgage Notes to
Supplemental Indentures. . . . . . . . . . . . . . . . . . 90
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Page
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . 90
Section 1003. Money for First Mortgage Notes Payments
to Be Held in Trust. . . . . . . . . . . . . . . . . . . . 91
Section 1004. Corporate Existence. . . . . . . . . . . . . . . . . . . . . 92
Section 1005. Payment of Taxes and Other Claims. . . . . . . . . . . . . . 93
Section 1006. Restriction on Dividends . . . . . . . . . . . . . . . . . . 93
Section 1007. Limitation on Future Liens and
Guaranties . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 1008. Limitation on Future Incurrence of
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 96
Section 1009. Limitation on Asset Dispositions . . . . . . . . . . . . . . 97
Section 1010. Maintenance of Properties. . . . . . . . . . . . . . . . . . 101
Section 1011. Compliance Certificates. . . . . . . . . . . . . . . . . . . 102
Section 1012. Waiver of Stay, Extension or Usury
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 1013. Change of Control. . . . . . . . . . . . . . . . . . . . . . 103
Section 1014. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . 105
Section 1015. Limitation on Collateral Asset Dispositions
and Collateral Loss Events . . . . . . . . . . . . . . . . 106
Section 1016. Procedures Concerning First Mortgage
Note Offers. . . . . . . . . . . . . . . . . . . . . . . . 110
ARTICLE ELEVEN
Maintenance of Subordinated Capital Base
Section 1101. Maintenance of Subordinated Capital
Base . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Section 1102. Alternative Interest Rate Adjustment . . . . . . . . . . . . 114
ix
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Page
ARTICLE TWELVE
Redemption of First Mortgage Notes
Section 1201. Election to Redeem; Notice to Trustee. . . . . . . . . . . . 116
Section 1202. Selection by Trustee of the First
Mortgage Notes to Be Redeemed. . . . . . . . . . . . . . . 116
Section 1203. Notice of Redemption . . . . . . . . . . . . . . . . . . . . 117
Section 1204. Deposit of Redemption Price. . . . . . . . . . . . . . . . . 118
Section 1205. First Mortgage Notes Payable on
Redemption Date. . . . . . . . . . . . . . . . . . . . . . 118
Section 1206. First Mortgage Notes Redeemed in Part. . . . . . . . . . . . 118
ARTICLE THIRTEEN
Collateral and Security Documents
Section 1301. Security Documents . . . . . . . . . . . . . . . . . . . . . 119
Section 1302. Recording. . . . . . . . . . . . . . . . . . . . . . . . . . 119
Section 1303. Possession of the Collateral and
the Cash Collateral Account. . . . . . . . . . . . . . . . 120
Section 1304. Suits to Protect the Collateral. . . . . . . . . . . . . . . 121
Section 1305. Release upon Termination of the Company's
Obligations; Partial Release . . . . . . . . . . . . . . . 121
ARTICLE FOURTEEN
Cash Collateral Account
Section 1401. Cash Collateral Account. . . . . . . . . . . . . . . . . . . 122
Section 1402. Terms of Cash Collateral Account . . . . . . . . . . . . . . 123
Section 1403. Representations, Warranties and
Covenants Specific to the Cash
Collateral Account. . . . . . . . . . . . . . . . . . . . 126
x
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Page
ARTICLE FIFTEEN
Defeasance And Covenant Defeasance
Section 1501. Applicability of Article; Company's
Option to Effect Defeasance or
Covenant Defeasance. . . . . . . . . . . . . . . . . . . . 126
Section 1502. Defeasance and Discharge . . . . . . . . . . . . . . . . . . 126
Section 1503. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . 127
Section 1504. Conditions to Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . 127
Section 1505. Deposited Money and Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions . . . . . . . . . . . . . . 129
ARTICLE SIXTEEN
Covenants Specific To The Collateral Property
Section 1601. Good Title; Authority; Priority;
Maintenance of Title; Supplemental
Indentures; Registration, Recording
and Filing . . . . . . . . . . . . . . . . . . . . . . . . 130
Section 1602. Further Documentation to Assure Lien; Fees
and Expenses . . . . . . . . . . . . . . . . . . . . . . . 132
Section 1603. Impairment of Collateral . . . . . . . . . . . . . . . . . . 133
Section 1604. Obligations with Respect to Leases and
Material Contracts . . . . . . . . . . . . . . . . . . . . 133
Section 1605. Use and Configuration; Maintenance of
Collateral Properties. . . . . . . . . . . . . . . . . . . 134
Section 1606. Payment of Taxes, Assessments;
Compliance with Law. . . . . . . . . . . . . . . . . . . . 135
Section 1607. Environmental Matters. . . . . . . . . . . . . . . . . . . . 136
Section 1608. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . 138
Section 1609. Required Insurance Policies. . . . . . . . . . . . . . . . . 139
Section 1610. Withdrawals of Condemnation Proceeds
and Insurance Proceeds . . . . . . . . . . . . . . . . . . 145
Section 1611. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . 149
xi
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Page
Section 1612. Failure to Make Certain Payments . . . . . . . . . . . . . . 149
Signatures and Seals . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
xii
<PAGE>
INDENTURE, dated as of October 12, 1994, between STONE CONTAINER
CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
Chicago, Illinois, and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking corporation, as Trustee (herein called the "Trustee") having its
Corporate Trust office at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479, United States of America.
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 10
3/4% First Mortgage Notes due 2002 (the "First Mortgage Notes"), of
substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.
All things necessary to make the First Mortgage Notes, when executed
by the Company and authenticated and delivered by the Trustee hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the First
Mortgage Notes by the Holders (as hereinafter defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
<PAGE>
(4) the word "including" (and with correlative meaning "include")
means including, without limiting the generality of, any description
preceding such term; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"1991 Indenture" means the indenture dated as of November 1, 1991
between the Company and The Bank of New York, as Trustee, as amended and
supplemented to the date hereof and, unless otherwise indicated, from time to
time after the date hereof. References herein to Indebtedness issued under the
1991 Indenture shall include any Indebtedness issued thereunder both before and
after the date hereof.
"Acquiring Person" means any Person or group (as defined in Section
13(d)(3) of the Exchange Act) who or which, together with all affiliates and
associates (as defined in Rule 12b-2 under the Exchange Act), becomes the
beneficial owner of shares of common stock of the Company having more than 50%
of the total number of votes that may be cast for the election of directors of
the Company; PROVIDED, HOWEVER, that an Acquiring Person shall not include (i)
the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan
of the Company or any Subsidiary of the Company or any entity holding common
stock of the Company for or pursuant to the terms of any such plan, (iv) any
descendant of Joseph Stone or the spouse of any such descendant, the estate of
any such descendant or the spouse of any such descendant, any trust or other
arrangement for the benefit of any such descendant or the spouse of any such
descendant or any charitable organization established by any such descendant or
the spouse of any such descendant (collectively, the "Stone Family"), or (v) any
group which includes any member or members of the Stone Family and a majority of
the common stock of the Company held by such group is beneficially owned by such
member or members. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of common stock by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to more than
50% or more of the common stock of the Company then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the beneficial owner of more than 50% or
more of the common stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the beneficial owner of any additional shares of common stock of the
2
<PAGE>
Company, then such Person shall be deemed to be an "Acquiring Person."
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Disposition" means any sale, transfer, sale-leaseback or other
disposition of (i) shares of Capital Stock of a Restricted Subsidiary (other
than directors' qualifying shares) or (ii) property or assets of the Company or
any Restricted Subsidiary (other than a sale, transfer, sale-leaseback or other
disposition of Receivables and other assets or property described in clause (vi)
of the definition of Permitted Liens pursuant to a Receivables sale constituting
Indebtedness pursuant to clause (ii) of the definition thereof); PROVIDED,
HOWEVER, that an Asset Disposition shall not include any sale, transfer, sale-
leaseback or other disposition of (a) Collateral, (b) the shares, property or
assets referred to in clause (i) and (ii) by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary or by the Company to a Restricted
Subsidiary, (c) of defaulted Receivables for collection or (d) in the ordinary
course of business, but shall include any sale, transfer, sale-leaseback or
other disposition by the Company or a Restricted Subsidiary to an Unrestricted
Subsidiary of the shares, property or assets referred to in clauses (i) and
(ii). The designation by the Company of a Subsidiary of the Company as an
"Unrestricted Subsidiary" shall constitute an Asset Disposition of such
Subsidiary's property and assets net of its liabilities, unless the transfer of
property and assets to such Subsidiary has previously constituted an Asset
Disposition.
"Asset Disposition Offer" shall have the meaning provided in Section
1009(c).
"Asset Disposition Offer Amount" shall have the meaning provided in
Section 1009(a).
"Asset Disposition Payment Date" shall have the meaning provided in
Section 1009(c).
3
<PAGE>
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate First Mortgage Notes.
"Authority" means any federal, state, municipal or local government or
quasi-governmental agency or authority.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company;
PROVIDED, HOWEVER, that when the context refers to actions or resolutions of the
Board of Directors, then the term "Board of Directors" shall also mean any duly
authorized committee of the Board of Directors of the Company or Officer
authorized to act with respect to any particular matter to exercise the power of
the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or regulation to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, warrants, rights, options or other equivalents
(however designated) of capital stock or any other equity interest of such
Person, including each class of common stock and preferred stock.
"Capitalized Lease Obligation" means, in respect of any Person, an
obligation to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of Indebtedness represented by such obligation shall be the capitalized
amount of such obligation determined in accordance with such principles.
"Cash Collateral Account" means one or more accounts forming part of
the Collateral in the sole dominion and control of the Trustee into which
certain funds are required to be deposited by or on behalf of the Company under
the terms of this Indenture and the Security Documents.
"Cash Equivalents" means, at any time, (i) any evidence of
Indebtedness with a maturity of 180 days or less issued or directly and fully
guaranteed or insured by the government of the
4
<PAGE>
United States of America, or any agency or instrumentality of such government
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptances with a
maturity of 180 days or less of any financial institution that is a member of
the Federal Reserve System of the United States of America, having combined
capital and surplus and undivided profits of not less than five hundred million
dollars ($500,000,000) and, as applicable, rated at least "A-" by Standard &
Poor's Corporation or at least "A3" by Moody's Investors Service, Inc.; (iii)
commercial paper with a maturity of 180 days or less issued by a corporation
(except an Affiliate of the Company) organized under the laws of any state of
the United States or the District of Columbia, and, as applicable, rated at
least A-1 by Standard & Poor's Corporation or at least P-1 by Moody's Investors
Service, Inc.; and (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the government of the United States of America, or issued by any agency
thereof, and backed by the full faith and credit of the United States, maturing
within one year from the date of acquisition; PROVIDED that the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on
October 31, 1985.
"Castlewood Agreement" has the meaning specified in clause (2) of the
proviso to clause (i) of the definition of Permitted Indebtedness.
"Casualty," with respect to any Collateral, shall mean loss of, damage
to or destruction of all or any part of such Collateral.
"Change of Control" means any event by which (i) an Acquiring Person
has become such or (ii) Continuing Directors cease to comprise a majority of the
members of the Board of Directors of the Company.
"Change of Control Date", "Change of Control Offer" and "Change of
Control Payment Date" shall have the respective meanings provided in Section
1013.
"Collateral" means the Collateral Properties (and all additions and
improvements thereto and replacements thereof), Replacement Collateral, the Cash
Collateral Account and all other property that from time to time secures the
First Mortgage Notes pursuant to this Indenture and the Security Documents.
"Collateral Asset Disposition" means any direct or indirect, voluntary
or involuntary sale, conveyance, lease, sale-
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leaseback, transfer or other disposition, including, without limitation, by
means of a merger, consolidation or similar transaction (each, a "Disposition"),
or a series of related Dispositions by the Company or any of its Restricted
Subsidiaries involving the Collateral (including, without limitation, a sale of,
or receipt by the Company of cash or Cash Equivalents in connection with the
repayment, exchange, redemption or retirement of, or an extraordinary dividend
or return of capital on, any Non-Cash Consideration), other than (a) the sale of
machinery, equipment, furniture, apparatus, tools or implements or other similar
property that may be defective or may have become worn out or obsolete or no
longer used or useful in the operation of the Collateral Properties, the
aggregate fair market value of which does not exceed five million dollars
($5,000,000) in any year; (b) the sale of equipment that has been replaced by
equipment of substantially equal value in an alteration or improvement made at
one of the Collateral Properties; (c) the use by the Trustee of amounts on
deposit in the Cash Collateral Account in accordance with Section 1009(g) or
Section 1015; and (d) a Disposition permitted pursuant to Article Eight. A
Collateral Asset Disposition shall not include a Condemnation or Casualty
involving any Collateral.
"Collateral Loss Event" means a Condemnation or Casualty involving an
actual or constructive total loss or agreed or compromised actual or
constructive total loss of all or substantially all of any Collateral Property.
"Collateral Properties" means the mills owned by the Company at
Uncasville, Connecticut, Ontonagon, Michigan, Missoula, Montana and York,
Pennsylvania, as more specifically described in the Security Documents, and all
mills, plants and related property constituting Replacement Collateral.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Commodities Agreement" of any Person means any forward contract,
option or futures contract or similar agreement or arrangement designed to
protect such Person or any of its Subsidiaries from fluctuations in the price
of, or shortage of supply of, commodities.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
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"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Controller,
an Assistant Controller, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Condemnation" means any taking of the Collateral or any part thereof,
in or by condemnation, expropriation or similar proceeding, eminent domain
proceedings, seizure or forfeiture, pursuant to any law, general or special, or
by reason of the temporary requisition of the use or occupancy of the Collateral
or any part thereof, by any Authority.
"Condemnation Proceeds" means any award, proceeds, payment or other
compensation arising out of a Condemnation.
"Consolidated Amortization Expense" means, for any period, the
amortization expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
period, (a) the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) Consolidated Income Tax
Expense, (iv) Consolidated Depreciation Expense, (v) Consolidated Amortization
Expense and (vi) other non-cash items reducing Consolidated Net Income, MINUS
(b) non-cash items increasing Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated Depreciation Expense" means, for any period, the
depreciation expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Free Cash Flow" means, for any period, (a) the sum of
the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated
Depreciation Expense and (iii) Consolidated Amortization Expense, MINUS (b) the
sum of (i) Restricted Payments during such period, (ii) net reduction during
such period in Indebtedness of the Company and its Restricted Subsidiaries
(other than as a result of Asset Dispositions, Collateral Asset Dispositions or
Collateral Loss Events) and (iii) the excess (but not the deficit) of capital
expenditures of the Company and its Restricted Subsidiaries for such period not
financed pursuant to clause (vi) of the definition of Permitted Indebtedness
over Consolidated Depreciation Expense.
"Consolidated Income Tax Expense" means, for any period, the aggregate
of the income tax expense of the Company
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and its Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, for any period, the
ratio of (i) Consolidated Cash Flow Available for Fixed Charges to (ii)
Consolidated Interest Expense.
"Consolidated Interest Expense" means, for any period, the interest
expense (including the interest component of all Capitalized Lease Obligations
and the earned discount or yield with respect to a Receivables sale constituting
Indebtedness) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; PROVIDED, HOWEVER,
that, with respect to revolving credit, revolving Receivables purchases or other
similar arrangements, the interest expense in respect thereof for any period
shall be the PRO FORMA interest expense attributable to all amounts committed
during such period under such revolving credit, revolving Receivables purchases
or other similar arrangements, whether or not such amounts were actually
outstanding during such period, in accordance with the terms thereof, in each
case on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
loss) of the Company and its Restricted Subsidiaries on a consolidated basis for
such period taken as a single accounting period, determined in accordance with
GAAP; PROVIDED, HOWEVER, that: (a) there shall be excluded therefrom (i) the
net income (or loss) of any Person (other than the Company) which is not a
Restricted Subsidiary, EXCEPT to the extent of the amounts of dividends or other
distributions actually paid in cash or tangible property or tangible assets
(such property or assets to be valued at their fair market value net of any
obligations secured thereby) to the Company or any of its Restricted
Subsidiaries by such Person during such period, (ii) EXCEPT to the extent
includable pursuant to the foregoing clause (i), the net income (or loss) of any
Person accrued prior to the date it becomes a Restricted Subsidiary or is merged
into or consolidated with the Company or any of its Restricted Subsidiaries or
that Person's property or assets are acquired by the Company or any of its
Restricted Subsidiaries, (iii) the net income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary (other than any restrictions contained in the instruments
relating to the 12-1/8% Subordinated Debentures due September 15, 2001 of Stone
Southwest) and (iv) the excess (but not the deficit), if any, of (x) any gain
which must be treated as an extraordinary item under GAAP or any gain realized
upon the sale
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or other disposition of any asset that is not sold in the ordinary course of
business or of any Capital Stock of a Restricted Subsidiary over (y) any loss
which must be treated as an extraordinary item under GAAP or any loss realized
upon the sale or other disposition of any asset that is not sold in the ordinary
course of business or of any Capital Stock of a Restricted Subsidiary; and (b)
there shall be included therein the amount of cash realized by the Company or
any of its Restricted Subsidiaries during such period on account of dividends or
other distributions theretofore paid in other than cash or tangible property or
tangible assets by a Person which is not a Restricted Subsidiary.
"Consolidated Net Worth" means the amount which at any date of
determination, in conformity with GAAP consistently applied, would be set forth
under the caption "stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Company and its Restricted Subsidiaries, exclusive of
amounts attributable to Redeemable Stock (at such time as no Indebtedness is
outstanding under the 1991 Indenture, excluding the effects of foreign currency
translation adjustments). If the Company has changed one or more of the
accounting principles used in the preparation of its financial statements
because of a change mandated by the Financial Accounting Standards Board or its
successor, then Consolidated Net Worth shall mean the Consolidated Net Worth the
Company would have had if the Company had continued to use those generally
accepted accounting principles employed on November 1, 1991.
"Contaminant" means any pollutant, contaminant (as those terms are
defined in 42 U.S.C. Section 9601(33)), toxic pollutant (as that term is
defined in 33 U.S.C. Section 1362(13)), hazardous substance (as that term is
defined in 42 U.S.C. Section 9601(14)), hazardous chemical (as that term is
defined by 29 CFR Section 1910.1200(c)), hazardous waste (as that term is
defined in 42 U.S.C. Section 6903(5)), or any state or local equivalent of such
laws and regulations, including, without limitation, radioactive material,
polychlorinated biphenyls, asbestos, petroleum, including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product
thereof, or any constituent of any such substance or waste.
"Continental Guaranty" means the Guaranty dated as of October 7, 1983
between The Continental Group, Inc. and the Company, as amended from time to
time.
"Continuing Director" means any member of the Board of Directors,
while such person is a member of such Board of Directors, who is not an
Acquiring Person, or an Affiliate or associate of an Acquiring Person or a
representative of an Acquiring Person or of any such Affiliate or associate and
who (a) was a member of the Board of Directors prior to November 1,
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1991, or (b) subsequently became or becomes a member of such Board of Directors
and whose nomination for election or election to such Board of Directors was or
is recommended or approved by resolution of a majority of the Continuing
Directors or who was or is included as a nominee in a proxy statement of the
Company distributed when a majority of such Board of Directors consists of
Continuing Directors.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date hereof is located at Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479, United States of America.
"corporation" includes corporations, associations, companies, business
trusts and limited partnerships.
"Co-Trustee" shall have the meaning specified in Section 615.
"covenant defeasance" has the meaning specified in Section 1503.
"Credit Agreements" means (i) the credit agreement, dated as of March
1, 1989, by and among the Company, the financial institutions signatory thereto,
Bankers Trust Company, as agent for such financial institutions, and Citibank,
N.A., Chemical Bank (as successor by merger to Manufacturers Hanover Trust
Company) and The First National Bank of Chicago, as co-agents for such financial
institutions, as amended, modified, refinanced (including, without limitation,
by the New Credit Agreement) or extended from time to time, (ii) the credit
agreement, dated as of March 1, 1989, by and among Stone Canada, the financial
institutions signatory thereto, Bankers Trust Company, as agent for such
financial institutions, and Citibank, N.A., Chemical Bank (as successor by
merger to Manufacturers Hanover Trust Company) and The First National Bank of
Chicago, as co-agents for such financial institutions, as amended, modified,
refinanced (including, without limitation, by the New Credit Agreement) or
extended from time to time and (iii) the revolving credit agreement, dated as of
March 1, 1989, by and among Stone Canada, the financial institutions signatory
thereto, BT Bank of Canada, as administrative agent, The Bank of Nova Scotia, as
payment agent, and Bankers Trust Company, as collateral agent, as amended,
modified, refinanced (including, without limitation, by the New Credit
Agreement) or extended from time to time.
"Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement, forward currency contract, option or futures
contract or other similar agreement or arrangement, and any renewal or extension
thereof, designed to
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protect such Person or any of its Subsidiaries against fluctuations in currency
values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage or time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"defeasance" has the meaning specified in Section 1502.
"Deficiency Amount" shall have the meaning provided in Section
1009(b).
"Deficiency Date" shall have the meaning provided in Section 1101(a).
"Deficiency Offer" shall have the meaning provided in Section 1101(a).
"Deficiency Offer Amount" shall have the meaning provided in Section
1101(a).
"Deficiency Payment Date" shall have the meaning provided in Section
1101(c)(2).
"dollars" and "$" means lawful money of the United States of America.
"Environment" means all components of the earth, including, without
limitation, air (and all layers of the atmosphere), land (and all surface and
subsurface soil, underground spaces and cavities and all land submerged under
water) and water (and all surface and underground water), organic and inorganic
matter and living organisms, the interacting natural systems that include
components referred to above in this definition.
"Environmental Laws" means all Legal Requirements imposing liability
or standards of conduct for or relating to the protection of the environment,
including, without limitation, (i) any actual or potential Release of any
Contaminant into the environment; (ii) the required notification of same;
(iii) preventive or remedial measures in connection with any event or occurrence
referred to in clause (i) of this definition above; (iv) the manufacturing,
processing, use, handling, packaging, labeling, sale, storage, recycling,
disposal, destruction, incineration, or transportation of any Contaminant,
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or any solicitation or offer to do any activity referred to in this clause (iv)
in connection with any Contaminant.
"Event of Default" has the meaning specified in Section 501.
"Excess Proceeds" means, on any date, the aggregate amount of Net
Proceeds from Collateral Asset Dispositions and Collateral Loss Events
consummated or occurring after the date hereof that have not been previously (a)
used to purchase or invest in Replacement Collateral or Restore Collateral in
accordance with Section 1015 or (b) included as part of a First Mortgage Note
Offer, PROVIDED that no such Net Proceeds will constitute Excess Proceeds until
the later of six months from the date of consummation of the relevant Collateral
Asset Disposition or receipt of the Net Proceeds from the relevant Collateral
Loss Event and the expiration of any longer period during which such Net
Proceeds may be used to purchase or invest in Replacement Collateral or Restore
Collateral to the extent permitted by Section 1015.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder.
"First Mortgage Notes" has the meaning stated in the first recital of
this Indenture and more particularly means any First Mortgage Note authenticated
and delivered under this Indenture.
"First Mortgage Note Offer" means an offer, made by the Company
pursuant to Section 1016, to repurchase, on a PRO RATA basis up to the amount of
Net Sale Proceeds included in such offer, any Outstanding First Mortgage Notes
tendered to the Company by any Holders thereof in response to such offer at a
purchase price payable in cash equal to the First Mortgage Note Offer Price.
"First Mortgage Note Offer Price" has the meaning specified in Section
1016(a).
"First Mortgage Note Payment Date" has the meaning specified in
Section 1016(b)(3).
"Five Year Treasury Rate" means the arithmetic average (rounded to the
nearest basis point) of the weekly average per annum yield to maturity values
adjusted to constant maturities of five years, for the Rate Determination Period
as determined from the yield curves of the most actively traded marketable
United States Treasury fixed interest rate securities (x) constructed daily by
the United States Treasury Department (i) as published by the Federal Reserve
Board in its Statistical Release
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H.15(519), "Selected Interest Rates," which weekly average yield to maturity
values currently are set forth in such Statistical Release under the caption
"U.S. Government Securities-Treasury Constant Maturities-5 Year" or (ii) if said
Statistical Release H.15(519) is not then published, as published by the Federal
Reserve Board in any release comparable to its Statistical Release H.15(519) or
(iii) if the Federal Reserve Board shall not then be publishing a comparable
release, as published in any official publication or release of any other United
States Government Department or agency or (y) if the United States Treasury
Department shall not then be constructing such yield curves, then as constructed
by the Federal Reserve Board or any other United States Government Department or
agency and published as set forth in (x) above. However, if the Five Year
Treasury Rate cannot be determined as provided above, then the Five Year
Treasury Rate shall mean the arithmetic average (rounded to the nearest basis
point) of the per annum yields to maturity for each Business Day during the Rate
Determination Period of all of the issues of actively trading issues of non-
interest bearing United States Treasury fixed interest rate securities with a
maturity of not less than 57 months nor more than 63 months from such Business
Day (1) as published in THE WALL STREET JOURNAL or (2) if THE WALL STREET
JOURNAL shall cease such publication, based on average asked prices (or yields)
as quoted by each of three United States Government securities dealers of
recognized national standing selected by the Company.
"GAAP" means generally accepted accounting principles, as in effect as
of November 1, 1991 in the United States of America, 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 is approved by a significant segment of the accounting profession.
"Holder" or "Securityholder" means a Person in whose name a First
Mortgage Note is registered in the Register.
"Improvements" shall have the meaning provided in the applicable
Security Document.
"Indebtedness" means (without duplication), with respect to any
Person, (i) any obligation of such Person to pay the principal of, premium, if
any, interest on, penalties, reimbursement or indemnification amounts, fees,
expenses or other amounts relating to any indebtedness, and any other liability,
contingent or otherwise, of such Person (A) for borrowed money or the deferred
purchase price of property or services (excluding trade payables and payables,
indebtedness, obligations and other liabilities of the Company to any Restricted
Subsidiary or of any Restricted Subsidiary to the Company or to any other
Restricted
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Subsidiary), whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof; (B) for any letter of credit
for the account of such Person supporting other obligations of such Person
described in this definition; or (C) for the payment of money relating to a
Capitalized Lease Obligation; (ii) the unrecovered investment of a purchaser
(other than the Company or any of its Restricted Subsidiaries) of such Person's
Receivables pursuant to a Receivables purchase facility or otherwise (whether or
not characterized as a sale of such Receivables or a secured loan, but excluding
any disposition of Receivables in connection with a disposition of fixed assets
or a business of such Person and any disposition of defaulted Receivables for
collection), together with any obligation of such Person to pay any discount,
interest, fees, indemnification amounts, penalties, recourse on account of the
uncollectability of Receivables, expenses or other amounts in connection
therewith; (iii) any obligation of another Person (other than a Restricted
Subsidiary of such Person) of the kind described in the preceding clause (i) or
(ii), which the Person has guaranteed or which is otherwise its legal liability;
(iv) any obligation of another Person (other than a Restricted Subsidiary of
such Person) of the kind described in the preceding clause (i) or (ii) secured
by a Lien to which the property or assets of such Person are subject, whether or
not the obligation secured thereby shall have been assumed by or shall otherwise
be such Person's legal liability; and (v) any renewals, extensions or refundings
of any of the foregoing described in any of the preceding clauses (i), (ii),
(iii) and (iv). The "amount" or "principal amount" of Indebtedness of any
Person at any date, as used herein, shall be the outstanding principal amount at
such date of all unconditional Indebtedness, the maximum principal amount of any
contingent Indebtedness or the unrecovered purchaser's investment in a sale of
Receivables, in each case at such date and without taking into account any
premium, interest, penalties, reimbursement or indemnification amounts, fees,
expenses or other amounts (other than principal or unrecovered purchaser's
investment) in respect thereof; PROVIDED, HOWEVER, that (y) with respect to
Indebtedness described in clause (iv) above, the amount of Indebtedness shall be
the lesser of (a) the amount of the Indebtedness of such other Person that is
secured by the property or assets of such Person and (b) the fair market value
of the property or assets securing such Indebtedness, and (z) with respect to
revolving credit, revolving Receivables purchases or other similar arrangements,
the amount of Indebtedness thereunder shall be the amounts of such commitments
as of the date of determination.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
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"Independent Appraiser" means an appraisal firm that is nationally
recognized in the United States that (i) does not have any direct financial
interest in the Company or any of its Subsidiaries, the Trustee or in any
Affiliate of any of them, and (ii) is not connected with the Company or any of
its Subsidiaries, the Trustee or any such Affiliate as an employee, associate or
Affiliate.
"Independent Director" means, in respect of any transaction involving
the Company, a director of the Company who is in fact independent of the
transaction other than (a) a director who is a party to such transaction, or (b)
a director who is an officer, employee, associate or Affiliate (or is related to
any of them by blood or marriage unless such director is, in fact, independent
of such relation) of a party to such transaction or who is an officer, employee,
director or associate of an Affiliate of the Company (other than the Company and
its Subsidiaries), or (c) a director who is an officer, employee or associate of
the Company or any of its Subsidiaries.
"Independent Financial Adviser" means an investment banking firm that
is nationally recognized in the United States that (i) does not have any direct
financial interest in the Company, any Subsidiary of the Company or the Trustee
or in any Affiliate of any of them, and (ii) is not connected with the Company,
a Subsidiary of the Company or the Trustee or any such Affiliate as an employee,
associate or Affiliate.
"Initial Interest Rate", when used with respect to any First Mortgage
Note, means the initial rate of interest to be borne by such First Mortgage Note
as stated on the face thereof.
"Insurance Proceeds" shall mean any payment, proceeds or other amounts
received at any time by the Company or any of its Restricted Subsidiaries under
any insurance policy as compensation in respect of a Casualty, PROVIDED that
proceeds received by the Company from business interruption insurance shall not
constitute Insurance Proceeds.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on any First Mortgage Note.
"Interest Swap Obligations" of any Person means the obligations of
such Person pursuant to any interest rate swap agreement, interest rate collar
agreement, forward rate agreement, interest rate cap insurance, option or
futures contract or other similar agreement or arrangement, and any renewal or
extension thereof, designed to protect such Person or any of its Subsidiaries
against fluctuations in interest rates or to permit the exchange of fixed rate
obligations of such Person for floating rate obligations and entered into the
ordinary
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course of financial management of the Company and not for speculative purposes.
"Issue Date" means October 12, 1994.
"Land" shall have the meaning provided in the applicable Security
Document.
"Legal Requirements" means any and all present and future judicial and
administrative rulings or decisions, and any and all present and future federal,
state and local laws, ordinances, rules, regulations, permits and certificates,
of any governmental authority in the United States, in each case in any way
applicable to the Company or the Collateral (or the ownership or use thereof).
"Lien" means any mortgage, pledge, security interest, adverse claim
(as defined in Section 8.302(2) of the New York Uniform Commercial Code),
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the Company or any of its Subsidiaries under a lease which is
not in the nature of a conditional sale or title retention agreement).
"Maturity", when used with respect to any First Mortgage Note, means
the date on which the principal of such First Mortgage Note or an installment of
the principal becomes due and payable as therein or herein provided, whether at
the Stated Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Minimum Subordinated Capital Base" shall have the meaning provided in
Section 1101(a).
"Mortgage" means, with respect to any Collateral Property, the
mortgage, assignment of leases and rents, security agreement and fixture filing
between the Company and the Trustee.
"Net Proceeds" means those proceeds received by the Company or any of
its Restricted Subsidiaries in connection with a Collateral Asset Disposition or
Collateral Loss Event consisting of (a) the sum of cash and Cash Equivalents
therefrom (including any amounts of Insurance Proceeds, Condemnation Proceeds or
other proceeds (other than proceeds from business interruption insurance)
received in connection therewith but excluding any other consideration received
in the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the relevant property) MINUS (b) all accounting, legal,
title, recording and tax expenses, commissions
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and other fees and expenses incurred, and all federal, state, provincial,
foreign and local taxes required to be accrued as a liability under generally
accepted accounting principles in effect at the date of the relevant Collateral
Asset Disposition or Collateral Loss Event, directly as a consequence of such
Collateral Asset Disposition or Collateral Loss Event and net of all payments
made on any Indebtedness which is secured by a Permitted Collateral Lien on the
Collateral Property subject to such Collateral Asset Disposition or Collateral
Loss Event, which must be paid in accordance with the terms of such Permitted
Collateral Lien or under applicable law.
"New Credit Agreement" means the credit agreement, dated as of October
12, 1994, by and among the Company, the financial institutions signatory thereto
and Bankers Trust Company, as agent for such financial institutions, as amended,
modified, refinanced or extended from time to time.
"Non-Cash Consideration" shall have the meaning provided in Section
1015(a)(v).
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer or the Secretary of the
Company.
"Officer's Certificate" means a certificate signed by an Officer and
delivered to the Trustee that shall comply with Sections 102 and 103.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company, and who shall be reasonably acceptable
to the Trustee.
"Ordinary Course of Business Liens" means, with respect to any Person,
(i) Liens for taxes, assessments, governmental charges, levies or
claims not yet delinquent or being contested in good faith;
(ii) statutory Liens of landlords, carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens arising in
the ordinary course of business (including the construction of facilities)
or deposits to obtain the release of such Liens;
(iii) Liens in connection with workers' compensation, unemployment
insurance and other similar legislation;
(iv) zoning restrictions, licenses, easements, rights-of-way and
other similar charges or encumbrances or
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restrictions not interfering in any material respect with the business of such
Person or any of its Subsidiaries;
(v) Liens securing such Person's obligations with respect to
commercial letters of credit;
(vi) Liens to secure public or statutory obligations of such Person;
(vii) judgment and attachment Liens against such Person not giving
rise to a Default under the First Mortgage Notes or Liens created by or
existing from any litigation or legal proceeding against such Person which
is currently being contested in good faith by such Person in appropriate
proceedings;
(viii) leases or subleases granted to other Persons or existing on
property acquired by such Persons;
(ix) Liens encumbering property or assets of such Person under
construction arising from progress or partial payments;
(x) Liens encumbering customary initial deposits and margin
accounts and other Liens securing obligations arising out of Interest Swap
Obligations, Currency Agreements and Commodities Agreements, in each case
of the type typically securing such obligations; PROVIDED, HOWEVER, that if
such Interest Swap Obligations, Currency Agreements and Commodities
Agreements relate to Indebtedness not incurred in violation of this
Indenture, such Lien may also cover the property and assets securing the
Indebtedness to which such Interest Swap Obligations, Currency Agreements
and Commodities Agreements relate;
(xi) Liens encumbering deposits made to secure obligations arising
from public, statutory, regulatory, contractual or warranty requirements or
obligations of such Person or its Subsidiaries (not constituting
Indebtedness);
(xii) Liens arising from filing UCC financing statements regarding
leases or consignments;
(xiii) purchase money Liens securing payables (not constituting
Indebtedness) arising from the purchase by such Person or any of its
Affiliates of any equipment or goods in the ordinary course of business;
(xiv) Liens arising out of consignment or similar arrangements for
the sale of goods entered into by such Person or any of its Subsidiaries in
the ordinary course of business;
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(xv) Liens in the ordinary course of business granted by such Person
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, or progress payments,
performance and return-of-money bonds and other similar obligations (not
constituting Indebtedness);
(xvi) Liens in favor of collecting banks constituting a right of set-
off, revocation, refund or chargeback with respect to money or instruments
of the Company or any Subsidiary on deposit with or in the possession of
such bank; and
(xvii) Liens in favor of customs and revenue authorities.
"Outstanding" means, as of the date of determination, all First
Mortgage Notes theretofore authenticated and delivered under this Indenture,
EXCEPT:
(i) First Mortgage Notes theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) First Mortgage Notes, or portions thereof, for whose payment
or redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such First Mortgage Notes;
PROVIDED that, if such First Mortgage Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) First Mortgage Notes which have been paid pursuant to Section
306 or in exchange for or in lieu of which other First Mortgage Notes have
been authenticated and delivered pursuant to this Indenture, other than any
such First Mortgage Notes in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such First Mortgage
Notes are held by a BONA FIDE purchaser in whose hands such First Mortgage
Notes are valid obligations of the Company; and
(iv) First Mortgage Notes which have been defeased pursuant to
Section 1502;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding First Mortgage Notes have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, First
Mortgage Notes owned by the Company or any other obligor upon the First Mortgage
Notes
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or any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only First Mortgage Notes
which the Trustee knows to be so owned shall be so disregarded. First Mortgage
Notes so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such First Mortgage Notes and that the
pledgee is not the Company or any other obligor upon the First Mortgage Notes or
any Affiliate of the Company or of such other obligor.
"Partial Collateral Loss" shall have the meaning provided in Section
1610(a).
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any First Mortgage Note on
behalf of the Company. The Company may act as Paying Agent with respect to any
First Mortgage Note issued hereunder.
"Permits" shall have the meaning provided in the Security Documents.
"Permitted Collateral Liens" means:
(i) Liens securing the First Mortgage Notes arising under this
Indenture or any Security Document;
(ii) Liens on a Collateral Property for taxes or governmental
assessments, charges, levies or claims not yet delinquent or for which a
bond has been posted in an amount equal to the contested amount (including
potential interest and penalties thereon) not interfering in any material
respect with the ordinary operation of such Collateral Property or
materially and adversely affecting the value thereof;
(iii) statutory Liens of landlords, carriers, warehousemen, mechanics,
suppliers, materialmen, repairmen or other like Liens arising in the
ordinary course of business of ownership and operation of a Collateral
Property relating to obligations either (a) not yet delinquent or (b) being
contested in good faith by appropriate proceedings and to which appropriate
reserves or other provisions have been made in advance in accordance with
GAAP, in each case not interfering in any material respect with the
ordinary operation of such Collateral Property or materially and adversely
affecting the value thereof;
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(iv) Liens on a Collateral Property in connection with workers'
compensation, unemployment insurance and other similar legislation, surety
or appeal bonds, performance bonds or other obligations of a like nature
(in each case not constituting Indebtedness) arising in the ordinary course
of business with respect to the ownership and operation of such Collateral
Property not interfering in any material respect with the ordinary
operation of such Collateral Property or materially and adversely affecting
the value thereof;
(v) zoning restrictions, licenses, easements, servitudes, rights-of-
way, title defects, covenants running with the land and other similar
charges or encumbrances or restrictions affecting a Collateral Property not
interfering in any material respect with the ordinary operation of such
Collateral Property or materially and adversely affecting the value
thereof; and
(vi) assignments, leases or subleases at a Collateral Property not
interfering in any material respect with the ordinary operation of such
Collateral Property or materially and adversely affecting the value
thereof.
"Permitted Existing Indebtedness of an Acquired Person" means
Indebtedness of any Person (which may be assumed or guaranteed by, or may
otherwise become the legal liability of, the Company or any Restricted
Subsidiary with or into which such Person is merged or consolidated) existing at
the time such Person becomes a Restricted Subsidiary, or is merged with or into
or consolidated with the Company or one of its Restricted Subsidiaries, so long
as such Indebtedness was not created in anticipation of or as a result of such
Person becoming a Restricted Subsidiary or of such merger or consolidation, and
any Indebtedness to the extent exchanged for, or the net proceeds of which are
used to refinance, redeem or defease, such Indebtedness (or any extension,
renewal or refinancing thereof), or to finance any costs incurred in connection
with such exchange, refinancing, redemption or defeasance; PROVIDED, HOWEVER,
that the proceeds of such Indebtedness shall be used to so refinance, redeem or
defease the Indebtedness within 12 months of the incurrence of such subsequent
Indebtedness.
"Permitted Indebtedness" means (i)(a) any Indebtedness in a principal
amount not exceeding the principal amount outstanding or committed under the
Credit Agreements (including any letter of credit facility thereunder) as of
November 1, 1991 PLUS two hundred fifty million dollars ($250,000,000), and
LESS the sum of (x) proceeds from the sale of all Indebtedness under the 1991
Indenture issued from time to time that is applied to repay Indebtedness under
the Credit Agreements and (y) the proceeds from the sale of the First Mortgage
Notes and the 11 1/2%
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Senior Notes due 2004 of the Company; (b) any Indebtedness in a principal amount
not exceeding 80% of the aggregate face amount of Receivables of the Company and
its Restricted Subsidiaries (measured as of the latest date as of which
information regarding Receivables is available) and constituting Indebtedness
described in clause (ii) of the definition of Indebtedness or outstanding
pursuant to any other revolving credit facility; (c) any Indebtedness under the
1991 Indenture issued prior to the date hereof the proceeds of which have been
used to repay Indebtedness under the Credit Agreements within five business days
after such issuance (and any subsequent Indebtedness the proceeds of which are
used to refinance such Indebtedness) and (d) the First Mortgage Notes and the
11 1/2% Senior Notes due 2004 (and any subsequent Indebtedness the proceeds of
which are used to refinance such Indebtedness); PROVIDED, HOWEVER, that:
(1) the aggregate principal amount permitted to be outstanding under
clause (a) shall be reduced by the aggregate amount of any repayments or
prepayments of any Senior Indebtedness (other than the First Mortgage
Notes, the 11 1/2% Senior Notes due 2004 of the Company and Indebtedness
issued under the 1991 Indenture) out of the proceeds of Asset Dispositions
as described in and required by Section 1009 hereof after November 1, 1991,
and, thereafter, shall be increased if, at the end of the fourth
consecutive complete fiscal quarter after the initial reduction pursuant to
this clause (1) or at any anniversary of the end of such fourth fiscal
quarter, the Consolidated Free Cash Flow of the Company for the preceding
four quarters has been zero or greater, in which event the amount of the
increase shall be the amount by which the consolidated capital expenditures
of the Company and its Restricted Subsidiaries not financed by Indebtedness
referred to in clause (vi) of this definition during such four-quarter
period exceeds Consolidated Depreciation Expense for such period (provided
any such increase shall be made only to the extent all such reductions
occurring prior to the four fiscal quarters for which such calculation of
Consolidated Free Cash Flow has been made exceed all prior increases
pursuant to this clause (1));
(2) (A) the aggregate amount permitted to be incurred under clause
(a) shall be reduced by the principal amount outstanding under the New
Credit Agreement on the date hereof net of subsequent reductions thereof,
and (B) the aggregate amount permitted to be incurred under clause (b)
shall be reduced by the principal amounts outstanding under each of the
Pledge and Administration Agreement, dated as of August 15, 1991, between
Stone Financial Corporation and Castlewood Funding Corporation (the
"Castlewood Agreement") and the Pledge and Administrative Agreement, dated
as of August 18, 1992, between Stone Fin II Receivables
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Corporation and South Shore Funding Corporation (the "Southshore Agreement") on
the date hereof net of subsequent reductions thereof;
(3) the Permitted Indebtedness contemplated by this clause (i) may be
incurred by the Company and, in the case of Permitted Indebtedness
constituting Indebtedness under clause (ii) of the definition of
Indebtedness, by the Company or any Restricted Subsidiary; and
(4) any Restricted Subsidiary in the Stone Canada Group may incur,
assume or guarantee any Indebtedness under clauses(i)(a) and (i)(b) above
under any revolving credit facilities of Restricted Subsidiaries in the
Stone Canada Group entered into pursuant to this clause (i), for which the
aggregate amount committed thereunder does not exceed two hundred million
dollars ($200,000,000), to finance the working capital of Restricted
Subsidiaries in the Stone Canada Group;
(ii) Permitted Subordinated Indebtedness;
(iii) Permitted Refinancing Indebtedness;
(iv) Permitted Stone Canada Indebtedness;
(v) Permitted Existing Indebtedness of an Acquired Person;
(vi) Indebtedness incurred for the purpose of acquiring Capital Stock
of another Person, or assets comprising a business or line of business or
intangible assets or acquiring, constructing or improving fixed assets, in each
case related primarily to, or used in connection with, the paper or forest
products businesses and which (a) constitutes all or a portion of (but not more
than) the purchase price of such Capital Stock or assets (such purchase price
including any Indebtedness assumed or repaid in connection with such purchase)
or the cost of construction or improvement of such assets (together with any
transaction costs relating to such purchase, construction or improvement), (b)
is incurred prior to, at the time of or within 270 days after the acquisition,
construction or improvement of such assets for the purpose of financing the
purchase price of such Capital Stock or assets or the cost of construction or
improvement thereof (together with any transaction costs relating to such
purchase, construction or improvement) and (c) is the direct or guaranteed
obligation of any of (1) the Company, (2) a Restricted Subsidiary formed for the
purpose of acquiring such Capital Stock or assets (and having no other material
assets other than assets to be used for such acquisition), (3) any Person
comprised within the acquired assets or (4) in the case of the construction or
improvement of fixed assets, the Restricted
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Subsidiary which will own such assets, or any extension, renewal or refinancing
of such Indebtedness; PROVIDED, HOWEVER, that the amount so extended, renewed or
refinanced shall not exceed the principal amount outstanding on the date of such
extension, renewal or refinancing, PLUS costs incurred in connection with any
such extension, renewal or refinancing (it being understood that any fixed
assets included within capital expenditures which increased Indebtedness
permitted under clause (i) of the definition of Permitted Indebtedness pursuant
to clause (1) to the proviso to such clause may not be financed pursuant to this
clause (vi));
(vii) Indebtedness in an aggregate principal amount not to exceed three
hundred million dollars ($300,000,000) at any one time outstanding; PROVIDED,
HOWEVER, that no Restricted Subsidiary may incur Indebtedness under this clause
(vii) to the extent that after the incurrence of such Indebtedness the sum
(without duplication) of (x) all Indebtedness of Restricted Subsidiaries
incurred under this clause (vii), PLUS (y) Indebtedness and other obligations
then secured pursuant to clause (xii) of the definition of Permitted Liens, PLUS
(z) the amount of Indebtedness that was not incurred pursuant to clause (i)(b)
of this definition and is secured pursuant to clause (vi) of the definition of
Permitted Liens shall not exceed three hundred million dollars ($300,000,000);
(viii) Indebtedness of the Company in an aggregate principal amount not
to exceed two hundred fifty million dollars ($250,000,000) at any one time
outstanding;
(ix) any Interest Swap Obligation, Currency Agreement or Commodities
Agreement relating to Indebtedness that was not incurred in violation of the
terms of this Indenture; and
(x) Indebtedness to finance an increase in the working capital of any
Person or Persons that (a) are organized under the laws of a jurisdiction other
than the United States or any subdivision thereof and (b) became Restricted
Subsidiaries after November 1, 1991; PROVIDED, HOWEVER, that Indebtedness
pursuant to this clause (x) is the obligation of the Company or such Person or
Persons.
