<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
STONE CONTAINER CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2621 36-2041256
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification Number)
</TABLE>
------------------------
STONE CONTAINER CORPORATION
150 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
(312) 346-6600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
LESLIE T. LEDERER
VICE PRESIDENT, SECRETARY AND COUNSEL
STONE CONTAINER CORPORATION
150 NORTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60601
(312)346-6600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
COPY TO:
IMAD I. QASIM
SIDLEY & AUSTIN
ONE FIRST NATIONAL PLAZA
CHICAGO, ILLINOIS 60603
(312) 853-7000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
------------------------
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box / /
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED SECURITY AGGREGATE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Rating Adjustable Senior Notes due
2016................................ $125,000,000 100% $125,000,000 (1) $43,104
</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ACTING PURSUANT
TO SECTION 8(a) MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE>
STONE CONTAINER CORPORATION
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B)
OF REGULATION S-K SHOWING LOCATION IN THE PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS OF FORM S-4
<TABLE>
<CAPTION>
ITEM AND HEADING IN
FORM S-4 REGISTRATION STATEMENT LOCATION OR CAPTION IN PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and Outside Front
Cover Page of Prospectus............................ Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page; Outside Back Cover Page
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information................................... Prospectus Summary; Risk Factors; Business; Summary
Financial Data
4. Terms of the Transaction............................. Prospectus Summary; The Exchange Offer; Description
of Notes; United States Federal Income Tax
Consequences
5. Pro Forma Financial Information...................... N/A
6. Material Contacts with the Company Being Acquired.... N/A
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be Underwriters....... Plan of Distribution
8. Interests of Named Experts and Counsel............... Legal Matters; Experts
9. Disclosure of Commission Position on Indemnification
of Securities Act Liabilities....................... N/A
10. Information with Respect to S-3 Registrants.......... Incorporation of Certain Documents by Reference;
Business
11. Incorporation of Certain Information by Reference.... Incorporation of Certain Documents by Reference
12. Information with Respect to S-2 or S-3 Registrants... N/A
13. Incorporation of Certain Information by Reference.... N/A
14. Information with Respect to Registrants Other than
S-3 or S-2 Registrants.............................. N/A
15. Information with Respect to S-3 Companies............ N/A
16. Information with Respect to S-2 or S-3 Companies..... N/A
17. Information with Respect to Companies Other than S-2
or S-3 Companies.................................... N/A
18. Information if Proxies, Consents or Authorizations
are to be Solicited................................. N/A
19. Information if Proxies, Consents or Authorizations
are not to be solicited, or in an Exchange Offer.... Prospectus Summary
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION DATED SEPTEMBER 17, 1996
PROSPECTUS
STONE CONTAINER CORPORATION
[LOGO]
OFFER TO EXCHANGE ITS RATING ADJUSTABLE SENIOR NOTES DUE 2016
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR ANY AND
ALL OF ITS OUTSTANDING RATING ADJUSTABLE SENIOR NOTES DUE 2016
------------------------
The Exchange Offer will expire at 5:00 p.m., New York City time on
, 1996, unless extended.
Stone Container Corporation, a Delaware corporation (the "Company"), hereby
offers (the "Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange $1,000 principal amount
of its new Rating Adjustable Senior Notes due 2016 (the "New Notes") for each
$1,000 principal amount of its outstanding Rating Adjustable Senior Notes due
2016 (the "Old Notes" and, together with the New Notes, the "Notes"), of which
$125,000,000 aggregate principal amount is outstanding. The form and terms of
the New Notes are the same as the form and terms of the Old Notes, except that
the New Notes will have been registered under the Securities Act of 1933, as
amended (the "Securities Act"). The New Notes will evidence the same debt as the
Old Notes (which they replace) and will be issued under, and entitled to
benefits of, the Indenture governing the Old Notes dated as of July 24, 1996, as
supplemented and amended by the First Supplemental Indenture dated as of July
24, 1996 (the "Indenture"). All references herein to the "Notes" shall be
references to the Old Notes and/or the New Notes, whichever was, is or will be
outstanding in the particular context. See "The Exchange Offer" and "Description
of Notes."
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time, on ,
1996, unless extended by the Company in its sole discretion (the "Expiration
Date"). Tenders of Old Notes may be withdrawn at any time prior to the
Expiration Date. The Exchange Offer is subject to certain customary conditions.
See "The Exchange Offer." Old Notes may be tendered only in integral multiples
of $1,000 principal amount.
The Old Notes were sold on July 24, 1996 in a transaction exempt from
registration under the Securities Act. The New Notes are being offered to
satisfy certain obligations of the Company under the Registration Rights
Agreement relating to the Old Notes. See "The Exchange Offer -- Purpose and
Effect of the Exchange Offer." New Notes issued pursuant to the Exchange Offer
in exchange for the Old Notes may be offered for resale, resold or otherwise
transferred by the holders thereof (other than any holder which is an affiliate
of the Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement with any person
to participate in the distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer" and "Plan of Distribution."
The Notes constitute securities for which there is no established trading
market. Any Old Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that any Old Notes are tendered and accepted
in the Exchange Offer, a holder's ability to sell untendered Old Notes could be
adversely affected. Application will be made to list the New Notes on the New
York Stock Exchange ("NYSE"). No assurance can be given as to the liquidity of
the trading market for either the Old Notes or the New Notes.
Interest on the New Notes shall accrue from the last February 1 or August 1
(an "Interest Payment Date") on which interest was paid on the Old Notes so
surrendered, or, if no interest has been paid on such Old Notes, from July 24,
1996.
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DESCRIPTION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND AN
INVESTMENT IN THE NEW NOTES OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THE EXCHANGE OFFER IS NOT BEING
MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF
OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE
THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
Until , 1996 (40 days after commencement of this offering), all
dealers effecting transactions in the New Notes, whether or not participating in
this offering, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
--------------------------
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 under the Securities Act for
the registration of the New Notes offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain items of which are
contained in exhibits and schedules to the Registration Statement as permitted
by the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement, including the exhibits thereto, the information
incorporated by reference therein and financial statements and notes filed as a
part thereof. Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Company has agreed
during any period in which it is no longer subject to such reporting
requirements, to file with the Trustee and the Commission such 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. Any reports, proxy statements and other information filed
with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
in Chicago, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and in
New York, 7 World Trade Center, 13th Floor, New York, New York, 10048. Copies of
such material may also be obtained by mail from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants who file electronically with the
Commission. In addition, such reports, proxy statements and other information
can be inspected at the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005, on which exchange the common stock of the Company is
listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus:
(a) the Company's Annual Report on Form 10-K for the year ended December 31,
1995;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996;
(c) the Company's Current Reports on Form 8-K, dated May 16, 1996; June 28,
1996, July 19, 1996 and July 25, 1996; and
(d) the Company's Proxy Statement, dated April 9, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering hereunder shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated by reference
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for all purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document that is also incorporated
or deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Copies of such documents (other than exhibits
thereto which are not specifically incorporated by reference herein) are
available, without charge, upon written or oral request to Investor Relations
Department, Stone Container Corporation, 150 North Michigan Avenue, Chicago,
Illinois 60601, telephone (312) 346-6600. In order to ensure timely delivery of
the documents prior to the Expiration Date, any request should be made by
[date five business days prior to expiration date].
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING INFORMATION IS QUALIFIED ENTIRELY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN OR INCORPORATED BY REFERENCE
INTO THIS PROSPECTUS. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FACTORS SET FORTH HEREIN UNDER THE CAPTION "RISK FACTORS." AS USED IN THIS
PROSPECTUS, THE TERM "COMPANY" INCLUDES STONE CONTAINER CORPORATION, ITS
SUBSIDIARIES (INCLUDING STONE-CONSOLIDATED CORPORATION PRIOR TO ITS AMALGAMATION
(THE "AMALGAMATION") ON NOVEMBER 1, 1995 WITH RAINY RIVER FOREST PRODUCTS INC.,
UNLESS OTHERWISE INDICATED) AND ITS AND THEIR RESPECTIVE PREDECESSORS AND
SUBSIDIARIES, EXCEPT AS THE CONTEXT OTHERWISE MAY REQUIRE.
THE COMPANY
The Company is a major international pulp and paper company engaged
principally in the production and sale of paper, packaging products, and market
pulp. The Company believes that it is the world's largest producer of unbleached
containerboard and kraft paper and the world's largest converter of those
products into corrugated containers and paper bags and sacks. The Company also
believes that it is one of the world's largest paper companies in terms of
annual tonnage, having produced approximately 8.0 million and 7.9 million total
tons of paper and pulp in 1995 and 1994, respectively. The Company produced
approximately 5.0 million and 5.2 million tons of unbleached containerboard and
kraft paper in 1995 and 1994, respectively, which accounted for approximately
63% and 66% of its total tonnage produced for 1995 and 1994, respectively. The
Company had net sales of approximately $7.4 billion and $5.7 billion in 1995 and
1994, respectively, and had net income of $255.5 million in 1995 and a net loss
of $204.6 million in 1994. The Company owns or has an interest in 130
manufacturing facilities in the United States, 31 in Canada, 16 in Germany,
seven each in France and Venezuela, two each in Australia, Belgium and the
United Kingdom and one each in Mexico, the Netherlands and China. These
facilities include 26 mills. The Company also maintains sales offices in the
United States, Canada, the United Kingdom, Germany, Belgium, France, Mexico,
China and Japan and has forestry operations in Costa Rica and Venezuela. The
principal executive offices of the Company are at 150 North Michigan Avenue,
Chicago, Illinois 60601 and the Company's telephone number is (312) 346-6600.
PAPERBOARD AND PAPER PACKAGING
The Company believes that its integrated unbleached paperboard and paper
packaging business is the largest in the world with 16 mills and 149 converting
plants located throughout the United States and Canada, and in Europe, Australia
and China. The major products in this business are containerboard and corrugated
containers, which are primarily sold to a broad range of manufacturers of
consumable and durable goods; kraft paper and paper bags and sacks, which are
sold primarily to supermarket chains, retailers of consumer products and, in the
case of multiwall shipping sacks, to the agricultural, chemical and cement
industries; and boxboard and folding cartons, which are sold to manufacturers of
consumable goods and other box manufacturers. The unbleached packaging business
of the Company has an annual capacity of approximately 5.5 million tons and is
more than 80% integrated. In 1995, total sales for the paperboard and paper
packaging business of the Company were approximately $5.4 billion, or
approximately 74% of total consolidated sales.
MARKET PULP
The Company believes it is a major market producer of market pulp in North
America. The Company owns and operates five market pulp mills in North America,
including the Celgar mill in Castlegar, British Columbia in which the Company
has a 45% interest (the "Celgar mill"). These mills have the capacity to produce
1.2 million tons of market pulp annually and produced 1.1 million tons in 1995
(including 45% of the production at the Celgar mill). In addition,
Stone-Consolidated owns and operates the Fort Frances, Ontario mill, which has
an annual capacity of approximately 130 thousand tons of market pulp. The
geographic diversity of the Company's mills enables the Company to offer its
customers a product mix of bleached northern and southern hardwood and bleached
northern softwood pulp. Market pulp is sold to manufacturers of paper products,
including fine papers, photographic papers, tissue and newsprint.
3
<PAGE>
NEWSPRINT AND UNCOATED GROUNDWOOD PAPER
The Company has an equity interest of approximately 47% in
Stone-Consolidated Corporation ("Stone-Consolidated"). The Company believes that
Stone-Consolidated is the largest producer of uncoated groundwood paper in North
America and one of the two largest in the world, and the second largest producer
and largest marketer of newsprint in the world, with an annual production
capacity of 2.4 million tons of newsprint (including the Company's newsprint
mill in Snowflake, Arizona, the entire production of which is sold by
Stone-Consolidated on a commission basis, and Boise Cascade Corporation's
newsprint mill in DeRidder, Louisiana, the entire production of which is
purchased at a discount and sold by Stone-Consolidated) and 803 thousand tons of
uncoated groundwood paper. Newsprint is marketed to newspaper publishers and
commercial printers. Uncoated groundwood paper is sold for use primarily in
newspaper inserts, retail store advertising fliers, magazines, telephone
directories and as computer paper.
THE EXCHANGE OFFER
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REGISTRATION RIGHTS AGREEMENT...... The Old Notes were sold July 24, 1996 (the "Closing Date")
in a transaction exempt from registration under the
Securities Act. In connection therewith, the Company
executed and delivered, for the benefit of the holders of
the Old Notes, a Registration Rights Agreement dated July
24, 1996 (the "Registration Rights Agreement"), which grants
the holders of Old Notes certain exchange and registration
rights. See "The Exchange Offer -- Termination of Certain
Rights." The Exchange Offer is intended to satisfy certain
of such rights, which terminate upon the Consummation (as
defined) of the Exchange Offer. Therefore, the holders of
New Notes will not be entitled to any exchange or
registration rights with respect to the New Notes.
THE EXCHANGE OFFER................. $1,000 principal amount of New Notes in exchange for each
$1,000 principal amount of Old Notes. As of the date hereof,
$125,000,000 aggregate principal amount of Old Notes is
outstanding. The terms of the New Notes are substantially
identical in all respects (including principal amount,
interest rate and maturity) to the terms of the Old Notes
for which they may be exchanged pursuant to the Exchange
Offer, except that the New Notes will have been registered
under the Securities Act and will not bear legends
restricting their transfer. See "The Exchange Offer -- Terms
of the Exchange Offer" and "The Exchange Offer -- Procedures
for Tendering."
Based on an interpretation by the staff of the Commission
set forth in no-action letters issued to third parties, the
Company believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by any holder or
beneficial owner thereof (other than any such holder or
beneficial owner which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act or a
"broker" or "dealer" registered under the Exchange Act)
without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that
such New Notes are acquired in the ordinary course of such
holder's or beneficial owner's business and that such holder
or beneficial owner is not
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4
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engaged in, does not intend to engage in and has no
arrangement or understanding with any person to participate
in the distribution of such New Notes. See "Plan of
Distribution."
EXPIRATION DATE.................... 5:00 p.m., New York City time, on ,1996 unless the
Exchange Offer is extended by the Company in its sole
discretion, in which case the term "Expiration Date" means
the latest date and time to which the Exchange Offer is
extended.
CONDITIONS OF THE EXCHANGE OFFER... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See "The
Exchange Offer -- Conditions of the Exchange Offer."
PROCEDURES FOR TENDERING OLD
NOTES............................. Each holder of Old Notes wishing to accept the Exchange
Offer must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in accordance with the
instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such
facsimile, together with the Old Notes and any other
required documentation to the Exchange Agent (as defined) at
the address set forth herein. By executing the Letter of
Transmittal, each holder will represent to the Company that,
among other things, the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of
business of the person receiving such New Notes, whether or
not such person is the holder, that neither the holder nor
any such other person is engaged in, intends to engage in or
has an arrangement or understanding with any person to
participate in the distribution of such New Notes and that
neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities
Act, of the Company. See "The Exchange Offer -- Procedures
for Tendering."
BROKERS OR DEALERS................. Any broker or dealer participating in the Exchange Offer
will be required to acknowledge that it will deliver a
prospectus in connection with any resales of the New Notes
received by it in the Exchange Offer. A broker or dealer
registered under the Exchange Act that acquired Old Notes
for its own account pursuant to its market-making or other
trading activities (other than Old Notes acquired directly
from the Company or an affiliate of the Company) may
participate in the Exchange Offer but may be deemed an
underwriter under the Securities Act and, therefore, must
deliver a prospectus relating to the New Notes in connection
with any resales by it of New Notes acquired by it for its
own account in the Exchange Offer; only such brokers or
dealers may use this Prospectus in connection with resales
of the New Notes. See "Plan of Distribution."
SPECIAL PROCEDURES FOR BENEFICIAL
OWNERS............................ Any beneficial owner whose Old Notes are registered in the
name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact such
registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See "The
Exchange Offer -- Procedures for Tendering."
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5
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<TABLE>
<S> <C>
GUARANTEED DELIVERY PROCEDURES..... Holders of Old Notes who wish to tender their Old Notes and
whose Old Notes are not immediately available or who cannot
deliver their Old Notes, the Letter of Transmittal or any
other documents required by the Letter of Transmittal to the
Exchange Agent prior to the Expiration Date, must tender
their Notes according to the guaranteed delivery procedures
set forth under "The Exchange Offer -- Guaranteed Delivery
Procedures."
WITHDRAWAL RIGHTS.................. Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. See "The
Exchange Offer -- Withdrawal of Tenders."
ACCEPTANCE OF OLD NOTES AND
DELIVERY OF NEW NOTES............. Subject to satisfaction or waiver of the conditions of the
Exchange Offer set forth under "The Exchange Offer --
Conditions of the Exchange Offer," the Company will accept
for exchange any and all Old Notes which are properly
tendered in the Exchange Offer prior to the Expiration Date.
The New Notes issued pursuant to the Exchange Offer will be
delivered on the earliest practicable date following the
Expiration Date. See "The Exchange Offer -- Terms of the
Exchange Offer."
UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES...................... An exchange of Old Notes for New Notes pursuant to the
Exchange Offer should not be treated as a sale, exchange or
other taxable event for United States federal income tax
purposes because the New Notes should not be considered to
differ materially in kind or extent from the Old Notes. As a
result, no material federal income tax consequences should
result from an exchange of Old Notes for New Notes pursuant
to the Exchange Offer. For federal income tax purposes, a
New Note received by a beneficial owner of an Old Note
should be treated as a continuation of the Old Note in the
hands of such owner. See "United States Federal Income Tax
Consequences."
EFFECT ON HOLDERS OF THE OLD
NOTES............................. As a result of the making of, and upon acceptance for
exchange of all validly tendered Old Notes pursuant to the
terms of, the Exchange Offer, the Company will have
fulfilled certain of its obligations contained in the
Registration Rights Agreement and, accordingly, there will
be no increase in the interest rate on the Old Notes
pursuant to the applicable terms of the Registration Rights
Agreement. Holders of the Old Notes who do not tender their
Old Notes will be entitled to all the rights and limitations
applicable thereto under the Indenture and the Registration
Rights Agreement, except for any rights under the Indenture
or the Registration Rights Agreement which by their terms
terminate or cease to have further effect as a result of the
making of, and the acceptance for exchange of all validly
tendered Old Notes pursuant to, the Exchange Offer. All
untendered Old Notes will continue to be subject to the
restrictions on transfer provided for in the Old Notes and
in the Indenture. The Registration Rights Agreement provides
that if a holder of $1,000,000 aggregate principal amount or
more of
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6
<PAGE>
<TABLE>
<S> <C>
Notes notifies the Company within 20 business days following
Consummation (as defined) of the Exchange Offer that (A)
such holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such holder may
not resell the Exchange Notes acquired by it in the Exchange
Offer to the public without delivering a prospectus and this
Prospectus is not appropriate or available for such resales
by such holder or (C) such holder is a broker or dealer
registered under the Exchange Act and holds Notes acquired
directly from the Company or one of its affiliates, then the
Company is required to file a shelf registration statement
(the "Shelf Registration Statement") pursuant to Rule 415
under the Securities Act. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, the trading
market for untendered Old Notes could be adversely affected.
USE OF PROCEEDS.................... There will be no cash proceeds to the Company from the
exchange pursuant to the Exchange Offer. See "Use of
Proceeds."
EXCHANGE AGENT..................... The Bank of New York, as Trustee, is serving as exchange
agent (the "Exchange Agent") in connection with the Exchange
Offer.
</TABLE>
SUMMARY OF TERMS OF THE NEW NOTES
<TABLE>
<S> <C>
SECURITIES OFFERED................. $125 million in aggregate principal amount of Rating
Adjustable Senior Notes due 2016.
INTEREST RATE ADJUSTMENT........... The New Notes will bear interest at an initial rate of
11.875% per annum. The interest rate shall be subject to
adjustment from time to time as follows: (i) in the event of
a change in Rating category that is an upward change, the
Applicable Rate shall be the interest rate set forth below
opposite the higher of the Moody's Rating or the S&P Rating
assigned to the Notes in effect at the close of business on
that Rating Adjustment Date; (ii) in the event of a change
in Rating category that is a downward change, the Applicable
Rate shall be the interest rate set forth below opposite the
lower of the Moody's Rating or the S&P Rating assigned to
the Notes in effect at the close of business on that Rating
Adjustment Date, PROVIDED, HOWEVER, that, for purposes of
this clause (ii), if after a downward change in Rating
category the Moody's Rating and the S&P Rating assigned to
the Notes differ by more than one Rating category, the
Applicable Rate shall be the interest rate set forth
opposite the Rating category that is one Rating category
below the higher of the two Ratings in effect at the close
of business on the Rating Adjustment Date. Notwithstanding
the foregoing, if both Moody's and S&P, on the same day,
change their respective Ratings assigned to the Notes and
one such change is an upward change while the other such
change is a
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
downward change, the Applicable Rate shall be determined in
accordance with clause (ii) above, including the proviso
thereto.
INTEREST
CATEGORY MOODY'S S&P RATE
A3 or higher A- or higher 7.760 %
Baa1 BBB+ 8.010 %
Baa2 BBB 8.260 %
Baa3 BBB- 8.510 %
Ba1 BB+ 9.830 %
Ba2 BB 10.580%
Ba3 BB- 11.330%
B1 B+ 11.875%
B2 B 12.580%
B3 or lower B- or lower 13.080%
</TABLE>
<TABLE>
<S> <C>
If an Investment Grade Triggering Event has occurred, the
Notes will not be redeemable at the option of the Company
until the fifteenth day following the date of the Investment
Grade Triggering Event. If on such fifteenth day an
Investment Grade Locking Event does not occur, the Notes
will be redeemable at the option of the Company as described
above. If on such fifteenth day an Investment Grade Locking
Event occurs, the Notes will not be redeemable at the option
of the Company prior to August 1, 2011, and thereafter the
Notes may be redeemed at the option of the Company at a
redemption price equal to 100% of the principal amount of
the Notes, plus accrued and unpaid interest, if any, to the
redemption date. See "Description of Notes -- Principal,
Maturity and Interest."
RANKING............................ The Notes will be unsecured and will rank PARI PASSU in
right of payment with all existing and future Senior
Indebtedness of the Company and senior in right of payment
and in rights upon liquidation to all existing and future
Subordinated Indebtedness of the Company. Obligations of the
Company's Subsidiaries (as defined), however, will represent
prior claims with respect to the assets and earnings of such
Subsidiaries. See "Description of Notes -- Ranking."
Borrowings by the Company under the Credit Agreement
constitute Senior Indebtedness and are secured by a
substantial portion of the assets of the Company. See
"Credit Agreement." The Company's First Mortgage Notes
constitute Senior Indebtedness and are secured by certain of
the assets of the Company.
COVENANTS PRIOR TO INVESTMENT GRADE
LOCKING EVENT..................... The Indenture relating to the Notes will contain certain
covenants that, among other things, will (i) limit the
ability of the Company to grant, create or permit to exist
any Lien (as defined), (ii) proscribe the use of certain
proceeds of certain Asset Dispositions (as defined), (iii)
restrict the ability of the Company and its Restricted
Subsidiaries, subject to certain exceptions, to pay
dividends or make distributions with respect to shares of
the Company's capital stock or acquire or retire
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
capital stock of the Company, (iv) subject to certain
significant exceptions, restrict the ability of the Company
and its Restricted Subsidiaries to create, incur or
guarantee Indebtedness, (v) require the Company to make
certain offers to repurchase Notes in the event that the
Company's Subordinated Capital Base (as defined) is less
than a specified level and (vi) restrict the ability of the
Company to enter into certain mergers and consolidations.
See "Description of Notes -- Certain Non-Investment Grade
Covenants."
COVENANTS AFTER INVESTMENT GRADE
LOCKING EVENT..................... Upon the occurrence of an Investment Grade Locking Event,
certain of the covenants described in the preceding
paragraph will cease to apply or will be modified. The
Indenture will contain covenants that, following the
occurrence of an Investment Grade Locking Event, will, among
other things, (i) limit the Company's ability to pledge, or
create or incur liens with respect to, certain of its
assets, (ii) restrict the ability of the Company to enter
into certain mergers or consolidations, and (iii) limit the
Company's ability to enter into sale-leaseback transactions.
See "Description of Notes -- Certain Investment Grade
Covenants" and "Description of Notes -- Certain Non-
Investment Grade Covenants -- Restriction on Mergers and
Consolidations and Sales of Assets."
CHANGE OF CONTROL.................. Upon the occurrence of a Change of Control (as defined), the
Company is required to offer to repurchase each holder's
Notes at a purchase price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest,
if any, to the date of repurchase. See "Description of Notes
-- Change of Control."
</TABLE>
9
<PAGE>
SUMMARY FINANCIAL DATA
The following summary Statement of Operations and Balance Sheet Data for the
five years ended December 31, 1995 have been derived from, and should be read in
conjunction with, the related audited consolidated financial statements and
accompanying notes of the Company in the Company's Annual Reports on Form 10-K
for the years ended December 31, 1995, 1994, 1993, 1992 and 1991. The summary
financial data for the three and six months ended June 30, 1996 and June 30,
1995 have been derived from, and should be read in conjunction with, the
unaudited consolidated financial statements for the quarters ended June 30, 1996
and June 30, 1995 of the Company in the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996 incorporated by reference in this
Prospectus. The summary financial data for the three and six months ended June
30, 1996 do not purport to be indicative of the Company's future results of
operations or financial position for any future interim period or the entire
year.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
(UNAUDITED) (UNAUDITED)
----------------------- -----------------------
1996 1995 1996 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $1,282,260 $1,963,558 $2,603,783 $3,782,817
Cost of products sold.............. 1,012,981 1,382,857 1,985,205 2,671,571
Selling, general and administrative
expenses.......................... 155,975 149,198 309,687 304,210
Depreciation and amortization...... 78,976 92,671 157,944 188,624
Income (loss) before interest
expense, income taxes, minority
interest, extraordinary charges
and cumulative effects of
accounting changes................ 60,206 350,975 205,846 640,667
Interest expense................... 101,543 118,101 201,093 239,481
Income (loss) before income taxes,
minority interest, extraordinary
charges and cumulative effects of
accounting changes................ (41,337) 232,874 4,753 401,186
Extraordinary charges from early
extinguishments of debt (net of
income tax benefits).............. (14) (3,089) (14) (3,089)
Cumulative effects of accounting
changes (b)....................... -- -- -- --
Net income (loss).................. (21,167) 127,963 11,293 224,759
Income (loss) per common share
before extraordinary charges and
cumulative effects of accounting
changes:
Primary.......................... (.23) 1.42 .07 2.46
Fully diluted.................... (d) 1.12 (d) 1.97
Net income (loss) per common share:
Primary.......................... (.23) 1.39 .07 2.43
Fully diluted.................... (d) 1.09 (d) 1.94
Ratio of earnings to fixed
charges........................... (e) 2.76 (e) 2.50
Dividends paid per common share
(c)............................... $ .15 -- $ .30 --
Average common shares outstanding:
Primary.......................... 99,160 90,806 99,391 90,788
Fully diluted.................... (d) 117,931 (d) 118,390
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1995 1994 1993 1992 (A) 1991
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $7,351,189 $5,748,723 $5,059,579 $5,520,655 $5,384,291
Cost of products sold.............. 5,168,930 4,564,333 4,223,444 4,473,746 4,287,212
Selling, general and administrative
expenses.......................... 608,534 568,238 512,174 543,519 522,780
Depreciation and amortization...... 371,801 358,843 346,811 329,234 273,534
Income (loss) before interest
expense, income taxes, minority
interest, extraordinary charges
and cumulative effects of
accounting changes................ 1,254,980 292,938 (36,598) 162,107 385,113
Interest expense................... 460,305 456,042 426,726 386,122 397,357
Income (loss) before income taxes,
minority interest, extraordinary
charges and cumulative effects of
accounting changes................ 794,675 (163,104) (463,324) (224,015) (12,244)
Extraordinary charges from early
extinguishments of debt (net of
income tax benefits).............. (189,008) (61,584) -- -- --
Cumulative effects of accounting
changes (b)....................... -- (14,189) (39,544) (99,527) --
Net income (loss).................. 255,449 (204,598) (358,729) (269,437) (49,149)
Income (loss) per common share
before extraordinary charges and
cumulative effects of accounting
changes:
Primary.......................... 4.64 (1.60) (4.59) (2.49)(c) (.78)(c)
Fully diluted.................... 3.89 (d) (d) (d) (d)
Net income (loss) per common share:
Primary.......................... 2.63 (2.46) (5.15) (3.89)(c) (.78)(c)
Fully diluted.................... 2.24 (d) (d) (d) (d)
Ratio of earnings to fixed
charges........................... 2.52 (e) (e) (e) (e)
Dividends paid per common share
(c)............................... $ .30 -- -- $ .35 $ .71
Average common shares outstanding:
Primary.......................... 94,132 88,195 71,163 70,987(c) 63,207(c)
Fully diluted.................... 114,674 (d) (d) (d) (d)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
(UNAUDITED) (UNAUDITED)
----------------------- -----------------------
1996 1995 1996 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
BALANCE SHEET DATA (at end of
period):
<S> <C> <C> <C> <C>
Working capital.................... $ 845,732 $1,207,796 $ 845,732 $1,207,796
Property, plant and equipment --
net............................... 2,591,704 3,455,596 2,591,704 3,455,596
Goodwill........................... 533,427 869,312 533,427 869,312
Total assets....................... 6,430,125 7,301,542 6,430,125 7,301,542
Long-term debt (f)................. 3,861,716 4,500,221 3,861,716 4,500,221
Stockholders' equity............... 963,267 942,451 963,267 942,451
OTHER DATA:
Net cash provided by (used in)
operating activities.............. $ 79,807 $ 222,509 $ 164,663 $ 328,605
Capital expenditures............... 60,472 113,495 102,285 182,000
Paperboard, paper and market pulp:
Produced (thousand tons)......... 1,697 2,038 3,429 4,126
Converted (thousand tons)........ 1,092 1,090 2,170 2,234
Corrugated shipments (billion sq.
ft.).............................. 13.4 13.4 26.5 27.1
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1995 1994 1993 1992 (A) 1991
BALANCE SHEET DATA (at end of
period):
<S> <C> <C> <C> <C> <C>
Working capital.................... $ 981,125 $ 785,504 $ 809,504 $ 756,964 $ 770,457
Property, plant and equipment --
net............................... 2,635,819 3,358,994 3,386,395 3,703,248 3,520,178
Goodwill........................... 545,534 860,175 910,534 983,499 1,126,100
Total assets....................... 6,398,918 7,004,872 6,836,661 7,026,973 6,902,852
Long-term debt (f)................. 3,885,035 4,431,949 4,268,277 4,104,982 4,046,379
Stockholders' equity............... 1,005,271 648,009 607,019 1,102,691 1,537,543
OTHER DATA:
Net cash provided by (used in)
operating activities.............. $ 961,721 $ 72,313(g) $ (129,092)(g) $ 120,836(g) $ 247,234(g)
Capital expenditures............... 386,484 232,601(h) 149,739(h) 281,446(h) 430,131(h)
Paperboard, paper and market pulp:
Produced (thousand tons)......... 7,980 7,928 7,475 7,517 7,365
Converted (thousand tons)........ 4,355 4,477 4,354 4,373 4,228
Corrugated shipments (billion sq.
ft.).............................. 52.97 54.09 52.48 51.67 49.18
</TABLE>
- ------------------------
(a) Restated to reflect the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" retroactive to January 1,
1992.
(b) Reflects cumulative effects of changes in accounting for (i) post-employment
benefits in 1994, (ii) post-retirement benefits in 1993 and (iii) income
taxes in 1992.
(c) Amounts per common share and average common shares outstanding have been
adjusted to reflect a 2% common stock dividend issued September 15, 1992. On
July 22, 1996, the Company declared a quarterly cash dividend of $0.15 per
share of common stock, payable on September 13, 1996.
(d) Fully diluted amounts and average common shares outstanding have not been
presented because amounts are either anti-dilutive or, when compared to
primary earnings per share, the potential dilutive effect is less than 3%.
Furthermore, in 1991, fully diluted amounts were not applicable because the
Company did not have any convertible securities outstanding.
(e) The Company's earnings for the three and six months ended June 30, 1996 and
the years ended December 31, 1994, 1993, 1992 and 1991 were insufficient to
cover fixed charges by $60.3 million, $41.1 million and $168.1 million,
$466.5 million, $270.1 million and $94.6 million, respectively.
(f) Includes approximately $252.9 million and $660.6 million as of June 30,
1996 and 1995, respectively, and $268.6 million, $783.8 million, $672.6
million and $574.8 million and $573.3 million as of December 31, 1995, 1994,
1993, 1992 and 1991, respectively, of long-term debt of consolidated
subsidiaries that is non-recourse to the parent.
(g) Adjusted to conform with the current financial statement presentation.
(h) Includes approximately $5.1 million, $14.6 million, $79.1 million and $219.8
million for 1994, 1993, 1992 and 1991, respectively, of expenditures
financed through project financings.
11
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE RISK FACTORS SET FORTH
BELOW AND OTHER INFORMATION INCLUDED ELSEWHERE OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS.
ABILITY OF THE COMPANY TO MAKE PAYMENTS
The Company's ability to make payments under the Notes depends upon the
Company's future performance, which is subject to many factors, several of which
are beyond the Company's control. While the Company expects to have funds
available sufficient to pay debt service with respect to the Notes when due, no
representation or assurance can be made that revenues will be realized by the
Company in amounts sufficient to make such payments. The future financial
condition of the Company could be adversely affected by, among other things,
demand for and sale prices of paper products, cost of raw materials and other
production costs, competition, general economic developments affecting the
Company, future access to credit markets to finance operations and refinance
existing indebtedness, environmental and other regulations and other
developments that cannot now be foreseen. Such factors may materially and
adversely affect the ability of the Company to make payments with respect to the
Notes.
SIGNIFICANT LEVERAGE AND DEBT SERVICE REQUIREMENTS
The Company has significant payment obligations under the Notes, in addition
to the Company's other indebtedness. As a result of indebtedness incurred by the
Company to finance the acquisition of Stone Container (Canada) Inc. (formerly
known as Consolidated-Bathurst, Inc.) in 1989 and indebtedness incurred to fund
operating losses incurred during the cyclical downturn from 1991-1994, the
Company is highly leveraged. The Company's total long-term indebtedness and
long-term debt to total capitalization ratio were 3.9 billion and 73.0%,
respectively, at June 30, 1996, which does not include the Notes or the SCFC
Notes (as defined below). Capitalization, for purposes of these ratios, includes
long-term debt (which at June 30, 1996 includes $252.9 million of indebtedness
of certain consolidated affiliates that is non-recourse to the Company),
deferred income taxes, minority interest and stockholders' equity.
Because it is highly leveraged, the Company will continue to require access
to significant funds in order to service its debt, including significant
amortization payments due beginning in 1997 and continuing thereafter. The
amounts of long-term debt (excluding capitalized lease obligations) outstanding
at June 30, 1996 maturing through 2001 and thereafter are as follows:
<TABLE>
<CAPTION>
THE COMPANY NON-RECOURSE
(EXCLUDING NON-RECOURSE INDEBTEDNESS OF
INDEBTEDNESS OF CERTAIN CONSOLIDATED
(IN MILLIONS) CERTAIN SUBSIDIARIES) SUBSIDIARIES(1) TOTAL
<S> <C> <C> <C>
July 1 - December 31, 1996.................... $ 11.6 $ 19.8 $ 31.4
1997.......................................... 235.6 20.0 255.6
1998.......................................... 470.6 18.9 489.5
1999.......................................... 449.1(2) 31.7 480.8(2)
2000.......................................... 506.5 28.3 534.8
2001.......................................... 594.5 28.3 622.8
Thereafter.................................... 1,518.9(3) 135.7 1,654.6(3)
</TABLE>
- ------------------------
(1) Includes non-recourse indebtedness of Stone Venepal (Celgar) Pulp Inc. of
$272.9 million and AB Specialty Packaging, Inc. of $9.8 million.
(2) The revolving credit facility and the supplemental revolving credit facility
under the Company's Credit Agreement mature in May 1999. This amount does
not include any additional borrowings that may be outstanding under the
revolving credit facility of the Credit Agreement as of its expiration.
12
<PAGE>
(3) Does not include the Notes or the Stone Container Finance Company of Canada
11 1/2% Senior Notes due 2006 (the "SCFC Notes"), issued August 16, 1996,
unconditionally guaranteed on a senior basis by the Company and of which
$200 million is outstanding as of August 31, 1996, and does not give effect
to the application of the proceeds therefrom.
In order to meet its amortization obligations, the Company will be required
to raise sufficient funds from operations and/or other sources and/or refinance
or restructure maturing indebtedness. No assurance can be given that financial
resources available to the Company will be sufficient to meet its debt service
obligations, including those on the Notes. If the Company is unable to generate
sufficient cash flow to meet its debt obligations, it may be required to pursue
other alternatives, including cost reductions, sales of assets, deferral of
certain capital expenditures and obtaining additional sources of funds.
The Company is a party to, and in certain instances is subject to the terms
and provisions of, various significant financial agreements, mortgages,
indentures, instruments, facilities, guarantees and other arrangements
(collectively, "Financial Obligations"). Certain of the Financial Obligations
evidence indebtedness that is secured by a substantial portion of the assets of
the Company. If such assets were utilized to support payment of or retire a
significant portion of the indebtedness evidenced by the Financial Obligations,
a substantial portion of the assets of the Company would be depleted. As of June
30, 1996, $1.8 billion or 45% of the Company's total indebtedness was secured by
pledges of, security interests in and mortgages of the Company's assets.
CYCLICALITY, OPERATING LOSSES AND PRICING
The markets for paper, packaging products and market pulp sold by the
Company are highly sensitive to changes in capacity of the paper industry and
cyclical changes in the economy, all of which can significantly impact demand
for and selling prices of the Company's products and thereby the Company's
profitability. The Company's product lines generally experienced declining
product prices from 1990 through the third quarter of 1993, which contributed to
the net losses incurred by the Company in each of the four years from 1991
through 1994. Improved economic conditions and demand/supply characteristics in
the paper industry enabled the Company to implement price increases for most of
its products beginning in October 1993. Pricing continued to improve in 1994 and
1995 through the third quarter of 1995. However, due to imbalance in the
demand/supply relationship for containerboard, corrugated containers and market
pulp during the third and fourth quarters of 1995, industry containerboard and
market pulp inventories rose significantly during that time. As a result of that
imbalance, containerboard and market pulp prices began declining during the
fourth quarter of 1995 with such declines continuing through the second quarter
of 1996, during which quarter the Company experienced a net loss of $21.1
million. In addition, prices for newsprint, which is the primary product of
Stone-Consolidated have also declined during the first and second quarters of
1996. The Company took market-related downtime at certain of its mills for
inventory balancing purposes in the last half of 1995 and in the first half of
1996. No assurance can be given that additional market-related downtime will not
be taken during the remainder of 1996.
As a consequence of these changes in the demand/supply characteristics for
the Company's products and recent decreases in the prices for those products,
operating results will be significantly reduced until demand increases as a
result of improvement in economic conditions. The Company's highly leveraged
capital structure makes it particularly vulnerable during industry down cycles,
which could adversely affect its financial flexibility and, as a result,
adversely affect its ability to service its debt obligations, including payment
with respect to the Notes.
FIBER SUPPLY AND PRICING
Wood fiber and recycled fiber, the principal raw materials used 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. The Company purchases or cuts a variety of species of
timber from which the Company utilizes wood fiber. 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. In
13
<PAGE>
addition, an increase in demand for the Company's and the paper industry's
products would result in greater demand for raw materials, and, coupled with
decreased sources of supply, could translate into higher raw material prices,
including a significant increase in the costs of recycled fiber.
The cost of recycled fiber is highly volatile. Over the last 18 months,
prices of old corrugated containers ("OCC") had risen to levels as high as $250
per ton and dropped to levels as low as $25 per ton. Currently the price of OCC
is $30-$90 per ton. It is possible that the increase in capacity of mills
utilizing recycled fiber may cause the price of OCC to rise. In addition,
increased utilization of recycled fiber may cause decreased sources of supply.
While the Company has not experienced any significant difficulty in obtaining
wood fiber and recycled fiber for its mills, there can be no assurance that this
will continue to be the case for any or all of its mills. See "Business -- Fiber
Supply."
COMPETITION
The paper, packaging products and market pulp produced by the Company are
sold in highly competitive markets. The Company faces competition from a variety
of sources, including other companies attempting to expand production through
the use of greater recycled fiber content products. The Company competes
directly with a number of such other producers, some of which have financial and
other resources greater than those of the Company. See "Business -- Markets and
Competition."
CREDIT AGREEMENT RESTRICTIONS
Borrowings under the Credit Agreement are secured by a substantial 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. The Credit Agreement also contains certain restrictions and limitations,
including those on capital expenditures, changes in control, payment of
dividends, sales of assets, lease payments, investments, additional
indebtedness, 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 indebtedness of $10
million or more of the Company and certain subsidiaries. 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 in the Credit Agreement).
The Company is required to maintain compliance with the prescribed financial
ratio tests, including indebtedness ratio and interest coverage ratio tests, and
other requirements contained in the Credit Agreement. Failure to maintain
compliance with such financial ratio tests or other requirements under the
Credit Agreement, in the absence of a waiver or amendment, would result in an
event of default and could lead to acceleration of the obligations under the
Credit Agreement. If waivers or amendments are requested by the Company, there
can be no assurance that the Company's bank lenders will grant such requests,
which, in turn, at the election of the holders of certain of the Company's other
indebtedness, could accelerate such other indebtedness. The failure to obtain
any such waivers or amendments would reduce the Company's flexibility to respond
to adverse industry conditions and could have a material adverse effect on the
Company. In September 1996, the Company will seek an amendment with respect to
certain covenants under the Credit Agreement for periods inclduing the fourth
quarter of 1996 and the first three quarters of 1997. See "Credit Agreement --
Covenants."
LEGAL AND ADMINISTRATIVE PROCEEDINGS
The Company is involved in various contract disputes, legal and
administrative proceedings and investigations of various types. Although any
litigation, proceeding or investigation has an element of uncertainty, the
Company believes that the outcome of any proceeding, lawsuit or claim that is
pending or threatened, or all of them combined, other than those described
specifically herein under "Business -- Legal Proceedings," would not have a
material adverse effect on its consolidated financial position, results of
operations or liquidity.
14
<PAGE>
ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive environmental regulation
by federal, state and local authorities in the United States and regulatory
authorities with jurisdiction over its foreign operations. The Company has in
the past made significant capital expenditures to comply with water, air and
solid and hazardous waste regulations and expects to make significant
expenditures in the future. Capital expenditures for environmental control
equipment and facilities were approximately $36 million in 1995 and the Company
anticipates that 1996 and 1997 environmental capital expenditures will
approximate $61 million and $16 million, respectively (exclusive of any
potential expenditures which may be required if the proposed "cluster rules"
described below are adopted). Although capital expenditures for environmental
control equipment and facilities and compliance costs in future years will
depend on legislative and technological developments which cannot be predicted
at this time, the Company anticipates that these costs will increase when final
"cluster rules", as described below, are adopted and as other environmental
regulations are imposed on the Company. In addition to capital expenditures for
environmental control equipment and facilities, other expenditures incurred to
maintain environmental regulatory compliance (including any remediation)
represent ongoing costs to the Company.
