UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F
¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 | |
x | ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2015 | Commission File Number 333-105024 |
CASCADES INC.
(Exact name of Registrant as specified in its charter)
Quebec, Canada
(Province or other jurisdiction of incorporation or organization)
2600
(Primary Standard Industrial Classification Code Number)
98-0140192
(I.R.S. Employer Identification Number)
404 Marie-Victorin Blvd.
Kingsey Falls, Quebec
Canada J0A 1B0
(819) 363-5100
(Address and telephone number of Registrant’s principal executive offices)
Cascades USA Inc.
1200 Forest Street
Eau Claire, WI 54703
(715) 834-3461
(Name, address (including zip code) and telephone
number (including area code)
of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
None.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
None.
For annual reports, indicate by check mark the information filed with this Form:
x | Annual information form | x | Audited annual financial statements |
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
95,310,923 shares of common stock outstanding as of December 31, 2015.
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.*
Yes | ¨ | No | x |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).
Yes | ¨ | No | ¨ |
* The registrant is currently not required to file reports, including this report, under Section 13 or 15(d) of the Securities Exchange Act of 1934 but is voluntarily filing this report with the Securities and Exchange Commission.
Annual Audited Consolidated Financial Statements
For the Annual Audited Consolidated Financial Statements for the years ended December 31, 2015 and 2014, including the Independent Auditor’s Report with respect thereto, of Cascades Inc. (the “Registrant” or “Cascades” or the “Corporation”), see the excerpt of Cascades’ 2015 Annual Report attached hereto as Exhibit 13.2.
Management’s Discussion and Analysis
For management’s discussion and analysis for the years ended December 31, 2015 and 2014, see the excerpt of Cascades’ 2015 Annual Report attached hereto as Exhibit 13.3.
Disclosure Controls and Procedures
Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by the Registrant in the reports that the Registrant files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified under Canadian securities laws and specified in the United States Securities and Exchange Commission’s (the “SEC”) rules and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including the President and Chief Executive Officer and the Vice-President and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
The Registrant conducted an evaluation (under the supervision and with the participation of the Registrant’s management, including the Chief Executive Officer and Chief Financial Officer) as of December 31, 2015, pursuant to Rule 13a-15 promulgated under the Exchange Act and under National Instrument 52-109 adopted by the Canadian Securities regulatory authorities, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures. Based on this evaluation, the Registrant’s Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of December 31, 2015.
It should be noted that while the Registrant’s Chief Executive Officer and Chief Financial Officer believe that the Registrant’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Registrant’s disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Management’s Report on Internal Control over Financial Reporting
Management’s Report to the shareholders of Cascades Inc. on internal control over financial reporting for the year ended December 31, 2015 is included in Exhibit 13.2 to this Annual Report on Form 40-F.
Management conducted an assessment of the effectiveness of the Corporation’s internal control over financial reporting, as at December 31, 2015 based on the framework and criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO Framework). Based on this evaluation, management has concluded that the Corporation’s internal control over financial reporting was effective as at December 31, 2015.
It should be noted that while the Registrant’s Chief Executive Officer and Chief Financial Officer believe that the Registrant’s internal control over financial reporting provide a reasonable level of assurance that they are effective, they do not expect that the Registrant’s internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Changes in Internal Controls over Financial Reporting
In July 2015, the Registrant initiated the first phase of the centralization of the accounting function within its Shared Services Centre and it ensured that appropriate internal control measures had been established and maintained with respect to financial reporting. There was no change in the Registrant’s internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect its internal controls over financial reporting.
Code of Ethics
The Corporation has adopted a Code of Ethics that applies to all directors, officers and employees, including the Corporation’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. For a discussion of the Corporation’s Code of Ethics, see page 11 of Cascades’ Annual Information Form for the year ended December 31, 2015 (“AIF”) attached hereto as Exhibit 13.1. There were neither amendments to nor waivers, including implicit waivers, from any provision of the Code of Ethics during the year ended December 31, 2015 that applied to the Corporation’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics is available on the Corporation’s website at www.cascades.com .
Audit Committee
The Registrant has a separately designated standing audit committee (the “Audit and Finance Committee”) as defined in Section 3(a)(58)(A) of the Exchange Act. The Audit and Finance Committee is composed entirely of directors who are “independent”, as such term is defined in the listing standards of the New York Stock Exchange. All members of the Audit and Finance Committee are financially literate and there is one “audit committee financial expert”. In considering criteria for the determination of financial literacy, the Board of Directors considers the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Registrant’s financial statements. In determining whether Audit and Finance Committee members are “audit committee financial experts”, the Board of Directors and the Audit and Finance Committee have considered the attributes set forth in Form 40-F. The “audit committee financial expert” is Laurence G. Sellyn. The other members of the Audit and Finance Committee are Georges Kobrynsky and David McAusland.
Principal Accountant Fees and Services
The aggregate fees for professional services rendered by our Independent Auditor, PricewaterhouseCoopers LLP, for the Corporation for the 2015 and 2014 fiscal years are shown in the table below:
Fees in Canadian dollars |
Year ended
December 31, 2015 |
Year ended
December 31, 2014 |
||||||
Audit Fees | $ | 1,675,465 | $ | 1,665,094 | ||||
Audit-Related Fees | $ | 524,585 | $ | 557,936 | ||||
Tax Fees | $ | 136,247 | $ | 191,241 | ||||
All Other Fees | N/A | N/A | ||||||
Total | $ | 2,336,297 | $ | 2,414,271 |
The nature of each category of fees is described below:
Audit Fees: Includes professional services provided by the Independent Auditor in connection with statutory and regulatory filings and audit of the annual financial statements of the Corporation.
Audit Related Fees: Includes professional services provided by the Independent Auditor in connection with auditing as well consultations on accounting and regulatory matters.
Tax Fees: Includes professional services rendered by the Independent Auditor for compliance with income tax laws.
All Other Fees: None.
Audit and Non-Audit Services Pre-Approval Policy
The Corporation’s Audit and Finance Committee has adopted a Pre-approval Policy and Procedures, for services provided by the Corporation’s Independent Auditor, PricewaterhouseCoopers LLP, which sets forth the procedures and the conditions pursuant to which permissible services proposed to be performed by the Independent Auditor are pre-approved. Under the terms of the policy, services that involve annual fees of less than $25,000 up to an annual limit of $50,000 are pre-approved. The Audit and Finance Committee has delegated to the Chairman of the Audit and Finance Committee pre-approval authority for any services not previously approved by the Audit and Finance Committee that involve the payment of unbudgeted fees up to a maximum of $100,000 per mandate. Services that involve fees of more than $100,000 require pre-approval of all the members of the Audit and Finance Committee. All of the non-audit services set forth above were approved under this pre-approval policy.
Services Approved by the Audit and Finance Committee
For the year ended December 31, 2015, the services described above requiring pre-approval were approved by the Audit and Finance Committee pursuant to paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X.
Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements as of December 31, 2015.
Tabular Disclosure of Contractual Obligations
For a tabular disclosure and discussion of contractual obligations, see the section entitled “Contractual Obligations and other commitments” on page 69 of Cascades’ Management’s Discussion and Analysis attached hereto as Exhibit 13.3.