"Permitted Liens" means, with respect to any Person,
(i) Ordinary Course of Business Liens;
(ii) Liens upon property or assets acquired or constructed by such
Person or any Affiliate after November 1, 1991 or constituting improvements
after November 1, 1991 to property or assets; PROVIDED, HOWEVER, that (a) any
such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance or refinance, the purchase
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price (such purchase price including any Indebtedness assumed or repaid in
connection with such purchase) or cost of construction of the property or assets
subject thereto or of such improvement, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such purchase price or
cost (together with any transaction costs relating to such purchase,
construction or improvement), (c) such Lien does not extend to or cover any
other property or assets other than such property, assets, improvement and any
other improvements thereon (or, in the case of any construction or improvement,
any substantially unimproved real property on which the property is constructed
or the improvement is located) and (d) the occurrence of such Indebtedness is
permitted by clause (vi) of the definition of Permitted Indebtedness;
(iii) Liens securing obligations with respect to letters of credit
(other than commercial letters of credit) to the extent the obligations
supported by such letters of credit may be secured without violating Section
1007 hereof;
(iv) Liens covering property subject to any Capitalized Lease
Obligation or other lease which was not entered into in violation of this
Indenture securing the interest of the lessor or other Person under such
Capitalized Lease Obligation or other lease;
(v) Liens securing obligations to a trustee pursuant to the
compensation and indemnity provisions of any indenture (including this
Indenture) and Liens securing obligations to a trustee or agent with respect to
collateral for any Indebtedness;
(vi) Liens created in connection with a disposition of Receivables
(whether or not characterized as a sale of such Receivables or a secured loan)
not prohibited by this Indenture on (a) such Receivables, (b) collateral
securing such Receivables, (c) goods or services, the sale, lease or furnishing
of which gave rise to such Receivables, (d) books and records relating to such
Receivables, (e) agreements or arrangements supporting or securing such
Receivables and (f) incidental property and assets relating to any of the
foregoing; PROVIDED, HOWEVER, that the aggregate amount at any time of
Indebtedness that is secured pursuant to this clause (vi) and was not incurred
pursuant to clause (i)(b) of the definition of Permitted Indebtedness, shall at
no time exceed (x) three hundred million dollars ($300,000,000) LESS (y) the sum
of Indebtedness and other obligations then secured pursuant to clause (xii) of
this definition PLUS the then outstanding principal amount of Indebtedness of
Restricted Subsidiaries incurred under clause (vii) of the definition of
Permitted Indebtedness (and not secured pursuant to this clause (vi) or such
clause (xii));
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(vii) Liens upon property or assets of the Company created in
substitution and exchange for a Permitted Lien upon other property or assets of
the Company or any of its Subsidiaries and Liens upon property or assets of any
Subsidiaries of the Company created in substitution and exchange for a Permitted
Lien upon other property or assets of any Subsidiaries of the Company; PROVIDED,
HOWEVER, that (a) such Permitted Lien is released contemporaneously with the
creation of the Lien in substitution therefor, (b) the fair market value of the
property or assets with respect to the Lien so released is substantially the
same as the fair market value of the property or assets subject to the Lien
created in substitution therefor and (c) no Lien may be placed on property or
assets of the Company or a Restricted Subsidiary in substitution and exchange
for a Lien upon property or assets of an Unrestricted Subsidiary;
(viii) Liens upon property or assets of a Subsidiary of a Person
securing Indebtedness of such Person or of such Subsidiary, which Liens are
created in substitution and exchange for an outstanding pledge by such Person of
a majority of the Capital Stock of such Subsidiary for the purpose of securing
such Indebtedness (or a guaranty in respect thereof); PROVIDED, HOWEVER, that
if the property and assets of such Subsidiary to be subjected to such Liens have
a fair market value in excess of twenty-five million dollars ($25,000,000), such
Subsidiary shall have guaranteed the obligations of the Company in respect of
the First Mortgage Notes and, if requested by the Trustee, such Subsidiary shall
have waived all its rights of subrogation and reimbursement from the Company in
connection with such guaranty;
(ix) Liens upon any property or assets (a) existing at the time of
acquisition thereof by the Company or any Subsidiary, (b) of a Person existing
at the time such Person is merged with or into or consolidated with the Company
or any Subsidiary of the Company or existing at the time of a sale or transfer
of any such property or assets of such Person to the Company or any Subsidiary
of the Company or (c) of a Person existing at the time such Person becomes a
Subsidiary of the Company; PROVIDED, HOWEVER, that such Liens shall not have
been created in contemplation of such sale, merger, consolidation, transfer or
acquisition;
(x) Liens existing at November 1, 1991;
(xi) (a) Liens upon any property or assets of the Company and its
Restricted Subsidiaries securing Indebtedness under the Credit Agreements in a
principal amount not exceeding the principal amount outstanding or committed
under the Credit Agreements (including any letter of credit facility, but
without duplication with respect to commitments for loans the use of proceeds of
which is restricted to repayment of other Indebtedness under the Credit
Agreements) as of November 1, 1991
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LESS (y) the proceeds from the sale of all Indebtedness under the 1991 Indenture
issued from time to time that are or have been applied to repay Indebtedness
under the Credit Agreements and PLUS (z) two hundred fifty million dollars
($250,000,000) and (b) Liens securing Indebtedness permitted by clause (i) of
the definition of Permitted Indebtedness upon property or assets that as of
November 1, 1991 secured the Credit Agreements, or the Castlewood Agreement;
(xii) Liens securing Indebtedness or other obligations of the Company
and its Restricted Subsidiaries not to exceed an aggregate principal amount of
three hundred fifty million dollars ($350,000,000) LESS, at any time, the sum of
(y) the then outstanding principal amount of Indebtedness of Restricted
Subsidiaries incurred under clause (vii) of the definition of Permitted
Indebtedness (and not secured pursuant to this clause (xii) or clause (vi) of
this definition) PLUS (z) the amount of Indebtedness secured pursuant to clause
(vi) of this definition and not incurred pursuant to clause (i)(b) of the
definition of Permitted Indebtedness;
(xiii) Liens upon property or assets of a Subsidiary securing
Indebtedness or other obligations owing to the Company;
(xiv) Liens on proceeds of any property or assets subject to a Lien
permitted by the other clauses of this definition;
(xv) any equal and ratable Lien that is granted pursuant to the
Continental Guaranty and that relates to a Lien that otherwise constitutes a
Permitted Lien;
(xvi) Liens on property or assets used to defease Indebtedness that was
not incurred in violation of this Indenture;
(xvii) Liens on property or assets of any Restricted Subsidiary
organized under the laws of a jurisdiction other than the United States or any
subdivision thereof securing Indebtedness of such Restricted Subsidiary
outstanding as of November 1, 1991 (or any extension, renewal or refinancing
thereof);
(xviii) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing clauses (i) through (xvii) (covering the same property and assets as
such Lien); and
(xix) Permitted Collateral Liens;
PROVIDED, HOWEVER, that no Lien described in any of the foregoing clauses other
than clause (xi)(a) shall encumber the rights of
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the Company with respect to Indebtedness, obligations and other liabilities owed
to the Company by any Restricted Subsidiary or to any Restricted Subsidiary by
the Company or another Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means Indebtedness of (i) the
Company to the extent exchanged for, or the net proceeds of which are used to
refinance, redeem or defease, Indebtedness of the Company or any Restricted
Subsidiary (or any extension, renewal or refinancing thereof) outstanding at the
time of incurrence of such subsequent Indebtedness, or to finance any costs
incurred in connection with any such exchange, refinancing, redemption or
defeasance, (ii) a Restricted Subsidiary to the extent exchanged for, or the net
proceeds of which are used to refinance, redeem or defease, Indebtedness of such
Restricted Subsidiary (or any extension, renewal or refinancing thereof)
outstanding at the time of incurrence of such subsequent Indebtedness, or to
finance any costs incurred in connection with any such exchange, refinancing,
redemption or defeasance, or (iii) the Company or a Restricted Subsidiary to the
extent exchanged for, or the net proceeds of which are used to refinance, redeem
or defease, any then outstanding industrial revenue or development bonds that
were outstanding at November 1, 1991 (or any extension, renewal or refinancing
thereof), or to finance any costs incurred in connection with such exchange,
refinancing or defeasance; PROVIDED, HOWEVER, that, in the case of (i), (ii) or
(iii), the proceeds of such Indebtedness shall be used to so refinance, redeem
or defease the Indebtedness within 12 months of the incurrence of such
subsequent Indebtedness; and PROVIDED, FURTHER, that the only Indebtedness
which may be subject to exchange, refinancing, redemption, or defeasance
pursuant to clause (i), (ii) or (iii) of this definition shall be Indebtedness
outstanding as of November 1, 1991 (other than Indebtedness under the Credit
Agreements, Subordinated Indebtedness and Indebtedness under lines of credit) or
any extension, renewal or refinancing thereof, and Indebtedness that was
incurred after November 1, 1991 and before the date hereof (other than solely as
Permitted Indebtedness under the 1991 Indenture) or is incurred after the date
hereof (other than solely as Permitted Indebtedness).
"Permitted Stone Canada Indebtedness" means Indebtedness of the
Company or a Restricted Subsidiary in the Stone Canada Group outstanding
pursuant to lines of credit in an aggregate principal amount not to exceed one
hundred million dollars ($100,000,000), (of which not more than Canadian sixty
million dollars (Cn.$60,000,000) may be owed by Restricted Subsidiaries in the
Stone Canada Group) at any one time outstanding or pursuant to any extension,
renewal or refinancing of such outstanding amount PLUS any costs incurred in
connection with any such extension, renewal or refinancing; PROVIDED, HOWEVER,
that the aggregate principal amount permitted to be
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incurred under this definition shall be reduced by the principal amount under
lines of credit outstanding on the date hereof net of subsequent repayments or
reductions thereof.
"Permitted Subordinated Indebtedness" means (i) Subordinated
Indebtedness of the Company to the extent exchanged for, or the net proceeds of
which are used to refinance, redeem or defease, then outstanding Subordinated
Indebtedness of the Company that was outstanding at November 1, 1991 (or any
extension, renewal or refinancing thereof), or to finance any costs incurred in
connection with any such exchange, refinancing, redemption or defeasance;
PROVIDED, HOWEVER, that (a) such Subordinated Indebtedness does not have a
shorter weighted average life than that then remaining for, or a maturity
earlier than that of, the Indebtedness so exchanged, refinanced, redeemed or
defeased, EXCEPT that in the case of any exchange, such Subordinated
Indebtedness may have a maturity that is earlier (but not more than six months
earlier) than that of the Indebtedness so exchanged, PROVIDED that the
Subordinated Indebtedness shall have the same or a longer weighted average life
than that then remaining for the Indebtedness so exchanged and (b) in the case
of refinancings, redemptions or defeasances, the proceeds of such Subordinated
Indebtedness shall be used to so refinance, redeem or defease the Indebtedness
within 12 months of the incurrence of such subsequent Subordinated Indebtedness;
and (ii) Indebtedness of the Company in an aggregate principal amount not to
exceed two hundred fifty million dollars ($250,000,000) at any one time
outstanding, so long as such Indebtedness (a) constitutes Subordinated
Indebtedness and (b) does not have (A) a weighted average life that is shorter
than that then remaining for the (x) the Company's 9-7/8% Senior Notes due 2001
then outstanding or (y) the First Mortgage Notes then Outstanding or (B) a
maturity that is earlier than the latest maturity of (x) the Company's 9-7/8%
Senior Notes due 2001 then outstanding or (y) the First Mortgage Notes then
Outstanding.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", means The City of New York or any other place or
places where the principal of (and premium, if any) and interest on the First
Mortgage Notes are payable.
"Predecessor First Mortgage Note" of any particular First Mortgage
Note means every previous First Mortgage Note evidencing all or a portion of the
same debt as that evidenced by such particular First Mortgage Note; and, for the
purposes of this definition, any First Mortgage Note authenticated and delivered
under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen First Mortgage Note shall be
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deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
First Mortgage Note.
"Rate Determination Period" means the four full weeks ending on the
seventh Business Day prior to a Reset Date.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money.
"Record Date" for the interest payable on any Interest Payment Date
means the close of business on the March 15 or September 15, as the case may be,
whether or not a Business Day, immediately preceding the Interest Payment Date
on which such interest is payable.
"Redeemable Stock" means, with respect to any Person, any Capital
Stock that by its terms or otherwise is required to be redeemed or purchased by
such Person or any of its Subsidiaries prior to 30 days after the maturity date
of the First Mortgage Notes then Outstanding, or is redeemable or subject to
mandatory purchase or similar put rights at the option of the Holder thereof at
any time prior to 30 days after the latest maturity date of the First Mortgage
Notes then Outstanding, or any security which is convertible or exchangeable
into a security which has such provisions.
"Redemption Date" means the date fixed for redemption of any First
Mortgage Note by or pursuant to this Indenture.
"Redemption Price" means the price at which any First Mortgage Note is
to be redeemed pursuant to this Indenture.
"Register" and "Registrar" have the respective meanings specified in
Section 305.
"Release" means any releasing, spilling, emitting, emptying, leaking,
pumping, pouring, injecting, depositing, disposing, dumping, discharge,
dispersing, leaching, escaping, emanating or migrating of any Contaminant in,
on, into or onto the environment, including without limitation the movement of
any Contaminant through or in the environment, the abandonment or discard of
barrels, containers, tanks or other receptacles containing any Contaminant, or
any release, emission or discharge other than permitted releases as those terms
are defined in any Environmental Laws.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent or minimize the Release or threat of Release of
Contaminants; or (iii) perform
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pre-remedial studies and investigations and post-remedial monitoring and care.
"Replacement Collateral" means, at any relevant date in connection
with a Collateral Asset Disposition, Collateral Loss Event or Condemnation (the
proceeds of which are to be used in accordance with the last sentence of Section
1610(d)), assets located in North America to be used in the pulp and paper
business as conducted by the Company at such date other than the Collateral,
which on such date, (a) constitute similar assets to Collateral disposed of or
destroyed (and do not constitute Capital Stock of any Person (except for Non-
Cash Consideration to the extent permitted by Section 1015(a) in connection with
a Collateral Asset Disposition)), (b) are acquired by the Company at a purchase
price which does not exceed the fair market value of such Replacement Collateral
(as determined, in the case of each of (a) and (b), in good faith by a majority
of the Board of Directors, including a majority of the Independent Directors, on
the basis of the written opinion of a qualified Independent Appraiser or
Independent Financial Adviser prepared contemporaneously with such purchase) and
made available to the Trustee, (c) are free and clear of all Liens other than
Permitted Collateral Liens and (d) satisfy the requirements of Section 1015(c).
"Reset Date" means a date on which the interest rate on the First
Mortgage Notes shall be reset pursuant to Section 1102(a).
"Reset Rate" shall have the meaning provided in Section 1102(a).
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or assistant trust officer, the
controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restoration" or "Restore" means the physical repair, restoration or
rebuilding of all or any portion of the Collateral following any Casualty or
Condemnation.
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"Restricted Payment" shall have the meaning provided in Section 1006.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Security Documents" means, collectively, the mortgage, assignment of
leases and rents, security agreement and fixture filings; security agreements;
financing statements and each other agreement executed and delivered pursuant to
and in connection with any such documents or which otherwise grants a Lien to
secure the First Mortgage Notes.
"Seminole" means Seminole Kraft Corporation, a Delaware corporation.
"Senior Indebtedness" means the principal of, interest on and other
amounts due on (i) Indebtedness of the Company, whether outstanding on the date
hereof or thereafter created, incurred, assumed or guaranteed by the Company, on
or prior to the date hereof in compliance with the 1991 Indenture and
thereafter, in compliance with Section 1008 hereof (including, without
limitation, the Company's 11 1/2% Senior Notes due 2004 and the First Mortgage
Notes), (ii) obligations of the Company related to the termination of Interest
Swap Obligations, Currency Agreements or Commodities Agreements pertaining to
Indebtedness described under clause (i) above and (iii) principal of or interest
on the First Mortgage Notes. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness shall not include: (a) Subordinated
Indebtedness, (b) Indebtedness of or amounts owed by the Company for
compensation to employees, for goods or materials purchased in the ordinary
course of business or for services or (c) Indebtedness of the Company to a
Subsidiary of the Company.
"Seven Year Treasury Rate" means the arithmetic average (rounded to
the nearest basis point) of the weekly average per annum yield to maturity
values adjusted to constant maturities of seven years, for the Rate
Determination Period as determined from the yield curves of the most actively
traded marketable United States Treasury fixed interest rate securities (x)
constructed daily by the United States Treasury Department (i) as published by
the Federal Reserve Board in its Statistical Release H.15 (519), "Selected
Interest Rates," which weekly average yield to maturity values currently are set
forth in such Statistical Release under the caption "U.S. Government
Securities--Treasury Constant Maturities--7 Year" or (ii) if said Statistical
Release H.15 (519) is not then published, as published by the Federal Reserve
Board in any release comparable to its Statistical Release H.15 (519) or (iii)
if the Federal Reserve Board shall not be publishing a comparable release, as
published in any official publication or release of any other United States
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Government Department or agency, or (y) if the United States Treasury Department
shall not then be constructing such yield curves, then as constructed by the
Federal Reserve Board or any other United States Government Department or agency
and published as set forth in (x) above. However, if the Seven Year Treasury
Rate cannot be determined as provided above, then the Seven Year Treasury Rate
shall mean the arithmetic average (rounded to the nearest basis point) of the
per annum yields to maturity for each Business Day during the Rate Determination
Period of all of the issues of actively trading issues of non-interest bearing
United States Treasury fixed interest rate securities with a maturity of not
less than 81 months nor more than 87 months from such Business Day (1) as
published in THE WALL STREET JOURNAL or (2) if THE WALL STREET JOURNAL shall
cease such publication, based on average asked prices (or yields) as quoted by
each of three United States Government securities dealers of recognized national
standing selected by the Company.
"Southshore Agreement" has the meaning specified in subparagraph 2(A)
of the definition of "Permitted Indebtedness."
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Specified Bank Debt" means (i) all Indebtedness and other monetary
obligations owing under the New Credit Agreement or any credit facilities with
the banks signatory to the New Credit Agreement (or with banks affiliated with
such banks), so long as such facilities are related to the New Credit Agreement;
and (ii) Indebtedness owing as of the date hereof or hereafter to banks or other
financial institutions under credit facilities which may in the future
refinance, refund, replace, supplement or succeed (regardless of any gaps in
time) the New Credit Agreements or the facilities referenced in clause (i)
hereof (including extensions and restructurings and the inclusion of additional
or different or substitute lenders), so long as (a) the aggregate principal
amount outstanding (including available amounts under committed revolving credit
or similar working capital facilities, letter of credit facilities and other
commitments to provide credit) of such Indebtedness is at least equal to the
principal of all publicly issued Senior Indebtedness (including without
limitation, the First Mortgage Notes, the 11 1/2% Senior Notes due 2004, and
Indebtedness under the 1991 Indenture) then Outstanding (it being understood
that Indebtedness described in clause (i) above and issues of Indebtedness
having a principal amount lower than set forth in clause (b) below shall not be
included in this amount), (b) Indebtedness outstanding under each particular
credit facility has a principal amount outstanding (including available amounts
under committed revolving credit or similar working capital facilities, letter
of credit facilities and other commitments to provide credit) of at least
twenty-five
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million dollars ($25,000,000) and (c) such Indebtedness constitutes Senior
Indebtedness.
"Stated Maturity," when used with respect to any First Mortgage Note
or any installment of principal thereof or interest thereon, means the date
specified in such First Mortgage Note as the fixed date on which the principal
of such First Mortgage Note or any installment of principal or interest is due
and payable.
"Stone Canada" means Stone Container (Canada) Inc., a company
organized under the Canadian Business Corporations Act.
"Stone Canada Group" means Stone Canada and its Restricted
Subsidiaries existing as of the date hereof.
"Stone Southwest" means Stone Southwest, Inc., a Delaware corporation.
"Subordinated Capital Base" means the sum of (i) the Consolidated Net
Worth and (ii) to the extent not included in clause (i) above, the amounts
(without duplication) relating to (a) the principal amount of Subordinated
Indebtedness incurred after November 1, 1991 which is unsecured and which does
not have at the time of incurrence of such Subordinated Indebtedness a weighted
average life that is shorter than the weighted average life remaining for the
then outstanding Indebtedness under the 1991 Indenture issued prior to the date
hereof, or if less than five hundred million dollars ($500,000,000) of such
Indebtedness is outstanding, the First Mortgage Notes or a maturity that is
earlier than the maturity of any of the then Outstanding Indebtedness under this
Indenture, or if less than five hundred million dollars ($500,000,000) of such
Indebtedness is outstanding, the First Mortgage Notes, (b) redeemable stock of
the Company that does not constitute Redeemable Stock and (c) the principal
amount of the 11 1/2% Senior Subordinated Notes due September 1, 1999 of the
Company and the 12-1/8% Subordinated Debentures due September 15, 2001 of Stone
Southwest or any Subordinated Indebtedness exchanged for, or the net proceeds of
which are used to refinance, redeem or defease, such 11 1/2% Senior Subordinated
Notes due September 1, 1999 (or, at such time as no Indebtedness is outstanding
under the 1991 Indenture, such 12-1/8% Subordinated Debentures due September 15,
2001) and pursuant to clause (ii) of the definition of "Permitted Indebtedness",
that, in the case of clauses (a), (b) and (c), as at the date of determination,
in conformity with GAAP consistently applied, would be set forth on the
consolidated balance sheet of the Company and its Restricted Subsidiaries.
"Subordinated Indebtedness" means Indebtedness of the Company (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed by the Company) which, pursuant to the terms of the instrument
creating or evidencing
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the same, is subordinate to the First Mortgage Notes in right of payment or in
rights upon liquidation.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which at least a majority in interest of the outstanding Capital Stock having by
the terms thereof voting power under ordinary circumstances to elect directors
of such corporation, irrespective of whether or not at the time stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency, is at the time, directly or
indirectly, owned or controlled by such Person, or by one or more other
corporations a majority in interest of such stock of which is similarly owned or
controlled, or by such Person and one or more other corporations a majority in
interest of such stock of which is similarly owned or controlled or (ii) any
other Person (other than a corporation) in which such Person, directly or
indirectly, at the date of determination thereof, has at least a majority equity
ownership interest; PROVIDED, HOWEVER, that, with respect to the Company, for
purposes of this Indenture (other than Section 1007(b)), "Subsidiary" shall not
include Seminole.
"Ten Year Treasury Rate" means the arithmetic average (rounded to the
nearest basis point) of the weekly average per annum yield to maturity values
(adjusted to constant maturities of ten years, for the Rate Determination Period
as determined from the yield curves of the most actively traded marketable
United States Treasury fixed interest rate securities (x) constructed daily by
the United States Treasury Department (i) as published by the Federal Reserve
Board in its Statistical Release H.15 (519), "Selected Interest Rates." which
weekly average yield to maturity values currently are set forth in such
Statistical Release under the caption "U.S. Government Securities--Treasury
Constant Maturities-10 Year" or (ii) if said Statistical Release H.15 (519) is
not then published, as published by the Federal Reserve Board in any release
comparable to its Statistical Release H.15 or (iii) if the Federal Reserve Board
shall not be publishing a comparable release, as published in any official
publication or release of any other United States Government Department or
agency, or (y) if the United States Treasury Department shall not then be
constructing such yield curves, then as constructed by the Federal Reserve Board
or any other United States Government Department or agency and published as set
forth in (x) above. However, if the Ten Year Treasury Rate cannot be determined
as provided above, then the Ten Year Treasury Rate shall mean the arithmetic
average (rounded to the nearest basis point) of the per annum yields to maturity
for each Business Day during the Rate Determination Period of all of the issues
of actively trading issues of non-interest bearing United States Treasury fixed
interest rate securities with a maturity of not less then 117 months nor more
than 123 months from such Business Day (1) as published in THE WALL STREET
JOURNAL or (2) if THE
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WALL STREET JOURNAL shall cease such publication, based on average asked prices
(or yields) as quoted by each of three United States Government securities
dealers of recognized national standing selected by the Company.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was executed;
PROVIDED, HOWEVER, that in the event that such Act is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Two Year Treasury Rate" means the arithmetic average (rounded to the
nearest basis point) of the weekly average per annum yield to maturity values
adjusted to constant maturities of two years, for the Rate Determination Period
as determined from the yield curves of the most actively traded marketable
United States Treasury fixed interest rate securities (x) constructed daily by
the United States Treasury Department (i) as published by the Federal Reserve
Board in its Statistical Release H.15 (519), "Selected Interest Rates," which
weekly average yield to maturity values currently are set forth in such
Statistical Release under the caption "U.S. Government Securities -- Treasury
Constant Maturities -- 2 Years" or (ii) if said Statistical Release H.15 (519)
is not then published, as published by the Federal Reserve Board in any release
comparable to its Statistical Release H.15 (519) or (iii) if the Federal Reserve
Board shall not be publishing a comparable release, as published in any official
publication or release of any other United States Government Department or
agency, or (y) if the United States Treasury Department shall not then be
constructing such yield curves, then as constructed by the Federal Reserve Board
or any other United States Government Department or agency and published as set
forth in (x) above. However, if the Two Year Treasury Rate cannot be determined
as provided above, then the Two Year Treasury Rate shall mean the arithmetic
average (rounded to the nearest basis point) of the per annum yields to maturity
for each Business Day during the Rate Determination Period of all of the issues
of actively trading issues of non-interest bearing United States Treasury fixed
interest rate securities with a maturity of not less than 21 months nor more
than 27 months from such Business Day (1) as published in THE WALL STREET
JOURNAL or (2) if THE WALL STREET JOURNAL shall cease such publication, based on
average asked prices (or yields) as quoted by each of three United States
Government securities dealers of recognized national standing selected by the
Company.
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"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed by the full
faith and credit of the United States of America which, in either case, are not
callable or redeemable at the option of the issuer thereof or otherwise subject
to prepayment.
"Unrestricted Subsidiary" means a Subsidiary of the Company which has
been designated as an "Unrestricted Subsidiary" for purposes of this Indenture
by the Company and (i) at least 20% of whose common stock is held by one or more
Persons (other than the Company and its Affiliates) which acquired such common
stock in a BONA FIDE transaction for fair value and (b) at least 10% of whose
total capitalization at the time of designation is in the form of common stock
or at least 15% of the fair market value of whose assets at such time shall have
been contributed by such Persons. An Unrestricted Subsidiary may be designated
to be a Restricted Subsidiary only if, at the time of such designation, all
Indebtedness and Liens of such Subsidiary could be incurred under this
Indenture. As of the date of this Indenture, the Company's Unrestricted
Subsidiaries are Stone-Consolidated Corporation and its Subsidiaries.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Work" shall have the meaning provided in Section 1610(b)(1).
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
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(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Officer or Officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
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(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person or any such
instrument or writing may be proved by the affidavit or a witness of such
execution or by a certificate of a notary public or other Person authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of First Mortgage Notes shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any First Mortgage Note shall bind every
future Holder of the same First Mortgage Note and the Holder of every First
Mortgage Note issued upon the registration of transfer thereof or in exchange
therefor in lieu thereof in respect of anything done, omitted or suffered to be
done by the Trustee or the Company in reliance thereon, whether or not notation
of such action is made upon such First Mortgage Note.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
(including
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revocation thereof) may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding First Mortgage Notes have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding First Mortgage Notes
shall be computed as of such record date; PROVIDED that no such authorization,
agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this Indenture, attention: Secretary or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture or any First Mortgage Note provides for notice to
Holders of any event, such notice shall be deemed sufficiently given (unless
otherwise herein or in such First Mortgage Note expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders or the validity of the proceedings to which such notice relates.
Where this Indenture or any First Mortgage Note provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such
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notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act (including, without limitation,
Sections 310 through 317, inclusive, of the Trust Indenture Act in accordance
with Section 318(c) thereof), such required provision shall control, provided
that, in cases where a provision of this Indenture requires that opinions or
certificates be given by an independent person, such requirement shall apply
notwithstanding that Section 314(d) of the Trust Indenture Act might otherwise
permit such certificate to be given by an officer or employee of the Company.
If any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or shall be excluded,
as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the First Mortgage Notes
shall be invalid, illegal or unenforceable, the
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validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture, in the Security Documents or in the First
Mortgage Notes, express or implied, shall give to any Person, other than the
parties hereto or thereto and their successors hereunder and the Holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the First Mortgage Notes shall be governed by and
construed in accordance with the laws (other than the choice of law provisions)
of the State of New York.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any First Mortgage Note, or any other payment date, including,
without limitation, any Asset Disposition Payment Date, Change of Control
Payment Date or First Mortgage Note Payment Date, shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the First
Mortgage Notes) payment of interest or principal (and premium, if any) need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or Redemption
Date, or at the Stated Maturity or other payment date, PROVIDED that no interest
shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity or other payment date, as the case may be.
SECTION 114. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholders, as such, of the Company
shall not have any liability for any obligations of the Company under the First
Mortgage Notes, this Indenture or any Security Document, or for any claim based
on, in respect of or by reason of such obligations or their creation. Each
Securityholder, by accepting a First Mortgage Note, waives and releases all such
liability. Such waivers and releases are part of the consideration for the
issuance of the First Mortgage Notes.
SECTION 115. Incorporation by Reference to
TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference
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in and made a part of this Indenture. The following Trust Indenture Act terms
incorporated by reference in this Indenture have the following meanings:
"indenture securities" means the First Mortgage Notes.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the First Mortgage Notes, if any.
All other Trust Indenture Act terms used or incorporated by reference
in this Indenture that are defined by the Trust Indenture Act, defined by Trust
Indenture Act reference to another statute or defined by Commission rule have
the meanings assigned to them therein.
ARTICLE TWO
FIRST MORTGAGE NOTE FORMS
SECTION 201. FORMS GENERALLY.
The First Mortgage Notes shall be in substantially the form set forth
in this Article, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Officers executing such First Mortgage Notes, as evidenced by their execution of
the First Mortgage Notes. The definitive First Mortgage Notes shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such First Mortgage
Notes, as evidenced by their execution of such First Mortgage Notes.
SECTION 202. FORM OF FACE OF FIRST MORTGAGE NOTE.
Each First Mortgage Note shall be in substantially the following form:
(Face of First Mortgage Note)
STONE CONTAINER CORPORATION
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10 3/4% First Mortgage Notes due 2002
Number R__________ $_____________
STONE CONTAINER CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ________________________ or registered
assigns, the principal sum of _____________ DOLLARS on October 1, 2002, and to
pay interest thereon from the date hereof or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on April 1 and October 1 of each year (commencing April 1, 1995), at the rate of
10 3/4% per annum, until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this First Mortgage Note (or one or more Predecessor First
Mortgage Notes) is registered at the close of business on the Record Date for
such interest, which shall be the March 15 or September 15 (whether or not a
Business Day), as the case may be, preceding such Interest Payment Date. Any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Record Date and may either be paid to the
Person in whose name this First Mortgage Note (or one or more Predecessor First
Mortgage Notes) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of First Mortgage Notes not less than 10 days
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the First Mortgage Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of (and premium, if any) and interest on this
First Mortgage Note will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York in
dollars; PROVIDED, HOWEVER, that at the option of the Company, payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Register.
Reference is hereby made to the further provisions of this First
Mortgage Note set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
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Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this First
Mortgage Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
STONE CONTAINER CORPORATION
By:
------------------------
[CORPORATE SEAL]
Attest:
- - - - ----------------------
SECTION 203. FORM OF REVERSE OF FIRST MORTGAGE NOTE.
(Reverse of First Mortgage Note)
1. This First Mortgage Note is one of a duly authorized issue of
securities of the Company designated as its "10 3/4% First Mortgage Notes due
2002" (herein called the "First Mortgage Notes") limited in aggregate principal
amount to five hundred million dollars ($500,000,000), issued and to be issued
in a single series under, and equally and ratably secured by or pursuant to, an
indenture dated as of October 12, 1994 (as amended or supplemented from time to
time, the "Indenture") between the Company and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee," which term includes any successor
Trustee under the Indenture), to which Indenture reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and each of the Holders and of the terms
upon which the First Mortgage Notes are, and are to be, authenticated and
delivered. All terms used in this First Mortgage Note which are not defined
herein shall have the meanings assigned to them in the Indenture.
2. As provided in the Indenture, the First Mortgage Notes are secured by
a pledge of the Collateral. The Trustee shall be entitled to the benefits of
the Liens on the Collateral under this Indenture and the Security Documents as
the same may be amended from time to time pursuant to the respective provisions
thereof and of the Indenture, subject only to Permitted Collateral Liens, for
the benefit of each Holder accepting a First Mortgage Note.
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3. Interest on this First Mortgage Note will be computed on the basis of
a 360-day year of twelve, 30-day months. Each payment of interest in respect of
an Interest Payment Date will include interest accrued through the day before
such Interest Payment Date. If an Interest Payment Date falls on a day that is
not a Business Day, the interest payment to be made on such Interest Payment
Date will be made on the next succeeding Business Day with the same force and
effect as if made on such Interest Payment Date, and no additional interest will
accrue as a result of such delayed payment. If any payment of principal of (and
premium, if any) or installment of interest on this First Mortgage Note is not
paid when due then, to the extent that payment of such interest shall be legally
enforceable, interest upon such overdue principal (and premium, if any) and
installment of interest, shall be paid at the rate set forth on the face of this
First Mortgage Note.
4. The First Mortgage Notes are subject to redemption upon not less than
30 days' notice nor more than 45 days' notice by mail, at any time on or after
October 1, 1999, as a whole or from time to time in part, at the election of the
Company, at a Redemption Price equal to 103.07% of the principal amount thereof
if redeemed on or after October 1, 1999 and before October 1, 2000, at 101.54%
of the principal amount thereof if redeemed on or after October 1, 2000 and
before October 1, 2001 and at 100% of the principal amount thereof if redeemed
on or after October 1, 2001 and prior to the Maturity Date, in each case, plus
accrued interest (if any) to the Redemption Date, but interest installments
whose Stated Maturity is on or prior to such Redemption Date will be payable to
the Holders of such First Mortgage Notes, or one or more Predecessor First
Mortgage Notes, of record at the close of business on the relevant Record Dates
referred to on the face hereof, all as provided in the Indenture.
5. Under certain circumstances following a Collateral Asset Disposition,
Collateral Loss Event or Asset Disposition, the Company may offer to repurchase
First Mortgage Notes at a repurchase price equal to 100% of the principal amount
thereof, plus accrued interest to the date of repurchase, from the Net Proceeds
(or Excess Proceeds, as appropriate) of such Collateral Asset Disposition or
Collateral Loss Event or proceeds of such Asset Disposition, as provided in, and
subject to the terms of, the Indenture. The Company is required to give Holders
notice of such right within the period specified in the Indenture. Holders may
tender their First Mortgage Notes for repurchase on or prior to the close of
business on the applicable payment date. If the aggregate principal amount of
First Mortgage Notes surrendered for repurchase exceeds the aggregate principal
amount of the applicable offer price, the selection of the First Mortgage Notes
to be repurchased shall be made by the Trustee on a PRO RATA basis.
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6. EXCEPT as set forth below, as provided in the Indenture, in the event
that the Company's Subordinated Capital Base is less than one billion dollars
($1,000,000,000) (the "Minimum Subordinated Capital Base") as at the end of each
of any two consecutive fiscal quarters (the last day of the second such fiscal
quarter, a "Deficiency Date"), then the Company shall no later than 60 days
after the Deficiency Date (105 days if a Deficiency Date is also the end of the
Company's fiscal year) make an offer to all Holders to purchase (a "Deficiency
Offer") 10% of the principal amount of the First Mortgage Notes originally
issued, or such lesser amount as may be Outstanding at the time such Deficiency
Offer is made (the "Deficiency Offer Amount"), at a purchase price equal to 100%
of principal amount, plus accrued and unpaid interest to the Deficiency Payment
Date. Thereafter, semi-annually the Company shall make like Deficiency Offers
for the then applicable Deficiency Offer Amount of First Mortgage Notes until
the Company's Subordinated Capital Base as at the end of any subsequent fiscal
quarter shall be equal to or greater than the Minimum Subordinated Capital Base.
Notwithstanding the foregoing, after any specified Deficiency Date, the last day
of any subsequent fiscal quarter shall not constitute a Deficiency Date (giving
rise to an additional obligation under the first sentence of this paragraph)
unless the Company's Subordinated Capital Base was equal to or greater than the
Minimum Subordinated Capital Base as at the end of a fiscal quarter that
followed such specified Deficiency Date and preceded such subsequent quarter.
7. Notwithstanding the foregoing, as provided in the Indenture, in the
event that (1) the making of a Deficiency Offer by the Company or (2) the
purchase of First Mortgage Notes by the Company in respect of a Deficiency Offer
would constitute a default (with the giving of notice, the passage of time or
both) with respect to any Specified Bank Debt at the time outstanding, then, in
lieu of the making of a Deficiency Offer in the circumstances set forth above,
(i) the interest rate on the First Mortgage Notes shall be reset as of the first
day of the second fiscal quarter following the Deficiency Date (the "Reset
Date") to a rate per annum (the "Reset Rate") equal to the greater of (x) the
Initial Interest Rate and (y) the sum of (A) 400 basis points and (B) the higher
of the Seven Year Treasury Rate and the Ten Year Treasury Rate, (ii) on the
first Interest Payment Date following the Reset Date, the interest rate on the
First Mortgage Notes, as reset on the Reset Date, shall increase by fifty (50)
basis points, and (iii) the interest rate on the First Mortgage Notes shall
further increase by an additional fifty (50) basis points on each succeeding
Interest Payment Date, PROVIDED, HOWEVER, that notwithstanding clauses (i), (ii)
or (iii) above, in no event shall the interest rate to be borne by the First
Mortgage Notes at any time exceed the Initial Interest Rate by more than two
hundred (200) basis points. Once the interest rate on the First Mortgage Notes
has been reset as set forth above, as
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provided in the Indenture, if the Company's Subordinated Capital Base is equal
to or greater than the Minimum Subordinated Capital Base as of the last day of
any fiscal quarter subsequent to the Deficiency Date, interest on the First
Mortgage Notes shall return to the Initial Interest Rate effective as of the
first day of the second following fiscal quarter.
8. The Indenture also provides that upon the occurrence of a Change of
Control, subject to the satisfaction of certain substantial conditions precedent
set forth in the Indenture, each Holder shall have the right to require that the
Company repurchase such Holder's First Mortgage Notes in whole or in part at a
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, if any, to the date of such repurchase.
9. The Indenture contains provisions for (i) defeasance of certain of the
Company's obligations (including covenants) under the Indenture and (ii)
satisfaction and discharge of the Indenture upon compliance by the Company with
certain conditions set forth therein, which provisions apply to this First
Mortgage Note.
10. The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Restricted Payments, create and incur Indebtedness and create or suffer to exist
certain Liens (other than Permitted Liens). The Indenture imposes limitations
on the ability of the Company to merge or consolidate with any other Person or
sell, assign, transfer or lease all or substantially all of its properties or
assets. All such covenants and limitations are subject to a number of important
qualifications and exceptions. The Company must report periodically to the
Trustee on compliance with the covenants in the Indenture.
11. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and of the Security Documents and the modification of the
rights and obligations of the Company and the rights of the Holders to be
affected under the Indenture and the Security Documents at any time by the
Company and the Trustee with the consent of the Holders representing at least
two-thirds in principal amount of the First Mortgage Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
at least two-thirds in principal amount of the First Mortgage Notes at the time
Outstanding, on behalf of the Holders of all First Mortgage Notes, to waive
compliance by the Company with certain provisions of the Indenture and the
Security Documents, and certain defaults under the Indenture and the Security
Documents, and their consequences. Any such consent or waiver by the Holder of
this First Mortgage Note shall bind such Holder and all future Holders of this
First Mortgage Note and of any First Mortgage Note issued
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upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
First Mortgage Note.
12. No reference herein to the Indenture and no provision of this First
Mortgage Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this First Mortgage Note at the times, place
and rate, and in the coin or currency, herein prescribed.
13. As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this First Mortgage Note is registrable in
the Register, upon surrender of this First Mortgage Note for registration of
transfer at the office or agency of the Company in any place where the principal
of (and premium, if any) and interest on this First Mortgage Note are payable,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed by the Holder
hereof, or such Holder's attorney duly authorized in writing, and thereupon one
or more new First Mortgage Notes, of authorized denominations and for the same
Stated Maturity and aggregate principal amount, will be issued to the designated
transferee or transferees.
14. The First Mortgage Notes are issuable only in registered form without
coupons in denominations of one thousand dollars ($1,000) and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, First Mortgage Notes are exchangeable for a like
aggregate principal amount of First Mortgage Notes of a different authorized
denomination, as requested by the Holder surrendering the same. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment by the Holder of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
15. Prior to due presentment of this First Mortgage Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this First Mortgage Note is
registered as the owner hereof for all purposes, whether or not this First
Mortgage Note be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
16. A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under this First
Mortgage Note, the Indenture or any Security Document, or for any claim based
on, in respect of or by reason of, such obligations or their creation. Each
Holder, by accepting a First Mortgage Note, waives and releases
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all such liability. The waiver and release are part of the consideration for
the issuance of this First Mortgage Note.
17. Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures ("CUSIP"), the Company has caused CUSIP
numbers to be printed on the First Mortgage Notes as a convenience to the
Holders of the First Mortgage Notes. No representation is made as to the
correctness or accuracy of such numbers as printed on the First Mortgage Notes
and reliance may be placed only on the other identification numbers printed
hereon.
ASSIGNMENT FORM
To assign this First Mortgage Note, fill in the form below: (I) or (we)
assign and transfer this First Mortgage Note to
- - - - --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this First Mortgage Note on the books of the Company. The
agent may substitute another to act for him or her.
Dated: Your Signature:
------------ ------------------------------------------
(Sign exactly as your name appears on the
other side of this First Mortgage Note)
Signature Guaranty:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this First Mortgage
Note purchased by the Company pursuant to Section 1009 ("Asset Disposition
Offer"), Section 1013 ("Change of Control Offer"), Section 1016 ("First Mortgage
Note Offer") or Section 1101 ("Deficiency Offer") of the Indenture, check the
applicable boxes:
/ / Section 1009: / / Section 1013: / / Section 1016:
in whole / / in whole / / in whole / /
in part / / in part / / in part / /
amount to be amount to be amount to be
purchased: $ purchased: $ purchased: $
------ ------ ------
/ / Section 1101:
in whole / /
in part / /
amount to be
purchased: $
------
Dated: Your Signature:
-------------- ---------------------------------------
(Sign exactly as your name appears on the other
side of this First Mortgage Note)
Signature Guaranty:
-----------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Social Security Number or Taxpayer Identification Number:
---------
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SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication on each First Mortgage
Note shall be in substantially the following form:
Dated:
------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 10 3/4% First Mortgage Notes due 2002 issued under
the Indenture referred to in this First Mortgage Note.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
AS TRUSTEE
By:
---------------------
AUTHORIZED SIGNATORY
SECTION 205. CUSIP NUMBER.
The Company in issuing First Mortgage Notes may use a "CUSIP" number,
and if so, the Trustee may use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; PROVIDED, that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed on the notice or on the First Mortgage Notes, and that reliance
may be placed only on the other identification numbers printed on the First
Mortgage Notes, and any such redemption shall not be affected by any defect in
or omission of such numbers. The Company will promptly notify the Trustee of
any change in the CUSIP number of the First Mortgage Notes.
ARTICLE THREE
THE FIRST MORTGAGE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of First Mortgage Notes Outstanding at
any time may not exceed the amount of five hundred million dollars
($500,000,000), except for First Mortgage Notes authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other First
Mortgage Notes pursuant to Section 304, 305, 306, 906 or 1206.
The First Mortgage Notes shall be issued in a single series, known and
designated as the "10 3/4% First Mortgage Notes due 2002" of the Company. The
Stated Maturity for the payment of
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principal of the First Mortgage Notes shall be October 1, 2002, and the First
Mortgage Notes shall bear interest at 10 3/4% per annum from the Issue Date, or
from the most recent Interest Payment Date to which interest has been paid
thereon or duly provided for, payable semi-annually on April 1 and October 1 of
each year (commencing April 1, 1995) until the principal thereof is paid or duly
provided for.
The principal of (premium, if any,) and interest on the First Mortgage
Notes shall be payable at the office or agency of the Company in the Borough of
Manhattan, The City of New York, maintained for such purpose and at any other
office or agency maintained by the Company for such purpose; PROVIDED, HOWEVER,
that interest may be payable at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Register.
SECTION 302. DENOMINATIONS.
The First Mortgage Notes shall be issuable in fully registered form
without coupons in denominations of one thousand dollars ($1,000) or any
integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The First Mortgage Notes shall be executed on behalf of the Company by
its Chairman of the Board, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the First
Mortgage Notes may be manual or facsimile. The seal of the Company may be in
the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the First Mortgage Notes. Typographical and other minor
errors or defects in any such reproduction of the seal or any such signature
shall not affect the validity or enforceability of any First Mortgage Note that
has been duly authenticated and delivered by the Trustee.
First Mortgage Notes bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such First
Mortgage Notes or did not hold such offices at the date of such First Mortgage
Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver First Mortgage Notes executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such First Mortgage Notes, and the Trustee in
accordance with the Company order shall authenticate
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and make such First Mortgage Notes available for delivery. Each First Mortgage
Note shall be dated the date of its authentication. The First Mortgage Notes
may contain such notations, legends or endorsements required by law, stock
exchange rule or usage.
No First Mortgage Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
First Mortgage Note a certificate of authentication substantially in the form
provided for herein executed by the Trustee by manual signature, and such
certificate upon any First Mortgage Note shall be conclusive evidence, and the
only evidence, that such First Mortgage Note has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
SECTION 304. TEMPORARY FIRST MORTGAGE NOTES.
Pending the preparation of definitive First Mortgage Notes, the
Company may execute, and upon Company Order the Trustee shall authenticate and
make available for delivery, temporary First Mortgage Notes which are printed,
lithographed, typewritten, mimeographed, or otherwise produced, in any
authorized denomination, substantially in the tenor of the definitive First
Mortgage Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such First Mortgage Notes may determine, as conclusively evidenced by
their execution of such First Mortgage Notes.
If temporary First Mortgage Notes are issued, the Company will cause
definitive First Mortgage Notes to be prepared without unreasonable delay.
After the preparation of definitive First Mortgage Notes, the temporary First
Mortgage Notes shall be exchangeable for definitive First Mortgage Notes upon
surrender of the temporary First Mortgage Notes at the office or agency of the
Company in a Place of Payment, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary First Mortgage Notes, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a like principal amount of definitive First Mortgage Notes
of authorized denominations and of like tenor. Until so exchanged the temporary
First Mortgage Notes shall in all respects be entitled to the same benefits
under this Indenture as definitive First Mortgage Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE.
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The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of First Mortgage Notes and for registration of transfers of First Mortgage
Notes. The Trustee is hereby appointed "Registrar" for the purpose of
registering First Mortgage Notes and transfers of First Mortgage Notes as herein
provided.
Upon surrender for registration of transfer of any First Mortgage Note
at the office or agency of the Company in a Place of Payment, the Company shall
execute, and the Trustee shall authenticate and make available for delivery, in
the name of the designated transferee or transferees, one or more new First
Mortgage Notes, of any authorized denomination or denominations and of a like
aggregate principal amount, all as requested by the transferor.
At the option of the Holder, First Mortgage Notes may be exchanged for
other First Mortgage Notes, of any authorized denomination or denominations and
of a like aggregate principal amount, upon surrender of the First Mortgage Notes
to be exchanged at such office or agency upon the payment of the charges, if
any, hereinafter provided. Whenever any of the First Mortgage Notes are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the First Mortgage Notes which the
Holder making the exchange is entitled to receive.
All First Mortgage Notes issued upon any registration of transfer or
exchange of First Mortgage Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the First Mortgage Notes surrendered upon such registration of
transfer or exchange.
Every First Mortgage Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed, by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of First Mortgage Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of First Mortgage
Notes,
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other than exchanges pursuant to Section 304, 906 or 1206 not involving any
transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange First Mortgage Notes during a period beginning at the opening of
business 15 days before the date of the mailing of a notice of redemption of
First Mortgage Notes selected for redemption under Section 1202 and ending at
the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any First Mortgage Note so selected for redemption in
whole or in part, except the unredeemed portion of any First Mortgage Note being
redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN FIRST
MORTGAGE NOTES.
If any mutilated First Mortgage Note is surrendered to the Trustee,
the Company shall execute and upon its request the Trustee shall authenticate
and deliver in exchange therefor a new First Mortgage Note of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company the Trustee (i) evidence of
their satisfaction of the destruction, loss or theft of any First Mortgage Note
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such First Mortgage Note has been acquired by a
BONA FIDE purchaser, the Company shall execute and upon its request the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
First Mortgage Note, a new First Mortgage Note of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen First Mortgage
Note has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new First Mortgage Note, pay such First
Mortgage Note.
No service charge shall be made for the issuance of any new First
Mortgage Note under this Section, but the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith.
Every new First Mortgage Note issued pursuant to this Section in lieu
of any destroyed, lost or stolen First Mortgage Note shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen First Mortgage Note shall be at any time enforceable
by
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anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other First Mortgage Notes duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen First Mortgage Notes.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any First Mortgage Note which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name such First Mortgage Note (or one or more Predecessor
First Mortgage Notes) is registered at the close of business on the Record Date
for such interest.
Any interest on any First Mortgage Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest,
and any interest payable on Defaulted Interest, to the Persons in whose
names the First Mortgage Notes (or their respective Predecessor First
Mortgage Notes) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each First Mortgage
Note and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in
this clause provided. Thereupon the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to
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be mailed, first-class postage prepaid, to each Holder at such Holder's address
as it appears in the Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the First Mortgage Notes (or their
respective Predecessor First Mortgage Notes) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following clause (2).
(2) The Company may make payment of any Defaulted Interest, and any
interest payable on Defaulted Interest, on the First Mortgage Notes in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which such First Mortgage Notes may be listed, and
upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each First
Mortgage Note delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other First Mortgage Note shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
Predecessor First Mortgage Note.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a First Mortgage Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such First Mortgage Note is registered as the
owner of such First Mortgage Note for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 307) interest on such
First Mortgage Note and for all other purposes whatsoever, whether or not such
First Mortgage Note be overdue, and neither the Company, the Trustee nor any
agent of the Company or the Trustee shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All First Mortgage Notes surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly canceled by
it. The Company may at any time deliver to the Trustee for cancellation any
First Mortgage Note previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all First Mortgage Notes
so delivered shall be promptly canceled by the Trustee. No First Mortgage Notes
shall be authenticated
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in lieu of or in exchange for any of the First Mortgage Notes canceled as
provided in this Section, except as expressly permitted by this Indenture. All
canceled First Mortgage Notes shall be held by the Trustee and may be destroyed
(and, if so destroyed, certification of their destruction shall be delivered to
the Company, unless, by a Company Order, the Company shall direct that canceled
First Mortgage Notes be returned to it).
SECTION 310. COMPUTATION OF INTEREST.
Interest on the First Mortgage Notes shall be computed on the basis of
a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture and all obligations of the Company under the Security
Documents shall cease to be of further effect (except as to any surviving rights
of registration of transfer or exchange of First Mortgage Notes herein expressly
provided for), when the Trustee, upon Company Request and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either:
(A) all Outstanding First Mortgage Notes theretofore
authenticated and issued hereunder (other than (i) First Mortgage
Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) First Mortgage
Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid
to the Company or discharged from such trust, as provided in Section
1003) have been delivered to the Trustee for cancellation; or
(B) all such First Mortgage Notes not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by
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the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (B)(i), (ii) or (iii) above, has deposited
with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such First
Mortgage Notes not theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest to the date of such
deposit (in the case of First Mortgage Notes which have become due and
payable) or the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Company to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to clause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the First Mortgage Notes
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with or
received by the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to First
Mortgage Notes, means any one of the following events (whatever the reason for
such Event of Default and whether it
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shall be voluntary or involuntary or to be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) the Company defaults in the payment of interest on any First
Mortgage Note when such interest becomes due and payable and the default
continues for a period of 30 days; or
(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any First Mortgage Note when the same becomes due and
payable at Maturity, upon redemption (including redemptions under Article
Twelve), upon repurchases pursuant to a Deficiency Offer as described in
Article Eleven, pursuant to an Asset Disposition Offer as described in
Section 1009, pursuant to a Change of Control Offer as described in Section
1013 or pursuant to a First Mortgage Note Offer as described in Section
1016 or otherwise; or
(3) the Company fails to observe or perform any of its other
covenants, warranties or agreements in the First Mortgage Notes or this
Indenture (other than a covenant, agreement or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with), and the failure to observe or perform continues for the period and
after the notice specified in the next to last paragraph of this Section;
or
(4) (i) the Company fails to pay at final maturity the principal of
any Indebtedness of the Company, whether such Indebtedness now exists or
shall hereafter be created and an aggregate principal amount of not less
than twenty-five million dollars ($25,000,000) (or, if less, the least
amount contained in any similar provision of an instrument governing any
outstanding Subordinated Indebtedness of the Company, but in no event less
than ten millions dollars ($10,000,000)) or more of such Indebtedness is
outstanding or (ii) an event or events of default, as defined in any one or
more mortgages, indentures, agreements or instruments under which there may
be issued, or by which there may be secured or evidenced, any Indebtedness
of the Company, whether such Indebtedness now exists or shall hereafter be
created, shall happen and shall result in Indebtedness in an aggregate
amount of not less than twenty-five million dollars ($25,000,000) (or, if
less, the least amount contained in any similar provision of an instrument
governing any outstanding Subordinated Indebtedness of the Company, but in
no event less than ten million dollars ($10,000,000)) or more becoming or
being declared due and payable prior to the date on which it would
otherwise have
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become due and payable, and such acceleration shall not have been rescinded
or annulled (or if such acceleration shall not have been rescinded or
annulled, such Indebtedness shall not have been discharged), within a
period of 15 days after there shall have been given to the Company by the
Trustee or to the Company by the Holders of at least 25% in aggregate
principal amount of the Outstanding First Mortgage Notes a written notice
specifying such event or events of default and requiring the Company to
cause such acceleration to be rescinded or annulled or to cause such
Indebtedness to be discharged and stating that such notice is a "Notice of
Default" hereunder; or
(5) one or more judgments or decrees shall be entered against the
Company involving, individually or in the aggregate, a liability of twenty-
five million dollars ($25,000,000) or more and a sufficient number of such
judgments or decrees shall not have been vacated, discharged, satisfied or
stayed pending appeal within 30 days from the entry thereof so as to bring
the aggregate liability in respect thereof below the twenty-five million
dollar ($25,000,000) threshold; or
(6) the Company pursuant to or within the meaning of any Bankruptcy
Law (i) commences a voluntary case or proceeding under any Bankruptcy Law
with respect to itself, (ii) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (iii) consents to or acquiesces in the institution of
bankruptcy or insolvency proceedings against it, (iv) applies for, consents
to or acquiesces in the appointment of or taking possession by a Custodian
of the Company or for any material part of its property, (v) makes a
general assignment for the benefit of its creditors or (vi) takes any
corporate action in furtherance of or to facilitate, conditionally or
otherwise, any of the foregoing; or
(7) (i) a court of competent jurisdiction enters a judgment, decree
or order for relief in respect of the Company in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition in respect of the Company, (B) appoint a Custodian of the
Company or for any material part of its property or (C) order the winding-
up or liquidation of its affairs, and such judgment, decree or order shall
remain unstayed and in effect for a period of 90 consecutive days; or (ii)
any bankruptcy or insolvency petition or application is filed, or any
bankruptcy or insolvency proceeding is commenced against the Company and
such petition, application or proceeding is not dismissed within 90 days;
or (iii) any
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warrant of attachment is issued against any material portion of the
property of the Company which is not released within 90 days of service; or
(8) the failure to observe or perform any covenant or agreement set
forth in Section 1015 and continuance of such failure for 30 days; or
(9)(i) the failure to observe or perform any of the covenants,
agreements or warranties contained or incorporated by reference in any
Security Document and continuance of such failure for 30 days after written
notice thereof has been given to the Company by the Trustee or to the
Company and the Trustee by the Holders representing at least 25% of the
principal amount of Outstanding First Mortgage Notes, (ii) for any reason,
other than the satisfaction in full and discharge of all obligations
secured thereby, to the extent permitted by this Indenture or any Security
Document, any Security Document ceases to be in full force and effect, any
Lien intended to be created thereby ceases to be or is not a valid and
perfected Lien having the ranking or priority contemplated thereby or any
Person (other than the Trustee and the Holders or the Company) obtains any
interest in the Collateral or any part thereof, except for Permitted
Collateral Liens and continuance of such condition for 30 days, or (iii)
the Company asserts in writing that any Security Document has ceased to be
or is not in full force and effect, in contravention of this Indenture.