In December 1993, the U.S. Environmental Protection Agency (the "EPA")
issued a proposed rule affecting the pulp and paper industry. These proposed
regulations, informally known as the "cluster rules," would make more stringent
requirements for discharge of wastewaters under the Clean Water Act and would
impose new requirements on air emissions under the Clean Air Act. Pulp and paper
manufacturers (including the Company) have submitted extensive comments to the
EPA on the proposed regulations in support of the position that requirements
under the proposed regulations are unnecessarily complex, burdensome and
environmentally unjustified. The EPA reopened the comment period on the proposed
regulations to allow review and comment on new data that the industry submitted
to the agency on the industry's air toxic emissions. It cannot be predicted at
this time whether the EPA will modify the requirements in the final regulations
which are scheduled to be issued in 1996, with compliance required within three
years from such date. The Company is considering and evaluating the potential
impact of the rules, as proposed, on its operations and capital expenditures
over the next several years. Estimates, based on the currently proposed
regulations, indicate that the Company could be required to make capital
expenditures of $350 - $450 million during the period of 1996 through 1998 in
order to meet the requirements of the regulations, although it is possible this
range could decrease upon finalization of the rules. In addition, annual
operating expenses would increase by as much as $20 million beginning in 1998.
The ultimate financial impact of the regulations cannot be accurately estimated
at this time but will be affected by several factors, including the actual
requirements imposed under the final rules, advancements in control process
technologies, possible reconfiguration of mills and inflation.
The Company is from time to time subject to litigation and governmental
proceedings regarding environmental matters in which injunctive and/or monetary
relief is sought. The Company has been named as a potentially responsible party
("PRP") at a number of sites which are the subject of remedial activity under
the federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA" or "Superfund") or comparable state laws. Although the Company
is subject to joint and several liability imposed under Superfund, at most of
the multi-PRP sites there are organized groups of PRPs and costs are being
shared among PRPs. See "Business -- Legal Proceedings."
Future environmental regulations, including the final "cluster rules," may
have an unpredictable adverse effect on the Company's operations and earnings,
but they are not expected to adversely affect the Company's competitive
position.
RANKING OF THE NOTES
The Notes will be senior unsecured obligations of the Company and will rank
PARI PASSU in right of payment with all existing and future Senior Indebtedness
of the Company, including the indebtedness under the Credit Agreement and the
Company's $239 million outstanding principal amount of 11 7/8% Senior Notes due
1998, $150 million outstanding principal amount of 12 5/8% Senior Notes due
1998,
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$574 million outstanding principal amount of 9 7/8% Senior Notes due 2001, $497
million outstanding principal amount of 10 3/4% First Mortgage Notes due 2002
(the "First Mortgage Notes"), $199 million outstanding principal amount of
11 1/2% Senior Notes due 2004 and the Company's guaranty of $200 million
outstanding principal amount of SCFC Notes. As of June 30, 1996, the total
amount of outstanding Senior Indebtedness of the Company was approximately $3.7
billion (which amount includes existing revolving credit commitments of the
Company but does not reflect the issuance of the Notes or the SCFC Notes, and
does not give effect to the application of the proceeds therefrom).
A substantial portion of the Company's assets currently secure borrowings
outstanding under the Credit Agreement. At June 30, 1996, the Company had $767
million outstanding under the Credit Agreement. The Company's First Mortgage
Notes, of which there was $497 million outstanding as of June 30, 1996, are
secured by four of the Company's mills and related assets. In the event of the
Company's insolvency or liquidation, the claims of the lenders under the Credit
Agreement would have to be satisfied out of the collateral securing borrowings
under the Credit Agreement before any such assets would be available to pay
claims of holders of the Notes. Similarly, the holders of the First Mortgage
Notes would have to be satisfied out of the collateral under the indenture and
related security documents with respect to the First Mortgage Note before any
such assets would be available to pay claims of holders of the Notes. If the
lenders under the Credit Agreement and/or the First Mortgage Note trustee under
the First Mortgage Note indenture and the related security documents should
foreclose on their respective collateral, no assurance can be given that there
will be sufficient assets available in the Company to pay amounts due under the
Notes. In addition, obligations of the Company's Subsidiaries, including trade
payables of any such Subsidiaries, will represent prior claims with respect to
the assets and earnings of such Subsidiaries.
FUTURE ACCESS TO THE CAPITAL MARKETS
Giving effect to the Offering, the Company will have sold securities on a
number of occasions in the last two years for total proceeds in excess of $2.3
billion. The recent issuance of a substantial amount of securities may make it
difficult, at least in the near future, for the Company to access the capital
markets for further financings and therefore may limit the Company's sources of
future liquidity.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, and subject to the prior rights
of certain lenders under certain specified bank debt, the Company is required to
offer to purchase each holder's Notes at a purchase price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
the date of purchase. Such Change of Control provisions in and of themselves may
not afford holders of the Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect such holders if such transaction
is not the type of transaction included within the definition of Change of
Control. See "Description of Notes -- Change of Control." There can be no
assurance that the Company would have sufficient funds to pay the required
purchase price for all Notes tendered by the holders thereof in the event of a
Change of Control. Neither the Board of Directors of the Company nor the Trustee
under the Indenture (as defined) relating to the Notes may waive the Change of
Control provisions.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the holders of the Old Notes. The Old
Notes were offered and sold to a small number of institutional investors and are
eligible for trading in the Private Offerings, Resale and Trading through
Automatic Linkages ("PORTAL") Market. Prior to the Exchange Offer, there has
been no market for the New Notes. The Company will apply for listing of the New
Notes on the NYSE. Future trading prices of the New Notes will depend upon many
factors including prevailing interest rates, the Company's operating results and
the market for similar securities.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
As a condition to the obligations of the Initial Purchasers under the
Purchase Agreement relating to the offering of the Old Notes (the "Purchase
Agreement"), the Company and the Initial Purchasers entered into the
Registration Rights Agreement on July 24, 1996. Pursuant to the Registration
Rights Agreement the Company agreed (i) to file with the Commission a
registration statement under the Securities Act with respect to the New Notes
within 60 days after the Closing Date, (ii) to use its best efforts to cause
such registration statement to become effective under the Securities Act as soon
as practicable, but in no event later than 120 days after the Closing Date, and
(iii) unless the Exchange Offer would not be permitted by applicable law or
Commission policy, the Company will commence the Exchange Offer and use its best
efforts to issue on or prior to 60 business days after the date on which the
Exchange Offer Registration Statement was declared effective by the Commission,
New Notes in exchange for all Old Notes tendered prior thereto in the Exchange
Offer. A copy of the Registration Rights Agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. This
Registration Statement is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement and the Purchase Agreement.
Following the Consummation (as defined under "-- Termination of Certain
Rights") of the Exchange Offer, except as set forth below, holders of Old Notes
not tendered will not have any further registration rights or rights to receive
certain specified liquidated damages and the Old Notes will continue to be
subject to certain restrictions on transfer. See "-- Holders Prohibited from
Participating in Exchange Offer," "-- Termination of Certain Rights" and "--
Consequences of Failure to Exchange." Accordingly, the liquidity of the market
for the Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to the Expiration Date. The Company
will issue $1,000 principal amount of New Notes in exchange for each $1,000
principal amount of outstanding Old Notes accepted in the Exchange Offer.
Holders may tender some or all of their Old Notes pursuant to the Exchange
Offer. However, Old Notes may be tendered only in integral multiples of $1,000
principal amount.
The form and terms of the New Notes are the same in all material respects as
the form and terms of the Old Notes except that (i) the New Notes will have been
registered under the Securities Act and hence will not bear legends restricting
their transfer pursuant to the Securities Act and (ii) holders of New Notes will
not be entitled to certain rights of holders of Old Notes under the Registration
Rights Agreement which will terminate upon the Consummation of the Exchange
Offer. The New Notes will evidence the same debt as the Old Notes (which they
replace) and will be issued under, and be entitled to the benefits of, the
Indenture governing the Old Notes.
As of the date of this Prospectus, $125,000,000 aggregate principal amount
of the Old Notes was outstanding and registered in the name of Cede & Co., as
nominee for The Depository Trust Company (the "Depository" or "DTC"). Only a
registered holder of Old Notes (or such holder's legal representative or
attorney-in-fact) as reflected on the records of the Trustee under the Indenture
may participate in the Exchange Offer. There will be no fixed record date for
determining registered holders of Old Notes entitled to participate in the
Exchange Offer.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Delaware General Corporation Law or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
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The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Notes for the purposes of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned (or,
in the case of Old Notes tendered by book-entry transfer through DTC, will be
credited to an account maintained with DTC), without expense, to the tendering
holder thereof as promptly as practicable after the Expiration Date. See "--
Procedures for Tendering."
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"-- Fees and Expenses."
HOLDERS PROHIBITED FROM PARTICIPATING IN EXCHANGE OFFER
The Registration Rights Agreement provides that if a holder of $1,000,000
aggregate principal amount or more of Notes notifies the Company within 20
business days following Consummation of the Exchange Offer that (A) such holder
was prohibited by law or Commission policy from participating in the Exchange
Offer or (B) such holder may not resell the New Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and this Prospectus
is not appropriate or available for such resales by such holder or (C) such
holder is a broker or dealer registered under the Exchange Act and holds Notes
acquired directly from the Company or one of its affiliates, then the Company is
required to file the Shelf Registration Statement. The Registration Rights
Agreement also provides that the Company will use its best efforts to keep the
Shelf Registration Statement continuously effective, supplemented and amended to
the extent necessary to ensure that it is available for sales of Old Notes by
the holders thereof entitled to the benefit of the Registration Rights
Agreement, for a period expiring on the earlier of (i) the date that all holders
of Old Notes who have properly requested registration have sold such securities
pursuant to the Shelf Registration Statement and (ii) July 24, 1999.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the
conditions set forth below under "-- Conditions of the Exchange Offer" shall not
have been satisfied, to terminate the Exchange Offer by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (iv) to
amend the terms of the Exchange Offer in any manner. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by a public announcement thereof. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendments by means of a prospectus
supplement that will be distributed to the registered holders of Old Notes, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to ten business day period.
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Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, termination or amendment of the Exchange
Offer, the Company shall not have an obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a registered holder of Old Notes may tender such Old Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign
and date the Letter of Transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
the Old Notes and any other required documents, to the Exchange Agent at the
address set forth below under "-- Exchange Agent" for receipt prior to the
Expiration Date; provided, however, that in lieu of the foregoing, a holder may
either (i) tender the Old Notes pursuant to the procedure for book-entry tender
set forth below, or (ii) comply with the guaranteed delivery procedure set forth
below.
The tender by a holder will constitute an agreement between such holder and
the Company in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTION FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. See "Instruction to
Registered Holder from Beneficial Owner" included with the Letter of
Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined) unless the
Old Notes tendered pursuant thereto are tendered (i) by a registered holder who
has not completed the box entitled "Special Delivery Instructions" on the Letter
of Transmittal, or (ii) for the account of an Eligible Institution. In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantee must be by a member
of one of the following signature guarantee programs: the Securities Transfer
Agents Medallion Program (STAMP), the New York Stock Exchange Medallion
Signature Program (MSP) and the Stock Exchange Medallion Program (SEMP) (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Notes listed therein, such Old Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered holder
as such registered holder's name appears on such Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
the Company, in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the
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terms and conditions of the Exchange Offer (including the instructions in the
Letter of Transmittal) will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Old Notes, neither the Company, the Exchange Agent nor any other person shall
incur any liability for failure to give such notification. Tenders of Old Notes
will not be deemed to have been made until such defects or irregularities have
been cured or waived. Any Old Notes received by the Exchange Agent that are not
validly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
By tendering, each registered holder will represent to the Company that,
among other things, (i) the New Notes to be acquired by the holder and any
beneficial owner(s) of Old Notes ("Beneficial Owner(s)") in connection with the
Exchange Offer are being acquired by the holder and any Beneficial Owner(s) in
the ordinary course of business of the holder and any Beneficial Owner(s), (ii)
the holder and each Beneficial Owner are not engaging in, do not intend to
engage in, and have no arrangement or understanding with any person to
participate, in the distribution of the New Notes, (iii) the holder and each
Beneficial Owner acknowledge and agree that any person participating in the
Exchange Offer for the purpose of distributing the New Notes must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the New Notes acquired by such
person and cannot rely on the position of the Staff of the Commission set forth
in no-action letters that are discussed under "Plan of Distribution", (iv) the
holder and each Beneficial Owner understands that a secondary resale transaction
described in clause (iii) above should be covered by an effective registration
statement containing the selling securityholder information required by Item 507
or 508, as applicable, of Regulation S-K of the Commission, and (v) neither the
holder nor any Beneficial Owner(s) is an "affiliate," as defined under Rule 405
of the Securities Act, of the Company except as otherwise disclosed to the
Company in writing.
EXCHANGING BOOK-ENTRY OLD NOTES
The Exchange Agent and DTC have confirmed that any financial institution
that has an account with DTC (a "Participant") may utilize DTC's Automated
Tender Offer Program ("ATOP") to tender Old Notes.
The Exchange Agent will request that DTC establish an account with respect
to the Old Notes for purposes of the Exchange Offer within two business days
after the date of the Exchange Offer. Any Participant may make book-entry
delivery of Old Notes by causing DTC to transfer such Old Notes into such
Exchange Agent's account in accordance with DTC's ATOP procedures for transfer.
However, the exchange for the Old Notes so tendered will only be made after
timely confirmation (a "Book-Entry Confirmation") of such book-entry transfer of
Old Notes into the Exchange Agent's account, and timely receipt by the Exchange
Agent of an Agent's Message (as defined) and any other documents required by the
Letter of Transmittal. The term "Agent's Message" means a message, transmitted
by DTC and received by the Exchange Agent and forming part of a Book-Entry
Confirmation, which states that DTC has received an express acknowledgment from
a Participant tendering Old Notes which are the subject of such Book-Entry
Confirmation that such Participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such Participant.
The method of delivery of Old Notes is at the option and risk of the
tendering holder and, except as otherwise provided in the Letter of Transmittal,
the delivery will be deemed to be made only when actually received by the
Exchange Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date or (iii) who cannot comply with the procedure for book-entry
tender on a timely basis, may effect a tender if:
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(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of the Old Notes being tendered,
stating that the tender is being made thereby and guaranteeing that, within
five business days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing the Old
Notes and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate (s) representing all tendered
Old Notes in proper form for transfer and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within five
business days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to
be withdrawn (including the certificate number or numbers (except in the case of
book-entry tenders) and principal amount at maturity (regardless of the means of
tendering) of such Old Notes), (iii) be signed by the holder in the same manner
as the original signature on the Letter of Transmittal by which such Old Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Old
Notes register the transfer of such Old Notes into the name of the Depositor
withdrawing the tender, and (iv) specify the name in which any such Old Notes
are to be registered, if different from that of the Depositor. If the Old Notes
have been tendered pursuant to the procedure for book-entry tender set forth
above under "Exchanging Book-Entry Old Notes," a notice of withdrawal must
specify, in lieu of certificate numbers, the name and account number at DTC to
be credited with the withdrawn Old Notes. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company in its sole discretion, which determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no New Notes will
be issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Properly withdrawn Old Notes may be retendered by following one of
the procedures described above under "Procedures for Tendering" at any time
prior to the Expiration Date.
Any Old Notes which have been tendered but which are not accepted for
exchange due to rejection of tender or termination of the Exchange Offer, or
which have been validly withdrawn, will be returned as soon as practicable to
the holder thereof without cost to such holder.
CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange New Notes for, any Old Notes,
and may terminate the Exchange Offer as provided herein before the acceptance of
such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or
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materially impair the contemplated benefits of the Exchange Offer to the
Company, or any material adverse development has occurred in any existing
action or proceeding with respect to the Company or any of its subsidiaries;
or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which, in the sole judgment of the Company, might materially
impair the ability of the Company to proceed with the Exchange Offer or
materially impair the contemplated benefits of the Exchange Offer to the
Company, or
(c) any law, statute, rule or regulation is proposed, adopted or
enacted, which, in the sole judgment of the Company, might materially impair
the ability of the Company to proceed with the Exchange Offer or materially
impair the contemplated benefits of the Exchange Offer to the Company; or
(d) any governmental approval has not been obtained, which approval the
Company shall, in its sole discretion, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
(or, in the case of Old Notes tendered by book-entry transfer through DTC,
promptly credit to an account maintained with DTC) all tendered Old Notes to the
tendering holders, (ii) extend the Exchange Offer and retain all Old Notes
tendered prior to the Expiration Date, subject, however, to the rights of
holders to withdraw such Old Notes (see "-- Withdrawal of Tenders") or (iii)
waive such unsatisfied conditions with respect to the Exchange Offer and accept
all validly tendered Old Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders, and the Company will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the waiver and the manner of disclosure to the registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
TERMINATION OF CERTAIN RIGHTS
Holders of the Old Notes to whom this Exchange Offer is made have special
rights under the Registration Rights Agreement that will terminate upon the
Consummation of the Exchange Offer. Under the Registration Rights Agreement, the
Exchange Offer shall be deemed consummated (the "Consummation") upon the
occurrence of (i) the filing and effectiveness under the Securities Act of a
registration statement relating to the New Notes to be issued in the Exchange
Offer, (ii) the maintenance of such registration statement continuously
effective and the keeping of the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
law (provided that in no event shall such Exchange Offer remain open and the
registration statement relating thereto remain continuously effective, in each
case, for less than 20 business days), and (iii) the delivery by the Company to
the Trustee under the Indenture of New Notes in the same aggregate principal
amount as the aggregate principal amount of Old Notes tendered by holders
thereof pursuant to the Exchange Offer. Such special rights which will terminate
include the right to require the Company to comply with the following: (a) to
file with the Commission a registration statement under the Securities Act with
respect to the New Notes on or before 60 days following the Closing Date, (b) to
use its reasonable best efforts to cause such registration statement to become
effective under the Securities Act as soon as practicable, but in no event later
than 120 days following the Closing Date, and (c) on or prior to 60 business
days after effectiveness of the registration statement, to commence the Exchange
Offer and offer to the holders of the Old Notes the opportunity to exchange
their Old Notes for a like principal amount at maturity of New Notes.
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EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent at (212) 815-2742
or addressed as follows:
BY OVERNIGHT COURIER/MAIL/HAND: BY FACSIMILE:
The Bank of New York The Bank of New York
Corporate Debt Operations Attn: Enrique Lopez
101 Barclay Street (212) 571-3080
Floor 7E
New York, NY 10286
Attn: Enrique Lopez
(Tel) 212/815-2742
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitations are being made by mail; however, additional
solicitations may be made by telegraph, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$ . Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Old Notes which are not exchanged for New Notes pursuant to the Exchange
Offer will remain restricted securities under the Securities Act. Accordingly,
such Old Notes may be resold only (i) to a person who the seller reasonably
believes is a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act ("QIB") in a transaction meeting the requirements of Rule 144A,
in a transaction meeting the requirements of Rule 144 under the Securities Act,
outside the U.S. to a foreign person in a transaction meeting the requirements
of Rule 904 under the Securities Act or in accordance with another exemption
from the registration requirements of the Securities Act (and based upon an
opinion of counsel if the Company so requests), (ii) to the Company or (iii)
pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any State of the United States
or any other applicable jurisdiction. Holders prohibited from participating in
the Exchange Offer have certain further registration rights under the
Registration Rights Agreement. See "-- Holders Prohibited from Participating in
Exchange Offer."
ACCOUNTING TREATMENT
The carrying value of the Old Notes is not expected to be materially
different from the fair value of the New Notes at the time of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company. The expenses of the Exchange Offer will be amortized by the Company
over the term of the New Notes.
23
<PAGE>
USE OF PROCEEDS
The Company will receive no proceeds from the exchange of New Notes for Old
Notes.
The net proceeds from the sale of Old Notes were $122,187,500, after
deducting fees and expenses of $2,812,500. The net proceeds will be used to fund
a portion of the redemption of the Company's 11 1/2% Senior Subordinated Notes
due September 1, 1999, in an aggregate amount of $224 million as of June 30,
1996.
24
<PAGE>
CAPITALIZATION
The following table sets forth a summary of the short-term debt and
capitalization of the Company, on a consolidated basis at June 30, 1996.
<TABLE>
<CAPTION>
JUNE 30, 1996
(DOLLARS IN
THOUSANDS)
<S> <C>
Short-term debt:
Notes payable............................................................................. $ 15,741
Current maturities of senior and subordinated long-term debt.............................. 186,589
Current maturities of debt of consolidated subsidiaries (non-recourse to parent).......... 29,738
-----------
Total short-term debt............................................................... $ 232,068
-----------
-----------
Long-term debt:
Senior debt (1):
Credit Agreement.......................................................................... $ 767,000
12 5/8% Senior Notes due July 15, 1998.................................................... 150,000
11 7/8% Senior Notes due December 1, 1998................................................. 239,379
9 7/8% Senior Notes due February 1, 2001.................................................. 573,757
10 3/4% First Mortgage Notes due October 1, 2002.......................................... 497,246
11 1/2% Senior Notes due October 1, 2004.................................................. 198,709
4% - 11 5/8% fixed rate debt and other variable rate debt (including capitalized lease
obligations)............................................................................. 305,763
Obligations under accounts receivable securitization program.............................. 260,000
Less: Current maturities.................................................................... (36,589)
-----------
Total senior long-term debt............................................................... 2,955,265
-----------
Subordinated debt:
10 3/4% Senior Subordinated Notes due June 15, 1997....................................... 150,000
11% Senior Subordinated Notes due August 15, 1999......................................... 125,000
11 1/2% Senior Subordinated Notes due September 1, 1999................................... 224,300
10 3/4% Senior Subordinated Debentures due April 1, 2002.................................. 199,303
8 7/8% Convertible Senior Subordinated Notes due July 15, 2000............................ 59,676
6 3/4% Convertible Subordinated Debentures due February 15, 2007.......................... 45,241
Less: Current maturities.................................................................... (150,000)
-----------
Total subordinated long-term debt......................................................... 653,520
-----------
Debt of consolidated subsidiaries (non-recourse to parent).................................. 282,669
Less: Current maturities.................................................................... (29,738)
-----------
Total long-term debt of consolidated subsidiaries (non-recourse to parent)................ 252,931
-----------
Total long-term debt...................................................................... 3,861,716
-----------
Stockholders' equity:
$1.75 Series E Cumulative Convertible Exchangeable Preferred Stock (4,600,000 shares, $25
per share liquidation preference)........................................................ 114,983
Common stock.............................................................................. 952,983
Retained earnings......................................................................... 75,282
Foreign currency translation adjustment................................................... (177,549)
Unamortized expense of restricted stock plan.............................................. (2,432)
-----------
Total stockholders' equity.......................................................... 963,267
-----------
Total capitalization.................................................................. 4,824,983
-----------
Total short-term debt and capitalization.............................................. $ 5,057,051
-----------
-----------
</TABLE>
- ------------------------
(1) Does not include the Notes or the SCFC Notes, of which $200 million is
outstanding as of August 31, 1996, and does not give effect to the
application of proceeds therefrom.
25
<PAGE>
BUSINESS
The Company is a major international pulp and paper company engaged
principally in the production and sale of paper, packaging products, and market
pulp. The Company believes that it is the world's largest producer of unbleached
containerboard and kraft paper and the world's largest converter of those
products into corrugated containers and paper bags and sacks. The Company also
believes that it is one of the world's largest paper companies in terms of
annual tonnage, having produced approximately 8.0 million and 7.9 million total
tons of paper and pulp in 1995 and 1994, respectively. The Company produced
approximately 5.0 million and 5.2 million tons of unbleached containerboard and
kraft paper in 1995 and 1994, respectively, which accounted for approximately
63% and 66% of its total tonnage produced for 1995 and 1994 respectively. The
Company had net sales of approximately $7.4 billion and $5.7 billion in 1995 and
1994, respectively, and had net income of $255.5 million in 1995 and a net loss
of $204.6 million in 1994. The Company owns or has an interest in 130
manufacturing facilities in the United States, 31 in Canada, 16 in Germany,
seven each in France and Venezuela, two each in Australia, Belgium and the
United Kingdom and one each in China, Mexico and the Netherlands. These
facilities include 26 mills. The Company also maintains sales offices in the
United States, Canada, the United Kingdom, Germany, Belgium, France, Mexico,
China and Japan and has forestry operations in Costa Rica and Venezuela. The
principal executive offices of the Company are at 150 North Michigan Avenue,
Chicago, Illinois 60601, and the Company's telephone number is (312) 346-6600.
The following table presents actual annual production capacity of the
Company at December 31, 1995 and December 31, 1994:
<TABLE>
<CAPTION>
TOTAL
1995 1994
(SHORT TONS IN
THOUSANDS)
<S> <C> <C>
United States (1)..................................................... 5,611 5,538
Canada (2)(3)......................................................... 2,164 2,357
Europe (3)............................................................ 505 650
--------- ---------
8,280 8,545
--------- ---------
--------- ---------
</TABLE>
- ------------------------
(1) Includes 100% of Seminole Kraft Corporation ("Seminole") mill. Effective
April 30, 1995, Seminole was merged into the Company.
(2) Includes 45% of the Celgar mill. Effective December 31, 1994, the Company
indirectly acquired an additional 20% of the Celgar mill, thereby increasing
its ownership interest from 25% to 45%.
(3) Includes 100% of Stone-Consolidated for 1994 and approximately 47% for 1995.
PAPERBOARD AND PAPER PACKAGING
The Company believes that its integrated unbleached paperboard and paper
packaging business is the largest in the world with 16 mills and 149 converting
plants located throughout the United States and Canada, and in Europe, Australia
and China. The major products in this business are containerboard and corrugated
containers, which are primarily sold to a broad range of manufacturers of
consumable and durable goods; kraft paper and paper bags and sacks, which are
sold primarily to supermarket chains, retailers of consumer products and, in the
case of multiwall shipping sacks, to the agricultural, chemical and cement
industries; and boxboard and folding cartons, which are sold to manufacturers of
consumable goods and other box manufacturers. The unbleached packaging business
of the Company has an annual capacity of approximately 5.5 million tons and is
more than 80% integrated. In 1995, total sales for the paperboard and paper
packaging business of the Company were approximately $5.4 billion, or
approximately 74% of total consolidated sales.
The paperboard and packaging business requires a large volume of recycled
fiber for its paperboard and paper packaging business. In 1995, the Company
processed approximately 2.6 million tons
26
<PAGE>
of recycled fiber. Recycled fiber is obtained from a variety of sources,
including through Paper Recycling International L.P. ("PRI"), a fifty
percent-owned joint venture. PRI is paid a fee by the Company for procuring
recycled fiber. See "-- Fiber Supply."
CONTAINERBOARD AND CORRUGATED SHIPPING CONTAINERS
The Company believes it is the world's largest producer of containerboard,
of which more than 80% is converted by the Company into corrugated shipping
containers. The Company's total sales of corrugated shipping containers in 1995
were $3.1 billion.
The Company's mills produce containerboard, including unbleached kraft
linerboard, recycled linerboard, medium and paper. Containerboard tons produced
and converted for the last three years were:
<TABLE>
<CAPTION>
1995 1994 1993
(SHORT TONS IN THOUSANDS)
<S> <C> <C> <C>
Containerboard
Production........................................................... 4,623.5 4,694.3 4,388.1
Converted............................................................ 3,741.9 3,789.2 3,709.5
</TABLE>
Containerboard is produced at the Company's mills located in Snowflake,
Arizona; Jacksonville, Florida; Panama City, Florida; Port Wentworth, Georgia;
Hoya, Germany; Hodge, Louisiana; Missoula, Montana; New Richmond, Quebec;
Florence, South Carolina and Hopewell, Virginia. Corrugating medium is produced
at the Company's mills located in Uncasville, Connecticut; Hoya, Germany;
Viersen, Germany; Hodge, Louisiana; Ontonagon, Michigan; Bathurst, New
Brunswick; Coshocton, Ohio and York, Pennsylvania.
The Company's containerboard and corrugated container operations are more
than 80% integrated and the Company believes this integration enhances its
ability to respond quickly and efficiently to customers and to fill orders on
short lead times. The Company believes it is the largest producer of corrugated
shipping containers in the U.S., with more than 100 containerboard converting
operations. Corrugated shipping containers, manufactured from containerboard in
converting plants, are used to ship such diverse products as home appliances,
electric motors, small machinery, grocery products, produce, books, tobacco and
furniture, and for many other applications. The Company stresses the value-added
aspects of its corrugated containers, such as labeling and multi-color graphics,
to differentiate its products and respond to customer requirements. The
Company's container plants serve local customers and large national accounts and
are located in the United States, Australia, Belgium, Canada, China, France,
Germany and Mexico, generally in or near large metropolitan areas. Corrugated
shipping container sales volume for 1995, 1994 and 1993 were 53.0, 54.1 and 52.5
billion square feet, respectively.
KRAFT PAPER AND BAGS AND SACKS
The Company also has a highly integrated kraft paper and converted product
operation and is a net buyer of kraft paper from third parties. The Company
operates 18 paper converting facilities, which shipped approximately 574
thousand tons and 654 thousand tons of paper bags and sacks nationwide in 1995
and 1994, respectively. The Company believes it is the largest producer of
grocery bags and sacks. Kraft paper volume produced and converted for the last
three years was:
<TABLE>
<CAPTION>
1995 1994 1993
(TONS IN THOUSANDS)
<S> <C> <C> <C>
Kraft Paper
Production................................................................. 384.8 516.6 499.8
Converted.................................................................. 613.5 688.1 644.7
</TABLE>
The Company produces kraft paper and recycled paper for conversion into bags
and sacks at its mills in Snowflake, Arizona; Jacksonville, Florida; Panama
City, Florida; Hodge, Louisiana; Trois-Rivieres, Quebec and Florence, South
Carolina.
27
<PAGE>
Grocery bags and sacks are sold primarily to supermarket chains, and
merchandise bags are sold to retailers of consumer products. Multiwall shipping
sacks, considered a premium product, are sold to the agricultural, chemical and
cement industries, among other industries. The Company's total sales of bags and
sacks in 1995 were $743 million. In July 1996, the Company combined its retail
packaging business with that of Gaylord Container Corporation in a new joint
venture company.
MARKET PULP
The Company believes it has a major market position in North America in the
production of market pulp. The Company owns and operates five market pulp mills
in North America, including mills in Panama City, Florida; Port Wentworth,
Georgia; Bathurst, New Brunswick; and Portage-du-Fort, Quebec and including the
Celgar mill in Castlegar, British Columbia in which the Company has a 45%
interest. These mills have the capacity to produce 1.2 million tons of market
pulp annually and produced 1.1 million tons in 1995 (including 45% of the
production at the Celgar mill). Total sales of market pulp (including 45% of the
Celgar mill) approximated $750 million in 1995. In addition, Stone-Consolidated
owns and operates the Fort Frances, Ontario mill, which has an annual capacity
of approximately 130 thousand tons of market pulp. The geographic diversity of
the Company's mills enables the Company to offer its customers a product mix of
bleached northern and southern hardwood and bleached northern softwood pulp.
Market pulp is sold to manufacturers of paper products, including fine papers,
photographic papers, tissue and newsprint.
NEWSPRINT AND UNCOATED GROUNDWOOD PAPER
The Company has an equity interest of approximately 47% in
Stone-Consolidated, which is the resulting entity from the Amalgamation of the
Company's formerly 75% owned subsidiary of the same name and Rainy River Forest
Products, Inc. The Company accounts for Stone-Consolidated in accordance with
the equity method of accounting. The Company believes that Stone-Consolidated is
the largest producer of uncoated groundwood paper in North America and one of
the two largest in the world, and the second largest producer and largest
marketer of newsprint in the world. Stone-Consolidated has an annual production
capacity of 2.4 million tons of newsprint (including the Company's newsprint
mill in Snowflake, Arizona, the entire production of which is sold by
Stone-Consolidated on a commission basis, and Boise Cascade Corporation's
newsprint mill in DeRidder, Louisiana, the entire production of which is
purchased at a discount and sold by Stone-Consolidated) and 803 thousand tons of
uncoated groundwood paper. Newsprint is marketed to newspaper publishers and
commercial printers. Uncoated groundwood paper is sold for use primarily in
newspaper inserts, retail store advertising fliers, magazines, telephone
directories and as computer paper.
NEWSPRINT
Stone-Consolidated owns and operates five newsprint mills located in
Shawinigan (Belgo mill) and Ville de La Baie (Port Alfred mill), Quebec; Kenora,
Ontario; West Tacoma, Washington and Ellesmere Port (Bridgewater mill), United
Kingdom. The Company owns and operates a fully integrated newsprint mill in
Snowflake, Arizona, the output of which Stone-Consolidated sells on a commission
basis. In addition, Stone-Consolidated also purchases at a discount and sells
the output of Boise Cascade Corporation's newsprint mill in DeRidder, Louisiana.
Stone-Consolidated's production of newsprint for 1995, on a pro forma basis
adjusted to reflect the effect of the Amalgamation as if it occurred January 1,
1995, was approximately 1.5 million tons. Sales of newsprint for
Stone-Consolidated on the same pro forma basis were approximately $1.2 billion.
Newsprint is primarily purchased by newspaper publishers and commercial
printers.
The newsprint produced by the Company contains a significant percentage of
recycled fiber from de-inked pulp using flotation de-inking ("FDI") technology.
Management believes that the ability to produce newsprint with recycled content
has become an important competitive factor. Management anticipates that the
demand for newsprint with recycled content will continue to grow as a result of
further legislative activity and customer preferences, although at a slower rate
than in recent years. While an increasing number of producers are gaining the
ability to supply newsprint with recycled content, management believes its
de-inking facilities and the relative proximity of the mills to reliable sources
of
28
<PAGE>
waste paper from urban centers will give the Company a competitive advantage
with customers who demand newsprint with recycled content, although there can be
no assurances that the Company will be able to maintain such a competitive
advantage.
UNCOATED GROUNDWOOD PAPERS
The principal uncoated groundwood paper production facilities which are
owned by Stone-Consolidated include five paper machines located at the
Grand-Mere (Laurentide) and Trois-Rivieres (Wayagamack), Quebec mills and an
uncoated groundwood paper mill in Fort Frances, Ontario; smaller quantities of
uncoated groundwood papers are also produced on other machines located at the
Ellesmere Port (Bridgewater) and Shawinigan (Belgo) mills. Stone-Consolidated's
production of uncoated groundwood papers for 1995, on a pro forma basis adjusted
to reflect the effect of the Amalgamation as if it occurred January 1, 1995, was
approximately 815 thousand tons. Sales of uncoated groundwood papers from
Stone-Consolidated on the same pro forma basis were approximately $583 million.
Uncoated groundwood papers are manufactured using production processes
similar to those used for newsprint but are generally of higher quality and
command higher prices and higher operating margins. The principal grades of
uncoated groundwood papers manufactured and sold by Stone-Consolidated are
directory papers, rotogravure and offset papers used in newspaper inserts,
retail store advertising fliers, Sunday magazines and other periodicals, bulky
book papers used for mass circulation paperback novels and form papers for use
in the manufacture of computer printout and other business forms. Major
customers for rotogravure and offset papers include major retailers, publishers
of Sunday magazines and other periodicals and major commercial printers. Major
customers for directory papers include telephone companies and independent
publishers of telephone directories and large commercial printers.
FIBER SUPPLY
Wood fiber, particularly from wood chips, and waste paper constitute the
basic raw materials for linerboard, corrugating medium, unbleached kraft paper
and market pulp. Wood fiber resources are available within economic proximity of
the mills, and the Company has not experienced any significant difficulty in
obtaining such resources, although environmental concerns in the Pacific
Northwest (including the designation of the spotted owl as a threatened species)
and the Southwestern United States have reduced the supply of wood in those
regions. Consistent with its strategy to obtain long-term wood fiber sources
without the costs associated with land ownership, the Company sold approximately
329 thousand acres of timberland during the years 1988 through 1992. This
acreage had been owned by Southwest Forest Industries, Inc., which was acquired
by the Company in 1987. At December 31, 1995, the Company owned approximately 9
thousand and 137 thousand acres of private fee timberland in the United States
and Canada, respectively. The Company assists certain landowners in the
southeastern United States in managing approximately 2.0 million acres of
timberland.
Wood fiber and recycled fiber 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, are 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.
The increase in demand for products manufactured, in whole or in part, from
recycled fiber has caused a tightness in supply of recycled fiber and a
resulting significant increase in the cost of such fiber used in the manufacture
of recycled containerboard and other products. As a result, the Company's costs
for recycled fiber increased significantly in 1995 and, although they have
moderated from the peak levels of 1995, such costs are likely to continue to
fluctuate based upon demand/supply characteristics. Given the volatility of the
recycled fiber market, there can be no assurance that such costs will not reach
29
<PAGE>
the peak levels of 1995. The Company's paperboard and paper packaging products
use a large volume of recycled fiber. 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.
MARKETS AND COMPETITION
The major markets in which the Company sells its principal products are
highly competitive. Its products compete with similar products manufactured by
others and, in some instances, with products manufactured from other materials.
Areas of competition include price, innovation, quality and service. The
Company's business is affected by cyclical industry conditions and economic
factors such as industry capacity, growth in the economy, interest rates,
unemployment levels and fluctuations in foreign currency exchange rates.
The Company's products and the raw materials needed to manufacture those
products have historically exhibited price and demand cyclicality. Cyclical
economic factors such as growth in the economy generally, interest rates,
unemployment levels and fluctuations in currency exchange rates as well as
certain industry conditions, such as production capacity, have had a significant
impact on prices and sales of the Company's products. The availability and cost
of wood fiber, including wood chips, and waste paper may be subject to
substantial variation, depending upon economic, political and conservation
considerations.
The Company's business is not dependent upon a single customer or upon a
small number of major customers. The loss of any one customer would not have a
material adverse effect on the Company.
Backlogs are not a significant factor in the industry in which the Company
operates; most orders placed with the Company are for delivery within 60 days or
less.
The Company owns patents, licenses, trademarks and tradenames on products.
The loss of any patent, license, trademark or tradename would not have a
material adverse effect on the Company's operations.
EMPLOYEES
As of December 31, 1995, the Company had approximately 25,900 employees, of
whom approximately 21,700 were employees of U.S. operations and the remainder
were employees of foreign operations. Of those in the United States,
approximately 14,000 are union employees.
LEGAL PROCEEDINGS
In November 1990, the U.S. Environmental Protection Agency ("EPA") announced
its decision to list two bodies of water in Arizona, Dry Lake and Twin Lakes, as
"waters of the United States" impacted by toxic pollutant discharges under
Section 304(l) of the federal Clean Water Act. These bodies of water have been
used by the Company's Snowflake, Arizona pulp and paper mill for the evaporation
of its process wastewater. The EPA is preparing a draft consent decree to
resolve the alleged past unpermitted discharges which will include the EPA's
proposal that the Company pay civil penalties in the amount of $900,000. The
Company has vigorously disputed the application of the Clean Water Act to these
two privately owned evaporation ponds. The Company has begun implementation of a
plan to use its wastewater to irrigate a biomass plantation and discontinue
using Dry Lake to evaporate wastewater. It is premature to predict the amount of
penalties, if any, that will eventually be assessed.
On October 27, 1992, the Florida Department of Environmental Regulation,
predecessor to the Department of Environmental Protection ("DEP"), filed a civil
complaint in the Fourteenth Judicial Circuit Court of Bay County, Florida
against the Company seeking injunctive relief, an unspecified amount of fines
and civil penalties, and other relief based on alleged groundwater contamination
at the Company's Panama City, Florida pulp and paperboard mill. In addition, the
complaint alleges operation of a solid waste facility without a permit and
discrepancies in hazardous waste shipping manifests. Because of
30
<PAGE>
uncertainties in the interpretation and application of DEP's rules, it is
premature to assess the Company's potential liability, if any, in the event of
an adverse ruling. At the parties' request, the case has been placed in abeyance
pending the conclusion of a related administrative proceeding petitioned by the
Company following DEP's proposal to deny to the Company a permit renewal to
continue operating its wastewater pretreatment facility at the mill site. The
administrative proceeding has been referred to a hearing officer for an
administrative hearing on the consolidated issues of compliance with a prior
consent order, denial of the permit renewal, completion of a contamination
assessment and denial of a sodium exemption. The consolidated cases were abated
at the parties' request and extensive settlement negotiations are being
conducted between the parties. The Company intends to vigorously assert its
entitlement to the permit renewal and to defend against the groundwater
contamination and unpermitted facility allegations in the event that a
settlement cannot be reached.
On April 20, 1994, Carolina Power & Light ("CP&L") commenced proceedings
(the "FERC Proceeding") against the Company before the Federal Energy Regulatory
Commission ("FERC") and in the United States District Court for the Eastern
District of North Carolina (the "Federal Court Action"). Both proceedings relate
to the Company's electric cogeneration facility located at its Florence, South
Carolina mill (the "Facility") and the Company's Electric Power Purchase
Agreement (the "Agreement") with CP&L.
In the FERC Proceeding, CP&L alleges that the Facility lost its qualifying
facility ("QF") certification under the Public Utility Regulatory Policy Act of
1978 on August 13, 1991, when the Agreement, pursuant to which CP&L purchases
electricity generated by the Facility, was amended to reflect the Company's
election under the Agreement to switch to a "buy-all/sell-all mode of
operation". As a result, CP&L alleges, the Company became a "public utility" on
August 13, 1991 subject to FERC regulation under the Federal Power Act. CP&L has
also requested that the FERC determine the "just and reasonable rate" for sales
of electric energy and capacity from the Facility since August 13, 1991 and
order the Company to refund any amounts paid in excess of that rate, plus
interest and penalties.
In its answer filed with the FERC on June 2, 1994, the Company stated that
its power sales to CP&L fully complied with the FERC's regulations. The Company
also requested that the FERC waive compliance with any applicable FERC
regulations in the event that the FERC should determine, contrary to the
Company's position, that the Company has not complied with the FERC's
regulations in any respect. If the FERC were to determine that the Company had
become a "public utility," the Company's issuance of securities and incurrence
of debt after the date that it became a "public utility" could be subject to the
jurisdiction and approval of the FERC unless the FERC granted a waiver. In the
absence of such a waiver, certain other activities and contracts of the Company
after such date could also be subject to additional federal and state regulatory
requirements, and defaults might be created under certain existing agreements.
Based on the past administrative practice of the FERC in granting waivers of
certain other regulations, the Company believes that it is likely that such a
waiver would be granted by the FERC in the event that such a waiver became
necessary.
In the Federal Court Action, CP&L has requested a declaratory judgment that
sales of electric energy and capacity under the Agreement since August 13, 1991
are subject to a just and reasonable rate to be determined by the FERC and that
the Agreement has been terminated as a result of the Company's failure to
maintain the Facility's QF status and the invalidity of the Agreement's rate
provisions. CP&L has also sought damages for breach of contract and for
purchases in excess of the just and reasonable rate to be determined by the
FERC. On June 9, 1994, the Company moved to dismiss CP&L's Federal Court Action
on the principal grounds that any proceedings in the United States District
Court are premature unless and until the FERC Proceeding is finally resolved. On
September 20, 1994, the United States District Court stayed the Federal Court
Action pending the outcome of the FERC proceeding.