Forward-Looking Statements
Certain statements in this Annual Report on Form 40-F or in documents incorporated by reference herein including statements regarding future results and performance, are forward-looking statements (as such term is defined, under the United States Private Securities Litigation Reform Act of 1995) based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for Cascades’ products, the prices and availability of raw materials and energy costs, Cascades’ exposure to significant competition, including competition with firms that may enjoy cost advantages or economies of scale, political, social and exchange rate risks due to its international operations, compliance costs associated with environmental laws and regulations, including unforeseen expenditures as a result of environmental liabilities, casualty of other losses that are not fully covered by insurance, labor disputes, work stoppages or increased labor costs, difficulty recouping its investments in joint ventures of other companies that Cascades does not control, difficulties associated with acquiring companies, or integrating acquired companies, as part of Cascades’ growth strategy, the impairment of Cascades’ goodwill or other intangible assets, changes in the control of Cascades‘ equity capital, changes in strategy or management brought about by its existing shareholders or similar changes relating to its control and management, Cascades’ inability to retain key personnel or attract and retain other talented employees, and fluctuations in currency exchange rates. Reference is made to the section entitled “Risk Factors” on page 11 of the AIF and to the section entitled “Risk Factors” on page 69 in Cascades’ Management’s Discussion and Analysis (which is incorporated by reference in the AIF) and attached hereto as Exhibit 13.1 and 13.3, respectively.
Consequently, all of the forward-looking statements made herein are qualified by these cautionary statements and there can be no assurance that the actual results on developments anticipated by the Corporation will be realized. The Corporation undertakes no obligation to update or revise any forward-looking statements.
Website Information
Notwithstanding any reference to the Registrant’s website in the AIF or in the documents attached as Exhibits hereto, the information contained in the Registrant’s website or any other website referred to in the Registrant’s website is not a part of this Form 40-F and, therefore, is not filed with the SEC.
Undertaking
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an Annual Report on Form 40-F arises; or transactions in said securities.
Consent to Service of Process
Any change to the name or address of the Registrant and/or to the name or address of the Registrant’s agent for service shall be communicated promptly to the Commission by amendment to the Form F-X referencing the file number of the Registrant.
Signatures
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.
CASCADES INC.
By: | /s/ Allan Hogg | |
Name: | Allan Hogg | |
Title: | Vice President and Chief Financial Officer | |
Date: | March 30, 2016 |
Exhibit Index
Exhibit
Number |
Description
of Exhibit (and document from
which incorporated by reference, if applicable) |
Note | ||
3.1 | Articles of Amalgamation of Cascades Inc. filed with the Inspector General of Financial Institutions of Quebec on January 10, 2004 | (A) | ||
3.2 | Articles of Amendment of Cascades Inc. filed with the Registrar of Companies of Quebec on July 27, 2011 | (B) | ||
3.3 | By-law No. 2011-1 of Cascades Inc., adopted by the Board of Directors of Cascades Inc. on March 14, 2011 and ratified by the Shareholders on May 12, 2011 | (B) | ||
4.1 | Indenture, dated as of June 19, 2014, among Cascades Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee | (D) | ||
4.2 | First Supplemental Indenture, dated as of March 16, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee | (D) | ||
4.3 | Second Supplemental Indenture, dated as of September 23, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee | (E) | ||
4.4 | Third Supplemental Indenture, dated December 9, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee | (E) | ||
4.5 | Indenture, dated as of June 19, 2014, among Cascades Inc., the Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee | (D) | ||
4.6 | First Supplemental Indenture, dated as of March 16, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee | (D) | ||
4.7 | Second Supplemental Indenture, dated as of September 23, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee | (E) | ||
4.8 | Third Supplemental Indenture, dated as of December 9, 2015, to the Indenture dated as of June 19, 2014, among Cascades Inc., the New Subsidiary Guarantors named therein and Computershare Trust Company of Canada, as Trustee | (E) | ||
4.9 | Indenture dated May 19, 2015, among Cascades Inc., the Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee | (E) | ||
4.10 | First Supplemental Indenture, dated September 23, 2015, to the Indenture dated May 19, 2015, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee | (E) | ||
4.11 | Second Supplemental Indenture, dated December 9, 2015, to the Indenture dated May 19, 2015, among Cascades Inc., the New Subsidiary Guarantors named therein and Wells Fargo Bank, National Association, as Trustee | (E) | ||
10.1 | Second Amended and Restated Credit Agreement, dated July 7, 2015, among Cascades Inc., Cascades USA Inc. and Cascades Europe SAS, National Bank of Canada, as administrative agent, The Bank of Nova Scotia, as collateral agent and syndication agent, and a syndicate of lenders named therein, as lenders | (E) | ||
11.1 | Amended and Restated Credit Agreement, dated as of May 14, 2012, among Greenpac Holding LLC, as borrower, Caisse de dépôt et placement du Québec and Cascades USA Inc., as lenders, and Caisse de dépôt et placement du Québec , as agent to the lenders | (C) | ||
13.1 | Annual Information Form for the year ended December 31, 2015 | (E) | ||
13.2 | Audited Consolidated Financial Statements for the year ended December 31, 2015 together | (E) |
with Management’s Report and the Independent Auditor’s Report | ||||
13.3 | Management’s Discussion and Analysis for the year ended December 31, 2015 | (E) | ||
23.1 | Consent of Independent Auditor | (E) | ||
31.1 | CEO Section 302 Certification | (E) | ||
31.2 | CFO Section 302 Certification | (E) | ||
32.1 | CEO and CFO Certification pursuant to Rule 13(a)-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350). | (E) |
(A) | Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 24, 2005 and incorporated herein by reference. |
(B) | Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 29, 2012 and incorporated herein by reference. |
(C) | Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 27, 2013 and incorporated herein by reference. |
(D) | Previously filed as an exhibit to Cascades Inc.’s Annual Report on Form 40-F, filed on March 27, 2015 and incorporated herein by reference. |
(E) | Filed herewith. |
Exhibit 4.3
SECOND SUPPLEMENTAL INDENTURE
dated as of September 23, 2015
to the
INDENTURE
dated as of June 19, 2014
among
CASCADES INC.,
THE SUBSIDIARY GUARANTORS named therein, and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
second SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (this “ Second Supplemental Indenture ”), dated as of September 23, 2015, among Cascades Flexible Packaging Inc. (the “ Guaranteeing Subsidiary ”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.
WITNESSETH:
WHEREAS, each of the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of its 5.50% Senior Notes due 2022 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Second Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
ARTICLE
I
DEFINITIONS
Section 1.1 Defined Terms . As used in this Second Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Second Supplemental Indenture refer to this Second Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE
II
AGREEMENT TO BE BOUND; GUARANTEE
Section 2.1 Agreement to be Bound . The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
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Section 2.2 Subsidiary Guarantee . The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Second Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.
ARTICLE
III
MISCELLANEOUS
Section 3.1 Notices . All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.
Section 3.2 Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Second Supplemental Indenture or the Indenture or any provision herein or therein contained.
Section 3.3 Governing Law . This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
Section 3.4 Severability . In case any provision in this Second Supplemental Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
Section 3.5 Benefits Acknowledged . The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.
Section 3.6 Ratification of Indenture; Second Supplemental Indenture Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
Section 3.7 The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this Second Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.
Section 3.8 Counterparts . The parties hereto may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Second Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and
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delivery of this Second Supplemental Indenture as to the parties hereto and may be used in lieu of the original Second Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 3.9 Execution and Delivery . The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.
Section 3.10 Headings . The headings of the Articles and the Sections in this Second Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
Section 3.11 FATCA . This Second Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.
[ The remainder of this page is intentionally left blank. ]
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IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.
CASCADES INC. | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Vice President, Legal Affairs | ||
and Corporate Secretary | |||
CASCADES FLEXIBLE PACKAGING INC., | |||
as the Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, | |||
as Trustee | |||
By: | /s/ Yana Kislenko | ||
Name: | Yana Kislenko | ||
Title: | Vice President |
Exhibit 4.4
THIRD SUPPLEMENTAL INDENTURE
dated as of December 9, 2015
to the
INDENTURE
dated as of June 19, 2014
among
CASCADES INC.,
THE SUBSIDIARY GUARANTORS named therein, and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
THIRD SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE (this “ Third Supplemental Indenture ”), dated as of December 9, 2015, among Cascades Recovery Inc., a Canadian corporation, Cascades Recovery U.S., Inc., a Delaware corporation, and Metro Retail Recycling Services, LLC, a Delaware limited liability company (collectively, the “ Guaranteeing Subsidiaries ”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.