A Default under clause (3) above is not an Event of Default until the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding First Mortgage Notes notify the Company of the Default and the
Company does not cure the Default within 60 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default." When a Default under clause (3) above is
cured within such 60-day period, it ceases.
The Company shall file with the Trustee written notice of the
occurrence of any Default or Event of Default within five (5) business days of
an Officer becoming aware of any such Default or Event of Default.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT.
If an Event of Default with respect to First Mortgage Notes (other
than an Event of Default specified in clause (6) or (7) of Section 501) occurs
and is continuing, the Trustee by notice in writing to the Company, or the
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Holders of at least 25% in aggregate principal amount of the Outstanding First
Mortgage Notes by notice in writing to the Company and the Trustee, may declare
the unpaid principal of and accrued interest to the date of acceleration on all
the Outstanding First Mortgage Notes to be due and payable immediately and, upon
any such declaration, the Outstanding First Mortgage Notes shall become and be
immediately due and payable.
If an Event of Default specified in clause (6) or (7) of Section 501
occurs, all unpaid principal (without premium) of and accrued interest on the
Outstanding First Mortgage Notes shall IPSO FACTO become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any Holder of any First Mortgage Note.
Upon payment of all such principal and interest, all of the Company's
obligations under the First Mortgage Notes and (upon payment of the First
Mortgage Notes) this Indenture shall terminate, EXCEPT obligations under Section
607.
The Holders representing at least two-thirds in principal amount of
the Outstanding First Mortgage Notes by notice to the Trustee may rescind an
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of the principal and interest of the First Mortgage Notes
that has become due solely by such declaration of acceleration, have been cured
or waived, (ii) to the extent the payment of such interest is lawful, interest
on overdue installments of interest and overdue principal that has become due
otherwise than by such declaration of acceleration have been paid, (iii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (iv) all payments due to the Trustee and any
predecessor Trustee under Section 607 have been made.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any interest on any First
Mortgage Note when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any First Mortgage Note at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such First Mortgage Notes, the whole
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amount then due and payable on such First Mortgage Notes for principal (and
premium, if any) and interest and, to the extent that payment of such interest
shall be legally enforceable, interest on any overdue principal (and premium, if
any) and on any overdue interest, at the rate or rates prescribed therefor in
such First Mortgage Notes, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such First Mortgage Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon such First
Mortgage Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, either for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted therein, or to secure any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the First
Mortgage Notes or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the First
Mortgage Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the First
Mortgage Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its
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agent and counsel) and of the Holders allowed in such judicial proceedings,
and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the First
Mortgage Notes or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
FIRST MORTGAGE NOTES.
All rights of action and claims under this Indenture or the First
Mortgage Notes may be prosecuted and enforced by the Trustee without the
possession of any of the First Mortgage Notes or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Holders in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the First Mortgage Notes in respect of
which moneys have been collected and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section
607;
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Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the First Mortgage Notes
in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such First Mortgage Notes for principal
(and premium, if any) and interest, respectively; and
Third: To the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 506. At least fifteen (15) days before such
record date, the Trustee shall mail to each Holder and the Company a notice that
states the record date, the payment date and the amount to be paid.
SECTION 507. LIMITATION ON SUITS.
No Holder shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding First Mortgage Notes shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding First Mortgage Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Indenture,
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except in the manner herein provided and for the equal and ratable benefit of
all such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision of this Indenture, the Holder of
any First Mortgage Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Section 307) interest on such First Mortgage Note on the Stated
Maturity or Maturities expressed in such First Mortgage Note (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement of
mutilated, destroyed, lost or stolen First Mortgage Notes in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion of employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any of the
First Mortgage Notes to exercise any right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
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SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding First
Mortgage Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the First Mortgage
Notes, PROVIDED that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to Section 601, the Trustee need not take any action
which might involve the Trustee in personal liability or be unduly
prejudicial to the Holders not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS.
Holders representing not less than at least two-thirds in principal
amount of the Outstanding First Mortgage Notes may by written notice to the
Trustee on behalf of the Holders of all First Mortgage Notes waive any Default
or Event of Default and its consequences, except a Default or Event of Default
(1) in respect of the payment of the principal of (or premium, if
any) or interest on any First Mortgage Note, or
(2) in respect of a covenant or other provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding First Mortgage Note affected.
Upon any such waiver, such Default or Event of Default shall cease to
exist and shall be deemed to have been cured, for every purpose of this
Indenture and the First Mortgage Notes; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any First
Mortgage Note by such Holder's acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the
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costs of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section shall not apply
to any suit instituted by the Company, to any suit instituted by the Trustee, to
any suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding First Mortgage Notes, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any First Mortgage Note on or
after the Stated Maturity or Maturities expressed in such First Mortgage Note
(or, in the case of redemption, on or after the Redemption Date).
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) Except during the continuance of an Event of Default, the
Trustee's duties and responsibilities under this Indenture shall be governed by
Section 315(a) of the Trust Indenture Act.
(b) In case an Event of Default has occurred and is continuing, and
is known to the Trustee, the Trustee shall exercise the rights and power vested
in it by this Indenture and the Security Documents, and shall use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
(c) None of the provisions of Section 315(d) of the Trust Indenture
Act shall be excluded from this Indenture.
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SECTION 602. NOTICE OF DEFAULTS.
Within 30 days after the occurrence of any Default or Event of
Default, the Trustee shall give to all Holders, as their names and addresses
appear in the Register, notice of such Default or Event of Default known to the
Trustee, unless such Default or Event of Default shall have been cured or
waived; PROVIDED, HOWEVER, that, except in the case of a Default or Event of
Default in the payment of the principal of (or premium, if any) or interest on
any First Mortgage Note, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or
directors or Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of the Trust Indenture Act:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder or under the Security
Documents, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an
Officer's Certificate;
(4) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder or under the Security Documents in good faith and
in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or under any Security
Document at the request or direction of any of the Holders pursuant to this
Indenture,
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unless such Holders shall have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities (including any
liabilities arising under Environmental Laws) which might be incurred by it
in compliance with such request or direction;
(6) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval or
other paper or document, or the books and records of the Company, unless
requested in writing to do so by the Holders of a majority in principal
amount of the Outstanding First Mortgage Notes; PROVIDED, HOWEVER, that if
the payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to so proceeding; the reasonable expense of
every such investigation shall be paid by the Company or, if paid by the
Trustee, shall be repaid by the Company upon demand;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder or under the Security Documents either
directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder; and
(8) the Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder or under any Security Document, or in the exercise of its
rights or power, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
FIRST MORTGAGE NOTES.
The recitals contained herein and in the First Mortgage Notes, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture, the Security Documents
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or of the First Mortgage Notes. Neither the Trustee nor any Authenticating
Agent shall be accountable for the use or application by the Company of First
Mortgage Notes or the proceeds thereof.
SECTION 605. MAY HOLD FIRST MORTGAGE NOTES.
The Trustee, any Authenticating Agent, any Paying Agent, any Registrar
or any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of First Mortgage Notes and, subject to Section 608
and 613, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Authenticating Agent, Paying Agent, Registrar or such
other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder (including amounts held
by the Trustee as Paying Agent) need not be segregated from other funds except
to the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed upon
in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability, damage, claim or expense, including taxes (other than
taxes based upon or determined or measured by the income of the Trustee),
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim
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or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a claim prior to the First Mortgage
Notes upon all property and funds held or collected by the Trustee hereunder,
except funds held in trust for payment of principal (and premium, if any) or
interest on the First Mortgage Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(6) or Section 501(7), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section 607 shall survive this Indenture.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
The Trustee shall be disqualified only where such disqualification is
required by Section 310(b) of the Trust Indenture Act.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Section 310(a)(1) of the Trust Indenture Act
having a combined capital and surplus of at least fifty million dollars
($50,000,000) subject to supervision or examination by federal or State
authority, to the extent there is such an institution eligible and willing to
serve. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Neither the Company nor any Affiliate of the Company may serve as Trustee. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
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SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611 and execution of supplemental Security
Documents if required.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding First Mortgage Notes, delivered
to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 310(b) of the
Trust Indenture Act after written request therefor by the Company or by any
Holder who has been a BONA FIDE Holder for at least six months; or
(ii) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a BONA FIDE Holder for at least six months; or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee, or (B) subject to Section 315(e) of the Trust Indenture Act, any Holder
who has been a BONA FIDE Holder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee, subject to any stay of such removal entered in accordance with Section
310(b) of the Trust Indenture Act.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of
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Trustee for any cause, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee and shall comply with the applicable requirements of
Section 611. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding First Mortgage Notes delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 611, any Holder who has been a BONA FIDE Holder for at least
six months may, subject to Section 514 hereof, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Register. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee,
every such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee, including all rights, powers
and trusts under each of the Security Documents, and shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder, subject to its Lien, if any, provided for in Section
607.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all
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such rights, powers and trusts referred to in Subsection (a) above.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article and the Trust Indenture Act.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversation or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such
corporation shall be otherwise qualified and eligible under this Article and the
Trust Indenture Act, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any First Mortgage Notes
shall have been authenticated, but not delivered, by the Trustee then in office,
any successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the First Mortgage Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such First Mortgage Notes.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
At any time when any of the First Mortgage Notes remain Outstanding
the Trustee may appoint an Authenticating Agent or Agents which shall be
authorized to act on behalf of, and subject to the direction of, the Trustee to
authenticate First Mortgage Notes issued upon exchange, registration of transfer
or partial redemption thereof or pursuant to Section 306, and First Mortgage
Notes so authenticated shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of First Mortgage Notes by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed
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on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
shall be acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States of America, any
State thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
fifty million dollars ($50,000,000) and subject to supervision or examination by
federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted to with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders, as their
names and addresses appear in the Register. Any successor Authenticating Agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
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If an appointment is made pursuant to this Section, the First Mortgage
Notes may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
Dated:
------------------------
This is one of the 10 3/4% First Mortgage Notes due 2002 issued under
the Indenture referred to in this First Mortgage Note.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
AS TRUSTEE
By:
----------------------------------------
AS AUTHENTICATING AGENT
By:
----------------------------------------
AUTHORIZED SIGNATORY
Section 615. APPOINTMENT OF SEPARATE TRUSTEE OR CO-TRUSTEE.
It is the purpose of this Indenture that there shall be no violation
of any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as the Trustee in such
jurisdiction. It is recognized that in case of litigation under this Indenture,
the First Mortgage Notes or the Security Documents, and in particular in case of
the enforcement of this Indenture, the First Mortgage Notes or the Security
Documents upon a Default or Event of present or future law of any jurisdiction
it may not exercise any in respect of the Collateral Properties or hold title to
the properties in trust, as herein granted, or to take title to any Collateral
Properties or connection therewith, it may be necessary, appropriate or
expeditious that the Trustee appoint, and the Trustee is hereby empowered to so
appoint, an additional individual or institution as a separate trustee or co-
trustee (the "Co-Trustee"). The appointment, and any such Co-Trustee shall be
entitled to payment and reimbursement pursuant to Section 607.
In the event that the Trustee appoints an additional individual or
institution as a Co-Trustee, each and every remedy, power, right, claim, demand,
cause of action, immunity, estate, title, interest and Lien expressed or
intended by this Indenture, by the First Mortgage Notes or by the Security
Documents to be
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exercised by or vested in or conveyed to the Trustee with respect thereto shall
be exercisable by and vest in such Co-Trustee shall run to and be enforceable by
either of them. Should any instrument in writing from the Company be required
by the Co-Trustee so appointed by the Trustee for more fully and certainly
vesting in and confirming to him, her or it such properties, rights, powers,
trusts, duties and obligations, any and all such instruments in writing shall,
on request, be executed, acknowledged and delivered by Company. In case any Co-
Trustee or a successor thereto shall die, become incapable of acting, resign or
be removed, all the estates, properties, rights, powers, trusts, duties
obligations of such Co-Trustee, so far as permitted by law, shall vest in and be
exercised by the Trustee until the appointment of a new Co-Trustee.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(1) semi-annually, not later than January 1 and July 1 in each
year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of the preceding December 15 or June
15, as the case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
PROVIDED, HOWEVER, that so long as the Trustee is the Registrar, no such list
shall be required to be furnished.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Registrar. The
Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
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(b) Holders may communicate as provided in Section 312(b) of the
Trust Indenture Act with other Holders with respect to their rights under this
Indenture or under the First Mortgage Notes, and the Trustee shall comply with
its obligations under such Section 312(b).
(c) Each Holder of First Mortgage Notes, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Holders in accordance with Section 702(b), regardless of the source from which
such information was derived, and that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a request made under Section
702(b).
SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the year
1995, the Trustee shall transmit by mail to all Holders as provided in Section
313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if
required by and in compliance with Section 313(a) of the Trust Indenture Act.
If required by Section 313(a) of the Trust Indenture Act, such report shall
describe any release, or release and substitution, of Collateral subject to the
Lien of any applicable Security Document (and consideration therefor, if any)
which has not previously been reported.
(b) The Trustee shall comply with Sections 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the First Mortgage Notes are listed, with the Commission and with the
Company. The Company will notify the Trustee when any of the First Mortgage
Notes are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Company is not required to file information, documents or
reports
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pursuant to either of said Sections, then it shall file with the Trustee
and the Commission, within the earlier of (a) the same 15 days after the
Company would have been required to file with the Commission under the
preceding clause and (b) the date which it is required to so file under the
1991 Indenture so long as any Indebtedness is outstanding thereunder, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Exchange
Act in respect of a security listed and registered on a national securities
exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to all Holders, as their names and addresses
appear in the Register, (a) concurrently with furnishing the same to its
stockholders, the Company's annual report to stockholders, containing
certified financial statements, and any other financial reports which the
Company generally furnishes to its stockholders, and (b) within 30 days
after the filing thereof with the Trustee, such summaries of any other
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission; and
(4) furnish to the Trustee, on or before May 1 of each year, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this
Indenture. For purposes of this paragraph, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. Such certificate need not comply with
Section 102.
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ARTICLE EIGHT
CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER
SECTION 801. WHEN COMPANY MAY MERGE, ETC.
The Company shall not consolidate with, or merge with or into any
other corporation (whether or not the Company shall be the surviving
corporation), or sell, assign, transfer or lease all or substantially all of its
properties and assets as an entirety or substantially as an entirety to any
Person or group of affiliated Persons, in one transaction or a series of related
transactions, unless:
(1) either the Company shall be the continuing Person or the Person
(if other than the Company) formed by such consolidation or with which or
into which the Company is merged or the Person (or group of affiliated
Persons) to which all or substantially all the properties and assets of the
Company as an entirety are sold, assigned, transferred or leased is a
corporation (or constitute corporations) organized and existing under the
laws of the United States of America or any State thereof or the District
of Columbia and expressly assumes, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Company under the First Mortgage Notes, this
Indenture and the Security Documents, including the Trustee's uninterrupted
Lien (subject to Permitted Collateral Liens) in respect of the Collateral;
(2) immediately before and after giving effect to such transaction or
series of related transactions, no Event of Default, and no Default, shall
have occurred and be continuing;
(3) immediately after giving effect to such transaction or series of
related transactions on a PRO FORMA basis, but prior to any purchase
accounting adjustments resulting from the transaction or series of related
transactions, the Consolidated Net Worth of the Company (or of the
surviving, consolidated or transferee entity if the Company is not
continuing, treating such entity as the Company for purposes of determining
Consolidated Net Worth) shall be at least equal to the Consolidated Net
Worth of the Company immediately before such transaction or series of
related transactions; and
(4) immediately after giving effect to such transaction or series of
related transactions, the Company (or the surviving, consolidated or
transferee entity if the Company is not continuing, but treating such
entity as the
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Company for purposes of making such determination) would be permitted to
incur an additional dollar of Indebtedness (not constituting Permitted
Indebtedness) immediately prior to such transaction or series of related
transactions under Section 1008; PROVIDED, HOWEVER,that this Subsection (4)
shall be inapplicable if (a) such transaction or series of related
transactions would result in the occurrence of a Change of Control or (b)
immediately prior to giving effect to such transaction or series of related
transactions, the Company would not be permitted to incur an additional
dollar of Indebtedness (not constituting Permitted Indebtedness) under
Section 1008, and immediately after giving effect to such transaction or
series of related transactions on a PRO FORMA basis, but prior to any
purchase accounting adjustments resulting from the transaction or series of
related transactions, the Consolidated Interest Coverage Ratio of the
Company (or the surviving, consolidated or transferee entity if the Company
is not continuing, treating such entity as the Company for purposes of
determining Consolidated Interest Coverage Ratio) shall be at least equal
to the Consolidated Interest Coverage Ratio of the Company immediately
before such transaction or series of related transactions; and PROVIDED,
FURTHER, that notwithstanding the foregoing, if this Subsection (4) in
inapplicable by reason of clause (b) of the first proviso to this
Subsection, and at the date three months after the consummation of such
transaction or series of related transactions the rating ascribed to the
First Mortgage Notes by Standard & Poor's Corporation or Moody's Investors
Service, Inc. shall be lower than the rating ascribed to the First Mortgage
Notes prior to the public announcement of such transaction or series of
related transactions, then the Company shall make an offer for the First
Mortgage Notes at the same price and following the same procedures and
obligations as required with respect to a Change of Control pursuant to
Section 1013 (as if such date three months after the giving effect to such
transaction or series of related transactions were the Change of Control
Date).
SECTION 802. FIRST MORTGAGE NOTES TO BE SECURED IN CERTAIN EVENTS.
If, upon any consolidation or merger, or upon any sale, assignment,
transfer or lease as provided in Section 801, any material property of the
Company or any Restricted Subsidiary or any shares of Capital Stock or
Indebtedness of any Restricted Subsidiary, owned immediately prior thereto,
would thereupon become subject to any Lien securing any indebtedness for
borrowed money of, or guaranteed by, such other corporation or Person (other
than any Permitted Lien), the Company, prior to such consolidation, merger,
sale, assignment, transfer or lease, will by indenture supplemental hereto
secure the due and punctual
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payment of the principal of, and premium, if any, and interest on the First
Mortgage Notes then Outstanding (together with, if the Company shall so
determine, any other Indebtedness of, or guaranteed by, the Company or any
Restricted Subsidiary and then existing or thereafter created) equally and
ratably with (or, at the option of the Company, prior to) the Indebtedness
secured by such Lien.
SECTION 803. OFFICER'S CERTIFICATE; OPINION OF COUNSEL.
The Company shall deliver to the Trustee prior to the proposed
transaction(s) covered by Section 801 an Officer's Certificate and an Opinion of
Counsel, each stating that the transaction(s) and such supplemental indenture
comply with this Indenture and that all conditions precedent to the consummation
of the transaction(s) under this Indenture have been met.
SECTION 804. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company with or merger by the Company
into any other corporation or any lease, sale, assignment or transfer of all or
substantially all of the property and assets of the Company in accordance with
Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or the successor corporation or affiliated group of
corporations to which such lease, sale, assignment or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture or under the Security Documents with the same
effect as if such successor corporation or corporations had been named as the
Company herein or under the Security Documents, and thereafter, except in the
case of a lease, the predecessor corporation or corporations shall be relieved
of all obligations and covenants under this Indenture, the First Mortgage Notes
and the Security Documents and in the event of such conveyance or transfer,
except in the case of a lease, any such predecessor corporation may be dissolved
and liquidated.
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO THE
INDENTURE AND SECURITY DOCUMENTS
SECTION 901. SUPPLEMENTAL INDENTURES AND AMENDMENTS TO SECURITY
DOCUMENTS WITHOUT CONSENT OF HOLDERS.
Without notice to or the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may, subject to Section 1003, enter into one or more indentures
supplemental hereto or one or more amendments to the Security Documents, in form
satisfactory to the Trustee, for any of the following purposes:
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(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the First Mortgage Notes or the Security Documents, as the case may
be; or
(2) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein or in the First Mortgage
Notes or the Security Documents conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to further secure the First Mortgage Notes; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 611(b); or
(6) to cure any ambiguity, defect or inconsistency or to correct or
supplement any provision herein or in any Security Document which may be
inconsistent with any other provision herein or therein; or
(7) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(8) to make any change that does not materially adversely affect the
interests of the Holders.
Upon request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture or amendment to the
Security Documents, and upon receipt by the Trustee of the documents described
in (and subject to the last sentence of) Section 903, the Trustee shall join
with the Company in the execution of any supplemental indenture or amendment to
the Security Documents authorized or permitted by the terms of this Indenture or
the Security Documents, respectively.
SECTION 902. SUPPLEMENTAL INDENTURES AND AMENDMENTS TO SECURITY
DOCUMENTS WITH CONSENT OF HOLDERS.
With the written consent of Holders representing at least two-thirds
in principal amount of the Outstanding First Mortgage Notes, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee shall, subject to Section 903, enter into
an indenture or indentures supplemental hereto or one or
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more amendments to any Security Document, to which it is a party (or authorize
one or more amendments to any other Security Document) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of any Security Document or of modifying in any manner the
rights of the Holders under this Indenture or the rights or obligations of the
parties to any Security Document or taking any actions pursuant thereto;
PROVIDED, HOWEVER, that no such supplemental indenture or amendment in respect
of any Security Document shall, without the consent of the Holder of each
Outstanding First Mortgage Note,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any First Mortgage Note, or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof or extend the time for payment
thereof, or change the Place of Payment where, or the coin or currency in
which, any First Mortgage Note or any premium or the interest thereon is
payable, or impair the right to institute a suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
First Mortgage Notes, the consent of whose Holders is required for any such
supplemental indenture or amendment, or the consent of whose Holders is
required for any waiver of compliance with certain provisions of this
Indenture or Defaults or Events of Default hereunder and their consequences
provided for in this Indenture, or
(3) change the repurchase provisions (including those contained in
Article Eleven, Section 1009, Section 1013, 1015 and 1016) or redemption
provisions (including those contained in Article Twelve) hereof in a manner
adverse to such Holder, or
(4) subordinate in right of payment, or otherwise subordinate, the
First Mortgage Notes to any other Indebtedness; or
(5) modify any of the provisions of this Section, Section 513 or
Section 1014, except to increase any such percentage or to provide that
certain other provisions of this Indenture or the Security Documents cannot
be modified or waived without the consent of the Holder of each Outstanding
First Mortgage Note affected thereby, PROVIDED, HOWEVER, that this clause
shall not be deemed to require the consent of any Holder with respect to
changes in the references to "the Trustee" and concomitant changes in this
Section and Section 1014, or the deletion of this proviso,
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in accordance with the requirements of Sections 611(b) and 901(7); or
(6) permit the creation of any Lien on the Collateral or any part
thereof (other than Permitted Collateral Liens and Liens in favor of the
Trustee) or terminate the Lien of any Security Document as to any part of
the Collateral, except as permitted by this Indenture or any Security
Document.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture or amendment
to any Security Document, but it shall be sufficient if such Act shall approve
the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES AND
AMENDMENTS TO SECURITY DOCUMENTS.
The Trustee shall sign any supplemental indenture or any amendment to
any Security Document authorized pursuant to this Article, subject to the last
sentence of this Section 903. In executing, or accepting the additional trusts
created by, any supplemental indenture or any amendment to any Security Document
permitted by this Article or the modifications thereby of the trusts created by
this Indenture and the Security Documents, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Officer's Certificate and an Opinion of Counsel stating that the execution of
such supplemental indenture or amendment is authorized or permitted by this
Indenture or the Security Documents, respectively. The Trustee may, but shall
not be obligated to, enter into any such supplemental indenture or amendment
which affects the Trustee's own rights, duties or immunities under this
Indenture and the Security Documents or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES AND
AMENDMENTS TO SECURITY DOCUMENTS.
Upon the execution of any supplemental indenture or any amendment to
any Security Document under this Article, this Indenture or such Security
Document, as the case may be, shall be modified in accordance therewith, and
such supplemental indenture or amendment shall form a part of this Indenture for
all purposes; and every Holder of First Mortgage Notes theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
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SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN FIRST MORTGAGE NOTES TO SUPPLEMENTAL
INDENTURES.
First Mortgage Notes authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new First Mortgage Notes so modified as to conform, in the opinion of
the Trustee and the Company, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding First Mortgage Notes.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any) and
interest on the First Mortgage Notes in accordance with the terms of the First
Mortgage Notes and this Indenture. An installment of principal or interest
shall be considered paid on the date it is due if the Trustee or Paying Agent
holds by 12:00 noon New York City time on the day prior to that date dollars
designated for and sufficient to pay the installment and is not prohibited from
paying such money to the Holders pursuant to the terms of this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Place of Payment, an office or agency
where First Mortgage Notes may be presented or surrendered for payment, where
First Mortgage Notes may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Company in respect of the First
Mortgage Notes and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as
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its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the First Mortgage Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Place of Payment for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
SECTION 1003. MONEY FOR FIRST MORTGAGE NOTES PAYMENTS TO BE HELD
IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to the First Mortgage Notes, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the First Mortgage
Notes, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents with respect
to the First Mortgage Notes, it will, prior to each due date of the principal of
(and premium, if any) or interest on any of the First Mortgage Notes, deposit
with a Paying Agent a sum sufficient to pay the principal (and premium, if any)
or interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure to so act.
The Company will cause each Paying Agent for the First Mortgage Notes
(other than the Trustee) to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on First Mortgage Notes in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the First Mortgage Notes)
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in the making of any payment of principal (and premium, if any) or interest
on the First Mortgage Notes; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any First Mortgage Note and remaining unclaimed for one year
after such principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such First
Mortgage Note shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and that of each of its Restricted Subsidiaries and the rights
(charter and statutory), licenses and franchises of the Company and its
Restricted Subsidiaries; PROVIDED, HOWEVER, that (a) the Company shall not be
required to preserve any such right, license or franchise or the corporate
existence of any of its Restricted Subsidiaries if the Board of Directors, or
the board of directors of the Restricted Subsidiary concerned, as the case may
be, shall
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determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any of its Restricted Subsidiaries and that the
loss thereof is not materially disadvantageous to the Holders and (b) nothing
herein contained shall prevent any Restricted Subsidiary of the Company from
liquidating or dissolving, or merging into, or consolidating with the Company
(PROVIDED that the Company shall be the continuing or surviving corporation) or
with any one or more Restricted Subsidiaries of the Company if the Board of
Directors or the board of directors of the Restricted Subsidiary concerned, as
the case may be, shall so determine.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
Without prejudice to the provisions of Article Sixteen of this
Indenture and the provisions of the applicable Security Documents, the Company
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (1) all material taxes, assessments and governmental charges
levied or imposed upon the Company or any Restricted Subsidiary or upon the
income, profits or property of the Company or any Restricted Subsidiary and (2)
all lawful claims against the Company or any Restricted Subsidiary for labor,
materials and supplies which in the case of either clause (1) or (2) of this
Section, if unpaid, might by law become a material Lien upon the property of the
Company or any Restricted Subsidiary; PROVIDED, HOWEVER, that neither the
Company nor any Restricted Subsidiary shall be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 1006. RESTRICTION ON DIVIDENDS.
The Company will not, and will not permit any Subsidiary of the
Company to, directly or indirectly, (1) declare or pay any dividend or make any
distribution, in cash or otherwise, in respect of any shares of Capital Stock of
the Company or to the holders of Capital Stock of the Company as such (other
than dividends or distributions payable in shares of Capital Stock of the
Company (other than Redeemable Stock)) or (2) purchase, redeem or otherwise
acquire or retire for value any of the Capital Stock of the Company or options,
warrants or other rights to acquire any such Capital Stock, other than
acquisitions of Capital Stock or such options, warrants or other rights by any
Subsidiary of the Company from the Company (any such transaction included in
clause (1) or (2) being hereafter collectively referred to as a "Restricted
Payment") if (i) at the time of such Restricted Payment and after giving effect
thereto, (a) an Event of Default shall have occurred and be continuing or (b)
the Consolidated Net Worth of the Company shall be less than seven hundred fifty
million dollars ($750,000,000); or if (ii) after
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giving effect to such Restricted Payment, the aggregate amount expended
subsequent to November 1, 1991, for all such Restricted Payments (the amount of
any Restricted Payment, if other than cash, to be the fair market value of such
payment as determined by the Board of Directors of the Company, whose reasonable
determination shall be conclusive and evidenced by a Board Resolution) exceeds
the algebraic sum of (w) a number calculated as follows: (A) if the aggregate
Consolidated Net Income of the Company earned on a cumulative basis during the
period subsequent to September 30, 1991 through the end of the last fiscal
quarter that is prior to the declaration of any such dividend or distribution or
the giving of notice of such purchase, redemption or other acquisition or
retirement and for which such financial information is then available, is a
positive number, then 100% of such positive number, and (B) if the aggregate
Consolidated Net Income of the Company earned on a cumulative basis during the
period subsequent to September 30, 1991 through the end of the last fiscal
quarter that is prior to the declaration of any such dividend or distribution or
the giving of notice of such purchase, redemption or other acquisition or
retirement and for which such financial information is then available, is a
negative number, then 100% of such negative number, (x) the aggregate net cash
proceeds received by the Company from the issuance and sale, other than to a
Subsidiary of the Company, subsequent to November 1, 1991, of Capital Stock
(including Capital Stock issued upon the conversion of, or in exchange for,
securities other than Capital Stock and options, warrants or other rights to
acquire Capital Stock, but excluding Redeemable Stock), (y) the aggregate net
cash proceeds originally received by the Company from the issuance and sale,
other than to a Subsidiary of the Company, of Indebtedness of the Company that
is converted into Capital Stock of the Company subsequent to November 1, 1991,
and (z) three hundred million dollars ($300,000,000); PROVIDED, HOWEVER, that
the retirement of any shares of the Company's Capital Stock by exchange for, or
out of the proceeds of the substantially concurrent sale of, other shares of
Capital Stock of the Company other than Redeemable Stock shall not constitute a
Restricted Payment. If all of the conditions to the declaration of a dividend
or distribution set out in this Section are satisfied at the time such dividend
or distribution is declared, then such dividend or distribution may be paid or
made within sixty days after such declaration even if the payment of such
dividend, the making of such distribution or the declaration thereof would not
have been permitted under this Section at any time after such declaration.
SECTION 1007. LIMITATION ON FUTURE LIENS AND GUARANTIES.
(a) If the Company or any Subsidiary of the Company shall create,
incur, assume or suffer to exist any Lien upon any of the assets of the Company
or a Subsidiary of the Company other than upon the Collateral (whether such
assets are owned at
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November 1, 1991 or thereafter acquired) as security for (i) any Indebtedness or
other obligation (whether unconditional or contingent) of the Company that ranks
PARI PASSU with the First Mortgage Notes or any Indebtedness or other obligation
(whether unconditional or contingent) of a Subsidiary of the Company, the
Company will secure or will cause such Subsidiary to guarantee and secure the
Outstanding First Mortgage Notes equally and ratably with (or, at the option of
the Company, prior to) such Indebtedness or other obligation, so long as such
Indebtedness or other obligation shall be so secured, or (ii) any Subordinated
Indebtedness, the Company will secure the Outstanding First Mortgage Notes prior
to such Subordinated Indebtedness, so long as such Subordinated Indebtedness
shall be so secured; PROVIDED, HOWEVER, that this Subsection shall not apply in
the case of Permitted Liens or Liens granted by any Unrestricted Subsidiary to
secure Indebtedness or other obligations of itself or of any Person other than
the Company and its Restricted Subsidiaries.
(b) The Company will not guarantee the Indebtedness of any Subsidiary
of the Company and will not permit any such Subsidiary or Seminole to guarantee
(i) any Indebtedness of the Company that ranks PARI PASSU with the First
Mortgage Notes, (ii) any Indebtedness of a Subsidiary of the Company or (iii)
any Subordinated Indebtedness; PROVIDED, HOWEVER, that this Subsection shall not
apply to (1) any guaranty by a Subsidiary if such Subsidiary also guarantees the
First Mortgage Notes on a PARI PASSU basis with respect to guaranties of
Indebtedness described in clause (i) and (ii) and on a senior basis with respect
to guaranties of Indebtedness described in clause (iii); (2) any guaranty
existing on November 1, 1991 or any extension or renewal of such guaranty to the
extent such extension or renewal is for the same or a lesser amount; (3) any
guaranty which constitutes Indebtedness permitted by clause (v) or (vi) of the
definition of Permitted Indebtedness granted by a Person permitted to incur such
Indebtedness; (4) any guaranty by the Company of Indebtedness of a Restricted
Subsidiary, PROVIDED that (A) incurrence of such Indebtedness of the Restricted
Subsidiary is not prohibited by this Indenture and (B) (x) such guaranty
constitutes Indebtedness of the Company incurred as Permitted Indebtedness
pursuant to clause (vii) or (viii) of the definition of Permitted Indebtedness
(it being understood that, for purposes of determining Permitted Indebtedness,
any such guaranty shall be deemed to constitute Indebtedness separate from, and,
in addition to, Indebtedness of a Restricted Subsidiary which is so guaranteed)
or (y) immediately prior to and (on a PRO FORMA basis) after granting such
guaranty, the Company would be permitted to incur an additional dollar of
Indebtedness (not constituting Permitted Indebtedness) under Section 1008; (5)
any guaranty by an Unrestricted Subsidiary of Indebtedness or other obligations
of any Person other than the Company and its Restricted Subsidiaries; (6) any
guaranty by the Company or any Subsidiary or Seminole of Indebtedness or other
obligations
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constituting Indebtedness permitted by clause (i)(a) of the definition of
Permitted Indebtedness in a principal amount not exceeding the principal amount
outstanding or committed under the Credit Agreements (including any letter of
credit facility, but without duplication with respect to commitments for loans
the use of proceeds of which is restricted to repayment of other Indebtedness
under the Credit Agreements) as of November 1, 1991, PLUS two hundred fifty
million dollars ($250,000,000) and LESS the proceeds from the sale of all
Indebtedness under the 1991 Indenture issued from time to time applied to repay
Indebtedness under the Credit Agreements; (7) any guaranty by the Company of
Indebtedness of any Restricted Subsidiary outstanding on November 1, 1991 which
is not subordinated to any Indebtedness of such Restricted Subsidiary, and any
renewal, extension or refinancing of such Indebtedness permitted by this
Indenture; (8) any guaranty by the Company of Indebtedness of any Restricted
Subsidiary that is organized under the laws of a jurisdiction other than the
United States or any subdivision thereof, PROVIDED that the incurrence of such
Indebtedness of such Restricted Subsidiary is not prohibited by this Indenture;
(9) any guaranty by a Restricted Subsidiary that is organized under the laws of
a jurisdiction other than the United States or any subdivision thereof of the
Indebtedness of any of its Subsidiaries that is a Restricted Subsidiary and that
is organized under the laws of a jurisdiction other than the United States or
any subdivision thereof, PROVIDED that incurrence of such Indebtedness of such
Restricted Subsidiary is not prohibited by this Indenture; (10) any guaranty by
the Company or a Subsidiary of the Company of Indebtedness or other obligations
in a principal amount not exceeding two hundred fifty thousand dollars
($250,000); (11) any guaranty in the form of an endorsement of negotiable
instruments for deposit or collection and similar transactions; (12) any
guaranty arising under or in connection with performance bonds, indemnity bonds,
surety bonds, or commercial letters of credit not exceeding twenty-five million
dollars ($25,000,000) in aggregate principal amount from time to time
outstanding; (13) any guaranty by a Subsidiary of the Company of Indebtedness or
other obligations of another Subsidiary in effect at the time of such guarantor
becoming a Subsidiary and not created in contemplation thereof; or (14) any
guaranty by the Company or a Restricted Subsidiary of any Interest Swap
Obligation, Currency Agreement or Commodities Agreement relating to Indebtedness
that is guaranteed pursuant to another clause of this Subsection.
SECTION 1008. LIMITATION ON FUTURE INCURRENCE OF INDEBTEDNESS.
The Company will not, and will not permit any Restricted Subsidiary
to, incur, create, assume, guarantee or in any other manner become directly or
indirectly liable with respect to or responsible for the payment of any
Indebtedness except: (1) Permitted Indebtedness; and (2) Indebtedness of the
Company if at the time thereof and after giving effect thereto
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the Consolidated Interest Coverage Ratio of the Company, on a PRO FORMA basis
for the then four most recent full quarters, taken as a whole (giving effect to
(i) such Indebtedness and (ii) the effect on the Consolidated Cash Flow
Available for Fixed Charges of the Company for the then four most recent full
fiscal quarters, taken as a whole, as a result of any acquisition of a Person
acquired by the Company or any Restricted Subsidiary with the proceeds of such
Indebtedness), would be greater than 1.75 to 1. Without limiting the foregoing,
the Company shall not, and shall not permit any Restricted Subsidiary to,
guarantee, or in any other manner become directly or indirectly liable with
respect to or responsible for the payment of, Indebtedness of any Unrestricted
Subsidiary in an amount greater than, for all guaranties and undertakings of
responsibility by the Company and its Restricted Subsidiaries, 20% of the
aggregate amount of Indebtedness of such Unrestricted Subsidiary.
SECTION 1009. LIMITATION ON ASSET DISPOSITIONS.
(a) (i) The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Disposition unless the Company (or the Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Disposition at least equal to the fair market value for the assets sold or
otherwise disposed of (which shall be as determined in good faith (x) in the
case of dispositions of assets having a fair market value of ten million dollars
($10,000,000) or more, by the Board of Directors, whose reasonable determination
shall be conclusive and evidenced by a Board Resolution, or (y) in the case of
dispositions of assets having a fair market value of less than ten million
dollars ($10,000,000) but not less than five million dollars ($5,000,000), an
Officer of the Company, whose reasonable determination shall be conclusive and
evidenced by a certificate of such Officer) and (ii) the Company will apply the
aggregate net proceeds in excess of three hundred million dollars ($300,000,000)
received by the Company or any Restricted Subsidiary from all Asset Dispositions
occurring subsequent to November 1, 1991 (but excluding for purposes of this
clause (ii), whether before or after the receipt of net proceeds in excess of
three hundred million dollars ($300,000,000), (1) the net proceeds of any Asset
Disposition or series of related Asset Dispositions where the net proceeds are
less than five million dollars ($5,000,000) and (2) the first twenty-five
million dollars ($25,000,000) of net proceeds in each fiscal year without taking
into account any amount excluded pursuant to (1)) as follows: (A) to the
payment or prepayment of any Senior Indebtedness within six months of such Asset
Disposition, or (B) to investment in the business of the Company and its
Restricted Subsidiaries (including, without limitation, by acquiring equity,
other than Redeemable Stock, of the transferee of such Asset Disposition) within
six months of such Asset Disposition or, if such investment is with respect to a
project to be completed
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within a period greater than six months from such Asset Disposition, then within
the period of time necessary to complete such project; PROVIDED, HOWEVER, that
(x) in the case of applications contemplated by clause (B), the Board of
Directors has, within such six-month period, adopted in good faith a resolution
committing such excess proceeds to such investment, (y) EXCEPT as provided in
the next sentence, none of such excess proceeds shall be used to make any
Restricted Payment or any payment in respect of Subordinated Indebtedness and
(z) to the extent not applied in accordance with clauses (A) or (B) above, or if
after being so applied there remain excess net proceeds in an amount greater
than ten million dollars ($10,000,000), the Company shall make a PRO RATA offer
to all Holders to purchase First Mortgage Notes at 100% of principal amount,
plus accrued and unpaid interest to the Asset Disposition Payment Date, up to an
aggregate principal amount equal to such excess net proceeds (as adjusted
pursuant to Subsection (g) of this Section, the "Asset Disposition Offer
Amount"). If after being applied in accordance with clauses (A), (B) and (z)
above there remain excess net proceeds, the Company will apply such excess net
proceeds to the general corporate purposes of the Company or any Subsidiary of
the Company.
(b) Notwithstanding Subsection (a) of this Section, to the extent the
Company or any of its Restricted Subsidiaries receives securities or other non-
cash property or assets as proceeds of an Asset Disposition (other than equity
in the transferee not constituting Redeemable Stock), the Company shall not be
required to make any application required by Subsection (a) of this Section
until it receives cash proceeds from a sale, repayment, exchange, redemption or
retirement of or extraordinary dividend or return of capital on such non-cash
property, EXCEPT that if and to the extent the sum of all cash proceeds plus the
fair market value of equity (other than Redeemable Stock) in the transferee of
such Asset Disposition received at the time of such Asset Disposition is less
than 70% of the fair market value of the total proceeds of such Asset
Disposition (with such fair market value determined and evidenced in the same
manner as stated in clause (i) of Subsection (a) of this Section), the amount of
such deficiency (the "Deficiency Amount") shall be applied as required by
Subsection (a) of this Section as if received at the time of the Asset
Disposition. Any amounts deferred pursuant to the preceding sentence shall be
applied in accordance with Subsection (a) of this Section when cash proceeds are
thereafter received from a sale, repayment, exchange, redemption or retirement
of or extraordinary dividend or return of capital on such non-cash property;
PROVIDED, HOWEVER, that the Company shall not be required to apply with respect
to any equity interest in a transferee an amount exceeding the fair market value
attributable to such equity interest at the time of the Asset Disposition; and
PROVIDED, FURTHER, that if a Deficiency Amount was applied pursuant to the
exception contained in the
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preceding sentence, then once the cumulative amount of applications made
pursuant to Subsections (a) and (b) of this Section (including any Deficiency
Amounts) equals 100% of the fair market value of the total proceeds of the Asset
Disposition at the time of such Asset Disposition, cash proceeds thereafter
received from a sale, repayment, exchange, redemption or retirement of or
extraordinary dividend or return of capital on such non-cash property shall not
be required to be applied in accordance with Subsection (a) of this Section
EXCEPT to the extent such cash proceeds exceed the Deficiency Amount.
(c) An offer to purchase First Mortgage Notes required to be made
pursuant to this Section is referred to as an "Asset Disposition Offer" and the
date on which the purchase of First Mortgage Notes relating to any such Asset
Disposition Offer is to be made is referred to as the "Asset Disposition Payment
Date."
(d) The Company shall provide the Trustee with notice of an Asset
Disposition Offer and with all information required to accompany the notice
described in (e) below, at least 45 days before any such Asset Disposition
Payment Date and at least 10 days before the notice of any Asset Disposition
Offer is mailed to Holders.
(e) Notice of an Asset Disposition Offer described in this Section
shall be mailed on behalf of the Company by the Trustee to all Holders at their
last registered addresses not less than 30 days nor more than 60 days before the
Asset Disposition Payment Date, which shall be a date not more than 210 days
after the Asset Disposition giving rise to such Asset Disposition Offer. The
Asset Disposition Offer shall remain open from the time of the mailing of such
notice until not more than five Business Days before the Asset Disposition
Payment Date. The notice shall state:
(1) that the Asset Disposition Offer is being made pursuant to this
Section and the reason for the Asset Disposition Offer;
(2) the purchase price and the Asset Disposition Payment Date;
(3) the aggregate principal amount of First Mortgage Notes initially
subject to the Asset Disposition Offer Amount and, if applicable, a
description of the adjustment mechanisms describe in Subsection (g) of this
Section;
(4) the name and address of the Paying Agent and the Trustee and that
First Mortgage Notes must be surrendered to the Paying Agent to collect the
purchase price;
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(5) that any of the First Mortgage Notes not tendered or accepted for
payment will continue to accrue interest;
(6) that any First Mortgage Note accepted for payment pursuant to the
Asset Disposition Offer shall cease to accrue interest after the Asset
Disposition Payment Date;
(7) that each Holder electing to have a First Mortgage Note purchased
pursuant to an Asset Disposition Offer will be required to surrender the
First Mortgage Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the First Mortgage Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the fifth Business Day prior to the Asset Disposition Payment
Date;
(8) 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 preceding the Asset Disposition Payment Date, a telegram,
telex, facsimile transmission or letter setting forth: the name of the
Holder, the principal amount of the First Mortgage Note the Holder
delivered for purchase, the certificate number of the First Mortgage Note
the Holder delivered and a statement that such Holder is withdrawing his
election to have the First Mortgage Note purchased; and
(9) that Holders whose First Mortgage Notes are purchased only in
part will be issued new First Mortgage Notes equal in principal amount to
the unpurchased portion of the First Mortgage Notes surrendered.
(f) On the Asset Disposition Payment Date, the Company shall (i)
accept for payment First Mortgage Notes or portions thereof tendered pursuant to
the Asset Disposition Offer in an aggregate principal amount equal to the Asset
Disposition Offer Amount or such lesser amount of First Mortgage Notes as shall
have been tendered, (ii) on or before 12:00 noon New York City time, deposit
with the Paying Agent money sufficient to pay the purchase price of all First
Mortgage Notes or portions thereof so accepted, and (iii) deliver or cause to be
delivered to the Trustee First Mortgage Notes so accepted together with an
Officer's Certificate stating the First Mortgage Notes or portions thereof
accepted by the Company. If the aggregate principal amount of First Mortgage
Notes tendered exceeds the Asset Disposition Offer Amount, the Company shall
select the First Mortgage Notes to be purchased on a PRO RATA basis to the
nearest one thousand dollars ($1,000) of principal amount. The Paying Agent
shall promptly mail or deliver to Holders of First Mortgage Notes so accepted
payment in an amount equal to the purchase price, and the Company shall execute
and the Trustee shall promptly authenticate and mail or make available for
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delivery to such Holders a new First Mortgage Note equal in principal amount to
any unpurchased portion of the First Mortgage Note surrendered. Any First
Mortgage Notes not so accepted shall be promptly mailed or made available for
delivery to the Holder thereof. The Company will publicly announce the results
of the Asset Disposition Offer on or as soon as practicable after the Asset
Disposition Payment Date. For purposes of this Section, the Trustee or its
agent shall act as the Paying Agent.
(g) The Company shall not make an "Asset Disposition Offer" (as
defined) required under Section 1009 of the 1991 Indenture in connection with a
disposition of assets other than the Collateral unless the Company shall have
made an Asset Disposition Offer hereunder (and in respect of certain other
Senior Indebtedness in accordance with the following sentence) on a PRO RATA
basis (in an aggregate amount equal to the amount to be offered pursuant to the
Asset Disposition Offer under the 1991 Indenture) the closing date of which is
prior to six months after the asset disposition triggering the obligations of
the Company under the 1991 Indenture. Notwithstanding the previous sentence, if
on or after the date hereof, the Company issues any Senior Indebtedness
(including the 11 1/2% Senior Notes due 2004 of the Company, reference being
made to Section 1009(g) of the indenture with respect thereto) containing a
requirement that an offer be made to repurchase such Senior Indebtedness under
the same circumstances and in the same manner (including the prescribed time
periods hereof) provided in this Section 1009, then (i) the Company may apply
the Asset Disposition Offer Amount (before any adjustment pursuant to this
sentence) to the PRO RATA purchase of First Mortgage Notes tendered hereunder
and the Senior Indebtedness tendered thereunder and (ii) the Asset Disposition
Offer Amount available to repurchase the First Mortgage Notes shall be reduced
by the amount applied to the purchase of such Senior Indebtedness; PROVIDED that
this sentence shall only apply to (i) Senior Indebtedness issued on or after the
date hereof (including the 11 1/2% Senior Notes due 2004 of the Company) that
explicitly permits the PRO RATA purchase of First Mortgage Notes as described
herein and refers to this Section 1009(g) and any Indebtedness outstanding at
the date of this Indenture that is amended to explicitly permit the PRO RATA
purchase of First Mortgage Notes as described herein and refers to this Section
1009(g) and (ii) asset dispositions not involving Collateral.
SECTION 1010. MAINTENANCE OF PROPERTIES.
The Company will cause all material properties used or useful in the
conduct of its business or the business of any of its Subsidiaries to be
maintained and kept in good condition, repair and working order (normal wear and
tear excepted) and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may
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be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; PROVIDED, HOWEVER, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is, in the judgment of the Board of Directors
or of the board of directors of the Subsidiary concerned, as the case may be,
desirable in the conduct of the business of the Company or any Subsidiary of the
Company and not materially disadvantageous to the Holders.
SECTION 1011. COMPLIANCE CERTIFICATES.
(a) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year of the Company (which fiscal year currently ends on
December 31), an Officer's Certificate stating whether or not the signer knows
of any Default or Event of Default by the Company that occurred prior to the end
of the fiscal year and is then continuing. If the signer does know of such a
Default or Event of Default, the certificate shall describe each such Default or
Event of Default and its status and the specific section or sections of this
Indenture in connection with which such Default or Event or Default has
occurred. The Company shall also promptly notify the Trustee in writing should
the Company's fiscal year be changed so that the end thereof is on any date
other than the date on which the Company's fiscal year currently ends.
(b) The Company shall deliver to the Trustee as soon as practicable
but in any event not later than 45 days after the end of each fiscal quarter an
Officer's Certificate setting forth the Company's Subordinated Capital Base for
purposes of this Section 1011. The Trustee may conclusively rely on the
Officer's Certificate for such purposes.
(c) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year a written statement by the Company's independent
certified public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the First Mortgage Notes as
they relate to accounting matters and (ii) whether, in connection with their
audit examination, any Default has come to their attention and if such a Default
has come to their attention, specifying the nature and period of existence
thereof and the specific section or sections of this Indenture in connection
with which such Default has occurred; PROVIDED, that without any restriction as
to the scope of the audit examination, such independent certified public
accountants shall not be liable by reason of the failure to obtain knowledge of
such Default that would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing standards.