The two proceedings are in their preliminary stages and no assurance can be
provided as to the timing of the decisions or the outcome of either of them. The
Company intends to contest these actions vigorously.
31
<PAGE>
On September 30, 1994, the EPA, Region IV, issued an Administrative Order
(the "Order") to the Company's Panama City mill pursuant to Section 3008(h) of
the Federal Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C.Section6928(h)(1). The Order requires the Company to perform a RCRA
Facility Investigation at the Panama City mill together with confirmatory
sampling, interim corrective measures and any other activities necessary to
correct alleged actual or threatened releases of hazardous substances or
hazardous constituents at or from the Panama City mill. The Company has filed a
protest and requested a hearing to contest the EPA's RCRA Section 3008(h)
jurisdiction over the Panama City mill and the parties have been engaged in
extensive settlement negotiations. The Company believes that the Panama City
mill is not currently a RCRA facility. The corrective measures mandated by the
Order would require the Company to conduct extensive groundwater and soil
sampling and analyses. The Company does not know at this time the likelihood of
success in challenging the Order. Notwithstanding the success in challenging the
Order, 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 from the property which may have migrated onto
the Panama City mill's property. 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.
On January 22, 1996, the United States of America filed a suit against the
Company in the United States District Court for the District of Montana seeking
injunctive relief and an unspecified amount in civil penalties based on the
alleged failure of the Company to comply with certain provisions of the Clean
Air Act ("CAA"), its implementing regulations, and the Montana State
Implementation Plan at the Company's Missoula, Montana kraft pulp mill (the
"Missoula Mill"). The complaint specifically alleges that the Company exceeded
the 20% opacity limitation for recovery boiler emissions, failed to properly set
the span on a recovery boiler continuous monitor, and concealed the emission of
an air contaminant by improperly venting non-condensible gases. The statutory
penalty for violations of the CAA is $25,000 per day for each day of violation.
The Company is reviewing the matter with counsel to assess its potential
liability. It is premature to predict the outcome of this matter at this time.
In a related matter, on November 27, 1995, the Company received notice from
several environmental groups that they intended to file citizens suits under the
CAA, the Federal Water Pollution Control Act ("CWA") and the Emergency Planning
and Community Right-to-Know Act ("EPCRA") against the Company based on alleged
violations of those Acts at the Missoula Mill. In December, 1995,
representatives of the Company met with representatives of the groups that sent
the notice to discuss the Company's position that the majority of the alleged
violations were not in excess of applicable permit limits or were excused
because they occurred during reported malfunctions or start-up or shutdown
conditions. On January 29, 1996, a Complaint was filed by the Montana Coalition
for Health, Environmental and Economic Rights Inc., Cold Mountain, Cold Rivers,
Inc. and Native Forest Network, Inc. (collectively, "Plaintiffs") in the United
States District Court for the District of Montana alleging numerous violations
of the provisions of the CAA, the CWA and the EPCRA. On February 7, 1996,
Plaintiffs filed an Amended Complaint seeking (1) a declaratory judgment that
the Company has violated Section 301(a) of the CWA, Section 502(a) of the CAA
and Section 313 of the EPCRA; (2) injunctive relief enjoining the Company from
operating the Missoula Mill in a manner as will result in further violations of
the CAA, CWA and EPCRA; and (3) civil penalties of $25,000 per day for each day
of alleged violation. The Company intends to vigorously contest the allegations.
In addition, the Company is involved in contractual disputes, administrative
and legal proceedings and investigations of various types other than those
described above. Although any such litigation, proceeding or investigation has
an element of uncertainty, the Company believes that the outcome of any such
proceeding, lawsuit or claim which is pending or threatened, or all of them
combined, other than those described above, would not have a material adverse
effect on its consolidated financial position, liquidity or results of
operations.
32
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT
In October 1994, the Company entered into a credit agreement which has been
amended and restated in August 1995 and March 1996 (as amended and restated the
"Credit Agreement"). The Credit Agreement consists of a $400 million senior
secured term loan maturing through April 1, 2000, $390 million senior secured
term loans maturing through October 1, 2003 and a $560 million senior secured
revolving credit facility commitment maturing May 15, 1999. The Credit Agreement
also provides for the issuance of letters of credit which, to the extent
utilized, will serve to reduce borrowing availability under the revolving credit
facility of the Credit Agreement.
The following summaries of certain provisions of the Credit Agreement do not
purport to be complete and are subject to, and are qualified in their entirety
by express reference to, all the provisions of the Credit Agreement, including
the definitions therein of certain terms. Certain capitalized terms under this
caption are defined in the Credit Agreement.
MATURITIES AND MANDATORY PREPAYMENTS
The initial $400 million term loan under the Credit Agreement will mature on
April 1, 2000. Amounts outstanding under the term loan amortize on a semi-annual
basis (April 1 and October 1) based upon the applicable percentage of the
principal amount of the initial term loan. Amortization amounts are .5% of
principal amount for the period from April 1, 1995 through April 1, 1999, 47.5%
on October 1, 1999 and 48.0% on April 1, 2000. The $390 million term loans will
mature on October 1, 2003. Amounts outstanding under the $390 million term loans
amortize on a semi-annual basis (April 1 and October 1) based upon the
applicable percentage of the initial principal amount of the additional term
loan. Amortization amounts for the $200 million term loan component are .5% of
principal amount for the period April 1, 1996 through October 1, 2002 and 46.5%
April 1 and October 1, 2003. Amortizations for the $190 million term loan
component are .5% of principal amount for the period from October 1, 1996
through October 1, 2002, 46.5% on April 1, 2003 and 47% on October 1, 2003. The
$560 million revolving credit facility will mature on May 15, 1999.
Mandatory prepayments are required under the term loan and additional term
loan portions of the Credit Agreement as follows: (i) 50% (subject to
performance-related step downs to 25%) of Excess Cash Flow (as defined in the
Credit Agreement) for each fiscal quarter, excluding the first $50 million of
Excess Cash Flow in each fiscal year; (ii) 100% of the net proceeds of (a) the
issuance or incurrence of additional indebtedness (excluding certain specified
refinancings and $400 million (the "Debt Basket") of other debt), and (b)
certain non-ordinary course asset sales (excluding $300 million (the "Asset
Basket") of proceeds from such sales (other than sales of Collateral or
collateral under the Credit Agreement pledged to the lenders under the Credit
Agreement (the "Bank Collateral")), in each case for which substitute collateral
is not provided). The lenders under the Credit Agreement have waived the
mandatory prepayment from Excess Cash Flow requirement for the fiscal quarters
ending June 30, 1995 through and including March 31, 1996. Additionally, the
Company has no mandatory prepayments under the $190 million term loan facility
until September 30, 1997, and Lenders of approximately 81% of the principal
amount of the other term loans have waived mandatory payments until September
30, 1997. All mandatory prepayments (except mandatory redemptions related to
sales of Bank Collateral) will be allocated entirely against the term loan and
additional term loan amortization in inverse order of maturity. In addition,
mandatory prepayments from sales of Bank Collateral (unless substitute
collateral has been provided) will be allocated pro rata between the term loan
and additional term loan (and applied in inverse order of maturity) on the one
hand and the revolving credit facility, on the other, and, in the case of the
revolving credit facility, will result in a corresponding permanent commitment
reduction.
At the Company's request, the holders of loans under the term loan or
additional term loan may, acting individually, waive their individual right to
any mandatory prepayment, in which case the amounts otherwise payable to such
holders may be retained by the Company. The cash flow in excess of the required
mandatory repayment, the net proceeds from the Debt Basket, the net proceeds
from the Asset
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<PAGE>
Basket, and waived prepayment obligations may be used for (i) general corporate
purposes, (ii) capital expenditures, acquisitions or investments in excess of
annual limitations (without reducing permitted basket amounts) and (iii)
prepayment of debt securities ("Permitted Uses").
The Company is also permitted to voluntarily reduce the unutilized portion
of the revolving credit facility and voluntarily prepay the term loan and
additional term loan, with voluntary term loan and additional term loan
prepayments to be applied against amortization in inverse order of maturity.
Voluntary prepayments of the term loan and additional term loan must be
proportionate with one another.
INTEREST RATES
The Credit Agreement permits the Company to choose among various interest
rate options for the revolving credit facility and the term loan and to specify
the interest rate period to which the interest rate options are to apply,
subject to certain parameters. The applicable interest rate options available to
the Company are: (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% (the alternative base rate ("ABR")) plus, in the case of (1) or (2),
1 5/8% per annum or (b) the London Interbank Offered Rate ("LIBOR") plus 2 5/8%
per annum; (ii) under the swing-line sub-facility, ABR plus 1 5/8% per annum;
(iii) under the term loan, ABR plus 2 1/8% per annum or LIBOR plus 3 1/8% per
annum; (iv) under the $200 million term loan and the $190 million term loan, ABR
plus 2 3/8% per annum or LIBOR plus 3 3/8% 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 pays a 1/2% commitment fee on the unused portions of the revolving
credit facility but without giving effect to reductions in availability for
swing-line loans and letters of credit outstanding. The Company will pay a fee
on the outstanding letters of credit issued under the revolving credit facility
at a rate equal to LIBOR plus 2 5/8%.
SECURITY
All indebtedness under the Credit Agreement is secured by a significant
portion of the assets of the Company. Loans and letters of credit under the
Credit Agreement are secured by a mortgage on the following mills and box plants
owned or leased by the Company or its subsidiaries, as well as liens on the
machinery, equipment and inventory located at each mill or box plant:
<TABLE>
<CAPTION>
PAPER MILLS: BOX PLANTS:
<S> <C>
Snowflake, Arizona 45 Owned Box Plants
Panama City, Florida 33 Leased Box Plants
Port Wentworth, Georgia
Florence, South Carolina
Hopewell, Virginia
Hodge, Louisiana
Coshocton, Ohio
</TABLE>
COVENANTS
The Credit Agreement contains covenants that include, among other things,
the maintenance of certain financial tests and ratios. Additionally, the term
loan portions of the Credit Agreement provide for mandatory prepayments from
sales of certain assets, certain debt financings and a percentage of excess cash
flow (as defined). The Company's bank lenders, at the Company's optional
request, may at their option, waive the receipt of certain mandatory
prepayments. Any mandatory and voluntary prepayments are allocated against the
term loan amortization in inverse order of maturity. Mandatory prepayments from
sales of collateral, unless replacement collateral is provided, will be applied
ratably to the term loans and revolving credit facility, permanently reducing
the loan commitments under the Credit Agreement. The Credit Agreement also
contains cross-default provisions to the indebtedness of $10 million or more of
the Company and certain subsidiaries.
34
<PAGE>
INDEBTEDNESS RATIO
The Company is required to have an indebtedness ratio (ratio of total
consolidated indebtedness to consolidated net worth plus total consolidated
indebtedness, as such terms are defined in the Credit Agreement) not exceeding
the following amounts as of the end of each fiscal quarter ending on a date as
indicated below:
<TABLE>
<CAPTION>
FISCAL QUARTER RATIO
<S> <C>
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 September 30, 1999................................................ .67 to 1
December 31, 1999 and thereafter............................................................ .62 to 1
At June 30, 1996, the Company's indebtedness ratio was .77 to 1.
</TABLE>
INTEREST COVERAGE RATIO
The Company is required to have an interest coverage ratio (ratio of
earnings before interest, taxes, depreciation and amortization to interest
expense) of at least the following ratios at the end of each fiscal quarter,
calculated for the most recent four fiscal quarters as indicated below:
<TABLE>
<CAPTION>
DATE RATIO
<S> <C>
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 and thereafter.......................................................... 2.25 to 1
</TABLE>
At June 30, 1996, the Company's interest coverage ratio was 2.55 to 1. In
September 1996, the Company will seek an amendment with respect to certain
covenants under the Credit Agreement, including indebtedness ratio and interest
coverage ratio covenants, for periods including the fourth quarter of 1996 and
the first three quarters of 1997.
RESTRICTIONS ON INVESTMENTS IN SUBSIDIARIES AND GUARANTEES; CROSS-DEFAULTS
The Credit Agreement contains restrictions on investments in
Stone-Consolidated and SVCPI. The Company is also not permitted to guarantee the
indebtedness of Stone-Consolidated or SVCPI and there are restrictions on other
guarantees. There are also restrictions on transactions with affiliates which
are not wholly-owned subsidiaries. Any event of default or default with respect
to the Company's or a Subsidiary's (as defined in the Credit Agreement)
indebtedness for money borrowed having an aggregate principal amount of $10
million or more constitutes an event of default under the Credit Agreement.
RESTRICTIONS ON DIVIDENDS
The Credit Agreement provides that the Company's dividend payments,
distributions or purchases of any class of capital stock of the Company and its
subsidiaries cannot exceed the sum of an amount (the "Dividend Basket") equal to
(i) 75% of the Consolidated Net Income (as defined by the Credit Agreement) of
the Company from October 1, 1994 to the date of payment of such dividends, minus
(ii) 100% of the Consolidated Net Loss (as defined by the Credit Agreement) of
the Company from October 1, 1994 to the date of payment of such dividend plus
(iii) 100% of any net cash proceeds from sales of common stock or certain
preferred stock of the Company from the closing date to the date of payment of
such dividends, minus (iv) the total of certain permitted investments and
permitted capital expenditures, which the Company will be permitted to make in
lieu of dividends the Company would be permitted to pay pursuant to this
dividend formula. For purposes of calculating the Dividend Basket, Consolidated
Net Income is deemed not to include the charge to earnings related to the
purchases of the Company's 8 7/8% Convertible Notes and the non-cash
extraordinary loss due to the early extinguishment of debt resulting therefrom.
In addition, the Credit Agreement permits the Company to pay dividends on its
preferred stock outstanding on the date of the Credit Agreement to the extent
permitted by the Company's senior subordinated indenture dated as of March 1992.
RESTRICTIONS ON INCURRENCE OF INDEBTEDNESS
The Credit Agreement restricts the incurrence of additional indebtedness,
subject to certain exceptions (including the refinancing of existing
indebtedness).
35
<PAGE>
DESCRIPTION OF NOTES
The Old Notes have been and the New Notes will be issued under an Indenture
dated as of July 24, 1996, as supplemented and amended by the First Supplemental
Indenture dated as of July 24, 1996 (the "Indenture"), between the Company and
The Bank of New York, as trustee (the "Trustee"). All references to "Securities"
shall refer to debt securities issued under the Indenture, as it may be
supplemented and amended from time to time. The following summaries of certain
provisions of the Notes and the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by express reference to, all the
provisions of the Indenture, including the definitions therein of certain terms.
Copies of the Indenture, are available from the Company. Certain capitalized
terms herein are defined in the Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of Securities
which may be issued thereunder and provides that Securities may be issued
thereunder from time to time in one or more series. The Notes will be senior
unsecured obligations of the Company. The principal of, and any premium or
interest on, the Notes will be payable, and the Notes will be exchangeable and
transfers thereof will be registrable, at the Place of Payment set forth in the
Indenture, provided 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 it
appears in the Register relating to such Notes.
The Notes will be issued in United States dollars in denominations of $1,000
or any integral multiple thereof. No service charge will be made for any
transfer or exchange of the Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
With respect to any Deficiency Offer, Change of Control Offer, Asset
Disposition Offer or Non-Investment Grade Repurchase Offer or optional
redemption of the Notes, the Company shall comply with the requirements of
Section 14(e) and Rule 14e-1 under the Exchange Act, as applicable.
RANKING
The Notes will rank pari passu in right of payment with all existing and
future Senior Indebtedness of the Company and senior in right of payment and
rights upon liquidation to all existing and future Subordinated Indebtedness of
the Company.
A significant portion of the Company's assets secure borrowings outstanding
under the Credit Agreement. See "Credit Agreement -- Credit Agreement --
Security." Likewise, the Company has issued $500 million of First Mortgage Notes
secured by four of the Company's mills and related assets and a special purpose
subsidiary of the Company has issued $260 million of floating rate receivables-
backed notes and a $50 million revolving receivables-backed note (collectively,
the "Receivables-Backed Notes"). In the event of the Company's insolvency or
liquidation, the claims of the lenders under the Credit Agreement, the holders
of the First Mortgage Notes and the holders of Receivables-Backed Notes would
have to be satisfied out of the collateral securing such obligations before any
such assets would be available to pay claims of holders of the Notes and other
holders of Senior Indebtedness of the Company (including such secured lenders to
the extent that they are not satisfied out of the proceeds of their collateral).
If the lenders under the Company's secured indebtedness should foreclose on
their respective collateral, no assurance can be given that there will be
sufficient assets available in the Company to pay amounts due on the Notes.
The Notes are obligations exclusively of the Company. Because certain of the
operations of the Company are currently conducted by subsidiaries (primarily
Stone Canada and its subsidiaries), the Company's cash flow and consequent
ability to service debt, including the Notes, are dependent, in part, upon the
earnings of its subsidiaries and the distribution of those earnings or upon
loans or other payments of funds by those subsidiaries to the Company. The
subsidiaries of the Company are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amount due pursuant to the Notes
or to make any funds available therefor, whether by dividends, loans or other
36
<PAGE>
payments. In addition, the payment of dividends and the making of loans and
advances to the Company by its subsidiaries may be subject to statutory or
contractual restrictions (as well as potential foreign tax withholding under
certain circumstances), are contingent upon the earnings of those subsidiaries
and are subject to various business considerations. See "Risk Factors -- Credit
Agreement Restrictions."
Any right of the Company to receive assets of any of its subsidiaries upon
their liquidation or reorganization (and the consequent right of the holders of
the Notes to participate in the distribution of or proceeds from those assets)
will be structurally subordinated to the claims of such subsidiary's creditors
(including trade creditors and holders of debt issued by such subsidiary),
except to the extent that the Company is itself recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subordinate
to any security interests in the assets of such subsidiary and any indebtedness
of such subsidiary senior to that held by the Company.
PRINCIPAL, MATURITY AND INTEREST
The Notes will mature on August 1, 2016. The Notes are not redeemable at the
option of the Company prior to August 1, 2001. Thereafter, if an Investment
Grade Triggering Event has not occurred, the Notes may be redeemed at the option
of the Company, in whole or in part from time to time on not less than 30 days,
nor more than 45 days, prior notice, mailed by first class mail to the Note
holders' last addresses as they shall appear in the note register, at the
following prices (expressed as percentages of the principal amount of the
Notes), if redeemed during the twelve months beginning August 1 of the year
indicated below, in each case together with interest accrued to the Redemption
Date:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
<S> <C>
2001............................................................. 105.938%
2002............................................................. 103.958%
2003............................................................. 101.979%
2004 and thereafter.............................................. 100.00%
</TABLE>
If an Investment Grade Triggering Event has occurred, the Notes will not be
redeemable at the option of the Company until the fifteenth day following the
date of the Investment Grade Triggering Event (the "Lock Determination Date").
If on the Lock Determination Date, (i) an Investment Grade Locking Event does
not occur, the Notes will be redeemable at the option of the Company as
described above, or (ii) an Investment Grade Locking Event occurs, the Notes
will not be redeemable at the option of the Company prior to August 1, 2011, and
thereafter the Notes may be redeemed at the option of the Company, in whole or
in part from time to time on not less than 30 days, nor more than 45 days, prior
notice, mailed by first class mail to the Note holders' last addresses as they
shall appear in the Note register, at 100% of the principal amount of the Notes,
together with interest accrued to the Redemption Date.
Selection of Notes for redemption will be made by the Trustee, upon notice,
substantially pro rata, by lot, or by any other method that the Trustee
considers fair and appropriate. The Indenture provides that, if any Note is to
be redeemed in part only, the notice which relates to the redemption of such
Note shall state the portion of the principal amount to be redeemed, and shall
state that on or after the Redemption Date, upon surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion thereof will
be issued.
The Notes will bear interest at the rate per annum shown on the cover page
of this Prospectus from the date of original issuance of the Notes or from the
most recent Interest Payment Date to which interest has been paid or provided
for, subject to adjustment as provided below, payable semi-annually in arrears
on February 1 and August 1 of each year, commencing February 1, 1997, to the
Holders in whose names the Notes are registered at the close of business on the
preceding January 15 and July 15, respectively.
In the event that the Company is required but unable to make a Deficiency
Offer, the Reset Rate on the Notes will be the greater of (x) the Applicable
Rate then in effect 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 and shall
37
<PAGE>
further increase by an additional 50 basis points on each succeeding Interest
Payment Date, provided, however that in no such event shall the interest rate at
any time exceed the Applicable Rate by more than 200 basis points. The Reset
Rate will be adjusted from time to time, if necessary, to reflect any change in
the Applicable Rate of the Notes.
INTEREST RATE ADJUSTMENT
Unless and until an Investment Grade Locking Event has occurred, the
interest payable on the Notes shall be based upon the debt rating (the "Rating")
for the Notes as determined by Moody's or S&P or their successors (as described
below), and adjusted if necessary in response to changes in a Rating. On the
date of this Prospectus, the Moody's Rating is B1 and the S&P Rating is B+ for
the Notes. Based on these Ratings, the initial Applicable Rate (as hereinafter
defined) on the Notes will be 11.875% per annum. The Notes will bear interest at
the initial Applicable Rate from the date of issuance of the Notes until the
earlier of (a) the date the principal of the Notes is paid or made available for
payment or (b) the calendar day immediately preceding the calendar day on which
a change in Rating category (as set forth in the table below) takes effect in
either the Moody's Rating or S&P Rating for the Notes, except that in the case
of a change in Rating category that occurs between a Regular Record Date and an
Interest Payment Date, such day shall be such Interest Payment Date (each a
"Rating Adjustment Date"); provided, however, that prior to August 1, 1997, such
interest rate shall not be less than 11.875% per annum. Beginning on a Rating
Adjustment Date, if any, and to the earlier of the date the principal of the
Notes is paid or made available for payment or the calendar day immediately
preceding the next Rating Adjustment Date, if any, the Notes will bear interest
at the rate per annum (the "Applicable Rate") determined as follows: (i) in the
event of a change in Rating category that is an upward change, the Applicable
Rate shall be the interest rate set forth below opposite the higher of the
Moody's Rating or the S&P Rating assigned to the Notes in effect at the close of
business on that Rating Adjustment Date; (ii) in the event of a change in Rating
category that is a downward change, the Applicable Rate shall be the interest
rate set forth below opposite the lower of the Moody's Rating or the S&P Rating
assigned to the Notes in effect at the close of business on that Rating
Adjustment Date, PROVIDED, HOWEVER, that, for purposes of this clause (ii), if
after a downward change in Rating category the Moody's Rating and the S&P Rating
assigned to the Notes differ by more than one Rating category, the Applicable
Rate shall be the interest rate set forth opposite the Rating category that is
one Rating category below the higher of the two Ratings in effect at the close
of business on the Rating Adjustment Date. Notwithstanding the foregoing, if
both Moody's and S&P, on the same day, change their respective Ratings assigned
to the Notes and one such change is an upward change while the other such change
is a downward change, the Applicable Rate shall be determined in accordance with
clause (ii) above, including the proviso thereto. If only one Rating is
available on any Rating Adjustment Date, the Applicable Rate shall be determined
solely by reference to such one Rating.
If neither Moody's nor S&P has a Rating in effect, then the Company shall,
with the approval of the Trustee, designate, as a substitute for Moody's or S&P,
as the case may be, a nationally recognized statistical rating organization (a
"Substitute Rating Agency"), and/or make adjustments in the relationship between
the Rating and the Applicable Rate, as are consistent with the table below. If,
for any period
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<PAGE>
prior to the occurrence of an Investment Grade Locking Event, no Substitute
Rating Agency shall have been so designated and a Substitute Rating Agency is
available, the Applicable Rate for such period shall be the highest Applicable
Rate set forth in the table below.
<TABLE>
<CAPTION>
RATING CATEGORY
MOODY'S S&P APPLICABLE RATE
<S> <C> <C>
A3 or higher A- or higher 7.760%
Baa1 BBB+ 8.010%
Baa2 BBB 8.260%
Baa3 BBB- 8.510%
Ba1 BB+ 9.830%
Ba2 BB 10.580%
Ba3 BB+ 11.330%
B1 B+ 11.875%
B2 B 12.580%
B3 or lower B- or lower 13.080%
</TABLE>
If any change in the Applicable Rate occurs during any interest payment
period, the Notes shall bear interest for such interest payment period at a rate
per annum equal to the weighted average of the Applicable Rates in effect during
such interest payment period, calculated by multiplying each Applicable Rate by
the number of days such Applicable Rate is in effect during each month of such
interest payment period, determining the sum of such products and dividing such
sum by the number of days in such interest payment period. All calculations
pursuant to the preceding sentence and of interest on the Notes will be computed
on the basis of a year of twelve 30-day months.
If any change in the Applicable Rate occurs, the Company shall notify the
Trustee of the new Applicable Rate not later than five Business Days after the
applicable Rating Adjustment Date. Not later than five Business Days after the
Trustee has received such notice setting forth the new Applicable Rate, the
Trustee shall mail to each Holder of Notes such notice setting forth the new
Applicable Rate.
INTEREST RATE LOCK
Upon the occurrence of an Investment Grade Locking Event, the interest rate
payable on the Notes will no longer be subject to adjustment and will be fixed
as described below. An "Investment Grade Locking Event" shall occur on the Lock
Determination Date -- the fifteenth day after the date of an Investment Grade
Triggering Event -- if, on such Lock Determination Date, the Rating assigned to
the Notes by S&P or Moody's or both is an Investment Grade Rating. An
"Investment Grade Triggering Event" shall occur on the first day on which the
Notes are assigned an Investment Grade Rating by either Moody's or S&P or both.
An "Investment Grade Rating" means a Moody's Rating of Baa3 or higher or an S&P
Rating of BBB- or higher. Upon the occurrence of an Investment Grade Locking
Event, the Notes will bear interest at the Applicable Rate set forth in the
table above opposite the higher of the Moody's Rating or the S&P Rating assigned
to the Notes in effect at the close of business on the date of the Investment
Grade Locking Event from such date until the principal of the Notes is paid or
made available for payment. Notwithstanding the foregoing, however, the interest
rate payable on the Notes prior to August 1, 1997 shall not be less than 11.875%
per annum.
NON-INVESTMENT GRADE REPURCHASE OFFER
If an Investment Grade Locking Event has not occurred on or before August 1,
2006 (the "Put Date"), the Company will be required to offer to repurchase and
each Holder shall have the right, on or prior to the Put Payment Date (as
defined below), to require the Company to repurchase such Holder's Notes in
whole or in part pursuant to the offer described below (the "Non-Investment
Grade Repurchase Offer") at a purchase price equal to 100% of the aggregate
principal amount of such Notes plus accrued and unpaid interest, if any, to the
date of such repurchase. Notwithstanding the immediately preceding sentence, if
an Investment Grade Triggering Event occurs on or after the fifteenth day prior
to the Put Date (the "Delaying Event"), the Company shall not be required to
make the Non-Investment Grade Repurchase Offer until the fifteenth day following
the Delaying Event (the "Delayed Put Date"). If on the
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<PAGE>
Delayed Put Date, (i) an Investment Grade Locking Event occurs, the Company
shall not be required to make the Non-Investment Grade Repurchase Offer, or (ii)
if an Investment Grade Locking Event does not occur, the Company shall make the
Non-Investment Grade Repurchase Offer as described below.
No later than the Put Date (or, if a Delaying Event has occurred, the
Delayed Put Date), the Company shall mail a notice to each Holder of Notes and
the Trustee in respect of the Non-Investment Grade Repurchase Offer (which
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes). All Notes tendered will be accepted for payment on a
date (the "Put Payment Date") which shall be no earlier than 30 days nor later
than 45 days from the date such notice is mailed.
On the Put Payment Date, the Company shall (i) accept for payment all Notes
or portions thereof tendered pursuant to the Non-Investment Grade Repurchase
Offer, (ii) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so tendered and accepted and (iii)
deliver or cause to be delivered to the Trustee Notes so accepted, together with
an Officer's Certificate stating the aggregate principal amount of the Notes or
portions thereof so accepted by the Company. The Paying Agent shall promptly
mail or deliver to the Holder of 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 Note equal in principal amount to
any unpurchased portion of the Note surrendered. The Company will publicly
announce the results of the Non-Investment Grade Repurchase Offer.
CERTAIN NON-INVESTMENT GRADE COVENANTS
MAINTENANCE OF SUBORDINATED CAPITAL BASE
The Indenture provides that until the occurrence of an Investment Grade
Locking Event, subject to the exception described in the fourth following
paragraph, in the event that the Company's Subordinated Capital Base is less
than $1 billion (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 the 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
of Notes to purchase (a "Deficiency Offer") 10% of the principal amount of 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 (as defined below). Thereafter, semiannually the Company
shall make like Deficiency Offers for the then applicable Deficiency Offer
Amount of 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.
Within 60 days (105 days if the 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 of Notes in respect of the Deficiency Offer (which notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes).
Notes tendered pursuant to a Deficiency Offer will be accepted for payment,
in amounts as set forth below, on the 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").
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On a Deficiency Payment Date, the Company shall (i) accept for payment 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 Notes as shall have been tendered, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all such Notes or portions
thereof so accepted, and (iii) deliver, or cause to be delivered to the Trustee,
Notes or portions thereof so accepted together with an Officer's Certificate
stating the Notes or portions thereof accepted by the Company. If the aggregate
principal amount of such Notes tendered exceeds the Deficiency Offer Amount, the
Company shall select the Notes to be purchased on a pro rata basis to the
nearest $1,000 of principal amount. The Paying Agent shall promptly mail or make
available for delivery to Holders of 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 Notes equal in principal amounts to, any unpurchased portion of
Notes surrendered. The Company will publicly announce the results of the
Deficiency Offer.
Notwithstanding the foregoing, in the event that (1) the making of a
Deficiency Offer by the Company or (2) the purchase of 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 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") specified above under
the heading "-- Principal, Maturity and Interest," (ii) on the first Interest
Payment Date following the Reset Date, the interest rate on the Notes as reset
on the Reset Date, shall increase by 50 basis points, and (iii) the interest
rate on the Notes shall further increase by an additional 50 basis points on
each succeeding Interest Payment Date; provided, however, that in no event shall
the interest rate on the Notes at any time exceed the Applicable Rate then in
effect by more than 200 basis points. The Reset Rate will be adjusted from time
to time, if necessary, to reflect any change in the Applicable Rate of the
Notes. If the Company's Subordinated Capital Base falls below $1 billion, it is
probable that the Company would also be in default under certain covenants
contained in the Credit Agreement.
Once the interest rate on the Notes has been reset as set forth above, 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 Notes shall return, effective as of the
first day of the second following fiscal quarter, to the Applicable Rate in
effect on such day; provided, however, that the interest rate on the Notes shall
again be adjusted as set forth above if the Company's Subordinated Capital Base
shall thereafter be less than the Minimum Subordinated Capital Base as at the
last day of each of any two consecutive subsequent fiscal quarters and if the
making of a Deficiency Offer or the purchase of Notes by the Company in respect
of a Deficiency Offer would, at such time, constitute a default (with the giving
of notice, passage of time or both) with respect to any Specified Bank Debt at
the time outstanding.
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 the second
preceding paragraph. Not later than five Business Days after the Trustee has
received such notice from the Company, the Trustee shall mail to each Holder of
Notes such notice setting forth the Reset Rate The Company shall notify the
Trustee and the Holders of Notes promptly when the interest rate on the Notes
returns to the Applicable Rate as set forth above.
Notwithstanding the foregoing, the Indenture provides that this covenant
shall be of no further force or effect and shall cease to apply upon and after
the occurrence of an Investment Grade Locking Event.
LIMITATION ON FUTURE INCURRENCE OF INDEBTEDNESS
The Indenture provides that until the occurrence of an Investment Grade
Locking Event 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
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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 fiscal
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.
Notwithstanding the foregoing, the Indenture provides that this covenant
shall be of no further force or effect and shall cease to apply upon and after
the occurrence of an Investment Grade Locking Event.
RESTRICTIONS ON DIVIDENDS
The Indenture provides that until the occurrence of an Investment Grade
Locking Event 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), 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 $750 million; 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) $300 million; 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 that are described above 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 at any time after such declaration.
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Notwithstanding the foregoing, the Indenture provides that this covenant
shall be of no further force or effect and shall cease to apply upon and after
the occurrence of an Investment Grade Locking Event.
LIMITATION ON FUTURE LIENS AND GUARANTIES
Pursuant to the terms of the Indenture, until the occurrence of an
Investment Grade Locking Event 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 (1) any Indebtedness or
other obligation (whether unconditional or contingent) of the Company that ranks
pari passu with the 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
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 (2) any Subordinated Indebtedness, the
Company will secure the Outstanding Notes prior to such Subordinated
Indebtedness, so long as such Subordinated Indebtedness shall be so secured;
provided, however, that this covenant does 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.
Notwithstanding the foregoing, this covenant shall be of no further force or
effect and shall cease to apply upon and after the occurrence of an Investment
Grade Locking Event.
In addition, pursuant to the terms of the Indenture, until the occurrence of
an Investment Grade Locking Event the Company will not guarantee the
Indebtedness of any Subsidiary of the Company and will not permit any such
Subsidiary to guarantee (i) any Indebtedness of the Company that ranks pari
passu with the Notes, (ii) any Indebtedness of a Subsidiary of the Company or
(iii) any Subordinated Indebtedness; provided, however, that this paragraph does
not apply to (1) any guaranty by a Subsidiary if such Subsidiary also guarantees
the Notes on a pari passu basis with respect to guaranties of Indebtedness
described in clauses (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 the 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 the restrictions
described in "Limitation on Future Incurrence of Indebtedness" above; (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 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 $250 million and less
the proceeds from the sale of all Indebtedness under the 1991 Indenture issued
from time to time that are 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 the Indenture; (8) any guaranty by
the Company of Indebtedness of any Restricted Subsidiary that is
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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 the 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 the Indenture; (10) any guaranty by the Company or a
Subsidiary of the Company of Indebtedness or other obligations in a principal
amount not exceeding $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 $25
million 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 paragraph.
Notwithstanding the foregoing, this covenant shall be of no further force or
effect and shall cease to apply upon and after the occurrence of an Investment
Grade Locking Event.
LIMITATION ON ASSET DISPOSITIONS
The Indenture provides that until the occurrence of an Investment Grade
Locking Event (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 determined in good faith (x) in the case
of dispositions of assets having a fair market value of $10 million or more, by
the Board of Directors of the Company, 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 $10 million but
not less than $5 million, 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
$300 million 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 $300 million, (1) the net proceeds of any Asset
Disposition or series of related Asset Dispositions where the net proceeds are
less than $5 million and (2) the first $25 million 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 $10 million, the Company
shall make a pro rata offer to all Holders to purchase Notes at 100% of
principal amount, plus accrued and unpaid interest to the Asset Disposition
Payment Date (as defined below), up to an aggregate principal amount equal to
such excess net proceeds (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.
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Notwithstanding the foregoing, 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 the preceding paragraph 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 the preceding paragraph), the amount of such deficiency (the "Deficiency
Amount") shall be applied as required by the preceding paragraph as if received
at the time of the Asset Disposition. Any amounts deferred pursuant to the
preceding sentence shall be applied in accordance with the preceding paragraph
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 the preceding paragraph
and this paragraph (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 the preceding paragraph except to the extent such cash proceeds
exceed the Deficiency Amount.
An offer to purchase Notes required to be made pursuant to this covenant is
an "Asset Disposition Offer" and the date on which the purchase of Notes
relating to any such Asset Disposition Offer is to be made is an "Asset
Disposition Payment Date."
Notice of an Asset Disposition Offer shall be mailed on behalf of the
Company by the Trustee to all Holders of Notes 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.
On the Asset Disposition Payment Date, the Company shall (i) accept for
payment 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 Notes as shall have been tendered, (ii) deposit
with the Paying Agent money sufficient to pay the purchase price of all Notes or
portions thereof so accepted, and (iii) deliver or cause to be delivered to the
Trustee, Notes so accepted together with an Officer's Certificate stating the
Notes or portions thereof accepted by the Company. If the aggregate principal
amount of Notes tendered exceeds the Asset Disposition Offer Amount, the Company
shall select the Notes to be purchased on a pro rata basis to the nearest $1,000
of principal amount. The Paying Agent shall promptly mail or deliver to Holders
of 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 Note equal in principal amount
to any unpurchased portion of the Note surrendered. The Company will publicly
announce the results of the Asset Disposition Offer.
The Company shall not make an "Asset Disposition Offer" (as defined)
required under the 1991 Indenture or the 1994 Indentures 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 in respect of the Notes (and 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
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Asset Disposition Offer under the 1991 Indenture and the 1994 Indentures (and in
accordance with Section 1009(g) of the 1994 Indentures)), 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 of the Indenture, the Company issues
any Senior Indebtedness (including the Notes) 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 herein, then (i) the Company may apply the Asset Disposition
Offer Amount (before any adjustment pursuant to this sentence) to the pro rata
purchase of Notes tendered under the Indenture and the Senior Indebtedness
tendered thereunder and (ii) the Asset Disposition Offer Amount available to
repurchase the Notes shall be reduced by the amount applied to the purchase of
such Senior Indebtedness; provided, however, that this sentence shall only apply
to Senior Indebtedness issued on or after the Issue Date that explicitly permits
the pro rata purchase of Notes as described in the Indenture and refers to the
"Limitation on Asset Dispositions" covenant and any Indebtedness outstanding at
the Issue Date that is amended to explicitly permit the pro rata purchase of
Notes as described therein and refers to the "Limitation on Asset Dispositions"
covenant.
In the event that the First Mortgage Notes are refinanced through a public
or private offering of Indebtedness constituting debt securities and the amount
of such refinancing Indebtedness is no greater than the principal amount of the
First Mortgage Notes Outstanding as of the date of such refinancing, the Company
need not comply with the first paragraph of this covenant 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.
Notwithstanding the foregoing, this covenant shall be of no further force or
effect and shall cease to apply upon and after the occurrence of an Investment
Grade Locking Event.
RESTRICTIONS ON MERGERS AND CONSOLIDATIONS AND SALES OF ASSETS
The Indenture provides that until the occurrence of an Investment Grade
Locking Event 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 are sold, assigned, transferred or leased is a corporation (or
constitute corporations) organized 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 to the Indenture, all the obligations of the
Company under the Notes and the 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; (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 such
transaction or series of related transactions, under the covenant contained in
the Indenture restricting the incurrence of Indebtedness; provided, however,
that this clause (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
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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 such covenant, 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 the 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 (5)
the Company shall have delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and
such supplemental indenture comply with the Indenture and that all conditions
precedent to the consummation of the transaction or series of related
transactions under the Indenture have been met. Notwithstanding the foregoing,
if clause (4) of the preceding sentence is inapplicable by reason of clause (b)
of the proviso thereto, and at the date three months after the consummation of
such transaction or series of related transactions, the rating ascribed to the
Notes by S&P or Moody's shall be lower than the rating ascribed to the Notes
prior to the public announcement of such transaction, then the Company shall
make an offer for the Notes at the same price and following the same procedures
and obligations as required with respect to a Change of Control (as if such date
three months after the giving effect to such transaction were the "Change of
Control Date"). See "-- LIMITATION ON FUTURE INCURRENCE OF INDEBTEDNESS" above
and "-- Change of Control" below. Notwithstanding the foregoing, clauses (3) and
(4) shall be of no further force or effect and shall cease to apply upon and
after the occurrence of an Investment Grade Locking Event.
If, upon any consolidation or merger, or upon any sale, assignment, transfer
or lease, as provided in the preceding paragraph, 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 an indenture supplemental to the
Indenture, secure the due and punctual payment of the principal of, and premium,
if any, and interest on the 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. Notwithstanding the foregoing, this covenant
shall be of no further force or effect and shall cease to apply upon and after
the occurrence of an Investment Grade Locking Event.
CERTAIN INVESTMENT GRADE COVENANTS
RESTRICTIONS ON SECURED INDEBTEDNESS
Upon and after the occurrence of an Investment Grade Locking Event, if the
Company or any Restricted Subsidiary shall incur, issue, assume or guarantee any
Indebtedness secured by a Lien on any Principal Property of the Company or any
Restricted Subsidiary or on any share of stock or Indebtedness of any Restricted
Subsidiary, the Company will secure or cause such Restricted Subsidiary to
secure the Notes equally and ratably with (or, at the Company's option, prior
to) such secured Indebtedness so long as such Indebtedness shall be so secured,
unless the aggregate amount of all such secured Indebtedness, together with all
Attributable Indebtedness of the Company and its Restricted Subsidiaries with
respect to any sale and leaseback transactions involving Principal Properties
(with the exception of such transactions which are excluded as described in
clauses (i) through (v) under "-- RESTRICTIONS ON SALES AND LEASEBACKS" below),
would not exceed 10% of Consolidated Net Tangible Assets. The above restriction
does not apply to, and there will be excluded from secured Indebtedness in any
computation under such restriction, Indebtedness secured by: (i) Liens on
property of, or on any share of stock or Indebtedness of, any corporation
existing at the time such corporation becomes a Restricted Subsidiary and Liens
on any property acquired from a corporation which is merged with or into the
Company or a Subsidiary; (ii) Liens in favor of the Company or a Restricted
Subsidiary; (iii) Liens
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in favor of governmental bodies to secure progress, advance or other payments;
(iv) Liens upon any property acquired after the date of the Indenture, securing
the purchase price thereof or created or incurred simultaneously with (or within
180 days after) such acquisition to finance the acquisition of such property or
existing on such property at the time of such acquisition, or Liens on
improvements after such date, in each case subject to certain conditions and
provided that the principal amount of the obligation or indebtedness secured by
such Lien shall not exceed 100% of the cost or fair value (as determined in good
faith by the Company), whichever shall be lower, of the property at the time of
the acquisition, construction or improvement thereof; (v) Liens securing
industrial revenue or pollution control bonds; (vi) Liens on timberlands or in
connection with arrangements under which the Company or any Restricted
Subsidiary is obligated to cut or pay for timber; (vii) Liens arising out of any
final judgment for the payment of money aggregating not in excess of $25 million
or Liens arising out of any judgments which are being contested in good faith;
(viii) Permitted Liens in existence on the date of the Investment Grade Locking
Event; or (ix) any extension, renewal, or replacement of any Lien referred to in
the foregoing clauses (i) through (viii) inclusive.
RESTRICTIONS ON SALES AND LEASEBACKS
Upon and after the occurrence of an Investment Grade Locking Event, neither
the Company nor any Restricted Subsidiary may enter into any sale and leaseback
transaction involving any Principal Property, unless the aggregate amount of all
Attributable Indebtedness of the Company and its Restricted Subsidiaries with
respect to such transaction plus all secured Indebtedness (with the exception of
secured Indebtedness which is excluded as described in clauses (i) through (ix)
under "-- RESTRICTIONS ON SECURED INDEBTEDNESS" above) would not exceed 10% of
Consolidated Net Tangible Assets. This restriction does not apply to, and there
shall be excluded from Attributable Indebtedness in any computation under such
restriction, any sale and leaseback transaction if: (i) the lease is for a
period, including renewal rights, not in excess of three years; (ii) the sale of
the Principal Property is made within 180 days after its acquisition,
construction or improvement; (iii) the lease secures or relates to industrial
revenue or pollution control bonds; (iv) the transaction is between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries; or (v) the
Company or such Restricted Subsidiary, within 180 days after the sale is
completed, applies to the retirement of Indebtedness of the Company or a
Restricted Subsidiary, or to the purchase of other property which will
constitute Principal Property, an amount not less than the greater of (1) the
net proceeds of the sale of the Principal Property leased or (2) the fair market
value (as determined by the Company in good faith) of the Principal Property
leased. The amount to be applied to the retirement of Indebtedness shall be
reduced by (x) the principal amount of any debentures or notes (including the
Notes) of the Company or a Restricted Subsidiary surrendered within 180 days
after such sale to the applicable trustee for retirement and cancellation, (y)
the principal amount of Indebtedness, other than the items referred to in the
preceding clause (x), voluntarily retired by the Company or a Restricted
Subsidiary within 180 days after such sale and (z) associated transaction
expenses.