WITNESSETH:
WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of its 5.50% Senior Notes due 2022 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiaries shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiaries shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Third Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiaries, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
ARTICLE
I
DEFINITIONS
Section 1.1 Defined Terms . As used in this Third Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Third Supplemental Indenture refer to this Third Supplemental Indenture as a whole and not to any particular section hereof.
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ARTICLE
II
AGREEMENT TO BE BOUND; GUARANTEE
Section 2.1 Agreement to be Bound . The Guaranteeing Subsidiaries hereby become parties to the Indenture as Subsidiary Guarantors and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
Section 2.2 Subsidiary Guarantee . The Guaranteeing Subsidiaries agree to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Third Supplemental Indenture shall constitute evidence of each Guaranteeing Subsidiary’s Subsidiary Guarantee.
ARTICLE
III
MISCELLANEOUS
Section 3.1 Notices . All notices and other communications to the Guaranteeing Subsidiaries shall be given as provided in the Indenture to the Guaranteeing Subsidiaries, with a copy to the Company as provided in the Indenture for notices to the Company.
Section 3.2 Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Third Supplemental Indenture or the Indenture or any provision herein or therein contained.
Section 3.3 Governing Law . This Third Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
Section 3.4 Severability . In case any provision in this Third Supplemental Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
Section 3.5 Benefits Acknowledged . Each Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiaries acknowledge that they will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by them pursuant to this Guarantee are knowingly made in contemplation of such benefits.
Section 3.6 Ratification of Indenture; Third Supplemental Indenture Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Third Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
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Section 3.7 The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this Third Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.
Section 3.8 Counterparts . The parties hereto may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Third Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Third Supplemental Indenture as to the parties hereto and may be used in lieu of the original Third Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 3.9 Execution and Delivery . The Guaranteeing Subsidiaries agree that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.
Section 3.10 Headings . The headings of the Articles and the Sections in this Third Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
Section 3.11 FATCA . This Third Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.
[ The remainder of this page is intentionally left blank. ]
3 |
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.
CASCADES INC. | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Vice President, Legal Affairs | ||
and Corporate Secretary | |||
CASCADES RECOVERY INC., | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary | ||
CASCADES RECOVERY U.S., INC., | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary | ||
METRO RETAIL RECYCLING SERVICES, LLC | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary |
4 |
WELLS FARGO BANK, NATIONAL ASSOCIATION, | |||
as Trustee | |||
By: | /s/ Yana Kislenko | ||
Name: | Yana Kislenko | ||
Title: | Vice President |
Exhibit 4.7
SECOND SUPPLEMENTAL INDENTURE
dated as of September 23, 2015
to the
INDENTURE
dated as of June 19, 2014
among
CASCADES INC.,
THE SUBSIDIARY GUARANTORS named therein, and
COMPUTERSHARE TRUST COMPANY OF CANADA,
as Trustee
second SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (this “ Second Supplemental Indenture ”), dated as of September 23, 2015, among Cascades Flexible Packaging Inc. (the “ Guaranteeing Subsidiary ”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), and Computershare Trust Company of Canada, as Trustee under the Indenture referred to below.
WITNESSETH:
WHEREAS, each of the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of its 5.50% Senior Notes due 2021 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Second Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
ARTICLE
I
DEFINITIONS
Section 1.1 Defined Terms . As used in this Second Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Second Supplemental Indenture refer to this Second Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE
II
AGREEMENT TO BE BOUND; GUARANTEE
Section 2.1 Agreement to be Bound . The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
1 |
Section 2.2 Subsidiary Guarantee . The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Second Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.
ARTICLE
III
MISCELLANEOUS
Section 3.1 Notices . All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.
Section 3.2 Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Second Supplemental Indenture or the Indenture or any provision herein or therein contained.
Section 3.3 Governing Law . This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the Province of Quebec.
Section 3.4 Severability . In case any provision in this Second Supplemental Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
Section 3.5 Benefits Acknowledged . The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.
Section 3.6 Ratification of Indenture; Second Supplemental Indenture Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter certified and delivered shall be bound hereby.
Section 3.7 The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this Second Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.
Section 3.8 Counterparts . The parties hereto may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Second Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Second Supplemental Indenture as to the parties hereto and may be used in lieu
2 |
of the original Second Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 3.9 Execution and Delivery . The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.
Section 3.10 Headings . The headings of the Articles and the Sections in this Second Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
Section 3.11 Language . The parties hereto have required that this Indenture and all documents and notices related hereto and/or resulting herefrom be drawn up in English only. Les parties aux présentes ont exigé que la présente convention ainsi que tous les documents et avis qui s’y rattachent et/ou qui en découleront soient rédigés en langue anglaise seulement.
[ The remainder of this page is intentionally left blank. ]
3 |
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.
CASCADES INC. | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Vice President, Legal Affairs | ||
and Corporate Secretary | |||
CASCADES FLEXIBLE PACKAGING INC., | |||
as the Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary |
4 |
COMPUTERSHARE TRUST COMPANY OF CANADA, | |||
as Trustee and not in its personal capacity | |||
By: | /s/ Sophie Brault | ||
Name: | Sophie Brault | ||
Title: | Corporate Trust Officer | ||
By: | /s/ Fabienne Pinatel | ||
Name: | Fabienne Pinatel | ||
Title: | Gestionnaire fiduciaire | ||
Corporate Trust Officer |
Exhibit 4.8
THIRD SUPPLEMENTAL INDENTURE
dated as of December 9, 2015
to the
INDENTURE
dated as of June 19, 2014
among
CASCADES INC.,
THE SUBSIDIARY GUARANTORS named therein, and
COMPUTERSHARE TRUST COMPANY OF CANADA,
as Trustee
third SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE (this “ Third Supplemental Indenture ”), dated as of December 9, 2015, among Cascades Recovery Inc., a Canadian corporation, Cascades Recovery U.S., Inc., a Delaware corporation, and Metro Retail Recycling Services, LLC, a Delaware limited liability company (collectively, the “ Guaranteeing Subsidiaries ”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), and Computershare Trust Company of Canada, as Trustee under the Indenture referred to below.
WITNESSETH:
WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of June 19, 2014 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of its 5.50% Senior Notes due 2021 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiaries shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiaries shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Third Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiaries, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
ARTICLE
I
DEFINITIONS
Section 1.1 Defined Terms . As used in this Third Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Third Supplemental Indenture refer to this Third Supplemental Indenture as a whole and not to any particular section hereof.
1 |
ARTICLE
II
AGREEMENT TO BE BOUND; GUARANTEE
Section 2.1 Agreement to be Bound . The Guaranteeing Subsidiaries hereby become parties to the Indenture as Subsidiary Guarantors and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
Section 2.2 Subsidiary Guarantee . The Guaranteeing Subsidiaries agree to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Third Supplemental Indenture shall constitute evidence of each Guaranteeing Subsidiary’s Subsidiary Guarantee.
ARTICLE
III
MISCELLANEOUS
Section 3.1 Notices . All notices and other communications to the Guaranteeing Subsidiaries shall be given as provided in the Indenture to the Guaranteeing Subsidiaries, with a copy to the Company as provided in the Indenture for notices to the Company.
Section 3.2 Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Third Supplemental Indenture or the Indenture or any provision herein or therein contained.
Section 3.3 Governing Law . This Third Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the Province of Quebec.
Section 3.4 Severability . In case any provision in this Third Supplemental Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
Section 3.5 Benefits Acknowledged . Each Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiaries acknowledge that they will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by them pursuant to this Guarantee are knowingly made in contemplation of such benefits.
Section 3.6 Ratification of Indenture; Third Supplemental Indenture Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Third Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter certified and delivered shall be bound hereby.
2 |
Section 3.7 The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this Third Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.
Section 3.8 Counterparts . The parties hereto may sign any number of copies of this Third Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Third Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Third Supplemental Indenture as to the parties hereto and may be used in lieu of the original Third Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 3.9 Execution and Delivery . The Guaranteeing Subsidiaries agree that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.