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(d) The Company shall deliver to the Trustee forthwith upon becoming
aware of a Default or Event of Default (but in no event later than 10 days after
the occurrence of each Default or Event of Default that is continuing), an
Officer's Certificate setting forth the details of such Default or Event of
Default and the action that the Company proposes to take with respect thereto
and the specific section or sections of this Indenture in connection with which
such Default or Event of Default has occurred.
SECTION 1012. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim, and will actively resist any and all efforts to be compelled to take the
benefit or advantage of, any stay or extension law or any usury law or other
law, which would prohibit or forgive the Company from paying all or any portion
of the principal of and/or interest on the First Mortgage Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 1013. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control (the "Change of
Control Date") and subject to the requirements of the next succeeding sentence,
each Holder shall have the right to require that the Company repurchase such
Holder's First Mortgage Notes in whole or in part pursuant to the offer
described in Subsection (b) below (the "Change of Control Offer") at a purchase
price equal to 101% of the aggregate principal amount of such First Mortgage
Notes plus accrued and unpaid interest, if any, to the date of such repurchase.
If such repurchase would constitute an event of default under Specified Bank
Debt, then, prior to giving the notice to Holders provided in Subsection (b)
below, the Company shall (i) repay in full in cash such Specified Bank Debt or
(ii) obtain the requisite consent of holders of such Specified Bank Debt to
permit the repurchase of First Mortgage Notes without giving rise to an event of
default under such Specified Bank Debt.
(b) Promptly upon satisfaction of either one of the obligations, if
then applicable, set forth in clause (i) or (ii) of Subsection (a) above, the
Company shall mail a notice to each Holder and the Trustee in respect of the
Change of Control Offer (which notice shall contain all instructions and
materials
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necessary to enable such Holders to tender First Mortgage Notes) stating:
(1) that the Change of Control Offer is being made pursuant to this
Section and that all First Mortgage Notes properly tendered will be
accepted for payment;
(2) the purchase price and the purchase date (which shall be no
earlier than 30 days nor later than 40 days from the date such notice is
mailed, but in any event prior to the date on which any Subordinated
Indebtedness is paid pursuant to the terms of a provision similar to this
Section) (the "Change of Control Payment Date");
(3) the name and address of the Paying Agent and the Trustee and that
the First Mortgage Notes must be surrendered to the Paying Agent to collect
the purchase price;
(4) that any First Mortgage Note not tendered will continue to accrue
interest;
(5) that any First Mortgage Note accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(6) that each Holder electing to have a First Mortgage Note purchased
pursuant to a Change of Control Offer will be required to surrender the
First Mortgage Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the First Mortgage Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day prior to the Change of Control Payment Date;
(7) 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 preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the First Mortgage Note the Holder
delivered for purchase, the certificate numbers of the First Mortgage Note
the Holder delivered and a statement that such Holder is withdrawing his
election to have such First Mortgage Note purchased; and
(8) that Holders whose First Mortgage Notes are purchased only in part
will be issued new First Mortgage Notes equal in principal amount to the
unpurchased portion of the First Mortgage Notes surrendered.
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On or before 12:00 noon New York City time on the Change of Control
Payment Date, the Company shall (i) accept for payment First Mortgage 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 First
Mortgage Notes or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee First Mortgage Notes so accepted, together with an
Officer's Certificate stating the aggregate principal amount of the First
Mortgage Notes or portions thereof so accepted by the Company. The Paying Agent
shall promptly mail or deliver to the Holder of First Mortgage Notes so accepted
payment in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail or make available for delivery to such Holder a new First
Mortgage Note equal in principal amount to any unpurchased portion of the First
Mortgage Note surrendered. The Company will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date. For purposes of this Section, the Trustee or its agent
shall act as the Paying Agent.
If a Change of Control has occurred but a Change of Control Offer is
not permitted to be made, the Company shall mail a notice of such Change of
Control to each Holder within 30 days following a Change of Control Date.
The Company shall comply with any applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) and any other legal requirements in the event that a Change of
Control Offer is made under the circumstances described in this Section 1013.
SECTION 1014. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1006, 1007, 1008, 1009 and
1015, if before the time for such compliance Holders representing at least two-
thirds in principal amount of the Outstanding First Mortgage Notes shall, by Act
of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition, but no such waiver
shall extend to or affect such term, provision or condition except to the extent
so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.
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SECTION 1015. LIMITATION ON COLLATERAL ASSET DISPOSITIONS AND COLLATERAL LOSS
EVENTS.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate or permit a Collateral Asset
Disposition unless: (i) the Company receives consideration in respect of and
concurrently with such Collateral Asset Disposition at least equal to the fair
market value of the relevant Collateral; (ii) with respect to each such
Collateral Asset Disposition, the Company delivers an Officer's Certificate to
the Trustee dated no more than 30 days prior to the date of consummation of the
relevant Collateral Asset Disposition, certifying that (A) such disposition
complies with clause (i) above, (B) the fair market value of the Collateral
being sold was determined in good faith by the Board of Directors of the
Company, including a majority of the Independent Directors (whose determination
was based on the opinion of a qualified Independent Appraiser or Independent
Financial Adviser prepared contemporaneously with such Collateral Asset
Disposition and which opinion will be evidenced by an opinion letter of the
Independent Appraiser or Independent Financial Adviser and attached to the
Officer's Certificate), as evidenced by copies of the resolutions of the Board
of Directors of the Company (which shall also indicate that the relevant
Collateral Asset Disposition is being made for an appropriate business purpose
which is not the redemption of the First Mortgage Notes), indicating the
requisite approval by the Independent Directors and the Board of Directors,
adopted in respect of and concurrently with such Collateral Asset Disposition
and (C) in the case of a release of less than all of a Collateral Property, the
release of the relevant portion of such Collateral Property will not interfere
with or materially and adversely affect the value of the remaining portion of
such Collateral Property, the maintenance and operation of such remaining
portion or the Trustee's uninterrupted valid first- ranking Lien (subject to
Permitted Collateral Liens) on such remaining portion (accompanied by a binding
commitment of a title insurer to issue an endorsement to the title insurance
policy previously issued in respect of such Collateral Property confirming that,
after such release, the Trustee's first-ranking Lien on such remaining portion
will remain unimpaired and uninterrupted (subject only to Permitted Collateral
Liens existing on the date hereof or obtaining priority through operation of
law)); (iii) at least 90% of such consideration is in cash or Cash Equivalents;
(iv) the Net Proceeds therefrom shall be paid directly by the purchaser thereof
to the Trustee and deposited into the Cash Collateral Account pending
application in accordance with clause (vii) below and the Company takes such
actions, at its sole expense, as shall be required to ensure that the Trustee
has from such date a first-ranking Lien thereon (subject to Permitted Collateral
Liens) pursuant to this Indenture and the Security Documents; (v) concurrently
with the
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relevant Collateral Asset Disposition, the Company takes such actions, at its
sole expense, as shall be required to ensure that the Trustee has from such date
a first-ranking Lien (subject to Permitted Collateral Liens) on any portion of
such consideration which is not in the form of cash or Cash Equivalents ("Non-
Cash Consideration"), and, upon receipt thereof, of property received in the
future in exchange for all or any part of such Non-Cash Consideration, pursuant
to the terms of this Indenture and the Security Documents; (vi) the Company
takes such other actions, at its sole expense, as shall be required to permit
the Trustee to release the Collateral being sold from the Lien of this Indenture
and the Security Documents; and (vii) the Company, within six months from the
date of consummation of a Collateral Asset Disposition, applies all of the Net
Proceeds therefrom for the following purposes, individually or in combination,
(A) to purchase or otherwise invest in Replacement Collateral (in accordance
with Subsection (c) below) or (B) to make a First Mortgage Note Offer; PROVIDED
that, (x) in the event that the Company enters into a binding commitment to
purchase or otherwise invest in Replacement Collateral pursuant to the foregoing
clause (vii)(A) within such six month period, the Company will have eighteen
months from the date of consummation of such Collateral Asset Disposition to
consummate such purchase or investment, which shall be completed with due
diligence and (y) in connection with a Collateral Asset Disposition involving
all (but not less than all) of the Collateral Property located in York,
Pennsylvania (as more specifically described in the relevant Security Document),
the Company may, concurrently with such Collateral Asset Disposition, make
subject to the Lien of this Indenture as Replacement Collateral any other assets
of the Company satisfying the definition of "Replacement Collateral" in
accordance with Subsection (c) below in lieu of the assets purchased with the
Net Proceeds of such Collateral Asset Disposition. The Company will not, and
will not permit any of its Restricted Subsidiaries, directly or indirectly, to
enter into a sale-leaseback transaction involving the Collateral.
(b) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, suffer or permit a Collateral Loss
Event unless: (i) the Net Proceeds therefrom are paid directly by the party
providing such Net Proceeds to the Trustee and deposited in the Cash Collateral
Account, (ii) the Company takes such actions, at its sole expense, as shall be
required to ensure that the Trustee has from the date of such deposit a first-
ranking Lien (subject to Permitted Collateral Liens) on such Net Proceeds in the
Cash Collateral Account pursuant to the terms of this Indenture and the Security
Documents and (iii) the Company, within six months of receipt of the Net
Proceeds therefrom, applies all the Net Proceeds received therefrom for the
following purposes, individually or in combination: (A) to purchase or
otherwise invest in Replacement Collateral; (B) to Restore the relevant
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Collateral; or (C) to make a First Mortgage Note Offer; PROVIDED that, in the
event that the Company enters into a binding commitment to purchase or otherwise
invest in Replacement Collateral pursuant to the foregoing clause (iii)(A) or to
Restore the relevant Collateral pursuant to the foregoing clause (iii)(B) within
six months of receipt of such Net Proceeds from a Collateral Loss Event, the
Company will have eighteen months from the date of such receipt to consummate or
complete such purchase, investment or Restoration, which shall be carried out
with due diligence. In connection with any Restoration, the Company shall
follow the procedures set forth in Section 1610 hereof.
(c) In the event that the Company (i) elects pursuant to clause
(a)(vii)(A) of this Section or clause (b)(iii)(A) of this Section to apply any
portion of the Net Proceeds from a Collateral Asset Disposition or Collateral
Loss Event, respectively, to purchase or otherwise invest in Replacement
Collateral, (ii) pursuant to Subsection (f) below is deemed to purchase or
otherwise invest in Replacement Collateral or (iii) pursuant to clause
(a)(vii)(y) elects to provide other assets of the Company as Replacement
Collateral for the Collateral Property located in York, Pennsylvania following
the sale thereof, (1) the Company shall deliver an Officers' Certificate to the
Trustee dated no more than 30 days prior to the date of consummation of the
relevant purchase of or investment in Replacement Collateral (in the case of
(i)) or of the relevant Collateral Asset Disposition (in the case of (iii) or
dated the date of withdrawal (in the case of (ii)), certifying that: (x) in the
case of clause (i), the purchase price for or the amount of the investment in
the relevant Replacement Collateral does not exceed the fair market value of
such Replacement Collateral, (y) in the case of clause (ii), the Company is
required to use the relevant portion of such Net Proceeds to fund an "Asset
Disposition Offer" under the 1991 Indenture in accordance with Subsection (f)
and has complied with Subsection (f) in connection therewith or (z) in the case
of (iii), the fair market value of such Replacement Collateral is not less than
thirty-one million dollars ($31,000,000), as determined in good faith by the
Board of Directors of the Company, including a majority of the Independent
Directors (whose determination (in the case of clauses (x) and (z)) was based on
the opinion of a qualified Independent Appraiser or Independent Financial
Adviser prepared contemporaneously with the consummation of such purchase of, or
investment in, the relevant Replacement Collateral and which opinion will be
evidenced by an opinion letter of the Independent Appraiser or Independent
Financial Adviser attached to the Officers' Certificate), as evidenced by copies
of the resolutions of the Board of Directors, indicating the requisite approval
of the Independent Directors, adopted in respect of and concurrently with the
purchase of or investment in such Replacement Collateral; and (2) the Company
shall take such actions, at its sole expense, as shall be required to permit the
Trustee to
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release such Net Proceeds (or proceeds required to be applied to the prepayment
of Indebtedness under the 1991 Indenture, as described in Subsection (f) of this
Section) from the Lien of this Indenture and the Security Documents and to
ensure that the Trustee has, from the date of such purchase or investment, a
first-ranking Lien (subject to Permitted Collateral Liens) on such Replacement
Collateral pursuant to the terms of this Indenture and the Security Documents.
Furthermore, the Trustee shall have received concurrently with the grant to it
of the Lien in respect of any Replacement Collateral constituting real property
or equipment the documents set forth in Section 1601(e) relating to such
Replacement Collateral substantially in the form delivered to the Trustee on the
date of this Indenture in respect of the original Collateral Properties.
(d) Notwithstanding the foregoing, the Company may defer a First
Mortgage Note Offer until such time as the Excess Proceeds exceed fifteen
million dollars ($15,000,000) (30 days from which time the Company must make a
First Mortgage Note Offer), PROVIDED that (i) the Company provides written
notice to the Trustee of such deferred application of Excess Proceeds, (ii) all
Excess Proceeds are deposited and remain on deposit in the Cash Collateral
Account pending a First Mortgage Note Offer and (iii) any First Mortgage Note
Offer shall include all Excess Proceeds on deposit in the Cash Collateral
Account on the date of such First Mortgage Note Offer, regardless of whether the
Excess Proceeds exceed fifteen million dollars ($15,000,000) at such time. All
amounts remaining after the completion of any First Mortgage Note Offer shall
remain in the Cash Collateral Account subject to the Lien of this Indenture.
The Company may use such amounts to purchase or otherwise invest in Replacement
Collateral securing the First Mortgage Notes on the basis described in
Subsection (c) of this Section 1015 at any time and from time to time.
(e) Within 30 days of any decision by the Company to make a First
Mortgage Note Offer or of the date upon which the Excess Proceeds exceed fifteen
million ($15,000,000), the Company, or the Trustee at the Company's request,
will mail or cause to be mailed to all Holders a notice of the First Mortgage
Note Offer in accordance with Section 1016 and of the Holders' rights resulting
therefrom. Such notice will contain all instructions and materials necessary to
enable Holders to tender their First Mortgage Notes to the Company.
(f) If, pursuant to Section 1009 of the 1991 Indenture, the Company
is required to make an "Asset Disposition Offer" (as defined thereunder) using
proceeds from a Collateral Asset Disposition, the Trustee shall, upon the
Company's request, release such proceeds as are on deposit in the Cash
Collateral Account to fund the purchase of Indebtedness under the 1991 Indenture
tendered pursuant to such offer; PROVIDED that the
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Company shall have subjected to the Lien of this Indenture and the Security
Documents cash in an amount equal to such proceeds as Replacement Collateral
pursuant to Subsection (c) of this Section in lieu of the cash released from the
Cash Collateral Account, the amount so released being deemed to be the amount
invested in or used to purchase Replacement Collateral for the purpose of such
Subsection (c) and such release and substitution being deemed to constitute a
purchase of such Replacement Collateral.
SECTION 1016. PROCEDURES CONCERNING FIRST
MORTGAGE NOTE OFFERS.
(a) All First Mortgage Note Offers shall be made at an offer price
(the "First Mortgage Note Offer Price") in cash (i) for Outstanding First
Mortgage Notes in an amount equal to 100% of their principal amount, PLUS any
accrued and unpaid interest, if any, to the First Mortgage Note Offer Payment
Date, and shall be conducted in accordance with the procedures set forth in
subsections (b) through (d) of this Section 1016.
(b) Within 30 days after any date on which the Company decides, or is
required pursuant to Section 1015, to make a First Mortgage Note Offer, the
Company or, at the direction of the Company, the Trustee on behalf of the
Company shall mail a notice to each Holder in respect of the First Mortgage Note
Offer at such Holder's last registered address (which notice shall contain all
instructions and materials necessary to enable such Holders to tender First
Mortgage Notes) stating:
(1) that the First Mortgage Note Offer is being made pursuant to this
Section, and the reason for the First Mortgage Note Offer;
(2) the aggregate principal amount of the First Mortgage Notes
subject to the First Mortgage Note Offer;
(3) that the Holder has the right to require the Company to
repurchase such Holder's First Mortgage Notes at the First Mortgage Note
Offer Price, subject to proration in the event the aggregate principal
amount of the First Mortgage Notes subject to the First Mortgage Note Offer
is less than the aggregate principal of all First Mortgage Notes tendered;
(4) the name and address of the Paying Agent and the Trustee and that
the First Mortgage Notes must be surrendered to the Paying Agent to collect
the First Mortgage Note Offer Price;
(5) the date of the closing of the First Mortgage Note Offer (the
"First Mortgage Note Offer Payment Date"), which
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shall be no earlier than 30 days nor later than 60 days from the date such
notice is mailed;
(6) that any of the First Mortgage Notes not tendered or accepted for
payment will continue to accrue interest;
(7) that any First Mortgage Note accepted for payment pursuant to the
First Mortgage Note Offer shall cease to accrue interest after the First
Mortgage Note Offer Payment Date;
(8) that each Holder electing to have First Mortgage Notes purchased
pursuant to a First Mortgage Note Offer will be required to surrender the
First Mortgage Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the First Mortgage Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the fifth Business Day prior to the First Mortgage Note Payment
Date;
(9) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than three (3) Business Days prior to the
First Mortgage Note Offer Payment Date, a telegram, telex, facsimile
transmission or letter setting forth: the name of the Holder, the principal
face amount of the First Mortgage Notes the Holder delivered for purchase,
the certificate number of the First Mortgage Note the Holder delivered and
a statement that such Holder is withdrawing its election to have such First
Mortgage Notes purchased; and
(10) that Holders whose First Mortgage Notes are purchased only in
part will be issued new First Mortgage Notes equal in principal amount to
the unpurchased portion of the First Mortgage Notes surrendered.
(c) On the First Mortgage Note Offer Payment Date, the Company shall
(i) accept for payment First Mortgage Notes or portions thereof tendered
pursuant to the First Mortgage Note Offer in an aggregate principal amount equal
to the First Mortgage Note Offer Amount or such lesser amount of First Mortgage
Notes as shall have been tendered, (ii) on or before 12:00 noon New York City
time, deposit with the Paying Agent money sufficient to pay the purchase price
of all First Mortgage Notes or portions thereof so accepted, and (iii) deliver
or cause to be delivered to the Trustee First Mortgage Notes so accepted
together with an Officer's Certificate stating the First Mortgage Notes or
portions thereof accepted by the Company. If the aggregate principal amount of
First Mortgage Notes surrendered exceeds the aggregate principal amount of First
Mortgage Notes subject to the First Mortgage Note Offer, as indicated in the
notice required by Subsection (b) of this Section 1016, the
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Trustee shall select the First Mortgage Notes to be purchased on a PRO RATA
basis to the nearest one thousand dollars ($1,000) of principal amount. The
Paying Agent shall promptly mail or deliver to Holders of First Mortgage Notes
so accepted payment in an amount equal to the purchase price, and the Company
shall execute and the Trustee shall promptly authenticate and mail or make
available for delivery to such Holders a new First Mortgage Note equal in
principal amount to any unpurchased portion of the First Mortgage Note
surrendered. Any First Mortgage Notes not so accepted shall be promptly mailed
or made available for delivery to the Holder thereof. The Company will publicly
announce the results of the First Mortgage Note Offer on or as soon as
practicable after the First Mortgage Note Offer Payment Date. For purposes of
this Section, the Trustee or its agent shall act as the Paying Agent.
(d) The Company shall comply with any applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) in the event that a First Mortgage Note Offer is made under
the circumstances described in this Section 1016.
ARTICLE ELEVEN
MAINTENANCE OF SUBORDINATED CAPITAL BASE
SECTION 1101. MAINTENANCE OF SUBORDINATED CAPITAL BASE.
(a) Subject to the terms of Section 1102, in the event that the
Company's Subordinated Capital Base is less than one billion dollars
($1,000,000,000) (the "Minimum Subordinated Capital Base") as at the end of each
of any two consecutive fiscal quarters (the last day of the second such fiscal
quarter, a "Deficiency Date"), then, with respect to First Mortgage Notes, the
Company shall, no later than 60 days after the Deficiency Date (105 days if a
Deficiency Date is also the end of the Company's fiscal year), make an offer to
all Holders to purchase (a "Deficiency Offer") 10% of the principal amount of
First Mortgage Notes originally issued, or such lesser amount as may be
Outstanding at the time each Deficiency Offer is made (the "Deficiency Offer
Amount"), at a purchase price equal to 100% of principal amount, plus accrued
and unpaid interest to the Deficiency Payment Date.
(b) Thereafter, semi-annually the Company shall make like Deficiency
Offers for the then applicable Deficiency Offer Amount of First Mortgage Notes
until the Company's Subordinated Capital Base as at the end of any subsequent
fiscal quarter shall be equal to or greater than the Minimum Subordinated
Capital Base. Notwithstanding the foregoing, after any specified Deficiency
Date, the last day of any subsequent fiscal quarter shall not constitute a
Deficiency Date (giving rise to an
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additional obligation under Subsection (a) of this Section) unless the Company's
Subordinated Capital Base was equal to or greater than the Minimum Subordinated
Capital Base as at the end of a fiscal quarter that followed such specified
Deficiency Date and preceded such subsequent quarter.
(c) Within 60 days (105 days if a Deficiency Date is also the end of
the Company's fiscal year) following a Deficiency Date, the Company shall mail a
notice to each Holder in respect of the Deficiency Offer (which notice shall
contain all instructions and materials necessary to enable such Holders to
tender First Mortgage Notes) stating:
(1) that the Deficiency Offer is being made pursuant to this Section
and the reason for the Deficiency Offer;
(2) the purchase price and the purchase date, which shall be 20
Business Days from the date such notice is mailed or, if acceptance for
payment and payment is not then lawful, on the earliest subsequent Business
Day on which acceptance for payment and payment is then lawful (a
"Deficiency Payment Date");
(3) the aggregate principal amount of First Mortgage Notes subject to
the Deficiency Amount;
(4) the name and address of the Paying Agent and the Trustee and that
First Mortgage Notes must be surrendered to the Paying Agent to collect the
purchase price;
(5) that any of the First Mortgage Notes not tendered or accepted for
payment will continue to accrue interest;
(6) that any First Mortgage Note accepted for payment pursuant to the
Deficiency Offer shall cease to accrue interest after the Deficiency
Payment Date;
(7) that each Holder electing to have a First Mortgage Note purchased
pursuant to a Deficiency Offer will be required to surrender the First
Mortgage Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the First Mortgage Note completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the
Business Day prior to the Deficiency Payment Date;
(8) 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 preceding the Deficiency Payment Date, a telegram, telex,
facsimile transmission or letter setting forth: the name of the Holder,
the principal amount of the First Mortgage Note the
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Holder delivered for purchase, the certificate number of the First Mortgage
Note the Holder delivered and a statement that such Holder is withdrawing
his election to have the First Mortgage Note purchased; and
(9) that Holders whose First Mortgage Notes are purchased only in part
will be issued new First Mortgage Notes equal in principal amount to the
unpurchased portion of the First Mortgage Notes surrendered.
(d) On a Deficiency Payment Date, the Company shall (i) accept for
payment First Mortgage Notes or portions thereof tendered pursuant to the
Deficiency Offer in an aggregate principal amount equal to the Deficiency Offer
Amount or such lesser principal amount of such First Mortgage Notes as shall
have been tendered, (ii) on or before 12:00 noon New York City time, deposit
with the Paying Agent money sufficient to pay the purchase price of all such
First Mortgage Notes or portions thereof so accepted, and (iii) deliver, or
cause to be delivered to the Trustee, First Mortgage Notes or portions thereof
so accepted together with an Officer's Certificate stating the First Mortgage
Notes or portions thereof accepted by the Company. If the aggregate principal
amount of such First Mortgage Notes tendered exceeds the Deficiency Offer
Amount, the Company shall select the First Mortgage Notes to be purchased on a
PRO RATA basis to the nearest one thousand dollars ($1,000) of principal amount.
The Paying Agent shall promptly mail or make available for delivery to Holders
of First Mortgage Notes so accepted payment in amounts equal to the purchase
prices therefor, and the Company shall execute and the Trustee shall promptly
authenticate and mail or make available for delivery to such Holders new First
Mortgage Notes equal in principal amounts to, any unpurchased portion of the
First Mortgage Notes surrendered. Any First Mortgage Notes not so accepted
shall be promptly mailed or made available for delivery to the Holder thereof.
The Company will publicly announce the results of the Deficiency Offer on or as
soon as practicable after the Deficiency Payment Date. For purposes of this
Section, the Trustee or its agent shall act as the Paying Agent.
(e) The Company shall comply with and applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) and any other legal requirements in the event that a
Deficiency Offer is made under the circumstances described in this Section 1101.
SECTION 1102. ALTERNATIVE INTEREST RATE ADJUSTMENT.
(a) Notwithstanding the terms of Section 1101, in the event that (1)
the making of a Deficiency Offer by the Company or (2) the purchase of First
Mortgage Notes by the Company in respect of a Deficiency Offer would constitute
a default (with
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the giving of notice, the passage of time or both) with respect to any Specified
Bank Debt at the time outstanding, then, in lieu of the making of a Deficiency
Offer in the circumstances set forth in Section 1101, (i) the interest rate on
the First Mortgage Notes shall be reset as of the first day of the second fiscal
quarter following the Deficiency Date (the "Reset Date") to a rate per annum
(the "Reset Rate") equal to the greater of (x) the Initial Interest Rate and (y)
the sum of (A) 400 basis points and (B) the higher of the Seven Year Treasury
Rate and the Ten Year Treasury Rate, (ii) on the first Interest Payment Date
following the Reset Date, the interest rate on the First Mortgage Notes, as
reset on the Reset Date, shall increase by fifty (50) basis points, and (iii)
the interest rate on the First Mortgage Notes shall further increase by an
additional fifty (50) basis points on each succeeding Interest Payment Date;
PROVIDED, HOWEVER, that in no event shall the interest rate on the First
Mortgage Notes at any time exceed the Initial Interest Rate by more than two
hundred (200) basis points.
(b) Once the interest rate on the First Mortgage Notes has been reset
pursuant to Subsection (a) of this Section, if the Company's Subordinated
Capital Base is equal to or greater than the Minimum Subordinated Capital Base
as of the last day of any fiscal quarter subsequent to the Deficiency Date,
interest on the First Mortgage Notes shall return to the Initial Interest Rate
effective as of the first day of the second following fiscal quarter; PROVIDED,
HOWEVER, that the interest rate on the First Mortgage Notes shall again be
adjusted in accordance with Subsection (a) of this Section if the Company's
Subordinated Capital Base shall thereafter be less than the Minimum Subordinated
Capital Base as at the last day of any two consecutive subsequent fiscal
quarters and if the making of a Deficiency Offer or the purchase of First
Mortgage Notes by the Company in respect of a Deficiency Offer would, at such
time, constitute a default (with the giving of notice, the passage of time, or
both) with respect to any Specified Bank Debt at the time outstanding.
(c) The Company shall notify the Trustee of the Reset Rate not later
than two Business Days after the Reset Date in the circumstances set forth in
Subsection (a) of this Section. Not later than five Business Days after the
Trustee has received such notice from the Company, the Trustee shall mail to
each Holder such notice setting forth the Reset Rate. Commencing on the Reset
Date, the First Mortgage Notes shall bear interest (as determined in accordance
with clauses (i), (ii) and (iii) of Subsection (a) of this Section) until the
date on which such interest rate returns to the Initial Interest Rate pursuant
to Subsection (b) of this Section. The Company shall notify the Trustee and the
Holders of such First Mortgage Notes promptly when the interest rate on such
First Mortgage Notes returns to the Initial Interest Rate pursuant to Subsection
(b) of this
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Section. Failure of the Company or the Trustee to give, or failure of a Holder
to receive, such notices shall not in any event affect the validity of the
proceedings of the adjustment of the interest to be borne by such First Mortgage
Notes effective on the Reset Date of the Company's obligations hereunder.
ARTICLE TWELVE
REDEMPTION OF FIRST MORTGAGE NOTES
SECTION 1201. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The Company may at its option redeem First Mortgage Notes pursuant to
paragraph 4 of the reverse of the First Mortgage Notes. The election of the
Company to redeem any of the First Mortgage Notes shall be evidenced by a Board
Resolution. In case of any redemption at the election of the Company of less
than all the First Mortgage Notes, the Company shall, at least 45 days prior to
the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of First Mortgage Notes to be redeemed. The Company shall
deliver to the Trustee an Officer's Certificate, a Board Resolution authorizing
the redemption and an Opinion of Counsel with respect to the due authorization
of such redemption and to the effect that such redemption is being made in
accordance with this Indenture and the First Mortgage Notes.
SECTION 1202. SELECTION BY TRUSTEE OF THE FIRST MORTGAGE NOTES TO BE REDEEMED.
If less than all the First Mortgage Notes are to be redeemed, the
particular First Mortgage Notes to be redeemed shall be selected not more than
90 days prior to the Redemption Date by the Trustee, from the Outstanding First
Mortgage Notes not previously called for redemption or submitted for repurchase
pursuant to Sections 1009, 1013, 1015 and 1016, substantially PRO RATA, by lot
or by any other method as the Trustee considers fair and appropriate and that
complies with the requirements of the principal national securities exchange, if
any, on which such First Mortgage Notes are listed, and which may provide for
the selection for redemption of portions (equal to one thousand dollars ($1,000)
or any integral multiple thereof) of the principal amount of First Mortgage
Notes of a denomination larger than one thousand dollars ($1,000).
The Trustee shall promptly notify the Company in writing of the First
Mortgage Notes selected for redemption and, in the case of any First Mortgage
Note selected for partial redemption, the principal amount thereof to be
redeemed.
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For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of First Mortgage Notes
shall relate, in the case of any First Mortgage Note redeemed or to be redeemed
only in part, to the portion of the principal amount of such First Mortgage Note
which has been or is to be redeemed.
SECTION 1203. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 45 days prior to the Redemption
Date, to each Holder of First Mortgage Notes to be redeemed, at the address of
such Holder appearing in the Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price (including the amount of accrued and unpaid
interest to be paid);
(3) the name and address of the Paying Agent and the Trustee and that
the First Mortgage Notes must be surrendered to the Paying Agent to collect
the Redemption Price;
(4) if less than all Outstanding First Mortgage Notes are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular First Mortgage Notes to be redeemed
and that, on or after the Redemption Date, upon surrender of any First
Mortgage Note to be redeemed in part, a new First Mortgage Note in
principal amount equal to the unredeemed portion thereof will be issued;
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such First Mortgage Note or portion thereof to be
redeemed and, if applicable, that interest thereon will cease to accrue on
and after said date; and
(6) the CUSIP number, if any, of the First Mortgage Notes to be
redeemed.
Notice of redemption of First Mortgage Notes to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
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SECTION 1204. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the First
Mortgage Notes or portions thereof which are to be redeemed on that date.
SECTION 1205. FIRST MORTGAGE NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the First
Mortgage Notes so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such First Mortgage Notes or portions thereof shall cease to
bear interest. Upon surrender of any such First Mortgage Note for redemption in
accordance with said notice, such First Mortgage Note or portion thereof shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; PROVIDED, HOWEVER, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such First Mortgage Notes, or one or more Predecessor First Mortgage
Notes, registered as such at the close of business on the relevant Record Dates
or Special Record Dates according to their terms and the provisions of Section
307.
If any First Mortgage Note or portion thereof called for redemption
shall not be so paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the Redemption Date at
the rate prescribed therefor in the First Mortgage Note.
SECTION 1206. FIRST MORTGAGE NOTES REDEEMED IN PART.
Any First Mortgage Note which is to be redeemed only in part shall be
surrendered at an office or agency of the Company at a Place of Payment therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such First Mortgage Note without service charge, one or
more new First Mortgage Notes, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the First Mortgage Note so surrendered.
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ARTICLE THIRTEEN
COLLATERAL AND SECURITY DOCUMENTS
SECTION 1301. SECURITY DOCUMENTS.
(a) As general and continuing collateral security for the due
repayment and satisfaction of all present and future indebtedness, liabilities
and obligations of any kind whatsoever, under, in connection with or relating to
this Indenture, including without limitation, the First Mortgage Notes and any
ultimate unpaid balance thereof and to secure the due performance of all of the
other present and future obligations of the Company to the Trustee (including
obligations under Section 607 hereof) and the Holders under this Indenture, each
Security Document and the First Mortgage Notes, the Company for all purposes,
has entered into the Security Documents and pledged the Collateral.
(b) The Company covenants and agrees that it has full right, power
and lawful authority to grant, bargain, sell, release, convey, hypothecate,
assign, mortgage, pledge, transfer and confirm the property constituting the
Collateral, in the manner and form done in the Security Documents, or intended
to be done, free and clear of all Liens, pledges, charges and encumbrances
whatsoever (other than Permitted Collateral Liens), and that (i) it will forever
warrant and defend the title to the same against the claims of all persons
whatsoever (except as to Permitted Collateral Liens), (ii) it will execute,
acknowledge and deliver to the Trustee such further assignments, transfers,
assurances or other instruments as the Trustee may require or request, and (iii)
it will do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the Trustee, to assume and confirm to the
Trustee the Collateral, or any part thereof, as from time to time constituted,
so as to render the same available for the security and benefit of the Security
Documents, this Indenture and of the First Mortgage Notes. The Company further
covenants and agrees that each Security Document, as applicable, creates or will
create, as the case may be, a direct and valid first-ranking Lien (subject to
Permitted Collateral Liens) on the Collateral subject thereto.
SECTION 1302. RECORDING.
The Company will cause, at its own expense, this Indenture and each
Security Document, and all amendments or supplements thereto, to be registered,
recorded and filed and/or re-recorded and/or re-filed and/or renewed in such
manner and in such place or places, if any, as may be required by law in order
to preserve, protect and maintain the perfected first-ranking Liens of the
Security Documents and all parts of the Collateral and to effectuate and
preserve the security of the Holders and
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all rights of the Trustee. The Company will pay all mortgage, mortgage
recording, stamp, intangible or other similar taxes required to be paid by any
Person under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, perfection or enforcement of any of the Security
Documents.
The Company shall furnish to the Trustee:
(1) promptly after the execution and delivery of this Indenture or
other instrument of further assurance, an Opinion of Counsel stating that,
in the opinion of such counsel, this Indenture, the Security Documents, and
all other instruments of further assurance have been properly recorded,
registered and filed to the extent necessary to make effective the Lien
intended to be created by the Security Documents, and reciting the details
of such action or referring to prior Opinions of Counsel in which such
details are given, and stating that all statements have been executed and
filed that are necessary fully to preserve and protect the rights of the
Holders and the Trustee hereunder and under the Security Documents, or
stating that, in the opinion of such counsel, no such action is necessary
to make such Liens effective; and
(2) by December 15 in each year beginning with the year 1995, an
Opinion or Opinions of Counsel, dated as of such date, either stating that,
in the opinion of such counsel, such action has been taken with respect to
the recording, registering, filing, re-recording, re-registering and re-
filing of (x) this Indenture, (y) the Security Documents, and all
supplemental indentures and amendments thereto, and (z) financing
statements, continuation statements or other instruments of further
assurances, as is necessary to maintain the Lien of each such Security
Document and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given, and stating that all
financing statements and continuation statements have been executed and
filed that are necessary to preserve and protect the rights of the Holders
and the Trustee hereunder, the rights of the Trustee under the Security
Documents, or stating that, in the opinion of such counsel, no such action
is necessary to maintain such Liens.
SECTION 1303. POSSESSION OF THE COLLATERAL AND THE CASH COLLATERAL ACCOUNT.
(a) Subject to Article 14, until the security provided by the
Security Documents becomes enforceable, the Company may possess, manage, operate
and enjoy, as applicable,
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the Collateral in accordance with the terms of the Security Documents.
(b) Notwithstanding the foregoing, all moneys received by the Trustee
for the release of any part of the Collateral, all Condemnation Proceeds or
Insurance Proceeds in respect of the Collateral received by the Trustee, and all
amounts of money, securities, letters of credit and other evidences of
indebtedness deposited with or held by the Trustee in accordance with this
Indenture and any Security Document shall be held by the Trustee, as security
for the obligations of the Company under this Indenture and the Security
Documents until applied in accordance with the terms of this Indenture. Neither
receipt by the Trustee, nor any application whatsoever by the Trustee of
Condemnation Proceeds or Insurance Proceeds, or other moneys under this
Subsection (b) shall operate as payment or novation of the Company's
indebtedness under this Indenture or the Security Documents, or as a reduction
of the mortgages, pledges and charges created under the Security Documents,
notwithstanding any law, usage or custom to the contrary.
SECTION 1304. SUITS TO PROTECT THE COLLATERAL.
The Trustee shall have power to institute and to maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts which may be unlawful or in violation of this Indenture
or any of the Security Documents, and such suits and proceedings as the Trustee
may deem expedient to preserve or protect its interests and the interests of the
Holders in the Collateral and in the principal, interest, issues, profits,
rents, revenues and other income arising therefrom, including power to institute
and maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of, or compliance
with, such enactment, rule or order would impair the security hereunder or under
any of the Security Documents, or be prejudicial to the interests of the Holders
or the Trustee.
SECTION 1305. RELEASE UPON TERMINATION OF THE COMPANY'S OBLIGATIONS; PARTIAL
RELEASE.
(a) In the event that the Company delivers an Officer's Certificate
certifying that all obligations under this Indenture have been satisfied and
discharged by complying with the provisions of Article Four or Section 1502, the
Trustee shall (i) to the extent the satisfaction and discharge of the Security
Documents is given in accordance with Article Four or Section 1502 deliver to
the Holders a notice stating that the Trustee, on behalf of the Holders,
disclaims and gives up any and all rights it has in and to the Collateral and
under this Indenture and the
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Security Documents (except for Section 1607(e)), and, upon and after the receipt
by the Holders of such notice, the Trustee shall not be deemed to hold any of
the Collateral pursuant to this Indenture and the Security Documents on behalf
of the Trustee for the benefit of the Holders; or (ii) otherwise disclaim and
give up any and all rights it has in and to the Collateral, and any rights it
has under any of the Security Documents, and the Trustee shall not be deemed to
hold any of the Collateral for the benefit of the Holders.
(b) The release of any Collateral from the terms hereof or from the
terms of any of the Security Documents, or the release, in whole or in part, of
the Lien created hereby or by any and all of the Security Documents, will not be
deemed to impair the Lien described in Section 1301 in contravention of the
provisions of this Indenture if and to the extent the Collateral or Lien are
released pursuant to, and in accordance with, the Security Documents and
pursuant to, and in accordance with, the terms hereof. The Trustee and each of
the Holders acknowledge that a release of any of the Collateral or any part of
the Lien in accordance with the terms of any of the Security Documents and the
terms hereof will not be deemed for any purpose to be an impairment of the Lien
in contravention of the terms of this Indenture. To the extent applicable, the
Company shall comply with Section 314 of the Trust Indenture Act relating to the
release of property or securities from the security interest in the Collateral.
Any certificate or opinion required by Section 314 of the Trust Indenture Act
shall be set forth in an Officer's Certificate, except in cases in which Section
1015 of this Indenture or Section 314(d) of the Trust Indenture Act requires
that such certificate or opinion be made by an independent person.
ARTICLE FOURTEEN
CASH COLLATERAL ACCOUNT
SECTION 1401. CASH COLLATERAL ACCOUNT.
The Company hereby acknowledges the establishment of the Cash
Collateral Account. As collateral security for the due, full and prompt payment
or performance when due of all of the Account-Related Obligations (as defined
below), the Company hereby grants to the Trustee on behalf of the Holders a
continuing first-ranking Lien (subject to Permitted Collateral Liens)upon and
security interest in, and pledges and assigns to the Trustee on behalf of the
Holders, all of the Company's right, title and interest in and to the Cash
Collateral Account and all funds on deposit from time to time therein, together
with all cash and non-cash proceeds and all investments made pursuant to Section
1402(d), together with all proceeds thereof and interest, earnings and
distributions with respect thereto, inclusive of all
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increments thereto (collectively, the "Account Collateral"), except for Account
Collateral distributed in accordance with the terms of this Indenture, until the
termination of the Cash Collateral Account pursuant to the terms of this
Indenture. "Account-Related Obligations" means all of the Company's present and
future indebtedness, liabilities and obligations of any kind whatsoever, under,
in connection with or relating to this Indenture, including, without limitation,
the First Mortgage Notes and any ultimate unpaid balance thereof and to secure
the due performance of all of the other present and future obligations of the
Company to the Trustee (including obligations under Section 607 of this
Indenture) and the Holders. From the date hereof and continuing until after
satisfaction and discharge of this Indenture pursuant to Section 401 of this
Indenture, the Cash Collateral Account shall be maintained with and managed by
the Trustee, and the Trustee shall act with respect thereto only in accordance
with this Indenture.
SECTION 1402. TERMS OF CASH COLLATERAL ACCOUNT.
(a) (i) From the date hereof and up and to satisfaction and discharge
of this Indenture pursuant to Section 401, there shall be established by the
Company a Cash Collateral Account with the Trustee in the name "Stone Container
Corporation, subject to the lien and security interest in favor of Norwest Bank
Minnesota, National Association" (or in the event a successor Trustee is
appointed under this Indenture, a similar account shall be established
consistently showing the name of such Trustee) which account shall be under the
sole dominion and control of the Trustee acting in accordance with this
Indenture.
(ii) The Company shall have no right under the terms of the Cash
Collateral Account established pursuant to clause (i) above, so long as any
First Mortgage Note is Outstanding or other payments are due under this
Indenture, to withdraw or instruct any Person to withdraw on its behalf any
money from the Cash Collateral Account. No passbook, certificate of
deposit or other similar instrument evidencing the Cash Collateral Account
shall be issued, and the Trustee shall retain all contracts, receipts and
other papers governing or evidencing the Cash Collateral Account. The
Company shall deposit, or shall have deposited as required by this
Indenture, from time to time into the Cash Collateral Account all Net
Proceeds from any Collateral Asset Disposition or Collateral Loss Event in
the manner required by Section 1015, as well as any Insurance Proceeds or
Condemnation Proceeds received in respect of a Partial Collateral Loss in
the manner required by Section 1610. In addition, any income received by
the Company or the Trustee with respect to the balance from time to time
standing to the credit of the Cash Collateral Account shall be deposited
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in the Cash Collateral Account, and shall be applied to purchase
Replacement Collateral pursuant to Section 1015, or applied to purchase
First Mortgage Notes pursuant to all First Mortgage Note Offers made by the
Company pursuant to Section 1015 following the date of such deposit, or
applied to Restoration pursuant to Section 1610 in the event of a Partial
Collateral Loss. All right, title and interest in and to the Account
Collateral shall vest in the Trustee, shall constitute part of the
Collateral hereunder and shall not constitute payment of the obligations of
the Company under Indenture or any Security Document or under the First
Mortgage Notes, whether principal, premium, interest (including Defaulted
Interest, and whether or not accruing after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company) or otherwise, until applied thereto as
hereinafter provided. In the event that any amount is required to be
deposited in the Cash Collateral Account as aforesaid, the Company shall
take such actions at its sole expense as shall be required to ensure that
the Trustee has from the date of such deposit a first-ranking Lien and
security interest (subject to Permitted Collateral Liens) on such deposit
for the benefit of the Trustee and the Holders. Upon receipt of an
appropriate Opinion of Counsel pursuant to Section 102 and in accordance
with the Trust Indenture Act of 1939, the Trustee shall take such steps as
shall be required to ensure that it has from the date of such deposit a
first-ranking Lien (subject to Permitted Collateral Liens) on such deposit
for its benefit and for the benefit of the Holders.
(iii) For so long as the First Mortgage Notes are Outstanding, the
Trustee shall not exercise any right of set-off or recoupment or similar
right that it may otherwise have against the Cash Collateral Account to
satisfy obligations of the Company to the Trustee (other than those
obligations that may have arisen under the Security Documents and in
respect of the Collateral).
(b) Except as otherwise provided in Section 1015, 1610 or subsection
(c) of this Section 1402, no amount (including interest on amounts on deposit in
the Cash Collateral Account) shall be paid or released to or for the account of,
or withdrawn by or for the account of, the Company or any other Person from
the Cash Collateral Account.
(c) The balance from time to time standing to the credit of the Cash
Collateral Account shall be released by the Trustee and distributed to the
Company or any other Person entitled thereto only as permitted under Sections
1015 and 1610; PROVIDED that the Trustee shall not distribute to the Company or
such other Person any such funds at any time a Default or an
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Event of Default shall have occurred and is continuing. If immediately
available cash on deposit in the Cash Collateral Account is not sufficient to
make any such permitted distribution, the Trustee shall liquidate as promptly as
practicable Cash Equivalents as required to obtain sufficient cash to make such
distribution and, notwithstanding any other provision of Sections 1015 and 1610
or this Section 1402, such distribution shall not be made until such liquidation
has taken place.
(d) The Trustee shall invest from time to time amounts on deposit in
the Cash Collateral Account in U.S. Government Obligations maturing within 30
days from the date of acquisition thereof, or a longer period (not exceeding one
year) if the Company certifies to the Trustee that the funds are set aside
either: (x) to purchase or invest in Replacement Collateral pursuant to
Section 1015(a)(vii) in the event of a Collateral Asset Disposition; or (y) to
Restore the relevant Collateral in accordance with Section 1610(c) and the
Trustee shall at all times have the exclusive right to make investment decisions
with respect to amounts on deposit in the Cash Collateral Account. Such
investments described above shall be held in the name of the Trustee and
shall be under the sole dominion and control of the Trustee, pursuant to this
Article Fourteen, subject to the rights of the Trustee under Article Five.
Each such investment shall be either:
(i) evidenced by negotiable certificates or instruments, or if
non-negotiable then issued in the name of the Trustee (or, in the case of
clause (2) of this sentence, in the name of the Clearing Corporation or its
nominee), which (1) are promptly upon acquisition delivered (together with
any appropriate instruments of transfer) to, and held by, the Trustee or an
agent thereof (which shall not be the Company or any of its Affiliates) in
the State of Minnesota or (2) held by of on behalf of The Depository Trust
Company (the "Clearing Corporation") or its nominee, and credited to a
securities account of the Trustee maintained with the Clearing Corporation;
or
(ii) maintained in book-entry form on the records of a Federal
Reserve Bank and registered in the name of the Trustee, as depositary, in a
book-entry securities account maintained with respect to such investment
with the Federal Reserve Bank in the Federal Reserve District in which the
Corporate Trust Office is located.
The Company shall bear the risk of any realized losses incurred on
such investments, and if any such realized loss shall occur on a day when the
Company would not be permitted pursuant to subsection (a) of this Section 1402
to withdraw monies from the Cash Collateral Account, the Company shall promptly
remit an
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amount equal to the amount of any such loss to the Trustee for credit to the
Cash Collateral Account.
SECTION 1403. REPRESENTATIONS, WARRANTIES AND
COVENANTS SPECIFIC TO THE
CASH COLLATERAL ACCOUNT.
The Company represents, warrants and covenants that the Lien and
security interest on the Account Collateral granted pursuant to Section 1401 is
and will remain (and the Company will make all such future filings and take all
such future actions as may be necessary or desirable in order to ensure that it
remains) a legal, valid, binding and enforceable Lien and security interest,
securing the Account-Related Obligations, ranking prior and superior to all
other Liens thereon (other than Permitted Collateral Liens), and covenants that
it shall take all necessary action to cause and maintain a perfected first-
ranking Lien (subject to Permitted Collateral Liens) in such Cash Collateral
Account. The Company represents and warrants that as of the date hereof, all
filings and other actions necessary or desirable for the purpose of registering
notice of, perfecting and establishing the first-ranking of such Lien (subject
to Permitted Collateral Liens) and security interest have been duly made or
taken. At any time upon the reasonable request of the Trustee, the Company
will, at the Company's sole expense, execute, acknowledge, deliver, record
and/or file such documents or instruments in form reasonably satisfactory to the
Trustee, and do such acts and things as may be reasonably necessary, desirable
or proper to carry out more effectively the purposes of such Lien and security
interest or to further assure, evidence, preserve or protect the perfection,
ranking or other benefits thereof.
ARTICLE FIFTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1501. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT DEFEASANCE
OR COVENANT DEFEASANCE.
The Company may at its option by Board Resolution, at any time, with
respect to the First Mortgage Notes, elect to have either Section 1502 (if
applicable) or Section 1503 (if applicable) be applied to the Outstanding First
Mortgage Notes upon compliance with the applicable conditions set forth below in
this Article.
SECTION 1502. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section 1501 to
defease the Outstanding First Mortgage Notes, the Company shall be discharged
from its obligations with respect to the Outstanding First Mortgage Notes on the
date the applicable
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conditions set forth in Section 1504 are satisfied (hereinafter, "defeasance").
Defeasance shall mean that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding First Mortgage
Notes and to have satisfied all its other obligations under such First Mortgage
Notes, this Indenture and the Security Documents (and the Trustee, at the
expense of the Company, shall executed proper instruments acknowledging the
same); PROVIDED, HOWEVER, that the following rights, obligations, powers,
trusts, duties and immunities shall survive until otherwise terminated or
discharged hereunder: (A) the rights of Holders of Outstanding First Mortgage
Notes to receive, solely from the trust fund provided for in Section 1504,
payments in respect of the principal of (and premium, if any) and interest on
such First Mortgage Notes when such payments are due, (B) the Company's
obligations with respect to such First Mortgage Notes under Sections 304, 305,
306, 1002, 1003 and 1607(e), (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (D) this Article. Subject to compliance
with this Article, the Company may exercise its option with respect to
defeasance under this Section 1502 notwithstanding the prior exercise of its
option with respect to covenant defeasance under Section 1503.
SECTION 1503. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section 1501 to
obtain a covenant defeasance with respect to the Outstanding First Mortgage
Notes, the Company shall be released from its obligations under this Indenture
(except its obligations under Sections 306, 506, 509, 610, 1001, 1002, 1011 and
1012) with respect to the Outstanding First Mortgage Notes on and after the date
the applicable conditions set forth in Section 1504 are satisfied (hereinafter,
"covenant defeasance"). Covenant defeasance shall mean that the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in this Indenture (except its obligations
under Sections 306, 506, 509, 610, 1001, 1002, 1011 and 1012), whether directly
or indirectly by reason of any reference elsewhere herein or by reason of any
reference to any other provision herein or in any other document, and such
omission to comply shall not constitute an Event of Default under Section 501(3)
with respect to Outstanding First Mortgage Notes, and the remainder of this
Indenture and of the First Mortgage Notes shall be unaffected thereby.