CHANGE OF CONTROL
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 Notes
in whole or in part pursuant to the offer described below (the "Change of
Control Offer") at a purchase price equal to 101% of the aggregate principal
amount of such 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 below,
the Indenture requires the Company to (1) repay in full in cash such Specified
Bank Debt or (2) obtain the requisite consent of holders of such Specified Bank
Debt to permit the repurchase of Notes without giving rise to an event of
default under such Specified Bank Debt.
Promptly upon satisfaction of either one of the obligations, if then
applicable, described above, Company shall mail a notice to each Holder of Notes
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 Notes). All Notes tendered will be accepted for payment on a date (the
"Change of Control
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Payment 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 the Change of Control Offer covenant.
On the Change of Control Payment Date, the Company shall (i) accept for
payment 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 Notes or portions thereof so accepted and (iii) deliver or cause to
be delivered to the Trustee Notes so accepted, together with an Officer's
Certificate stating the aggregate principal amount of the Notes or portions
thereof so accepted by the Company. The Paying Agent shall promptly mail or
deliver to the Holder of 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 Note and equal in principal amount
to any unpurchased portion of the Note surrendered. The Company will publicly
announce the results of the Change of Control Offer.
Whether a Change of Control has occurred depends entirely on the
accumulation of common stock of the Company and on certain changes in the
composition of the Company's Board of Directors. As a result, the Company can
enter into certain highly leveraged transactions, including certain
recapitalizations, mergers or stock repurchases, that would not result in the
application of the Change of Control provisions. Because the definitions of
"Change of Control" and "Acquiring Person" exclude the Company, any Subsidiary
of the Company and certain members of the Stone family, certain transactions in
which such entities and persons participate as beneficial owners of Common Stock
(including, among others, a leveraged buyout or recapitalization) would not
constitute a Change of Control.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Indenture: (1) failure to pay
interest on any Note when due, continued for 30 days; (2) failure to pay the
principal of (or premium, if any, on) any Note when due and payable at Maturity,
upon redemption, upon repurchase pursuant to a Deficiency Offer as described
under "-- MAINTENANCE OF SUBORDINATED CAPITAL BASE" above, pursuant to an Asset
Disposition Offer described under "-- LIMITATION ON ASSET DISPOSITIONS," a
Change of Control Offer as described under
"-- Change of Control," a Non-Investment Grade Repurchase Offer as described
under "-- Non-Investment Grade Repurchase Offer" above or otherwise; (3) failure
to observe or perform any other applicable covenant, warranty or agreement
contained in the Notes or in the Indenture continued for a period of 60 days
after notice has been given to the Company by the Trustee or Holders of at least
25% in aggregate principal amount of the Outstanding Notes; (4) failure to pay
at final maturity, or acceleration of, Indebtedness of the Company having an
aggregate principal amount of not less than $25 million (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
$10 million), unless cured within 15 days after notice has been given to the
Company by the Trustee or Holders of at least 25% in aggregate principal amount
of the Outstanding Notes; (5) the entering against the Company of one or more
judgments or decrees involving an aggregate liability of $25 million or more
unless vacated, discharged, satisfied or stayed within 30 days of the entering
of such judgments or decrees; and (6) certain events of bankruptcy, insolvency
or reorganization relating to the Company.
The Indenture provides that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default give the Holders of Notes notice
of all uncured Defaults or Events of Default known to it (the term "Default" to
include the events specified above without grace or notice); provided, however,
that, except in the case of an Event of Default or a Default in payment on any
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 of Notes.
If an Event of Default (other than due to event of bankruptcy, insolvency or
reorganization) occurs and is continuing, the Trustee or the Holders of at least
25% in aggregate principal amount of the Outstanding Notes by notice in writing
to the Company (and to the Trustee if given by the Holders of at
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least 25% in aggregate amount of Notes), may declare the unpaid principal of and
accrued interest to the date of acceleration on all the Outstanding Notes to be
due and payable immediately and, upon any such declaration, the Notes shall
become immediately due and payable.
If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal (without premium) of and accrued interest
on the Outstanding Notes ipso facto becomes immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder of any
Notes.
Any such declaration with respect to Notes may be annulled and past Events
of Default and Defaults (except, unless theretofore cured, an Event of Default
or a Default, in payment of principal of or interest on the Notes) may be waived
by the Holders of at least a majority of the principal amount of the Outstanding
Notes upon the conditions provided in the Indenture.
The Indenture provides that the Company will periodically file statements
with the Trustee regarding compliance by the Company with certain of the
covenants thereof and specifying any Event of Default or Defaults in performing
such covenants of which the signers may have knowledge.
MODIFICATION OF INDENTURE; WAIVER
The Indenture may be modified by the Company and the Trustee without the
consent of any Holders with respect to certain matters, including (i) to cure
any ambiguity, defect or inconsistency or to correct or supplement any provision
which may be inconsistent with any other provision of the Indenture and (ii) to
make any change that does not materially adversely affect the interests of any
Holder of Securities of any series. In addition, under the Indenture, certain
rights and obligations of the Company and the rights of Holders of the Notes may
be modified by the Company and the Trustee with the written consent of the
Holders of at least a majority of the aggregate principal amount of the
Outstanding Securities of each series affected thereby; but no extension of the
maturity of any Securities of any series, reduction in the interest rate or
extension of the time for payment of interest, change in the optional redemption
or repurchase provisions in a manner adverse to any Holder of Securities of any
series, other modification in the terms of payment of the principal of or
interest on any Securities of any series or reduction of the percentage required
for modification, will be effective against any Holder of any Outstanding
Securities of any series affected thereby without his consent.
The Holders of at least a majority in principal amount of the Outstanding
Securities of any series may on behalf of the Holders of all Securities of that
series waive compliance by the Company with certain restrictive covenants of the
Indenture. The Holders of at least a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all
Securities of that series waive any past Event of Default or Default under the
Indenture, except an Event of Default or a Default in the payment of the
principal of or premium, if any, or any interest on any Securities of that
series or in respect of a provision which under the Indenture cannot be modified
or amended without the consent of the Holder of each Outstanding Securities of
that series affected.
SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE
The Company may terminate its substantive obligations in respect of the
Notes by delivering all Outstanding Notes to the Trustee for cancellation and
paying all sums payable by it on account of principal of and interest on all
Notes. The Company may terminate its substantive obligations in respect of the
Notes (except for its obligations to pay the principal of (and premium, if any,
on) and the interest on the Notes) by (i) depositing with the Trustee under the
terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient to pay all remaining indebtedness on the Notes, (ii)
delivering to the Trustee either an Opinion of Counsel or a ruling directed to
the Trustee from the Internal Revenue Service to the effect that the Holders of
the Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and termination of obligations, and (iii)
complying with certain other requirements set forth in the Indenture. In
addition, the Company may terminate all of its substantive obligations in
respect of the Notes (including its obligations to pay the principal of (and
premium, if any, on) and interest on the Notes) by (i) depositing with the
Trustee under
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the terms of an irrevocable trust agreement, money or United States Government
Obligations sufficient to pay all remaining indebtedness on the Notes, (ii)
delivering to the Trustee either a ruling directed to the Trustee from the
Internal Revenue Service to the effect that the Holders of the Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and termination of obligations or an Opinion of Counsel, based upon
such a ruling or a change in the applicable federal tax law since the date of
the Indenture, to such effect, and (iii) complying with certain other
requirements set forth in the Indenture.
THE TRUSTEE
The Bank of New York will be the Trustee under the Indenture. The Company
maintains normal commercial banking relations with The Bank of New York, which
may also be a lender under the Credit Agreement and which is the trustee under
other indentures of the Company.
CERTAIN DEFINITIONS
For purposes of the Indenture, certain defined terms have the following
meanings:
"11 1/2% Notes" means the Company's 11 1/2% Senior Notes due 2004.
"11 1/2% Note Indenture" means the indenture dated as of October 12, 1994
between the Company and The Bank of New York, as Trustee, relating to the
11 1/2% Notes, as amended and supplemented to the date of the Indenture and,
unless otherwise indicated, from time to time after the date of the Indenture.
"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 of the Indenture and, unless otherwise indicated, from time to time
after the date of the Indenture. References in the Indenture to Indebtedness
issued under the 1991 Indenture shall include any Indebtedness issued thereunder
both before and after the date of the Indenture.
"1994 Indentures" means (i) the 11 1/2% Note Indenture and (ii) the First
Mortgage Note Indenture. References in the Indenture to Indebtedness issued
under the 1994 Indentures shall include any Indebtedness issued thereunder both
before and after the date of the Indenture.
"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 Company, then such Person shall be
deemed to be an "Acquiring Person."
"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
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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 (a) of
Collateral (as defined in the First Mortgage Note Indenture while the First
Mortgage Notes are outstanding), (b) 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.
"Attributable Indebtedness" means the total net amount of rent required to
be paid during the remaining primary term of any particular lease under which
any person is at the time liable, discounted at the rate per annum equal to the
weighted average interest rate borne by the Notes.
"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.
"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.
"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 (as defined under the subsection entitled
"Restrictions on Dividends" above) 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.
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"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
includible 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 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 Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) of the Company
and its Restricted Subsidiaries after deducting (i) all liabilities (excluding,
to the extent included in such liabilities, Indebtedness, deferred income taxes
and shareholders' equity), and (ii) all goodwill, trade names, trademarks,
patents, organizational expenses and other like intangibles, of the Company and
its Restricted Subsidiaries, in each case to the extent included in the
aggregate amount of assets, all as set forth on the most recent consolidated
balance sheet of the Company and its Restricted Subsidiaries and computed in
accordance with GAAP.
"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.
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"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, 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.
"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.
"First Mortgage Notes" means the Company's 10 3/4% First Mortgage Notes due
2002.
"First Mortgage Note Indenture" means the indenture dated as of October 12,
1994 between the Company and Norwest Bank Minnesota, National Association, as
Trustee, relating to the First Mortgage Notes, as amended and supplemented to
the date of the Indenture and, unless otherwise indicated, from time to time
after the date of the Indenture.
"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.
"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
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
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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.
"Issue Date" means July 24, 1996.
"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).
"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, including without
limitation, as amended and restated as of March 22, 1996.
"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 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;
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(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 the 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.
"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 $250 million, and less the sum of (x) the proceeds from the sale of
all Indebtedness under the 1991 Indenture issued from time to time that are
applied to repay Indebtedness under the Credit Agreements and (y) the proceeds
from the sale of the 11 1/2% Notes, the First Mortgage Notes and the Securities
of any series; (b) any Indebtedness in a principal amount not exceeding 80% of
the aggregate face amount of Receivables of the Company and its Restricted
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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, the 11 1/2% Notes and the
Securities of any series (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 11 1/2% Notes, the
First Mortgage Notes, any Securities of any series and Indebtedness
issued under the 1991 Indenture) out of the proceeds of Asset
Dispositions as described in and required by "-- LIMITATION ON ASSET
DISPOSITIONS" above 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 Issue Date net of subsequent reductions thereof,
and (B) the aggregate amount permitted to be incurred under clause (b)
shall be reduced by the principal amount outstanding under the Master
Trust Indenture and Security Agreement among Stone Receivable
Corporation, Marine Midland Bank, as trustee, and Bankers Trust Company,
as administrative agent (the "SRC Master Trust Indenture") on the Issue
Date net of any 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 $200
million, 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
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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 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 $300
million 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 $300 million;
(viii) Indebtedness of the Company in an aggregate principal amount not
to exceed $250 million 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 the 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 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;
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(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 the
limitation on liens described under "-- LIMITATION ON FUTURE LIENS AND
GUARANTIES;"
(iv) Liens covering property subject to any Capitalized Lease Obligation
or other lease which was not entered into in violation of the 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 the 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 the 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) $300 million 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 $25 million, such Subsidiary
shall have guaranteed the obligations of the Company in respect of the 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
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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) $250
million 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 SRC Master Trust
Indenture;
(xii) Liens securing Indebtedness or other obligations of the Company and
its Restricted Subsidiaries not to exceed an aggregate principal amount of
$350 million 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 the 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 (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
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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 Issue Date (other than solely
as Permitted Indebtedness under the 1991 Indenture) or is incurred after the
Issue Date (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 U.S. $100 million (of
which not more than Cdn. $60 million 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 Issue Date 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 $250 million 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 (1) the Company's 9 7/8% Senior Notes due 2001 then
outstanding, (2) the 11 1/2% Notes then outstanding or (3) the Notes then
Outstanding (provided that, for purposes of this definition, it shall be deemed
that the Notes will cease to be Outstanding as of the first day following the
Put Date (or, if a Delaying Event shall have occurred, the Delayed Put Date)) or
(B) a maturity that is earlier than the latest maturity of (1) the Company's
9 7/8% Senior Notes due 2001 then outstanding, (2) the 11 1/2% Notes then
outstanding or (3) the Notes then Outstanding (provided that, for purposes of
this definition, it shall be deemed that the Notes will mature as of the first
day following the Put Date (or, if a Delaying Event shall have occurred, the
Delayed Put Date)).
"Principal Property" means (i) any mill, converting plant, manufacturing
plant, or other facility owned by the Company or any Restricted Subsidiary of
the Company which is located within the present fifty states of the United
States and the gross book value of which (without deduction of any depreciation
reserves) on the date as of which the determination is being made exceeds 3% of
Consolidated Net Tangible Assets and (ii) timberlands, in each case other than
properties or any portion of a particular property which in the opinion of the
Board of Directors is not of material importance to the Company's business.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money.
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"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 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 Notes then Outstanding (provided
that, for purposes of this definition, it shall be deemed that the Notes will
mature as of the first day following the Put Date (or, if a Delaying Event shall
have occurred, the Delayed Put Date)), or any security which is convertible or
exchangeable into a security which has such provisions.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Senior Indebtedness" means the principal of, interest on and other amounts
due on (i) Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred, assumed or guaranteed by the Company, on or prior
to the Issue Date in compliance with the 1991 Indenture and thereafter, in
compliance with the "-- LIMITATION ON FUTURE INCURRENCE OF INDEBTEDNESS"
covenant (including, without limitation, the 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 Securities.
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 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.
"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 of the Indenture or thereafter 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 Agreement 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
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commitments to provide credit) of such Indebtedness is at least equal to the
principal of all publicly issued Senior Indebtedness (including, without
limitation, any Indebtedness under the 1991 Indenture and the 1994 Indentures)
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 $25 million and (c) such Indebtedness
constitutes Senior Indebtedness.
"Stone Canada Group" means Stone Canada and its Restricted Subsidiaries
existing as of the date of the Indenture.
"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 Issue
Date, or if less than $200,000,000 of such Indebtedness is outstanding, the
11 1/2% Notes then outstanding, or if less than $100,000,000 of such
Indebtedness is outstanding, the Outstanding Notes (provided that for purposes
of this definition, it shall be deemed that the Notes will cease to be
Outstanding as of the day following the Put Date (or, if a Delaying Event shall
have occurred, the Delayed Put Date)), or a maturity that is earlier than the
maturity of any of the then outstanding Indebtedness under the 1991 Indenture
issued prior to the Issue Date, or if less than $200,000,000 of such
Indebtedness is outstanding, the 11 1/2% Notes then outstanding , or if less
than $100,000,000 of such Indebtedness is outstanding, the Outstanding Notes
(provided that for purposes of this definition, it shall be deemed that the
Notes will mature as of the day following the Put Date (or, if a Delaying Event
shall have occurred, the Delayed Put Date)), (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 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 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 of the Indenture or thereafter 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 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 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.
"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
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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 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.
"Unrestricted Subsidiary" means a Subsidiary of the Company which has been
designated as an "Unrestricted Subsidiary" for purposes of the Indenture by the
Company and (a) 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 the Indenture.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal income
tax consequences of the purchase, ownership and disposition of Notes to
beneficial owners purchasing Notes at their original issuance ("holders"). This
summary is based on the Internal Revenue Code of 1986, as amended (the "Code"),
legislative history, administrative pronouncements, judicial decisions and
final, temporary and proposed Treasury Regulations, changes to any of which
subsequent to the date of this Prospectus may affect the tax consequences
described herein. This summary does not address all of the tax consequences that
might be relevant to the holder in light of the holder's particular
circumstances or to holders subject to special rules. This summary assumes that
holders will hold the Notes as capital assets within the meaning of Section 1221
of the Code. This summary does not address any tax consequences to a holder who
or which is, for United States federal income tax purposes, a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust. Furthermore, this summary does not describe any aspect of the tax laws of
any state, local or foreign jurisdiction.
THE EXCHANGE
An exchange of Old Notes for New Notes pursuant to the Exchange Offer should
not be treated as a sale, exchange or other taxable event for federal income tax
purposes because the New Notes should not be considered to differ materially in
kind or extent from the Old Notes. As a result, no material federal income tax
consequences should result from an exchange of Old Notes for New Notes pursuant
to the Exchange Offer.
For federal income tax purposes, a New Note received by a beneficial owner
of an Old Note should be treated as a continuation of the Old Note in the hands
of such owner.
RECOGNITION OF INTEREST INCOME
On June 11, 1996, the Internal Revenue Service issued final Treasury
Regulations governing the treatment of debt instruments issued on or after
August 13, 1996 that provide for one or more contingent
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payments. Although the interest payments on the Notes will be treated as
contingent payments, the Old Notes were issued prior to August 13, 1996 and
therefore the final Treasury Regulations will not apply to the Notes. With
respect to debt instruments issued prior to August 13, 1996, the preamble to the
final Treasury Regulations states that a taxpayer, which would include the
Company or a holder of Notes, may use any reasonable method to account for
contingent payments.
Under general principles of federal income tax law, interest on the Notes
may be taken into income by a holder that uses the cash method of accounting
when actually or constructively received, and may be taken into income by a
holder that uses an accrual method of accounting when the right to receive such
interest is fixed and the amount thereof is determinable with reasonable
accuracy. Alternatively, the preamble to the final Treasury Regulations states
that a reasonable method would include the method set forth in the proposed
Treasury Regulations which have been finalized through the issuance of the final
Treasury Regulations. Under those proposed Treasury Regulations, a payment
schedule must be projected for the contingent payment debt instrument and
holders generally must recognize interest income on a constant-yield basis based
on the projected schedule, with certain adjustments if payments are not made in
accordance with such schedule. The method set forth in the proposed Treasury
Regulations might result in the inclusion of interest in income earlier or later
than under the general principles of federal income tax law described above
depending upon the projected payment schedule and might result in the inclusion
in income before the receipt of cash attributable thereto. Under the proposed
Treasury Regulations, certain amounts realized upon disposition of a Note which
would otherwise be treated as capital gain or loss may be recharacterized as
interest income or ordinary loss.
The Company believes the general principles of federal income tax law
discussed above constitute a reasonable method, and consequently the Company
intends to accrue interest expense on the Notes and to provide tax reporting
information to holders and the Internal Revenue Service, consistent with these
principles.
SALE, EXCHANGE OR RETIREMENT OF NOTES
A holder generally recognizes gain or loss upon the sale, exchange or
retirement of a Note equal to the difference between the amount realized upon
such sale, exchange or retirement (excluding any amount attributable to accrued
but unpaid interest) and the holder's adjusted basis in the Note. In general, a
holder's tax basis in the Note will be equal to the holder's cost for the Note
decreased by any principal payments on the Note. To the extent attributable to
accrued but unpaid interest, the amount realized by the holder will be treated
as payment of interest. Except as noted above under "-- Recognition of Interest
Income", any gain or loss generally will be capital gain or loss and will be
long-term capital gain or loss if the Notes have been held for more than one
year at the time of such sale, exchange or retirement.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting requirements apply to interest and principal payments
made to, and to the proceeds of sales before maturity by, certain non-corporate
holders. In addition, a 31% backup withholding tax applies if the non-corporate
holder fails to provide certain identifying information (such as the holder's
taxpayer identification number) in the required manner. Backup withholding does
not apply with respect to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. Any amounts withheld from a payment
to a holder under the backup withholding rules are allowed as a refund or a
credit against such holder's United States federal income tax, provided that the
required information is furnished to the Internal Revenue Service.
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THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS NOT
TAX ADVICE. ACCORDINGLY, EACH PERSON CONSIDERING THE ACQUISITION OF NEW NOTES
SHOULD CONSULT A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO HIM, HER OR
IT OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS AND OF CHANGES IN
APPLICABLE TAX LAWS.
PLAN OF DISTRIBUTION
Prior to the Exchange Offer, there has been no market for any of the New
Notes. Application will be made to list the New Notes on the NYSE. The Old Notes
are eligible for trading in the Private Offerings, Resales and Trading through
Automatic Linkages ("PORTAL") market. There can be no assurance that an active
trading market will develop for, or as to the liquidity of, any of the Notes.
With respect to resales of New Notes, based on an interpretation by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that any holder or beneficial owner (other than a person
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act or a "broker" or "dealer" registered under the Exchange Act) who
exchanges Old Notes for New Notes in the ordinary course of business and who is
not participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the New
Notes, will be allowed to resell the New Notes to the public without further
registration under the Securities Act and without delivering to the purchasers
of the New Notes a prospectus that satisfies the requirements of Section 10
thereof. However, if any holder or beneficial owner acquires New Notes in the
Exchange Offer for the purpose of distributing or participating in a
distribution of the New Notes, such holder or beneficial owner cannot rely on
the position of the staff of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988) or similar no-action letters or any similar
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction, unless an exemption from registration is otherwise
available.
As contemplated by the above no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the New Notes to be acquired
by the holder and any Beneficial Owners of Old Notes in connection with the
Exchange Offer are being acquired in the ordinary course of business of the
holder and any Beneficial Owners, (ii) the holder and each Beneficial Owner are
not engaging, do not intend to engage and have no arrangements or understanding
with any person to participate in the distribution of the New Notes, (iii) the
holder and each Beneficial Owner acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the New
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction of the New
Notes acquired by such person and cannot rely on the position of the Staff of
the Commission set forth in no-action letters that are discussed herein above,
(iv) the holder and each Beneficial Owner understands that a secondary resale
transaction described in clause (iii) above should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or 508, as applicable, of Regulation S-K of the Commission,
and (v) neither the holder nor any Beneficial Owner(s) is an "affiliate," as
defined under Rule 405 of the Securities Act, of the Company except as otherwise
disclosed to the Company in writing.
Any broker or dealer registered under the Exchange Act (each a
"Broker-Dealer") who holds Old Notes that were acquired for its own account as a
result of market-making activities or other trading activities (other than Old
Notes acquired directly from the Company or any affiliate of the Company) may
exchange such Old Notes for New Notes pursuant to the Exchange Offer; however,
such Broker-Dealer may be deemed an underwriter within the meaning of the
Securities Act and, therefore, must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the New
Notes received by it in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of this
Prospectus. Any Broker-Dealer participating in the Exchange
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Offer will be required to acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of New
Notes received by it in the Exchange Offer. However only Broker-Dealers who
exchange Old Notes that were acquired for their own account as a result of
market-making activities or other trading activities (other than Old Notes
acquired directly from the Company or any affiliate of the Company), may use
this Prospectus to satisfy the prospectus delivery requirements of the
Securities Act. The delivery by a Broker-Dealer of a prospectus in connection
with resales of New Notes shall not be deemed to be an admission by such
Broker-Dealer that it is an underwriter within the meaning of the Securities
Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Leslie T.
Lederer, Vice President, Secretary and Counsel of the Company (who owns Common
Stock of the Company).
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 have
been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
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PAGE
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Available Information................... 2
Incorporation of Certain Documents by
Reference.............................. 2
Prospectus Summary...................... 3
Summary Financial Data.................. 10
Risk Factors............................ 12
The Exchange Offer...................... 17
Use of Proceeds......................... 24
Capitalization.......................... 25
Business................................ 26
Credit Agreement........................ 33
Description of Notes.................... 36
United States Federal Income Tax
Consequences........................... 64
Plan of Distribution.................... 66
Legal Matters........................... 67
Experts................................. 67
</TABLE>
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UNTIL , 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENT OR SUBSCRIPTIONS.
[LOGO]
STONE CONTAINER CORPORATION
OFFER TO EXCHANGE ITS
RATING ADJUSTABLE SENIOR NOTES
DUE 2016 FOR ANY AND ALL OF
ITS OUTSTANDING
RATING ADJUSTABLE SENIOR
NOTES DUE 2016
---------------------
PROSPECTUS
---------------------
, 1996
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 145 ("Section 145") of the Delaware General
Corporation Law of the State of Delaware (the "Delaware GCL") which provides for
indemnification of directors and officers in certain circumstances.
In accordance with Section 102(b)(7) of the Delaware GCL, the Company's
Restated Certificate of Incorporation provides that directors shall not be
personally liable for monetary damages for breaches of their fiduciary duty as
directors except for (i) breaches of their duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law, (iii) under Section 174 of
the Delaware GCL (unlawful payment of dividends) or (iv) transactions from which
a director derives an improper personal benefit.
The Restated Certificate of Incorporation of the Company provides for
indemnification of directors and officers to the full extent provided by the
Delaware GCL, as amended from time to time. It states that the indemnification
provided therein shall not be deemed exclusive. The Company may maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Company, or another corporation, partnership, joint venture, trust
or other enterprise against any expense, liability or loss, whether or not the
Company would have the power to indemnify him against such expense, liability or
loss, under the provisions of the Delaware GCL.
Pursuant to Section 145 and the Restated Certificate of Incorporation, the
Company maintains directors' and officers' liability insurance coverage.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
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*4.1 Indenture dated as of July 24, 1996 (the "Indenture") between Stone Container
Corporation and The Bank of New York, as Trustee.
*4.2 First Supplemental Indenture dated as of July 24, 1996 between Stone Container
Corporation and the Bank of New York, as Trustee.
*4.3 Form of Note issued pursuant to the Indenture (included in Exhibit 4.2 of this
Registration Statement).
*4.4 Registration Rights Agreement dated as of July 24, 1996 among Stone Container
Corporation and the initial purchasers of the Notes.
4.5 Specimen certificate representing Common Stock, $.01 par value, filed as Exhibit
4(a) to the Company's Annual Report on Form 10-K for the year ended December
31, 1987, is hereby incorporated by reference.
4.6 Specimen certificate representing the $1.75 Series E Cumulative Convertible
Exchangeable Preferred Stock, filed as Exhibit 4(g) to the Company's
Registration Statement on Form S-3, Registration Number 33-45374, is hereby
incorporated by reference.
4.7 Rights Agreement, dated as of July 25, 1988, between the Company and The First
National Bank of Chicago, filed as Exhibit 1 to the Company's Registration
Statement on Form 8-A dated July 27, 1988, is hereby incorporated by reference.
4.8 Amendment to Rights Agreement, dated as of July 23, 1990, between the Company
and The First National Bank of Chicago, filed as Exhibit 1A to the Company's
Form 8 dated August 2, 1990 amending the Company's Registration Statement on
Form 8-A dated July 27, 1988, is hereby incorporated by reference.
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4.9 Amendment to Rights Agreement, dated as of May 16, 1996, between the Company and
the First National Bank of Chicago, filed as Exhibit 1 to the Company's
Registration Statement on Form 8-A dated June 8, 1996 amending the Company's
Registration Statement on Form 8-A dated July 27, 1988, as amended, is hereby
incorporated by reference.
4.10 First Amendment of Credit Agreement, dated as of June 20, 1996, among the
Company, financial institutions signatory thereto, the Agent and the Co-Agents,
filed as Exhibit 4(s) to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, is hereby incorporated by reference.
4.11 Indenture dated as of October 12, 1994 between the Company and Norwest Bank
Minnesota, N.A., as Trustee, relating to the 10 3/4 percent First Mortgage
Notes due October 1, 2002, filed as Exhibit 4(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994, is hereby
incorporated by reference.
4.12 Indenture dated as of October 12, 1994 between the Company and The Bank of New
York, as Trustee, relating to the 11 1/2 percent Senior Notes due October 1,
2004, filed as Exhibit 4(c) to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994, is hereby incorporated by reference.
4.13 Indenture, dated as of September 1, 1989, between the Company and Bankers Trust
Company, as Trustee, relating to the Company's 11 1/2% Senior Subordinated
Notes due September 1, 1999, filed as Exhibit 4(n) to the Company's
Registration Statement on Form S-3, Registration Number 33-46764, is hereby
incorporated by reference.
4.14 Indenture, dated as of February 15, 1992, between the Company and The Bank of
New York, as Trustee, relating to the Company's 6 3/4% Convertible Subordinated
Debentures due February 15, 2007, filed as Exhibit 4(p) to the Company's
Registration Statement on Form S-3, Registration Number 33-45978, is hereby
incorporated by reference.
4.15 Senior Subordinated Indenture, dated as of March 15, 1992, between the Company
and The Bank of New York, as Trustee, filed as Exhibit 4(a) to the Company's
Registration Statement Form S-3, Registration Number 33-46764, is hereby
incorporated by reference.
4.16 Indenture dated as of June 15, 1993, between the Company and Norwest Bank
Minnesota, National Association, as Trustee, relating to the Company's 8 7/8%
Convertible Senior Subordinated Notes due 2000, filed as Exhibit 4(a) to the
Company's Registration Statement on Form S-3, Registration Number 33-66086, is
hereby incorporated by reference.
4.17 Indenture, dated as of November 1, 1991, between the Company and The Bank of New
York, as Trustee, relating to the Company's Senior Debt Securities, filed as
Exhibit 4(u) to the Company's Registration Statement on Form S-3, Registration
Number 33-45374, is hereby incorporated by reference.
4.18 First Supplemental Indenture dated as of June 23, 1993, between the Company and
The Bank of New York, as Trustee, relating to the Indenture, dated as of
November 1, 1991, between the Company and The Bank of New York, as Trustee,
filed as Exhibit 4(aa) to the Company's Registration Statement on Form S-3,
Registration Number 33-66086, is hereby incorporated by reference.
4.19 Second Supplemental Indenture dated as of February 1, 1994, between the Company
and the Bank of New York, as Trustee, relating to the Indenture, dated as of
November 1, 1991, as amended, filed as Exhibit 4.2 to the Company's Current
Report on Form 8-K, dated January 24, 1994, is hereby incorporated by
reference.
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4.20 Master Trust Indenture and Security Agreement dated as of March 14, 1995, among
Stone Receivables Corporation, the Company, as Servicer, Marine Midland Bank,
as Trustee, and Bankers Trust Company, as Administrative Agent, relating to the
accounts receivable securitization program, filed as Exhibit 4(o) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995, is
hereby incorporated by reference.
4.21 Series 1995-1 Supplement dated as of March 14, 1995, to the Master Trust
Indenture and Security Agreement dated as of March 14, 1995, among Stone
Receivables Corporation, the Company, as Servicer, Marine Midland Bank, as
Trustee, and Bankers Trust Company, as Administrative Agent, relating to the
accounts receivable securitization program, filed as Exhibit 4(p) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995, is
hereby incorporated by reference.
Indentures with respect to other long-term debt, none of which exceeds 10
percent of the total assets of the Company and its subsidiaries on a
consolidated basis, are not attached. (The Registrant agrees to furnish a copy
of such documents to the Commission upon request).
4.22 Guaranty, dated October 7, 1983, between the Company and The Continental Group,
Inc., filed as Exhibit 4(h) to the Company's Registration Statement on Form
S-3, Registration Number 33-36218, is hereby incorporated by reference.
4.23 Amendment No. 1 to Guaranty, dated as of June 1, 1996, among Continental
Holdings, Inc., Continental Group, Inc. and the Company, filed as Exhibit 4(r)
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996, is hereby incorporated by reference.
*5.1 Opinion of Leslie T. Lederer, Esq.
*12.1 Statement re Computation of Ratios
*23.1 Consent of Price Waterhouse LLP
*23.2 Consent of Leslie T. Lederer, Esq. (contained in his opinion filed as Exhibit
5.1 to this Registration Statement)
*24.1 Powers of Attorney
*25.1 Statement of Eligibility of Trustee, The Bank of New York, on Form T-1
*99.1 Form of Letter of Transmittal
*99.2 Form of Notice of Guaranteed Delivery
*99.3 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees
*99.4 Form of Letter from Registered Holders to Clients
*99.5 Form of Exchange Agent Agreement
</TABLE>
- ------------------------
* Filed herewith
(b) Financial Statement Schedules
Not applicable.
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended (the "Act"), and is therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
II-3
<PAGE>
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(c) The undersigned Registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not subject of and included in the Registration Statement when it
became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
STONE CONTAINER CORPORATION, a Delaware corporation, has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in Chicago, Illinois on September 17, 1996.
STONE CONTAINER CORPORATION
By: /s/ RANDOLPH C. READ
-----------------------------------
Randolph C. Read
SENIOR VICE PRESIDENT
CHIEF FINANCIAL AND PLANNING
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the day of September, 1996 by
the following persons in the capacities indicated.
<TABLE>
<C> <S>
/s/ ROGER W. STONE Chairman of the Board, President and Chief
- ------------------------------------------- Executive Officer and Director (Principal
Roger W. Stone Executive Officer)
/s/ RANDOLPH C. READ Senior Vice President -- Chief Financial and
- ------------------------------------------- Planning Officer (Principal Financial
Randolph C. Read Officer)
/s/ THOMAS P. CUTILLETTA
- ------------------------------------------- Senior Vice President and Corporate Controller
Thomas P. Cutilletta (Principal Accounting Officer)
*
- ------------------------------------------- Director
William F. Aldinger
*
- ------------------------------------------- Director
Richard A. Giesen
*
- ------------------------------------------- Director
James J. Glasser
*
- ------------------------------------------- Director
Jack M. Greenberg
*
- ------------------------------------------- Director
George D. Kennedy
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S>
*
- ------------------------------------------- Director
Howard C. Miller, Jr.
*
- ------------------------------------------- Director
John D. Nichols
*
- ------------------------------------------- Director
Jerry K. Pearlman
*
- ------------------------------------------- Director
Richard J. Raskin
*
- ------------------------------------------- Director
Alan Stone
*
- ------------------------------------------- Director
Avery J. Stone
*
- ------------------------------------------- Director
Ira N. Stone
*
- ------------------------------------------- Director
James H. Stone
</TABLE>
*By: /s/ LESLIE T. LEDERER
----------------------------------
Leslie T. Lederer
(ATTORNEY-IN-FACT)
II-6
<PAGE>
EXHIBIT 4.1
STONE CONTAINER CORPORATION,
as Issuer
TO
THE BANK OF NEW YORK,
as Trustee
---------
Indenture
Dated as of July 24, 1996
------------
<PAGE>
STONE CONTAINER CORPORATION
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of July 24, 1996
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)............................................................Not Applicable
(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
<PAGE>
(a)(1)(A).................................................................512
(a)(1)(B)............................................................502, 513
(a)(2).........................................................Not Applicable
(b).......................................................................508
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
ARTICLE ONE - Definitions and Other Provisions of General Application....... 1
SECTION 101. Definitions.......................................... 1
11 1/2% Notes................................................. 2
11 1/2% Note Indenture........................................ 2
1991 Indenture................................................ 2
1994 Indentures............................................... 2
Acquiring Person.............................................. 2
Act........................................................... 3
Affiliate..................................................... 3
Agent......................................................... 3
Asset Disposition............................................. 3
Asset Disposition Offer....................................... 3
Asset Disposition Offer Amount................................ 3
Asset Disposition Payment Date................................ 3
Authenticating Agent.......................................... 3
Authority..................................................... 4
Bankruptcy Law................................................ 4
Board of Directors............................................ 4
Board Resolution.............................................. 4
Business Day.................................................. 4
Capital Stock................................................. 4
Capitalized Lease Obligation.................................. 4
Change of Control............................................. 4
Change of Control Date........................................ 4
Change of Control Offer....................................... 4
Change of Control Payment Date................................ 4
Commission.................................................... 4
Commodities Agreement......................................... 5
Company....................................................... 5
Company Request............................................... 5
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............................... 5
Consolidated Interest Coverage Ratio.......................... 6
Consolidated Interest Expense................................. 6
Consolidated Net Income....................................... 6
Consolidated Net Worth........................................ 6
i
<PAGE>
Continental Guaranty.......................................... 7
Continuing Director........................................... 7
Corporate Trust Office........................................ 7
corporation................................................... 7
covenant defeasance........................................... 7
Credit Agreements............................................. 7
Currency Agreement............................................ 8
Custodian..................................................... 8
Default....................................................... 8
Defaulted Interest............................................ 8
defeasance.................................................... 8
Deficiency Amount............................................. 8
Deficiency Date............................................... 8
Deficiency Offer.............................................. 8
Deficiency Offer Amount....................................... 8
Deficiency Payment Date....................................... 8
Depository.................................................... 8
dollars....................................................... 8
$............................................................. 8
Event of Default.............................................. 8
Exchange Act.................................................. 9
First Mortgage Notes.......................................... 9
First Mortgage Note Indenture................................. 9
Five Year Treasury Rate....................................... 9
GAAP.......................................................... 9
Holder........................................................ 10
Securityholder................................................ 10
Indebtedness.................................................. 10
Indenture..................................................... 11
Initial Interest Rate......................................... 11
interest...................................................... 11
Interest Payment Date......................................... 11
Interest Swap Obligations..................................... 11
Lien.......................................................... 11
Maturity...................................................... 11
Minimum Subordinated Capital Base............................. 11
New Credit Agreement.......................................... 11
Officer....................................................... 12
Officer's Certificate......................................... 12
Opinion of Counsel............................................ 12
Ordinary Course of Business Liens............................. 12
Original Issue Discount Security.............................. 13
Outstanding................................................... 13
Paying Agent.................................................. 14
ii
<PAGE>
Permitted Existing Indebtedness of an Acquired Person......... 14
Permitted Indebtedness........................................ 15
Permitted Liens............................................... 17
Permitted Refinancing Indebtedness............................ 20
Permitted Stone Canada Indebtedness........................... 21
Permitted Subordinated Indebtedness........................... 21
Person........................................................ 21
Place of Payment.............................................. 22
Predecessor Security.......................................... 22
Rate Determination Period..................................... 22
Receivables................................................... 22
Redeemable Stock.............................................. 22
Redemption Date............................................... 22
Redemption Price.............................................. 22
Register...................................................... 22
Registrar..................................................... 22
Registered Security........................................... 22
Regular Record Date........................................... 22
Reset Date.................................................... 22
Reset Rate.................................................... 22
Responsible Officer........................................... 23
Restricted Payment............................................ 23
Restricted Subsidiary......................................... 23
SRC Master Trust Indenture.................................... 23
Securities.................................................... 23
Senior Indebtedness........................................... 23
Seven Year Treasury Rate...................................... 23
Special Record Date........................................... 24
Specified Bank Debt........................................... 24
Stated Maturity............................................... 24
Stone Canada.................................................. 25
Stone Canada Group............................................ 25
Subordinated Capital Base..................................... 25
Subordinated Indebtedness..................................... 25
Subsidiary.................................................... 25
Ten Year Treasury Rate........................................ 26
Trustee....................................................... 26
Trust Indenture Act........................................... 26
Two Year Treasury Rate........................................ 26
U.S. Government Obligations................................... 27
Unrestricted Subsidiary....................................... 27
Vice President................................................ 27
SECTION 102. Compliance Certificates and Opinions................. 27
SECTION 103. Form of Documents Delivered to Trustee............... 28
iii
<PAGE>
SECTION 104. Acts of Holders...................................... 29
SECTION 105. Notices, etc., to Trustee and Company................ 30
SECTION 106. Notice to Holders; Waiver............................ 30
SECTION 107. Conflict with Trust Indenture Act.................... 31
SECTION 108. Effect of Headings and Table of Contents............. 31
SECTION 109. Successors and Assigns............................... 31
SECTION 110. Separability Clause.................................. 31
SECTION 111. Benefits of Indenture................................ 31
SECTION 112. Governing Law........................................ 31
SECTION 113. Legal Holidays....................................... 32
SECTION 114. No Recourse Against Others........................... 32
SECTION 115. Incorporation by Reference to Trust Indenture Act.... 32
ARTICLE TWO - Security Forms................................................ 33
SECTION 201. Forms Generally...................................... 33
SECTION 202. Form of Face of Security............................. 33
SECTION 203. Form of Reverse of Security.......................... 36
SECTION 204. Form of Trustee's Certificate of Authentication...... 44
SECTION 205. Securities in Global Form............................ 45
SECTION 206. CUSIP Number......................................... 45
SECTION 207. Form of Legend for Securities in Global Form......... 46
ARTICLE THREE - The Securities.............................................. 46
SECTION 301. Amount Unlimited: Issuable in Series................. 46
SECTION 302. Denominations........................................ 48
SECTION 303. Execution, Authentication, Delivery and Dating....... 48
SECTION 304. Temporary Securities................................. 50
SECTION 305. Registration, Transfer and Exchange.................. 51
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities..... 53
SECTION 307. Payment of Interest; Interest Rights Preserved....... 54
SECTION 308. Persons Deemed Owners................................ 55
SECTION 309. Cancellation......................................... 55
SECTION 310. Computation of Interest.............................. 56
ARTICLE FOUR - Satisfaction and Discharge................................... 56
SECTION 401. Satisfaction and Discharge of Indenture.............. 56
SECTION 402. Application of Trust Money........................... 57
ARTICLE FIVE - Remedies..................................................... 57
SECTION 501. Events of Default.................................... 57
iv
<PAGE>
SECTION 502. Acceleration of Maturity; Rescission and Annulment... 60
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee.......................................... 60
SECTION 504. Trustee May File Proofs of Claim..................... 61
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities.......................................... 62
SECTION 506. Application of Money Collected....................... 62
SECTION 507. Limitation on Suits.................................. 63
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest................................ 63
SECTION 509. Restoration of Rights and Remedies................... 64
SECTION 510. Rights and Remedies Cumulative....................... 64
SECTION 511. Delay or Omission Not Waiver......................... 64
SECTION 512. Control by Holders................................... 64
SECTION 513. Waiver of Past Defaults.............................. 65
SECTION 514. Undertaking for Costs................................ 65
SECTION 515. Waiver of Stay or Extension Laws..................... 65
ARTICLE SIX - The Trustee................................................... 66
SECTION 601. Certain Duties and Responsibilities of the Trustee... 66
SECTION 602. Notice of Defaults................................... 66
SECTION 603. Certain Rights of Trustee............................ 67
SECTION 604. Not Responsible for Recitals or Issuance of
Securities.......................................... 68
SECTION 605. May Hold Securities.................................. 68
SECTION 606. Money Held in Trust.................................. 68
SECTION 607. Compensation and Reimbursement....................... 68
SECTION 608. Disqualification; Conflicting Interests.............. 69
SECTION 609. Corporate Trustee Required; Eligibility.............. 69
SECTION 610. Resignation and Removal; Appointment of Successor.... 70
SECTION 611. Acceptance of Appointment by Successor............... 71
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business............................................ 72
SECTION 613. Preferential Collection of Claims Against Company.... 73
SECTION 614. Appointment of Authenticating Agent.................. 73
ARTICLE SEVEN - Holders' Lists and Reports by Trustee and Company........... 75
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders............................................. 75
SECTION 702. Preservation of Information; Communications to
Holders............................................. 75
SECTION 703. Reports by Trustee................................... 75
SECTION 704. Reports by Company................................... 76
v
<PAGE>
ARTICLE EIGHT - Consolidation, Merger, Lease, Sale or Transfer.............. 77
SECTION 801. When Company May Merge, etc.......................... 77
SECTION 802. Securities to Be Secured in Certain Events........... 78
SECTION 803. Officer's Certificate; Opinion of Counsel............ 78
SECTION 804. Successor Corporation Substituted.................... 79
ARTICLE NINE - Supplements to the Indenture ................................ 79
SECTION 901. Supplemental Indentures Without Consent of Holders... 79
SECTION 902. Supplemental Indentures with Consent of Holders...... 80
SECTION 903. Execution of Supplemental Indentures................. 82
SECTION 904. Effect of Supplemental Indentures.................... 82
SECTION 905. Conformity with Trust Indenture Act.................. 82
SECTION 906. Reference in Securities to Supplemental Indentures... 82
ARTICLE TEN - Covenants..................................................... 82
SECTION 1001. Payment of Principal, Premium and Interest.......... 82
SECTION 1002. Maintenance of Office or Agency..................... 83
SECTION 1003. Money for Securities Payments to Be Held in Trust... 83
SECTION 1004. Corporate Existence................................. 85
SECTION 1005. Payment of Taxes and Other Claims................... 85
SECTION 1006. Restriction on Dividends............................ 85
SECTION 1007. Limitation on Future Liens and Guaranties........... 86
SECTION 1008. Limitation on Future Incurrence of Indebtedness..... 88
SECTION 1009. Limitation on Asset Dispositions.................... 88
SECTION 1010. Maintenance of Properties........................... 92
SECTION 1011. Compliance Certificates............................. 93
SECTION 1012. Waiver of Stay, Extension or Usury Laws............. 94
SECTION 1013. Change of Control................................... 94
SECTION 1014. Waiver of Certain Covenants......................... 96
ARTICLE ELEVEN - Maintenance of Subordinated Capital Base................... 96
SECTION 1101. Maintenance of Subordinated Capital Base............ 96
SECTION 1102. Alternative Interest Rate Adjustment................ 98
ARTICLE TWELVE - Redemption of Securities...................................100
SECTION 1201. Applicability of Article............................100
SECTION 1202. Election to Redeem; Notice to Trustee...............100
SECTION 1203. Selection by Trustee of the Securities to Be
Redeemed...........................................100
vi
<PAGE>
SECTION 1204. Notice of Redemption................................101
SECTION 1205. Deposit of Redemption Price.........................101
SECTION 1206. Securities Payable on Redemption Date...............102
SECTION 1207. Securities Redeemed in Part.........................102
ARTICLE THIRTEEN - Sinking Funds............................................102
SECTION 1301. Applicability of Article............................102
SECTION 1302. Satisfaction of Sinking Fund Payments with
Securities.........................................103
SECTION 1303. Redemption of Securities for Sinking Fund...........103
ARTICLE FOURTEEN - Defeasance And Covenant Defeasance.......................103
SECTION 1401. Applicability of Article; Company's Option to Effect
Defeasance or Covenant Defeasance..................103
SECTION 1402. Defeasance and Discharge............................104
SECTION 1403. Covenant Defeasance.................................104
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.....105
SECTION 1405. Deposited Money and Government Obligations to be
Held in Trust; Other Miscellaneous Provisions......106
- -----------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of this Indenture.
vii
<PAGE>
INDENTURE, dated as of July 24, 1996, 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 execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders (as hereinafter defined) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Securities
or of any series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) the word "including" (and with correlative meaning "include")
means including, without limiting the generality of, any description preceding
such term; and
<PAGE>
(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.