Section 3.10 Headings . The headings of the Articles and the Sections in this Third Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
Section 3.11 Language . The parties hereto have required that this Indenture and all documents and notices related hereto and/or resulting herefrom be drawn up in English only. Les parties aux présentes ont exigé que la présente convention ainsi que tous les documents et avis qui s’y rattachent et/ou qui en découleront soient rédigés en langue anglaise seulement.
[ The remainder of this page is intentionally left blank. ]
3 |
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the date first above written.
CASCADES INC. | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Vice President, Legal Affairs | ||
and Corporate Secretary | |||
CASCADES RECOVERY INC., | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary | ||
CASCADES RECOVERY U.S., INC., | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary | ||
METRO RETAIL RECYCLING SERVICES, LLC | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary |
4 |
COMPUTERSHARE TRUST COMPANY OF CANADA, | |||
as Trustee and not in its personal capacity | |||
By: | /s/ Sophie Brault | ||
Name: | Sophie Brault | ||
Title: | Gestionnaire Fiduciaire | ||
Corporate Trust Officer | |||
By: | /s/ Ekaterini Galouzis | ||
Name: | Ekaterini Galouzis | ||
Title: | Gestionnaire Fiduciaire Adjointe | ||
Associate Trust Officer |
Exhibit 4.9
EXECUTION VERSION
CASCADES INC.
5.75% SENIOR NOTES DUE 2023
INDENTURE
Dated as of May 19, 2015
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Trustee
TABLE OF CONTENTS
Page | ||
ARTICLE 1. | ||
DEFINITIONS AND INCORPORATION BY REFERENCE | ||
Section 1.01. | Definitions | 1 |
Section 1.02. | Other Definitions | 29 |
Section 1.03. | Incorporation by Reference of Trust Indenture Act | 30 |
Section 1.04. | Rules of Construction | 30 |
ARTICLE 2. | ||
THE NOTES | ||
Section 2.01. | Form and Dating | 31 |
Section 2.02. | Execution and Authentication | 33 |
Section 2.03. | Registrar and Paying Agent | 33 |
Section 2.04. | Paying Agent to Hold Money in Trust | 33 |
Section 2.05. | Holder Lists | 34 |
Section 2.06. | Transfer and Exchange | 34 |
Section 2.07. | Replacement Notes | 44 |
Section 2.08. | Outstanding Notes | 44 |
Section 2.09. | Treasury Notes | 45 |
Section 2.10. | Temporary Notes | 45 |
Section 2.11. | Cancellation | 45 |
Section 2.12. | Payment of Interest; Defaulted Interest | 45 |
Section 2.13. | CUSIP or ISIN Numbers | 46 |
Section 2.14. | Issuance of Additional Notes | 46 |
ARTICLE 3. | ||
REDEMPTION AND PREPAYMENT | ||
Section 3.01. | Notices to Trustee | 46 |
Section 3.02. | Selection of Notes to Be Redeemed | 47 |
Section 3.03. | Notice of Redemption | 47 |
Section 3.04. | Effect of Notice of Redemption | 48 |
Section 3.05. | Deposit of Redemption Price | 48 |
Section 3.06. | Notes Redeemed in Part | 48 |
Section 3.07. | Optional Redemption | 48 |
Section 3.08. | Mandatory Redemption | 50 |
Section 3.09. | Offer To Purchase by Application of Excess Proceeds | 50 |
ARTICLE 4. | ||
COVENANTS | ||
Section 4.01. | Payment of Notes | 52 |
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Page | ||
Section 4.02. | Maintenance of Office or Agency | 52 |
Section 4.03. | Reports | 52 |
Section 4.04. | Compliance Certificate | 53 |
Section 4.05. | Taxes | 54 |
Section 4.06. | Stay, Extension and Usury Laws | 54 |
Section 4.07. | Corporate Existence | 54 |
Section 4.08. | Payments for Consent | 54 |
Section 4.09. | Limitation on Debt | 54 |
Section 4.10. | Limitation on Restricted Payments | 57 |
Section 4.11. | Limitation on Liens | 61 |
Section 4.12. | Limitation on Asset Sales | 61 |
Section 4.13. | Limitation on Restrictions on Distributions from Restricted Subsidiaries | 63 |
Section 4.14. | Limitations on Affiliate Transactions | 65 |
Section 4.15. | Designation of Restricted and Unrestricted Subsidiaries | 66 |
Section 4.16. | Repurchase at the Option of Holders Upon a Change of Control | 68 |
Section 4.17. | Future Subsidiary Guarantors | 69 |
Section 4.18. | Covenant Termination | 70 |
Section 4.19. | Additional Amounts | 70 |
ARTICLE 5. | ||
SUCCESSORS | ||
Section 5.01. | Merger, Consolidation and Sale of Assets | 73 |
Section 5.02. | Successor Corporation Substituted | 74 |
ARTICLE 6. | ||
DEFAULTS AND REMEDIES | ||
Section 6.01. | Events of Default | 75 |
Section 6.02. | Acceleration | 77 |
Section 6.03. | Other Remedies | 78 |
Section 6.04. | Waiver of Past Defaults | 78 |
Section 6.05. | Control by Majority | 78 |
Section 6.06. | Limitation on Suits | 78 |
Section 6.07. | Rights of Holders to Receive Payment | 79 |
Section 6.08. | Collection Suit by Trustee | 79 |
Section 6.09. | Trustee May File Proofs of Claim | 79 |
Section 6.10. | Priorities | 80 |
Section 6.11. | Undertaking for Costs | 80 |
ARTICLE 7. | ||
TRUSTEE | ||
Section 7.01. | Duties of Trustee | 80 |
Section 7.02. | Rights of Trustee | 81 |
Section 7.03. | Individual Rights of Trustee | 82 |
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Page | ||
Section 7.04. | Trustee’s Disclaimer | 83 |
Section 7.05. | Notice of Defaults | 83 |
Section 7.06. | Reports by Trustee to Holders | 83 |
Section 7.07. | Compensation and Indemnity | 83 |
Section 7.08. | Replacement of Trustee | 84 |
Section 7.09. | Successor Trustee by Merger, etc. | 85 |
Section 7.10. | Eligibility; Disqualification | 85 |
Section 7.11. | Preferential Collection of Claims Against Company | 85 |
ARTICLE 8. | ||
LEGAL DEFEASANCE AND COVENANT DEFEASANCE | ||
Section 8.01. | Option to Effect Legal Defeasance or Covenant Defeasance | 86 |
Section 8.02. | Legal Defeasance and Discharge | 86 |
Section 8.03. | Covenant Defeasance | 86 |
Section 8.04. | Conditions to Legal or Covenant Defeasance | 87 |
Section 8.05. | Deposited Cash and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions | 88 |
Section 8.06. | Repayment to Company | 89 |
Section 8.07. | Reinstatement | 89 |
ARTICLE 9. | ||
AMENDMENT, SUPPLEMENT AND WAIVER | ||
Section 9.01. | Without Consent of Holders of Notes | 89 |
Section 9.02. | With Consent of Holders of Notes | 90 |
Section 9.03. | Compliance with Trust Indenture Act | 92 |
Section 9.04. | Revocation and Effect of Consents | 92 |
Section 9.05. | Notation on or Exchange of Notes | 92 |
Section 9.06. | Trustee to Sign Amendments, etc. | 92 |
ARTICLE 10. | ||
SUBSIDIARY GUARANTEES | ||
Section 10.01. | Subsidiary Guarantees | 93 |
Section 10.02. | Limitation on Subsidiary Guarantor Liability | 94 |
Section 10.03. | Evidence of Subsidiary Guarantee | 95 |
Section 10.04. | Subsidiary Guarantors May Consolidate, etc., on Certain Terms | 95 |
Section 10.05. | Releases Following Sale or Other Disposition of Assets | 96 |
ARTICLE 11. | ||
SATISFACTION AND DISCHARGE | ||
Section 11.01. | Satisfaction and Discharge | 96 |
Section 11.02. | Deposited Cash and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions | 97 |
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Page | ||
Section 11.03. | Repayment to Company | 97 |
ARTICLE 12. | ||
MISCELLANEOUS | ||
Section 12.01. | Trust Indenture Act Controls | 97 |
Section 12.02. | Notices | 98 |
Section 12.03. | Communication by Holders of Notes with Other Holders of Notes | 99 |
Section 12.04. | Certificate and Opinion as to Conditions Precedent | 99 |
Section 12.05. | Statements Required in Certificate or Opinion | 99 |
Section 12.06. | Rules by Trustee and Agents | 99 |
Section 12.07. | No Personal Liability of Directors, Officers, Employees and Stockholders | 100 |
Section 12.08. | Governing Law | 100 |
Section 12.09. | No Adverse Interpretation of Other Agreements | 100 |
Section 12.10. | Successors | 100 |
Section 12.11. | Severability | 100 |
Section 12.12. | Consent to Jurisdiction and Service of Process | 100 |
Section 12.13. | Conversion of Currency | 101 |
Section 12.14. | Currency Equivalent | 102 |