SECTION 1504. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to defeasance under Section 1502
and covenant defeasance under Section 1503 with respect to the Outstanding First
Mortgage Notes:
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(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this
Article applicable to it), under the terms of an irrevocable trust
agreement in form and substance reasonably satisfactory to such Trustee, as
trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit
of the Holders, (A) dollars in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide, not later
than the due date of any payment, money in an amount, or (C) a combination
thereof, in each case sufficient, after payment of all federal, state and
local taxes or other charges or assessments in respect thereof payable by
the Trustee, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of (and premium, if any, on) and each installment of principal of
(and premium, if any) and interest on the Outstanding First Mortgage Notes
on the Stated Maturity of such principal or installment of principal or
interest and (ii) any mandatory payments applicable to the Outstanding
First Mortgage Notes on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such First Mortgage
Notes.
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit, and no Default or Event of Default under clause (6) or (7) of
Section 501 hereof shall occur and be continuing, at any time during the
period ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period).
(3) Such deposit, defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it is
bound.
(4) Such defeasance or covenant defeasance shall not cause the First
Mortgage Notes then listed on any national securities exchange registered
under the Exchange Act to be delisted.
(5) In the case of an election with respect to Section 1502, the
Company shall have delivered to the Trustee either
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(A) a ruling directed to the Trustee received from the Internal Revenue
Service to the effect that the Holders of the Outstanding First Mortgage
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance had not occurred or (B) an
Opinion of Counsel, based on such ruling or on a change in the applicable
federal income tax law since the date of this Indenture, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding First Mortgage Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and a the same times as would have been the case if such defeasance
had not occurred.
(6) In the case of an election with respect to Section 1503, the
Company shall have delivered to the Trustee an Opinion of Counsel or a
ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders of the Outstanding First Mortgage Notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such covenant defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred.
(7) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 1502
or the covenant defeasance under Section 1503 (as the case may be) have
been complied with.
SECTION 1505. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1505, the "Trustee") pursuant to Section 1504 in respect of the
Outstanding First Mortgage Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such First Mortgage Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such First Mortgage Notes of all sums due and to
become due thereon in respect of principal (and premium, if any) and
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interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1504 or the principal and interest received in
respect thereof, other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding First Mortgage Notes.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or Government Obligations held by it as provided in Section 1504 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited for
the purpose for which such money or U.S. Government Obligations were deposited.
ARTICLE SIXTEEN
COVENANTS SPECIFIC TO THE COLLATERAL PROPERTY
SECTION 1601. GOOD TITLE; AUTHORITY; PRIORITY; MAINTENANCE OF TITLE;
SUPPLEMENTAL INDENTURES; REGISTRATION, RECORDING AND FILING;
CLOSING DOCUMENTS.
(a) The Company represents, warrants and covenants that (i) it is and
will be the sole owner of and has and will have good and indefeasible title in
fee to the real property comprising part of each Collateral Property (except
that the Company is and will be the sole holder of a leasehold interest in the
portion of the Collateral Property located in Ontonagon, Michigan, as further
described in the Mortgage relating to such Mortgaged Property) and good title to
the balance of each such Collateral Property, and is now lawfully seized and
possessed of the Collateral subject to the Liens created by the Security
Documents (and any Permitted Collateral Liens); (ii) it has, and will have, good
right and lawful authority to hypothecate, mortgage, pledge, assign, charge,
cede and transfer all of the Collateral as provided in the Security Documents;
(iii) the Collateral is, and will be, free and clear of any Lien, except
Permitted Collateral Liens; and (iv) each Security Document, as applicable,
creates and constitutes, and will create and constitute a valid and enforceable
uninterrupted and perfected first-ranking Lien (subject to Permitted Collateral
Liens) on the Collateral.
(b) The Company hereby does and will forever warrant and defend the
title to the Collateral against the claims and demands of all Persons whomsoever
and warrants that it will fully
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and effectively maintain the security created by the applicable Security
Documents. The Company further represents and warrants that each of the
material contracts, leases and agreements described in the Security Documents is
in full force and effect and no defaults, waivers or indulgences exist
thereunder.
(c) The Company shall promptly after the execution thereof properly
file or record, as applicable, the Security Documents in the appropriate public
records, where, in the opinion of the Trustee, the filing or registration
thereof may be necessary or advisable, and shall as applicable, from time to
time renew the same, if such renewal is necessary or advisable in the opinion of
the Trustee, to maintain such security.
(d) Except as permitted by the Security Documents or this Indenture,
the Company shall keep in effect all material rights and appurtenances to or
that constitute a part of the Collateral.
(e) As a condition to the effectiveness of this Indenture and the
issuance of the First Mortgage Notes hereunder, the Company shall have delivered
to the Trustee the following documents relating to the Collateral in form and
substance satisfactory to the Trustee and its counsel:
(i) Security Documents and related lien searches for each
Collateral Property;
(ii) UCC filing, tax liens, judgments and litigation reports with
respect to each Collateral Property;
(iii) title insurance policies and surveys for each Collateral
Property;
(iv) certificates of insurance;
(v) environmental and engineer reports for each Collateral
Property;
(vi) evidence of compliance with zoning and other local laws
(including possession of required permits) for each Collateral
Property;
(vii) opinion of local counsel in each jurisdiction where a
Collateral Property is located;
(viii) documents and opinions of counsel relating to the Company's
due execution and delivery of the Security Documents; and
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(ix) such other documents as the Trustee or its counsel may
reasonably request.
SECTION 1602. FURTHER DOCUMENTATION TO ASSURE LIEN; FEES AND EXPENSES.
(a) The Company shall, at its sole cost and expense, promptly do,
execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, charges, mortgages, assignments, notices of assignment, transfers
and assurances as the Trustee shall from time to time reasonably request, which
may be necessary or advisable in the opinion of the Trustee from time to time to
assure, perfect and maintain without interruption, convey, assign, transfer,
hypothecate and confirm unto the Trustee the property and rights thereby
conveyed, hypothecated or otherwise assigned, or which the Company hereunder or
thereunder may be bound to convey, hypothecate or otherwise assign to the
Trustee, or which may facilitate the performance of the terms of the first-
ranking Lien (subject to Permitted Collateral Liens) and any other Liens created
under applicable Security Documents, or the filing, registering or recording of
such applicable Security Document.
(b) The Company shall promptly (i) deliver to the Trustee such
supplemental agreements, documents or notices containing further descriptions of
properties (including replacements and additions to the Collateral) mortgaged or
intended to be mortgaged by the applicable Security Document, as may, in the
opinion of the Trustee, be necessary or advisable to give the Trustee valid and
enforceable first-ranking Liens (subject to Permitted Collateral Liens) upon
such properties as contemplated by the granting clauses or the charging
provisions of such applicable Security Document, and (ii) cause at all times to
be kept registered, recorded and filed the applicable Security Document, any and
all supplemental trust deeds and instruments of hypothec, mortgage, pledge,
assignment, charge, cession and transfer or further assurance, any required
financing and continuation statements and all other required papers in such
manner and in such places as may in the opinion of the Trustee be required by
law, or which may be necessary or advisable, in order fully to perfect, preserve
and protect the uninterrupted Liens (subject to Permitted Collateral Liens) of
the applicable Security Document as a mortgage, pledge, assignment, charge,
cession and transfer of immovables and movables and interest therein. The
Company shall promptly pay or cause to be paid all taxes, fees and other charges
in connection with such recording and/or filing.
(c) The Company shall from time to time execute and do or cause to be
executed and done all such assurances and things as the Trustee may reasonably
require for facilitating the realization of the Collateral, for exercising all
the powers,
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authorities and discretion conferred upon the Trustee under such Security
Document and for confirming to any purchaser of any of the Collateral, whether
held by the Trustee under the applicable Security Documents or by judicial
proceedings, the title to the properties so sold, and that it shall give or
cause to be given all notices and directions as the Trustee may consider
expedient.
(d) If the government of any state in which any of the Collateral
Property is located or any political subdivision thereof (including a
municipality) shall levy, assess or charge any tax, imposition or assessment
upon the Security Documents relating to the obligations or the interest of the
Trustee, in any of the Collateral (other than income, franchise or similar taxes
imposed on the Trustee or on the Holders), the Company shall pay all such taxes,
assessments and impositions to, for or on account of the Trustee when due and
payable and shall furnish promptly to the Trustee proof of such payment.
Notwithstanding the foregoing, the Company may contest such amount paid or
payable in accordance with the procedures set forth in Section 1606(d).
SECTION 1603. IMPAIRMENT OF COLLATERAL.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, (i) incur or suffer to exist any Lien upon any of
the Collateral other than Permitted Collateral Liens, (ii) take any action or
omit to take any action with respect to the Collateral that would or could be
reasonably expected to have the result of adversely affecting, impairing or
failing to maintain without interruption the security interests in the
Collateral under this Indenture or the Security Documents, or (iii) grant any
interest whatsoever (other than Permitted Collateral Liens) in any of the
Collateral to any other Person (other than the Company or the Trustee), or
suffer to exist any such interest.
SECTION 1604. OBLIGATIONS WITH RESPECT TO
LEASES AND MATERIAL CONTRACTS.
(a) Without prejudice to Section 1603, if the Company shall be
permitted to enter into any lease or sublease with respect to any of the
Collateral Property, the Company shall not (i) execute any assignment of any
such assigned lease or sublease or of the rents or any part thereof other than
pursuant to the applicable Security Document, (ii) accept any prepayments of any
installment of rents or other amounts to become due thereunder for a period
exceeding one month (except for a security deposit), or (iii) enter into or
modify any such assigned lease in any fashion which will (x) interfere in any
material respect with the ordinary operation of such Collateral Property or (y)
materially and adversely affect the value of such Collateral Property or the
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security provided by the applicable Security Document, without the prior written
consent of the Trustee.
(b) The Company shall furnish to the Trustee, upon the request
thereof, within thirty (30) days after such request to do so, a written
statement in respect of any or all of the leases that include any of the
Collateral Properties, setting forth the space occupied, if any, the portion of
the Collateral Property demised thereby, the rentals or other amounts payable
thereunder, and such other information as the Trustee may reasonably request (to
the extent reasonably available to the Company).
(c) The Company shall notify the Trustee annually, within 90 days
from the end of each of its fiscal years, of the existence of any and all leases
or leasing contracts in respect of any part of the Collateral.
SECTION 1605. USE AND CONFIGURATION; MAINTENANCE OF
COLLATERAL PROPERTIES.
(a) The Company represents and warrants that (i) the Collateral
Properties are served by all utilities required or necessary for the current use
thereof, (ii) all streets necessary to serve the Collateral Properties are
substantially completed and serviceable and have been dedicated and accepted as
such by each governmental authority having jurisdiction and (iii) the Company
has access to the Collateral Properties from public roads or by way of recorded
easements sufficient to allow the Company to conduct its business as conducted
presently at such Collateral Properties.
(b) The Company shall, at all times, make or cause to be made such
expenditures by means of renewals, replacements, repairs, maintenance or
otherwise as shall be necessary to maintain, preserve and keep the Collateral
Properties in good working order, condition and repair (ordinary wear and tear
excepted), in a state of good operating efficiency, and shall not commit any
waste on or with respect to the Collateral Properties that has the effect of
reducing materially the value of such Collateral or any other property of the
Company or its Restricted Subsidiaries constituting Collateral. The Company (i)
shall not alter or permit to be altered the occupancy of the Collateral
Properties or use of all or any part of the Collateral Properties without the
prior written consent of the Trustee if such alteration could reasonably be
expected to reduce materially the value of the Collateral, and (ii) shall do all
other acts which from the character or use of the Collateral Properties
reasonably may be necessary, advisable or appropriate to comply with the terms
of this Indenture and the Security Documents. Except as otherwise permitted by
this Indenture or the Security Documents, the material improvements to the
Collateral Properties and any material machinery and equipment shall not be
demolished, nor
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shall any such material improvements, machinery and equipment be removed without
the prior written consent of the Trustee.
(c) The Company shall duly observe and conform to all covenants,
terms and conditions under or upon which any part of the Collateral is held.
SECTION 1606. PAYMENT OF TAXES, ASSESSMENTS;
COMPLIANCE WITH LAW.
(a) Unless contested in accordance with the provisions of Subsection
(d) below, the Company shall pay and discharge, from time to time when the same
shall become due, all immoveable and other taxes, special assessments, levies,
permits, inspection and license fees, all utility charges, including water and
sewer rents and charges, and all other public charges, imposed upon or assessed
against the Collateral or any part thereof or upon the revenues, rents, issues,
income and profits of the Collateral or any part thereof, including, without
limitation, those arising in respect of the occupancy, use or possession
thereof.
(b) From and after the occurrence and during the continuance of an
Event of Default, the Company shall pay directly to the Trustee for deposit into
the Cash Collateral Account, on the first day of each month, an amount
reasonably estimated by the Trustee to be equal to one-twelfth (1/12th) of the
annual taxes, assessments and other items required to be discharged by the
Company under Subsection (a) above. Such amounts shall be held by the Trustee
in the Cash Collateral Account and (at the time that any payment is due pursuant
to Subsection (a) above) the Trustee, after receipt of an Officer's Certificate,
shall release an amount to make such payment and to apply such amount to the
payment that is due. If the amounts so deposited by the Company into the Cash
Collateral Account under this Subsection (b) prove insufficient to pay the
amounts required to be discharged by the Company, then, upon demand, the Company
shall pay directly to the Trustee for deposit into the Cash Collateral Account
such additional amounts. In the event that the First Mortgage Notes become
immediately due and payable upon maturity or acceleration, or the Collateral
becomes enforceable otherwise, the Trustee may apply all or any part of the sums
held pursuant to this Subsection (b) to payment and performance of the Company's
obligations in accordance with this Indenture and the applicable Security
Document, until such time, if any, that such acceleration is rescinded in
accordance with this Indenture.
(c) The Company currently has and shall maintain in full force and
effect all material Permits now or hereafter required by any Authority
(including, without limitation, building ordinances and codes and zoning
requirements to operate or use and occupy the Collateral Properties for their
intended uses or that otherwise relate to the Collateral Property. Unless
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contested in accordance with the provisions of Subsection (d) below, the Company
shall comply promptly in all respects with all requirements set forth in the
permits and all requirements of any law, ordinance, rule, regulation or
requirement of any Authority related to all or any part of the Collateral
Property or the condition, use or occupancy of all or any part thereof or any
recorded deed of restriction, declaration, covenant running with the land or
otherwise, now or hereafter in force, except in such cases where such
noncompliance would not have a material adverse effect on the condition, use,
operation or value of the relevant Collateral Property. The Company shall not
initiate or consent to any change in the zoning or any other permitted use
classification of any Land which could reasonably be expected to have a material
adverse effect on the Lien under the applicable Security Document or the value
of any Collateral Property without the written consent of the Trustee.
(d) The Company may at its own expense contest the amount or
applicability of any of the obligations described in Subsections (a) and (c)
above by appropriate legal proceedings, prosecution of which operates to prevent
the collection thereof and the sale or forfeiture of the Collateral or any part
thereof to satisfy the same; PROVIDED, HOWEVER, that in connection with such
contest, the Company shall (i) have made provision for the payment of such
contested amount on the Company's books if and to the extent required by GAAP or
(ii) if deemed necessary or advisable in the opinion of the Trustee, pay
directly to the Trustee for deposit into the Cash Collateral Account a sum
sufficient to pay and discharge such obligation and the Trustee's estimate of
all interest and penalties related thereto. Notwithstanding the foregoing
provisions of this subsection (d), (1) no contest of any such obligations may be
pursued by the Company if such contest would (y) expose the Trustee or any
Holder to any criminal liability or, unless the Company shall have furnished a
bond or other security therefor reasonably satisfactory to the Trustee, any
additional civil liability for failure to comply with such obligations, or (z)
have a material adverse effect on the Collateral and (2) if at any time payment
of any obligation imposed upon the Company by this Section 1606 shall become
necessary to prevent the delivery of a sale for tax conveying the Collateral or
any portion thereof because of nonpayment, the Company shall pay the same in
sufficient time to prevent the delivery of such sale by any Authority.
SECTION 1607. ENVIRONMENTAL MATTERS.
(a) The Company (i) shall be, and shall cause its Restricted
Subsidiaries to be, at all times in compliance in all material respects with all
applicable Environmental Laws and (ii) shall ensure, and shall cause its
Restricted Subsidiaries to ensure, that the condition of all property forming
part of the Collateral is in compliance in all material respects with
Environmental Laws.
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(b) The Company shall, and shall cause its Restricted Subsidiaries
to, promptly provide notice to the Trustee of any written notice received to the
effect that any of them is or may reasonably be likely to become liable to any
Person or governmental authority in an amount in excess of one million dollars
($1,000,000) as a result of: (i) any violation or alleged violation by any of
them of any Environmental Laws, (ii) any administrative or judicial complaint or
order filed against any of them alleging a violation of any Environmental Laws,
(iii) any breach or alleged breach of any environmental certificate, approval or
permit relating to the installations or operations at the Collateral Properties,
or (iv) any liability arising out of the Release or threatened Release of any
Contaminant into the environment or for any damages resulting from such Release.
(c) Upon reasonable request and at reasonable intervals, the Company
shall, and shall cause its Restricted Subsidiaries to, provide the Trustee with
updated information concerning any matter for which notice is provided under
subparagraph (b) above. In addition, upon written request by the Trustee, but
no more frequently than annually, the Company shall, and shall cause its
Restricted Subsidiaries to, submit to the Trustee a report ("Environmental
Report") providing an update of the status of each environmental, health or
safety compliance, hazard or liability issue identified in any notice required
pursuant to subparagraph (b), above.
In the event the Company or the Restricted Subsidiaries receives any
written notice from any governmental authority, or if there is a change in
Environmental Laws, either of which is reasonably likely to give rise to a
material adverse effect on any Collateral Property, the Trustee, in its
discretion, acting reasonably, may require the Company to undertake an
environmental assessment, evaluating potential costs to correct or meet such
change in law, using qualified engineers or environmental consultants, for any
property affected by such notice or change in law and forming part of the
Collateral, which assessments shall be treated as confidential by Trustee.
(d) The Company shall, and shall cause its Restricted Subsidiaries
to, diligently undertake any Remedial Action required under Environmental Laws
in the event of (i) any violation of any Environmental Laws, (ii) any Release of
any Contaminant on any property forming part of the Collateral or owned by the
Company or its Restricted Subsidiaries or (ii) any other Release or threatened
Release of a Contaminant into the Environment occurring in the course of the
operations of the Company or its Restricted Subsidiaries or originating from
said property; provided, however, that the Company and its Restricted
Subsidiaries shall have no obligations under this subparagraph (d) to the extent
any of them is diligently
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prosecuting a defense or other legal challenge to any alleged liability or
requirement for Remedial Action.
(e) The Company hereby undertakes, to the extent permitted by
applicable law, to indemnify the Holders, as well as the Trustee, their
officers, directors, employees, agents and shareholders, and agrees to hold each
of them harmless from and against any and all losses, liabilities, damages,
reasonable costs, expenses and claims of any and every kind whatsoever, arising
out of or related to:
(i) defending and/or counter-claiming or claiming over against
third parties in respect of any environmental action or matter
relating to any property that forms part of the Collateral,
and
(ii) any cost, liability or damage arising out of the disposition
or settlement of any environmental action entered into by the
Trustee relating to any property that forms part of the
Collateral, and which at any time or from time to time may be
paid or incurred by, or asserted against the Trustee for, with
respect to or as a direct or indirect result of (a) the
presence in contravention of any Environmental Law (or any
governmental directive given to the Company or any of its
Restricted Subsidiaries) on or under, or the Release from any
property that forms part of the Collateral, or any other
property owned or occupied by the Company or any of its
Restricted Subsidiaries, of any Contaminant into the
environment and (b) a failure on the part of the Company or
its Restricted Subsidiaries to comply with any Environmental
Laws.
The provisions of any undertakings and indemnifications set out in
this Section 1607 shall survive the satisfaction of the Company's obligations
under the First Mortgage Notes, and its release from all other obligations under
this Indenture and the Security Documents. Notwithstanding the foregoing, the
indemnity provided by the Company and its Restricted Subsidiaries pursuant to
this Section 1607(e) shall not apply to any liabilities or costs arising out of
the gross negligence or wilful misconduct of Trustee or to liabilities arising
out of the actions or inactions of third parties after any transfer of any
property forming a part of the Collateral.
SECTION 1608. CONDEMNATION.
If there shall occur any Condemnation or commencement of proceedings
thereof with respect to Collateral that has a fair
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value exceeding five hundred thousand dollars ($500,000), the Company shall
immediately notify the Trustee upon receiving notice of such Condemnation or
commencement of proceedings therefor. Any such Condemnation Proceeds are hereby
assigned to the Trustee and shall be deposited directly into the Cash Collateral
Account to be held subject to the terms of this Indenture (including Section
1610) and the applicable Security Documents, provided that, so long as no Event
of Default has occurred and is continuing, such Condemnation Proceeds need not
be so deposited unless they exceed two million five hundred thousand dollars
($2,500,000). The Company shall take all steps necessary to notify the
condemning authority of such assignment.
SECTION 1609. REQUIRED INSURANCE POLICIES.
The Company shall maintain in full force the insurance coverages in
respect of the Collateral required by this Section 1609 as follows:
(A) POLICIES TO BE MAINTAINED:
The Company shall take out and maintain at all times the following
policies of insurance relating to the Collateral Properties and their operation
with financially sound and reputable insurers:
(1) "ALL RISKS" PROPERTY INSURANCE: Property insurance on an "all
risks" basis against physical loss of, damage to or impairment of the
material improvements, machinery and equipment, including coverage of the
risks of earthquake and flood. All such insurance shall be for not less
than full replacement cost value, with limits and sublimits, if any,
consistent with Subsection (B) below. The policy will apply in connection
with construction, renovation, replacement and expansion.
(2) BUSINESS INTERRUPTION INSURANCE: Business interruption insurance
written on a gross earnings form to cover the actual loss sustained,
including loss of earnings, fixed costs and debt service, resulting from
interruption of business operations due to physical loss of, damage to or
impairment of the material improvements, machinery and equipment.
(3) BOILER AND MACHINERY INSURANCE: Comprehensive broad form boiler
and machinery insurance to cover physical loss or damage, which insurance
shall be for not less than full replacement cost value, with limits and
sublimits, if any, consistent with Subsection (B) below.
(4) COMPREHENSIVE GENERAL LIABILITY INSURANCE: Comprehensive general
liability insurance to cover all sums
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which the Company or its Restricted Subsidiaries shall become obligated to
pay by reason of liability imposed by law upon the insured or assumed by
the insured under any contract for damages because of bodily injury or
property damage, including in connection with any construction. Such
insurance shall include the policy extensions commonly referred to as:
(i) Blanket written and oral contractual liability;
(ii) Owner's and contractor's protective liability;
(iii) Personal injury liability;
(iv) Employer's liability;
(v) Property damage on a broad form basis;
(vi) Non-owned automobile liability;
(vii) Non-owned watercraft liability;
(viii) Named peril pollution liability, including legal liability
for any evacuation; and
(ix) Products and completed operations liability.
(5) AUTOMOBILE LIABILITY INSURANCE: Automobile liability insurance
on all vehicles owned, leased, hired, operated or licensed by or in the
name of the Company for bodily injury, death or property damage, including
loss of use thereof.
(6) UMBRELLA LIABILITY INSURANCE. Excess or umbrella liability
insurance in respect of the insurance required by paragraphs (4) and (5) of
this Subsection 1609(A) in the aggregate in excess of the underlying limits
of the policies taken out pursuant to said paragraphs (4) and (5).
(B) DEDUCTIBLES AND MULTIPLE INSUREDS:
Deductibles, limits and sublimits in connection with any insurance
policies required under this Section 1609 shall be for such amounts as would be
purchased by a prudent Person engaged in the pulp and paper industry in North
America and similarly situated with the Company. If any such policies insure
others as well as the Company, it will contain a cross-liability or severability
of interests clause.
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(C) OTHER POLICIES TO BE MAINTAINED:
Notwithstanding anything contained in this Section 1609, the Company
shall take and maintain all such other insurance policies as may be required
from time to time by any applicable statute, regulation, decree or court order.
Moreover, the Trustee shall, after consultation with the Company, be entitled,
acting reasonably, to require the Company to amend the scope or limits of
insurance (including but not limited to decreases or increases in limits to take
into account deflation or inflation) or to obtain such additional insurance, all
as may be advisable in accordance with industry practice, and the Company shall
comply with any request by the Trustee to do so within thirty days of such
request (or such longer period as may be reasonably required to obtain such
amendment or new insurance).
If any insurance required to be maintained by the Company under this
Section 1609 is not available on a commercially reasonable basis as a result of
changes in the insurance market occurring after the date hereof, the Company may
so advise the Trustee, and the Company shall procure such insurance most closely
approximating the required insurance which is not available at commercially
reasonable rates as determined by a Person qualified to survey risks and to
recommend insurance coverage for companies in the pulp and paper industry that
is not an employee, officer or director or Affiliate of the Company or any of
its Affiliates selected by the Company and approved by the Trustee, as specified
in a certificate of such Person delivered to the Trustee, PROVIDED that this
provision shall not relieve the Company of the obligation of maintaining the
insurance as required in Section 1609 (A)(1), (2) or (3).
(D) POLICY REQUIREMENTS:
(1) PARTIES PROTECTED. The interest of the Trustee under this
Indenture and as mortgagee and secured creditor in the Collateral under the
Security Documents shall be noted as loss payee upon all property policies
taken out by the Company relating to the Collateral, whether or not
required by this Section 1609. Each of the said policies will contain a
mortgage clause and a breach of conditions endorsement or extension, in
form and substance satisfactory to the Trustee. The interests of other
hypothecary creditors may also be noted upon property policies or protected
by a mortgage clause, PROVIDED that their encumbrances relate to property
other than the Collateral.
Each of the said policies will contain a waiver of subrogation by the
insurer against the Trustee and against the other hypothecary creditors
whose interests are noted, and all of their directors, officers and
employees.
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Each policy of insurance referred to in paragraphs (A) (1), (2), (3)
and (4) shall provide for automatic assignment to the Trustee and coverage
for a minimum of sixty days, regardless of the policy expiration date,
after the Trustee shall have taken possession or become owner of the
material improvements, machinery and/or equipment. Each liability policy
written on a claims made basis shall provide that if it remains in force at
the time the Security Documents is discharged, the claims reporting period
will, on the request of the Trustee, be continued for one year after the
expiry date of the policy.
The Trustee shall be named as additional insureds under all liability
policies taken out by the Company relating to the Collateral, including,
without limitation, those referred to in paragraphs (A)(4) and (6).
(2) NOTICE REQUIREMENTS IN POLICIES: All insurance policies shall
provide for sixty days' prior written notice of cancellation, termination
or material change to the Trustee and the other hypothecary creditors whose
interests are noted.
(3) INSURER, FORM OF POLICY: All insurance policies required by this
Indenture or the Security Documents shall be taken out with reputable
insurers and reinsurers which are acceptable to the Trustee, acting
reasonably and in consultation with the Company's insurance broker, and
which are licensed to do business as required. All such policies shall be
in form acceptable to the Trustee, acting reasonably and in consultation
with the Company's insurance broker.
All insurance shall provide primary coverage for the risks insured,
without right of contribution of any other insurance carried by or on
behalf of the Trustee with respect to its interest in the material
improvements, machinery and equipment.
All insurance shall be endorsed to provide that, inasmuch as the
policy is written to cover more than one insured, all terms, conditions,
insuring agreements and endorsements, with the exception of insurers limits
of liability, shall operate in the same manner as if there were a separate
policy covering each insured.
(4) NO CO-INSURANCE: No property policies shall permit co-insurance.
(E) COMPANY'S OBLIGATIONS CONCERNING INSURANCE:
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(1) PAYMENT OF PREMIUMS: The Company will pay punctually all
premiums payable for all insurance taken out and maintained by it and will
on request furnish the Trustee with proof of such payment.
(2) DELIVERY OF POLICIES, RENEWALS AND AMENDMENTS: The Company shall
promptly deliver to the Trustee copies of all certificates and policies of
insurance taken out by it, certified by the insurer or its authorized
representative in each case. The Company shall also provide evidence
(which may include cover notes or binders) of every renewal or replacement
of a policy at least ten days prior to its expiry date. If any policy is
materially and adversely amended the Company shall promptly provide the
Trustee with a certified copy of such amendment.
(3) ANNUAL CERTIFICATE OF INSURANCE: The Company will on or before
the renewal date of each policy in each year deliver to the Trustee
certificates of insurance issued by each of its insurers, in form and
substance satisfactory to the Trustee, certifying which policies of
insurance have been obtained or renewed and listing all policies in force.
In addition, the Company shall deliver a certificate stating the following
in respect of each such policy:
(i) the policy limits;
(ii) the insurance companies or underwriters carrying the
insurance;
(iii) the effective and expiry dates of the policy; and
(iv) that the policy complies with the provisions of Section
1609(D).
(4) COMPLIANCE WITH POLICY REQUIREMENTS: The Company shall comply
with all material requirements of all policies of insurance and in
particular will promptly inform each of its insurers of all material events
and matters which it is necessary to disclose to such insurer to preserve
or obtain coverage. Without limiting the generality of the foregoing, the
Company shall not in its use and occupancy of the Collateral Properties
(including, without limitation, in the making of any alteration thereto)
take any action that could reasonably be expected to be the basis for
termination, revocation or denial of any insurance coverage required to be
maintained under this Indenture or that could reasonably be expected to be
the basis for a defense to any claim under any insurance policy maintained
in respect of the Collateral.
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(5) AMOUNT OF COVERAGE: Wherever the Company is required to maintain
insurance coverage for full replacement cost value or for full indemnity,
it shall make due allowance for the anticipated effect of inflation or
increases in costs, expenditures or revenues, as may be reasonably
foreseeable.
(6) NOTIFICATION OF TRUSTEE AND FILING OF PROOFS OF CLAIM: In the
event of any total or partial loss with respect to any Collateral in excess
of five hundred thousand dollars ($500,000) in the reasonable estimation of
the Company, the Company shall notify the Trustee and any other hypothecary
creditor whose interest is noted of such occurrence within thirty days of
the date of the occurrence and shall do or cause to be done all such acts
and things as may be necessary or advisable to obtain prompt payment of all
insurance proceeds in relation thereto in accordance with the terms hereof,
including (without limitation) the timely filing of interim and final
proofs of loss with insurers subject, however, to the provisions of Section
1610.
(F) NO OBLIGATION ON TRUSTEE:
The Trustee makes no representation or warranty as to the sufficiency
or adequacy of the insurance coverage required to be maintained pursuant to this
Section 1609. The Trustee shall have no obligation to verify any information or
statement contained in any certificate or policy delivered to it.
(G) TRUSTEE MAY INSURE:
If the Company fails to take out or maintain insurance as required by
this Section 1609, and if it fails to rectify such situation within forty-eight
hours after notice from the Trustee, the Trustee shall have the right but not
the obligation to take out and maintain such insurance at the cost of the
Company. No insurance taken out by the Trustee shall relieve the Company of its
obligation to insure hereunder and the Trustee shall not be liable for any loss
or damage suffered by the Company in connection therewith.
(H) Any and all Insurance Proceeds (except if no Event of Default has
occurred and is continuing, and the total Insurance Proceeds received in
connection with a Casualty do not exceed two million five hundred thousand
dollars ($2,500,000)) received by the Company shall be paid to the Trustee to be
deposited directly and held in the Cash Collateral Account subject to the terms
of this Indenture, including Section 1610. Following an Event of Default, all
proceeds of insurance for business interruptions of a Collateral Property shall
be paid directly into the Cash Collateral Account, and shall be subject to the
Lien (subject to
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Permitted Collateral Liens) of the applicable Security Document and shall be
applied in accordance with the terms of this Indenture.
SECTION 1610. WITHDRAWALS OF CONDEMNATION PROCEEDS
AND INSURANCE PROCEEDS.
(a) In the event of any Casualty or Condemnation not involving or
constituting a Collateral Loss Event (for which no Event of Default has occurred
and is continuing, and the Insurance Proceeds or Condemnation Proceeds exceed
two million five hundred thousand dollars ($2,500,000) (a "Partial Collateral
Loss")), (1) the Insurance Proceeds or Condemnation Proceeds therefrom shall be
paid directly to the Trustee for deposit in the Cash Collateral Account and (2)
the Company shall take such actions, at its sole expense, as may be required to
ensure that the Trustee has from the date of such deposit a first-ranking Lien
(subject to Permitted Collateral Liens) on such Insurance Proceeds or
Condemnation Proceeds pursuant to the applicable Security Document or this
Indenture. The Company shall apply all such Insurance Proceeds or Condemnation
Proceeds to commencement and completion of Restoration of the Collateral
affected by the relevant Casualty or Condemnation.
(b) In connection with any Partial Collateral Loss, or any Collateral
Loss Event with respect to which the Company has elected to apply the Insurance
Proceeds or Condemnation Proceeds, as the case may be, to Restoration of the
relevant Collateral pursuant to Section 1015(b)(iii)(B), the Company shall take
such actions, at its sole expense, as shall be required to permit the Trustee to
release such Insurance or Condemnation Proceeds from the Lien thereon. Upon the
receipt of an appropriate Opinion of Counsel pursuant to Section 102 and in
accordance with the Trust Indenture Act of 1939, and any related documentation,
the Trustee shall release to the Company the Insurance Proceeds or Condemnation
Proceeds from such Casualty or Condemnation on deposit in the Cash Collateral
Account (less the cost of recovering and paying out such Insurance Proceeds or
Condemnation Proceeds, including attorneys' fees and costs allocable to
inspecting the Work (as defined below) and the plans and specifications
therefor) in order to enable the Company to Restore the relevant Collateral to
at least its general utility and value prior to the relevant Casualty or
Condemnation, only in accordance with the following procedures:
(1) if the cost of the work to be completed (the "Work"), estimated
by the Company, shall exceed ten million dollars ($10,000,000), the Work
shall be under the charge of an architect, engineer or construction manager
(who may be an employee of the Company) and, before the Company commences
any Work, other than temporary Work to protect property to prevent
interference with business and
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Restoration work up to five million dollars ($5,000,000), the Trustee and
an independent consulting engineer selected by the Company and approved by
the Trustee shall have approved the plans and specifications for the Work,
which approval shall not be unreasonably withheld or delayed, it being
nevertheless understood that said plans and specifications shall provide
for such Work that, upon completion thereof, the improvements shall be at
least equal in general utility and value to the Improvements that were on
the site prior to the Condemnation or Casualty;
(2) each request for payment shall be made on no less than 10 nor
more than 30 days' prior notice to the Trustee and shall be accompanied by
a certificate to be made by such architect, engineer or construction
manager, if supervision is required by such a person under clause (1) of
this Section 1610(b), and by an Officer's Certificate, stating (i) that all
of the Work completed has been done substantially in compliance with the
approved plans and specifications, if any is required under said clause
(1), (ii) that the sum requested is required to pay, or to reimburse the
Company for the cost incurred in connection with, such Work (giving a brief
description of the services and materials provided in connection with such
Work); (iii) that the sum requested, when added to all proceeds previously
paid out by the Trustee, does not exceed the value of the Work done
(including downpayments made to suppliers related to the Work in accordance
with customary practice) as of the date of such certificate (less any
retainer set forth in the relevant construction contract, if applicable,
which shall contain customary provisions) and (iv) that the amount of
Insurance Proceeds or Condemnation Proceeds, as the case may be, from the
relevant Casualty or Condemnation remaining in the Cash Collateral Account,
together with the Insurance Proceeds or Condemnation Proceeds which will
thereafter become available in connection therewith (together with any
funds of the Company other than Condemnation Proceeds or Insurance Proceeds
deposited by the Company in the Cash Collateral Account for purposes of
completion of such Work), will at all times be sufficient to complete the
Restoration (giving in such reasonable detail as the Trustee may require an
estimate of the cost of such completion);
(3) each request shall be accompanied by waivers of Liens
(conditional as to the current request and unconditional as to prior
requests) satisfactory to the Trustee covering that part of the Work for
which payment or reimbursement is being requested and by evidence
satisfactory to the Trustee that there has not been filed with respect to
the Collateral Property any mechanic's or other Lien or instrument for the
retention of title in
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respect of any part of the Work not discharged of record (other than
Permitted Collateral Liens);
(4) any Work shall, once commenced, be prosecuted diligently to
completion in a good and workmanlike manner in material compliance with all
applicable Legal Requirements;
(5) each request shall be accompanied by an Officer's Certificate
dated not more than 10 days prior to the date of such request to the effect
that
(i) no material contract, lease or license affecting the relevant
Collateral Property immediately prior to the relevant Casualty or
Condemnation shall have been canceled, or contain any still
exercisable right to cancel, due to such Condemnation or Casualty;
(ii) no Default or Event of Default shall have occurred and be
continuing;
(6) the request for any payment after the Work has been completed
shall be accompanied by a copy of any certificate or certificates required
by law to render occupancy of the relevant Collateral Property legal;
(7) the buildings, equipment or other improvements or fixtures
covered by the Work shall be subject to the Lien of and security interest
created by the Security Documents (subject only to Permitted Collateral
Liens) and the Trustee shall have received an Opinion of Counsel
satisfactory to it to this effect;
(8) each request shall be accompanied by the documentation required
under Section 314(d) of the Trust Indenture Act;
(9) during the performance of any such Work, the Company shall
procure and maintain the insurance coverages required under Section 1609
hereof, including business interruption insurance covering the entire
period of Restoration; and
(10) the Company shall provide such other documents as the Trustee may
reasonably require.
(c) All Restoration shall be completed within 360 days from the
receipt of the Insurance Proceeds or Condemnation Proceeds from the relevant
Casualty or Condemnation, PROVIDED that, in the event that the Company enters
into a binding Commitment to Restore the relevant Collateral within six months
from such receipt, the Company shall have 24 months from such
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receipt to complete the Restoration, which shall be carried out with due
diligence.
(d) In the event that any Condemnation Proceeds or Insurance
Proceeds, as the case may be, remain on deposit in the Cash Collateral Account
following payment of all costs in connection with the Restoration of a
Collateral Property to substantially its prior value and general utility, such
funds shall remain on deposit in the Cash Collateral Account and will be made
available by the Trustee to the Company from time to time either (i) for the
construction of improvements at any Collateral Property, which shall become
subject to the first-ranking Lien of the Trustee (subject to Permitted
Collateral Liens) in accordance with substantially the same procedures set forth
in paragraph (b) above or (ii) for the purchase of additional Collateral to be
made subject to a first-ranking Lien of the Trustee (subject to Permitted
Collateral Liens) in accordance with substantially the same procedures set forth
in Section 1015. In the event that any funds of the Company other than
Insurance Proceeds or Condemnation Proceeds deposited by the Company in the Cash
Collateral Account for purposes of completing the relevant Work in accordance
with Section 1610(b)(2) hereof remain at such time, such funds shall be returned
to the Company. In the event that, following a Partial Collateral Loss
resulting from a Condemnation, it is determined by the engineering firm engaged
pursuant to Section 1610(b)(1) that Restoration of the relevant Collateral
Property is impossible or impracticable or that the Condemnation did not
materially and adversely affect the then current or anticipated operations of
the Collateral Property, the Condemnation Proceeds may be used in their entirety
to purchase Replacement Collateral, in accordance with substantially the same
procedures set forth in Section 1015.
(e) EVENT OF DEFAULT: If an Event of Default has occurred and is
continuing under this Indenture, the First Mortgage Notes or any Security
Document, the Trustee may, notwithstanding anything herein contained, apply any
Insurance Proceeds, Condemnation Proceeds, proceeds from business interruption
insurance deposited in the Cash Collateral Account pursuant to Section 1609(H),
or any amounts held by it or held in the Cash Collateral Account, to the
satisfaction of the Company's obligations under this Indenture. If an event has
occurred which, with the passage of time after notice, may become an Event of
Default, the Trustee shall be entitled to hold any such proceeds or amounts
pending expiry of the notice period.
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SECTION 1611. INSPECTION.
The Company shall, and shall cause each of its Restricted Subsidiaries
to, permit authorized representatives of the Trustee (i) to inspect and obtain
copies of all records and documents relating to the properties of the Company or
its Subsidiaries constituting Collateral in the possession of any federal, state
or municipal authorities and shall sign or cause to be signed any documents
required for this purpose, and (ii) to visit and inspect the properties of the
Company or its Restricted Subsidiaries constituting Collateral, and any or all
books, records and documents in the possession of the Company relating to the
Collateral, and to make copies and take extracts therefrom and to visit and
inspect the Collateral, all upon reasonable prior notice and at such reasonable
times during normal business hours and as often as may be reasonably requested.
SECTION 1612. FAILURE TO MAKE CERTAIN PAYMENTS.
If the Company shall fail to perform any of the covenants contained in
this Article Sixteen, including, without limitation, the Company's covenants to
pay the premiums in respect of all required insurance coverages, and such
failure shall continue after any applicable notice and grace period, the Trustee
may, but shall not be obligated to, and shall have no liability whatsoever for
its failure to, make advances to perform such covenant on the Company's behalf,
and all sums so advanced shall be immediately due and payable by the Company and
shall bear interest at a rate which shall equal the highest interest rate then
applicable under this Indenture. Neither the provisions of this Section 1612
nor any action taken by the Trustee pursuant to the provisions of this Section
1612 shall prevent any such failure to observe any covenant contained in this
Indenture or the Security Documents from constituting a Default or an Event of
Default.
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This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
STONE CONTAINER CORPORATION
By:
-------------------------
Name:
Title:
[SEAL]
Attest:
- - - - ----------------------------
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
AS TRUSTEE
By:
-------------------------------
Name:
Title:
[SEAL]
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STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
On the 12 day of October, 1994, before me personally came Amy K.
Johnson, to me known, who, being by me duly sworn, did depose and say that she
is Corporate Trust Officer of Norwest Bank Minnesota, National Association, one
of the parties described in and which executed the foregoing instrument; that
she knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal, that it was so affixed by authority of the Board of
Directors of said corporation; and that she signed his name thereto by like
authority.
-------------------------------
My commission expires:
<PAGE>
STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
On the 12 day of October, 1994, before me personally came
____________, to me known, who, being by me duly sworn, did depose and say that
he is _______________________ of Stone Container Corporation, one of the parties
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal, that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
-------------------------------
My commission expires:
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 12th day of October, 1994, before me personally came
_____________, to me known, who, being by me duly sworn, did depose and say that
he is _____________ of Norwest Bank Minnesota, National Association, one of the
parties described in and which executed the foregoing instrument; that he knows
the seal of said bank; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors of
said bank; and that he signed his name thereto by like authority.
-------------------------------
My Commission Expires:
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF )
On the 12th day of October, 1994, before me personally came
_____________, to me known, who, being by me duly sworn, did depose and say that
he is _________ of Stone Container Corporation, one of the parties described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
-------------------------------
My Commission Expires:
<PAGE>
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
STONE CONTAINER CORPORATION,
as Issuer
TO
THE BANK OF NEW YORK,
as Trustee
____________
Indenture
Dated as of October 12, 1994
____________
up to $200,000,000
11-1/2% Senior Notes due 2004
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
<PAGE>
STONE CONTAINER CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of October 12, 1994
Trust Indenture Indenture Section
Act Section
Section 310(a)(1). . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . 609
(b). . . . . . . . . . . . . . . . . . 608, 610
(c). . . . . . . . . . . . . . . . . . Not Applicable
Section 311(a) . . . . . . . . . . . . . . . 613
(b). . . . . . . . . . . . . . . . . . 613
(b)(2) . . . . . . . . . . . . . . . . 703(a), 703(b)
Section 312(a) . . . . . . . . . . . . . . . 701, 702(a)
(b). . . . . . . . . . . . . . . . . . 702(b)
(c). . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . 703(a)
(b). . . . . . . . . . . . . . . . . . 703(b)
(c). . . . . . . . . . . . . . . . . . 703(a), 703(b)
(d). . . . . . . . . . . . . . . . . . 703(b)
Section 314(a)(1) . . . . . . . . . . . . . 704
(a)(2). . . . . . . . . . . . . . 704
(a)(3). . . . . . . . . . . . . . 704
(a)(4). . . . . . . . . . . . . . 1011
(b) . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . Not Applicable
(d). . . . . . . . . . . . . . . . . . 1009
(e). . . . . . . . . . . . . . . . . . 102
(f). . . . . . . . . . . . . . . . . . Not Applicable
Section 315(a) . . . . . . . . . . . . . . . 601(a)
(b). . . . . . . . . . . . . . . . . . 602, 703(a)
(c). . . . . . . . . . . . . . . . . . 601(b)
(d). . . . . . . . . . . . . . . . . . 601(c)
(d)(1) . . . . . . . . . . . . . . . . 601(a), 601(c)
(d)(2) . . . . . . . . . . . . . . . . 601(c)
(d)(3) . . . . . . . . . . . . . . . . 601(c)
(e). . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . 101
(a)(1)(A). . . . . . . . . . . . . . . 512
(a)(1)(B). . . . . . . . . . . . . . . 502, 513
(a)(2) . . . . . . . . . . . . . . . . Not Applicable
(b). . . . . . . . . . . . . . . . . . 508
____________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
Section 317(a)(1). . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . 504
(b). . . . . . . . . . . . . . . . . . 1003
(c). . . . . . . . . . . . . . . . . . 104(c)
Section 318(a) . . . . . . . . . . . . . . . 107
- - - - --------------------
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS(1)
______________
Page
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recitals of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE ONE
Definitions and Other Provisions of General Application
Section 101. Definitions:
1991 Indenture . . . . . . . . . . . . . . . . . . . . . . . . 2
Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . 2
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Asset Disposition. . . . . . . . . . . . . . . . . . . . . . . 3
Asset Disposition Offer. . . . . . . . . . . . . . . . . . . . 3
Asset Disposition Offer Amount . . . . . . . . . . . . . . . . 3
Asset Disposition Payment Date . . . . . . . . . . . . . . . . 3
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . 4
Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . 4
Board of Directors . . . . . . . . . . . . . . . . . . . . . . 4
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . 4
Capitalized Lease Obligation . . . . . . . . . . . . . . . . . 4
Castlewood Agreement . . . . . . . . . . . . . . . . . . . . . 4
Change of Control. . . . . . . . . . . . . . . . . . . . . . . 4
Change of Control Date; Change of
Control Offer; Change of Control
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . 5
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Commodities Agreement. . . . . . . . . . . . . . . . . . . . . 5
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Company Request; Company Order . . . . . . . . . . . . . . . . 5
Consolidated Amortization Expense. . . . . . . . . . . . . . . 5
Consolidated Cash Flow Available for
Fixed Charges. . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Depreciation Expense. . . . . . . . . . . . . . . 5
Consolidated Free Cash Flow. . . . . . . . . . . . . . . . . . 5
Consolidated Income Tax Expense. . . . . . . . . . . . . . . . 6
Consolidated Interest Coverage Ratio . . . . . . . . . . . . . 6
Consolidated Interest Expense. . . . . . . . . . . . . . . . . 6
Consolidated Net Income. . . . . . . . . . . . . . . . . . . . 6
- - - - --------------------
(1) NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
i
<PAGE>
Page
Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . 7
Continental Guaranty . . . . . . . . . . . . . . . . . . . . . 7
Continuing Director. . . . . . . . . . . . . . . . . . . . . . 7
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . 8
corporation. . . . . . . . . . . . . . . . . . . . . . . . . . 8
covenant defeasance. . . . . . . . . . . . . . . . . . . . . . 8
Credit Agreements. . . . . . . . . . . . . . . . . . . . . . . 8
Currency Agreement . . . . . . . . . . . . . . . . . . . . . . 8
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 9
defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Deficiency Amount. . . . . . . . . . . . . . . . . . . . . . . 9
Deficiency Date. . . . . . . . . . . . . . . . . . . . . . . . 9
Deficiency Offer . . . . . . . . . . . . . . . . . . . . . . . 9
Deficiency Offer Amount. . . . . . . . . . . . . . . . . . . . 9
Deficiency Payment Date. . . . . . . . . . . . . . . . . . . . 9
dollars; $ . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Event of Default . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . 9
First Mortgage Note Indenture. . . . . . . . . . . . . . . . . 9
Five Year Treasury Rate. . . . . . . . . . . . . . . . . . . . 9
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Holder; Securityholder . . . . . . . . . . . . . . . . . . . . 10
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 10
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Initial Interest Rate. . . . . . . . . . . . . . . . . . . . . 11
Interest Payment Date. . . . . . . . . . . . . . . . . . . . . 12
Interest Swap Obligations. . . . . . . . . . . . . . . . . . . 12
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Minimum Subordinated Capital Base. . . . . . . . . . . . . . . 12
New Credit Agreement . . . . . . . . . . . . . . . . . . . . . 12
Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Officer's Certificate. . . . . . . . . . . . . . . . . . . . . 12
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 13
Ordinary Course of Business Liens. . . . . . . . . . . . . . . 13
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . 15
Permitted Existing Indebtedness of an
Acquired Person. . . . . . . . . . . . . . . . . . . . . . . 15
Permitted Indebtedness . . . . . . . . . . . . . . . . . . . . 16
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . 19
Permitted Refinancing Indebtedness . . . . . . . . . . . . . . 22
Permitted Stone Canada
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 23
Permitted Subordinated Indebtedness. . . . . . . . . . . . . . 23
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ii
<PAGE>
Page
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . 24
Predecessor Senior Note. . . . . . . . . . . . . . . . . . . . 24
Rate Determination Period. . . . . . . . . . . . . . . . . . . 24
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Redeemable Stock . . . . . . . . . . . . . . . . . . . . . . . 24
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . 24
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . 24
Register; Registrar. . . . . . . . . . . . . . . . . . . . . . 24
Reset Date . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reset Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Responsible Officer. . . . . . . . . . . . . . . . . . . . . . 25
Restricted Payment . . . . . . . . . . . . . . . . . . . . . . 25
Restricted Subsidiary. . . . . . . . . . . . . . . . . . . . . 25
Seminole . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . 25
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . 25
Seven Year Treasury Rate . . . . . . . . . . . . . . . . . . . 26
Southshore Agreement . . . . . . . . . . . . . . . . . . 26
Special Record Date. . . . . . . . . . . . . . . . . . . . . . 26
Specified Bank Debt. . . . . . . . . . . . . . . . . . . . . . 26
Stated Maturity. . . . . . . . . . . . . . . . . . . . . . . . 27
Stone Canada . . . . . . . . . . . . . . . . . . . . . . . . . 27
Stone Canada Group . . . . . . . . . . . . . . . . . . . . . . 27
Stone Southwest. . . . . . . . . . . . . . . . . . . . . . . . 27
Subordinated Capital Base. . . . . . . . . . . . . . . . . . . 27
Subordinated Indebtedness. . . . . . . . . . . . . . . . . . . 28
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Ten Year Treasury Rate . . . . . . . . . . . . . . . . . . . . 28
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . 29
Two Year Treasury Rate . . . . . . . . . . . . . . . . . . . . 29
U.S. Government Obligations. . . . . . . . . . . . . . . . . . 30
Unrestricted Subsidiary. . . . . . . . . . . . . . . . . . . . 30
Vice President . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 102. Compliance Certificates and Opinions . . . . . . . . . . . . . 31
Section 103. Form of Documents Delivered
to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . . . . . 32
Section 105 Notices, etc., to Trustee and Company. . . . . . . . . . . . . 33
Section 106. Notice to Holders; Waiver. . . . . . . . . . . . . . . . . . . 34
Section 107. Conflict with Trust Indenture Act. . . . . . . . . . . . . . . 34
iii
<PAGE>
Page
Section 108. Effect of Headings and
Table of Contents. . . . . . . . . . . . . . . . . . . . . . 34
Section 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 35
Section 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . . 35
Section 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . . 35
Section 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 114. No Recourse Against Others . . . . . . . . . . . . . . . . . . 35
Section 115. Incorporation by Reference
to Trust Indenture Act . . . . . . . . . . . . . . . . . . . 36
ARTICLE TWO
Senior Note Forms
Section 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . . 36
Section 202. Form of Face of Senior Note. . . . . . . . . . . . . . . . . . 37
Section 203. Form of Reverse of Senior Note . . . . . . . . . . . . . . . . 39
Section 204. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . . . . . . . . . 45
Section 205. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE THREE
The Senior Notes
Section 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . . 45
Section 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 303. Execution, Authentication, Delivery
and Dating . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 304. Temporary Senior Notes . . . . . . . . . . . . . . . . . . . . 47
Section 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . . . . . . . . . . 47
iv
<PAGE>
Page
Section 306. Mutilated, Destroyed, Lost and Stolen
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 307. Payment of Interest; Interest Rights
Preserved. . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . 51
Section 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 310. Computation of Interest. . . . . . . . . . . . . . . . . . . . 51
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 402. Application of Trust Money . . . . . . . . . . . . . . . . . . 53
ARTICLE FIVE
Remedies
Section 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . . 53
Section 502. Acceleration of Maturity; Rescission
and Annulment. . . . . . . . . . . . . . . . . . . . . . . . 56
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . . . . . . . . . . 56
Section 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 57
Section 505. Trustee May Enforce Claims Without
Possession of Senior Notes . . . . . . . . . . . . . . . . . 58
Section 506. Application of Money Collected . . . . . . . . . . . . . . . . 58
Section 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . 59
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . 60
Section 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . 60
v
<PAGE>
Page
Section 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . 60
Section 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . 61
Section 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . 61
Section 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . 61
Section 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . 62
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities
of the Trustee . . . . . . . . . . . . . . . . . . . . . . . 62
Section 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 63
Section 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . . 63
Section 604. Not Responsible for Recitals or
Issuance of Senior Notes . . . . . . . . . . . . . . . . . . 64
Section 605. May Hold Senior Notes. . . . . . . . . . . . . . . . . . . . . 65
Section 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . . 65
Section 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . 65
Section 608. Disqualification; Conflicting
Interests. . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 609. Corporate Trustee Required;
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 610. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 611. Acceptance of Appointment by
Successor. . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 612. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . . . . . . . . . . 69
Section 613. Preferential Collection of Claims
Against Company. . . . . . . . . . . . . . . . . . . . . . . 69
Section 614. Appointment of Authenticating Agent. . . . . . . . . . . . . . 69
vi
<PAGE>
Page
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and
Addresses of Holders . . . . . . . . . . . . . . . . . . . . 71
Section 702. Preservation of Information;
Communications to Holders. . . . . . . . . . . . . . . . . . 72
Section 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . 72
Section 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE EIGHT
Consolidation, Merger, Lease, Sale or Transfer
Section 801. When Company May Merge, etc. . . . . . . . . . . . . . . . . . 74
Section 802. Senior Notes to Be Secured in
Certain Events . . . . . . . . . . . . . . . . . . . . . . . 75
Section 803. Officer's Certificate;
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 76
Section 804. Successor Corporation Substituted. . . . . . . . . . . . . . . 76
ARTICLE NINE
Supplements to the
Indenture
Section 901. Supplemental Indentures Without Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 902. Supplemental Indentures with Consent of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 903. Execution of Supplemental Indentures . . . . . . . . . . . . . 78
Section 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . . 79
Section 905. Conformity with Trust Indenture Act. . . . . . . . . . . . . . 79
Section 906. Reference in Senior Notes to
Supplemental Indentures. . . . . . . . . . . . . . . . . . . 79
vii
<PAGE>
Page
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . . 79
Section 1003. Money for Senior Notes Payments
to Be Held in Trust. . . . . . . . . . . . . . . . . . . . . 80
Section 1004. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . 81
Section 1005. Payment of Taxes and Other Claims. . . . . . . . . . . . . . . 82
Section 1006. Restriction on Dividends . . . . . . . . . . . . . . . . . . . 82
Section 1007. Limitation on Future Liens and
Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 1008. Limitation on Future Incurrence of
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 1009. Limitation on Asset Dispositions . . . . . . . . . . . . . . . 86
Section 1010. Maintenance of Properties. . . . . . . . . . . . . . . . . . . 91
Section 1011. Compliance Certificates. . . . . . . . . . . . . . . . . . . . 91
Section 1012. Waiver of Stay, Extension or Usury
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 1013. Change of Control. . . . . . . . . . . . . . . . . . . . . . . 93
Section 1014. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . . 95
ARTICLE ELEVEN
Maintenance of Subordinated Capital Base
Section 1101. Maintenance of Subordinated Capital
Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 1102. Alternative Interest Rate Adjustment . . . . . . . . . . . . . 97
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Page
ARTICLE TWELVE
Redemption of Senior Notes
Section 1201. Election to Redeem; Notice to Trustee. . . . . . . . . . . . . 99
Section 1202. Selection by Trustee of the First
Mortgage Notes to Be Redeemed. . . . . . . . . . . . . . . . 99
Section 1203. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 100
Section 1204. Deposit of Redemption Price. . . . . . . . . . . . . . . . . . 100
Section 1205. Senior Notes Payable on
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . 101
Section 1206. Senior Notes Redeemed in Part. . . . . . . . . . . . . . . . . 101
ARTICLE THIRTEEN
Defeasance And Covenant Defeasance
Section 1301. Applicability of Article; Company's
Option to Effect Defeasance or
Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . 101
Section 1302. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . 102
Section 1303. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . 102
Section 1304. Conditions to Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 1305. Deposited Money and Government
Obligations to be Held in Trust;
Other Miscellaneous Provisions . . . . . . . . . . . . . . . 104
ix
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INDENTURE, dated as of October 12, 1994, between STONE CONTAINER
CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
Chicago, Illinois, and The Bank of New York, a New York banking corporation, as
Trustee (herein called the "Trustee") having its Corporate Trust office at 101
Barclay Street, New York, New York 10286, United States of America.