"11 1/2% Notes" means the Company's 11-1/2% Senior Notes due 2004.
"11 1/2% Note Indenture" means the indenture dated as of October 12, 1994
between the Company and The Bank of New York, as Trustee, relating to the
11 1/2% Notes, as amended and supplemented to the date hereof and, unless
otherwise indicated, from time to time after the date hereof.
"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.
"1994 Indentures" means (i) the 11 1/2% Note Indenture and (ii) the First
Mortgage Note Indenture. References herein to Indebtedness issued under the
1994 Indentures 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
2
<PAGE>
beneficial owner of any additional shares of common stock of the 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.
"Agent" means any Registrar, Paying Agent or co-registrar.
"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 (a) of Collateral (as defined in the First
Mortgage Note Indenture while the First Mortgage Notes are outstanding), (b) 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).
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Securities.
3
<PAGE>
"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.
"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.
"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.
4
<PAGE>
"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 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.
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"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 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
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"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 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 1403.
"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
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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.
"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 of 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 1402.
"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).
"Depository" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more permanent global
Securities, the Person designated as Depository by the Company pursuant to
Section 301, until a successor Depository shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depository" shall mean
or include each Person who is then a Depository hereunder, and if at any time
there is more than one such Person, "Depository" shall mean the Depository with
respect to the Securities of that series.
"dollars" and "$" means lawful money of the United States of America.
"Event of Default" has the meaning specified in Section 501.
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"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" means the Company's 10-3/4% First Mortgage Notes due
2002.
"First Mortgage Note Indenture" means the indenture dated as of October 12,
1994 between the Company and Norwest Bank Minnesota, National Association, as
Trustee, relating to the First Mortgage Notes, as amended and supplemented to
the date hereof and unless otherwise indicated, 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 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.
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"Holder" or "Securityholder" means a Person in whose name a Security 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
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.
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"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as contemplated
by Section 301.
"Initial Interest Rate", when used with respect to any Security, means the
initial rate of interest to be borne by such Security as stated on the face
thereof.
"interest", when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"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.
"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 Security, means the date on which
the principal of such Security 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, including without
limitation, as amended and restated as of March 22, 1996.
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"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 Person entitled to receive such opinion.
"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 Securities of any series 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
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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;
(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.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities or Securities of any
series, means, as of the date of determination, all such Securities theretofore
authenticated and delivered under this Indenture, EXCEPT:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities, 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
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than the Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of such
Securities; PROVIDED that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a BONA FIDE purchaser in whose hands such
Securities are valid obligations of the Company; and
(iv) Securities which have been defeased pursuant to Section 1402;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be that portion of the principal amount
thereof that could be declared to be due and payable upon the occurrence of an
Event of Default and the continuation thereof pursuant to the terms of such
Original Issue Discount Security as of the date of such determination, and (b)
Securities owned by the Company or any other obligor upon the Securities 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 Securities which the Trustee knows to
be so owned shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any 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 Securities on behalf of
the Company. The Company may act as Paying Agent with respect to any Securities
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 any costs incurred in connection with such exchange,
refinancing, redemption or defeasance; PROVIDED,
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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 are applied to repay Indebtedness under
the Credit Agreements and (y) the proceeds from the sale of the 111/2% Notes,
the First Mortgage Notes and the Securities of any series; (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, the 111/2% Notes and the Securities of any series
(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
111/2% Notes, the First Mortgage Notes, any Securities of any series
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
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the principal amounts outstanding under the Master Trust Indenture and
Security Agreement among Stone Receivable Corporation, Marine Midland Bank,
as trustee, and Bankers Trust Company, as administrative agent (the "SRC
Master Trust Indenture");
(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 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
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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 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)
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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));
(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
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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 Securities 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 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 SRC Master Trust Indenture;
(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;
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(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 (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
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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 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 (1) the Company's
97/8% Senior Notes due 2001 then outstanding, (2) the 111/2% Notes then
outstanding or (3) the Securities of any series then Outstanding or (B) a
maturity that is earlier than the latest maturity of (1) the Company's 97/8%
Senior Notes due 2001 then outstanding, (2) the 111/2% Notes then outstanding or
(3) the Securities of any series 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", when used with respect to Securities of any series,
means The City of New York or any other place or places where the principal of
(and premium, if any)
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and interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"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.
"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 then Outstanding Securities of any series, 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 then
Outstanding Securities of any series, or any security which is convertible or
exchangeable into a security which has such provisions.
"Redemption Date", when used with respect to any Security of any series to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security of any series to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Register" and "Registrar" have the respective meanings specified in
Section 305.
"Registered Security" means any Security issued hereunder and registered in
the Register.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Reset Date" means a date on which the interest rate on the Securities of
the applicable series shall be reset pursuant to Section 1102(a).
"Reset Rate" shall have the meaning provided in Section 1102(a).
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"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.
"SRC Master Trust Indenture" has the meaning specified in clause (2) of the
proviso to clause (i) of the definition of Permitted Indebtedness.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Security authenticated and delivered under this
Indenture.
"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
Securities of any series), (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 Securities. 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
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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.
"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, Indebtedness under the 1991 Indenture and the 1994 Indentures) 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 Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
any installment of principal or interest is due and payable.
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"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.
"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 111/2% Notes then outstanding, or if less than
one hundred million dollars ($100,000,000) of such Indebtedness is outstanding,
the then Outstanding Securities of any series, or a maturity that is earlier
than the maturity of any of the then outstanding Indebtedness under the 1991
Indenture, or if less than two hundred million dollars ($200,000,000) of such
Indebtedness is outstanding, the 111/2% Notes then outstanding, or if less than
one hundred million dollars ($100,000,000) of such Indebtedness is outstanding,
the then Outstanding Securities of any series, (b) redeemable stock of the
Company that does not constitute Redeemable Stock and (c) the principal amount
of the 111/2% Senior Subordinated Securities due September 1, 1999 of the
Company or any Subordinated Indebtedness exchanged for, or the net proceeds of
which are used to refinance, redeem or defease, such 111/2% Senior Subordinated
Notes due September 1, 1999 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 Securities 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 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.
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"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 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, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as 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
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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.
"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 (ii) 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.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officer's
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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 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.
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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 Registered Securities shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor in lieu thereof in respect of anything
done, omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
(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
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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 Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities 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 Security provides for notice to Holders of any
event, such notice shall be deemed sufficiently given (unless otherwise herein
or in such Security 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 Security
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
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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.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws (other than the choice of law provisions) of the State
of New York.
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SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security, 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 Securities) 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.
Directors, officers, employees or stockholders, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities 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 Security, waives and releases all such liability. Such waivers and releases
are part of the consideration for the issuance of the Securities.
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 Securities.
"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 Securities, 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.
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ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Securities of each series shall be substantially in the form set forth
in this Article, or in such other form as shall be established by or pursuant to
a Board Resolution or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The Trustee's certificates of authentication shall be in substantially the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 202. FORM OF FACE OF SECURITY.
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT - FOR
PURPOSES OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), THE ISSUE PRICE (AS DEFINED IN TREASURY REGULATION SECTION 1.1273-
2(a)(1)) OF THIS SECURITY IS , THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT (AS DEFINED IN SECTION 1273(a)(1) OF THE CODE AND TREASURY REGULATION
1.1273-1(a)) WITH RESPECT TO THIS SECURITY IS , THE ISSUE DATE (AS
DEFINED IN SECTION 1275(a)(2) OF THE CODE AND TREASURY REGULATION SECTION
1.1273-2(a)(2)) OF THIS SECURITY IS AND THE YIELD TO MATURITY (AS
DEFINED IN TREASURY REGULATION SECTION 1.1272-1(b)(i)) OF THIS SECURITY IS
.] [IF THE SECURITY IS SUBJECT TO THE RULES OF TREASURY REGULATION
SECTION 1.1275-4(B), INSERT - THE COMPARABLE YIELD (AS DEFINED IN TREASURY
REGULATION SECTION 1.1275-4(b)(4)) OF THIS SECURITY IS AND THE
PROJECTED PAYMENT SCHEDULE (AS DEFINED IN TREASURY REGULATION SECTION 1.1275-
4(b)(4))
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WITH RESPECT TO THIS SECURITY IS AS FOLLOWS:
.]
STONE CONTAINER CORPORATION
-----------------------------------
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 , [IF THE
SECURITY IS TO BEAR INTEREST PRIOR TO MATURITY, INSERT - and to pay interest
thereon from or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, semi-annually on
and of each year (commencing ), at the rate of %
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 Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the or (whether or not a
Business Day), as the case may be, preceding such Interest Payment Date. Any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture.
[IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT - The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at
Stated Maturity and in such case the overdue principal of this Security
shall bear interest at the rate of % per annum (to the extent that the
payment of such interest shall be legally enforceable), which shall accrue
from the date of such default in payment to the date payment of such
principal has been made or duly provided for. Interest on any overdue
principal shall be payable on demand. Any such interest on any overdue
principal that is not so paid on demand shall bear interest at the rate of
% per annum (to the extent that the payment of such interest shall be
legally enforceable), which shall accrue from the
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<PAGE>
date of such demand for payment to the date payment of such interest has
been made or duly provided for, and such interest shall also be payable on
demand.]
Payment of the principal of (and premium, if any) and [IF APPLICABLE,
INSERT - any such] interest on this Security will be made at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York in dollars; [IF APPLICABLE, INSERT - PROVIDED, HOWEVER,
that at the option of the Company, payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Register.]
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
STONE CONTAINER CORPORATION
By:
------------------------
[CORPORATE SEAL]
Attest:
- -------------------
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SECTION 203. FORM OF REVERSE OF SECURITY.
------------------------------
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an indenture, dated as of , 1996 (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 Securities are, and are to be, authenticated and delivered. All
terms used in this Security which are not defined herein shall have the meanings
assigned to them in the Indenture. This Security is one of the series
designated on the face hereof [, limited in principal amount to $ ].
[IF APPLICABLE, INSERT--The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [IF APPLICABLE, INSERT-
(1) on in any year commencing with the year and
ending with the year through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount, and (2)] at
any time [on or after , ], as a whole or in part, at the
election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount):
If redeemed [on or before , %, and if redeemed] during the
12-month period beginning of the years indicated,
Redemption Redemption
Year Price Year Price
---- ---------- ---- ----------
and thereafter at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption [IF APPLICABLE, INSERT--(whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[IF APPLICABLE, INSERT-The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on
in any year commencing with the year and ending
with the year through operation of the
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<PAGE>
sinking fund for this series at the Redemption Prices for redemption through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below, and (2) at any time [on or after ],
as a whole or in part, at the election of the Company, at the Redemption Prices
for redemption otherwise than through operation of the sinking fund (expressed
as percentages of the principal amount) set forth in the table below:
If redeemed during a 12-month period beginning of the years
indicated,
Redemption Price
For Redemption Redemption Price for
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
---- ------------ -------------------
and thereafter at a Redemption Price equal to % of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to ,
redeem any Securities of this series as contemplated by [clause (2) of] the
preceding paragraph as a part of, or in anticipation of, any refunding operation
by the application, directly or indirectly, of moneys borrowed having an
interest cost to the Company (calculated in accordance with generally accepted
financial practice) of less than % per annum.]
[The sinking fund for this series provides for the redemption on in
each year beginning with the year and ending with the year
of [not less than] $ [("mandatory sinking fund") and
not more than $ ] aggregate principal amount of Securities of this
series.] [Securities of this series acquired or redeemed by the Company
otherwise than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made-in
the inverse order in which they become due.]
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<PAGE>
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
[IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY,-If any Event
of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY,--If an Event of
Default with respect to Securities of this series shall occur and be continuing,
an amount of principal of the Securities of this series may be declared due and
payable in the manner and with the effect provided in the Indenture. Such
amount shall be equal to [insert formula for determining the amount]. Upon
payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal and overdue interest (in each case to the
extent that the payment of such interest shall be legally enforceable), all of
the Company's obligations in respect of the payment of the principal of and
interest, if any, on the Securities of this series shall terminate.]
[The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Security and (b) the Company's
obligations under the Indenture and this Security (other than its obligations to
pay principal of (and premium, if any) and interest on the Securities and
certain other provisions of the Indenture) and the related Events of Default,
upon compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.]
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 of the Securities of this
series to purchase (a "Deficiency Offer") 10% of the principal amount of the
Securities of this series 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 the Securities of this series 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
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<PAGE>
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.
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
Securities of this series 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 Securities of this series 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
Securities of this series, as reset on the Reset Date, shall increase by fifty
(50) basis points, and (iii) the interest rate on the Securities of this series
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 Securities of this series at any time exceed the Initial Interest
Rate by more than two hundred (200) basis points. Once the interest rate on the
Securities of this series 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 Securities of this
series shall return to the Initial Interest Rate effective as of the first day
of the second following fiscal quarter.
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 Securities 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.
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 Security.
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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The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders representing at least a majority in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of at least a majority
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Security shall bind such Holder and all future Holders of this Security
and of any Security 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 Security.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in any place where the principal of (and premium, if any) and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Registrar duly executed by the Holder hereof, such Holder's attorney duly
authorized in writing, and thereupon one or more new Securities of this series,
of authorized denominations and for the same Stated Maturity and aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of one thousand dollars ($1,000) and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series 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.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
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Directors, officers, employees or stockholders, as such, of the Company
shall not have any liability for any obligations of the Company under this
Security 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 Security,
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Security.
[IF APPLICABLE, INSERT - 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 Securities of this series as a
convenience to the Holders of the Securities of this series. No representation
is made as to the correctness or accuracy of such numbers as printed on the
Securities of this series and reliance may be placed only on the other
identification numbers printed hereon.]
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ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security 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 Security 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 Security)
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 Security 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 Security)
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.
Dated:
---------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
THE BANK OF NEW YORK,
AS TRUSTEE
By
---------------------
AUTHORIZED SIGNATORY
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SECTION 205. SECURITIES IN GLOBAL FORM.
If Securities of a series are issuable in global form, as contemplated by
Section 301, then, notwithstanding the provisions of Section 302, any such
Security shall represent such of the Outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Securities from time to time endorsed thereon and that the
aggregate amount of Outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges, redemptions
and repurchases. Any endorsement of a Security in global form to reflect the
amount, or any increase or decrease in the amount, of Outstanding Securities
represented thereby shall be made in such manner and upon instructions given by
such Person or Persons as shall be specified therein or in the Company Order to
be delivered to the Trustee pursuant to Section 303 or Section 304. Subject to
the provisions of Section 303 and, if applicable, Section 304, the Trustee shall
deliver and redeliver any Security in permanent global form in the manner and
upon instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.
The provisions of Section 309 shall apply to any Security represented by a
Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 102 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby.
Notwithstanding the provisions of Sections 201 and 307, unless otherwise
specified as contemplated by Section 301, payment of principal of and any
premium and interest on any Security in permanent global form shall be made to
the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided in the
preceding paragraph, the Company, the Trustee and any agent of the Company and
the Trustee shall treat a Person as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security as shall be
specified in a written statement of the Holder of such permanent global
Security.
SECTION 206. CUSIP NUMBER.
The Company in issuing Securities of any series 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 of such series; 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 Securities of such
series, and that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption shall not be
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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 any series of
Securities.
SECTION 207. FORM OF LEGEND FOR SECURITIES IN GLOBAL FORM.
Any Security in global form authenticated and delivered hereunder shall
bear a legend in substantially the following form:
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED: ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more series.
There shall be established in or pursuant to a Board Resolution, and set forth
in an Officer's Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the
Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to Sections
304, 305, 306, 906 or 1207);
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(3) whether any Securities of the series are to be issuable in permanent
global form with or without coupons and, if so, (i) whether beneficial owners of
interests in any such permanent global Security may exchange such interests for
Securities of such series and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may occur, if
other than in the manner provided in Section 305, (ii) the name of the
Depository with respect to any global Security, and (iii) to the extent Section
205 is inapplicable thereto, any substitute provisions applicable thereto;
(4) whether any Securities of such series are to be issuable subject to
transfer restrictions and, if so, the circumstances under which any such
transfers may occur, if other than the manner provided in Section 305;
(5) the date or dates on which the principal of the Securities of the
series is payable;
(6) the rate or rates at which the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be payable and the Regular
Record Date for the interest payable on any Interest Payment Date and the basis
points and United States Treasury rate(s) to be used in calculating the Reset
Rate;
(7) the place or places where the principal of (and premium, if any) and
interest on Securities of the series shall be payable;
(8) the period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series may be redeemed, in
whole or in part, at the option of the Company, pursuant to any sinking fund or
otherwise;
(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation, and, where applicable, the obligation of the Company to select the
Securities to be redeemed;
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
(12) additional Events of Default with respect to Securities of the series,
if any, other than those set forth herein:
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(13) the application, if any, of either or both of Section 1402 and Section
1403 to the Securities of the series;
(14) if other than the Trustee, the identity of the Registrar and any
Paying Agent;
(15) any additions or changes to or deletions from the provisions of
Section 101 or Articles Eight, Ten and Eleven hereof;
(16) the exchangeability, if any, of any series of Securities issued
without registration under the Securities Act for new Securities of the same
series to be registered under the Securities Act pursuant to an exchange offer;
and
(17) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
Board Resolution and set forth in such Officer's Certificate or in any such
indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officer's
Certificate setting forth, or providing the manner for determining, the terms of
the Securities of such series.
SECTION 302. DENOMINATIONS.
The Securities of each series shall be issuable in fully registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its President or one of its Vice Presidents, under its corporate
seal reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile. 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
Securities. 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 Security that has been duly authenticated and delivered by
the Trustee.
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<PAGE>
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and make such Securities available for
delivery. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Sections 315(a)
through (d) of the Trust Indenture Act) shall be fully protected in relying
upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 301, that such terms have been
established in conformity with the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except to the extent enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and by the effect of
general principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law); and
(d) that no consent, approval, authorization, order, registration or
qualification of or with any court or any governmental agency or body having
jurisdiction over the Company is required for the execution and delivery of such
Securities by the Company, except such as have been obtained (except that no
opinion need be expressed as to the securities laws of any state).
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee, or in the written opinion of
counsel
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to the Trustee (which counsel may be an employee of the Trustee) such
authentication may not lawfully be made or would involve the Trustee in personal
liability.
Notwithstanding the provisions of Section 301 and of the immediately
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officer's
Certificate otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to the immediately preceding
paragraph at or prior to the time of authentication of each Security of such
series if such documents are delivered at or prior to the authentication upon
original issuance of the first Security of such series to be issued.
If the Company shall establish pursuant to Section 301 that the Securities
of a series are to be issued in the form of one or more global Securities, then
the Company shall execute and the Trustee shall, in accordance with this Section
and the Company Order with respect to the authentication and delivery of such
series, authenticate and deliver one or more global Securities that (i) shall be
in an aggregate amount equal to the aggregate principal amount specified in such
Company Order, (ii) shall be registered in the name of the Depository therefor
or its nominee, and (iii) shall be made available for delivery by the Trustee to
such Depository or pursuant to such Depository's instructions.
Unless otherwise provided for in the form of Security, each Security shall
be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed, or otherwise produced, in any authorized
denomination, substantially in the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
In the case of Securities of any series, such temporary Securities may be
in global form, representing all or a portion of the Outstanding Securities of
such series.
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Except in the case of temporary Securities in global form (which shall be
exchanged in accordance with the provisions of Section 305), if temporary
Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities of such series at the office or agency of
the Company in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series, the Company shall execute and the Trustee shall authenticate and make
available for delivery in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor. Until so exchanged the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
If temporary Securities of any series are issued in global form, any such
temporary global Security shall, unless otherwise provided therein, be delivered
to the office of a Depository for credit to the respective accounts of the
beneficial owners of such Securities (or to such other accounts as they may
direct).
SECTION 305. REGISTRATION, 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 provide for the registration
of Securities and for registration of transfers of Securities. The Trustee is
hereby appointed "Registrar" for the purpose of registering Notes and transfers
of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any series
at the office or agency of the Company in a Place of Payment for that series,
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 Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and Stated Maturity.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of a
like aggregate principal amount and Stated Maturity, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and make available for delivery, the Securities which the
Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global Security shall be exchangeable
only as provided in this
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paragraph. If the beneficial owners of interests in a permanent global Security
are entitled to exchange such interests for Securities of such series and of
like tenor and principal amount of another authorized form and denomination, as
specified and as subject to the conditions contemplated by Section 301, then
without unnecessary delay but in any event not later than the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of that series in aggregate principal amount equal
to the principal amount of such permanent global Security, executed by the
Company. On or after the earliest date on which such interests may be so
exchanged, such permanent global Securities shall be surrendered from time to
time by the Depository and in accordance with instructions given to the Trustee
and the Depository (which instructions shall be in writing but need not comply
with Section 102 or be accompanied by an Opinion of Counsel), as shall be
specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or in part, for
definitive Securities of the same series without charge. The Trustee shall
authenticate and make available for delivery, in exchange for each portion of
such surrendered permanent global Security, a like aggregate principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor as the portion of such permanent global Security to be exchanged which
shall be in the form of the Securities of such series; PROVIDED, HOWEVER, that
no such exchanges may occur during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Securities of
that series selected for redemption under Section 1203 and ending at the close
of business on the day of such mailing. Promptly following any such exchange in
part, such permanent global Security shall be returned by the Trustee to the
Depository or such other Depository referred to above in accordance with the
written instructions of the Company referred to above. If a Security in the
form specified for such series is issued in exchange for any portion of a
permanent global Security after the close of business at the office or agency
where such exchange occurs on (i) any Regular Record Date and before the opening
of business at such office or agency on the relevant Interest Payment Date, or
(ii) any Special Record Date and before the opening of business at such office
or agency on the related proposed date for payment of interest or Defaulted
Interest, as the case may be, such interest or Defaulted Interest will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of such Security in the form specified for such series, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such permanent global Security is payable in accordance with the provisions
of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by
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a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
Unless otherwise provided in the Securities to be transferred or exchanged,
no service charge shall be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 304, 906 or 1207 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 1203 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company shall
execute and upon its request the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company the Trustee (i) evidence of
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a BONA FIDE
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
No service charge shall be made for the issuance of any new Security 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 Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation
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of the Company, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Securities of
that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Security (or one or more Predecessor Securities) is registered at the
close of business on the Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to 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 Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security of
such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such series at
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 Securities of
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such series (or their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest, and any
interest payable on Defaulted Interest, on the Securities of any series in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such Predecessor Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
None of the Company, the Trustee or any agent of the Company or the Trustee
shall have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interest of a
Security in global form, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interest. Notwithstanding the
foregoing, with respect to any Security in global form, nothing herein shall
prevent the Company or the Trustee or any agent of the Company or the Trustee,
from giving effect to any written certification, proxy or other authorization
furnished by the Depository (or its nominee), as a Holder, with respect to such
Security in global form or impair, as between the Depository and owners of
beneficial interests in such Security in global form, the operation of customary
practices governing the exercise of the right of the Depository (or its nominee)
as holder of such Security in global form.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The
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Company may at any time deliver to the Trustee for cancellation any Security
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly canceled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any of the Securities canceled as provided in this
Section, except as expressly permitted by this Indenture. All canceled
Securities 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 Securities be
returned to it).
SECTION 310. COMPUTATION OF INTEREST.
Except as contemplated by Section 301 for Securities of any series,
interest on the Securities of each series shall be computed on the basis of a
360-day year of twelve 30-day months.
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 Securities 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 Securities theretofore authenticated and issued
hereunder (other than (i) Securities which have been destroyed,
lost or stolen and which have been replaced or paid as provided
in Section 306 and (ii) Securities for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
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(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 Securities not theretofore
delivered to the Trustee for cancellation, for principal (and premium, if any)
and interest to the date of such deposit (in the case of Securities which have
become due and payable) or 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 Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with or
received by the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and
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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 Security of
that series 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 Security of that series 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 otherwise; or
(3) the Company fails to observe or perform any of its other covenants,
warranties or agreements in the Securities of that series 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 or which has
expressly been included in this Indenture solely for the benefit of series of
Securities other than that series), 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 million 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 Securities of that series a
written notice specifying such event or events of default and requiring the
Company to cause such acceleration to be rescinded or annulled
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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 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) any other Event of Default provided with respect to Securities of that
series.
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 Securities of that series 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 Securities of any series (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 Securities of that
series by notice in writing to the Company and the Trustee, may declare the
unpaid principal of and accrued interest to the date of acceleration (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) on all
the Outstanding Securities of that series to be due and payable immediately and,
upon any such declaration, the Outstanding Securities of that series (or
specified principal amount) 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 Securities (or specified principal amount) 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 Security.
Upon payment of all such principal and interest, all of the Company's
obligations under the Securities of that series and (upon payment of the
Securities of all series) this Indenture shall terminate, EXCEPT obligations
under Section 607.
The Holders representing at least a majority in principal amount of the
Outstanding Securities of that series 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 Securities of that
series 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 Security of any
series when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security of any series at the Maturity thereof,
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the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, 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
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(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 Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its 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;
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article in respect of
Securities of any series shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
Securities 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
applicable to such series;
Second: To the payment of the amounts then due and unpaid for principal of
(and premium, if any) and interest on the Securities of such series in respect
of which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities of such series for principal (and premium, if any)
and interest, respectively; and
Third: To the Company.
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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 of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request 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 Securities of that series;
it being understood and intended that no one or more Holders of Securities of
any series shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the
rights of any other of such Holders, or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders of Securities of the affected series.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST.
Notwithstanding any other provision of this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
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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 Securities in the last paragraph of Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion 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 Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series, PROVIDED that:
(1) such direction shall not be in conflict with any rule of law or with
this Indenture;
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; and
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(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 a majority in principal amount of the
Outstanding Securities of any series may by written notice to the Trustee on
behalf of the Holders of all Securities of such series waive any Default or
Event of Default with respect to such series 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 Security of such series, 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 Security of such series 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 Securities of such series; 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 Security 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 costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series, or to any suit instituted by
any Holder for the enforcement of the payment of the principal of (or premium,
if any) or interest on any Security on or after the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on or
after the Redemption Date).
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or
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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.
(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 with
respect to Securities of any series, the Trustee shall give to all Holders of
Securities of such series, 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 Security of
such series or in the payment of any sinking fund installment with respect to
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or
directors or Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders of Securities
of such series.
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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;
(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 with respect to the
Securities of any series 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 Securities of any series; 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;
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(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 SECURITIES.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any Registrar or
any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 608 and 613,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, 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);
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(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 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 Securities 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
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the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the Securities
of one or more series by Act of the Holders of a majority in principal amount of
the Outstanding Securities of such series, delivered to the Trustee and to the
Company.
(d) If at any time:
(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 of a Security 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 such Holder of a Security 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 with respect to all Securities, or (B) subject to Section 315(e) of the
Trust Indenture Act, any Holder who has been a BONA FIDE Holder of a Security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor
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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, with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611, become the successor
Trustee with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company with respect to such
Securities. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
BONA FIDE Holder of a Security of such series for at least six months may,
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 with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Register. Each notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its Corporate Trust
Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the 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
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Trustee all property and money held by such retiring Trustee hereunder, subject
to its Lien, if any, provided for in Section 607.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (i) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (ii)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(iii) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in
subsection (a) or (b) above, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article 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
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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 Securities shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
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 Securities remain Outstanding the Trustee may
appoint an Authenticating Agent or Agents with respect to one or more series of
Securities which shall be authorized to act on behalf of, and subject to the
direction of, the Trustee to authenticate Securities of such series issued upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 306, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than 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
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or consolidation to which such Authenticating Agent shall be a party, or any
corporation succeeding to the corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the 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.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
Dated:
------------------------
This is one of the Securities of the series designated therein referred to
the within-mentioned Indenture.
THE BANK OF NEW YORK
AS TRUSTEE
By:
----------------------------------------
AS AUTHENTICATING AGENT
By:
----------------------------------------
AUTHORIZED SIGNATORY
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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.
(b) Holders of Securities 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 Securities, and the Trustee shall comply with its
obligations under such Section 312(b).
(c) Each Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the year
1997, the Trustee shall transmit by mail to all Holders of Securities as
provided in Section 313(c) of the
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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
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the 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
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(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.
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
Securities 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
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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
Securities of any series by Standard & Poor's Corporation or Moody's Investors
Service, Inc. shall be lower than the rating ascribed to the Securities of any
series prior to the public announcement of such transaction or series of related
transactions, then the Company shall make an offer for the Securities of each
series 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. SECURITIES 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 Securities 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
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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 Securities 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 Securities; or
(2) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are
expressly being included solely for the benefit of such series) or to surrender
any right or power herein or in the Securities conferred upon the Company; or
(3) to add any additional Events of Default with respect to all or any
series of Securities; or
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(4) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental Indenture which is entitled to the benefit of such provision;
or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 611(b); or;
(9) 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
(10) 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
(11) to make any change that does not materially adversely affect the
interests of the Holders of Securities of any series.
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 a majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
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 of Securities of such series
under this
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Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof or extend the time for payment thereof, or reduce the amount
of the principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change the Place of Payment where, or the coin or currency in
which, any Security or any premium or the interest thereon is payable, or impair
the right to institute 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
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver of compliance with certain provisions of this Indenture or 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) 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
Securities 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 Security affected thereby, PROVIDED, HOWEVER,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes in
this Section and Section 1014, or the deletion of this proviso, in accordance
with the requirements of Sections 611(b) and 901(10).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
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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.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of the Holders of each
series of Securities that it will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities of that series in accordance
with the terms of the Securities of that
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series 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 of Securities of that series pursuant to the terms of this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of (and premium, if
any) or interest on any Securities of that series, deposit with a Paying Agent a
sum sufficient to pay the principal (and premium, if any) or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium or interest, and (unless such
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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 any series of Securities
(other than the Trustee) to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities of that series) in the making of any payment of
principal (and premium, if any) or interest on the Securities of that series;
and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for 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 Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in 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.
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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 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 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 with
respect to any series of Securities or (b) the Consolidated Net Worth of the
Company shall be
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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.
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 Securities 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 Securities 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)
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any Subordinated Indebtedness, the Company will secure the Outstanding
Securities 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 to guarantee (i) any
Indebtedness of the Company that ranks PARI PASSU with the Securities, (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 Securities 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 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
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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 the Consolidated
Interest Coverage Ratio of the Company, on a PRO FORMA basis for the then four
most recent full fiscal 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) So long as any of the Securities are Outstanding, (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,
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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 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 Securities 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
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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 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 Securities required to be made pursuant to this
Section is referred to as an "Asset Disposition Offer" and the date on which the
purchase of Securities 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 Securities initially subject to
the Asset Disposition Offer Amount and, if applicable, a
description of the adjustment mechanisms describe in subsection
(g) of this Section;
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(4) the name and address of the Paying Agent and the Trustee and that
Securities must be surrendered to the Paying Agent to collect the
purchase price;
(5) that any of the Securities not tendered or accepted for payment
will continue to accrue interest;
(6) that any Security 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 Security purchased pursuant
to an Asset Disposition Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security 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
Security the Holder delivered for purchase, the certificate
number of the Security the Holder delivered and a statement that
such Holder is withdrawing his election to have the Security
purchased; and
(9) that Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
(f) On the Asset Disposition Payment Date, the Company shall (i) accept
for payment Securities 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 Securities 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 Securities or
portions thereof so accepted, and (iii) deliver or cause to be delivered to the
Trustee Securities so accepted together with an Officer's Certificate stating
the Securities or portions thereof accepted by the Company. If the aggregate
principal amount of Securities tendered exceeds the Asset Disposition Offer
Amount, the Company shall select the Securities 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 Securities 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
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Holders a new Security of the applicable series and equal in principal amount to
any unpurchased portion of the Security surrendered. Any Securities 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 or the 1994 Indentures 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 and the 1994 Indentures (and in accordance with Section
1009(g) of the 1994 Indentures)) the closing date of which is prior to six
months after the asset disposition triggering the obligations of the Company
under the 1991 Indenture and/or the 1994 Indentures, as the case may be.
Notwithstanding the previous sentence, if on or after the date hereof, the
Company issues any Senior Indebtedness (including the Securities) 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 Securities tendered hereunder and the
Senior Indebtedness tendered thereunder and (ii) the Asset Disposition Offer
Amount available to repurchase the Securities 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
that explicitly permits the PRO RATA purchase of Securities 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
Securities 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 amount of such
refinancing Indebtedness is no greater than the principal amount of the 103/4%
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
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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 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 Securities 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
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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 Securities 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
Securities 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 Securities 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 Securities 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 of Securities of each applicable series 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 Securities) stating:
(1) that the Change of Control Offer is being made pursuant to this
Section and that all Securities 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
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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 Securities must be surrendered to the Paying Agent to collect
the purchase price;
(4) that any Security not tendered will continue to accrue interest;
(5) that any Security 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 Security purchased pursuant
to a Change of Control Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security 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
Security the Holder delivered for purchase, the certificate
numbers of the Security the Holder delivered and a statement that
such Holder is withdrawing his election to have such Security
purchased; and
(8) that Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the
unpurchased portion of the Securities 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 Securities of each applicable
series 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 Securities of each applicable series or portions thereof so accepted and
(iii) deliver or cause to be delivered to the Trustee Securities so accepted,
together with an Officer's Certificate stating the aggregate principal amount of
the Securities or portions thereof so accepted by the Company. The Paying Agent
shall promptly mail or deliver to the Holder of Securities of each applicable
series 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 Security of the same series as, and equal in principal amount
to, any unpurchased portion of the Security
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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 and 1009 with
respect to the Securities of any series, if before the time for such compliance
Holders representing at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
ARTICLE ELEVEN
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 Securities of each series, 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
of Securities of each such series to purchase (a "Deficiency Offer") 10% of the
principal amount of Securities of each such series 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.
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(b) Thereafter, semi-annually the Company shall make like Deficiency
Offers for the then applicable Deficiency Offer Amount of Securities of each
such series 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.
(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 of Securities of the applicable series in respect of the
Deficiency Offer (which notice shall contain all instructions and materials
necessary to enable such Holders to tender Securities) 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 Securities subject to the
Deficiency Amount;
(4) the name and address of the Paying Agent and the Trustee and that
Securities must be surrendered to the Paying Agent to collect the
purchase price;
(5) that any Securities not tendered or accepted for payment will
continue to accrue interest;
(6) that any Security 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 Security purchased pursuant
to a Deficiency Offer will be required to surrender the Security,
with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security 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;
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(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 Security the
Holder delivered for purchase, the certificate number of the
Security the Holder delivered and a statement that such Holder is
withdrawing his election to have the Security purchased; and
(9) that Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered.
(d) On a Deficiency Payment Date, the Company shall (i) accept for payment
Securities of each applicable series 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 Securities 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 Securities
or portions thereof so accepted, and (iii) deliver, or cause to be delivered to
the Trustee, Securities or portions thereof so accepted together with an
Officer's Certificate stating the Securities or portions thereof accepted by the
Company. If the aggregate principal amount of such Securities tendered exceeds
the Deficiency Offer Amount, the Company shall select the Securities 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 Securities 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 Securities of the same series as, and equal in principal amounts to, any
unpurchased portion of the Securities surrendered. Any Securities 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 Securities 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,
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then, in lieu of the making of a Deficiency Offer in the circumstances set forth
in Section 1101, (i) the interest rate on the Securities of the applicable
series 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 Securities of such series, as reset on the Reset Date,
shall increase by fifty (50) basis points, and (iii) the interest rate on the
Securities of such series 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 Securities of such series at any time
exceed the Initial Interest Rate by more than two hundred (200) basis points.
(b) Once the interest rate on the Securities of any series 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 Securities of each such series 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 Securities of each
such series 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 Securities 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 of Securities of the applicable series such notice setting forth the
Reset Rate. Commencing on the Reset Date, the Securities 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 Securities promptly when the
interest rate on such Securities 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 Securities effective on the Reset Date of the Company's
obligations hereunder.
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ARTICLE TWELVE
REDEMPTION OF SECURITIES
SECTION 1201. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Securities of any series) in
accordance with this Article.
SECTION 1202. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any of the Securities of any series
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company of less than all the Securities, 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 Securities of such series 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 Securities.
SECTION 1203. SELECTION BY TRUSTEE OF THE SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 90 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series 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 Securities are listed, and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series; provided that in case the
Securities of such series have different terms and maturities, the Securities to
be redeemed shall be selected by the Company and the Company shall give notice
thereof to the Trustee.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Security selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Security redeemed or
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to be redeemed only in part, to the portion of the principal amount of such
Security which has been or is to be redeemed.
SECTION 1204. 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 Securities 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
Securities must be surrendered to the Paying Agent to collect the Redemption
Price;
(4) if less than all Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed and that, on or
after the Redemption Date, upon surrender of any Security to be redeemed in
part, a new Security 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 Security or portion thereof to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after said date;
(6) that the redemption is for a sinking fund, if such is the case; and
(7) the CUSIP number, if any, of the Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1205. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be redeemed on that date.
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SECTION 1206. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities or portions thereof shall cease to bear interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security 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 Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Regular Record Dates or Special Record Dates according
to their terms and the provisions of Section 305.
If any Security 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 Security.
SECTION 1207. SECURITIES REDEEMED IN PART.
Any Security 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 Security without service charge, a new Security or Securities of
the same series and Stated Maturity, of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of a series, except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the
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terms of Securities of any series, the cash amount of any sinking fund payment
may be subject to reduction as provided in Section 1302. Each sinking fund
payment shall be applied to the redemption of Securities of any series as
provided for by the terms of Securities of such series.
SECTION 1302. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (1) may deliver Securities of a series (other than any
Securities previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
SECTION 1303. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officer's
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1302 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1203 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1204. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 1206 and 1207.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO EFFECT DEFEASANCE OR
COVENANT DEFEASANCE.
If pursuant to Section 301 provision is made for either or both of (a)
defeasance of the Securities of a series under Section 1402 or (b) covenant
defeasance of the Securities of a
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series under Section 1403, then the provisions of such Section or Sections, as
the case may be, together with the other provisions of this Article, shall be
applicable to the Securities of such series, and the Company may at its option
by Board Resolution, at any time, with respect to the Securities of such series,
elect to have either Section 1402 (if applicable) or Section 1403 (if
applicable) be applied to the Outstanding Securities of such series upon
compliance with the applicable conditions set forth below in this Article.
SECTION 1402. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section 1401 to
defease the Outstanding Securities of a particular series, the Company shall be
discharged from its obligations with respect to the Outstanding Securities of
such series on the date the applicable conditions set forth in Section 1404 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 Securities of such series and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, shall execute
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 Securities of such series to receive, solely from the
trust fund provided for in Section 1404, payments in respect of the principal of
(and premium, if any) and interest on such Securities when such payments are
due, (B) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 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 1402 notwithstanding the prior exercise of its
option with respect to covenant defeasance under Section 1403 in regard to the
Securities of such series.