Section 12.15. | Counterpart Originals | 102 |
Section 12.16. | Table of Contents, Headings, etc. | 102 |
Section 12.17. | U.S.A. Patriot Act | 102 |
- iv - |
CROSS-REFERENCE TABLE
TIA Section
Reference |
Section
Indenture |
||
310 | 7.03 | ||
310 | (a)(1) | 7.10 | |
(a)(2) | 7.10 | ||
(a)(3) | N.A. | ||
(a)(4) | N.A. | ||
(a)(5) | 7.10 | ||
(b) | 7.10 | ||
(c) | N.A. | ||
311 | (a) | 7.11 | |
(b) | 7.11 | ||
(c) | N.A. | ||
312 | (a) | 2.05 | |
(b) | 12.03 | ||
(c) | 12.03 | ||
313 | (a) | 7.06 | |
(b)(1) | N.A. | ||
(b)(2) | 7.06 | ||
(c) | 7.06, 12.02 | ||
(d) | 7.06 | ||
314 | (a) | 4.03, 4.04, 12.05 | |
(b) | N.A. | ||
(c)(1) | 12.04 | ||
(c)(2) | 12.04 | ||
(c)(3) | N.A. | ||
(d) | N.A. | ||
(e) | 12.05 | ||
315 | (a) | 7.01 | |
(b) | 7.05 | ||
(c) | 7.01 | ||
(d) | 7.01 | ||
(e) | 6.11 | ||
316 | (a) (last sentence) | 2.09 | |
(a)(1)(A) | 6.05 | ||
(a)(1)(B) | 6.04 | ||
(a)(2) | N.A. | ||
(b) | 6.07 | ||
317 | (a)(1) | 6.08 | |
(a)(2) | 6.09 | ||
(b) | 2.04 | ||
318 | (a) | 12.01 | |
318 | (c) | 12.01 |
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.
This INDENTURE dated as of May 19, 2015, is among CASCADES INC., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), the Subsidiary Guarantors listed on the signature pages hereto, and Wells Fargo Bank, National Association , as trustee (the “ Trustee ”).
All dollar amounts in this Indenture are expressed in Canadian dollars unless otherwise specified or the context requires otherwise. The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 5.75% Senior Notes due 2023 (the “ Notes ”):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions .
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
“ 144A Global Note ” means the Global Note or Global Notes substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.
“ Additional Assets ” means:
(a) any Property (other than cash, Temporary Cash Investments, securities and Capital Stock) to be owned by the Company or any Restricted Subsidiary in a Related Business (including any capital expenditures with respect to any Property already owned or to be owned);
(b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary from any Person other than the Company or a Subsidiary of the Company; or
(c) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;
provided , however , that, in the case of clauses (b) and (c), such Restricted Subsidiary is primarily engaged in a Related Business.
“ Additional Notes ” means any Notes (other than Initial Notes) issued under this Indenture in accordance with Section 2.02, Section 2.14 and Section 4.09 hereof, as part of the same series as the Initial Notes or as an additional series.
“ 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 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, co-registrar, Paying Agent or additional paying agent.
“ Applicable Procedures ” means, with respect to any transfer, redemption or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer, redemption or exchange.
“ Asset Sale ” means any sale, lease, transfer, issuance or other disposition (or series of related sales, leases, transfers, issuances or dispositions that are part of a common plan) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of
(a) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares or interests required to be held by foreign nationals under law), or
(b) any other Property of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary.
Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales:
(1) any disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary;
(2) any disposition that constitutes a Permitted Investment or Restricted Payment permitted by Section 4.10 hereof;
(3) any disposition effected in compliance with Section 5.01(a) hereof or constituting a Change of Control;
(4) any disposition or series of related dispositions with an aggregate Fair Market Value and for net proceeds (exclusive of indemnities) of less than the greater of (x) $50.0 million and (y) 2.0% of Consolidated Net Tangible Assets;
(5) sales, transfers or other distributions of Property, including Capital Stock of Restricted Subsidiaries, for consideration at least equal to the Fair Market Value of the Property sold or disposed of, but only if the consideration received consists of Capital Stock of a Person that becomes a Restricted Subsidiary engaged in, or Property (other than cash, except to the extent used as a bona fide means of equalizing the value of the Property involved in the asset swap transaction) of a nature or type that are used in, a business having Property of a nature or type, or engaged in a business similar or related to the nature or type of the Property, or businesses of, the Company and its Restricted Subsidiaries existing on the date of such sale or other disposition;
(6) the creation of any Permitted Lien;
(7) any disposition of surplus, discontinued, obsolete or worn-out equipment or other immaterial assets or other personal Property that is no longer used or useful in the ongoing business of the Company and its Restricted Subsidiaries;
(8) any surrender, waiver or settlement of contract rights or release of contract or tort claims;
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(9) any sale of cash or Temporary Cash Investments or the unwinding of any Hedging Obligations;
(10) dispositions of receivables in connection with a sale or the compromise, settlement or collection thereof in a bankruptcy or similar proceeding;
(11) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases, subleases or co-location agreements with respect to other property which do not materially interfere with the business of the Company and its Restricted Subsidiaries;
(12) sales of interests in or assets of Unrestricted Subsidiaries;
(13) any exchange or trade-in of equipment or other property by the Company or any Restricted Subsidiary in exchange for other equipment or property of a nature or type that is used or to be used in, the businesses of the Company and its Restricted Subsidiaries; provided that the Fair Market Value of the equipment or property received is at least as great as the Fair Market Value of the equipment or other property being exchanged or traded-in;
(14) any sale of Receivables pursuant to a Qualified Receivables Transaction;
(15) any disposition of Property by the Company or any Subsidiary in connection with the transfer of the Company’s Larochette mill to Reno de Medici S.p.A. or in connection with transactions relating to Boralex Inc., Reno de Medici S.p.A. or Cascades Recovery Inc.; and
(16) any disposition arising from foreclosure, condemnation or similar action with respect to any property or other assets, or exercise of termination rights under any lease, license, concession or other agreement or pursuant to buy/sell arrangements under any joint venture or similar agreement or arrangement.
“ Attributable Debt ” in respect of a Sale and Leaseback Transaction means, at any date of determination,
(a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of “Capital Lease Obligations,” and
(b) in all other instances the present value (discounted at the interest rate implicit in such transaction compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended).
“ Average Life ” means, as of any date of determination, with respect to any Debt, the quotient obtained by dividing:
(a) the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by
(b) the sum of all such payments.
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“ Bankruptcy Law ” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or any other Canadian federal or provincial law or the law of any other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors.
“ Board of Directors ” means, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partnership of such Person) or, in each case, any duly authorized committee.
“ Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the applicable Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“ Business Day ” means each day which is not a Saturday, Sunday or a day on which commercial banks are authorized or required to close in New York City or Montreal.
“ Capital Lease Obligations ” means any obligation under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP; and the amount of Debt represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP ; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of Section 4.11 hereof, a Capital Lease Obligation shall be deemed secured by a Lien on the Property being leased.
“ Capital Stock ” means, with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock, limited liability company interests or partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt security convertible or exchangeable into such equity interest.
“ Capital Stock Sale Proceeds ” means the aggregate cash proceeds received by the Company from the issuance or sale (other than to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees to the extent such sale is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination) by the Company of its Capital Stock (other than Disqualified Stock) after the Issue Date, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.
“ Change of Control ” means the occurrence of any of the following events:
(a) any “ person ” or “ group ” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing) of persons, including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, other than the Permitted Holders, becomes the “ beneficial owner ” (as defined in Rule 13d-3 under the Exchange Act), of more than 50% of the total voting power of the Voting Stock of the Company; or
(b) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the Property of the Company and its Restricted Subsidiaries,
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considered as a whole (other than a disposition of such Property as an entirety or virtually as an entirety to a Restricted Subsidiary or one or more Permitted Holders) shall have occurred, or the Company merges, consolidates, liquidates, dissolves, winds-up or amalgamates with or into any other Person (other than one or more Permitted Holders) or any other Person (other than one or more Permitted Holders) merges, consolidates, liquidates, dissolves, winds-up or amalgamates with or into the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where:
(1) the outstanding Voting Stock of the Company is reclassified into or exchanged for other Voting Stock of the Company or for Voting Stock of the Surviving Person, and
(2) the holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the Company or the Surviving Person immediately after such transaction and in substantially the same proportion as before the transaction; or
(c) the shareholders of the Company shall have approved any plan of liquidation or dissolution of the Company.
“ Clearstream ” means Clearstream Banking S.A. and any successor thereto.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Commission ” means the U.S. Securities and Exchange Commission.
“ Commodity Price Protection Agreement ” means, in respect of a Person, any commodity futures contract, forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement (including derivative agreements or arrangements) designed to protect such Person against fluctuations in commodity prices.
“ Comparable Treasury Issue ” means the United States treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes.
“ Comparable Treasury Price ” means, with respect to any redemption date:
(a) the average of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the most recently published statistical release designated “H.15(519)” (or any successor release) published by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” or
(b) if such release (or any successor release) is not published or does not contain such prices on such business day, the average of the Reference Treasury Dealer Quotations for such redemption date.
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“ Consolidated Current Liabilities ” means, as of any date of determination, the aggregate amount of liabilities of the Company and its Restricted Subsidiaries (based on the most recent quarterly or annual period for which the Company’s financial statements are publicly available) which may properly be classified as current liabilities (including taxes accrued as estimated), after eliminating:
(a) all intercompany items between the Company and any Restricted Subsidiary or between Restricted Subsidiaries, and
(b) all current maturities of long-term Debt.
“ Consolidated Interest Coverage Ratio ” means, as of any date of determination, the ratio of:
(a) the aggregate amount of EBITDA for the most recent four consecutive fiscal quarters for which financial statements are publicly available prior to such determination date to
(b) Consolidated Interest Expense for such four fiscal quarters;
provided , however , that:
(1) if
(A) since the beginning of such period the Company or any Restricted Subsidiary has Incurred any Debt that remains outstanding or Repaid any Debt, or
(B) the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence or Repayment of Debt,
Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Incurrence or Repayment as if such Debt was Incurred or Repaid on the first day of such period (except that in making such computation, the amount of Debt under any revolving credit facility outstanding on the date of such calculation will be deemed to be (i) the average daily balance of such Debt during such four fiscal quarters or such shorter period for which such facility was outstanding or (ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Debt during the period from the date of creation of such facility to the date of such calculation); and
(2) if
(A) since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Sale or other disposition or an Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of Property which constitutes all or substantially all of a company, division, operating unit, segment, business, group of related businesses or assets of a business,
(B) the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is such an Asset Sale or other disposition, Investment or acquisition, or
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(C) since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made such an Asset Sale or other disposition, Investment or acquisition,
then EBITDA for such period shall be calculated after giving pro forma effect to such Asset Sale or other disposition, Investment or acquisition as if such Asset Sale or other disposition, Investment or acquisition had occurred on the first day of such period.
If any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt shall be calculated as if the base interest rate in effect for such floating rate of interest on the date of determination had been the applicable base interest rate for the entire period (taking into account any Interest Rate Agreement applicable to such Debt). If any Debt bears interest, at the option of the Company or a Restricted Subsidiary, at a rate of interest based on a prime or similar rate, a eurocurrency interbank offered rate or other fixed or floating rate, and such Debt is being given pro forma effect, the interest expense with respect to such Debt shall be calculated for the entire period by applying such optional rate as shall be in effect as of the date of determination. Interest on a Capital Lease Obligation shall be deemed to accrue at an interest rate determined in good faith by a responsible financial or accounting officer of the Company to be the rate of interest implicit in such Capital Lease Obligation in accordance with GAAP. In addition, in the event the Capital Stock of any Restricted Subsidiary is sold during the period, the Company shall be deemed, for purposes of clause (1) above, to have Repaid during such period the Debt of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Debt after such sale.
“ Consolidated Interest Expense ” means, for any period, the total interest expense, net of any interest income of the Company and its Restricted Subsidiaries and excluding interest expense relating to employee future benefits, of the Company and its Restricted Subsidiaries, plus, to the extent not included in such total interest expense, and to the extent Incurred by the Company or its Restricted Subsidiaries:
(a) interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to Capital Lease Obligations;
(b) amortization of debt discount and debt issuance cost excluding amortization of deferred and other financing fees; provided, however , that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such amortization of bond premium has otherwise reduced Consolidated Interest Expense;
(c) capitalized interest;
(d) non-cash interest expense (but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of Hedging Obligations or other derivative instruments pursuant to GAAP);
(e) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;
(f) net payments associated with Interest Rate Agreements (including amortization of fees) provided , however , that if Interest Rate Agreements result in net receipts rather than net payments, such payments shall be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such net payments are otherwise reflected in Consolidated Net Income;
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(g) Disqualified Stock Dividends to the extent made to Persons other than the Company or a Restricted Subsidiary;
(h) Preferred Stock Dividends to the extent made to Persons other than the Company or a Restricted Subsidiary;
(i) interest Incurred in connection with Investments in discontinued operations;
(j) interest accruing on any Debt of any other Person to the extent such Debt is Guaranteed by the Company or any Restricted Subsidiary; and
(k) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Debt Incurred by such plan or trust.
“ Consolidated Net Income ” means, for any period, the net income (loss) of the Company and its Restricted Subsidiaries (determined in accordance with GAAP); provided, however , that there shall not be included in such Consolidated Net Income:
(a) any net income (loss) of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:
(1) subject to the exclusion contained in clause (c) below, the equity of the Company and its Restricted Subsidiaries in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (b) below), and
(2) the equity of the Company and its Restricted Subsidiaries in a net loss of any such Person other than an Unrestricted Subsidiary for such period shall be included in determining such Consolidated Net Income;
(b) any net income (loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Company, except that:
(1) subject to the exclusion contained in clause (c) below, the equity of the Company and its Restricted Subsidiaries in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause), and
(2) the equity of the Company and its Restricted Subsidiaries in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;
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(c) any gain (loss) realized upon the sale or other disposition of any Property of the Company or any of its Restricted Subsidiaries or any Permitted Joint Venture (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business ( provided that sales or other dispositions of assets in connection with any Qualified Receivables Transaction shall be deemed to be in the ordinary course), and fees and expenses relating to any sale or other disposition or acquisition of Property, regardless of whether such transaction is consummated;
(d) the effect of any non-cash items resulting from any amortization, write-up, write-down or write-off of assets (including intangible assets, goodwill and deferred financing costs but excluding inventory) of the Company or any of its Restricted Subsidiaries or any Permitted Joint Venture incurred subsequent to the Issue Date (excluding any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period except to the extent such item is subsequently reversed);
(e) any extraordinary gain or loss (including fees and expenses relating to any event or transaction giving rise thereto);
(f) any gain or loss arising from any refinancing, repurchase or extinguishment of Debt;
(g) any unrealized gain or loss attributable to the movement in the mark to market valuation of Hedging Obligations, other derivative instruments and other items pursuant to GAAP;
(h) the cumulative effect of a change in accounting principles;
(i) any gain or loss arising from foreign currency fluctuations on foreign currency denominated Debt; and
(j) any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Company or any Restricted Subsidiary.