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its
11-1/2% Senior Notes due 2004 (the "Senior Notes"), of substantially the tenor
and amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
All things necessary to make the Senior Notes, when executed by the
Company and authenticated and delivered by the Trustee hereunder and duly issued
by the Company, the valid obligations of the Company, and to make this Indenture
a valid agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Senior Notes by the Holders (as hereinafter defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
<PAGE>
(4) the word "including" (and with correlative meaning "include")
means including, without limiting the generality of, any description
preceding such term; and
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"1991 Indenture" means the indenture dated as of November 1, 1991
between the Company and The Bank of New York, as Trustee, as amended and
supplemented to the date hereof and, unless otherwise indicated, from time to
time after the date hereof. References herein to Indebtedness issued under the
1991 Indenture shall include any Indebtedness issued thereunder both before and
after the date hereof.
"Acquiring Person" means any Person or group (as defined in Section
13(d)(3) of the Exchange Act) who or which, together with all affiliates and
associates (as defined in Rule 12b-2 under the Exchange Act), becomes the
beneficial owner of shares of common stock of the Company having more than 50%
of the total number of votes that may be cast for the election of directors of
the Company; PROVIDED, HOWEVER, that an Acquiring Person shall not include (i)
the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan
of the Company or any Subsidiary of the Company or any entity holding common
stock of the Company for or pursuant to the terms of any such plan, (iv) any
descendant of Joseph Stone or the spouse of any such descendant, the estate of
any such descendant or the spouse of any such descendant, any trust or other
arrangement for the benefit of any such descendant or the spouse of any such
descendant or any charitable organization established by any such descendant or
the spouse of any such descendant (collectively, the "Stone Family"), or (v) any
group which includes any member or members of the Stone Family and a majority of
the common stock of the Company held by such group is beneficially owned by such
member or members. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of common stock by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to more than
50% or more of the common stock of the Company then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the beneficial owner of more than 50% or
more of the common stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the beneficial owner of any additional shares of common stock of the
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Company, then such Person shall be deemed to be an "Acquiring Person."
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Disposition" means any sale, transfer, sale-leaseback or other
disposition of (i) shares of Capital Stock of a Restricted Subsidiary (other
than directors' qualifying shares) or (ii) property or assets of the Company or
any Restricted Subsidiary (other than a sale, transfer, sale-leaseback or other
disposition of Receivables and other assets or property described in clause (vi)
of the definition of Permitted Liens pursuant to a Receivables sale constituting
Indebtedness pursuant to clause (ii) of the definition thereof); PROVIDED,
HOWEVER, that an Asset Disposition shall not include any sale, transfer, sale-
leaseback or other disposition of (a) Collateral (as defined in the First
Mortgage Note Indenture while the 10-3/4% First Mortgage Notes due 2002 of the
Company are outstanding), (b) the shares, property or assets referred to in
clause (i) and (ii) by a Restricted Subsidiary to the Company or to another
Restricted Subsidiary or by the Company to a Restricted Subsidiary, (c) of
defaulted Receivables for collection or (d) in the ordinary course of business,
but shall include any sale, transfer, sale-leaseback or other disposition by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary of the shares,
property or assets referred to in clauses (i) and (ii). The designation by the
Company of a Subsidiary of the Company as an "Unrestricted Subsidiary" shall
constitute an Asset Disposition of such Subsidiary's property and assets net of
its liabilities, unless the transfer of property and assets to such Subsidiary
has previously constituted an Asset Disposition.
"Asset Disposition Offer" shall have the meaning provided in Section
1009(c).
"Asset Disposition Offer Amount" shall have the meaning provided in
Section 1009(a).
"Asset Disposition Payment Date" shall have the meaning provided in
Section 1009(c).
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"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Senior Notes.
"Authority" means any federal, state, municipal or local government or
quasi-governmental agency or authority.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company;
PROVIDED, HOWEVER, that when the context refers to actions or resolutions of the
Board of Directors, then the term "Board of Directors" shall also mean any duly
authorized committee of the Board of Directors of the Company or Officer
authorized to act with respect to any particular matter to exercise the power of
the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or regulation to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, warrants, rights, options or other equivalents
(however designated) of capital stock or any other equity interest of such
Person, including each class of common stock and preferred stock.
"Capitalized Lease Obligation" means, in respect of any Person, an
obligation to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of Indebtedness represented by such obligation shall be the capitalized
amount of such obligation determined in accordance with such principles.
"Castlewood Agreement" has the meaning specified in clause (2) of the
proviso to clause (i) of the definition of Permitted Indebtedness.
"Change of Control" means any event by which (i) an Acquiring Person
has become such or (ii) Continuing Directors cease to comprise a majority of the
members of the Board of Directors of the Company.
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"Change of Control Date", "Change of Control Offer" and "Change of
Control Payment Date" shall have the respective meanings provided in Section
1013.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Commodities Agreement" of any Person means any forward contract,
option or futures contract or similar agreement or arrangement designed to
protect such Person or any of its Subsidiaries from fluctuations in the price
of, or shortage of supply of, commodities.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Controller,
an Assistant Controller, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Amortization Expense" means, for any period, the
amortization expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
period, (a) the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) Consolidated Income Tax
Expense, (iv) Consolidated Depreciation Expense, (v) Consolidated Amortization
Expense and (vi) other non-cash items reducing Consolidated Net Income, MINUS
(b) non-cash items increasing Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated Depreciation Expense" means, for any period, the
depreciation expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Free Cash Flow" means, for any period, (a) the sum of
the amounts for such period of (i) Consolidated
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Net Income, (ii) Consolidated Depreciation Expense and (iii) Consolidated
Amortization Expense, MINUS (b) the sum of (i) Restricted Payments during such
period, (ii) net reduction during such period in Indebtedness of the Company and
its Restricted Subsidiaries (other than as a result of Asset Dispositions,
Collateral Asset Dispositions (as defined in the First Mortgage Note Indenture)
or Collateral Loss Events (as defined in the First Mortgage Note Indenture)) and
(iii) the excess (but not the deficit) of capital expenditures of the Company
and its Restricted Subsidiaries for such period not financed pursuant to clause
(vi) of the definition of Permitted Indebtedness over Consolidated Depreciation
Expense.
"Consolidated Income Tax Expense" means, for any period, the aggregate
of the income tax expense of the Company and its Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, for any period, the
ratio of (i) Consolidated Cash Flow Available for Fixed Charges to (ii)
Consolidated Interest Expense.
"Consolidated Interest Expense" means, for any period, the interest
expense (including the interest component of all Capitalized Lease Obligations
and the earned discount or yield with respect to a Receivables sale constituting
Indebtedness) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; PROVIDED, HOWEVER,
that, with respect to revolving credit, revolving Receivables purchases or other
similar arrangements, the interest expense in respect thereof for any period
shall be the PRO FORMA interest expense attributable to all amounts committed
during such period under such revolving credit, revolving Receivables purchases
or other similar arrangements, whether or not such amounts were actually
outstanding during such period, in accordance with the terms thereof, in each
case on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
loss) of the Company and its Restricted Subsidiaries on a consolidated basis for
such period taken as a single accounting period, determined in accordance with
GAAP; PROVIDED, HOWEVER, that: (a) there shall be excluded therefrom (i) the
net income (or loss) of any Person (other than the Company) which is not a
Restricted Subsidiary, EXCEPT to the extent of the amounts of dividends or other
distributions actually paid in cash or tangible property or tangible assets
(such property or assets to be valued at their fair market value net of any
obligations secured thereby) to the Company or any of its Restricted
Subsidiaries by such Person during such period, (ii) EXCEPT to the extent
includable pursuant to the foregoing clause (i), the net income (or loss) of any
Person accrued prior
6
<PAGE>
to the date it becomes a Restricted Subsidiary or is merged into or consolidated
with the Company or any of its Restricted Subsidiaries or that Person's property
or assets are acquired by the Company or any of its Restricted Subsidiaries,
(iii) the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary (other
than any restrictions contained in the instruments relating to the 12-1/8%
Subordinated Debentures due September 15, 2001 of Stone Southwest) and (iv) the
excess (but not the deficit), if any, of (x) any gain which must be treated as
an extraordinary item under GAAP or any gain realized upon the sale or other
disposition of any asset that is not sold in the ordinary course of business or
of any Capital Stock of a Restricted Subsidiary over (y) any loss which must be
treated as an extraordinary item under GAAP or any loss realized upon the sale
or other disposition of any asset that is not sold in the ordinary course of
business or of any Capital Stock of a Restricted Subsidiary; and (b) there shall
be included therein the amount of cash realized by the Company or any of its
Restricted Subsidiaries during such period on account of dividends or other
distributions theretofore paid in other than cash or tangible property or
tangible assets by a Person which is not a Restricted Subsidiary.
"Consolidated Net Worth" means the amount which at any date of
determination, in conformity with GAAP consistently applied, would be set forth
under the caption "stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Company and its Restricted Subsidiaries, exclusive of
amounts attributable to Redeemable Stock (at such time as no Indebtedness is
outstanding under the 1991 Indenture, excluding the effects of foreign currency
translation adjustments). If the Company has changed one or more of the
accounting principles used in the preparation of its financial statements
because of a change mandated by the Financial Accounting Standards Board or its
successor, then Consolidated Net Worth shall mean the Consolidated Net Worth the
Company would have had if the Company had continued to use those generally
accepted accounting principles employed on November 1, 1991.
"Continental Guaranty" means the Guaranty dated as of October 7, 1983
between The Continental Group, Inc. and the Company, as amended from time to
time.
"Continuing Director" means any member of the Board of Directors,
while such person is a member of such Board of Directors, who is not an
Acquiring Person, or an Affiliate or associate of an Acquiring Person or a
representative of an
7
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Acquiring Person or of any such Affiliate or associate and who (a) was a member
of the Board of Directors prior to November 1, 1991, or (b) subsequently became
or becomes a member of such Board of Directors and whose nomination for election
or election to such Board of Directors was or is recommended or approved by
resolution of a majority of the Continuing Directors or who was or is included
as a nominee in a proxy statement of the Company distributed when a majority of
such Board of Directors consists of Continuing Directors.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date hereof is located at 101 Barclay Street,
New York, New York, 10286, United States of America.
"corporation" includes corporations, associations, companies, business
trusts and limited partnerships.
"covenant defeasance" has the meaning specified in Section 1303.
"Credit Agreements" means (i) the credit agreement, dated as of March
1, 1989, by and among the Company, the financial institutions signatory thereto,
Bankers Trust Company, as agent for such financial institutions, and Citibank,
N.A., Chemical Bank (as successor by merger to Manufacturers Hanover Trust
Company) and The First National Bank of Chicago, as co-agents for such financial
institutions, as amended, modified, refinanced (including, without limitation,
by the New Credit Agreement) or extended from time to time, (ii) the credit
agreement, dated as of March 1, 1989, by and among Stone Canada, the financial
institutions signatory thereto, Bankers Trust Company, as agent for such
financial institutions, and Citibank, N.A., Chemical Bank (as successor by
merger to Manufacturers Hanover Trust Company) and The First National Bank of
Chicago, as co-agents for such financial institutions, as amended, modified,
refinanced (including, without limitation, by the New Credit Agreement) or
extended from time to time and (iii) the revolving credit agreement, dated as of
March 1, 1989, by and among Stone Canada, the financial institutions signatory
thereto, BT Bank of Canada, as administrative agent, The Bank of Nova Scotia, as
payment agent, and Bankers Trust Company, as collateral agent, as amended,
modified, refinanced (including, without limitation, by the New Credit
Agreement) or extended from time to time.
"Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement, forward currency contract, option or futures
contract or other similar agreement or arrangement, and any renewal or extension
thereof, designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values.
8
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"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage or time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"defeasance" has the meaning specified in Section 1302.
"Deficiency Amount" shall have the meaning provided in Section
1009(b).
"Deficiency Date" shall have the meaning provided in Section 1101(a).
"Deficiency Offer" shall have the meaning provided in Section 1101(a).
"Deficiency Offer Amount" shall have the meaning provided in Section
1101(a).
"Deficiency Payment Date" shall have the meaning provided in Section
1101(c)(2).
"dollars" and "$" means lawful money of the United States of America.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder.
"First Mortgage Note Indenture" means the indenture dated the date
hereof between the Company and Norwest Bank Minnesota, National Association, as
Trustee, as amended and supplemented from time to time after the date hereof.
"Five Year Treasury Rate" means the arithmetic average (rounded to the
nearest basis point) of the weekly average per annum yield to maturity values
adjusted to constant maturities of five years, for the Rate Determination Period
as determined from the yield curves of the most actively traded marketable
United States Treasury fixed interest rate securities (x) constructed daily by
the United States Treasury Department (i) as published by the Federal Reserve
Board in its Statistical Release H.15(519), "Selected Interest Rates," which
weekly average yield to maturity values currently are set forth in such
Statistical
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<PAGE>
Release under the caption "U.S. Government Securities-Treasury Constant
Maturities-5 Year" or (ii) if said Statistical Release H.15(519) is not then
published, as published by the Federal Reserve Board in any release comparable
to its Statistical Release H.15(519) or (iii) if the Federal Reserve Board shall
not then be publishing a comparable release, as published in any official
publication or release of any other United States Government Department or
agency or (y) if the United States Treasury Department shall not then be
constructing such yield curves, then as constructed by the Federal Reserve Board
or any other United States Government Department or agency and published as set
forth in (x) above. However, if the Five Year Treasury Rate cannot be
determined as provided above, then the Five Year Treasury Rate shall mean the
arithmetic average (rounded to the nearest basis point) of the per annum yields
to maturity for each Business Day during the Rate Determination Period of all of
the issues of actively trading issues of non-interest bearing United States
Treasury fixed interest rate securities with a maturity of not less than 57
months nor more than 63 months from such Business Day (1) as published in THE
WALL STREET JOURNAL or (2) if THE WALL STREET JOURNAL shall cease such
publication, based on average asked prices (or yields) as quoted by each of
three United States Government securities dealers of recognized national
standing selected by the Company.
"GAAP" means generally accepted accounting principles, as in effect as
of November 1, 1991 in the United States of America, 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 is approved by a significant segment of the accounting profession.
"Holder" or "Securityholder" means a Person in whose name a Senior
Note is registered in the Register.
"Indebtedness" means (without duplication), with respect to any
Person, (i) any obligation of such Person to pay the principal of, premium, if
any, interest on, penalties, reimbursement or indemnification amounts, fees,
expenses or other amounts relating to any indebtedness, and any other liability,
contingent or otherwise, of such Person (A) for borrowed money or the deferred
purchase price of property or services (excluding trade payables and payables,
indebtedness, obligations and other liabilities of the Company to any Restricted
Subsidiary or of any Restricted Subsidiary to the Company or to any other
Restricted Subsidiary), whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof; (B) for any
letter of credit for the account of such Person supporting other obligations of
such Person described in this definition; or (C) for the payment of money
relating to a
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Capitalized Lease Obligation; (ii) the unrecovered investment of a purchaser
(other than the Company or any of its Restricted Subsidiaries) of such Person's
Receivables pursuant to a Receivables purchase facility or otherwise (whether or
not characterized as a sale of such Receivables or a secured loan, but excluding
any disposition of Receivables in connection with a disposition of fixed assets
or a business of such Person and any disposition of defaulted Receivables for
collection), together with any obligation of such Person to pay any discount,
interest, fees, indemnification amounts, penalties, recourse on account of the
uncollectability of Receivables, expenses or other amounts in connection
therewith; (iii) any obligation of another Person (other than a Restricted
Subsidiary of such Person) of the kind described in the preceding clause (i) or
(ii), which the Person has guaranteed or which is otherwise its legal liability;
(iv) any obligation of another Person (other than a Restricted Subsidiary of
such Person) of the kind described in the preceding clause (i) or (ii) secured
by a Lien to which the property or assets of such Person are subject, whether or
not the obligation secured thereby shall have been assumed by or shall otherwise
be such Person's legal liability; and (v) any renewals, extensions or refundings
of any of the foregoing described in any of the preceding clauses (i), (ii),
(iii) and (iv). The "amount" or "principal amount" of Indebtedness of any
Person at any date, as used herein, shall be the outstanding principal amount at
such date of all unconditional Indebtedness, the maximum principal amount of any
contingent Indebtedness or the unrecovered purchaser's investment in a sale of
Receivables, in each case at such date and without taking into account any
premium, interest, penalties, reimbursement or indemnification amounts, fees,
expenses or other amounts (other than principal or unrecovered purchaser's
investment) in respect thereof; PROVIDED, HOWEVER, that (y) with respect to
Indebtedness described in clause (iv) above, the amount of Indebtedness shall be
the lesser of (a) the amount of the Indebtedness of such other Person that is
secured by the property or assets of such Person and (b) the fair market value
of the property or assets securing such Indebtedness, and (z) with respect to
revolving credit, revolving Receivables purchases or other similar arrangements,
the amount of Indebtedness thereunder shall be the amounts of such commitments
as of the date of determination.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Initial Interest Rate", when used with respect to any Senior Note,
means the initial rate of interest to be borne by such Senior Note as stated on
the face thereof.
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"Interest Payment Date" means the Stated Maturity of an installment of
interest on any Senior Note.
"Interest Swap Obligations" of any Person means the obligations of
such Person pursuant to any interest rate swap agreement, interest rate collar
agreement, forward rate agreement, interest rate cap insurance, option or
futures contract or other similar agreement or arrangement, and any renewal or
extension thereof, designed to protect such Person or any of its Subsidiaries
against fluctuations in interest rates or to permit the exchange of fixed rate
obligations of such Person for floating rate obligations and entered into the
ordinary course of financial management of the Company and not for speculative
purposes.
"Issue Date" means October 12, 1994.
"Lien" means any mortgage, pledge, security interest, adverse claim
(as defined in Section 8.302(2) of the New York Uniform Commercial Code),
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the Company or any of its Subsidiaries under a lease which is
not in the nature of a conditional sale or title retention agreement).
"Maturity", when used with respect to any Senior Note, means the date
on which the principal of such Senior Note or an installment of the principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Minimum Subordinated Capital Base" shall have the meaning provided in
Section 1101(a).
"New Credit Agreement" means the credit agreement, dated as of October
12, 1994, by and among the Company, the financial institutions signatory thereto
and Bankers Trust Company, as agent for such financial institutions, as amended,
modified, refinanced or extended from time to time.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer or the Secretary of the
Company.
"Officer's Certificate" means a certificate signed by an Officer and
delivered to the Trustee that shall comply with Sections 102 and 103.
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"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company, and who shall be reasonably acceptable
to the Trustee.
"Ordinary Course of Business Liens" means, with respect to any Person,
(i) Liens for taxes, assessments, governmental charges, levies or
claims not yet delinquent or being contested in good faith;
(ii) statutory Liens of landlords, carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other like Liens arising in
the ordinary course of business (including the construction of facilities)
or deposits to obtain the release of such Liens;
(iii) Liens in connection with workers' compensation, unemployment
insurance and other similar legislation;
(iv) zoning restrictions, licenses, easements, rights-of-way and
other similar charges or encumbrances or restrictions not interfering in
any material respect with the business of such Person or any of its
Subsidiaries;
(v) Liens securing such Person's obligations with respect to
commercial letters of credit;
(vi) Liens to secure public or statutory obligations of such Person;
(vii) judgment and attachment Liens against such Person not giving
rise to a Default under the Senior Notes or Liens created by or existing
from any litigation or legal proceeding against such Person which is
currently being contested in good faith by such Person in appropriate
proceedings;
(viii) leases or subleases granted to other Persons or existing on
property acquired by such Persons;
(ix) Liens encumbering property or assets of such Person under
construction arising from progress or partial payments;
(x) Liens encumbering customary initial deposits and margin
accounts and other Liens securing obligations arising out of Interest Swap
Obligations, Currency Agreements and Commodities Agreements, in each case
of the type typically securing such obligations; PROVIDED, HOWEVER, that if
such Interest Swap Obligations, Currency Agreements and Commodities
Agreements relate to Indebtedness not incurred
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in violation of this Indenture, such Lien may also cover the property and
assets securing the Indebtedness to which such Interest Swap Obligations,
Currency Agreements and Commodities Agreements relate;
(xi) Liens encumbering deposits made to secure obligations arising
from public, statutory, regulatory, contractual or warranty requirements or
obligations of such Person or its Subsidiaries (not constituting
Indebtedness);
(xii) Liens arising from filing UCC financing statements regarding
leases or consignments;
(xiii) purchase money Liens securing payables (not constituting
Indebtedness) arising from the purchase by such Person or any of its
Affiliates of any equipment or goods in the ordinary course of business;
(xiv) Liens arising out of consignment or similar arrangements for
the sale of goods entered into by such Person or any of its Subsidiaries in
the ordinary course of business;
(xv) Liens in the ordinary course of business granted by such Person
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, or progress payments,
performance and return-of-money bonds and other similar obligations (not
constituting Indebtedness);
(xvi) Liens in favor of collecting banks constituting a right of set-
off, revocation, refund or chargeback with respect to money or instruments
of the Company or any Subsidiary on deposit with or in the possession of
such bank; and
(xvii) Liens in favor of customs and revenue authorities.
"Outstanding" means, as of the date of determination, all Senior Notes
theretofore authenticated and delivered under this Indenture, EXCEPT:
(i) Senior Notes theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Senior Notes, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Senior
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Notes; PROVIDED that, if such Senior Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Senior Notes which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Senior Notes have been authenticated
and delivered pursuant to this Indenture, other than any such Senior Notes
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Senior Notes are held by a BONA FIDE purchaser
in whose hands such Senior Notes are valid obligations of the Company; and
(iv) Senior Notes which have been defeased pursuant to Section 1302;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Senior Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Senior Notes
owned by the Company or any other obligor upon the Senior Notes or any Affiliate
of the Company or of such other obligor shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Senior Notes which the Trustee knows to be so
owned shall be so disregarded. Senior Notes so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Senior Notes and that the pledgee is not the Company or any other obligor upon
the Senior Notes or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Senior Note on behalf of
the Company. The Company may act as Paying Agent with respect to any Senior
Note issued hereunder.
"Permitted Existing Indebtedness of an Acquired Person" means
Indebtedness of any Person (which may be assumed or guaranteed by, or may
otherwise become the legal liability of, the Company or any Restricted
Subsidiary with or into which such Person is merged or consolidated) existing at
the time such Person becomes a Restricted Subsidiary, or is merged with or into
or consolidated with the Company or one of its Restricted Subsidiaries, so long
as such Indebtedness was not created in anticipation of or as a result of such
Person becoming a Restricted Subsidiary or of such merger or consolidation, and
any Indebtedness to the extent exchanged for, or the net proceeds of which are
used to refinance, redeem or defease, such Indebtedness (or any extension,
renewal or refinancing thereof), or to finance
15
<PAGE>
any costs incurred in connection with such exchange, refinancing, redemption or
defeasance; PROVIDED, HOWEVER, that the proceeds of such Indebtedness shall be
used to so refinance, redeem or defease the Indebtedness within 12 months of the
incurrence of such subsequent Indebtedness.
"Permitted Indebtedness" means (i)(a) any Indebtedness in a principal
amount not exceeding the principal amount outstanding or committed under the
Credit Agreements (including any letter of credit facility thereunder) as of
November 1, 1991 PLUS two hundred fifty million dollars ($250,000,000), and
LESS the sum of (x) proceeds from the sale of all Indebtedness under the 1991
Indenture issued from time to time that is applied to repay Indebtedness under
the Credit Agreements and (y) the proceeds from the sale of the Senior Notes and
the 10-3/4 First Mortgage Notes due 2002 of the Company; (b) any Indebtedness in
a principal amount not exceeding 80% of the aggregate face amount of Receivables
of the Company and its Restricted Subsidiaries (measured as of the latest date
as of which information regarding Receivables is available) and constituting
Indebtedness described in clause (ii) of the definition of Indebtedness or
outstanding pursuant to any other revolving credit facility; (c) any
Indebtedness under the 1991 Indenture issued prior to the date hereof the
proceeds of which have been used to repay Indebtedness under the Credit
Agreements within five Business Days after such issuance (and any subsequent
Indebtedness the proceeds of which are used to refinance such Indebtedness) and
(d) the Senior Notes and the 10-3/4% First Mortgage Notes due 2002 (and any
subsequent Indebtedness the proceeds of which are used to refinance such
Indebtedness); PROVIDED, HOWEVER, that:
(1) the aggregate principal amount permitted to be outstanding
under clause (a) shall be reduced by the aggregate amount of any repayments
or prepayments of any Senior Indebtedness (other than the Senior Notes, the
10-3/4% First Mortgage due 2002 of the Company and Indebtedness issued
under the 1991 Indenture) out of the proceeds of Asset Dispositions as
described in and required by Section 1009 hereof after November 1, 1991,
and, thereafter, shall be increased if, at the end of the fourth
consecutive complete fiscal quarter after the initial reduction pursuant to
this clause (1) or at any anniversary of the end of such fourth fiscal
quarter, the Consolidated Free Cash Flow of the Company for the preceding
four quarters has been zero or greater, in which event the amount of the
increase shall be the amount by which the consolidated capital expenditures
of the Company and its Restricted Subsidiaries not financed by Indebtedness
referred to in clause (vi) of this definition during such four-quarter
period exceeds Consolidated Depreciation Expense for such period (provided
any such increase shall be made only to the extent all such reductions
occurring prior to the four fiscal quarters for
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which such calculation of Consolidated Free Cash Flow has been made exceed
all prior increases pursuant to this clause (1));
(2) (A) the aggregate amount permitted to be incurred under clause
(a) shall be reduced by the principal amount outstanding under the New
Credit Agreement on the date hereof net of subsequent reductions thereof,
and (B) the aggregate amount permitted to be incurred under clause (b)
shall be reduced by the principal amounts outstanding under each of the
Pledge and Administration Agreement, dated as of August 15, 1991, between
Stone Financial Corporation and Castlewood Funding Corporation (the
"Castlewood Agreement") and the Pledge and Administrative Agreement, dated
as of August 18, 1992, between Stone Fin II Receivables Corporation and
South Shore Funding Corporation (the "Southshore Agreement") on the date
hereof net of subsequent reductions thereof;
(3) the Permitted Indebtedness contemplated by this clause (i) may
be incurred by the Company and, in the case of Permitted Indebtedness
constituting Indebtedness under clause (ii) of the definition of
Indebtedness, by the Company or any Restricted Subsidiary; and
(4) any Restricted Subsidiary in the Stone Canada Group may incur,
assume or guarantee any Indebtedness under clauses(i)(a) and (i)(b) above
under any revolving credit facilities of Restricted Subsidiaries in the
Stone Canada Group entered into pursuant to this clause (i), for which the
aggregate amount committed thereunder does not exceed two hundred million
dollars ($200,000,000), to finance the working capital of Restricted
Subsidiaries in the Stone Canada Group;
(ii) Permitted Subordinated Indebtedness;
(iii) Permitted Refinancing Indebtedness;
(iv) Permitted Stone Canada Indebtedness;
(v) Permitted Existing Indebtedness of an Acquired Person;
(vi) Indebtedness incurred for the purpose of acquiring Capital
Stock of another Person, or assets comprising a business or line of business or
intangible assets or acquiring, constructing or improving fixed assets, in each
case related primarily to, or used in connection with, the paper or forest
products businesses and which (a) constitutes all or a portion of (but not more
than) the purchase price of such Capital Stock or assets (such purchase price
including any Indebtedness assumed or
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<PAGE>
repaid in connection with such purchase) or the cost of construction or
improvement of such assets (together with any transaction costs relating to such
purchase, construction or improvement), (b) is incurred prior to, at the time of
or within 270 days after the acquisition, construction or improvement of such
assets for the purpose of financing the purchase price of such Capital Stock or
assets or the cost of construction or improvement thereof (together with any
transaction costs relating to such purchase, construction or improvement) and
(c) is the direct or guaranteed obligation of any of (1) the Company, (2) a
Restricted Subsidiary formed for the purpose of acquiring such Capital Stock or
assets (and having no other material assets other than assets to be used for
such acquisition), (3) any Person comprised within the acquired assets or (4) in
the case of the construction or improvement of fixed assets, the Restricted
Subsidiary which will own such assets, or any extension, renewal or refinancing
of such Indebtedness; PROVIDED, HOWEVER, that the amount so extended, renewed or
refinanced shall not exceed the principal amount outstanding on the date of such
extension, renewal or refinancing, PLUS costs incurred in connection with any
such extension, renewal or refinancing (it being understood that any fixed
assets included within capital expenditures which increased Indebtedness
permitted under clause (i) of the definition of Permitted Indebtedness pursuant
to clause (1) to the proviso to such clause may not be financed pursuant to this
clause (vi));
(vii) Indebtedness in an aggregate principal amount not to exceed
three hundred million dollars ($300,000,000) at any one time outstanding;
PROVIDED, HOWEVER, that no Restricted Subsidiary may incur Indebtedness under
this clause (vii) to the extent that after the incurrence of such Indebtedness
the sum (without duplication) of (x) all Indebtedness of Restricted Subsidiaries
incurred under this clause (vii), PLUS (y) Indebtedness and other obligations
then secured pursuant to clause (xii) of the definition of Permitted Liens, PLUS
(z) the amount of Indebtedness that was not incurred pursuant to clause (i)(b)
of this definition and is secured pursuant to clause (vi) of the definition of
Permitted Liens shall not exceed three hundred million dollars ($300,000,000);
(viii) Indebtedness of the Company in an aggregate principal amount
not to exceed two hundred fifty million dollars ($250,000,000) at any one time
outstanding;
(ix) any Interest Swap Obligation, Currency Agreement or Commodities
Agreement relating to Indebtedness that was not incurred in violation of the
terms of this Indenture; and
(x) Indebtedness to finance an increase in the working capital of
any Person or Persons that (a) are organized under the laws of a jurisdiction
other than the United States or any
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subdivision thereof and (b) became Restricted Subsidiaries after November 1,
1991; PROVIDED, HOWEVER, that Indebtedness pursuant to this clause (x) is the
obligation of the Company or such Person or Persons.
"Permitted Liens" means, with respect to any Person,
(i) Ordinary Course of Business Liens;
(ii) Liens upon property or assets acquired or constructed by such
Person or any Affiliate after November 1, 1991 or constituting improvements
after November 1, 1991 to property or assets; PROVIDED, HOWEVER, that (a) any
such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance or refinance, the purchase price (such
purchase price including any Indebtedness assumed or repaid in connection with
such purchase) or cost of construction of the property or assets subject thereto
or of such improvement, (b) the principal amount of the Indebtedness secured by
such Lien does not exceed 100% of such purchase price or cost (together with any
transaction costs relating to such purchase, construction or improvement), (c)
such Lien does not extend to or cover any other property or assets other than
such property, assets, improvement and any other improvements thereon (or, in
the case of any construction or improvement, any substantially unimproved real
property on which the property is constructed or the improvement is located) and
(d) the occurrence of such Indebtedness is permitted by clause (vi) of the
definition of Permitted Indebtedness;
(iii) Liens securing obligations with respect to letters of credit
(other than commercial letters of credit) to the extent the obligations
supported by such letters of credit may be secured without violating Section
1007 hereof;
(iv) Liens covering property subject to any Capitalized Lease
Obligation or other lease which was not entered into in violation of this
Indenture securing the interest of the lessor or other Person under such
Capitalized Lease Obligation or other lease;
(v) Liens securing obligations to a trustee pursuant to the
compensation and indemnity provisions of any indenture (including this
Indenture) and Liens securing obligations to a trustee or agent with respect to
collateral for any Indebtedness;
(vi) Liens created in connection with a disposition of Receivables
(whether or not characterized as a sale of such Receivables or a secured loan)
not prohibited by this Indenture on (a) such Receivables, (b) collateral
securing such Receivables, (c) goods or services, the sale, lease or furnishing
of which gave rise to such Receivables, (d) books and records
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relating to such Receivables, (e) agreements or arrangements supporting or
securing such Receivables and (f) incidental property and assets relating to any
of the foregoing; PROVIDED, HOWEVER, that the aggregate amount at any time of
Indebtedness that is secured pursuant to this clause (vi) and was not incurred
pursuant to clause (i)(b) of the definition of Permitted Indebtedness, shall at
no time exceed (x) three hundred million dollars ($300,000,000) LESS (y) the sum
of Indebtedness and other obligations then secured pursuant to clause (xii) of
this definition PLUS the then outstanding principal amount of Indebtedness of
Restricted Subsidiaries incurred under clause (vii) of the definition of
Permitted Indebtedness (and not secured pursuant to this clause (vi) or such
clause (xii));
(vii) Liens upon property or assets of the Company created in
substitution and exchange for a Permitted Lien upon other property or assets of
the Company or any of its Subsidiaries and Liens upon property or assets of any
Subsidiaries of the Company created in substitution and exchange for a Permitted
Lien upon other property or assets of any Subsidiaries of the Company; PROVIDED,
HOWEVER, that (a) such Permitted Lien is released contemporaneously with the
creation of the Lien in substitution therefor, (b) the fair market value of the
property or assets with respect to the Lien so released is substantially the
same as the fair market value of the property or assets subject to the Lien
created in substitution therefor and (c) no Lien may be placed on property or
assets of the Company or a Restricted Subsidiary in substitution and exchange
for a Lien upon property or assets of an Unrestricted Subsidiary;
(viii) Liens upon property or assets of a Subsidiary of a Person
securing Indebtedness of such Person or of such Subsidiary, which Liens are
created in substitution and exchange for an outstanding pledge by such Person of
a majority of the Capital Stock of such Subsidiary for the purpose of securing
such Indebtedness (or a guaranty in respect thereof); PROVIDED , HOWEVER, that
if the property and assets of such Subsidiary to be subjected to such Liens have
a fair market value in excess of twenty-five million dollars ($25,000,000), such
Subsidiary shall have guaranteed the obligations of the Company in respect of
the Senior Notes and, if requested by the Trustee, such Subsidiary shall have
waived all its rights of subrogation and reimbursement from the Company in
connection with such guaranty;
(ix) Liens upon any property or assets (a) existing at the time of
acquisition thereof by the Company or any Subsidiary, (b) of a Person existing
at the time such Person is merged with or into or consolidated with the Company
or any Subsidiary of the Company or existing at the time of a sale or transfer
of any such property or assets of such Person to the Company or any Subsidiary
of the Company or (c) of a Person existing at the time such Person becomes a
Subsidiary of the Company; PROVIDED,
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HOWEVER, that such Liens shall not have been created in contemplation of such
sale, merger, consolidation, transfer or acquisition;
(x) Liens existing at November 1, 1991;
(xi) (a) Liens upon any property or assets of the Company and its
Restricted Subsidiaries securing Indebtedness under the Credit Agreements in a
principal amount not exceeding the principal amount outstanding or committed
under the Credit Agreements (including any letter of credit facility, but
without duplication with respect to commitments for loans the use of proceeds of
which is restricted to repayment of other Indebtedness under the Credit
Agreements) as of November 1, 1991 LESS (y) the proceeds from the sale of all
Indebtedness under the 1991 Indenture issued from time to time that are or have
been applied to repay Indebtedness under the Credit Agreements and PLUS (z) two
hundred fifty million dollars ($250,000,000) and (b) Liens securing Indebtedness
permitted by clause (i) of the definition of Permitted Indebtedness upon
property or assets that as of November 1, 1991 secured the Credit Agreements or
the Castlewood Agreement;
(xii) Liens securing Indebtedness or other obligations of the Company
and its Restricted Subsidiaries not to exceed an aggregate principal amount of
three hundred fifty million dollars ($350,000,000) LESS, at any time, the sum of
(y) the then outstanding principal amount of Indebtedness of Restricted
Subsidiaries incurred under clause (vii) of the definition of Permitted
Indebtedness (and not secured pursuant to this clause (xii) or clause (vi) of
this definition) PLUS (z) the amount of Indebtedness secured pursuant to clause
(vi) of this definition and not incurred pursuant to clause (i)(b) of the
definition of Permitted Indebtedness;
(xiii) Liens upon property or assets of a Subsidiary securing
Indebtedness or other obligations owing to the Company;
(xiv) Liens on proceeds of any property or assets subject to a Lien
permitted by the other clauses of this definition;
(xv) any equal and ratable Lien that is granted pursuant to the
Continental Guaranty and that relates to a Lien that otherwise constitutes a
Permitted Lien;
(xvi) Liens on property or assets used to defease Indebtedness that
was not incurred in violation of this Indenture;
(xvii) Liens on property or assets of any Restricted Subsidiary
organized under the laws of a jurisdiction other than
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the United States or any subdivision thereof securing Indebtedness of such
Restricted Subsidiary outstanding as of November 1, 1991 (or any extension,
renewal or refinancing thereof);
(xviii) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any Lien referred
to in the foregoing clauses (i) through (xvii) (covering the same property and
assets as such Lien); and
(xix) Permitted Collateral Liens (as defined in the First Mortgage
Note Indenture);
PROVIDED, HOWEVER, that no Lien described in any of the foregoing clauses other
than clause (xi)(a) shall encumber the rights of the Company with respect to
Indebtedness, obligations and other liabilities owed to the Company by any
Restricted Subsidiary or to any Restricted Subsidiary by the Company or another
Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means Indebtedness of (i) the
Company to the extent exchanged for, or the net proceeds of which are used to
refinance, redeem or defease, Indebtedness of the Company or any Restricted
Subsidiary (or any extension, renewal or refinancing thereof) outstanding at the
time of incurrence of such subsequent Indebtedness, or to finance any costs
incurred in connection with any such exchange, refinancing, redemption or
defeasance, (ii) a Restricted Subsidiary to the extent exchanged for, or the net
proceeds of which are used to refinance, redeem or defease, Indebtedness of such
Restricted Subsidiary (or any extension, renewal or refinancing thereof)
outstanding at the time of incurrence of such subsequent Indebtedness, or to
finance any costs incurred in connection with any such exchange, refinancing,
redemption or defeasance, or (iii) the Company or a Restricted Subsidiary to the
extent exchanged for, or the net proceeds of which are used to refinance, redeem
or defease, any then outstanding industrial revenue or development bonds that
were outstanding at November 1, 1991 (or any extension, renewal or refinancing
thereof), or to finance any costs incurred in connection with such exchange,
refinancing or defeasance; PROVIDED, HOWEVER, that, in the case of (i), (ii) or
(iii), the proceeds of such Indebtedness shall be used to so refinance, redeem
or defease the Indebtedness within 12 months of the incurrence of such
subsequent Indebtedness; and PROVIDED, FURTHER, that the only Indebtedness
which may be subject to exchange, refinancing, redemption, or defeasance
pursuant to clause (i), (ii) or (iii) of this definition shall be Indebtedness
outstanding as of November 1, 1991 (other than Indebtedness under the Credit
Agreements, Subordinated Indebtedness and Indebtedness under lines of credit) or
any extension, renewal or refinancing thereof, and Indebtedness that was
incurred after November 1, 1991 and before the date hereof
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(other than solely as Permitted Indebtedness under the 1991 Indenture) or is
incurred after the date hereof (other than solely as Permitted Indebtedness).
"Permitted Stone Canada Indebtedness" means Indebtedness of the
Company or a Restricted Subsidiary in the Stone Canada Group outstanding
pursuant to lines of credit in an aggregate principal amount not to exceed one
hundred million dollars ($100,000,000), (of which not more than Canadian sixty
million dollars (Cn.$60,000,000) may be owed by Restricted Subsidiaries in the
Stone Canada Group) at any one time outstanding or pursuant to any extension,
renewal or refinancing of such outstanding amount PLUS any costs incurred in
connection with any such extension, renewal or refinancing; PROVIDED, HOWEVER,
that the aggregate principal amount permitted to be incurred under this
definition shall be reduced by the principal amount under lines of credit
outstanding on the date hereof net of subsequent repayments or reductions
thereof.
"Permitted Subordinated Indebtedness" means (i) Subordinated
Indebtedness of the Company to the extent exchanged for, or the net proceeds of
which are used to refinance, redeem or defease, then outstanding Subordinated
Indebtedness of the Company that was outstanding at November 1, 1991 (or any
extension, renewal or refinancing thereof), or to finance any costs incurred in
connection with any such exchange, refinancing, redemption or defeasance;
PROVIDED, HOWEVER, that (a) such Subordinated Indebtedness does not have a
shorter weighted average life than that then remaining for, or a maturity
earlier than that of, the Indebtedness so exchanged, refinanced, redeemed or
defeased, EXCEPT that in the case of any exchange, such Subordinated
Indebtedness may have a maturity that is earlier (but not more than six months
earlier) than that of the Indebtedness so exchanged, PROVIDED that the
Subordinated Indebtedness shall have the same or a longer weighted average life
than that then remaining for the Indebtedness so exchanged and (b) in the case
of refinancings, redemptions or defeasances, the proceeds of such Subordinated
Indebtedness shall be used to so refinance, redeem or defease the Indebtedness
within 12 months of the incurrence of such subsequent Subordinated Indebtedness;
and (ii) Indebtedness of the Company in an aggregate principal amount not to
exceed two hundred fifty million dollars ($250,000,000) at any one time
outstanding, so long as such Indebtedness (a) constitutes Subordinated
Indebtedness and (b) does not have (A) a weighted average life that is shorter
than that then remaining for the (x) the Company's 9-7/8% Senior Notes due 2001
then outstanding or (y) the Senior Notes then Outstanding or (B) a maturity that
is earlier than the latest maturity of (x) the Company's 9-7/8% Senior Notes due
2001 then outstanding or (y) the Senior Notes then Outstanding.
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"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment", means The City of New York or any other place or
places where the principal of (and premium, if any) and interest on the Senior
Notes are payable.
"Predecessor Senior Note" of any particular Senior Note means every
previous Senior Note evidencing all or a portion of the same debt as that
evidenced by such particular Senior Note; and, for the purposes of this
definition, any Senior Note authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Senior Note
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Senior Note.
"Rate Determination Period" means the four full weeks ending on the
seventh Business Day prior to a Reset Date.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money.
"Record Date" for the interest payable on any Interest Payment Date
means the close of business on the March 15 or September 15, as the case may be,
whether or not a Business Day, immediately preceding the Interest Payment Date
on which such interest is payable.
"Redeemable Stock" means, with respect to any Person, any Capital
Stock that by its terms or otherwise is required to be redeemed or purchased by
such Person or any of its Subsidiaries prior to 30 days after the latest
maturity date of the Senior Notes then Outstanding, or is redeemable or subject
to mandatory purchase or similar put rights at the option of the Holder thereof
at any time prior to 30 days after the maturity date of the Senior Notes then
Outstanding, or any security which is convertible or exchangeable into a
security which has such provisions.
"Redemption Date" means the date fixed for redemption of any Senior
Note by or pursuant to this Indenture.
"Redemption Price" means the price at which any Senior Note is to be
redeemed pursuant to this Indenture.
"Register" and "Registrar" have the respective meanings specified in
Section 305.
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"Reset Date" means a date on which the interest rate on the Senior
Notes shall be reset pursuant to Section 1102(a).
"Reset Rate" shall have the meaning provided in Section 1102(a).
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or assistant trust officer, the
controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Payment" shall have the meaning provided in Section 1006.
"Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.
"Seminole" means Seminole Kraft Corporation, a Delaware corporation.
"Senior Indebtedness" means the principal of, interest on and other
amounts due on (i) Indebtedness of the Company, whether outstanding on the date
hereof or thereafter created, incurred, assumed or guaranteed by the Company, on
or prior to the date hereof in compliance with the 1991 Indenture and thereafter
in compliance with Section 1008 hereof (including, without limitation, the
Company's 10-3/4% First Mortgage Notes due 2002 of the Company and the Senior
Notes), (ii) obligations of the Company related to the termination of Interest
Swap Obligations, Currency Agreements or Commodities Agreements pertaining to
Indebtedness described under clause (i) above and (iii) principal of or interest
on the Senior Notes. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness shall not include: (a) Subordinated Indebtedness, (b)
Indebtedness of or amounts owed by the Company for compensation to employees,
for goods or materials purchased in the ordinary course of business or for
services or (c) Indebtedness of the Company to a Subsidiary of the Company.