SECTION 1403. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section 1401 to
obtain a covenant defeasance with respect to the Outstanding Securities of a
particular series, 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 Securities of such series on and
after the date the applicable conditions set forth in Section 1404 are satisfied
(hereinafter, "covenant defeasance"). Covenant defeasance shall mean that, with
respect to the Outstanding Securities of such series, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in 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
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to Outstanding Securities of such series, and the remainder of this Indenture
and of the Securities of such series shall be unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to defeasance under Section 1402 and
covenant defeasance under Section 1403 with respect to the Outstanding
Securities of a particular series:
(1) the Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 609
who shall agree to comply with the provisions of this Article 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 of such Securities, (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 Securities of such series on
the Stated Maturity of such principal or installment of principal or interest
and (ii) any mandatory payments applicable to the Outstanding Securities of such
series on the day on which such payments are due and payable in accordance with
the terms of this Indenture and of such Securities.
(2) No Default or Event of Default with respect to the Securities of such
series 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 Securities
of such series then listed on any national securities exchange registered under
the Exchange Act to be delisted.
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(5) In the case of an election with respect to Section 1402, 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 Securities of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such defeasance had not occurred 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 Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amounts, in the same manner and 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 1403, 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 Securities of such series will not recognize income,
gain or loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such covenant
defeasance had not occurred.
(7) Such defeasance or covenant defeasance shall be effected in compliance
with any additional terms, conditions or limitations which may be imposed on the
Company in connection therewith pursuant to Section 301.
(8) 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 1402 or
the covenant defeasance under Section 1403 (as the case may be) have been
complied with.
SECTION 1405. 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
1405, the "Trustee") pursuant to Section 1404 in respect of the Outstanding
Securities of a particular series shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
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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 1404 or the principal and interest received in respect
thereof, other than any such tax, fee or other charge which by law is for the
account of the Holders of the Outstanding Securities of such series.
Anything in this Article 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 1404 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.
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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:
THE BANK OF NEW YORK
as Trustee
By:
------------------------
Name:
Title:
[CORPORATE SEAL]
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STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
On the day of , 1996, before me personally came
, to me known, who, being by me duly sworn, did depose and say
that (s)he is of The Bank of New York, one of the parties
described in and which executed the foregoing instrument; that (s)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 (s)he signed his/her name thereto by like authority.
-------------------------------
My commission expires:
<PAGE>
STATE OF ILLINOIS )
) SS.:
COUNTY OF COOK )
On the day of , 1996, before me personally came
, to me known, who, being by me duly sworn, did depose and say that (s)he
is of Stone Container Corporation, one of the parties
described in and which executed the foregoing instrument; that (s)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 (s)he signed his/her name thereto by like authority.
-------------------------------
My commission expires:
<PAGE>
EXHIBIT 4.2
STONE CONTAINER CORPORATION,
as Issuer
TO
THE BANK OF NEW YORK,
Trustee
First Supplemental Indenture
Dated as of July 24, 1996
Supplemental Indenture to Indenture Dated
As of July 24, 1996
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of July 24, 1996 (this
"Supplemental Indenture") 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 entered into an Indenture dated as of July 24, 1996 with
the Trustee (the "Indenture") to provide for the issuance from time to time of
its unsecured debentures, notes or other evidences of indebtedness (herein
generally called the "Securities"), to be issued in one or more series as in the
Indenture provided.
The Company proposes to issue a series of Securities denominated its
Rating Adjustable Senior Notes due 2016.
Sections 901(7), 901(9) and 901(11) of the Indenture provide that
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 of the Indenture, enter into one or more indentures
supplemental to the Indenture to establish the form or terms of Securities of
any series as permitted by Sections 201 and 301 thereof, to cure any ambiguity,
defect or inconsistency or to correct or supplement any provision of the
Indenture which may be inconsistent with any other provision in the Indenture,
or to make any other change that does not materially adversely affect the
interests of the Holders of Securities of any series.
The entry into this Supplemental Indenture by the parties hereto is in
all respects authorized by the provisions of the Indenture.
All things necessary to make this Supplemental Indenture a valid
agreement of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of Senior
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of Senior Notes except as
otherwise provided in the Indenture or this Supplemental Indenture, as follows:
SECTION 1. The Indenture is hereby amended, solely with respect to
the Senior Notes, as follows:
<PAGE>
(a) By amending Section 101 to delete the definitions in the Indenture of
"Permitted Subordinated Indebtedness," "Redeemable Stock" and "Subordinated
Capital Base" and add the following definitions of those terms:
"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 (1) the Company's 9 7/8% Senior Notes due 2001
then outstanding, (2) the 11 1/2% Notes then outstanding or (3) the
Senior Notes then Outstanding (provided that, for purposes of this
definition, it shall be deemed that the Senior Notes will cease to be
Outstanding as of the first day following the Put Date (or, if a
Delaying Event shall have occurred, the Delayed Put Date)) or (B) a
maturity that is earlier than the latest maturity of (1) the Company's
9 7/8% Senior Notes due 2001 then outstanding, (2) the 11 1/2% Notes then
outstanding or (3) the Senior Notes then Outstanding (provided that,
for purposes of this definition, it shall be deemed that the Senior
Notes will mature as of the first day following the Put Date (or, if a
Delaying Event shall have occurred, the Delayed Put Date)).
"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 then Outstanding Senior Notes,
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 then Outstanding Senior
Notes (provided that, for purposes of this definition, it shall be
deemed
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that the Senior Notes will mature as of the first day following the Put
Date (or, if a Delaying Event shall have occurred, the Delayed Put Date)),
or any security which is convertible or exchangeable into a security which
has such provisions.
"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 11 1/2% Notes then outstanding, or if
less than one hundred million dollars ($100,000,000) of such
Indebtedness is outstanding, the then Outstanding Senior Notes
(provided that, for purposes of this definition, it shall be deemed
that the Senior Notes will cease to be Outstanding as of the first day
following the Put Date (or, if a Delaying Event shall have occurred,
the Delayed Put Date)), or a maturity that is earlier than the
maturity of any of the then outstanding Indebtedness under the 1991
Indenture, or if less than two hundred million dollars ($200,000,000)
of such Indebtedness is Outstanding, the 11 1/2% Notes then
outstanding, or if less than one hundred million ($100,000,000) of
such Indebtedness is outstanding, the then Outstanding Senior Notes
(provided that, for purposes of this definition, it shall be deemed
that the Senior Notes will mature as of the first day following the
Put Date (or, if a Delaying Event shall have occurred, the Delayed Put
Date)), (b) redeemable stock of the Company that does not constitute
Redeemable Stock and (c) the principal amount of the 11 1/2% Senior
Subordinated Securities due September 1, 1999 of the Company 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 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.
(b) By amending Section 101 to delete current clause (vii) of the definition of
"Ordinary Course of Business Liens" and add the following as clause (vii):
(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;
3
<PAGE>
(c) By amending Section 101 to delete current clause (viii) of the definition
of "Permitted Liens" and add the following as clause (viii):
(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;
(d) By amending Section 101 to add new definitions thereto, in the appropriate
alphabetical sequence, as follows:
"Applicable Rate" shall have the meaning provided in paragraph 2
of the reverse of the Senior Notes.
"Attributable Indebtedness" means the total net amount of rent
required to be paid during the remaining primary term of any particular
lease under which any person is at the time liable, discounted at the rate
per annum equal to the weighted average interest rate borne by the Notes.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) of
the Company and its Restricted Subsidiaries after deducting (i) all
liabilities (excluding, to the extent included in such liabilities,
Indebtedness, deferred income taxes and shareholders' equity), and (ii) all
goodwill, trade names, trademarks, patents, organizational expenses and
other like intangibles, of the Company and its Restricted Subsidiaries, in
each case to the extent included in the aggregate amount of assets, all as
set forth on the most recent consolidated balance sheet of the Company and
its Restricted Subsidiaries and computed in accordance with GAAP.
"Definitive Notes" means Senior Notes that are in the form of the
Senior Notes set forth in EXHIBIT A to this Supplemental Indenture,
that do not include the information called for by footnotes 1 and 4
thereof.
"Delaying Event" and "Delayed Put Date" shall have the respective
meanings provided in Section 1015.
4
<PAGE>
"Exchange Notes" means Senior Notes that are in the form of the
Senior Notes set forth in EXHIBIT A to this Supplemental Indenture,
that do not include the information called for by footnotes 2 and 3
thereof, which Exchange Notes will be issued by the Company in
exchange for the Notes pursuant to the Exchange Offer, as amended or
modified from time to time in accordance with the terms of such
Exchange Notes and the Indenture.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Exchange Notes
for the Notes.
"Global Note" means a Senior Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in
footnote 4 to the form of the Senior Note set forth in EXHIBIT A to
the Supplemental Indenture.
"Investment Grade Locking Event," "Investment Grade Triggering
Event" and "Investment Grade Rating" shall have the respective
meanings provided in paragraph 3 of the reverse of the Senior Notes.
"Issue Date" means July 24, 1996.
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Non-Investment Grade Repurchase Offer" shall have the meaning
provided in Section 1015.
"Note Custodian" means the Trustee, as custodian for the
Depository with respect to any Senior Notes in global form, or any
successor entity thereto.
"Notes" means Senior Notes that are in the form of the Senior
Notes set forth in EXHIBIT A to this Supplemental Indenture, that
include the information called for by footnotes 2 and 3 thereof, as
amended or modified from time to time in accordance with the terms of
such Notes and the Indenture.
"Predecessor 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 of the Indenture 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.
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"Principal Property" means (i) any mill, converting plant,
manufacturing plant, or other facility owned by the Company or any
Restricted Subsidiary of the Company which is located within the present
fifty states of the United States and the gross book value of which
(without deduction of any depreciation reserves) on the date as of which
the determination is being made exceeds 3% of Consolidated Net Tangible
Assets and (ii) timberlands, in each case other than properties or any
portion of a particular property which in the opinion of the Board of
Directors is not of material importance to the Company's business.
"Put Date" and "Put Payment Date" shall have the respective
meanings provided in Section 1015.
"Rating" and "Rating Adjustment Date" shall have the respective
meanings provided in paragraph 2 of the reverse of the Senior Notes.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of July 24, 1996, by and among the Company and the
other parties named on the signature pages thereof, as such agreement
may be amended, modified, or supplemented from time to time.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the close of business on January 15 or July 15, as
the case may be, whether or not a Business Day, immediately preceding
the Interest Payment Date on which such interest is payable.
"S&P" means Standard & Poor's Corporation.
"Senior Notes" means the Company's Rating Adjustable Senior Notes
due 2016 and includes the Notes and, when issued pursuant to the
Exchange Offer, the Exchange Notes, all of which shall constitute
Securities of one and the same series under the Indenture.
"Substitute Rating Agency" shall have the meaning provided in
paragraph 2 of the reverse of the Senior Notes.
"Transfer Restricted Securities" means securities that bear or
are required to bear the legend set forth in Section 305 hereof.
(e) By deleting current Section 305 and adding as new Section 305 the
following:
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE.
(a) REGISTRATION; DEPOSITORY. The Company shall cause to be
kept at the Corporate Trust Office of the Trustee a register (the
register maintained
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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 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.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Senior Notes issued
or issuable in whole or in part in global form.
(b) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other
authorized denominations,
the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met; PROVIDED,
HOWEVER, that the Definitive Notes presented or surrendered for
register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his
attorney, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied
by the following additional information and documents,
as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification to that effect from such
Holder (in substantially the form of Exhibit B
hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer"
(as
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<PAGE>
defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from
the registration requirements of the Securities
Act, a certification to that effect from such
Holder (in substantially the form of Exhibit B
hereto) and an Opinion of Counsel from such Holder
or the transferee reasonably acceptable to the
Company and to the Registrar to the effect that
such transfer is in compliance with the Securities
Act.
(c) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements
set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) if such Definitive Note is a Transfer Restricted Security, a
certification from the Holder thereof (in substantially the
form of Exhibit B hereto) to the effect that such Definitive
Note is being transferred by such Holder to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Note is a Transfer Restricted
Security, written instructions from the Holder thereof
directing the Trustee to make, or to direct the Note
Custodian to make, an endorsement on the Global Note to
reflect an increase in the aggregate principal amount of the
Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in
accordance with Section 309 hereof and cause, or direct the Note
Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian, the
aggregate principal amount of Notes
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<PAGE>
represented by the Global Note to be increased accordingly. If no Global
Notes are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 303 hereof, the Trustee
shall authenticate a new Global Note in the appropriate principal amount.
(d) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and
exchange of Global Notes or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture and
the procedures of the Depository therefor, which shall include
restrictions on transfer comparable to those set forth herein to the
extent required by the Securities Act.
(e) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE.
(i) Any Person having a beneficial interest in a Global
Note may upon request exchange such beneficial interest
for a Definitive Note. Upon receipt by the Trustee of
written instructions or such other form of instructions
as is customary for the Depository, from the Depository
or its nominee on behalf of any Person having a
beneficial interest in a Global Note, and, in the case
of a Transfer Restricted Security, the following
additional information and documents (all of which may
be submitted by facsimile):
(A) if such beneficial interest is being transferred
to the Person designated by the Depository as
being the beneficial owner, a certification to
that effect from such Person (in substantially the
form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred
to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit B hereto);
or
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<PAGE>
(C) if such beneficial interest is being transferred
in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor
(in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company
and to the Registrar to the effect that such
transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depository and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute
and, upon receipt of an authentication order in accordance
with Section 303 hereof, the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the
appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section
305(e) shall be registered in such names and in such
authorized denominations as the Depository, pursuant to
instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered.
(f) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of the Indenture (other than the
provisions set forth in subsection (g) of this Section 305), a Global
Note may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository or by the Depository
or any such nominee to a successor Depository or a nominee of such
successor Depository.
(g) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF DEPOSITORY.
If at any time:
(i) the Depository for the Senior Notes notifies the
Company that the Depository is unwilling or unable to
continue as Depository for the Global Notes and a
successor
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Depository for the Global Notes is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance
of Definitive Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of
an authentication order in accordance with Section 303 hereof,
authenticate and deliver, Definitive Notes in an aggregate principal
amount equal to the principal amount of the Global Notes in exchange
for such Global Notes.
(h) LEGENDS.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Senior Note certificate evidencing
Global Notes and Definitive Notes (and all Senior Notes
issued in exchange therefor or substitution thereof)
shall bear legends in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION PROVIDED BY RULE 144A UNDER THE
SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR
(d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
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<PAGE>
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted
Security represented by a Global Note) pursuant to
Rule 144 under the Securities Act or pursuant to
an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Note, the
Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security
for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a Global Note, such
Transfer Restricted Security shall not be
required to bear the legend set forth in (i)
above, but shall continue to be subject to
the provisions of Section 305(d) hereof;
PROVIDED, HOWEVER, that with respect to any
request for an exchange of a Transfer
Restricted Security that is represented by a
Global Note for a Definitive Note that does
not bear the legend set forth in (i) above,
which request is made in reliance upon Rule
144, the transferor thereof shall certify in
writing to the Registrar that such request is
being made pursuant to Rule 144 (such
certification to be substantially in the form
of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the
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Company shall issue and, upon receipt of an
authentication order in accordance with Section 303
hereof, the Trustee shall authenticate Exchange Notes
in exchange for the Notes accepted for exchange in the
Exchange Offer, which Exchange Notes shall not bear the
legend set forth in (i) above, and the Registrar shall
rescind any restriction on the transfer of such
Exchange Notes, in each case unless the Holder of such
Exchange Notes is either (A) a broker-dealer, (B) a
Person participating in the distribution of the
Exchange Notes or (C) a Person who is an affiliate (as
defined in Rule 144A) of the Company.
(i) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such
time as all beneficial interests in Global Notes have been exchanged
for Definitive Notes, redeemed, repurchased or cancelled, all Global
Notes shall be returned to or retained and cancelled by the Trustee in
accordance with Section 309 hereof. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged
for Definitive Notes, redeemed, repurchased or cancelled, or if any
Definitive Notes are exchanged for a beneficial interest in any Global
Note, the principal amount of Notes represented by such Global Note
shall be adjusted accordingly and an endorsement shall be made on such
Global Note, by the Trustee or the Notes Custodian, at the direction
of the Trustee, to reflect such adjustment.
(j) EXCHANGE OF NOTES FOR EXCHANGE NOTES. The Notes may be
exchanged for Exchange Notes pursuant to the terms of the Exchange
Offer. The Trustee and Registrar shall make the exchange as follows:
(i) the Company shall present the Trustee with an
Officer's Certificate certifying that the
principal amount of Notes properly tendered in the
Exchange Offer which are represented by a Global
Note and the principal amount of Notes properly
tendered in the Exchange Offer which are
represented by Definitive Notes (together with
such Definitive Notes), the name of each Holder of
such Definitive Notes, the principal amount
properly tendered in the Exchange Offer by each
such Holder, the name and address to which
Definitive Notes for Exchange Notes shall be
registered and sent for each such Holder and that
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<PAGE>
upon issuance of the Exchange Notes, the transactions
contemplated by the Exchange Offer will have been
consummated;
(ii) The Trustee, upon receipt of such Officer's
Certificate and a Company Order shall authenticate
(A) a Global Note for Exchange Notes in principal
amount equal to the principal amount of Notes
represented by a Global Note indicated in such
Officer's Certificate as having been properly
tendered and (B) Definitive Notes representing
Exchange Notes registered in the names of, and in
the principal amounts indicated in, such Officer's
Certificate;
(iii) The Trustee shall deliver such Global Note for Exchange
Notes to the Note Custodian who shall deliver to the Trustee
the Global Note for the Notes for cancellation pursuant to
Section 309, or if the principal of the Global Note for the
Exchange Notes is less than the principal amount of the
Global Note for Notes, the Trustee shall direct the Note
Custodian to make an endorsement on such Global Note for
Notes indicating a reduction in the principal amount
represented thereby; and
(iv) The Trustee shall deliver such Definitive Notes
for Exchange Notes to the Holders thereof as
indicated in such Officer's Certificate.
(k) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the
Trustee shall authenticate Definitive Notes and
Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer
taxes
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<PAGE>
or similar governmental charge payable upon exchange or
transfer pursuant to Sections 304, 906 or 1207 hereto).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Senior Note selected for redemption in
whole or in part, except the unredeemed portion of any
Senior Note being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive
Notes or Global Notes shall be the valid obligations of
the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the
Definitive Notes or Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Senior Notes during a period beginning at
the opening of business 15 days before the day of
any selection of Senior Notes for redemption under
Section 1203 hereof and ending at the close of
business on the day of selection; or
(B) to register the transfer of or to exchange any
Senior Note so selected for redemption in whole or
in part, except the unredeemed portion of any
Senior Note being redeemed in part; or
(C) to register the transfer of or to exchange a
Senior Note between a record date and the next
succeeding interest payment date.
(vi) Prior to due presentment for the registration of a
transfer of any Senior Note, the Trustee, any Agent and
the Company may deem and treat the Person in whose name
any Senior Note is registered as the absolute owner of
such Senior Note for the purpose of receiving payment
of principal of and interest on such Senior Notes, and
neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
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(vii) The Trustee shall authenticate Definitive Notes and Global
Notes in accordance with the provisions of Section 303
hereof.
(f) By deleting current subparagraph (2) of Section 501 of the Indenture and
adding as new subparagraph (2) the following:
(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any Senior Notes 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 Non-Investment Grade
Repurchase Offer as described in Section 1015 or otherwise; or
(g) By adding the following paragraph as the last paragraph of Section 801:
Notwithstanding the foregoing, subsections (3) and (4) of this Section
801 shall be of no further force or effect and shall cease to apply upon
and after the occurrence of an Investment Grade Locking Event.
(h) By adding the following paragraph as the last paragraph of Section 802:
Notwithstanding the foregoing, this Section 802 shall be of no
further force or effect and shall cease to apply upon and after the
occurrence of an Investment Grade Locking Event.
(i) By deleting current subparagraph (3) of Section 902 and adding as new
subparagraph (3) the following:
(3) change the repurchase provisions (including those contained
in Article Eleven, Section 1009, Section 1013 or Section 1015) or
redemption provisions (including those contained in Article Twelve)
hereof in a manner adverse to such Holder, or
(j) By adding the following paragraph as the last paragraph of Section 1006:
Notwithstanding the foregoing, this Section 1006 shall be of no
further force or effect and shall cease to apply upon and after the
occurrence of an Investment Grade Locking Event.
(k) By adding the following subparagraph (c) to Section 1007:
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(c) Notwithstanding the foregoing, this Section 1007 shall be of
no further force or effect and shall cease to apply upon and after the
occurrence of an Investment Grade Locking Event.
(l) By adding the following paragraph as the last paragraph of Section 1008:
Notwithstanding the foregoing, this Section 1008 shall be of no
further force or effect and shall cease to apply upon and after the
occurrence of an Investment Grade Locking Event.
(m) By adding the following subparagraph (h) to Section 1009:
(h) Notwithstanding the foregoing, this Section 1009 shall be of no
further force or effect and shall cease to apply upon and after
the occurrence of an Investment Grade Locking Event.
(n) By adding as new Section 1015 the following:
SECTION 1015. NON-INVESTMENT GRADE REPURCHASE OFFER.
(a) If an Investment Grade Locking has not occurred on or before
August 1, 2006 (the "Put Date"), the Company shall be required to
offer to repurchase and each Holder shall have the right, on or prior
to the Put Payment Date, to require the Company to repurchase such
Holder's Senior Notes in whole or in part pursuant to the offer
described in subsection (b) below (the "Non-Investment Grade
Repurchase Offer") at a purchase price equal to 100% of the aggregate
principal amount of such Senior Notes plus accrued and unpaid
interest, if any, to the date of such repurchase. Notwithstanding the
immediately preceding sentence, if an Investment Grade Triggering
Event occurs on or after the fifteenth (15th) day prior to the Put
Date (the "Delaying Event"), the Company shall not be required to make
the Non-Investment Grade Repurchase Offer until the fifteenth (15th)
day following the Delaying Event (the "Delayed Put Date"). If on the
Delayed Put Date, (i) an Investment Grade Locking Event occurs, the
Company shall not be required to make the Non-Investment Grade
Repurchase Offer, and (ii) if an Investment Grade Locking Event does
not occur, the Company shall make the Non-Investment Grade Repurchase
Offer as described below.
(b) No later than the Put Date (or, if a Delaying Event has
occurred, the Delayed Put Date), the Company shall mail a notice to
each Holder and the Trustee in respect of the Non-Investment Grade
Repurchase Offer (which notice shall contain all instructions and
materials necessary to enable such Holders to tender Senior Notes)
stating:
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(1) that the Non-Investment Grade Repurchase 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 45 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 "Put 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 Non-Investment Grade Repurchase Offer shall cease
to accrue interest after the Put Payment Date;
(6) that each Holder electing to have a Senior Note
purchased pursuant to a Non-Investment Grade Repurchase
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 Put 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 Put 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
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amount to the unpurchased portion of the Senior Notes
surrendered.
On or before 12:00 noon New York City time on the Put Payment
Date, the Company shall (i) accept for payment Senior Notes or
portions thereof tendered pursuant to the Non-Investment Grade
Repurchase 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 Non-Investment Grade Repurchase Offer on or as soon
as practicable after the Put Payment Date. For purposes of this
Section, the Trustee or its agent shall act as the Paying Agent.
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 Non-Investment Grade Repurchase Offer is made under the
circumstances described in this Section 1015.
(o) By adding as new Section 1016 the following:
SECTION 1016. RESTRICTIONS ON SECURED INDEBTEDNESS. Upon and
after the occurrence of an Investment Grade Locking Event, if the
Company or any Restricted Subsidiary shall incur, issue, assume, or
guarantee any Indebtedness, secured after the date hereof by a Lien on
any Principal Property of the Company or any Restricted Subsidiary or
on any shares of Capital Stock of or Indebtedness of any Restricted
Subsidiary, the Company will secure or cause such Restricted
Subsidiary to secure the Senior Notes (together with, if the Company
shall so determine, any other Indebtedness of the Company or such
Restricted Subsidiary then existing or thereafter created which is not
subordinate to the Notes) equally and ratably with (or, at the option
of the Company, prior to) such Indebtedness, so long as such secured
Indebtedness shall be so secured unless the aggregate amount of all
such secured Indebtedness plus all Attributable Indebtedness of the
Company and its Restricted Subsidiaries with respect to sale and
leaseback transactions to which Section 1017 is applicable would not
exceed 10% of Consolidated Net Tangible Assets; PROVIDED, HOWEVER,
that this Section 1016 shall not apply to, and there
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shall be excluded from secured Indebtedness in any computation under this
Section 1016, Indebtedness secured by:
(1) Liens on property of, or on any shares of Capital Stock of
or Indebtedness of, any corporation existing at the time
such corporation becomes a Restricted Subsidiary and Liens
on any property acquired from a corporation which is merged
with or into the Company or a Restricted Subsidiary;
(2) Liens in favor of the Company or any Restricted Subsidiary;
(3) Liens in favor of any governmental body to secure progress,
advance or other payments;
(4) Liens upon any property acquired after the date hereof,
securing the purchase price thereof or created or incurred
simultaneously with such acquisition (or for which a secured
loan commitment shall have been received within 180 days
thereafter) to finance the acquisition of such property or
existing on such property at the time of such acquisition
(whether or not assumed), or Liens on improvements made
after the date hereof on any property owned at the date
hereof or acquired after the date hereof, securing the
purchase price or cost of construction of such improvements
or created or incurred simultaneously with the acquisition
or completion of such improvements (or for which a secured
loan commitment shall have been received within 180 days
thereafter) to finance the acquisition or construction of
such improvements or existing on any property or materials
included in such improvements at the time of the acquisition
thereof (whether or not assumed), if (i) such Lien shall be
limited to the property so acquired or to the improvements
so made, (ii) the amount of the obligations or indebtedness
secured by such Lien shall not be increased after the date
of the acquisition of such property or the completion of
such improvements except to the extent improvements shall be
made to such property after the date of such acquisition or
the making of initial improvements, and (iii) in each
instance where the obligation or indebtedness secured by
such Lien shall constitute an obligation or indebtedness of,
or is assumed by, the Company or such Subsidiary, the
principal amount of the obligation or indebtedness secured
by such Lien shall not exceed 100% of the cost or fair value
(as determined in good faith by the Company), whichever
shall be lower, of the property or improvements at the time
of the acquisition or completion thereof;
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(5) Liens securing obligations issued by a state, territory or
possession of the United States, or any political
subdivision of any of the foregoing or the District of
Columbia, to finance the acquisition or construction of
property, and on which the interest is not, in the opinion
of tax counsel or recognized standing or in accordance with
a ruling issued by the Internal Revenue Service, includible
in gross income of the holder by reason of Section 103(a)(1)
of the Internal Revenue Code (or any successor to such
provision) as in effect at the time of the issuance of such
obligations;
(6) Liens on timberlands or in connection with an arrangement
under which the Company or one of its Restricted
Subsidiaries is obligated to cut or pay for timber;
(7) Liens arising out of any final judgment for the payment of
money aggregating not in excess of $25,000,000; or Liens
arising out of any final judgment for the payment of money
provided such judgment is being contested in good faith;
(8) Permitted Liens in existence on the date of an Investment Grade
Locking Event; or
(9) Any extension, renewal or replacement (or successive
extensions, renewals or replacements as a whole or in part,
of any Lien referred to in the foregoing clauses (1) to (8),
inclusive.
Notwithstanding the foregoing, this Section 1016 shall be of no force
or effect and shall not apply until the occurrence of an Investment
Grade Locking Event.
(p) By adding as new Section 1017 the following:
SECTION 1017. RESTRICTION ON SALES AND LEASEBACKS. Upon and
after the occurrence of an Investment Grade Locking Event, the Company
will not itself, and will not permit any Restricted Subsidiary to,
enter into any transaction after the date hereof with any bank,
insurance company or other investor, or to which any such bank,
company, lender or investor is a party, providing for the leasing by
the Company or a Restricted Subsidiary of any Principal Property which
has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such bank, company, lender or investor, or to
any person to whom funds have been or are to be advanced by such bank,
company, lender or investor on the security of such Principal
21
<PAGE>
Property (herein referred to as a "sale and leaseback transaction") unless,
after giving effect thereto, the aggregate amount of all Attributable
Indebtedness with respect to such transactions plus all secured
Indebtedness to which Section 1016 is applicable would not exceed 10% of
Consolidated Net Tangible Assets. This covenant shall not apply to, and
there shall be excluded from Attributable Indebtedness in any computation
under this Section 1017, Attributable Indebtedness with respect to any sale
and leaseback transaction if;
(1) the lease in such sale and leaseback transaction is for a
period, including renewal rights, of not in excess of three
years, or
(2) the Company or a Restricted Subsidiary, within 180 days
after the sale or transfer shall have been made by the
Company or by a Restricted Subsidiary, applies an amount not
less than the greater of the net proceeds of the sale of the
Principal Property leased pursuant to such arrangement or
the fair market value of the Principal Property so leased at
the time of entering into such arrangement (as determined in
good faith by the Company) to (a) the retirement of
Indebtedness of the Company or the retirement of
Indebtedness of a Restricted Subsidiary; PROVIDED, HOWEVER,
that the amount to be applied to the retirement of such
Indebtedness of the Company or a Restricted Subsidiary shall
be reduced by (x) the principal amount of any Senior Notes
(or other notes or debentures constituting such
Indebtedness) delivered within such 180-day period to the
Trustee or other applicable trustee for retirement and
cancellation and (y) the principal amount of such
Indebtedness, other than items referred to in the preceding
clause (x), voluntarily retired by the Company or a
Restricted Subsidiary within 180 days after such sale and
(z) associated transaction expenses; and PROVIDED, FURTHER,
that, notwithstanding the foregoing, no retirement referred
to in this clause (a) may be effected by payment at maturity
or pursuant to any mandatory sinking fund payment or any
mandatory prepayment provision, or (b) the purchase of other
property which will constitute Principal Property having a
fair market value in the opinion of the Company, at least
equal to the fair market value of the Principal Property
leased in such sale and leaseback transaction, or
(3) such sale and leaseback transaction is entered into prior
to, at the time of, or within 180 days after the later of
the acquisition of the Principal Property or the completion
of construction or improvement thereon; PROVIDED, HOWEVER,
that if such transaction is in connection with the
acquisition of any timberlands, and the
22
<PAGE>
Board of Directors of the Company has determined, prior to or at
the time of such acquisition, that the Company will seek to enter
into such transaction (with a lender or investor not including
the Company or any Subsidiary), then such transaction shall be
deemed to be included in this clause (3) if such transaction is
entered into within a further 180 days after the end of such
first 180-day period, or
(4) the lease in such sale and leaseback transaction secured or
related to obligations issued by a state, territory or
possession of the United States, or any political
subdivision of any of the foregoing, or the District of
Columbia, to finance the acquisition or construction of
property, and on which the interest is not, is the opinion
of tax counsel of recognized standing or in accordance with
a ruling issued by the Internal Revenue Service, includible
in gross income of the Holder by reason of Section 103(a)(1)
of the Internal Revenue Code (or any successor to such
provision) as in effect at the time of the issuance of such
obligations, or
(5) such sale and leaseback transaction is entered into between
the Company and a Restricted Subsidiary or between
Restricted Subsidiaries.
(q) By adding the following subparagraph (f) to Section 1101:
(f) Notwithstanding the foregoing, this Section 1101 shall be of
no further force or effect and shall cease to apply upon and after the
occurrence of an Investment Grade Locking Event.
(r) By deleting current subparagraphs (a), (b) and (c) of Section 1102 of the
Indenture and adding as new subparagraphs (a), (b) and (c) the following:
(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, subject to
subsequent adjustment as described below, to a rate per annum (as so
adjusted, the "Reset Rate") equal to the greater of (x) the Applicable
Rate then in effect and (y) the sum of (A) 400 basis points and (B)
the higher of the Seven Year Treasury Rate and
23
<PAGE>
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 in no event shall the interest rate on the Senior Notes at
any time exceed the Applicable Rate then in effect by more than two hundred
(200) basis points. The Reset Rate will be adjusted from time to time, if
necessary, to reflect any change in the Applicable Rate with respect to the
Senior Notes.
(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, effective as of the first day of the second following fiscal
quarter, to the Applicable Rate then in effect; 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 of Senior Notes 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 Applicable Rate
then in effect pursuant to subsection (b) of this Section. The
Company shall notify the Trustee and the Holders of the Senior Notes
promptly when the interest rate on the Senior Notes returns to the
Applicable Rate then in effect 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 the Senior Notes effective on the Reset Date of the Company's
obligations hereunder.
(s) By adding as the first sentence of Section 1202 the following:
24
<PAGE>
The Company may redeem the Senior Notes, in whole or in part pursuant
to paragraph 6 of the reverse of the Senior Notes.
(t) By amending the table of contents in the Indenture to reflect the additions
described in subsections (a) through (s) of this Section 1.
SECTION 2. The Notes shall be substantially in the form of EXHIBIT A
hereto (including the information called for by footnotes 2 and 3 thereof),
which form is hereby incorporated in and made a part of this Supplemental
Indenture. Subject to Section 306 of the Indenture, the Notes shall be in an
aggregate principal amount of $125,000,000; PROVIDED, HOWEVER, that in the event
Exchange Notes are issued hereunder pursuant to the Exchange Offer, the
principal amount of Notes shall be reduced by the principal amount of Exchange
Notes so issued. The Exchange Notes, when and if issued, shall be substantially
in the form of EXHIBIT A hereto (not including the information called for by
footnotes 2 and 3 thereof), which form is hereby incorporated in and made a part
of this Supplemental Indenture. Subject to Section 306 of the Indenture, the
Exchange Notes shall be in a principal amount of $125,000,000 less the principal
amount of Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer. The Senior Notes may have notations, legends or endorsements
required by law, stock exchange rule, or agreements to which the Company is
subject. Each Senior Note shall be dated the date of its authentication. The
Senior Notes shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Senior Notes shall constitute,
and are hereby expressly made, a part of this Supplemental Indenture, and the
Company and the Trustee, by their execution and delivery of this Supplemental
Indenture, expressly agree to such terms and provisions and to be bound thereby.
The Notes will initially be issued in global form, substantially in the
form of EXHIBIT A hereto (including the information called for by footnotes 1
and 4 thereof), except for those Notes that will be issued in definitive form in
the name of various institutional accredited investors. The Exchange Notes also
will initially be issued in global form, substantially in the form of EXHIBIT A
hereto (including the information called for by footnotes 1 and 4 thereof),
except for those Exchange Notes that will be issued in definitive form in the
name of various institutional accredited investors. Such Global Notes shall be
registered in the name of the Depository for such Global Notes or the nominee of
such Depository and shall be delivered by the Trustee to such Depository or
pursuant to such Depository's instructions. So long as the Depository or its
nominee is the registered owner of such Global Notes it will be deemed the sole
owner and holder of such Global Notes for all purposes under the Indenture,
hereunder and under such Global Notes. Neither the Company nor the Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made by the Depository on account of beneficial interest in such
Global Notes. Such Global Notes shall represent such of the outstanding Senior
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Senior Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding
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<PAGE>
Senior Notes represented thereby may from time to time be reduced or increased,
as appropriate, to reflect exchanges and redemptions and repurchases. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the principal amount of outstanding Senior Notes represented thereby shall be
made by the Trustee or the Note Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
305 hereof.
The provisions of this Section 2 supersede the provisions of Section 205 of
the Indenture (other than the second paragraph thereof), which provisions shall
not apply to the Senior Notes.
SECTION 3. The Senior Notes shall be subject to the defeasance provisions
of Sections 1402 and 1403 of the Indenture.
SECTION 4. Except as specifically supplemented and amended by this
Supplemental Indenture, the terms and provisions of the Indenture shall remain
in full force and effect. The Indenture, as supplemented and amended by this
Supplemental Indenture and all other indentures supplemental thereto, is in all
respects ratified and confirmed, and the Indenture, this Supplemental Indenture
and all indentures supplemental thereto shall be read, taken and construed as
one and the same instrument.
SECTION 5. If any provision hereof limits, qualifies or conflict with
another provision hereof which is required to be included in this Supplemental
Indenture by any of the provisions of the Trust Indenture Act, such required
provision shall control.
SECTION 6. All covenants and agreements in this Supplemental Indenture by
the Company shall bind its successors and assigns, whether or so expressed or
not.
SECTION 7. In case any provision in this Supplemental Indenture or in the
Securities of any series shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions (or of the
other series of Securities) shall not in any way be affected or impaired
thereby.
SECTION 8. Nothing in this Supplemental Indenture, expressed or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, and the Holders of the Senior Notes any benefit or any legal or
equitable right, remedy or claim under this Supplemental Indenture.
SECTION 9. This Supplemental Indenture and each Senior Note shall be
deemed to be a contract made under the laws of the State of New york and this
Supplemental Indenture and each Senior Note shall be governed by and construed
in accordance with the laws of the State of New York.
26
<PAGE>
SECTION 10. All terms used in this Supplemental Indenture and not
otherwise defined herein that are defined in the Indenture shall have the
meanings set forth therein.
SECTION 11. This Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 12. The recitals contained herein and in the Senior Notes, except
the certificate of authentication of the Trustee thereon, shall be taken as
statements of the Company, and the Trustee assumes no responsibility for their
accuracy or completeness. The Trustee make no representations as to the
validity or sufficiency of the Indenture, this Supplemental Indenture or of the
Senior Notes and shall not be accountable for the use or application by the
Company of the Senior Notes or the proceeds thereof.
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first written above.
STONE CONTAINER CORPORATION
By:
--------------------------
Name:
------------------------
Attest Title:
-----------------------
- --------------------
Title:
SEAL
THE BANK OF NEW YORK
By:
--------------------------
Name:
------------------------
Attest Title:
-----------------------
- --------------------
Title:
SEAL
28
<PAGE>
STATE OF ILLINOIS )
ss.:
COUNTY OF COOK )
On the ___ day of _______________, 1996, before me personally came
_____________________, to me known, who, being by me duly sworn, did depose and
say that he is ______________ of The Bank of New York, one of the parties
described in and which executed the foregoing instrument; that he knows the seal
of said corporations; 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.
-----------------------------------
Notary Public
SEAL
29
<PAGE>
STATE OF ILLINOIS )
ss.:
COUNTY OF COOK )
On the ___ day of _______________, 1996, 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
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporations; 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.
-----------------------------------
Notary Public
SEAL
30
<PAGE>
EXHIBIT A
FORM OF SENIOR NOTES
(FACE OF SENIOR NOTE)
STONE CONTAINER CORPORATION
Rating Adjustable Senior Note due 2016
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 August 1, 2016, 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
February 1 and August 1 of each year (commencing February 1, 1997), at the rate
of 11.875% per annum, subject to adjustment from time to time as provided on the
reverse hereof, 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 Note (or one or more Predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest, which
shall be January 15 or July 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 Regular Record Date and may either be paid to the Person in whose name this
Note (or one or more Predecessor 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 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 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 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.
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<PAGE>
Reference is hereby made to the further provisions of this 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 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:
- ----------------------
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By:
-------------------
32
<PAGE>
(REVERSE OF SENIOR NOTE)
Rating Adjustable Senior Note due 2016
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation, to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.] 1/
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE HOLDER
OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN OF RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS
1/ THIS PARAGRAPH SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL
FORM.
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<PAGE>
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
1. This Note is one of a duly authorized issue of a series of securities
of the Company designated as its "Rating Adjustable Senior Notes due 2016"
(herein called the "Notes") issued under an Indenture, dated as of July 24,
1996, as amended and supplemented by a First Supplemental Indenture dated as of
July 24, 1996 (as further 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 Notes are,
and are to be, authenticated and delivered. All terms used in this Note which
are not defined herein shall have the meanings assigned to them in the
Indenture.
2. Unless and until an Investment Grade Locking Event has occurred, the
interest payable on this Note shall be based upon the debt rating (the "Rating")
for the Notes as determined by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Corporation ("S&P") or their successors (as described below),
and adjusted if necessary in response to changes in a Rating. The initial
Applicable Rate (as defined) on this Note is 11.875% per annum. This Note will
bear interest at the initial Applicable Rate from the date of issuance of this
Note until the earlier of (a) the date the principal of the Notes is paid or
made available for payment or (b) the calendar day immediately preceding the
calendar day on which a change in Rating category (as set forth in the table
below) takes effect in either the Moody's Rating or S&P Rating for the Notes,
except that in the case of a change in Rating category that occurs between a
Regular Record Date and an Interest Payment Date, such day shall be such
Interest Payment Date (each a "Rating Adjustment Date"); PROVIDED, HOWEVER, that
from the date of issuance of this Note until August 1, 1997, the interest rate
payable on this Note shall not be less than 11.875% per annum, notwithstanding
any change in the Moody's Rating or S&P Rating applicable to the Notes.
Beginning on a Rating Adjustment Date, if any, and to the earlier of the date
the principal of this Note is paid or made available for payment or the calendar
day immediately preceding the next Rating Adjustment Date, if any, this Note
will bear interest at the rate per annum (the "Applicable Rate") determined as
follows: (i) in the event of a change in Rating category that is an upward
change, the Applicable Rate shall be the interest rate set forth below opposite
the higher of the Moody's Rating or the S&P Rating assigned to the Notes in
effect at the close of business on that Rating Adjustment Date; (ii) in the
event of a change in Rating category that is a downward change, the Applicable
Rate shall be the interest rate set forth below opposite the lower of the
Moody's Rating or the S&P Rating assigned to the Notes in effect at the close of
business on that Rating Adjustment Date, PROVIDED, HOWEVER, that, for
2/ THIS PARAGRAPH SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED WITHOUT
REGISTRATION UNDER SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED.
34
<PAGE>
purposes of this clause (ii), if after a downward change in Rating category the
Moody's Rating and the S&P Rating assigned to the Notes differ by more than one
Rating category below, the Applicable Rate shall be the interest rate set forth
opposite the Rating category that is one Rating category below the higher of the
two Ratings in effect at the close of business on the Rating Adjustment Date.
Notwithstanding the foregoing, if both Moody's and S&P, on the same day, change
their respective Ratings assigned to the Notes and one such change is an upward
change while the other such change is a downward change, the Applicable Rate
shall be determined in accordance with clause (ii) above, including the proviso
thereto. If only one Rating is available on any Rating Adjustment Date, the
Applicable Rate shall be determined solely by reference to such one Rating.
If neither S&P nor Moody's has a Rating in effect, then the Company shall,
with the approval of the Trustee, designate, as a substitute for Moody's or S&P,
as the case may be, a nationally recognized statistical rating organization (a
"Substitute Rating Agency"), and/or make adjustments in the relationship between
the Rating and the Applicable Rate, as are consistent with the table below. If,
for any period prior to the occurrence of an Investment Grade Locking Event, no
Substitute Rating Agency shall have been so designated and a Substitute Rating
Agency is available, the Applicable Rate for such period shall be the highest
Applicable Rate set forth in the table below.
RATING CATEGORY
MOODY'S S&P APPLICABLE RATE
------- --------------- ---------------
A3 or higher A- or higher 7.760%
Baa1 BBB+ 8.010%
Baa2 BBB 8.260%
Baa3 BBB- 8.510%
Ba1 BB+ 9.830%
Ba2 BB 10.580%
Ba3 BB- 11.330%
B1 B+ 11.875%
B2 B 12.580%
B3 or lower B- or lower 13.080%
If any change in the Applicable Rate occurs during any interest
payment period, this Note shall bear interest for such interest payment period
at a rate per annum equal to the weighted average of the Applicable Rates in
effect during such interest payment period, calculated by multiplying each
Applicable Rate by the number of days such Applicable Rate is in effect during
each month of such interest payment period, determining the sum of such products
and dividing such sum by the number of days in such interest payment period.