Notwithstanding the foregoing, for purposes of Section 4.10 hereof only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of Property from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted pursuant to Section 4.10(a)(iii)(D) hereof. In addition, any cash payments made during such period in respect of non-cash charges or other items described above in this definition subsequent to the fiscal quarter in which the relevant non-cash charges were added back shall be deducted.
“ Consolidated Net Tangible Assets ” means, as of any date of determination, the sum of the amounts that would appear on a consolidated balance sheet of the Company and its Restricted Subsidiaries (based upon the most recent quarterly or annual period for which the Company’s financial statements are publicly available) as the total assets (less accumulated depreciation and amortization, allowances for doubtful receivables, other applicable reserves and other properly deductible items) of the Company and its Restricted Subsidiaries, after giving effect to purchase accounting and after deducting therefrom Consolidated Current Liabilities and, to the extent otherwise included, the amounts of (without duplication):
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(a) the excess of cost over fair market value of assets or businesses acquired;
(b) any revaluation or other write-up in book value of assets subsequent to the last day of the fiscal quarter of the Company immediately preceding the Issue Date as a result of a change in the method of valuation in accordance with GAAP;
(c) unamortized debt discount and expenses and other unamortized deferred charges, good-will, patents, trademarks, service marks, trade names, copyrights, licenses, organization or developmental expenses and other intangible items;
(d) minority interests in consolidated Subsidiaries held by Persons other than the Company or any Restricted Subsidiary;
(e) treasury stock; and
(f) cash or securities set aside and held in a sinking or other similar fund established for the purpose of redemption or other retirement of Capital Stock to the extent such obligation is not reflected in Consolidated Current Liabilities.
“ Corporate Trust Office of the Trustee ” means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 150 East 42nd Street, 40th Floor, New York, New York 10017 or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company).
“ Credit Facility ” means the Debt represented by:
(a) one or more debt facilities, commercial paper facilities or instruments, in each case with banks or other lenders providing for revolving credit loans, term loans, letters of credit or debt securities, including, without limitation, the Amended and Restated Credit Agreement, dated as of February 10, 2011,as amended, among the Company, certain of its Subsidiaries, the lenders party thereto, The National Bank of Canada, as Administrative Agent and The Bank of Nova Scotia, as Collateral Agent, together with the related documents thereto (including, without limitation, any guarantee agreements and security documents), as the same may be amended, supplemented or otherwise modified from time to time, including amendments, supplements or modifications relating to the addition or elimination of Subsidiaries of the Company as borrowers, guarantors or other credit parties thereunder; and
(b) any renewal, extension, refunding, restructuring, replacement or refinancing thereof (whether with the original Administrative and/or Collateral Agent and lenders or another administrative agent or agents or one or more other lenders and whether provided under the original Credit Facility or one or more other credit or other agreements or notes or other securities issued pursuant to an indenture).
“ Currency Exchange Protection Agreement ” means, in respect of a Person, any foreign exchange contract, currency swap agreement, futures contract, currency option or other similar agreement or arrangement designed to protect such Person against fluctuations in currency exchange rates.
“ Custodian ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as Custodian with respect to the Notes, any and
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all successors thereto appointed as custodian hereunder and having become such pursuant to the applicable provisions of this Indenture.
“ Debt ” means, with respect to any Person on any date of determination (without duplication):
(a) any indebtedness of any Person:
(1) in respect of money borrowed, or
(2) evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;
(b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person;
(c) all obligations of such Person representing the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business), but only to the extent that such purchase price is due more than six months after the date of placing such Property in service for taking delivery and title therein;
(d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person that is not a Subsidiary Guarantor, any Preferred Stock (but excluding, in each case, any accrued dividends);
(f) all obligations of the type referred to in clauses (a) through (e) above of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;
(g) all obligations of the type referred to in clauses (a) through (f) above of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such Property and the amount of the obligation so secured; and
(h) to the extent not otherwise included in this definition, Hedging Obligations of such Person.
The amount of Debt of any Person at any date shall be the outstanding balance, or the accreted value of such Debt in the case of Debt issued with original issue discount, at such date of all unconditional obligations as described above. The amount of Debt represented by a Hedging Obligation shall be equal to:
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(1) zero if such Hedging Obligation has been Incurred pursuant to clause (v), (vi) or (vii) of Section 4.09(b) hereof; or
(2) the notional amount of such Hedging Obligation if not Incurred pursuant to such clauses.
Notwithstanding the foregoing, Debt shall not include (a) any endorsements for collection or deposits in the ordinary course of business, (b) any realization of a Permitted Lien, and (c) Debt that has been defeased or satisfied in accordance with the terms of the documents governing such Indebtedness. With respect to any Debt denominated in a foreign currency, for purposes of determining compliance with any Canadian-dollar denominated restriction on the Incurrence of such Debt under Section 4.09 hereof, the amount of such Debt shall be calculated based on the currency exchange rate in effect at the end of the most recent fiscal quarter for which financial statements have been made publicly available.
“ Default ” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in substantially the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
“ Depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provisions of this Indenture.
“ Designated Noncash Consideration ” means the fair market value of any non-cash consideration received by the Company or any Restricted Subsidiary of the Company in connection with an Asset Sale that is designated as Designated Noncash Consideration pursuant to an Officers’ Certificate.
“ Disqualified Stock ” means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(b) is or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part, or
(c) is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock,
on or prior to, in the case of clause (a), (b) or (c), 91 days after the Stated Maturity of the Notes; provided that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or asset sale or disposition (each as defined in a similar manner to the corresponding definitions in this Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company
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may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Company with Section 4.12; and such repurchase or redemption complies with Section 4.10.
Notwithstanding the foregoing, Capital Stock issued to any employee benefit plan, or by any such plan to any employees of the Company or any Subsidiary, shall not constitute Disqualified Stock solely because it may be required to be repurchased or otherwise acquired or retired in order to satisfy applicable statutory or regulatory obligations.
“ Disqualified Stock Dividends ” means all dividends with respect to Disqualified Stock of the Company held by Persons other than a Restricted Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the Company.
“ Distribution Compliance Period ” means the 40-day distribution compliance period as defined in Regulation S.
“ EBITDA ” means, for any period, an amount equal to, for the Company and its Restricted Subsidiaries:
(a) the sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period:
(1) the provision for taxes based on income or profits or utilized in computing net loss; plus
(2) Consolidated Interest Expense plus interest expense relating to employee future benefits; plus
(3) depreciation; plus
(4) amortization of intangibles; plus
(5) the amount of any restructuring charges or reserves (which for the avoidance of doubt shall include severance contracts, termination costs (including pension settlement amounts)), including future lease commitments, costs to close or consolidate facilities and costs to relocate employees, and
(b) any non-cash items decreasing Consolidated Net Income (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period), minus
(c) all non-cash items increasing Consolidated Net Income for such period (other than any such non-cash item to the extent that it is expected to result in the receipt of cash payments in any future period), minus
(d) any cash payments made during such period in respect of non-cash charges or other items described above in this definition subsequent to the fiscal quarter in which the relevant non-cash charges or other items were reflected in Consolidated Net Income.