"Senior Notes" has the meaning stated in the first recital of this
Indenture and more particularly means any Senior Note authenticated and
delivered under this Indenture.
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"Seven Year Treasury Rate" means the arithmetic average (rounded to
the nearest basis point) of the weekly average per annum yield to maturity
values adjusted to constant maturities of seven years, for the Rate
Determination Period as determined from the yield curves of the most actively
traded marketable United States Treasury fixed interest rate securities (x)
constructed daily by the United States Treasury Department (i) as published by
the Federal Reserve Board in its Statistical Release H.15 (519), "Selected
Interest Rates," which weekly average yield to maturity values currently are set
forth in such Statistical Release under the caption "U.S. Government
Securities--Treasury Constant Maturities--7 Year" or (ii) if said Statistical
Release H.15 (519) is not then published, as published by the Federal Reserve
Board in any release comparable to its Statistical Release H.15 (519) or (iii)
if the Federal Reserve Board shall not be publishing a comparable release, as
published in any official publication or release of any other United States
Government Department or agency, or (y) if the United States Treasury Department
shall not then be constructing such yield curves, then as constructed by the
Federal Reserve Board or any other United States Government Department or agency
and published as set forth in (x) above. However, if the Seven Year Treasury
Rate cannot be determined as provided above, then the Seven Year Treasury Rate
shall mean the arithmetic average (rounded to the nearest basis point) of the
per annum yields to maturity for each Business Day during the Rate Determination
Period of all of the issues of actively trading issues of non-interest bearing
United States Treasury fixed interest rate securities with a maturity of not
less than 81 months nor more than 87 months from such Business Day (1) as
published in THE WALL STREET JOURNAL or (2) if THE WALL STREET JOURNAL shall
cease such publication, based on average asked prices (or yields) as quoted by
each of three United States Government securities dealers of recognized national
standing selected by the Company.
"Southshore Agreement" has the meaning specified in subparagraph 2(A)
of the definition of "Permitted Indebtedness."
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Specified Bank Debt" means (i) all Indebtedness and other monetary
obligations owing under the New Credit Agreement or any credit facilities with
the banks signatory to the New Credit Agreement (or with banks affiliated with
such banks), so long as such facilities are related to the New Credit Agreement;
and (ii) Indebtedness owing as of the date hereof or hereafter to banks or other
financial institutions under credit facilities which may in the future
refinance, refund, replace, supplement or succeed (regardless of any gaps in
time) the New Credit Agreements or the facilities referenced in clause (i)
hereof
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(including extensions and restructurings and the inclusion of additional or
different or substitute lenders), so long as (a) the aggregate principal amount
outstanding (including available amounts under committed revolving credit or
similar working capital facilities, letter of credit facilities and other
commitments to provide credit) of such Indebtedness is at least equal to the
principal of all publicly issued Senior Indebtedness (including without
limitation, the Senior Notes, the 10-3/4% First Mortgage Notes due 2002 of the
Company and Indebtedness under the 1991 Indenture) then Outstanding (it being
understood that Indebtedness described in clause (i) above and issues of
Indebtedness having a principal amount lower than set forth in clause (b) below
shall not be included in this amount), (b) Indebtedness outstanding under each
particular credit facility has a principal amount outstanding (including
available amounts under committed revolving credit or similar working capital
facilities, letter of credit facilities and other commitments to provide credit)
of at least twenty-five million dollars ($25,000,000) and (c) such Indebtedness
constitutes Senior Indebtedness.
"Stated Maturity," when used with respect to any Senior Note or any
installment of principal thereof or interest thereon, means the date specified
in such Senior Note as the fixed date on which the principal of such Senior Note
or any installment of principal or interest is due and payable.
"Stone Canada" means Stone Container (Canada) Inc., a company
organized under the Canadian Business Corporations Act.
"Stone Canada Group" means Stone Canada and its Restricted
Subsidiaries existing as of the date hereof.
"Stone Southwest" means Stone Southwest, Inc., a Delaware corporation.
"Subordinated Capital Base" means the sum of (i) the Consolidated Net
Worth and (ii) to the extent not included in clause (i) above, the amounts
(without duplication) relating to (a) the principal amount of Subordinated
Indebtedness incurred after November 1, 1991 which is unsecured and which does
not have at the time of incurrence of such Subordinated Indebtedness a weighted
average life that is shorter than the weighted average life remaining for the
then outstanding Indebtedness under the 1991 Indenture issued prior to the date
hereof, or if less than two hundred million dollars ($200,000,000) of such
Indebtedness is outstanding, the Senior Notes or a maturity that is earlier than
the maturity of any of the then Outstanding Indebtedness under this Indenture,
or if less than two hundred million dollars ($200,000,000) of such Indebtedness
is Outstanding, the Senior Notes, (b) redeemable stock of the Company that does
not constitute Redeemable Stock and (c) the principal amount of the
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11-1/2% Senior Subordinated Notes due September 1, 1999 of the Company, and the
12-1/8% Subordinated Debentures due September 15, 2001 of Stone Southwest or any
Subordinated Indebtedness exchanged for, or the net proceeds of which are used
to refinance, redeem or defease, such 11-1/2% Senior Subordinated Notes due
September 1, 1999 (or, at such time as no Indebtedness is outstanding under the
1991 Indenture, such 12-1/8% Subordinated Debentures due September 15, 2001)
pursuant to clause (ii) of the definition of "Permitted Indebtedness", that, in
the case of clauses (a), (b) and (c), as at the date of determination, in
conformity with GAAP consistently applied, would be set forth on the
consolidated balance sheet of the Company and its Restricted Subsidiaries.
"Subordinated Indebtedness" means Indebtedness of the Company (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed by the Company) which, pursuant to the terms of the instrument
creating or evidencing the same, is subordinate to the Senior Notes in right of
payment or in rights upon liquidation.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which at least a majority in interest of the outstanding Capital Stock having by
the terms thereof voting power under ordinary circumstances to elect directors
of such corporation, irrespective of whether or not at the time stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency, is at the time, directly or
indirectly, owned or controlled by such Person, or by one or more other
corporations a majority in interest of such stock of which is similarly owned or
controlled, or by such Person and one or more other corporations a majority in
interest of such stock of which is similarly owned or controlled or (ii) any
other Person (other than a corporation) in which such Person, directly or
indirectly, at the date of determination thereof, has at least a majority equity
ownership interest; PROVIDED, HOWEVER, that, with respect to the Company, for
purposes of this Indenture (other than Section 1007(b)), "Subsidiary" shall not
include Seminole.
"Ten Year Treasury Rate" means the arithmetic average (rounded to the
nearest basis point) of the weekly average per annum yield to maturity values
(adjusted to constant maturities of ten years, for the Rate Determination Period
as determined from the yield curves of the most actively traded marketable
United States Treasury fixed interest rate securities (x) constructed daily by
the United States Treasury Department (i) as published by the Federal Reserve
Board in its Statistical Release H.15 (519), "Selected Interest Rates." which
weekly average yield to maturity values currently are set forth in such
Statistical Release under the caption "U.S. Government Securities--Treasury
Constant Maturities-10 Year" or (ii) if said Statistical Release
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H.15 (519) is not then published, as published by the Federal Reserve Board in
any release comparable to its Statistical Release H.15 or (iii) if the Federal
Reserve Board shall not be publishing a comparable release, as published in any
official publication or release of any other United States Government Department
or agency, or (y) if the United States Treasury Department shall not then be
constructing such yield curves, then as constructed by the Federal Reserve Board
or any other United States Government Department or agency and published as set
forth in (x) above. However, if the Ten Year Treasury Rate cannot be determined
as provided above, then the Ten Year Treasury Rate shall mean the arithmetic
average (rounded to the nearest basis point) of the per annum yields to maturity
for each Business Day during the Rate Determination Period of all of the issues
of actively trading issues of non-interest bearing United States Treasury fixed
interest rate securities with a maturity of not less then 117 months nor more
than 123 months from such Business Day (1) as published in THE WALL STREET
JOURNAL or (2) if THE WALL STREET JOURNAL shall cease such publication, based on
average asked prices (or yields) as quoted by each of three United States
Government securities dealers of recognized national standing selected by the
Company.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was executed;
PROVIDED, HOWEVER, that in the event that such Act is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Two Year Treasury Rate" means the arithmetic average (rounded to the
nearest basis point) of the weekly average per annum yield to maturity values
adjusted to constant maturities of two years, for the Rate Determination Period
as determined from the yield curves of the most actively traded marketable
United States Treasury fixed interest rate securities (x) constructed daily by
the United States Treasury Department (i) as published by the Federal Reserve
Board in its Statistical Release H.15 (519), "Selected Interest Rates," which
weekly average yield to maturity values currently are set forth in such
Statistical Release under the caption "U.S. Government Securities -- Treasury
Constant Maturities -- 2 Years" or (ii) if said Statistical Release H.15 (519)
is not then published, as published by the Federal Reserve Board in any release
comparable to its Statistical Release H.15 (519) or (iii) if the Federal Reserve
Board shall not be publishing a comparable release, as published
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in any official publication or release of any other United States Government
Department or agency, or (y) if the United States Treasury Department shall not
then be constructing such yield curves, then as constructed by the Federal
Reserve Board or any other United States Government Department or agency and
published as set forth in (x) above. However, if the Two Year Treasury Rate
cannot be determined as provided above, then the Two Year Treasury Rate shall
mean the arithmetic average (rounded to the nearest basis point) of the per
annum yields to maturity for each Business Day during the Rate Determination
Period of all of the issues of actively trading issues of non-interest bearing
United States Treasury fixed interest rate securities with a maturity of not
less than 21 months nor more than 27 months from such Business Day (1) as
published in THE WALL STREET JOURNAL or (2) if THE WALL STREET JOURNAL shall
cease such publication, based on average asked prices (or yields) as quoted by
each of three United States Government securities dealers of recognized national
standing selected by the Company.
"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed by the full
faith and credit of the United States of America which, in either case, are not
callable or redeemable at the option of the issuer thereof or otherwise subject
to prepayment.
"Unrestricted Subsidiary" means a Subsidiary of the Company which has
been designated as an "Unrestricted Subsidiary" for purposes of this Indenture
by the Company and (i) at least 20% of whose common stock is held by one or more
Persons (other than the Company and its Affiliates) which acquired such common
stock in a BONA FIDE transaction for fair value and (b) at least 10% of whose
total capitalization at the time of designation is in the form of common stock
or at least 15% of the fair market value of whose assets at such time shall have
been contributed by such Persons. An Unrestricted Subsidiary may be designated
to be a Restricted Subsidiary only if, at the time of such designation, all
Indebtedness and Liens of such Subsidiary could be incurred under this
Indenture. As of the date of this Indenture, the Company's Unrestricted
Subsidiaries are Stone-Consolidated Corporation and its Subsidiaries.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
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SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or
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opinion of, or representations by, counsel, unless such Officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an Officer or Officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person or any such
instrument or writing may be proved by the affidavit or a witness of such
execution or by a certificate of a notary public or other Person authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Senior Notes shall be proved by the Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Senior Note shall bind every future
Holder of the same Senior Note and the Holder of every Senior Note issued upon
the registration of transfer thereof or in exchange therefor in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Senior Note.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other Act
(including revocation thereof) may be given before or after such record date,
but only the Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining whether Holders of
the requisite proportion of Outstanding Senior Notes have authorized or agreed
or consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding Senior Notes shall be
computed as of such record date; PROVIDED that no such authorization, agreement
or consent by the Holders on such record date shall be deemed effective unless
it shall become effective pursuant to the provisions of this Indenture not later
than six months after the record date.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this Indenture, attention: Secretary or at any other
address previously furnished in writing to the Trustee by the Company.
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SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture or any Senior Note provides for notice to Holders
of any event, such notice shall be deemed sufficiently given (unless otherwise
herein or in such Senior Note expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders or the
validity of the proceedings to which such notice relates. Where this Indenture
or any Senior Note provides for notice in any manner, such notice may be waived
in writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act (including, without limitation,
Sections 310 through 317, inclusive, of the Trust Indenture Act in accordance
with Section 318(c) thereof), such required provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or shall be excluded, as the
case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
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SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Senior Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Senior Notes, express or implied,
shall give to any Person, other than the parties hereto or thereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Senior Notes shall be governed by and construed
in accordance with the laws (other than the choice of law provisions) of the
State of New York.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Senior Note, or any other payment date, including, without
limitation, any Asset Disposition Payment Date or Change of Control Payment
Date, shall not be a Business Day, then (notwithstanding any other provision of
this Indenture or of the Senior Notes) payment of interest or principal (and
premium, if any) need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity or other
payment date, PROVIDED that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity or other
payment date, as the case may be.
SECTION 114. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholders, as such, of the Company
shall not have any liability for any obligations of the Company under the Senior
Notes or this Indenture, or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Securityholder, by accepting a
Senior Note, waives and releases all such liability. Such
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waivers and releases are part of the consideration for the issuance of the
Senior Notes.
SECTION 115. INCORPORATION BY REFERENCE TO TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture. The following Trust Indenture Act terms incorporated by reference in
this Indenture have the following meanings:
"indenture securities" means the Senior Notes.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Senior Notes, if any.
All other Trust Indenture Act terms used or incorporated by reference
in this Indenture that are defined by the Trust Indenture Act, defined by Trust
Indenture Act reference to another statute or defined by Commission rule have
the meanings assigned to them therein.
ARTICLE TWO
SENIOR NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Senior Notes shall be in substantially the form set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Officers executing such Senior Notes, as evidenced by their execution of the
Senior Notes. The definitive Senior Notes shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such Senior Notes, as evidenced by their
execution of such Senior Notes.
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SECTION 202. FORM OF FACE OF SENIOR NOTE.
Each Senior Note shall be in substantially the following form:
(Face of Senior Note)
STONE CONTAINER CORPORATION
11-1/2% Senior Note due 2004
Number R__________ $_____________
STONE CONTAINER CORPORATION, a corporation duly organized and existing
under the laws of Delaware (herein called the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ______________________ or registered
assigns, the principal sum of _____________ DOLLARS on October 1, 2004, and to
pay interest thereon from the date hereof or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on April 1 and October 1 of each year (commencing April 1, 1995), at the rate of
11-1/2% per annum, until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Senior Note (or one or more Predecessor Senior Notes)
is registered at the close of business on the Record Date for such interest,
which shall be the March 15 or September 15 (whether or not a Business Day), as
the case may be, preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Record Date and may either be paid to the Person in whose name
this Senior Note (or one or more Predecessor Senior Notes) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Senior Notes not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Senior Notes may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture.
Payment of the principal of (and premium, if any) and interest on this
Senior Note will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, The City of New York in dollars;
PROVIDED, HOWEVER, that at the option of the Company, payment of interest may be
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made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Register.
Reference is hereby made to the further provisions of this Senior Note
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Senior
Note shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
STONE CONTAINER CORPORATION
By:
-------------------------------------
[CORPORATE SEAL]
Attest:
- - - - -----------------------------------
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SECTION 203. FORM OF REVERSE OF SENIOR NOTE.
(Reverse of Senior Note)
1. This Senior Note is one of a duly authorized issue of securities of
the Company designated as its "11-1/2% Senior Notes due 2004" (herein called the
"Senior Notes") limited in aggregate principal amount to two hundred million
dollars ($200,000,000), issued and to be issued in a single series under an
indenture, dated as of October 12, 1994 (as amended or supplemented from time to
time, the "Indenture"), between the Company and The Bank of New York, as trustee
(the "Trustee," which term includes any successor Trustee under the Indenture),
to which Indenture reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and each of the Holders and of the terms upon which the Senior Notes
are, and are to be, authenticated and delivered. All terms used in this Senior
Note which are not defined herein shall have the meanings assigned to them in
the Indenture.
2. Interest on this Senior Note will be computed on the basis of a 360-
day year of twelve, 30-day months. Each payment of interest in respect of an
Interest Payment Date will include interest accrued through the day before such
Interest Payment Date. If an Interest Payment Date falls on a day that is not a
Business Day, the interest payment to be made on such Interest Payment Date will
be made on the next succeeding Business Day with the same force and effect as if
made on such Interest Payment Date, and no additional interest will accrue as a
result of such delayed payment. If any payment of principal of (and premium, if
any) or installment of interest on this Senior Note is not paid when due then,
to the extent that payment of such interest shall be legally enforceable,
interest upon such overdue principal (and premium, if any) and installment of
interest, shall be paid at the rate set forth on the face of this Senior Note.
3. The Senior Notes are subject to redemption upon not less than 30 days'
notice nor more than 45 days' notice by mail, at any time on or after October 1,
1999 as a whole or from time to time in part, at the election of the Company, at
a Redemption Price equal to 104.31% of the principal amount thereof if redeemed
on or after October 1, 1999 and before October 1, 2000, at 102.88% of the
principal amount thereof if redeemed on or after October 1, 2000 and before
October 1, 2001, at 101.44% of the principal amount thereof if redeemed on or
after October 1, 2001 and before October 1, 2002 and at 100% of the principal
amount thereof if redeemed on or after October 1, 2002 and prior to the Maturity
Date, in each case, plus accrued interest (if any) to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be
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payable to the Holders of such Senior Notes, or one or more Predecessor Senior
Notes, of record at the close of business on the relevant Record Dates referred
to on the face hereof, all as provided in the Indenture.
4. Under certain circumstances following an Asset Disposition, the
Company may offer to repurchase Senior Notes, in whole or in part, at a
repurchase price equal to 100% of the principal amount thereof, plus accrued
interest to the date of repurchase, from proceeds or excess net proceeds of such
Asset Disposition, as provided in, and subject to the terms of, the Indenture.
The Company is required to give Holders notice of such right within the period
specified in the Indenture. Holders may tender their Senior Notes for
repurchase on or prior to the close of business on the applicable payment date.
If the aggregate principal amount of Senior Notes surrendered for repurchase
exceeds the aggregate principal amount of the applicable offer price, the
selection of the Senior Notes to be repurchased shall be made by the Trustee on
a PRO RATA basis.
5. EXCEPT as set forth below, as provided in the Indenture, in the event
that the Company's Subordinated Capital Base is less than one billion dollars
($1,000,000,000) (the "Minimum Subordinated Capital Base") as at the end of each
of any two consecutive fiscal quarters (the last day of the second such fiscal
quarter, a "Deficiency Date"), then the Company shall, no later than 60 days
after the Deficiency Date (105 days if a Deficiency Date is also the end of the
Company's fiscal year), make an offer to all Holders to purchase (a "Deficiency
Offer") 10% of the principal amount of the Senior Notes originally issued, or
such lesser amount as may be Outstanding at the time such Deficiency Offer is
made (the "Deficiency Offer Amount"), at a purchase price equal to 100% of
principal amount, plus accrued and unpaid interest to the Deficiency Payment
Date. Thereafter, semi-annually the Company shall make like Deficiency Offers
for the then applicable Deficiency Offer Amount of Senior Notes until the
Company's Subordinated Capital Base as at the end of any subsequent fiscal
quarter shall be equal to or greater than the Minimum Subordinated Capital Base.
Notwithstanding the foregoing, after any specified Deficiency Date, the last day
of any subsequent fiscal quarter shall not constitute a Deficiency Date (giving
rise to an additional obligation under the first sentence of this paragraph)
unless the Company's Subordinated Capital Base was equal to or greater than the
Minimum Subordinated Capital Base as at the end of a fiscal quarter that
followed such specified Deficiency Date and preceded such subsequent quarter.
6. Notwithstanding the foregoing, as provided in the Indenture, in the
event that (1) the making of a Deficiency Offer by the Company or (2) the
purchase of Senior Notes by the Company in respect of a Deficiency Offer would
constitute a default (with
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the giving of notice, the passage of time or both) with respect to any Specified
Bank Debt at the time outstanding, then, in lieu of the making of a Deficiency
Offer in the circumstances set forth above, (i) the interest rate on the Senior
Notes shall be reset as of the first day of the second fiscal quarter following
the Deficiency Date (the "Reset Date") to a rate per annum (the "Reset Rate")
equal to the greater of (x) the Initial Interest Rate and (y) the sum of (A) 400
basis points and (B) the higher of the Seven Year Treasury Rate and the Ten Year
Treasury Rate, (ii) on the first Interest Payment Date following the Reset Date,
the interest rate on the Senior Notes, as reset on the Reset Date, shall
increase by fifty (50) basis points, and (iii) the interest rate on the Senior
Notes shall further increase by an additional fifty (50) basis points on each
succeeding Interest Payment Date; PROVIDED, HOWEVER, that notwithstanding
clauses (i), (ii) or (iii) above, in no event shall the interest rate to be
borne by the Senior Notes at any time exceed the Initial Interest Rate by more
than two hundred (200) basis points. Once the interest rate on the Senior Notes
has been reset as set forth above, as provided in the Indenture, if the
Company's Subordinated Capital Base is equal to or greater than the Minimum
Subordinated Capital Base as of the last day of any fiscal quarter subsequent to
the Deficiency Date, interest on the Senior Notes shall return to the Initial
Interest Rate effective as of the first day of the second following fiscal
quarter.
7. The Indenture also provides that upon the occurrence of a Change of
Control, subject to the satisfaction of certain substantial conditions precedent
set forth in the Indenture, each Holder shall have the right to require that the
Company repurchase such Holder's Senior Notes in whole or in part at a price
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of such repurchase.
8. The Indenture contains provisions for (i) defeasance of certain of the
Company's obligations (including covenants) under the Indenture and (ii)
satisfaction and discharge of the Indenture upon compliance by the Company with
certain conditions set forth therein, which provisions apply to this Senior
Note.
9. The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries to, among other things, make certain
Restricted Payments, create and incur Indebtedness and create or suffer to exist
certain Liens (other than Permitted Liens). The Indenture imposes limitations
on the ability of the Company to merge or consolidate with any other Person or
sell, assign, transfer or lease all or substantially all of its properties or
assets. All such covenants and limitations are subject to a number of important
qualifications and exceptions. The Company must report periodically to the
Trustee on compliance with the covenants in the Indenture.
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10. The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders to be affected under the Indenture at any
time by the Company and the Trustee with the consent of the Holders representing
at least two-thirds in principal amount of the Senior Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
at least two-thirds in principal amount of the Senior Notes at the time
Outstanding, on behalf of the Holders of all Senior Notes, to waive compliance
by the Company with certain provisions of the Indenture and certain defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Senior Note shall bind such Holder and all future Holders of this
Senior Note and of any Senior Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Senior Note.
11. No reference herein to the Indenture and no provision of this Senior
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of (and premium, if
any) and interest on this Senior Note at the times, place and rate, and in the
coin or currency, herein prescribed.
12. As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Senior Note is registrable in the
Register, upon surrender of this Senior Note for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Senior Note are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder hereof, such Holder's
attorney duly authorized in writing, and thereupon one or more new Senior Notes,
of authorized denominations and for the same Stated Maturity and aggregate
principal amount, will be issued to the designated transferee or transferees.
13. The Senior Notes are issuable only in registered form without coupons
in denominations of one thousand dollars ($1,000) and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Senior Notes are exchangeable for a like aggregate principal
amount of Senior Notes of a different authorized denomination, as requested by
the Holder surrendering the same. No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment by the
Holder of a sum sufficient to cover any tax or other governmental charge payable
in connection therewith.
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14. Prior to due presentment of this Senior Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Senior Note is registered as the owner
hereof for all purposes, whether or not this Senior Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
15. A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under this
Senior Note or the Indenture, or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder, by accepting a
Senior Note, waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Senior Note.
16. Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures ("CUSIP"), the Company has caused CUSIP
numbers to be printed on the Senior Notes as a convenience to the Holders of the
Senior Notes. No representation is made as to the correctness or accuracy of
such numbers as printed on the Senior Notes and reliance may be placed only on
the other identification numbers printed hereon.
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or (we) assign and
transfer this Senior Note to
- - - - --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
- - - - --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this Senior Note on the books of the Company. The agent may
substitute another to act for him or her.
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Dated: Your Signature:
------------ -----------------------------------------
(Sign exactly as your name appears on the
other side of this Senior Note)
Signature Guaranty:
--------------------------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this Senior Note
purchased by the Company pursuant to Section 1009 ("Asset Disposition Offer"),
Section 1013 ("Change of Control Offer"), or Section 1101 ("Deficiency Offer")
of the Indenture, check the applicable boxes:
/ / Section 1009: / / Section 1013: / / Section 1101:
in whole / / in whole / / in whole / /
in part / / in part / / in part / /
amount to be amount to be amount to be
purchased: $ purchased: $ purchased: $
------ ------ ------
Dated: Your Signature:
------------ -----------------------------------------
(Sign exactly as your name appears on the
other side of this Senior Note)
Signature Guaranty:
------------------------------------------------------------
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar,
which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
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Social Security Number or Taxpayer Identification Number:
---------
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication on each Senior Note shall
be in substantially the following form:
Dated:
------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 11-1/2% Senior Notes due 2004 issued under the
Indenture referred to in this Senior Note.
THE BANK OF NEW YORK,
AS TRUSTEE
By
-------------------------------------
AUTHORIZED SIGNATORY
SECTION 205. CUSIP NUMBER.
The Company in issuing Senior Notes may use a "CUSIP" number, and if
so, the Trustee may use the CUSIP number in notices of redemption or exchange as
a convenience to Holders; PROVIDED, that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed on the notice or on the Senior Notes, and that reliance may be placed
only on the other identification numbers printed on the Senior Notes, and any
such redemption shall not be affected by any defect in or omission of such
numbers. The Company will promptly notify the Trustee of any change in the
CUSIP number of the Senior Notes.
ARTICLE THREE
THE SENIOR NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Senior Notes Outstanding at any time
may not exceed the amount of two hundred million dollars ($200,000,000), except
for Senior Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Senior Notes pursuant to Section 304,
305, 306, 906 or 1206.
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The Senior Notes shall be issued in a single series, known and
designated as the "11-1/2% Senior Notes due 2004" of the Company. The Stated
Maturity for the payment of principal of the Senior Notes shall be October 1,
2004, and the Senior Notes shall bear interest at 11-1/2% per annum from the
Issue Date, or from the most recent Interest Payment Date to which interest has
been paid thereon or duly provided for, payable semi-annually on April 1 and
October 1 of each year (commencing April 1, 1995) until the principal thereof is
paid or duly provided for.
The principal of (and premium, if any,) and interest on the Senior
Notes shall be payable at the office or agency of the Company in the Borough of
Manhattan, The City of New York, maintained for such purpose and at any other
office or agency maintained by the Company for such purpose; PROVIDED, HOWEVER,
that interest may be payable at the option of the Company by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Register.
SECTION 302. DENOMINATIONS.
The Senior Notes shall be issuable in fully registered form without
coupons in denominations of one thousand dollars ($1,000) or any integral
multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Senior Notes shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Senior
Notes may be manual or facsimile. The seal of the Company may be in the form of
a facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Senior Notes. Typographical and other minor errors or defects
in any such reproduction of the seal or any such signature shall not affect the
validity or enforceability of any Senior Note that has been duly authenticated
and delivered by the Trustee.
Senior Notes bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Senior Notes or did not
hold such offices at the date of such Senior Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Senior Notes executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Senior Notes, and the Trustee in accordance
with the
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Company order shall authenticate and make such Senior Notes available for
delivery. Each Senior Note shall be dated the date of its authentication. The
Senior Notes may contain such notations, legends or endorsements required by
law, stock exchange rule or usage.
No Senior Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Senior
Note a certificate of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such certificate upon
any Senior Note shall be conclusive evidence, and the only evidence, that such
Senior Note has been duly authenticated and delivered hereunder and is entitled
to the benefits of this Indenture.
SECTION 304. TEMPORARY SENIOR NOTES.
Pending the preparation of definitive Senior Notes, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Senior Notes which are printed, lithographed,
typewritten, mimeographed, or otherwise produced, in any authorized
denomination, substantially in the tenor of the definitive Senior Notes in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Senior Notes
may determine, as conclusively evidenced by their execution of such Senior
Notes.
If temporary Senior Notes are issued, the Company will cause
definitive Senior Notes to be prepared without unreasonable delay. After the
preparation of definitive Senior Notes, the temporary Senior Notes shall be
exchangeable for definitive Senior Notes upon surrender of the temporary Senior
Notes at the office or agency of the Company in a Place of Payment, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Senior Notes, the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a like
principal amount of definitive Senior Notes of authorized denominations and of
like tenor. Until so exchanged the temporary Senior Notes shall in all respects
be entitled to the same benefits under this Indenture as definitive Senior
Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall
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<PAGE>
provide for the registration of Senior Notes and for registration of transfers
of Senior Notes. The Trustee is hereby appointed "Registrar" for the purpose of
registering Senior Notes and transfers of Senior Notes as herein provided.
Upon surrender for registration of transfer of any Senior Note at the
office or agency of the Company in a Place of Payment, the Company shall
execute, and the Trustee shall authenticate and make available for delivery, in
the name of the designated transferee or transferees, one or more new Senior
Notes, of any authorized denomination or denominations and of a like aggregate
principal amount, all as requested by the transferor.
At the option of the Holder, Senior Notes may be exchanged for other
Senior Notes, of any authorized denomination or denominations and of a like
aggregate principal amount, upon surrender of the Senior Notes to be exchanged
at such office or agency upon the payment of the charges, if any, hereinafter
provided. Whenever any of the Senior Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and make available for
delivery, the Senior Notes which the Holder making the exchange is entitled to
receive.
All Senior Notes issued upon any registration of transfer or exchange
of Senior Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the Senior
Notes surrendered upon such registration of transfer or exchange.
Every Senior Note presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed, by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Senior Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Senior Notes, other
than exchanges pursuant to Section 304, 906 or 1206 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Senior Notes during a period beginning at the opening of business
15 days before the date of the mailing of a notice of redemption of Senior Notes
selected for redemption under Section 1202 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Senior Note so selected for
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<PAGE>
redemption in whole or in part, except the unredeemed portion of any Senior Note
being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN FIRST MORTGAGE NOTES.
If any mutilated Senior Note is surrendered to the Trustee, the
Company shall execute and upon its request the Trustee shall authenticate and
deliver in exchange therefor a new Senior Note of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company the Trustee (i) evidence of
their satisfaction of the destruction, loss or theft of any Senior Note and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Senior Note has been acquired by a BONA FIDE
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Senior
Note, a new Senior Note of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Senior Note has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Senior Note, pay such Senior Note.
No service charge shall be made for the issuance of any new Senior
Note under this Section, but the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Senior Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Senior Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Senior Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Senior Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Senior Notes.
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<PAGE>
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Senior Note which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name such Senior Note (or one or more Predecessor Senior Notes) is
registered at the close of business on the Record Date for such interest.
Any interest on any Senior Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest,
and any interest payable on Defaulted Interest, to the Persons in whose
names the Senior Notes (or their respective Predecessor Senior Notes) are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Senior Note and the date of
the proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at such Holder's address as it appears in the Register, not
less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Senior Notes (or their respective
Predecessor Senior Notes) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2).
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(2) The Company may make payment of any Defaulted Interest, and any
interest payable on Defaulted Interest, on the Senior Notes in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which such Senior Notes may be listed, and upon such notice as
may be required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Senior Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Senior Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such Predecessor Senior
Note.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Senior Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Senior Note is registered as the owner
of such Senior Note for the purpose of receiving payment of principal of (and
premium, if any) and (subject to Section 307) interest on such Senior Note and
for all other purposes whatsoever, whether or not such Senior Note be overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Senior Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Senior Note
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Senior Notes so delivered shall be
promptly canceled by the Trustee. No Senior Notes shall be authenticated in
lieu of or in exchange for any of the Senior Notes canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled Senior
Notes shall be held by the Trustee and may be destroyed (and, if so destroyed,
certification of their destruction shall be delivered to the Company, unless, by
a Company Order, the Company shall direct that canceled Senior Notes be returned
to it).
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Senior Notes shall be computed on the basis of a 360-
day year of twelve 30-day months.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Senior Notes herein
expressly provided for), when the Trustee, upon Company Request and at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either:
(A) all Outstanding Senior Notes theretofore authenticated and
issued hereunder (other than (i) Senior Notes which have been
destroyed, lost or stolen and which have been replaced or paid as
provided in Section 306 and (ii) Senior Notes for whose payment money
has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Senior Notes not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of (B)(i), (ii) or (iii) above, has deposited
with the Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on such Senior
Notes not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of such deposit
(in the case of Senior Notes which have become due and payable) or the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
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(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Company to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to clause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Senior Notes and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with or
received by the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Senior Notes,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or to be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Company defaults in the payment of interest on any Senior
Note when such interest becomes due and payable and the default continues
for a period of 30 days; or
(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any Senior Note when the same becomes due and payable
at Maturity, upon redemption (including redemptions under Article Twelve),
upon repurchases pursuant to a Deficiency Offer as described in Article
Eleven, pursuant to an Asset Disposition Offer as
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described in Section 1009 or pursuant to a Change of Control Offer as
described in Section 1013 or otherwise; or
(3) the Company fails to observe or perform any of its other
covenants, warranties or agreements in the Senior Notes or this Indenture
(other than a covenant, agreement or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with), and the failure to observe or perform continues for the period and
after the notice specified in the next to last paragraph of this Section;
or
(4) (i) the Company fails to pay at final maturity the principal of
any Indebtedness of the Company, whether such Indebtedness now exists or
shall hereafter be created and an aggregate principal amount of not less
than twenty-five million dollars ($25,000,000) (or, if less, the least
amount contained in any similar provision of an instrument governing any
outstanding Subordinated Indebtedness of the Company, but in no event less
than ten millions dollars ($10,000,000)) or more of such Indebtedness is
outstanding or (ii) an event or events of default, as defined in any one or
more mortgages, indentures, agreements or instruments under which there may
be issued, or by which there may be secured or evidenced, any Indebtedness
of the Company, whether such Indebtedness now exists or shall hereafter be
created, shall happen and shall result in Indebtedness in an aggregate
amount of not less than twenty-five million dollars ($25,000,000) (or, if
less, the least amount contained in any similar provision of an instrument
governing any outstanding Subordinated Indebtedness of the Company, but in
no event less than ten million dollars ($10,000,000)) or more becoming or
being declared due and payable prior to the date on which it would
otherwise have become due and payable, and such acceleration shall not have
been rescinded or annulled (or if such acceleration shall not have been
rescinded or annulled, such Indebtedness shall not have been discharged),
within a period of 15 days after there shall have been given to the Company
by the Trustee or to the Company by the Holders of at least 25% in
aggregate principal amount of the Outstanding Senior Notes a written notice
specifying such event or events of default and requiring the Company to
cause such acceleration to be rescinded or annulled or to cause such
Indebtedness to be discharged and stating that such notice is a "Notice of
Default" hereunder; or
(5) one or more judgments or decrees shall be entered against the
Company involving, individually or in the aggregate, a liability of twenty-
five million dollars ($25,000,000) or more and a sufficient number of such
judgments or decrees shall not have been vacated,
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discharged, satisfied or stayed pending appeal within 30 days from the
entry thereof so as to bring the aggregate liability in respect thereof
below the twenty-five million dollar ($25,000,000) threshold; or
(6) the Company pursuant to or within the meaning of any Bankruptcy
Law (i) commences a voluntary case or proceeding under any Bankruptcy Law
with respect to itself, (ii) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (iii) consents to or acquiesces in the institution of
bankruptcy or insolvency proceedings against it, (iv) applies for, consents
to or acquiesces in the appointment of or taking possession by a Custodian
of the Company or for any material part of its property, (v) makes a
general assignment for the benefit of its creditors or (vi) takes any
corporate action in furtherance of or to facilitate, conditionally or
otherwise, any of the foregoing; or
(7) (i) a court of competent jurisdiction enters a judgment, decree
or order for relief in respect of the Company in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition in respect of the Company, (B) appoint a Custodian of the
Company or for any material part of its property or (C) order the winding-
up or liquidation of its affairs, and such judgment, decree or order shall
remain unstayed and in effect for a period of 90 consecutive days; or (ii)
any bankruptcy or insolvency petition or application is filed, or any
bankruptcy or insolvency proceeding is commenced against the Company and
such petition, application or proceeding is not dismissed within 90 days;
or (iii) any warrant of attachment is issued against any material portion
of the property of the Company which is not released within 90 days of
service.
A Default under clause (3) above is not an Event of Default until the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Senior Notes notify the Company of the Default and the Company does
not cure the Default within 60 days after receipt of the notice. The notice
must specify the Default, demand that it be remedied and state that the notice
is a "Notice of Default." When a Default under clause (3) above is cured within
such 60-day period, it ceases.
The Company shall file with the Trustee written notice of the
occurrence of any Default or Event of Default within five (5) business days of
an Officer becoming aware of any such Default or Event of Default.
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SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Senior Notes (other than an
Event of Default specified in clause (6) or (7) of Section 501) occurs and is
continuing, the Trustee by notice in writing to the Company, or the Holders of
at least 25% in aggregate principal amount of the Outstanding Senior Notes by
notice in writing to the Company and the Trustee, may declare the unpaid
principal of and accrued interest to the date of acceleration on all the
Outstanding Senior Notes to be due and payable immediately and, upon any such
declaration, the Outstanding Senior Notes shall become and be immediately due
and payable.
If an Event of Default specified in clause (6) or (7) of Section 501
occurs, all unpaid principal (without premium) of and accrued interest on the
Outstanding Senior Notes shall IPSO FACTO become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder of any Senior Note.
Upon payment of all such principal and interest, all of the Company's
obligations under the Senior Notes and (upon payment of the Senior Notes) this
Indenture shall terminate, EXCEPT obligations under Section 607.
The Holders representing at least two-thirds in principal amount of
the Outstanding Senior Notes by notice to the Trustee may rescind an
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of the principal and interest of the Senior Notes that has
become due solely by such declaration of acceleration, have been cured or
waived, (ii) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal that has become due
otherwise than by such declaration of acceleration have been paid, (iii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (iv) all payments due to the Trustee and any
predecessor Trustee under Section 607 have been made.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any interest on any Senior Note
when such interest becomes due and payable and such default continues for a
period of 30 days, or
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(2) default is made in the payment of the principal of (or premium,
if any, on) any Senior Note at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Senior Notes, the whole amount then due and payable on such
Senior Notes for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Senior Notes, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Senior Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Senior Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, either for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted therein, or to secure any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Senior
Notes or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Senior
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Senior
Notes and to file such other
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papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agent and counsel)
and of the Holders allowed in such judicial proceedings, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Senior
Notes or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SENIOR NOTES.
All rights of action and claims under this Indenture or the Senior
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Senior Notes or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders in respect of which such judgment has been
recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Senior Notes in respect of which
moneys have been collected and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
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First: To the payment of all amounts due the Trustee under Section
607;
Second: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Senior Notes in
respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Senior Notes for principal (and premium, if
any) and interest, respectively; and
Third: To the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 506. At least fifteen (15) days before such
record date, the Trustee shall mail to each Holder and the Company a notice that
states the record date, the payment date and the amount to be paid.
SECTION 507. LIMITATION ON SUITS.
No Holder shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Senior Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Senior Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other of such
Holders, or to
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obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all such Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision of this Indenture, the Holder of
any Senior Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Senior Note on the Stated Maturity or Maturities
expressed in such Senior Note (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement of
mutilated, destroyed, lost or stolen Senior Notes in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion of employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any of the
Senior Notes to exercise any right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be
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exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Senior Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Senior Notes,
PROVIDED that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(3) subject to Section 601, the Trustee need not take any action
which might involve the Trustee in personal liability or be unduly
prejudicial to the Holders not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS.
Holders representing not less than two-thirds in principal amount of
the Outstanding Senior Notes may by written notice to the Trustee on behalf of
the Holders of all Senior Notes waive any Default or Event of Default and its
consequences, except a Default or Event of Default
(1) in respect of the payment of the principal of (or premium, if
any) or interest on any Senior Note, or
(2) in respect of a covenant or other provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Senior Note affected.
Upon any such waiver, such Default or Event of Default shall cease to
exist and shall be deemed to have been cured, for every purpose of this
Indenture and the Senior Notes; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Senior
Note by such Holder's acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy
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under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Senior Notes, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium, if any) or
interest on any Senior Note on or after the Stated Maturity or Maturities
expressed in such Senior Note (or, in the case of redemption, on or after the
Redemption Date).
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) Except during the continuance of an Event of Default, the
Trustee's duties and responsibilities under this Indenture shall be governed by
Section 315(a) of the Trust Indenture Act.
(b) In case an Event of Default has occurred and is continuing, and
is actually known to the Trustee, the Trustee shall exercise the rights and
power vested in it by this Indenture and shall use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
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(c) None of the provisions of Section 315(d) of the Trust Indenture
Act shall be excluded from this Indenture.
(d) No implied covenants or obligations shall be read into this
Indenture against the Trustee.
SECTION 602. NOTICE OF DEFAULTS.
Within 30 days after the occurrence of any Default or Event of
Default, the Trustee shall give to all Holders, as their names and addresses
appear in the Register, notice of such Default or Event of Default actually
known to the Trustee, unless such Default or Event of Default shall have been
cured or waived; PROVIDED, HOWEVER, that, except in the case of a Default or
Event of Default in the payment of the principal of (or premium, if any) or
interest on any Senior Note, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or
directors or Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of the Trust Indenture Act:
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate;
(4) the Trustee may consult with counsel of its selection and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
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(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval or
other paper or document, or the books and records of the Company, unless
requested in writing to do so by the Holders of a majority in principal
amount of the Outstanding Senior Notes; PROVIDED, HOWEVER, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is not, in the opinion of the Trustee, reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such costs, expenses or liabilities as
a condition to so proceeding; the reasonable expense of every such
investigation shall be paid by the Company or, if paid by the Trustee,
shall be repaid by the Company upon demand;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights or power, if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SENIOR NOTES.
The recitals contained herein and in the Senior Notes, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as
to the
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validity or sufficiency of this Indenture or of the Senior Notes. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Senior Notes or the proceeds thereof.
SECTION 605. MAY HOLD SENIOR NOTES.
The Trustee, any Authenticating Agent, any Paying Agent, any Registrar
or any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Senior Notes and, subject to Section 608 and 613,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Registrar or such other
agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder (including amounts held
by the Trustee as Paying Agent) need not be segregated from other funds except
to the extent required by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed upon
in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability, damage, claim or expense, including taxes (other than
taxes based upon or determined or measured by the income of the Trustee),
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim
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or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
The Trustee shall have a claim prior to the Senior Notes as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 607, except with respect to funds
held in trust for the benefit of the Holders.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(6) or Section 501(7), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section 607 shall survive the termination of
this Indenture and the resignation or removal of the Trustee.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
The Trustee shall be disqualified only where such disqualification is
required by Section 310(b) of the Trust Indenture Act.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Section 310(a)(1) of the Trust Indenture Act
having a combined capital and surplus of at least fifty million dollars
($50,000,000) subject to supervision or examination by federal or State
authority, to the extent there is such an institution eligible and willing to
serve. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Neither the Company nor any Affiliate of the Company may serve as Trustee. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the
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successor Trustee in accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Senior Notes, delivered to the
Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 310(b) of the
Trust Indenture Act after written request therefor by the Company or by any
Holder who has been a BONA FIDE Holder for at least six months; or
(ii) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a BONA FIDE Holder for at least six months; or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee, or (B) subject to Section 315(e) of the Trust Indenture Act, any Holder
who has been a BONA FIDE Holder for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee, subject to any stay of such removal entered in accordance with Section
310(b) of the Trust Indenture Act.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
shall comply with the applicable requirements of Section 611. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Senior Notes delivered to the
Company and the
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retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements of
Section 611, become the successor Trustee and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a BONA FIDE Holder for
at least six months may, subject to Section 514 hereof, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Register. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee,
every such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject to its Lien, if any, provided for in
Section 607.
(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in Subsection (a) above.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article and the Trust Indenture Act.
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SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversation or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, PROVIDED such
corporation shall be otherwise qualified and eligible under this Article and the
Trust Indenture Act, without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any Senior Notes shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Senior Notes so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Senior Notes.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
At any time when any of the Senior Notes remain Outstanding the
Trustee may appoint an Authenticating Agent or Agents which shall be authorized
to act on behalf of, and subject to the direction of, the Trustee to
authenticate Senior Notes issued upon exchange, registration of transfer or
partial redemption thereof or pursuant to Section 306, and Senior Notes so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Senior Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than fifty million dollars ($50,000,000) and subject to
supervision or examination by federal or State authority. If
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such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted to with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders, as their
names and addresses appear in the Register. Any successor Authenticating Agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
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If an appointment is made pursuant to this Section, the Senior Notes
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
Dated:
------------------------
This is one of the 11-1/2% Senior Notes due 2004 issued under the
Indenture referred to in this Senior Note.
THE BANK OF NEW YORK
AS TRUSTEE
By:
------------------------------------
AS AUTHENTICATING AGENT
By:
------------------------------------
AUTHORIZED SIGNATORY
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(1) semi-annually, not later than January 1 and July 1 in each year,
a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of the preceding December 15 or June 15, as
the case may be, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
PROVIDED, HOWEVER, that so long as the Trustee is the Registrar, no such list
shall be required to be furnished.
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SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Registrar. The
Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
(b) Holders may communicate as provided in Section 312(b) of the
Trust Indenture Act with other Holders with respect to their rights under this
Indenture or under the Senior Notes, and the Trustee shall comply with its
obligations under such Section 312(b).
(c) Each Holder of Senior Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the year
1995, the Trustee shall transmit by mail to all Holders as provided in Section
313(c) of the Trust Indenture Act, a brief report dated as of such May 15, if
required by and in compliance with Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Sections 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Senior Notes are listed, with the Commission and with the Company.
The Company will notify the Trustee when any of the Senior Notes are listed on
any stock exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission,
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copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which
the Company may be required to file with the Commission pursuant to Section
13 or Section 15(d) of the Exchange Act; or, if the Company is not required
to file information, documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the Commission, within
the earlier of (a) the same 15 days after the Company would have been
required to file with the Commission under the preceding clause and (b) the
date which it is required to so file under the 1991 Indenture so long as
any Indebtedness is outstanding thereunder, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations;
(3) transmit by mail to all Holders, as their names and addresses
appear in the Register, (a) concurrently with furnishing the same to its
stockholders, the Company's annual report to stockholders, containing
certified financial statements, and any other financial reports which the
Company generally furnishes to its stockholders, and (b) within 30 days
after the filing thereof with the Trustee, such summaries of any other
information, documents and reports required to be filed by the Company
pursuant to paragraphs (1) and (2) of this Section as may be required by
rules and regulations prescribed from time to time by the Commission; and
(4) furnish to the Trustee, on or before May 1 of each year, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this
Indenture. For purposes of this paragraph, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture. Such certificate need not comply with
Section 102.
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ARTICLE EIGHT
CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER
SECTION 801. WHEN COMPANY MAY MERGE, ETC.
The Company shall not consolidate with, or merge with or into any
other corporation (whether or not the Company shall be the surviving
corporation), or sell, assign, transfer or lease all or substantially all of its
properties and assets as an entirety or substantially as an entirety to any
Person or group of affiliated Persons, in one transaction or a series of related
transactions, unless:
(1) either the Company shall be the continuing Person or the Person
(if other than the Company) formed by such consolidation or with which or
into which the Company is merged or the Person (or group of affiliated
Persons) to which all or substantially all the properties and assets of the
Company as an entirety are sold, assigned, transferred or leased is a
corporation (or constitute corporations) organized and existing under the
laws of the United States of America or any State thereof or the District
of Columbia and expressly assumes, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Company under the Senior Notes and this
Indenture;
(2) immediately before and after giving effect to such transaction or
series of related transactions, no Event of Default, and no Default, shall
have occurred and be continuing;
(3) immediately after giving effect to such transaction or series of
related transactions on a PRO FORMA basis, but prior to any purchase
accounting adjustments resulting from the transaction or series of related
transactions, the Consolidated Net Worth of the Company (or of the
surviving, consolidated or transferee entity if the Company is not
continuing, treating such entity as the Company for purposes of determining
Consolidated Net Worth) shall be at least equal to the Consolidated Net
Worth of the Company immediately before such transaction or series of
related transactions; and
(4) immediately after giving effect to such transaction or series of
related transactions, the Company (or the surviving, consolidated or
transferee entity if the Company is not continuing, but treating such
entity as the Company for purposes of making such determination) would be
permitted to incur an additional dollar of Indebtedness (not constituting
Permitted Indebtedness) immediately prior to
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such transaction or series of related transactions under Section 1008;
PROVIDED, HOWEVER,that this Subsection (4) shall be inapplicable if (a)
such transaction or series of related transactions would result in the
occurrence of a Change of Control or (b) immediately prior to giving effect
to such transaction or series of related transactions, the Company would
not be permitted to incur an additional dollar of Indebtedness (not
constituting Permitted Indebtedness) under Section 1008, and immediately
after giving effect to such transaction or series of related transactions
on a PRO FORMA basis, but prior to any purchase accounting adjustments
resulting from the transaction or series of related transactions, the
Consolidated Interest Coverage Ratio of the Company (or the surviving,
consolidated or transferee entity if the Company is not continuing,
treating such entity as the Company for purposes of determining
Consolidated Interest Coverage Ratio) shall be at least equal to the
Consolidated Interest Coverage Ratio of the Company immediately before such
transaction or series of related transactions; and PROVIDED, FURTHER, that
notwithstanding the foregoing, if this Subsection (4) in inapplicable by
reason of clause (b) of the first proviso to this Subsection, and at the
date three months after the consummation of such transaction or series of
related transactions the rating ascribed to the Senior Notes by Standard &
Poor's Corporation or Moody's Investors Service, Inc. shall be lower than
the rating ascribed to the Senior Notes prior to the public announcement of
such transaction or series of related transactions, then the Company shall
make an offer for the Senior Notes at the same price and following the same
procedures and obligations as required with respect to a Change of Control
pursuant to Section 1013 (as if such date three months after the giving
effect to such transaction or series of related transactions were the
Change of Control Date).
SECTION 802. SENIOR NOTES TO BE SECURED IN CERTAIN EVENTS.
If, upon any consolidation or merger, or upon any sale, assignment,
transfer or lease as provided in Section 801, any material property of the
Company or any Restricted Subsidiary or any shares of Capital Stock or
Indebtedness of any Restricted Subsidiary, owned immediately prior thereto,
would thereupon become subject to any Lien securing any indebtedness for
borrowed money of, or guaranteed by, such other corporation or Person (other
than any Permitted Lien), the Company, prior to such consolidation, merger,
sale, assignment, transfer or lease, will by indenture supplemental hereto
secure the due and punctual payment of the principal of, and premium, if any,
and interest on the Senior Notes then Outstanding (together with, if the Company
shall so determine, any other Indebtedness of, or guaranteed by, the Company or
any Restricted Subsidiary and then existing or
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thereafter created) equally and ratably with (or, at the option of the Company,
prior to) the Indebtedness secured by such Lien.