All calculations pursuant to the preceding sentence of interest on the Notes
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
If any change in the Applicable Rate occurs, the Company shall notify
the Trustee of the new Applicable Rate not later than five Business Days after
the applicable
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<PAGE>
Rating Adjustment Date. Not later than the five Business Days after the Trustee
has received such notice setting for the new Applicable Rate, the Trustee shall
mail to each Holder of Notes such notice setting forth the new Applicable Rate.
3. Upon the occurrence of an Investment Grade Locking Event, the interest
rate payable on this Note will no longer be subject to adjustment and will be
fixed as described below. An "Investment Grade Locking Event" shall occur on
the fifteenth (15th) day after the date of an Investment Grade Triggering Event
(as defined) if, on such day, the Rating assigned to the Notes by Moody's or S&P
or both is an Investment Grade Rating. An "Investment Grade Triggering Event"
shall occur on the first day on which the Notes are assigned an Investment Grade
Rating by either or both of Moody's or S&P. An "Investment Grade Rating" means
a Moody's Rating of Baa3 or higher or a S&P Rating of BBB- or higher. Upon the
occurrence of an Investment Grade Locking Event, this Note will bear interest at
the Applicable Rate set forth in the table above opposite the higher of the
Moody's Rating or the S&P Rating assigned to this Note in effect at the close of
business on the date of the Investment Grade Locking Event from such date until
the principal of this Note is paid or made available for payment.
Notwithstanding the foregoing, the interest rate payable on this Note prior to
August 1, 1997 shall not be less than 11.875% per annum.
4. The Indenture provides that if an Investment Grade Locking Event has
not occurred on or before August 1, 2006, the Company shall be required to offer
to repurchase and the Holder shall have the right to require that the Company
repurchase this Note in whole or in part at a price equal to 100% of the
aggregate principal amount thereof plus accrued and unpaid interest, if any, to
the date of such repurchase. Notwithstanding the immediately preceding sentence,
if an Investment Grade Triggering Event occurs on or after the fifteenth (15th)
day prior to the Put Date (the "Delaying Event"), the Company shall not be
required to make the Non-Investment Grade Repurchase Offer until the fifteenth
(15th) day following the Delaying Event (the "Delayed Put Date"). If on the
Delayed Put Date, (i) an Investment Grade Locking Event occurs, the Company
shall not be required to make the Non-Investment Grade Repurchase Offer, and
(ii) if an Investment Grade Locking Event does not occur, the Company shall make
the Non-Investment Grade Repurchase Offer as described in the Indenture.
5. Interest on this 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 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 then Applicable Rate.
36
<PAGE>
6. If an Investment Grade Triggering Event has not occurred, this Note is
subject to redemption upon not less than 30 days' notice nor more than 45 days'
notice by mail, at any time on or after August 1, 2001 as a whole or from time
to time in part, at the election of the Company, at a Redemption Price equal to
105.938% of the principal amount hereof if redeemed on or after August 1, 2001
and before August 1, 2002, at 103.958% of the principal amount hereof if
redeemed on or after August 1, 2002 and before August 1, 2003, at 101.979% of
the principal amount hereof if redeemed on or after August 1, 2003 and before
August 1, 2004, and at 100% of the principal amount hereof if redeemed on or
after August 1, 2004 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 Holder of
this Note, or one or more Predecessor 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. Notwithstanding the foregoing, if an Investment Grade Triggering
Event has occurred, this Note will not be redeemable at the option of the
Company until the fifteenth (15th) day following the date of the Investment
Grade Triggering Event (the "Lock Determination Date"). If on the Lock
Determination Date, (i) an Investment Grade Locking Event does not occur, this
Note will be redeemable at the option of the Company as described above, or (ii)
an Investment Grade Locking Event occurs, this Note will not be redeemable at
the option of the Company prior to August 1, 2011, and thereafter this Note will
be subject to redemption upon not less than 30 days' notice nor more than 45
days' notice by mail, at any time as a whole or from time to time in part, at
the election of the Company, at a Redemption Price equal to 100% of the
principal amount thereof, 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 Holder of this Note, or one or more
Predecessor 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.
7. Under certain circumstances following an Asset Disposition, the
Company may offer to repurchase 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 Notes for repurchase on or
prior to the close of business on the applicable payment date. If the aggregate
principal amount of Notes surrendered for repurchase exceeds the aggregate
principal amount of the applicable offer price, the selection of the Notes to be
repurchased shall be made by the Trustee on a PRO RATA basis.
8. Except as set forth below, as provided in the Indenture, until the
occurrence of an Investment Grade Locking Event, 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
37
<PAGE>
year), make an offer to all Holders to purchase (a "Deficiency Offer") 10% of
the principal amount of the 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 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.
9. 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 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 Senior Notes shall be reset as of the first day of the
second fiscal quarter following the Deficiency Date (the "Reset Date"), subject
to further adjustment as described below, to a rate per annum (as so adjusted,
the "Reset Rate") equal to the greater of (x) the Applicable Rate then in effect
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 Notes, as reset on the
Reset Date, shall increase by fifty (50) basis points, and (iii) the interest
rate on the Notes shall further increase by an additional fifty (50) basis
points on each succeeding Interest Payment Date; PROVIDED, HOWEVER, in no event
shall the interest rate to be borne by the Notes at any time exceed the
Applicable Rate then in effect by more than two hundred (200) basis points. The
Reset Rate shall be adjusted from time to time, if necessary, to reflect any
change in the Applicable Rate with respect to the Notes. Once the interest rate
on the 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 rate on the Notes effective as of the first day of
the second following fiscal quarter shall return to the Applicable Rate then in
effect.
10. 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 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.
38
<PAGE>
11. 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 Note.
12. 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. Upon the occurrence of an Investment Grade Locking Event certain of the
covenants described above will cease to apply or will be modified. The
Indenture contains covenants that following the occurrence of an Investment
Grade Locking Event, will, among other things, limit the Company's ability to
pledge or create or incur liens with respect to certain of its assets and the
Company's ability to enter into certain sale-leaseback transactions. 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.
13. 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 a majority in principal amount of the Notes at the time Outstanding.
The Indenture also contains provisions permitting the Holders of at least a
majority in principal amount of the Notes at the time Outstanding, on behalf of
the Holders of all 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 Note shall bind
such Holder and all future Holders of this Note and of any 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 Note.
14. No reference herein to the Indenture and no provision of this 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 Note at the times, place and rate, and in the coin or currency,
herein prescribed.
15. As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Register,
upon surrender of this 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 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 Notes, of authorized denominations and
for the same
39
<PAGE>
Stated Maturity and aggregate principal amount, will be issued to the designated
transferee or transferees.
16. The 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, Notes are exchangeable for a like aggregate principal amount
of 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.
17. Prior to due presentment of this 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 Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
18. Directors, officers, employees or stockholders, as such, of the
Company shall not have any liability for any obligations of the Company under
this 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
Note, waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of this Note.
19. 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 Notes as a convenience to the Holders of the Notes.
No representation is made as to the correctness or accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
[20. In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Transferred Restricted Securities shall have all the
rights set forth in the Registration Rights Agreement dated as of July 24, 1996,
between the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement"). The Company will furnish to any Holder upon
written request and without charge a copy of the Indenture and/or the
Registration Rights Agreement. Requests may be made to: Stone Container
Corporation, 150 North Michigan Avenue, Chicago, IL 60601, Attention:
__________.] 3/
3/ THIS PARAGRAPH SHOULD BE INCLUDED ONLY IF THE NOTES ARE ISSUED WITHOUT
REGISTRATION UNDER SECTION 5 OF THE SECURITIES ACT OF 1933, AS AMENDED.
40
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this 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 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 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.
41
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this Note purchased by
the Company pursuant to Section 1009 ("Asset Disposition Offer"), Section 1013
("Change of Control Offer"), Section 1015 ("Non-Investment Grade Repurchaser
Offer") or Section 1101 ("Deficiency Offer") of the Indenture, check the
applicable boxes:
" Section 1009: " Section 1013: " Section 1015: " Section 1101:
in whole " in whole " in whole" in whole "
in part " in part " in part" in part "
amount to be amount to be amount to be amount to be
purchased: $ purchased: $ purchased: $ purchased: $
----- ----- ----- -----
Dated: Your Signature:
-------------- -----------------------------------
(Sign exactly as your name appears on the other side of this 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:
---------
42
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE 4/
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Amount of
decrease Principal Amount Signature of
in Principal Amount of of this Global Note authorized
Amount increase in following such officer of
Date of of this Global Principal Amount decrease (or Trustee or Note
Exchange Note of this Global Note increase) Custodian
- -------- -------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
4/ THIS SHOULD BE INCLUDED ONLY IF THE NOTE IS ISSUED IN GLOBAL FORM.
43
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: Rating Adjustable Senior Notes due 2016 of Stone Container Corporation.
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 305 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 305(b)(ii)(A) or Section 305(e)(i)(A) of
the Indenture).
Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
305(b)(ii)(B), Section 305(c)(i) or Section 305(e)(i) (B) of the Indenture) or
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (in satisfaction of Section 305(b)(ii)(B) or Section 305(e)(i)(B)
of the Indenture.)
- ---------------------
*Check applicable box.
B-1
<PAGE>
Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 305(b)(ii)(B) or Section 305(e)(i)(B)
of the Indenture).
Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
305(b)(ii)(C) or Section 305(e)(i)(C) of the Indenture).
----------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
-------------------------------------
Date:
--------------------------------------------------
- --------------------
*Check applicable box.
B-2
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
Dated as of July 24, 1996
by and among
STONE CONTAINER CORPORATION
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
LEHMAN BROTHERS INC.
BT SECURITIES CORPORATION
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of July 24, 1996, by and among Stone Container Corporation, a
Delaware corporation (the "COMPANY"), and Donaldson, Lufkin & Jenrette
Securities Corporation as representative of the several purchasers named in
Schedule I to the Purchase Agreement dated as of July 17, 1996 ("PURCHASE
AGREEMENT") (each an "INITIAL PURCHASER" and, collectively, the "INITIAL
PURCHASERS"), each of whom has agreed to purchase the Company's Rating
Adjustable Senior Notes due 2016 (the "NOTES") pursuant to the Purchase
Agreement.
This Agreement is made pursuant to the Purchase Agreement. In order
to induce the Initial Purchasers to purchase the Notes, the Company has agreed
to provide the registration rights set forth in this Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Exchange Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Notes that
such Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Notes acquired directly from
the Company or any of its affiliates).
CERTIFICATED SECURITIES: As defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Exchange Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar
1
<PAGE>
under the Indenture of Exchange Notes in the same aggregate principal amount as
the aggregate principal amount of Notes tendered by Holders thereof pursuant to
the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Notes, each Interest
Payment Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE NOTES: The Company's Rating Adjustable Senior Notes due 2016
to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any Holder of Notes covered by a Shelf Registration Statement, in
exchange for such Notes.
EXCHANGE OFFER: The registration by the Company under the Act of the
Exchange Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities for Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain "accredited
investors," as such term is defined in Rule 501(a)(1), (2), (3), and (7) of
Regulation D under the Act.
GLOBAL NOTE: As defined in the Indenture.
HOLDERS: As defined in Section 2 hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated the Closing Date, among the Company
and Bank of New York, as trustee (the "TRUSTEE"), as supplemented by that First
Supplemental Indenture dated the Closing Date, pursuant to which the Senior
Notes are to be issued, as such Indenture is amended or supplemented from time
to time in accordance with the terms thereof.
INTEREST PAYMENT DATE: As defined in the Indenture and the Senior
Notes.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
2
<PAGE>
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECORD HOLDER: With respect to any Damages Payment Date, each Person
who is a Holder of Senior Notes on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company
relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
SENIOR NOTES: The Notes and the Exchange Notes.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
3
<PAGE>
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law or Commission policy (after the procedures set forth in Section
6(a)(i) below have been complied with), the Company shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 60 days after the Closing Date, the Exchange Offer Registration
Statement, (ii) use its best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 120 days after the Closing Date, (iii) in connection with the
foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Exchange Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, provided that in no event shall the Company
be obligated to qualify to do business in any jurisdiction where it is not now
so qualified, or take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the Exchange Notes to be offered in exchange for
the Notes that are Transfer Restricted Securities and to permit sales of Broker-
Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company shall use its best efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and shall keep the
Exchange Offer open for a period of not less than the minimum period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; PROVIDED, HOWEVER, that in no event shall such period be less than 20
Business Days. The Company shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Senior Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use its best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 60
Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Notes that are Transfer
Restricted Securities and that were acquired for the account of such Broker-
Dealer as a result of market-making activities or other trading activities, may
exchange such Notes (other than Transfer Restricted Securities acquired directly
from the Company or any affiliate of the Company) pursuant to the Exchange
Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within
the meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of each Series B
Note received by such Broker-
4
<PAGE>
Dealer in the Exchange Offer, which prospectus delivery requirement may be
satisfied by the delivery by such Broker-Dealer of the Prospectus contained in
the Exchange Offer Registration Statement. Such "Plan of Distribution" section
shall also contain all other information with respect to such sales of Broker-
Dealer Transfer Restricted Securities by Restricted Broker-Dealers that the
Commission may require in order to permit such sales pursuant thereto, but such
"Plan of Distribution" shall not name any such Broker-Dealer or disclose the
amount of Senior Notes held by any such Broker-Dealer, except to the extent
required by the Commission as a result of a change in policy after the date of
this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for sales of Broker-Dealer Transfer Restricted
Securities by Restricted Broker-Dealers, and to ensure that such Registration
Statement conforms with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period expiring on the earlier of (i) the date that all Holders of
Broker Dealer Transfer Restricted Securities have sold such securities and (ii)
365 days from the date on which the Exchange Offer Registration Statement is
declared effective.
The Company shall promptly provide sufficient copies of the latest
version of such Prospectus to such Restricted Broker-Dealers promptly upon
request, and in no event later than one day after such request, at any time
during such period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company is not required to file
an Exchange Offer Registration Statement with respect to the Exchange Notes
because the Exchange Offer is not permitted by applicable law (after the
procedures set forth in Section 6(a)(i) below have been complied with) or (ii)
if any Holder of $1,000,000 aggregate principal amount or more of Transfer
Restricted Securities shall notify the Company within 20 Business Days following
the Consummation of the Exchange Offer that (A) such Holder was prohibited by
law or Commission policy from participating in the Exchange Offer or (B) such
Holder may not resell the Exchange Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Notes
acquired directly from the Company or one of its affiliates, then the Company
shall (x) cause to be filed on or prior to 30 days after the date on which the
Company determines that it is not required to file the Exchange Offer
Registration Statement pursuant to clause (i) above or 30 days after the date on
which the Company receives the notice specified in clause (ii) above a shelf
registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (in either event, the
"SHELF REGISTRATION STATEMENT")), relating to all
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Transfer Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof, and shall (y) use its best
efforts to cause such Shelf Registration Statement to become effective on or
prior to 90 days after the date on which the Company becomes obligated to file
such Shelf Registration Statement. If, after the Company has filed an Exchange
Offer Registration Statement which satisfies the requirements of Section 3(a)
above, the Company is required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer shall not be permitted under
applicable federal law, then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above. Such
an event shall have no effect on the requirements of clause (y) above. The
Company shall use its best efforts to keep the Shelf Registration Statement
discussed in this Section 4(a) continuously effective, supplemented and amended
as required by and subject to the provisions of Sections 6(b) and (c) hereof to
the extent necessary to ensure that it is available for sales of Transfer
Restricted Securities by the Holders thereof entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period expiring on the earlier of (i) the
date that all Holders of Transfer Restricted Securities have sold such
securities pursuant to the Shelf Registration Statement and (ii) three years
following the Closing Date.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until (i) such Holder furnishes
to the Company in writing, within the earlier of (x) 20 days after receipt of a
request therefor or (y) the time such Holder delivers the request described in
clause (ii) immediately below, such information specified in item 507 of
Regulation S-K under the Act, or otherwise required by the Act or the Commission
for use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein and (ii) requests the Company in writing
to include such Holders' Transfer Restricted Securities in such Shelf
Registration Statement no later than 10 Business Days prior to the date the
Company is required to file such Shelf Registration Statement under Section 4(a)
hereof. No Holder of Transfer Restricted Securities shall be entitled to
Liquidated Damages pursuant to Section 5 hereof unless and until such Holder has
provided all such information required to be provided by such holder for
inclusion therein. Each Holder as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Company in writing all
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement, (iii) the Exchange Offer has not been
Consummated within 30 Business Days after the Exchange Offer Registration
Statement is
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first declared effective by the Commission or (iv) any Registration Statement
required by this Agreement is filed and declared effective but shall thereafter
cease to be effective or fail to be usable in connection with resales of
Transfer Restricted Securities during the periods specified in this Agreement,
without being succeeded immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is itself declared
effective within 5 Business Days (each such event referred to in clauses (i)
through (iv), a "REGISTRATION DEFAULT"), then the Company hereby agrees to pay
liquidated damages to each Holder of Transfer Restricted Securities with respect
to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
pro rata for a portion of each week that the Registration Default continues.
The amount of the liquidated damages shall increase by an additional $.05 per
week per $1,000 in principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of liquidated damages of $.30 per week per
$1,000 principal amount of Transfer Restricted Securities. Notwithstanding
anything to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued liquidated damages shall be paid by the Company to the
Holder of the Global Note by wire transfer of immediately available funds or by
federal funds check and to Holders of Certificated Securities by mailing checks
to their registered addresses on each Damages Payment Date. All obligations of
the Company set forth in the preceding paragraph that are outstanding with
respect to any Transfer Restricted Security at the time such security ceases to
be a Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its best efforts to effect such exchange and to
permit the sale of Broker-Dealer Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof, and
shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that
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in the reasonable opinion of counsel to the Company there is a substantial
question as to whether the Exchange Offer is permitted by applicable
federal law, the Company hereby agrees to seek a no-action letter or other
favorable decision from the Commission allowing the Company to Consummate
an Exchange Offer for such Notes. The Company hereby agrees to pursue the
issuance of such a decision to the Commission staff level. In connection
with the foregoing, the Company hereby agrees to take all such other
actions as are requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation
(A) participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes to be issued in the
Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary
course of business. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in MORGAN
STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Exchange Notes obtained by such Holder
in exchange for Notes acquired by such Holder directly from the Company or
an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the
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<PAGE>
Exchange Notes to be received in the Exchange Offer and that, to the best
of the Company's information and belief, each Holder participating in the
Exchange Offer is acquiring the Exchange Notes in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the Exchange Notes received in the
Exchange Offer and (C) any other undertaking or representation required by
the Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement and the related Prospectus, to the
extent that the same are required to be available to permit sales of Broker-
Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the Company
shall:
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale
of Transfer Restricted Securities during the period required by this
Agreement, the Company shall promptly file an appropriate amendment to such
Registration Statement, (1) in the case of clause (A), correcting any such
misstatement or omission, and (2) in the case of clauses (A) and (B), use
its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, and 430A, as
applicable, under the
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<PAGE>
Act in a timely manner; and comply with the provisions of the Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) in the case of a Shelf Registration Statement, advise the
underwriter(s), if any, and selling Holders promptly and, if requested by
such Persons, confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company
shall use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(iv) furnish to each selling Holder named in any Shelf
Registration Statement or related Prospectus and each of the underwriter(s)
in connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (other than all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (other than all such documents incorporated by
reference) to which the selling Holders of the Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s) in
connection with such sale, if any, shall reasonably object within five
Business Days after the receipt thereof. A selling Holder or underwriter,
if any, shall be deemed to have reasonably objected to such filing if such
Registration Statement, amendment, Prospectus or supplement, as applicable,
as
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<PAGE>
proposed to be filed, contains a material misstatement or omission or fails
to comply with the applicable requirements of the Act;
(v) promptly prior to the filing of any report on Form 8-K
that is to be incorporated by reference into a Shelf Registration Statement
or related Prospectus, provide copies of such document to the selling
Holders and to the underwriter(s) in connection with such sale, if any,
make the Company's representatives available for discussion of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any managing underwriter participating in any disposition
pursuant to such Shelf Registration Statement and any attorney or
accountant retained by such selling Holders or any of such underwriter(s),
all pertinent financial and other records, pertinent corporate documents
and properties of the Company and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent
to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s)
in connection with such sale, if any, promptly include in any Shelf
Registration Statement or related Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such selling
Holders and underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and any
other terms of the offering of the Transfer Restricted Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without charge, at
least one copy of the Shelf Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company hereby consents
to the use (in accordance with law) of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
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underwriter(s), if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto;
(x) enter into such agreements (including in the case of a
Shelf Registration Statement, unless not required pursuant to Section 10
hereof, an underwriting agreement) and make such representations and
warranties and take all such other actions in connection therewith in order
to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement, and
in such connection, whether or not an underwriting agreement is entered
into and whether or not the registration is an Underwritten Registration,
the Company shall:
(A) furnish (or in the case of paragraph (2), use its best
efforts to furnish) to each selling Holder and each underwriter, if
any, upon the effectiveness of the Shelf Registration Statement, and
to each Restricted Broker-Dealer who was an Initial Purchaser and,
upon request, to each other Restricted Broker-Dealer, upon
Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf of
the Company by a principal financial or accounting officer of the
Company, confirming, as of the date thereof, the matters set
forth in paragraph (d) of Section 9 of the Purchase Agreement
(but only to the extent then true and correct (with reference
therein to the Offering Documents being deemed references to the
applicable Registration Statement, as amended or supplemented))
and such other similar matters as the Holders, underwriter(s)
and/or Restricted Broker Dealers may reasonably request; and
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company covering (i) due authorization and enforceability of the
Exchange Notes, and (ii) such other matters of the type
customarily covered in opinions of counsel of an issuer in
connection with similar securities offerings as the Holders,
underwriters and/or Restricted Broker Dealers may reasonably
request;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the selling Holders, the underwriter(s), if
any, and Restricted Broker
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Dealers, if any, to evidence compliance with clause (A) above and with
any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company pursuant to this clause
(C).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company contemplated in
(A)(1) above cease to be true and correct, the Company shall so advise the
underwriter(s), if any, the selling Holders and each Restricted Broker-
Dealer promptly and if requested by such Persons, shall confirm such advice
in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the applicable Shelf
Registration Statement; PROVIDED, HOWEVER, that the Company shall not be
required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Shelf Registration Statement, in any
jurisdiction where it is not now so subject;
(xii) issue, upon the request of any Holder of Notes covered by
any Shelf Registration Statement contemplated by this Agreement, Exchange
Notes having an aggregate principal amount equal to the aggregate principal
amount of Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such Exchange Notes to be registered
in the name of such Holder or in the name of the purchaser(s) of such
Senior Notes, as the case may be; in return, the Notes held by such Holder
shall be surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the Holders
or the underwriter(s), if any, may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
(xiv) use its best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xi)
above;
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(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee under
the Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository
Trust Company;
(xvii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its best efforts to cause such Registration Statement to
become effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer Restricted
Securities;
(xviii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders of Senior Notes to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance with
the terms of the TIA; and execute and use its best efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of any notice from the Company
of the existence of any
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fact of the kind described in Section 6(c)(i) or Section 6(c)(iii)(D) hereof,
such Holder will forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xv) hereof, or until it is advised in writing by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus (the "Advice"). If so directed by the Company, each Holder will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice. In the event the Company shall give any such notice,
the time period regarding the effectiveness of such Registration Statement set
forth in Section 3 or 4 hereof, as applicable, shall be extended by the number
of days during the period from and including the date of the giving of such
notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and
including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the
Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by any Initial Purchaser or Holder with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter") and its counsel in
connection therewith that may be required by the rules and regulations of the
NASD); (ii) all fees and expenses of compliance with federal securities and
state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the Exchange Notes to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Company and, in accordance
with Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Senior Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Holders of Transfer Restricted
15
<PAGE>
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared. Any underwriting discounts or commissions shall be paid by the
selling Holders of Transfer Restricted Securities, pro rata based on the
principal amount thereof held by each selling Holder.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) any Holder (any of the persons
referred to in this clause (ii) being hereinafter referred to as a "controlling
person") and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"INDEMNIFIED HOLDER"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
furnished in writing to the Company by any of the Holders expressly for use
therein.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which indemnity may be sought against
the Company, such Indemnified Holder (or the Indemnified Holder controlled by
such controlling person) shall promptly notify the Company in writing (PROVIDED,
that the failure to give such notice shall not relieve the Company of their
obligations pursuant to this Agreement). Such Indemnified Holder shall have the
right to employ its own counsel in any such action and the fees and expenses of
such counsel shall be paid, as incurred, by the Company (regardless of whether
it is ultimately determined that an Indemnified Holder is not entitled to
indemnification hereunder). The Company shall not, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees
16
<PAGE>
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for such Indemnified Holders, which firm shall be
designated by the Holders and shall be reasonably acceptable to the Company.
The Company shall be liable for any settlement of any such action or proceeding
effected with the Company's prior written consent, which consent shall not be
withheld unreasonably, and the Company agrees to indemnify and hold harmless
each Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Company. The Company shall not, without the prior written
consent of each Indemnified Holder, settle or compromise or consent to the entry
of judgment in or otherwise seek to terminate any pending or threatened action,
claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is a
party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from all liability
arising out of such action, claim, litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company, and its directors,
officers, and any person controlling (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) the Company, and the respective officers,
directors, partners, employees, representatives and agents of each such person,
to the same extent as the foregoing indemnity from the Company to each of the
Indemnified Holders, but only with respect to claims and actions based on
information furnished in writing by such Holder expressly for use in any
Registration Statement. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling person
in respect of which indemnity may be sought against a Holder of Transfer
Restricted Securities, such Holder shall have the rights and duties given the
Company, and the Company, such directors or officers or such controlling person
shall have the rights and duties given to each Holder by the preceding
paragraph. In no event shall any Holder be liable or responsible for any amount
in excess of the total dollar amount received by such Holder with respect to its
sale of Transfer Restricted Securities pursuant to a Registration Statement.
(c) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under Section 8(a) or Section 8(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Holders, on the other hand, from their sale of
Transfer Restricted Securities or if such allocation is not permitted by
applicable law, the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and of the Indemnified Holder, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
17
<PAGE>
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Indemnified Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in the second
paragraph of Section 8(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company and each Holder of Transfer Restricted Securities agree
that it would not be just and equitable if contribution pursuant to this Section
8(c) were determined by pro rata allocation (even if the Holders were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no Holder or
its related Indemnified Holders shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of its Transfer Restricted Securities
pursuant to a Registration Statement exceeds the sum of (A) the amount paid by
such Holder for such Transfer Restricted Securities PLUS (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Notes held by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company is not subject to Section 13 or 15(d) of the Securities Exchange
Act, to make available, upon request of any Holder of Transfer Restricted
Securities, to any Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
18
<PAGE>
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements, lock-
up letters and other documents required under the terms of such underwriting
arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers for any Underwritten Offering that will
administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company. Such investment bankers and managers
are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by them of the provisions of this Agreement and hereby
agree to waive the defense in any action for specific performance that a remedy
at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) ADJUSTMENTS AFFECTING THE SENIOR NOTES. The Company will not
take any action, or voluntarily permit any change to occur, with respect to the
Senior Notes that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company
19
<PAGE>
has obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given by the Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities subject to such Exchange
Offer.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Telecopier No.: (312) 580-7040
Attention: Chief Financial Officer
With a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Telecopier No.: (312) 853-7036
Attention: Imad I. Qasim
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that this Agreement shall not inure to the benefit of or be
20
<PAGE>
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign acquired Transfer Restricted Securities directly from such
Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
21
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
STONE CONTAINER CORPORATION
By:
------------------------------------------
Name: Randolph C. Read
Title: Senior Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
Acting severally on behalf of
itself and the several
Initial Purchasers named in
Schedule I to the Purchase
Agreement.
By DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
--------------------------
Name:
Title:
22
<PAGE>
EXHIBIT 5.1
September 16, 1996
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Re: Rating Adjustable Senior Notes due 2016
Ladies and Gentlemen:
I refer to the Registration Statement on Form S-4 (the "Registration
Statement") being filed by Stone Container Corporation, a Delaware corporation
(the "Company"), with the Securities and Exchange Commission under the
Securities Act of 1933 (the "Securities Act"), relating to the registration of
$125,000,000 aggregate principal amount of the Company's new Rating Adjustable
Senior Notes due 2016 (the "New Notes"). The New Notes are to be issued under
the Indenture dated as of July 24, 1996 (the "Indenture") between the Company
and The Bank of New York, as trustee (the "Trustee"). The Company intends to
offer, upon the terms and subject to the conditions set forth in the
Registration Statement, to exchange $1,000 principal amount of New Notes for
each $1,000 principal amount of its outstanding Rating Adjustable Senior Notes
due 2016 (the "Old Notes") of which $125,000,000 aggregate principal amount is
outstanding (the "Exchange Offer").
I am familiar with the proceedings to date with respect to the proposed
issuance and delivery of the New Notes and have examined such records, documents
and questions of law, and satisfied myself as to such matters of fact, as I have
considered relevant and necessary as a basis for my opinion.
Based on the foregoing, I am of the opinion that:
1. The Company is duly incorporated and validly existing under the laws
of the State of Delaware.
2. All necessary action has been taken by the Board of Directors of the
Company to authorize the issuance of the New Notes.
3. The New Notes issued upon acceptance of the Exchange Offer will be
legally issued and binding obligations of the Company (except to the extent
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws affecting
the enforcement of creditor's rights generally and by the effect of
<PAGE>
general principles of equity, regardless of whether enforceability is considered
in a proceeding in equity or at law) when (i) the Registration Statement, as
finally amended, shall have become effective under the Securities Act and the
Indenture shall have been qualified under the Trust Indenture Act of 1939, as
amended, and (ii) the New Notes shall have been duly executed and authenticated
as provided in the Indenture and shall have been duly delivered to the holders
of the Old Notes in accordance with the terms and conditions of the Exchange
Offer.
My opinion expressed herein is limited to the General Corporation Law of
the State of Delaware, the laws of the State of Illinois and the laws of the
United States.
I do not find it necessary for the purposes of this opinion to cover, and
accordingly I express no opinion as to, the application of the securities or
blue sky laws of the various states to the offer and exchange of the New Notes.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to the opinion included in or made
a part of the Registration Statement.
Very truly yours,
Leslie T. Lederer
Vice President, Secretary
and Counsel
<PAGE>
EXHIBIT 12.1
STONE CONTAINER CORPORATION
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months Six Months
ended ended
June 30, June 30,
------------------- ------------------
(IN MILLIONS) 1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Income (loss) before extraordinary charges and cumulative
effects of accounting changes. . . . . . . . . . . . . . . . . . . $(21.1) $131.0 $ 11.3 $227.8
Income tax provision (credit). . . . . . . . . . . . . . . . . . . . (19.3) 93.2 (4.7) 160.5
Minority interest in consolidated subsidiaries . . . . . . . . . . . (.9) 8.7 (1.8) 12.9
Preferred stock dividend requirements of majority owned
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - -
Undistributed (earnings) loss of non-consolidated subsidiaries . . . (15.4) (.9) (39.1) (2.7)
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . (3.6) (3.5) (6.8) (5.8)
------- -------- ------- -------
(60.3) 228.5 (41.1) 392.7
------- -------- ------- -------
------- -------- ------- -------
Fixed charges:
Interest charges (expensed and capitalized), amortization of
debt discount and debt fees on all indebtedness. . . . . . . . . 105.1 121.6 207.9 245.3
Interest cost portion of rental expenses (33 1/3%) . . . . . . . . 8.9 8.4 17.8 16.1
Preferred stock dividend requirements of majority owned
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - -
------- -------- ------- -------
Total fixed charges. . . . . . . . . . . . . . . . . . . . . . 114.0 130.0 225.7 261.4
------- -------- ------- -------
------- -------- ------- -------
Earnings before income taxes, undistributed (earnings) loss of
non-consolidated subsidiaries, minority interest and fixed
charges (excluding capitalized interest) . . . . . . . . . . . . . $53.7 $358.5 $184.6 $654.1
------- -------- ------- -------
Ratio of earnings to fixed charges . . . . . . . . . . . . . . . . . (A) 2.76 (A) 2.50
------- -------- ------- -------
------- -------- ------- -------
<CAPTION>
Year ended December 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------- --------
<S> <C> <C> <C> <C> <C>
Income (loss) before extraordinary charges and cumulative
effects of accounting changes. . . . . . . . . . . . . . . . . $ 444.5 $(128.8) $(319.2) $ (169.9) $(49.1)
Income tax provision (credit). . . . . . . . . . . . . . . . . . 320.9 (35.5) (147.7) (59.4) 31.1
Minority interest in consolidated subsidiaries . . . . . . . . . 29.3 1.2 3.6 5.3 5.8
Preferred stock dividend requirements of majority owned
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . - (9.4) (5.7) (4.7) (5.9)
Undistributed (earnings) loss of non-consolidated subsidiaries . (9.0) 9.1 13.3 6.0 5.4
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . (13.2) (4.7) (10.8) (47.4) (81.9)
-------- -------- -------- ------- -------
772.5 (168.1) (466.5) (270.1) (94.6)
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Fixed charges:
Interest charges (expensed and capitalized), amortization of
debt discount and debt fees on all indebtedness. . . . . . . 473.5 460.7 437.5 433.5 479.7
Interest cost portion of rental expenses (33 1/3%) . . . . . . 35.4 29.1 27.4 27.8 26.8
Preferred stock dividend requirements of majority owned
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . - 9.4 5.7 4.7 5.9
-------- -------- -------- ------- -------
Total fixed charges. . . . . . . . . . . . . . . . . . . . 508.9 499.2 470.6 466.0 512.4
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Earnings before income taxes, undistributed (earnings) loss of
non-consolidated subsidiaries, minority interest and fixed
charges (excluding capitalized interest) . . . . . . . . . . . $1,281.4 $ 331.1 $ 4.1 $ 195.9 $417.8
-------- -------- -------- ------- -------
Ratio of earnings to fixed charges . . . . . . . . . . . . . . . 2.52 (B) (C) (D) (E)
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ----------
</TABLE>
(A) The Company's earnings for the three and six months ended June 30,
1996 were insufficient to cover fixed charges by $60.3 million and
$41.1 million, respectively.
(B) The Company's earnings for the year ended December 31, 1994 were
insufficient to cover fixed charges by $168.1 million. Earnings for
1994 included a non-recurring pretax gain of $22.0 million relating to
an involuntary conversion at the Company's Panama City, Florida pulp
and paperboard mill. If such a nonrecurring event had not occurred,
earnings would have been insufficient to cover the fixed charges by
$190.1 million.
(C) The Company's earnings for the year ended December 31, 1993 were
insufficient to cover fixed charges by $466.5 million. Earnings for
1993 included a non-recurring pretax gain of $35.4 million from the
sale of the Company's 49 percent equity interest in Empaques de Carton
Titan, S.A. If such a non-recurring event had not occurred, earnings
would have been insufficient to cover fixed charges by $501.9 million.
(D) The Company's earnings for the year ended December 31, 1992 were
insufficient to cover fixed charges by $270.1 million.
(E) The Company's earnings for the year ended December 31, 1991 were
insufficient to cover fixed charges by $94.6 million. Earnings for
1991 included a non-recurring pretax gain of $41.8 million associated
with the settlement and termination of a Canadian supply contract and
a non-recurring pretax gain of $17.5 million relating to an
involuntary conversion at the Company's Missoula, Montana mill. If
such nonrecurring events had not occurred, earnings would have been
insufficient to cover the fixed charges by $153.9 million.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Stone Container
Corporation of our report dated February 5, 1996, which appears in Stone
Container Corporation's Annual Report on Form 10-K for the year ended December
31, 1995. We also consent to the incorporation by reference of our report on the
Financial Statement Schedule, which appears in such Annual Report on Form 10-K.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
PRICE WATERHOUSE LLP
Chicago, Illinois
September 11, 1996
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Roger W. Stone
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Thomas P. Cutilletta
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
William F. Aldinger
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Richard A. Giesen
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
James J. Glasser
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Jack M. Greenberg
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
George D. Kennedy
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Howard C. Miller, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 29th
day of August, 1996.
John D. Nichols
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Jerry K. Pearlman
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Richard J. Raskin
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Alan Stone
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Avery J. Stone
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
Ira N. Stone
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints Roger W. Stone, Randolph C. Read and
Leslie T. Lederer, and each of them, the undersigned's true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution
for the undersigned and in the undersigned's name, place and stead, in any and
all capacities to sign a registration statement on Form S-4 relating to debt
securities of Stone Container Corporation, and any and all amendments (including
post-effective amendments) to such registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and any documents relating to the
qualification or registration under state Blue Sky or securities laws of such
securities, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes the undersigned might or could do in person, ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or the
substitute or substitutes of said attorneys-in-fact and agents or any of them,
may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned this Power of Attorney this 27th
day of August, 1996.
James H. Stone
<PAGE>
Exhibit 25.1
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
STONE CONTAINER CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 36-2041256
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
(Address of principal executive offices) (Zip code)
______________________
Rating Adjustable Senior Notes due 2016
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
- 3 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 10th day of September, 1996.
THE BANK OF NEW YORK
By: /S/ MARY LAGUMINA
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1996, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic of-
fices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................27,820,159
LESS: Allowance for loan and
lease losses ..............509,817
LESS: Allocated transfer risk
reserve......................1,000
Loans and leases, net of unearned
income, allowance, and reserve 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................ 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies .......................... 225,158
Customers' liability to this bank on
acceptances outstanding ............ 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
Total assets ......................... $41,558,682
LIABILITIES
Deposits:
In domestic offices ................ $18,851,327
Noninterest-bearing .......7,102,645
Interest-bearing .........11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 10,965,604
Noninterest-bearing ..........37,855
<PAGE>
Interest-bearing .........10,927,749
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,224,886
Securities sold under agreements
to repurchase .................... 29,728
Demand notes issued to the U.S.
Treasury ........................... 118,870
Trading liabilities .................. 673,944
Other borrowed money:
With original maturity of one year
or less .......................... 2,713,248
With original maturity of more than
one year ......................... 20,780
Bank's liability on acceptances exe-
cuted and outstanding .............. 803,292
Subordinated notes and debentures .... 1,022,860
Other liabilities .................... 1,590,564
Total liabilities .................... 38,015,103
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 3,197
Cumulative foreign currency transla-
tion adjustments .................. ( 5,765)
Total equity capital ................ 3,543,579
Total liabilities and equity
capital ........................... $41,558,682
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and
to the best of our knowledge and belief has been prepared in
conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 p.m., NEW YORK CITY
TIME, ON , 1996, (AS SUCH DATE AND TIME MAY BE EXTENDED BY THE COMPANY
IN ITS SOLE DISCRETION, THE "EXPIRATION DATE").
- --------------------------------------------------------------------------------
STONE CONTAINER CORPORATION
Rating Adjustable Senior Notes due 2016
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal
should be completed, signed, and submitted to:
BY OVERNIGHT CARRIER: BY FACSIMILE:
The Bank of New York The Bank of New York
Corporate Debt Operations Attn: Enrique Lopez
101 Barclay Street (212) 571 - 3080
Floor 7E
New York, NY 10286
Attn: Enrique Lopez
(tel) 212/815-2742
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
THAT SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1996 (the "Prospectus") of Stone Container Corporation, a Delaware
corporation (the "COMPANY"), and this Letter of Transmittal (the "LETTER OF
TRANSMITTAL"), that together constitute the Company's offer (the "EXCHANGE
OFFER") to exchange $1,000 principal amount of its new Rating Adjustable Senior
Notes due 2016 (the "NEW NOTES") for each $1,000 principal amount of its
outstanding Rating Adjustable Senior Notes due 2016 (the "OLD NOTES").
Capitalized terms used but not defined herein have the meanings ascribed to them
in the Prospectus.
The undersigned hereby tenders the Old Notes described in Box 1 below (the
"TENDERED OLD NOTES") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Old Notes and the undersigned represents that it has
received from each beneficial owner of Tendered Old Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder
<PAGE>
from Beneficial Owner" accompanying this Letter of Transmittal, instructing the
undersigned to take the action described in this Letter of Transmittal.
This Letter of Transmittal is to be used whether the Old Notes are to be
physically delivered herewith, or whether guaranteed delivery procedures or
book-entry delivery procedures are being used, pursuant to the procedures set
forth in the Prospectus under the caption "The Exchange Offer -- Procedures for
Tendering." If delivery of Tendered Old Notes is to be made by book-entry
transfer to the account maintained by the Exchange Agent at The Depository Trust
Company ("DTC"), this Letter of Transmittal need not be manually executed;
PROVIDED, HOWEVER, that tenders of Old Notes must be effected in accordance with
the procedures mandated by DTC's Automated Tender Offer Program ("ATOP") and the
procedures set forth in the Prospectus under the caption "The Exchange Offer --
Exchanging Book Entry Old Notes." If a registered holder desires to tender Old
Notes and such Old Notes are not immediately available or time will not permit
all documents required by the Exchange Offer to reach the Exchange Agent (or
such registered holder is unable to complete the procedure for book-entry
transfer on a timely basis) prior to the Expiration Date, a tender may be
effected in accordance with the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." See Instruction 2.
Subject to, and effective upon, the acceptance for exchange of the Tendered
Old Notes, the undersigned hereby exchanges, assigns, and transfers to, or upon
the order of, the Company all right, title, and interest in, to, and under the
Tendered Old Notes.
Please issue the New Notes exchanged for Tendered Old Notes in the name(s)
of the undersigned. Similarly, unless otherwise indicated under "SPECIAL
DELIVERY INSTRUCTIONS" below (Box 3), please send or cause to be sent the
certificates for New Notes (and accompanying documents, as appropriate) to the
undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Old Notes, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver the Tendered Old Notes to the Company or cause ownership of the
Tendered Old Notes to be transferred to, or upon the order of, the Company, on
the books of the registrar for the Old Notes and deliver all accompanying
evidences of transfer and authenticity to, or transfer ownership of such Old
Notes on the account books maintained by DTC to, or upon the order of, the
Company upon receipt by the Exchange Agent, as the undersigned's agent, of the
New Notes to which the undersigned is entitled upon the acceptance by the
Company of the Tendered Old Notes pursuant to the Exchange Offer, and
(ii) receive all benefits and otherwise exercise all rights of beneficial
ownership of the Tendered Old Notes, all in accordance with the terms of the
Exchange Offer.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
-2-
<PAGE>
Exchange Offer -- Withdrawal of Tenders." All authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned
and any Beneficial Owner(s), and every obligation of the undersigned or any
Beneficial Owners hereunder shall be binding upon the heirs, representatives,
successors, and assigns of the undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Old Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances, and adverse
claims when the Tendered Old Notes are acquired by the Company as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and deliver any additional documents reasonably requested by the Company as
necessary or desirable to complete and give effect to the transactions
contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the New Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not engaging, do not intend to engage, and have no
arrangement or understanding with any person to participate, in the
distribution of the New Notes, and (iii) the undersigned and each Beneficial
Owner acknowledge and agree that any person participating in the Exchange Offer
for the purpose of distributing the New Notes must comply with the registration
and prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "SECURITIES
ACT"), in connection with a secondary resale transaction of the New Notes
acquired by such person and cannot rely on the position of the Staff of the
Securities and Exchange Commission (the "COMMISSION") set forth in no-action
letters that are discussed in the section of the Prospectus entitled "Plan of
Distribution."
The undersigned and each Beneficial Owner understand that a secondary
resale transaction described in clause (iii) above should be covered by an
effective registration statement containing the selling securityholder
information required by Item 507 or 508, as applicable, of Regulation S-K of the
Commission. The undersigned hereby represents and warrants that neither it nor
any Beneficial Owner(s) is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company.
If the undersigned or any Beneficial Owner(s) is a "broker" or "dealer"
registered under the Exchange Act, the undersigned understands and acknowledges
that it and any such Beneficial Owner(s) may be deemed to be an "underwriter"
within the meaning of the Securities Act and, therefore, must deliver a
prospectus meeting the requirements of the Securities Act relating to the New
Notes in connection with any resales by it or any Beneficial Owner(s) of New
Notes acquired for its own account or the account of any Beneficial Owner(s) in
the Exchange Offer. If the undersigned or any Beneficial Owner(s) is a "broker"
or "dealer" that acquired Old Notes
-3-
<PAGE>
for its own account pursuant to its market-making or other trading activities
(other than Old Notes acquired directly from the Company or an affiliate of
the Company), the undersigned and any Beneficial Owner(s) may use the
Prospectus to satisfy the prospectus delivery requirements of the Securities
Act. Notwithstanding the foregoing, the undersigned does not thereby admit
that it or any Beneficial Owner(s) is an "underwriter" within the meaning of
the Securities Act.
The undersigned understands and acknowledges that the Company reserves in
its sole discretion to purchase or make offers for any Old Notes that remain
outstanding subsequent to the Expiration Date or, as set forth in the Prospectus
under the caption "The Exchange Offer - Conditions of the Exchange Offer," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
-4-
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
BOX 1
DESCRIPTION OF OLD NOTES TENDERED
(ATTACH ADDITIONAL SIGNED PAGES, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------
Aggregate
Name(s) and address(es) of Registered Old Note Principal Aggregate
Holder(s), exactly as name(s) appear(s) on Old Note Certificate Amount Principal
Certificate(s) Number(s) Represented Amount
(Please fill in, if blank) of Old by Tendered*
Notes Certificate(s)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* The minimum permitted tender is $1,000 in principal amount of Old Notes.
All other tenders must be in integral multiples of $1,000 of principal
amount. Unless otherwise indicated in this column, the principal amount of
all Old Note Certificates identified in this Box 1 or delivered to the
Exchange Agent herewith shall be deemed tendered. See Instruction 4.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
BOX 2
BENEFICIAL OWNER(S)
- ----------------------------------------------------------------------------------------------------------
State of Principal Residence of Each Beneficial Owner of Principal Amount of Tendered Old Notes Held for
Tenedered Old Notes Account of Beneficial Owner
- ----------------------------------------------------------------------------------------------------------
<S> <C>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
If delivery of Old Notes is to be made by book-entry transfer to the
account maintained by the Exchange Agent at DTC, then tenders of Old Notes must
be effected in accordance with the procedures mandated by DTC's Automated Tender
Offer Program and the procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Exchanging Book Entry Old Notes."
-5-
<PAGE>
- --------------------------------------------------------------------------------
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if the New Notes exchanged for the Old Notes and untendered
Old Notes are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Mail New Note(s) and any untendered Old Notes to:
Name(s):
- --------------------------------------------------------------------------------
(please print)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(include Zip Code)
Tax Identification or
Social Security No.:
- --------------------------------------------------------------------------------
-6-
<PAGE>
BOX 4
USE OF GUARANTEED DELIVERY
/ / CHECK HERE ONLY IF OLD NOTES ARE BEING TENDERED BY MEANS OF A NOTICE
OF GUARANTEED DELIVERY. See Instruction 2. If this box is checked,
please provide the following information:
Name(s) of Registered Holder(s):
- --------------------------------------------------
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- --------------------------------------------------
Name of Institution which Guaranteed Delivery:
- --------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BOX 5
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
-7-
<PAGE>
- --------------------------------------------------------------------------------
X
-----------------------------------------
X
-----------------------------------------
(Signature of Registerd Holder(s)
or Authorized Signatory)
Note: The above lines must be signed by the registered holder(s) of Old Notes
as their name(s) appear(s) on the Old Notes or by person(s) authorized to become
registered holder(s) (which must be transmitted with this Letter of
Transmittal). If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer, or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below.
See Instruction 5.
Name(s):
-----------------------------------------
-----------------------------------------
Capacity:
----------------------------------------
----------------------------------------
Street Address:
----------------------------------
----------------------------------
----------------------------------
(include Zip Code)
Area Code and Telephone Number:
- --------------------------------------------------
Tax Identification or Social Security Number:
- --------------------------------------------------
- --------------------------------------------------------------------------------
-8-
<PAGE>
- --------------------------------------------------------------------------------
Signature Guarantee
(If required by Instruction 5)
Authorized Signature
X
-----------------------------------------------
Name:
--------------------------------------------
(please print)
Title:
------------------------------------------
Name of Firm:
-----------------------------------
Must be an Eligible Institution
as defined in Instruction 2)
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
(include Zip Code)
Area Code and Telephone Number:
- --------------------------------------------------
Dated:
------------------------------------------
- --------------------------------------------------------------------------------
-9-
<PAGE>
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. The Tendered Old
Notes, as well as a properly completed and duly executed copy of this Letter of
Transmittal, a Substitute Form W-9 (or facsimile thereof) and any other
documents required by this Letter of Transmittal must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date;
provided, however that book-entry transfers of Old Notes may be effected in
accordance with the procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Exchanging Book-Entry Old Notes." The method of delivery
of certificates for Old Notes and all other required documents is at the
election and risk of the tendering holder and delivery will be deemed made only
when actually received by the Exchange Agent. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
Instead of delivery by mail, it is recommended that the holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. Neither the Company nor the Exchange Agent is under any
obligation to notify any tendering holder of the Company's acceptance of
Tendered Old Notes prior to the Closing of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Old
Notes but whose Old Notes are not immediately available and who cannot deliver
their Old Notes, Letter of Transmittal and any other documents required by the
Letter of Transmittal to the Exchange Agent prior to the Expiration Date must
tender their Old Notes according to the guaranteed delivery procedures set forth
below, including completion of Box 4. Pursuant to such procedures: (i) such
tender must be made by or through a firm which is a member of one of the
following signature guarantee programs: the Securities Transfer Agents
Medallion Program (STAMP), the New York Stock Exchange Medallion Signature
Program (MSP) and the Stock Exchange Medallion Program (SEMP) (an "ELIGIBLE
INSTITUTION") and the Notice of Guaranteed Delivery must be signed by the
holder; (ii) prior to the Expiration Date, the Exchange Agent must have received
from the holder and the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail, or hand
delivery) setting forth the name and address of the holder, the certificate
number or numbers of the Tendered Old Notes (except in the case of book-entry
tenders), and the principal amount of Tendered Old Notes, stating that the
tender is being made thereby and guaranteeing that, within five business days
after the Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the Tendered Old Notes and any other required documents will be
deposited by the Eligible Institution with the Exchange Agent; and (iii) such
properly completed and executed documents required by this Letter of Transmittal
and the Tendered Old Notes in proper form for transfer (or a Book-Entry
Confirmation with respect to such Old Notes) must be received by the Exchange
Agent within five business days after the Expiration Date. Any holder who
wishes to tender Old Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery relating to such Old Notes prior to the Expiration Date.
Failure to complete the guaranteed delivery procedures outlined above will not,
of itself, affect the validity or effect a revocation of any Letter of
Transmittal
-10-
<PAGE>
form properly completed and executed by an Eligible Holder who attempted to use
the guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name the Old Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Old Notes who
is not the registered holder must arrange promptly with the registered holder to
execute and deliver this Letter of Transmittal on his or her behalf through the
execution and delivery to the registered holder of the Instructions to
Registered Holder from Beneficial Owner form accompanying this Letter of
Transmittal.
4. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in
integral multiples of $1,000 in principal amount. If less than the entire
principal amount of Old Notes is tendered, the tendering holder should fill in
the principal amount tendered in the column labeled "Aggregate Principal Amount
Tendered" of the box entitled "Description of Old Notes Tendered" (Box 1) above.
The entire principal amount of Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Old Notes is not tendered, Old Notes for the principal
amount of Old Notes not tendered and New Notes exchanged for any Old Notes
tendered will be sent to the holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal, as soon as practicable following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Old Notes, the signature must correspond
with the name(s) as written on the face of the Tendered Old Notes without
alteration, enlargement, or any change whatsoever.
If any of the Tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Old Notes are held in different names on several Old Notes, it will be necessary
to complete, sign, and submit as many separate copies of the Letter of
Transmittal documents as there are names in which Tendered Old Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Old Notes tendered and New Notes are to be issued and any untendered
principal amount of Old Notes is to be reissued) to the registered holder(s),
the registered holder(s) need not and should not endorse any Tendered Old Notes
nor provide a separate bond power. In any other case, such registered holder(s)
must either properly endorse the Old Notes tendered or transmit a properly
completed separate bond power with this Letter of Transmittal, with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
Registered Holder(s) of any Old Notes, the Tendered Old Notes must be endorsed
or accompanied by appropriate bond powers, in each case, signed as the name of
the registered holder(s) appears on the Old Notes, with the signature on the
endorsement or bond power guaranteed by an Eligible Institution along with the
other documents required upon transfer by the Purchase Agreements.
-11-
<PAGE>
If this Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 5 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the Tendered Old Notes are tendered (i) by a Registered
Holder who has not completed the box set forth herein entitled "Special Delivery
Instructions" (Box 3) or (ii) by an Eligible Institution.
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering Eligible Holders should
indicate, in the applicable box (Box 3), the name and address to which the New
Notes and/or substitute Old Notes for principal amounts not tendered or not
accepted for exchange are to be sent, if different from the name and address of
the person signing this Letter of Transmittal.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the sale and transfer of Old Notes to the Company pursuant to the
Exchange Offer. If, however, a transfer tax is imposed for any reason other
than the transfer and sale of Old Notes to the Company pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or on any other person) will be payable by the tendering
holder and billed directly to such tendering holder. The Company will not bill
a holder for any transfer taxes if satisfactory evidence of payment of such
taxes or exemption from taxes therefrom is not submitted with this Letter of
Transmittal.
With respect to transfer taxes payable by the Company, as provided in
Instruction 7, it will not be necessary for transfer tax stamps to be affixed to
the Old Notes listed in this Letter of Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder of Old Notes or New Notes must provide the Company (as payor) with its
correct taxpayer identification number ("TIN"), which, in the case of a holder
who is an individual, is his or her social security number. If the Company is
not provided with the correct TIN, the holder may be subject to a $50 penalty
imposed by the Internal Revenue Service.
To prevent backup withholding with respect to payments of interest on the
New Notes, each tendering holder must provide such holder's correct TIN by
completing the Substitute Form W-9 set forth herein, certifying that the TIN
provided is correct (or that such holder is awaiting a TIN), and that (i) the
holder is exempt from backup withholding, or (ii) the holder has not been
notified by the Internal Revenue Service that such holder is subject to backup
withholding as a result of failure to report all interest or dividends or
(iii) the Internal Revenue Service has notified the holder that such holder is
no longer subject to backup withholding. If the New Notes will be registered in
more than one name or are not in the name of the actual owner,
-12-
<PAGE>
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for information on which TIN to report. Certain
holders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. See the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional instructions.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding. Any amount paid as backup withholding will be creditable against a
holder's tax liability.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of Tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the right to reject any and all
Old Notes not validly tendered or any Old Notes the Company's acceptance of
which would, in the opinion of the Company or its counsel, be unlawful. The
Company also reserves the right to waive any conditions of the Exchange Offer or
defects or irregularities in tenders of Old Notes as to any ineligibility of any
holder who seeks to tender Old Notes in the Exchange Offer. The interpretation
of the terms and conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) by the Company shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. The Company will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Old Notes,
but shall not incur any liability for failure to give such notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive, or modify specified conditions in the Exchange Offer in the case
of any Tendered Old Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Old Notes or transmittal of this Letter of Transmittal will
be accepted.
12. MUTILATED, LOST STOLEN, OR DESTROYED OLD NOTES. Any tendering holder
whose Old Notes have been mutilated, lost, stolen, or destroyed should contact
the Exchange Agent at the address indicated above for further instruction.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address and telephone number specified in
the Prospectus. Holders may also contact their broker, dealer, commercial bank,
trust company, or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED OLD NOTES AND ISSUANCE OF NEW NOTES; RETURN OF
OLD NOTES. Subject to the terms and conditions of the Exchange Offer, the
Company will accept for exchange all validly tendered Old Notes as soon as
practicable after the Expiration Date and will issue New Notes therefor as soon
as practicable thereafter. For purposes of the Exchange Offer, the Company
shall be deemed to have accepted tendered Old Notes when, as and if the Company
has given written or oral notice thereof to the Exchange Agent. If any Tendered
Old Notes are
-13-
<PAGE>
not exchanged pursuant to the Exchange Offer for any reason, such unexchanged
Old Notes will be returned, without expense, to the undersigned at the address
shown below or at a different address as may be indicted herein under "Special
Delivery Instructions."
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer--Withdrawal of Tenders".
-14-
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
- --Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification number have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- --------------------------------------------------------------------------------
For this type of account Give the SOCIAL SECURITY number of --
- --------------------------------------------------------------------------------
1. Individual The individual
2. Two or more individuals The actual owner of the account or, if
(joint account) combined funds, the first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-trustee(1)
trust account (grantor is
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Give the EMPLOYER IDENTIFICATION
For this type of account number of--
- --------------------------------------------------------------------------------
5. Sole proprietorship account The Owner(3)
6. A valid trust, estate, or pension Legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not designated in
the account title.)(4)
7. Corporate The Corporation
8. Association, club, religious, The organization
charitable, educational, or
other tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a State
or local government, school
district, or person) that
receives agricultural program
payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name issued.
-15-
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application or a Social Security Number Card, for
Form SS-4. Application for Employer identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
Payees Exempt from Backup Withholding Payees specifically exempted from backup
withholding on most payments include the following:
- - A Corporation
- - A financial institution
- - An organization exempt from tax under Section 501(a), or, an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payment of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include
the following:
- - Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
-16-
<PAGE>
Exempt payee described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
PENALTIES
FAILURE TO FURNISH TIN. --If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. --If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. --Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. --If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
PRIVACY ACT NOTICE. --Section 6109 requires you to furnish your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your TIN whether or not you are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a TIN to a payer. Certain penalties may also
apply.
-17-
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
RATING ADJUSTABLE SENIOR NOTES DUE 2016
OF
STONE CONTAINER CORPORATION
As set forth in the Exchange Offer (as defined below), this form or one
substantially equivalent hereto or the electronic form used by The Depository
Trust Company for this purpose must be used to accept the Exchange Offer (as
defined below) if certificates for Rating Adjustable Senior Notes due 2016
(the "Old Notes") of Stone Container Corporation (the "Company") are not
immediately available or if a holder of the Old Notes is unable to complete
the procedure for book entry transfer on a timely basis, or if time will not
permit all required documents to reach the Exchange Agent prior to 5:00 p.m.
New York City time on , 1996 unless extended (the "Expiration
Date"). This form or a facsimile hereof may be delivered by hand or sent by
telegram, facsimile transmission or mail to the Exchange Agent. Capitalized
terms used herein and not defined herein shall have the meanings assigned to
them in the Exchange Offer.
THE EXCHANGE AGENT IS:
THE BANK OF NEW YORK
BY OVERNIGHT CARRIER: BY FACSIMILE:
The Bank of New York The Bank of New York
Corporate Debt Operations Attn: Enrique Lopez
101 Barclay Street (212) 571-3080
Floor 7E
New York, NY 10286
Attn: Enrique Lopez
(tel) 212/815-2742
FOR INFORMATION WITH RESPECT TO
THE OFFER CALL THE CORPORATE DEBT OPERATIONS OF THE EXCHANGE AGENT
PHONE NO. (212) 815-2742
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
(as defined therein) under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders the Old Notes indicated below pursuant to
the guaranteed delivery procedures set forth in the accompanying Prospectus
dated , 1996 (the "Prospectus") and in the related Letter of
Transmittal (which together with the Prospectus constitute the "Exchange
Offer"), receipt of which is hereby acknowledged.
<PAGE>
The undersigned hereby represents and warrants that the undersigned accepts
the terms and conditions of the Exchange Offer, has full power and authority to
tender, exchange, assign and transfer the Old Notes tendered hereby, and that
when the same are accepted for exchange by the Company, the Company will acquire
good and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim or right. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be reasonably necessary or
desirable to complete the sale, assignment and transfer of the Old Notes
tendered hereby.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on an interpretation by the staff of the Securities and Exchange
Commission that the New Notes issued pursuant to the terms of the Prospectus in
exchange for the Old Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act of 1933, as amended (the "Securities Act"), or a "broker" or "dealer"
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of such New
Notes.
The undersigned represents that (i) the New Notes acquired pursuant to the
Offer are being obtained in the ordinary course of such holder's business,
(ii) such holder is not engaging, does not intend to engage and has no
arrangement or understanding with any person to participate, in the distribution
of such New Notes, and (iii) such holder is not an "affiliate," as defined under
Rule 405 of the Securities Act, of the Company.
If the undersigned is a "broker" or "dealer" registered under the
Exchange Act that acquired Old Notes for its own account pursuant to its
market-making or other trading activities (other than Old Notes acquired
directly from the Company or an affiliate of the Company), the undersigned
understands and acknowledges that it may be deemed to be an "underwriter"
within the meaning of the Securities Act and, therefore, must deliver a
prospectus relating to the New Notes in connection with any resales by it of
New Notes acquired for its own account in the Exchange Offer. Notwithstanding
the foregoing, the undesigned does not thereby admit that it is an
"underwriter" within the meaning of the Securities Act.
The undersigned understands and acknowledges that the Company reserves in
its sole discretion to purchase or make offers for any Old Notes that remain
outstanding subsequent to the Expiration Date or, as set forth in the Prospectus
under the caption "The Exchange Offer - Conditions of the Exchange Offer," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
ALL QUESTIONS AS TO THE VALIDITY, FORM, ELIGIBILITY (INCLUDING TIME OF
RECEIPT), AND ACCEPTANCE OF TENDERED OLD NOTES WILL BE DETERMINED BY THE COMPANY
IN ITS SOLE DISCRETION, WHICH DETERMINATION WILL BE FINAL AND BINDING. THE
COMPANY RESERVES THE RIGHT TO REJECT ANY AND ALL OLD NOTES NOT VALIDLY TENDERED
OR ANY OLD NOTES THE COMPANY'S ACCEPTANCE OF WHICH WOULD, IN THE OPINION OF
THE COMPANY OR ITS COUNSEL, BE UNLAWFUL.
Names(s) of Record Holder(s):
--------------------------------------------------
- --------------------------------------------------------------------------------
Please Print
Address(es):
--------------------------------------------------------------------
- --------------------------------------------------------------------------------
-2-
<PAGE>
Area Code and Tel. No(s):
-------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s)
Certificate No(s) Principal Amount
(if available) Tendered
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member of the Securities Transfer Agents Medallion
Program (STAMP), the New York Stock Exchange Medallion Signature Program (MSP)
or the Stock Exchange Medallion Program (SEMP) hereby guarantees delivery to the
Exchange Agent of certificates for the Old Notes tendered hereby, in proper form
for transfer with delivery of a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal, all within five (5) business days after the Expiration
Date.
The undersigned acknowledges that it must communicate the guarantee to the
Exchange Agent and must deliver the Letter of Transmittal and certificates for
Old Notes to the Exchange Agent within the time period shown hereon. Failure to
do so could result in a financial loss to the undersigned.
- ------------------------------------- -------------------------------------
Firm Authorized Signature
Name
- ------------------------------------- --------------------------------
Address (Please Type or Print)
Title
- ------------------------------------- --------------------------------
Zip Code
Dated , 1996
-------------------------
Area Code and Tel. No.
--------------------------------------
DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM -- THEY SHOULD BE
SENT WITH THE LETTER OF TRANSMITTAL.
-3-
<PAGE>
EXHIBIT 99.3
STONE CONTAINER CORPORATION
OFFER TO EXCHANGE
ITS
RATING ADJUSTABLE SENIOR NOTES DUE 2016
FOR ANY AND ALL OF THE OUTSTANDING
RATING ADJUSTABLE SENIOR NOTES DUE 2016
__________, 1996
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees:
We are enclosing herewith an offer by Stone Container Corporation, a
Delaware corporation (the "Company"), to exchange its new Rating Adjustable
Senior Notes due 2016 (the "New Notes") for any and all of the outstanding
Rating Adjustable Senior Notes due 2016 (the "Old Notes"), upon the terms and
subject to the conditions set forth in the accompanying Prospectus, dated
__________, 1996 (the "Prospectus"), and related Letter of Transmittal (which
together with the Prospectus constitutes the "Exchange Offer").
The Exchange Offer provides a procedure for holders to tender the Old Notes
by means of guaranteed delivery.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
___________, 1996, unless extended (the "Expiration Date"). Tendered Old Notes
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date, if such Old Notes have not previously been accepted for
exchange pursuant to the Offer.
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "SEC"), New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder which is an
"affiliate" of the Company with the meaning of Rule 405 under the Securities Act
of 1933, as amended (the "Securities Act") or a "broker" or "dealer" registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
without compliance with the registration and prospectus delivery provisions of
the Securities Act provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders are not engaging, do not
intend to engage, and have no arrangement with any person to participate, in the
distribution of such New Notes. See "Shearman & Sterling," SEC No-Action Letter
(available July 2, 1993), "Morgan Stanley & Co., Inc.," SEC No-Action Letter
(available June 5, 1991) and "Exxon Capital Holding Corporation," SEC No-Action
Letter (available May 13, 1988).
The Exchange Offer is not conditioned on any minimum principal amount of
Old Notes being tendered except that Old Notes may be tendered only in integral
multiples of $1,000.
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange New Notes for, any Old Notes not
theretofore accepted for exchange, and may terminate or amend the Exchange Offer
as provided herein before the acceptance of such Old Notes, if any of the
conditions described in the Prospectus under "The Exchange Offer - Conditions of
the Exchange Offer" exist.
<PAGE>
The Company reserves the right in its sole discretion to purchase or make
offers for any Old Notes that remain outstanding subsequent to the Expiration
Date or, as set forth in the Prospectus under the caption "The Exchange Offer -
Conditions of the Exchange Offer," to terminate the Exchange Offer and, to the
extent permitted by applicable law, purchase Old Notes in the open market in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the Exchange Offer.
For your information and for forwarding to your clients for whom you hold
Old Notes registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. A Prospectus, dated __________, 1996.
2. A Letter of Transmittal for your use and for the information of
your clients.
3. A printed form of letter which may be sent to your clients for
whose accounts you hold Old Notes registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Exchange Offer.
4. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 of the Internal Revenue Service (included in Letter of
Transmittal instruction number 8).
WE URGE YOU TO CONTACT YOUR
CLIENTS AS PROMPTLY AS POSSIBLE.
Any inquiries you may have with respect to the Exchange Offer may be
addressed to, and additional copies of the enclosed materials may be obtained
from the Corporate Debt Operations of the Exchange Agent at the following
telephone number: (212) 815-2742.
Very truly yours,
STONE CONTAINER CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
AS THE AGENT OF THE COMPANY, THE EXCHANGE AGENT OR ANY OTHER PERSON, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT 99.4
STONE CONTAINER CORPORATION
OFFER TO EXCHANGE
ITS
RATING ADJUSTABLE SENIOR NOTES DUE 2016
FOR ANY AND ALL OF THE OUTSTANDING
RATING ADJUSTABLE SENIOR NOTES DUE 2016
To Our Clients:
Enclosed for your consideration are the Prospectus, dated __________, 1996
(the "Prospectus") and the related Letter of Transmittal (which together with
the Prospectus constitute the "Exchange Offer") in connection with the offer by
Stone Container Corporation, a Delaware corporation (the "Company"), to exchange
its Rating Adjustable Senior Notes due 2016 ( the "New Notes") for any and all
of the outstanding Rating Adjustable Senior Notes due 2016 (the "Old Notes"),
upon the terms and subject to the conditions set forth in the Exchange Offer.
We are the Registered Holders of Old Notes held for your account. An
exchange of the Old Notes can be made only by us as the Registered Holders and
pursuant to your instructions. The Letter of Transmittal is furnished to you
for your information only and cannot be used by you to exchange the Old Notes
held by us for your account. The Exchange Offer provides a procedure for
holders to tender by means of guaranteed delivery.
We request information as to whether you wish us to exchange any or all of
the Old Notes held by us for your account upon the terms and subject to the
conditions of the Exchange Offer.
Your attention is directed to the following:
1. The New Notes will be exchanged for the Old Notes at the
rate of $1,000 principal amount of New Notes for each $1,000 principal
amount of Old Notes. Interest will accrue from the last February 1 or
August 1 on which interest was paid on the Old Notes, or, if no
interest has been paid on the Old Notes, from July 24, 1996. The form
and terms of the New Notes are the same in all material respects as
the form and terms of the Old Notes (which they replace) except that
the New Notes have been registered under the Securities Act of 1933,
as amended (the "Securities Act").
2. Based on an interpretation by the staff of the Securities
and Exchange Commission (the "SEC"), New Notes issued pursuant to the
Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder
which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act or a "broker" or "dealer" registered under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
without compliance with the registration and prospectus delivery
provisions of the Securities Act provided that such New Notes are
acquired in the ordinary course of such holders' business and such
holders are not engaging, do not intend to engage, and have no
arrangement with any person to participate, in the distribution of
such New Notes. See "Shearman & Sterling," SEC No-Action Letter
(available July 2, 1993), "Morgan Stanley & Co., Inc.," SEC No-Action
Letter (available June 5, 1991) and "Exxon Capital Holdings
Corporation," SEC No-Action Letter (available May 13, 1988).
<PAGE>
3. The Exchange Offer is not conditioned on any minimum
principal amount of Old Notes being tendered except that Old Notes may
be tendered only in integral multiples of $1,000.
4. Notwithstanding any other term of the Exchange Offer, the
Company will not be required to accept for exchange, or exchange New
Notes for, any Old Notes not theretofore accepted for exchange, and
may terminate or amend the Offer as provided herein before the
acceptance of such Old Notes, if any of the conditions described in
the Prospectus under "The Exchange Offer -- Conditions of the Exchange
Offer" exist.
5. Tendered Old Notes may be withdrawn at any time prior to
5:00 p.m., New York City time, on ___________, 1996 if such Old Notes
have not previously been accepted for exchange pursuant to the
Exchange Offer.
6. Any transfer taxes applicable to the exchange of the Old
Notes pursuant to the Exchange Offer will be paid by the Company,
except as otherwise provided in Instruction 7 of the Letter of
Transmittal.
If you wish to have us tender any or all of your Old Notes, please so
instruct us by completing, detaching and returning to us the instruction form
attached hereto. An envelope to return your instructions is enclosed. If you
authorize a tender of your Old Notes, the entire principal amount at maturity of
Old Notes held for your account will be tendered unless otherwise specified on
the instruction form. Your instructions should be forwarded to us in ample time
to permit us to submit a tender on your behalf by the Expiration Date.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM
OR ON BEHALF OF, HOLDERS OF THE OLD NOTES IN ANY JURISDICTION IN WHICH THE
MAKING OF THE EXCHANGE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH
ANY PROVISION OF ANY APPLICABLE SECURITY LAW.
-2-
<PAGE>
STONE CONTAINER CORPORATION
OFFER TO EXCHANGE
ITS
RATING ADJUSTABLE SENIOR NOTES DUE 2016
FOR ANY AND ALL OF THE OUTSTANDING
RATING ADJUSTABLE SENIOR NOTES DUE 2016
The undersigned acknowledge(s) receipt of your letter and the enclosed
Prospectus and the related Letter of Transmittal, in connection with the offer
by the Company to exchange the Old Notes.
This will instruct you to tender the principal amount of Old Notes
indicated below held by you for the account of the undersigned, upon the terms
and subject to the conditions set forth in the Prospectus and the related Letter
of Transmittal.
The undersigned represents that (i) the New Notes acquired pursuant to the
Offer are being obtained in the ordinary course of such holder's business,
(ii) such holder is not engaging, does not intend to engage, and has no
arrangement or understanding with any person to participate, in the distribution
of such New Notes, and (iii) such holder is not an "affiliate," as defined under
Rule 405 of the Securities Act, of the Company.
If the undersigned is a "broker" or "dealer" registered under the Exchange
Act that acquired Old Notes for its own account pursuant to its market-making or
other trading activities (other than Old Notes acquired directly from the
Company or an affiliate of the Company), the undersigned understands and
acknowledges that it may be deemed to be an "underwriter" within the meaning of
the Securities Act and, therefore, must deliver a prospectus relating to the New
Notes in connection with any resales by it of New Notes acquired for its own
account in the Exchange Offer. Notwithstanding the foregoing, the undersigned
does not thereby admit that it is an "underwriter" within the meaning of the
Securities Act.
Sign Here
................................................
Signature(s)
-3-
<PAGE>
Securities which are to be tendered:
TENDER ALL OF THE OLD NOTES
Principal Amount*
----------------
/ / Old Notes..................................................
...............................................................
NAME(S) (PLEASE PRINT)
...............................................................
ADDRESS
...............................................................
ZIP CODE
...............................................................
AREA CODE AND TELEPHONE NO.
Dated: , 1996
________________________
*Unless otherwise indicated, it will be assumed that all of the Old Notes listed
are to be tendered.
<PAGE>
, 1996
EXCHANGE AGENT AGREEMENT
The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street - 21st Floor
New York, New York 10286
Ladies and Gentlemen:
Stone Container Corporation (the "Company") proposes to make an
offer (the "Exchange Offer") to exchange its outstanding Rating Adjustable
Senior Notes (the "Old Securities") for its New Rating Adjustable Senior
Notes (the "New Securities"). The terms and conditions of the Exchange Offer
as currently contemplated are set forth in a prospectus, dated ___________,
1996 (the "Prospectus"), proposed to be distributed to all record holders of
the Old Securities. The Old Securities and the New Securities are
collectively referred to herein as the "Securities".
The Company hereby appoints The Bank of New York to act as exchange
agent (the "Exchange Agent") in connection with the Exchange Offer. References
hereinafter to "you" shall refer to The Bank of New York.
The Exchange Offer is expected to be commenced by the Company on or
about ___________, 1996. The Letter of Transmittal accompanying the Prospectus
is to be used by the holders of the Old Securities to accept the Exchange Offer,
and contains instructions with respect to the delivery of certificates for Old
Securities tendered.
The Exchange Offer shall expire at 5:00 P.M., New York City time, on
_____________, 1996 or on such later date or time to which the Company may
extend the Exchange Offer (the "Expiration Date"). Subject to the terms and
conditions set forth in the Prospectus, the Company expressly reserves the right
to extend the Exchange Offer from time to time and may extend the Exchange Offer
by giving oral (confirmed in writing) or written notice to you before 9:00 A.M.,
New York City time, on the business day following the previously scheduled
Expiration Date.
The Company expressly reserves the right to amend or
<PAGE>
terminate the Exchange Offer, and not to accept for exchange any Old Securities
not theretofore accepted for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified in the Prospectus under the caption
"The Exchange Offer -- Conditions of the Exchange Offer." The Company will
give oral (confirmed in writing) or written notice of any amendment, termination
or nonacceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein; PROVIDED, HOWEVER, that in no way
will your general duty to act in good faith be discharged by the foregoing.
2. You will establish an account with respect to the Old Securities
at The Depository Trust Company (the "Book-Entry Transfer Facility") for
purposes of the Exchange Offer within two business days after the date of the
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of the Old
Securities by causing the Book-Entry Transfer Facility to transfer such Old
Securities into your account in accordance with the Book-Entry Transfer
Facility's procedure for such transfer.
3. You are to examine each of the Letters of Transmittal and
certificates for Old Securities (or confirmation of book-entry transfer into
your account at the Book-Entry Transfer Facility) and any other documents
delivered or mailed to you by or for holders of the Old Securities to ascertain
whether: (i) the Letters of Transmittal and any such other documents are duly
executed and properly completed in accordance with instructions set forth
therein and (ii) the Old Securities have otherwise been properly tendered. In
each case where the Letter of Transmittal or any other document has been
improperly completed or executed or any of the certificates for Old Securities
are not in proper form for transfer or some other irregularity in connection
with the acceptance of the Exchange Offer exists, you will endeavor to inform
the presenters of the need for fulfillment of all requirements and to take any
other action as may be necessary or advisable to cause such irregularity to be
corrected.
4. With the approval of the President, Senior Vice President,
Executive Vice President, or any Vice President of the Company (such approval,
if given orally, to be confirmed in writing) or any other party designated by
such an officer in
<PAGE>
writing, you are authorized to waive any irregularities in connection with any
tender of Old Securities pursuant to the Exchange Offer.
5. Tenders of Old Securities may be made only as set forth in the
Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer -- Procedures for Tendering", and Old Securities shall be
considered properly tendered to you only when tendered in accordance with the
procedures set forth therein.
Notwithstanding the provisions of this paragraph 5, Old Securities
which the President, Senior Vice President, Executive Vice President, or any
Vice President of the Company shall approve as having been properly tendered
shall be considered to be properly tendered (such approval, if given orally,
shall be confirmed in writing).
6. You shall advise the Company with respect to any Old Securities
received subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Old Securities.
7. You shall accept tenders:
(a) in cases where the Old Securities are registered in two or more
names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter of
Transmittal) is acting in a fiduciary or a representative capacity only when
proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered holder of Old Securities
provided that customary transfer requirements, including any applicable transfer
taxes, are fulfilled.
You shall accept partial tenders of Old Securities where so indicated
and as permitted in the Letter of Transmittal and deliver certificates for Old
Securities to the transfer agent for split-up and return any untendered Old
Securities to the holder (or such other person as may be designated in the
Letter of Transmittal) as promptly as practicable after expiration or
termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration Date, of
all Old
<PAGE>
Securities properly tendered and you, on behalf of the Company, will exchange
such Old Securities for New Securities and cause such Old Securities to be
cancelled. Delivery of New Securities will be made on behalf of the Company by
you at the rate of $1,000 principal amount of New Securities for each $1,000
principal amount of the corresponding series of Old Securities tendered promptly
after notice (such notice if given orally, to be confirmed in writing) of
acceptance of said Old Securities by the Company; provided, however, that in all
cases, Old Securities tendered pursuant to the Exchange Offer will be exchanged
only after timely receipt by you of certificates for such Old Securities (or
confirmation of book-entry transfer into your account at the Book-Entry
Transfer Facility), a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) with any required signature guarantees and any other
required documents. You shall issue New Securities only in denominations of
$1,000 or any integral multiple thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable, except
that, subject to the terms and upon the conditions set forth in the Prospectus
and the Letter of Transmittal, Old Securities tendered pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Date.
10. The Company shall not be required to exchange any Old Securities
tendered if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Company not to exchange any Old Securities
tendered shall be given (and confirmed in writing) by the Company to you.
11. If, pursuant to the Exchange Offer, the Company does not accept
for exchange all or part of the Old Securities tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus under
the caption "The Exchange Offer -- Conditions of the Exchange Offer" or
otherwise, you shall as soon as practicable after the expiration or termination
of the Exchange Offer return those certificates for unaccepted Old Securities
(or effect appropriate book-entry transfer), together with any related required
documents and the Letters of Transmittal relating thereto that are in your
possession, to the persons who deposited them.
12. All certificates for reissued Old Securities, unaccepted Old
Securities or for New Securities shall be forwarded by (a) first-class certified
mail, return receipt requested under a blanket surety bond protecting you and
the Company from loss or liability arising out of the non-receipt or
non-delivery of such
<PAGE>
certificates or (b) by registered mail insured separately for the replacement
value of each of such certificates.
13. You are not authorized to pay or offer to pay any concessions,
commissions or solicitation fees to any broker, dealer, bank or other persons or
to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or as may be subsequently agreed to in writing by
you and the Company;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness of any of
the certificates or the Old Securities represented thereby deposited with you
pursuant to the Exchange Offer, and will not be required to and will make no
representation as to the validity, value or genuineness of the Exchange Offer;
(c) shall not be obligated to take any legal action hereunder
which might in your reasonable judgment involve any expense or liability, unless
you shall have been furnished with reasonable indemnity;
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter, telegram or
other document or security delivered to you and reasonably believed by you to be
genuine and to have been signed by the proper party or parties;
(e) may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as to its due
execution and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in good
faith believe to be genuine or to have been signed or represented by a proper
person or persons;
(f) may rely on and shall be protected in acting upon written or
oral instructions from any officer of the Company;
(g) may consult with your counsel with respect to any questions
relating to your duties and responsibilities; and
(h) shall not advise any person tendering Old
<PAGE>
Securities pursuant to the Exchange Offer as to the wisdom of making such tender
or as to the market value or decline or appreciation in market value of any Old
Securities.
15. You shall take such action as may from time to time be requested
by the Company or its counsel (and such other action as you may reasonably deem
appropriate) to furnish copies of the Prospectus, Letter of Transmittal and the
Notice of Guaranteed Delivery (as defined in the Prospectus) or such other forms
as may be approved from time to time by the Company, to all persons requesting
such documents and to accept and comply with telephone requests for information
relating to the Exchange Offer, provided that such information shall relate only
to the procedures for accepting (or withdrawing from) the Exchange Offer. The
Company will furnish you with copies of such documents at your request. All
other requests for information relating to the Exchange Offer shall be directed
to the Company, Attention: Leslie T. Lederer.
16. You shall advise by facsimile transmission or telephone, and
promptly thereafter confirm in writing to Leslie T. Lederer of the Company and
such other person or persons as it may request, daily (and more frequently
during the week immediately preceding the Expiration Date and if otherwise
requested) up to and including the Expiration Date, as to the number of Old
Securities which have been tendered pursuant to the Exchange Offer and the items
received by you pursuant to this Agreement, separately reporting and giving
cumulative totals as to items properly received and items improperly received.
In addition, you will also inform, and cooperate in making available to, the
Company or any such other person or persons upon oral request made from time to
time prior to the Expiration Date of such other information as it or he or she
reasonably requests. Such cooperation shall include, without limitation, the
granting by you to the Company and such person as the Company may request of
access to those persons on your staff who are responsible for receiving tenders,
in order to ensure that immediately prior to the Expiration Date the Company
shall have received information in sufficient detail to enable it to decide
whether to extend the Exchange Offer. You shall prepare a final list of all
persons whose tenders were accepted, the aggregate principal amount of Old
Securities tendered, the aggregate principal amount of Old Securities accepted
and deliver said list to the Company.
17. Letters of Transmittal and Notices of Guaranteed Delivery shall
be stamped by you as to the date and the time of receipt thereof and shall be
preserved by you for a period of time at least equal to the period of time you
preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus
<PAGE>
materials by returning them to the Company.
18. You hereby expressly waive any lien, encumbrance or right of
set-off whatsoever that you may have with respect to funds deposited with you
for the payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be
entitled to such compensation as set forth on Schedule I attached hereto.
20. You hereby acknowledge receipt of the Prospectus and the Letter
of Transmittal and further acknowledge that you have examined each of them. Any
inconsistency between this Agreement, on the one hand, and the Prospectus and
the Letter of Transmittal (as they may be amended from time to time), on the
other hand, shall be resolved in favor of the latter two documents, except with
respect to the duties, liabilities and indemnification of you as Exchange Agent,
which shall be controlled by this Agreement.
21. The Company covenants and agrees to indemnify and hold you
harmless in your capacity as Exchange Agent hereunder against any loss,
liability, cost or expense, including attorneys' fees and expenses, arising out
of or in connection with any act, omission, delay or refusal made by you in
reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by you to be valid, genuine and sufficient and in accepting any tender or
effecting any transfer of Old Securities reasonably believed by you in good
faith to be authorized, and in delaying or refusing in good faith to accept any
tenders or effect any transfer of Old Securities; provided, however, that the
Company shall not be liable for indemnification or otherwise for any loss,
liability, cost or expense to the extent arising out of your gross negligence or
willful misconduct. In no case shall the Company be liable under this indemnity
with respect to any claim against you unless the Company shall be notified by
you, by letter or cable or by facsimile confirmed by letter, of the written
assertion of a claim against you or of any other action commenced against you,
promptly after you shall have received any such written assertion or notice of
commencement of action. The Company shall be entitled to participate at its own
expense in the defense of any such claim or other action, and, if the Company so
elects, the Company shall assume the defense of any suit
<PAGE>
brought to enforce any such claim. In the event that the Company shall assume
the defense of any such suit, the Company shall not be liable for the fees and
expenses of any additional counsel thereafter retained by you so long as the
Company shall retain counsel satisfactory to you to defend such suit.
22. You shall arrange to comply with all requirements under the tax
laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service. The Company understands that you are required to deduct 31% on
payments to holders who have not supplied their correct Taxpayer Identification
Number or required certification. Such funds will be turned over to the
Internal Revenue Service in accordance with applicable regulations.
23. You shall deliver or cause to be delivered, in a timely manner to
each governmental authority to which any transfer taxes are payable in respect
of the exchange of Old Securities, your check in the amount of all transfer
taxes so payable, and the Company shall reimburse you for the amount of any and
all transfer taxes payable in respect of the exchange of Old Securities;
provided, however, that you shall reimburse the Company for amounts refunded to
you in respect of your payment of any such transfer taxes, at such time as such
refund is received by you.
24. This Agreement and your appointment as Exchange Agent hereunder
shall be construed and enforced in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within such
state, and without regard to conflicts of law principles, and shall inure to the
benefit of, and the obligations created hereby shall be binding upon, the
successors and assigns of each of the parties hereto.
25. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
26. In case any provision of this Agreement 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.
27. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, cancelled or waived, in whole or in part, except by a
written instrument signed by a duly authorized representative of the party to be
charged. This Agreement may not be modified orally.
<PAGE>
28. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party, addressed to it, at its
address or telecopy number set forth below:
<PAGE>
If to the Company:
Stone Container Corporation
150 N. Michigan Avenue
Chicago, IL 60601
Facsimile: (312) 580-2299
Attention: Law Department
If to the Exchange Agent:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Facsimile: (212) 815-5915
5915 Attention: Corporate Trust Trustee
Trust Trustee
Administration
29. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Paragraphs 19, 21 and 23 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver
to the Company any certificates for Securities, funds or property then held by
you as Exchange Agent under this Agreement.
30. This Agreement shall be binding and effective as of the date
hereof.
<PAGE>
Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
STONE CONTAINER CORPORATION
By:
------------------------
Name:
Title:
Accepted as of the date
first above written:
THE BANK OF NEW YORK, as Exchange Agent
By:
--------------------------
Name:
Title:
<PAGE>
SCHEDULE I
FEES