SECTION 803. OFFICER'S CERTIFICATE; OPINION OF COUNSEL.
The Company shall deliver to the Trustee prior to the proposed
transaction(s) covered by Section 801 an Officer's Certificate and an Opinion of
Counsel, each stating that the transaction(s) and such supplemental indenture
comply with this Indenture and that all conditions precedent to the consummation
of the transaction(s) under this Indenture have been met.
SECTION 804. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company with or merger by the Company
into any other corporation or any lease, sale, assignment or transfer of all or
substantially all of the property and assets of the Company in accordance with
Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or the successor corporation or affiliated group of
corporations to which such lease, sale, assignment or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation or corporations had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor corporation or
corporations shall be relieved of all obligations and covenants under this
Indenture and the Senior Notes and in the event of such conveyance or transfer,
except in the case of a lease, any such predecessor corporation may be dissolved
and liquidated.
ARTICLE NINE
SUPPLEMENTS TO THE INDENTURE
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without notice to or the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may, subject to Section 1003, enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Senior Notes; or
(2) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein or in the Senior Notes
conferred upon the Company; or
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(3) to add any additional Events of Default; or
(4) to secure the Senior Notes; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(6) to cure any ambiguity, defect or inconsistency or to correct or
supplement any provision herein which may be inconsistent with any other
provision herein; or
(7) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(8) to make any change that does not materially adversely affect the
interests of the Holders.
Upon request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon receipt
by the Trustee of the documents described in (and subject to the last sentence
of) Section 903, the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the written consent of Holders representing at least two-thirds
in principal amount of the Outstanding Senior Notes, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee shall, subject to Section 903, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Senior Note,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Senior Note, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof or extend the time for payment thereof,
or change the Place of Payment where, or the coin or currency in which, any
Senior Note or any premium or the interest thereon is payable, or impair
the right to institute a suit for the enforcement of any such payment on or
after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or
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(2) reduce the percentage in principal amount of the Outstanding
Senior Notes, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or Defaults
or Events of Default hereunder and their consequences provided for in this
Indenture, or
(3) change the repurchase provisions (including those contained in
Article Eleven, Section 1009 and Section 1013) or redemption provisions
(including those contained in Article Twelve) hereof in a manner adverse to
such Holder, or
(4) subordinate in right of payment, or otherwise subordinate, the
Senior Notes to any other Indebtedness; or
(5) modify any of the provisions of this Section, Section 513 or
Section 1014, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Senior Note affected
thereby, PROVIDED, HOWEVER, that this clause shall not be deemed to require
the consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1014, or the
deletion of this proviso, in accordance with the requirements of Sections
611(b) and 901(7).
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
The Trustee shall sign any supplemental indenture authorized pursuant
to this Article, subject to the last sentence of this Section 903. In
executing, or accepting the additional trusts created by, any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 601) shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
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SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Senior Notes theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. REFERENCE IN SENIOR NOTES TO SUPPLEMENTAL INDENTURES.
Senior Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Senior Notes so modified as to conform, in the opinion of the Trustee and
the Company, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Senior Notes.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any) and
interest on the Senior Notes in accordance with the terms of the Senior Notes
and this Indenture. An installment of principal or interest shall be considered
paid on the date it is due if the Trustee or Paying Agent holds by 12:00 noon
New York City time on that date dollars designated for and sufficient to pay the
installment and is not prohibited from paying such money to the Holders pursuant
to the terms of this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Place of Payment, an office or agency
where Senior Notes may be presented or surrendered for payment, where Senior
Notes may be surrendered
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for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Senior Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Place of Payment for such purposes. The Company will give prompt written notice
to the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 1003. MONEY FOR SENIOR NOTES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to the Senior Notes, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Senior Notes,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying Agents with respect
to the Senior Notes, it will, prior to each due date of the principal of (and
premium, if any) or interest on any of the Senior Notes, deposit with a Paying
Agent a sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its action or
failure to so act.
The Company will cause each Paying Agent for the Senior Notes (other
than the Trustee) to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
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(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Senior Notes in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Senior Notes) in the making of any payment of
principal (and premium, if any) or interest on the Senior Notes; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any Senior Note and remaining unclaimed for one year after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Senior Note
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full
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force and effect its corporate existence and that of each of its Restricted
Subsidiaries and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted Subsidiaries; PROVIDED, HOWEVER, that (a) the
Company shall not be required to preserve any such right, license or franchise
or the corporate existence of any of its Restricted Subsidiaries if the Board of
Directors, or the board of directors of the Restricted Subsidiary concerned, as
the case may be, shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company or any of its Restricted
Subsidiaries and that the loss thereof is not materially disadvantageous to the
Holders and (b) nothing herein contained shall prevent any Restricted Subsidiary
of the Company from liquidating or dissolving, or merging into, or consolidating
with the Company (PROVIDED that the Company shall be the continuing or surviving
corporation) or with any one or more Restricted Subsidiaries of the Company if
the Board of Directors or the board of directors of the Restricted Subsidiary
concerned, as the case may be, shall so determine.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or property of the Company or any
Restricted Subsidiary and (2) all lawful claims against the Company or any
Restricted Subsidiary for labor, materials and supplies which in the case of
either clause (1) or (2) of this Section, if unpaid, might by law become a
material Lien upon the property of the Company or any Restricted Subsidiary;
PROVIDED, HOWEVER, that neither the Company nor any Restricted Subsidiary shall
be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 1006. RESTRICTION ON DIVIDENDS.
The Company will not, and will not permit any Subsidiary of the
Company to, directly or indirectly, (1) declare or pay any dividend or make any
distribution, in cash or otherwise, in respect of any shares of Capital Stock of
the Company or to the holders of Capital Stock of the Company as such (other
than dividends or distributions payable in shares of Capital Stock of the
Company (other than Redeemable Stock)) or (2) purchase, redeem or otherwise
acquire or retire for value any of the Capital Stock of the Company or options,
warrants or other rights to acquire any such Capital Stock, other than
acquisitions of Capital Stock or such options, warrants or other rights by any
Subsidiary of the Company from the Company (any such transaction
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included in clause (1) or (2) being hereafter collectively referred to as a
"Restricted Payment") if (i) at the time of such Restricted Payment and after
giving effect thereto, (a) an Event of Default shall have occurred and be
continuing or (b) the Consolidated Net Worth of the Company shall be less than
seven hundred fifty million dollars ($750,000,000); or if (ii) after giving
effect to such Restricted Payment, the aggregate amount expended subsequent to
November 1, 1991, for all such Restricted Payments (the amount of any Restricted
Payment, if other than cash, to be the fair market value of such payment as
determined by the Board of Directors of the Company, whose reasonable
determination shall be conclusive and evidenced by a Board Resolution) exceeds
the algebraic sum of (w) a number calculated as follows: (A) if the aggregate
Consolidated Net Income of the Company earned on a cumulative basis during the
period subsequent to September 30, 1991 through the end of the last fiscal
quarter that is prior to the declaration of any such dividend or distribution or
the giving of notice of such purchase, redemption or other acquisition or
retirement and for which such financial information is then available, is a
positive number, then 100% of such positive number, and (B) if the aggregate
Consolidated Net Income of the Company earned on a cumulative basis during the
period subsequent to September 30, 1991 through the end of the last fiscal
quarter that is prior to the declaration of any such dividend or distribution or
the giving of notice of such purchase, redemption or other acquisition or
retirement and for which such financial information is then available, is a
negative number, then 100% of such negative number, (x) the aggregate net cash
proceeds received by the Company from the issuance and sale, other than to a
Subsidiary of the Company, subsequent to November 1, 1991, of Capital Stock
(including Capital Stock issued upon the conversion of, or in exchange for,
securities other than Capital Stock and options, warrants or other rights to
acquire Capital Stock, but excluding Redeemable Stock), (y) the aggregate net
cash proceeds originally received by the Company from the issuance and sale,
other than to a Subsidiary of the Company, of Indebtedness of the Company that
is converted into Capital Stock of the Company subsequent to November 1, 1991,
and (z) three hundred million dollars ($300,000,000); PROVIDED, HOWEVER, that
the retirement of any shares of the Company's Capital Stock by exchange for, or
out of the proceeds of the substantially concurrent sale of, other shares of
Capital Stock of the Company other than Redeemable Stock shall not constitute a
Restricted Payment. If all of the conditions to the declaration of a dividend
or distribution set out in this Section are satisfied at the time such dividend
or distribution is declared, then such dividend or distribution may be paid or
made within sixty days after such declaration even if the payment of such
dividend, the making of such distribution or the declaration thereof would not
have been permitted under this Section at any time after such declaration.
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SECTION 1007. LIMITATION ON FUTURE LIENS AND GUARANTIES.
(a) If the Company or any Subsidiary of the Company shall create,
incur, assume or suffer to exist any Lien upon any of the assets of the Company
or a Subsidiary of the Company (whether such assets are owned at November 1,
1991 or thereafter acquired) as security for (i) any Indebtedness or other
obligation (whether unconditional or contingent) of the Company that ranks PARI
PASSU with the Senior Notes or any Indebtedness or other obligation (whether
unconditional or contingent) of a Subsidiary of the Company, the Company will
secure or will cause such Subsidiary to guarantee and secure the Outstanding
Senior Notes equally and ratably with (or, at the option of the Company, prior
to) such Indebtedness or other obligation, so long as such Indebtedness or other
obligation shall be so secured, or (ii) any Subordinated Indebtedness, the
Company will secure the Outstanding Senior Notes prior to such Subordinated
Indebtedness, so long as such Subordinated Indebtedness shall be so secured;
PROVIDED, HOWEVER, that this Subsection shall not apply in the case of Permitted
Liens or Liens granted by any Unrestricted Subsidiary to secure Indebtedness or
other obligations of itself or of any Person other than the Company and its
Restricted Subsidiaries.
(b) The Company will not guarantee the Indebtedness of any Subsidiary
of the Company and will not permit any such Subsidiary or Seminole to guarantee
(i) any Indebtedness of the Company that ranks PARI PASSU with the Senior Notes,
(ii) any Indebtedness of a Subsidiary of the Company or (iii) any Subordinated
Indebtedness; PROVIDED, HOWEVER, that this Subsection shall not apply to (1) any
guaranty by a Subsidiary if such Subsidiary also guarantees the Senior Notes on
a PARI PASSU basis with respect to guaranties of Indebtedness described in
clause (i) and (ii) and on a senior basis with respect to guaranties of
Indebtedness described in clause (iii); (2) any guaranty existing on November 1,
1991 or any extension or renewal of such guaranty to the extent such extension
or renewal is for the same or a lesser amount; (3) any guaranty which
constitutes Indebtedness permitted by clause (v) or (vi) of the definition of
Permitted Indebtedness granted by a Person permitted to incur such Indebtedness;
(4) any guaranty by the Company of Indebtedness of a Restricted Subsidiary,
PROVIDED that (A) incurrence of such Indebtedness of the Restricted Subsidiary
is not prohibited by this Indenture and (B) (x) such guaranty constitutes
Indebtedness of the Company incurred as Permitted Indebtedness pursuant to
clause (vii) or (viii) of the definition of Permitted Indebtedness (it being
understood that, for purposes of determining Permitted Indebtedness, any such
guaranty shall be deemed to constitute Indebtedness separate from, and, in
addition to, Indebtedness of a Restricted Subsidiary which is so guaranteed) or
(y) immediately prior to and (on a PRO FORMA basis) after granting such
guaranty, the Company would be
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permitted to incur an additional dollar of Indebtedness (not constituting
Permitted Indebtedness) under Section 1008; (5) any guaranty by an Unrestricted
Subsidiary of Indebtedness or other obligations of any Person other than the
Company and its Restricted Subsidiaries; (6) any guaranty by the Company or any
Subsidiary or Seminole of Indebtedness or other obligations constituting
Indebtedness permitted by clause (i)(a) of the definition of Permitted
Indebtedness in a principal amount not exceeding the principal amount
outstanding or committed under the Credit Agreements (including any letter of
credit facility, but without duplication with respect to commitments for loans
the use of proceeds of which is restricted to repayment of other Indebtedness
under the Credit Agreements) as of November 1, 1991, PLUS two hundred fifty
million dollars ($250,000,000) and LESS the proceeds from the sale of all
Indebtedness under the 1991 Indenture issued from time to time applied to repay
Indebtedness under the Credit Agreements; (7) any guaranty by the Company of
Indebtedness of any Restricted Subsidiary outstanding on November 1, 1991 which
is not subordinated to any Indebtedness of such Restricted Subsidiary, and any
renewal, extension or refinancing of such Indebtedness permitted by this
Indenture; (8) any guaranty by the Company of Indebtedness of any Restricted
Subsidiary that is organized under the laws of a jurisdiction other than the
United States or any subdivision thereof, PROVIDED that the incurrence of such
Indebtedness of such Restricted Subsidiary is not prohibited by this Indenture;
(9) any guaranty by a Restricted Subsidiary that is organized under the laws of
a jurisdiction other than the United States or any subdivision thereof of the
Indebtedness of any of its Subsidiaries that is a Restricted Subsidiary and that
is organized under the laws of a jurisdiction other than the United States or
any subdivision thereof, PROVIDED that incurrence of such Indebtedness of such
Restricted Subsidiary is not prohibited by this Indenture; (10) any guaranty by
the Company or a Subsidiary of the Company of Indebtedness or other obligations
in a principal amount not exceeding two hundred fifty thousand dollars
($250,000); (11) any guaranty in the form of an endorsement of negotiable
instruments for deposit or collection and similar transactions; (12) any
guaranty arising under or in connection with performance bonds, indemnity bonds,
surety bonds, or commercial letters of credit not exceeding twenty-five million
dollars ($25,000,000) in aggregate principal amount from time to time
outstanding; (13) any guaranty by a Subsidiary of the Company of Indebtedness or
other obligations of another Subsidiary in effect at the time of such guarantor
becoming a Subsidiary and not created in contemplation thereof; or (14) any
guaranty by the Company or a Restricted Subsidiary of any Interest Swap
Obligation, Currency Agreement or Commodities Agreement relating to Indebtedness
that is guaranteed pursuant to another clause of this Subsection.
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SECTION 1008. LIMITATION ON FUTURE INCURRENCE OF INDEBTEDNESS.
The Company will not, and will not permit any Restricted Subsidiary
to, incur, create, assume, guarantee or in any other manner become directly or
indirectly liable with respect to or responsible for the payment of any
Indebtedness except: (1) Permitted Indebtedness; and (2) Indebtedness of the
Company if at the time thereof and after giving effect thereto the Consolidated
Interest Coverage Ratio of the Company, on a PRO FORMA basis for the then four
most recent full quarters, taken as a whole (giving effect to (i) such
Indebtedness and (ii) the effect on the Consolidated Cash Flow Available for
Fixed Charges of the Company for the then four most recent full fiscal quarters,
taken as a whole, as a result of any acquisition of a Person acquired by the
Company or any Restricted Subsidiary with the proceeds of such Indebtedness),
would be greater than 1.75 to 1. Without limiting the foregoing, the Company
shall not, and shall not permit any Restricted Subsidiary to, guarantee, or in
any other manner become directly or indirectly liable with respect to or
responsible for the payment of, Indebtedness of any Unrestricted Subsidiary in
an amount greater than, for all guaranties and undertakings of responsibility by
the Company and its Restricted Subsidiaries, 20% of the aggregate amount of
Indebtedness of such Unrestricted Subsidiary.
SECTION 1009. LIMITATION ON ASSET DISPOSITIONS.
(a) (i) The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Disposition unless (except as otherwise permitted
in the last sentence of Subsection (g) below) the Company (or the Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Disposition at least equal to the fair market value for the assets sold or
otherwise disposed of (which shall be as determined in good faith (x) in the
case of dispositions of assets having a fair market value of ten million dollars
($10,000,000) or more, by the Board of Directors, whose reasonable determination
shall be conclusive and evidenced by a Board Resolution, or (y) in the case of
dispositions of assets having a fair market value of less than ten million
dollars ($10,000,000) but not less than five million dollars ($5,000,000), an
Officer of the Company, whose reasonable determination shall be conclusive and
evidenced by a certificate of such Officer) and (ii) the Company will apply the
aggregate net proceeds in excess of three hundred million dollars ($300,000,000)
received by the Company or any Restricted Subsidiary from all Asset Dispositions
occurring subsequent to November 1, 1991 (but excluding for purposes of this
clause (ii), whether before or after the receipt of net proceeds in excess of
three hundred million dollars ($300,000,000), (1) the net proceeds of any Asset
Disposition or series of related Asset Dispositions where the net proceeds are
less than five million
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dollars ($5,000,000) and (2) the first twenty-five million dollars ($25,000,000)
of net proceeds in each fiscal year without taking into account any amount
excluded pursuant to (1)) as follows: (A) to the payment or prepayment of any
Senior Indebtedness within six months of such Asset Disposition, or (B) to
investment in the business of the Company and its Restricted Subsidiaries
(including, without limitation, by acquiring equity, other than Redeemable
Stock, of the transferee of such Asset Disposition) within six months of such
Asset Disposition or, if such investment is with respect to a project to be
completed within a period greater than six months from such Asset Disposition,
then within the period of time necessary to complete such project; PROVIDED,
HOWEVER, that (x) in the case of applications contemplated by clause (B), the
Board of Directors has, within such six-month period, adopted in good faith a
resolution committing such excess proceeds to such investment, (y) EXCEPT as
provided in the next sentence, none of such excess proceeds shall be used to
make any Restricted Payment or any payment in respect of Subordinated
Indebtedness and (z) to the extent not applied in accordance with clauses (A) or
(B) above, or if after being so applied there remain excess net proceeds in an
amount greater than ten million dollars ($10,000,000), the Company shall make a
PRO RATA offer to all Holders to purchase Senior Notes at 100% of principal
amount, plus accrued and unpaid interest to the Asset Disposition Payment Date,
up to an aggregate principal amount equal to such excess net proceeds (as
adjusted pursuant to Subsection (g) of this Section, the "Asset Disposition
Offer Amount"). If after being applied in accordance with clauses (A), (B) and
(z) above there remain excess net proceeds, the Company will apply such excess
net proceeds to the general corporate purposes of the Company or any Subsidiary
of the Company.
(b) Notwithstanding Subsection (a) of this Section, to the extent the
Company or any of its Restricted Subsidiaries receives securities or other non-
cash property or assets as proceeds of an Asset Disposition (other than equity
in the transferee not constituting Redeemable Stock), the Company shall not be
required to make any application required by Subsection (a) of this Section
until it receives cash proceeds from a sale, repayment, exchange, redemption or
retirement of or extraordinary dividend or return of capital on such non-cash
property, EXCEPT that if and to the extent the sum of all cash proceeds plus the
fair market value of equity (other than Redeemable Stock) in the transferee of
such Asset Disposition received at the time of such Asset Disposition is less
than 70% of the fair market value of the total proceeds of such Asset
Disposition (with such fair market value determined and evidenced in the same
manner as stated in clause (i) of Subsection (a) of this Section), the amount of
such deficiency (the "Deficiency Amount") shall be applied as required by
Subsection (a) of this Section as if received at the time of the Asset
Disposition. Any amounts
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deferred pursuant to the preceding sentence shall be applied in accordance with
Subsection (a) of this Section when cash proceeds are thereafter received from a
sale, repayment, exchange, redemption or retirement of or extraordinary dividend
or return of capital on such non-cash property; PROVIDED, HOWEVER, that the
Company shall not be required to apply with respect to any equity interest in a
transferee an amount exceeding the fair market value attributable to such equity
interest at the time of the Asset Disposition; and PROVIDED, FURTHER, that if a
Deficiency Amount was applied pursuant to the exception contained in the
preceding sentence, then once the cumulative amount of applications made
pursuant to Subsections (a) and (b) of this Section (including any Deficiency
Amounts) equals 100% of the fair market value of the total proceeds of the Asset
Disposition at the time of such Asset Disposition, cash proceeds thereafter
received from a sale, repayment, exchange, redemption or retirement of or
extraordinary dividend or return of capital on such non-cash property shall not
be required to be applied in accordance with Subsection (a) of this Section
EXCEPT to the extent such cash proceeds exceed the Deficiency Amount.
(c) An offer to purchase Senior Notes required to be made pursuant to
this Section is referred to as an "Asset Disposition Offer" and the date on
which the purchase of Senior Notes relating to any such Asset Disposition Offer
is to be made is referred to as the "Asset Disposition Payment Date."
(d) The Company shall provide the Trustee with notice of an Asset
Disposition Offer and with all information required to accompany the notice
described in (e) below, at least 45 days before any such Asset Disposition
Payment Date and at least 10 days before the notice of any Asset Disposition
Offer is mailed to Holders.
(e) Notice of an Asset Disposition Offer described in this Section
shall be mailed on behalf of the Company by the Trustee to all Holders at their
last registered addresses not less than 30 days nor more than 60 days before the
Asset Disposition Payment Date, which shall be a date not more than 210 days
after the Asset Disposition giving rise to such Asset Disposition Offer. The
Asset Disposition Offer shall remain open from the time of the mailing of such
notice until not more than five Business Days before the Asset Disposition
Payment Date. The notice shall state:
(1) that the Asset Disposition Offer is being made pursuant to this
Section and the reason for the Asset Disposition Offer;
(2) the purchase price and the Asset Disposition Payment Date;
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(3) the aggregate principal amount of Senior Notes initially subject
to the Asset Disposition Offer Amount and, if applicable, a description of
the adjustment mechanisms describe in Subsection (g) of this Section;
(4) the name and address of the Paying Agent and the Trustee and that
Senior Notes must be surrendered to the Paying Agent to collect the
purchase price;
(5) that any of the Senior Notes not tendered or accepted for payment
will continue to accrue interest;
(6) that any Senior Note accepted for payment pursuant to the Asset
Disposition Offer shall cease to accrue interest after the Asset
Disposition Payment Date;
(7) that each Holder electing to have a Senior Note purchased
pursuant to an Asset Disposition Offer will be required to surrender the
Senior Note, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Senior Note completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the fifth
Business Day prior to the Asset Disposition Payment Date;
(8) 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 preceding the Asset Disposition Payment Date, a telegram,
telex, facsimile transmission or letter setting forth: the name of the
Holder, the principal amount of the Senior Note the Holder delivered for
purchase, the certificate number of the Senior Note the Holder delivered
and a statement that such Holder is withdrawing his election to have the
Senior Note purchased; and
(9) that Holders whose Senior Notes are purchased only in part will
be issued new Senior Notes equal in principal amount to the unpurchased
portion of the Senior Notes surrendered.
(f) On the Asset Disposition Payment Date, the Company shall (i)
accept for payment Senior Notes or portions thereof tendered pursuant to the
Asset Disposition Offer in an aggregate principal amount equal to the Asset
Disposition Offer Amount or such lesser amount of Senior Notes as shall have
been tendered, (ii) on or before 12:00 noon New York City time, 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 Senior Notes so accepted together with an Officer's Certificate stating
the Senior Notes or portions thereof accepted by the Company. If the aggregate
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principal amount of Senior Notes tendered exceeds the Asset Disposition Offer
Amount, the Company shall select the Senior Notes to be purchased on a PRO RATA
basis to the nearest one thousand dollars ($1,000) of principal amount. The
Paying Agent shall promptly mail or deliver to Holders of Senior Notes so
accepted payment in an amount equal to the purchase price, and the Company shall
execute and the Trustee shall promptly authenticate and mail or make available
for delivery to such Holders a new Senior Note equal in principal amount to any
unpurchased portion of the Senior Note surrendered. Any Senior Notes not so
accepted shall be promptly mailed or made available for delivery to the Holder
thereof. The Company will publicly announce the results of the Asset
Disposition Offer on or as soon as practicable after the Asset Disposition
Payment Date. For purposes of this Section, the Trustee or its agent shall act
as the Paying Agent.
(g) The Company shall not make an "Asset Disposition Offer" (as
defined) required under Section 1009 of the 1991 Indenture in connection with a
disposition of assets other than the Collateral (as defined in the First
Mortgage Note Indenture) unless the Company shall have made an Asset Disposition
Offer hereunder (and in respect of certain other Senior Indebtedness in
accordance with the following sentence) on a PRO RATA basis (in an aggregate
amount equal to the amount to be offered pursuant to the Asset Disposition Offer
under the 1991 Indenture) the closing date of which is prior to six months after
the asset disposition triggering the obligations of the Company under the 1991
Indenture. Notwithstanding the previous sentence, if on or after the date
hereof, the Company issues any Senior Indebtedness (including the 10-3/4% First
Mortgage Notes due 2002 of the Company, reference being made to Section 1009(g)
of the First Mortgage Note Indenture) containing a requirement that an offer be
made to repurchase such Senior Indebtedness under the same circumstances and in
the same manner (including the prescribed time periods hereof) provided in this
Section 1009, then (i) the Company may apply the Asset Disposition Offer Amount
(before any adjustment pursuant to this sentence) to the PRO RATA purchase of
Senior Notes tendered hereunder and the Senior Indebtedness tendered thereunder
and (ii) the Asset Disposition Offer Amount available to repurchase the Senior
Notes shall be reduced by the amount applied to the purchase of such Senior
Indebtedness; PROVIDED that this sentence shall only apply to (i) Senior
Indebtedness issued on or after the date hereof (including the 10-3/4% First
Mortgage Notes due 2002 of the Company) that explicitly permits the PRO RATA
purchase of Senior Notes as described herein and refers to this Section 1009(g)
and any Indebtedness outstanding at the date of this Indenture that is amended
to explicitly permit the PRO RATA purchase of Senior Notes as described herein
and refers to this Section 1009(g). In the event that the First Mortgage Notes
are refinanced through a public or private offering of Indebtedness constituting
debt securities and the
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amount of such refinancing Indebtedness is no greater than the principal amount
of the 10-3/4% First Mortgage Notes due 2002 of the Company outstanding as of
the date of such refinancing, the Company need not comply with Subsection (a) of
this Section 1009 in respect of an Asset Disposition involving the collateral
securing such Indebtedness (other than collateral granted in respect of such
Indebtedness pursuant to a negative pledge or similar provision contained in the
indenture or similar instrument relating to such Indebtedness) to the extent
that such compliance would constitute a default under such indenture or similar
instrument.
SECTION 1010. MAINTENANCE OF PROPERTIES.
The Company will cause all material properties used or useful in the
conduct of its business or the business of any of its Subsidiaries to be
maintained and kept in good condition, repair and working order (normal wear and
tear excepted) and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary, so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; PROVIDED, HOWEVER, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties, or disposing of any of them, if such discontinuance or disposal
is, in the judgment of the Board of Directors or of the board of directors of
the Subsidiary concerned, as the case may be, desirable in the conduct of the
business of the Company or any Subsidiary of the Company and not materially
disadvantageous to the Holders.
SECTION 1011. COMPLIANCE CERTIFICATES.
(a) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year of the Company (which fiscal year currently ends on
December 31), an Officer's Certificate stating whether or not the signer knows
of any Default or Event of Default by the Company that occurred prior to the end
of the fiscal year and is then continuing. If the signer does know of such a
Default or Event of Default, the certificate shall describe each such Default or
Event of Default and its status and the specific section or sections of this
Indenture in connection with which such Default or Event or Default has
occurred. The Company shall also promptly notify the Trustee in writing should
the Company's fiscal year be changed so that the end thereof is on any date
other than the date on which the Company's fiscal year currently ends.
(b) The Company shall deliver to the Trustee as soon as practicable
but in any event not later than 45 days after the end of each fiscal quarter an
Officer's Certificate setting forth
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the Company's Subordinated Capital Base for purposes of this Section 1011. The
Trustee may conclusively rely on the Officer's Certificate for such purposes.
(c) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year a written statement by the Company's independent
certified public accountants stating (i) that their audit examination has
included a review of the terms of this Indenture and the Senior Notes as they
relate to accounting matters and (ii) whether, in connection with their audit
examination, any Default has come to their attention and if such a Default has
come to their attention, specifying the nature and period of existence thereof
and the specific section or sections of this Indenture in connection with which
such Default has occurred; PROVIDED, that without any restriction as to the
scope of the audit examination, such independent certified public accountants
shall not be liable by reason of the failure to obtain knowledge of such Default
that would not be disclosed in the course of an audit examination conducted in
accordance with generally accepted auditing standards.
(d) The Company shall deliver to the Trustee forthwith upon becoming
aware of a Default or Event of Default (but in no event later than 10 days after
the occurrence of each Default or Event of Default that is continuing), an
Officer's Certificate setting forth the details of such Default or Event of
Default and the action that the Company proposes to take with respect thereto
and the specific section or sections of this Indenture in connection with which
such Default or Event of Default has occurred.
SECTION 1012. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim, and will actively resist any and all efforts to be compelled to take the
benefit or advantage of, any stay or extension law or any usury law or other
law, which would prohibit or forgive the Company from paying all or any portion
of the principal of and/or interest on the Senior Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
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SECTION 1013. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control (the "Change of
Control Date") and subject to the requirements of the next succeeding sentence,
each Holder shall have the right to require that the Company repurchase such
Holder's Senior Notes in whole or in part pursuant to the offer described in
Subsection (b) below (the "Change of Control Offer") at a purchase price equal
to 101% of the aggregate principal amount of such Senior Notes plus accrued and
unpaid interest, if any, to the date of such repurchase. If such repurchase
would constitute an event of default under Specified Bank Debt, then, prior to
giving the notice to Holders provided in Subsection (b) below, the Company shall
(i) repay in full in cash such Specified Bank Debt or (ii) obtain the requisite
consent of holders of such Specified Bank Debt to permit the repurchase of
Senior Notes without giving rise to an event of default under such Specified
Bank Debt.
(b) Promptly upon satisfaction of either one of the obligations, if
then applicable, set forth in clause (i) or (ii) of Subsection (a) above, the
Company shall mail a notice to each Holder and the Trustee in respect of the
Change of Control Offer (which notice shall contain all instructions and
materials necessary to enable such Holders to tender Senior Notes) stating:
(1) that the Change of Control Offer is being made pursuant to this
Section and that all Senior Notes properly tendered will be accepted for
payment;
(2) the purchase price and the purchase date (which shall be no
earlier than 30 days nor later than 40 days from the date such notice is
mailed, but in any event prior to the date on which any Subordinated
Indebtedness is paid pursuant to the terms of a provision similar to this
Section) (the "Change of Control Payment Date");
(3) the name and address of the Paying Agent and the Trustee and that
the Senior Notes must be surrendered to the Paying Agent to collect the
purchase price;
(4) that any Senior Note not tendered will continue to accrue
interest;
(5) that any Senior Note accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(6) that each Holder electing to have a Senior Note purchased pursuant
to a Change of Control Offer will be required to surrender the Senior Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Senior Note completed, to the Paying Agent at the
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address specified in the notice prior to the close of business on the
Business Day prior to the Change of Control Payment Date;
(7) 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 preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Senior Note the Holder delivered for
purchase, the certificate numbers of the Senior Note the Holder delivered
and a statement that such Holder is withdrawing his election to have such
Senior Note purchased; and
(8) that Holders whose Senior Notes are purchased only in part will be
issued new Senior Notes equal in principal amount to the unpurchased
portion of the Senior Notes surrendered.
On or before 12:00 noon New York City time on the Change of Control
Payment Date, the Company 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 Senior Notes so accepted, together with an Officer's Certificate stating
the aggregate principal amount of the Senior Notes or portions thereof so
accepted by the Company. The Paying Agent shall promptly mail or deliver to the
Holder of Senior Notes so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail or make available
for delivery to such Holder a new Senior Note equal in principal amount to any
unpurchased portion of the Senior Note surrendered. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date. For purposes of this Section, the
Trustee or its agent shall act as the Paying Agent.
If a Change of Control has occurred but a Change of Control Offer is
not permitted to be made, the Company shall mail a notice of such Change of
Control to each Holder within 30 days following a Change of Control Date.
The Company shall comply with any applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) and any other legal requirements in the event that a Change of
Control Offer is made under the circumstances described in this Section 1013.
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SECTION 1014. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1006, 1007, 1008 and 1009, if
before the time for such compliance Holders representing at least two-thirds in
principal amount of the Outstanding Senior Notes shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
ARTICLE ELEVEN
MAINTENANCE OF SUBORDINATED CAPITAL BASE
SECTION 1101. MAINTENANCE OF SUBORDINATED CAPITAL BASE.
(a) Subject to the terms of Section 1102, in the event that the
Company's Subordinated Capital Base is less than one billion dollars
($1,000,000,000) (the "Minimum Subordinated Capital Base") as at the end of each
of any two consecutive fiscal quarters (the last day of the second such fiscal
quarter, a "Deficiency Date"), then, with respect to Senior Notes, the Company
shall, no later than 60 days after the Deficiency Date (105 days if a Deficiency
Date is also the end of the Company's fiscal year), make an offer to all Holders
to purchase (a "Deficiency Offer") 10% of the principal amount of Senior Notes
originally issued, or such lesser amount as may be Outstanding at the time each
Deficiency Offer is made (the "Deficiency Offer Amount"), at a purchase price
equal to 100% of principal amount, plus accrued and unpaid interest to the
Deficiency Payment Date.
(b) Thereafter, semi-annually the Company shall make like Deficiency
Offers for the then applicable Deficiency Offer Amount of Senior Notes until the
Company's Subordinated Capital Base as at the end of any subsequent fiscal
quarter shall be equal to or greater than the Minimum Subordinated Capital Base.
Notwithstanding the foregoing, after any specified Deficiency Date, the last day
of any subsequent fiscal quarter shall not constitute a Deficiency Date (giving
rise to an additional obligation under Subsection (a) of this Section) unless
the Company's Subordinated Capital Base was equal to or greater than the Minimum
Subordinated Capital Base as at the end of a fiscal quarter that followed such
specified Deficiency Date and preceded such subsequent quarter.
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(c) Within 60 days (105 days if a Deficiency Date is also the end of
the Company's fiscal year) following a Deficiency Date, the Company shall mail a
notice to each Holder in respect of the Deficiency Offer (which notice shall
contain all instructions and materials necessary to enable such Holders to
tender Senior Notes) stating:
(1) that the Deficiency Offer is being made pursuant to this Section
and the reason for the Deficiency Offer;
(2) the purchase price and the purchase date, which shall be 20
Business Days from the date such notice is mailed or, if acceptance for
payment and payment is not then lawful, on the earliest subsequent Business
Day on which acceptance for payment and payment is then lawful (a
"Deficiency Payment Date");
(3) the aggregate principal amount of Senior Notes subject to the
Deficiency Amount;
(4) the name and address of the Paying Agent and the Trustee and that
Senior Notes must be surrendered to the Paying Agent to collect the
purchase price;
(5) that any of the Senior Notes not tendered or accepted for payment
will continue to accrue interest;
(6) that any Senior Note accepted for payment pursuant to the
Deficiency Offer shall cease to accrue interest after the Deficiency
Payment Date;
(7) that each Holder electing to have a Senior Note purchased pursuant
to a Deficiency Offer will be required to surrender the Senior Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse 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 prior to the
Deficiency Payment Date;
(8) 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 preceding the Deficiency Payment Date, a telegram, telex,
facsimile transmission or letter setting forth: the name of the Holder,
the principal amount of the Senior Note the Holder delivered for purchase,
the certificate number of the Senior Note the Holder delivered and a
statement that such Holder is withdrawing his election to have the Senior
Note purchased; and
(9) that Holders whose Senior Notes are purchased only in part will be
issued new Senior Notes equal in principal
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amount to the unpurchased portion of the Senior Notes surrendered.
(d) On a Deficiency Payment Date, the Company shall (i) accept for
payment Senior Notes or portions thereof tendered pursuant to the Deficiency
Offer in an aggregate principal amount equal to the Deficiency Offer Amount or
such lesser principal amount of such Senior Notes as shall have been tendered,
(ii) on or before 12:00 noon New York City time, deposit with the Paying Agent
money sufficient to pay the purchase price of all such Senior Notes or portions
thereof so accepted, and (iii) deliver, or cause to be delivered to the Trustee,
Senior Notes or portions thereof so accepted together with an Officer's
Certificate stating the Senior Notes or portions thereof accepted by the
Company. If the aggregate principal amount of such Senior Notes tendered
exceeds the Deficiency Offer Amount, the Company shall select the Senior Notes
to be purchased on a PRO RATA basis to the nearest one thousand dollars ($1,000)
of principal amount. The Paying Agent shall promptly mail or make available for
delivery to Holders of Senior Notes so accepted payment in amounts equal to the
purchase prices therefor, and the Company shall execute and the Trustee shall
promptly authenticate and mail or make available for delivery to such Holders
new Senior Notes equal in principal amounts to, any unpurchased portion of the
Senior Notes surrendered. Any Senior Notes not so accepted shall be promptly
mailed or made available for delivery to the Holder thereof. The Company will
publicly announce the results of the Deficiency Offer on or as soon as
practicable after the Deficiency Payment Date. For purposes of this Section,
the Trustee or its agent shall act as the Paying Agent.
(e) The Company shall comply with and applicable tender offer rules
(including, without limitation, any applicable requirements of Rule 14e-1 under
the Exchange Act) and any other legal requirements in the event that a
Deficiency Offer is made under the circumstances described in this Section 1101.
SECTION 1102. ALTERNATIVE INTEREST RATE ADJUSTMENT.
(a) Notwithstanding the terms of Section 1101, in the event that (1)
the making of a Deficiency Offer by the Company or (2) the purchase of Senior
Notes by the Company in respect of a Deficiency Offer would constitute a default
(with the giving of notice, the passage of time or both) with respect to any
Specified Bank Debt at the time outstanding, then, in lieu of the making of a
Deficiency Offer in the circumstances set forth in Section 1101, (i) the
interest rate on the Senior Notes shall be reset as of the first day of the
second fiscal quarter following the Deficiency Date (the "Reset Date") to a rate
per annum (the "Reset Rate") equal to the greater of (x) the Initial Interest
Rate and (y) the sum of (A) 400 basis points and (B) the higher of the Seven
Year Treasury Rate and the Ten Year Treasury Rate,
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(ii) on the first Interest Payment Date following the Reset Date, the interest
rate on the Senior Notes, as reset on the Reset Date, shall increase by fifty
(50) basis points, and (iii) the interest rate on the Senior Notes shall further
increase by an additional fifty (50) basis points on each succeeding Interest
Payment Date; PROVIDED, HOWEVER, that in no event shall the interest rate on the
Senior Notes at any time exceed the Initial Interest Rate by more than two
hundred (200) basis points.
(b) Once the interest rate on the Senior Notes has been reset
pursuant to Subsection (a) of this Section, if the Company's Subordinated
Capital Base is equal to or greater than the Minimum Subordinated Capital Base
as of the last day of any fiscal quarter subsequent to the Deficiency Date,
interest on the Senior Notes shall return to the Initial Interest Rate effective
as of the first day of the second following fiscal quarter; PROVIDED, HOWEVER,
that the interest rate on the Senior Notes shall again be adjusted in accordance
with Subsection (a) of this Section if the Company's Subordinated Capital Base
shall thereafter be less than the Minimum Subordinated Capital Base as at the
last day of any two consecutive subsequent fiscal quarters and if the making of
a Deficiency Offer or the purchase of Senior Notes by the Company in respect of
a Deficiency Offer would, at such time, constitute a default (with the giving of
notice, the passage of time, or both) with respect to any Specified Bank Debt at
the time outstanding.
(c) The Company shall notify the Trustee of the Reset Rate not later
than two Business Days after the Reset Date in the circumstances set forth in
Subsection (a) of this Section. Not later than five Business Days after the
Trustee has received such notice from the Company, the Trustee shall mail to
each Holder such notice setting forth the Reset Rate. Commencing on the Reset
Date, the Senior Notes shall bear interest (as determined in accordance with
clauses (i), (ii) and (iii) of Subsection (a) of this Section) until the date on
which such interest rate returns to the Initial Interest Rate pursuant to
Subsection (b) of this Section. The Company shall notify the Trustee and the
Holders of such Senior Notes promptly when the interest rate on such Senior
Notes returns to the Initial Interest Rate pursuant to Subsection (b) of this
Section. Failure of the Company or the Trustee to give, or failure of a Holder
to receive, such notices shall not in any event affect the validity of the
proceedings of the adjustment of the interest to be borne by such Senior Notes
effective on the Reset Date of the Company's obligations hereunder.
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ARTICLE TWELVE
REDEMPTION OF SENIOR NOTES
SECTION 1201. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The Company may at its option redeem Senior Notes, in whole or in
part, pursuant to paragraph 3 of the reverse of the Senior Notes. The election
of the Company to redeem any of the Senior Notes shall be evidenced by a Board
Resolution. In case of any redemption at the election of the Company of less
than all the Senior Notes, the Company shall, at least 45 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Senior Notes to be redeemed. The Company shall deliver
to the Trustee an Officer's Certificate, a Board Resolution authorizing the
redemption and an Opinion of Counsel with respect to the due authorization of
such redemption and to the effect that such redemption is being made in
accordance with this Indenture and the Senior Notes.
SECTION 1202. SELECTION BY TRUSTEE OF THE SENIOR NOTES TO BE REDEEMED.
If less than all the Senior Notes are to be redeemed, the particular
Senior Notes to be redeemed shall be selected not more than 90 days prior to the
Redemption Date by the Trustee, from the Outstanding Senior Notes not previously
called for redemption or submitted for repurchase pursuant to Sections 1009 and
1013, substantially PRO RATA, by lot or by any other method as the Trustee
considers fair and appropriate and that complies with the requirements of the
principal national securities exchange, if any, on which such Senior Notes are
listed, and which may provide for the selection for redemption of portions
(equal to one thousand dollars ($1,000) or any integral multiple thereof) of the
principal amount of Senior Notes of a denomination larger than one thousand
dollars ($1,000).
The Trustee shall promptly notify the Company in writing of the Senior
Notes selected for redemption and, in the case of any Senior Note selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Senior Notes shall
relate, in the case of any Senior Note redeemed or to be redeemed only in part,
to the portion of the principal amount of such Senior Note which has been or is
to be redeemed.
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SECTION 1203. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 45 days prior to the Redemption
Date, to each Holder of Senior Notes to be redeemed, at the address of such
Holder appearing in the Register.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price (including the amount of accrued and unpaid
interest to be paid);
(3) the name and address of the Paying Agent and the Trustee and that
the Senior Notes must be surrendered to the Paying Agent to collect the
Redemption Price;
(4) if less than all Outstanding Senior Notes are to be redeemed, the
identification (and, in the case of partial redemption, the principal
amounts) of the particular Senior Notes to be redeemed and that, on or
after the Redemption Date, upon surrender of any Senior Note to be redeemed
in part, a new Senior Note in principal amount equal to the unredeemed
portion thereof will be issued;
(5) that on the Redemption Date the Redemption Price will become due
and payable upon each such Senior Note or portion thereof to be redeemed
and, if applicable, that interest thereon will cease to accrue on and after
said date; and
(6) the CUSIP number, if any, of the Senior Notes to be redeemed.
Notice of redemption of Senior Notes to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1204. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Senior
Notes or portions thereof which are to be redeemed on that date.
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SECTION 1205. SENIOR NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Senior Notes
so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Senior Notes or portions thereof shall cease to bear interest.
Upon surrender of any such Senior Note for redemption in accordance with said
notice, such Senior Note or portion thereof shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Senior
Notes, or one or more Predecessor Senior Notes, registered as such at the close
of business on the relevant Record Dates or Special Record Dates according to
their terms and the provisions of Section 307.
If any Senior Note or portion thereof called for redemption shall not
be so paid upon surrender thereof for redemption, the principal (and premium, if
any) shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Senior Note.
SECTION 1206. SENIOR NOTES REDEEMED IN PART.
Any Senior Note which is to be redeemed only in part shall be
surrendered at an office or agency of the Company at a Place of Payment therefor
(with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Senior Note without service charge, one or more
new Senior Notes, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Senior Note so surrendered.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT DEFEASANCE
OR COVENANT DEFEASANCE.
The Company may at its option by Board Resolution, at any time, with
respect to the Senior Notes, elect to have either Section 1302 (if applicable)
or Section 1303 (if applicable) be applied to the Outstanding Senior Notes upon
compliance with the applicable conditions set forth below in this Article.
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SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section 1301 to
defease the Outstanding Senior Notes, the Company shall be discharged from its
obligations with respect to the Outstanding Senior Notes on the date the
applicable conditions set forth in Section 1304 are satisfied (hereinafter,
"defeasance"). Defeasance shall mean that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by the Outstanding
Senior Notes and to have satisfied all its other obligations under such Senior
Notes and this Indenture (and the Trustee, at the expense of the Company, shall
executed proper instruments acknowledging the same); PROVIDED, HOWEVER, that the
following rights, obligations, powers, trusts, duties and immunities shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Senior Notes to receive, solely from the trust fund
provided for in Section 1304, payments in respect of the principal of (and
premium, if any) and interest on such Senior Notes when such payments are due,
(B) the Company's obligations with respect to such Senior Notes under Sections
304, 305, 306, 1002 and 1003 (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and (D) this Article. Subject to compliance
with this Article, the Company may exercise its option with respect to
defeasance under this Section 1302 notwithstanding the prior exercise of its
option with respect to covenant defeasance under Section 1303.
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section 1301 to
obtain a covenant defeasance with respect to the Outstanding Senior Notes, the
Company shall be released from its obligations under this Indenture (except its
obligations under Sections 306, 506, 509, 610, 1001, 1002, 1011 and 1012) with
respect to the Outstanding Senior Notes on and after the date the applicable
conditions set forth in Section 1304 are satisfied (hereinafter, "covenant
defeasance"). Covenant defeasance shall mean that the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in this Indenture (except its obligations under Sections
306, 506, 509, 610, 1001, 1002, 1011 and 1012), whether directly or indirectly
by reason of any reference elsewhere herein or by reason of any reference to any
other provision herein or in any other document, and such omission to comply
shall not constitute an Event of Default under Section 501(3) with respect to
Outstanding Senior Notes, and the remainder of this Indenture and of the Senior
Notes shall be unaffected thereby.
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SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to defeasance under Section 1302
and covenant defeasance under Section 1303 with respect to the Outstanding
Senior Notes:
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 609 who shall agree to comply with the provisions of this
Article applicable to it), under the terms of an irrevocable trust
agreement in form and substance reasonably satisfactory to such Trustee, as
trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit
of the Holders, (A) dollars in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide, not later
than the due date of any payment, money in an amount, or (C) a combination
thereof, in each case sufficient, after payment of all federal, state and
local taxes or other charges or assessments in respect thereof payable by
the Trustee, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, (i) the
principal of (and premium, if any, on) and each installment of principal of
(and premium, if any) and interest on the Outstanding Senior Notes on the
Stated Maturity of such principal or installment of principal or interest
and (ii) any mandatory payments applicable to the Outstanding Senior Notes
on the day on which such payments are due and payable in accordance with
the terms of this Indenture and of such Senior Notes.
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit, and no Default or Event of Default under clause (6) or (7) of
Section 501 hereof shall occur and be continuing, at any time during the
period ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period).
(3) Such deposit, defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, any other
agreement or instrument to which the Company is a party or by which it is
bound.
(4) Such defeasance or covenant defeasance shall not cause the Senior
Notes then listed on any national
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securities exchange registered under the Exchange Act to be delisted.
(5) In the case of an election with respect to Section 1302, the
Company shall have delivered to the Trustee either (A) a ruling directed to
the Trustee received from the Internal Revenue Service to the effect that
the Holders of the Outstanding Senior Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such defeasance
had not occurred or (B) an Opinion of Counsel, based on such ruling or on a
change in the applicable federal income tax law since the date of this
Indenture, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of the Outstanding Senior Notes
will not recognize income, gain or loss for federal income tax purposes as
a result of such defeasance and will be subject to federal income tax on
the same amounts, in the same manner and a the same times as would have
been the case if such defeasance had not occurred.
(6) In the case of an election with respect to Section 1303, the
Company shall have delivered to the Trustee an Opinion of Counsel or a
ruling directed to the Trustee received from the Internal Revenue Service
to the effect that the Holders of the Outstanding Senior Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such covenant defeasance had not occurred.
(7) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 1302
or the covenant defeasance under Section 1303 (as the case may be) have
been complied with.
SECTION 1305. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Outstanding Senior Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Senior Notes and this Indenture, to the
payment, either directly or through any Paying
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Agent (including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Senior Notes of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 1304 or the principal and interest received in
respect thereof, other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Senior Notes.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or Government Obligations held by it as provided in Section 1304 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited for
the purpose for which such money or U.S. Government Obligations were deposited.
105
<PAGE>
This Indenture may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
STONE CONTAINER CORPORATION
By:
------------------------------------
Name:
Title:
[SEAL]
Attest:
- - - - -----------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Trustee
By:
------------------------------------
Name:
Title:
[CORPORATE SEAL]
106
<PAGE>
STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
On the 12th day of October, 1994, before me personally came Helen
Cotiaux, to me known, who, being by me duly sworn, did depose and say that she
is Vice President of The Bank of New York, one of the parties described in and
which executed the foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal,
that it was so affixed by authority of the Board of Directors of said
corporation; and that she signed his name thereto by like authority.
----------------------------------------
My commission expires:
<PAGE>
STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
On the 12th day of October, 1994, before me personally came
____________, to me known, who, being by me duly sworn, did depose and say that
he is _______________________ of Stone Container Corporation, one of the parties
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal, that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
----------------------------------------
My commission expires:
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Stone
Container Corporation and Subsidiaries' September 30, 1994 Consolidated
Balance Sheet and Consolidated Statement of Operations and Accumulated
Deficit and is qualified in its entirety by reference to such Financial
Statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 140
<SECURITIES> 0
<RECEIVABLES> 788
<ALLOWANCES> 0
<INVENTORY> 693
<CURRENT-ASSETS> 1,837
<PP&E> 5,375
<DEPRECIATION> 2,059
<TOTAL-ASSETS> 6,761
<CURRENT-LIABILITIES> 1,001
<BONDS> 4,150
<COMMON> 849
48
115
<OTHER-SE> (296)
<TOTAL-LIABILITY-AND-EQUITY> 6,761
<SALES> 4,127
<TOTAL-REVENUES> 4,127
<CGS> 3,367
<TOTAL-COSTS> 4,053
<OTHER-EXPENSES> (40)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 338
<INCOME-PRETAX> (224)
<INCOME-TAX> (65)
<INCOME-CONTINUING> (159)
<DISCONTINUED> 0
<EXTRAORDINARY> (62)
<CHANGES> (14)
<NET-INCOME> (234)
<EPS-PRIMARY> (2.75)
<EPS-DILUTED> (2.75)
</TABLE>