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Notwithstanding the foregoing, the provision for taxes, depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its shareholders.
“ Euroclear ” means Euroclear Bank, S.A./N.V., as operator of the Euroclear systems, and any successor thereto.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
“ Fair Market Value ” means, with respect to any Property, the price that would reasonably be expected to be negotiated in an arm’s-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined, except as otherwise provided,
(a) if such Property has a Fair Market Value equal to or less than $50.0 million, by any Officer of the Company, or
(b) if such Property has a Fair Market Value in excess of $50.0 million, by a Board Resolution of the Company.
“ Foreign Subsidiary ” means any Subsidiary which is not organized under the laws of Canada or any province thereof, or the United States of America or any State thereof or the District of Columbia.
“ GAAP ” means generally accepted accounting principles in Canada, consistently applied, which are in effect from time to time, which as of the Issue Date are International Financial Reporting Standards.
“ Global Note Legend ” means the legend set forth in Section 2.06(f)(ii), which is required to be placed on all Global Notes issued under this Indenture.
“ Global Notes ” means one or more global Notes registered in the name of the Depositary or its nominee issued in accordance with Article 2 hereof substantially in the form of Exhibit A hereto and bearing the Global Note Legend and including the “Schedule of Exchanges of Interests in the Global Note” attached thereto.
“ Guarantee ” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Debt of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase securities or to maintain financial condition or otherwise), or
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(b) entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part);
provided , however , that the term “Guarantee” shall not include:
(1) endorsements for collection or deposit in the ordinary course of business, or
(2) a contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under clause (a) or (b) of the definition of “Permitted Investment.”
The term “Guarantee” used as a verb has a corresponding meaning.
“ Guarantor ” means any Person Guaranteeing any obligation.
“ Hedging Obligation ” of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange Protection Agreement, Commodity Price Protection Agreement or any other similar agreement or arrangement.
“ Holder ” means a Person in whose name a Note is registered.
“ Income Tax Act ” means the Income Tax Act (Canada).
“ Incur ” means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or otherwise), extend, assume, Guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the balance sheet of such Person (and “Incurrence” and “Incurred” shall have meanings correlative to the foregoing); provided , however , that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; provided further , however , that any Debt or other obligations of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary; and provided further , however , that solely for purposes of determining compliance with Section 4.09 hereof, amortization of debt discount shall not be deemed to be the Incurrence of Debt, provided that in the case of Debt sold at a discount, the amount of such Debt Incurred shall at all times be the aggregate principal amount at its stated maturity.
“ Indenture ” means this instrument, as originally executed or as it may from time to time be supplemented or amended in accordance with Article 9 hereof.
“ Independent Financial Advisor ” means an investment banking firm of national standing or any third-party appraiser of national standing in Canada or the United States, provided that such firm or appraiser is not an Affiliate of the Company.
“ Independent Investment Banker ” means one of the Reference Treasury Dealers appointed by the Company.
“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.
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“ Initial Notes ” means US$250,000,000.00 aggregate principal amount of Notes issued under this Indenture on the date hereof.
“ Interest Payment Dates ” shall have the meaning set forth in paragraph 1 of the Note.
“ Interest Rate Agreement ” means, for any Person, any interest rate swap agreement, interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement designed to protect against fluctuations in interest rates.
“ Investment ” by any Person means any direct or indirect loan (other than accounts receivable, trade credit or other advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person), advance or other extension of credit or capital contribution (by means of transfers of cash or other Property to others or payments for Property or services for the account or use of others, or otherwise) to, or Incurrence of a Guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by, any other Person. For purposes of Sections 4.10 and 4.15 hereof and the definitions of “Restricted Payment” and “Unrestricted Subsidiary,” the term “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided , however , that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary of an amount (if positive) equal to:
(a) the Company’s “Investment” in such Subsidiary at the time of such redesignation, less
(b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation.
In determining the amount of any Investment made by transfer of any Property other than cash, such Property shall be valued at its Fair Market Value at the time of such Investment.
“ Investment Grade Rating ” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s or BBB- (or the equivalent) by S&P.
“ Investment Grade Status ” shall be deemed to have been reached on the date that the Notes have an Investment Grade Rating from either of the Rating Agencies.
“ Issue Date ” means May 19, 2015.
“ Legal Holiday ” means a Saturday, a Sunday or a day on which banking institutions in New York City, Montreal, the city in which the Corporate Trust Office of the Trustee is located, or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period.
“ Lien ” means, with respect to any Property of any Person, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever on or with respect to such
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Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing or any Sale and Leaseback Transaction).
“ Moody’s ” means Moody’s Investors Service, Inc. or any successor to the rating agency business of Moody’s Investors Service, Inc.
“ Net Available Cash ” from any Asset Sale means cash payments received therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other non-cash form), in each case net of:
(a) all legal, title, accounting and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale;
(b) all payments made on or in respect of any Debt that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale;
(c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale;
(d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale, including pension and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale; and
(e) payments of unassumed liabilities (not constituting Debt) relating to the assets sold at the time of, or within 30 days after, the date of such sale.
“ Non-Recourse Debt ” means Debt:
(a) as to which neither the Company nor any Restricted Subsidiary (i) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Debt), (ii) is directly or indirectly liable as a guarantor or otherwise, or (iii) constitutes the lender and
(b) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any Debt (other than the Notes) of the Company or any Restricted Subsidiary to declare a default on such other Debt or cause the payment thereof to be accelerated or payable prior to its stated maturity.
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“ Obligations ” means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Debt.
“ Offering Memorandum ” means the final offering memorandum, dated May 11, 2015, relating to and used in connection with the offering of the Initial Notes.
“ Officer ” means the Chairman, Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, Secretary, Assistant Secretary or any Vice President of the Company, or, in the event that the Company has no such officers, a person duly authorized under applicable law by the managers, members or a similar body to act on behalf of the Company. Officer of any Subsidiary Guarantor has a correlative meaning.
“ Officers’ Certificate ” means a certificate signed by two Officers of the Company and delivered to the Trustee.
“ Opinion of Counsel ” means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company.
“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively, and, with respect to The Depository Trust Company, shall include Euroclear and Clearstream.
“ Permitted Asset Swap ” means, the concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash, Temporary Cash Investments or Designated Noncash Consideration between the Company or any of the Restricted Subsidiaries and another Person; provided , that any cash or Temporary Cash Investments received shall, to the extent required, be applied in accordance with Section 4.12 hereof.
“ Permitted Holders ” means (i) each of Laurent Lemaire, Bernard Lemaire and Alain Lemaire; (ii) the spouse, parents, siblings, descendants (including children or grandchildren by adoption) of any Person referred to in clause (i) or of such spouse or siblings; (iii) in the event of the incompetence or death of any of the Persons referred to in clauses (i) or (ii), such Person’s estate, executor, administrator, committee or other personal representative in each case who at any particular date shall beneficially own or have the right to acquire, directly or indirectly, Voting Stock of the Company; (iv) any trusts or foundations created for the sole benefit of any of the Persons referred to in clauses (i) through (iii) or any trust or foundation for the benefit of such trust or foundation; or (v) any Person of which any of the Persons referred to in clauses (i) through (iv) “beneficially owns” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) on a fully diluted basis all the Voting Stock of such Person or is the sole trustee or general partner, or otherwise has the sole power to manage the business and affairs of such Person.
“ Permitted Investment ” means any Investment by the Company or a Restricted Subsidiary in:
(a) any Investment existing on the Issue Date, including any Investment of any Subsidiary or joint venture at the time such Subsidiary or joint venture became a Subsidiary or joint venture and Investments to be made pursuant to binding commitments in effect on the Issue Date;
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(b) the Company or any Restricted Subsidiary or any Person that will, upon the making of such Investment, become a Restricted Subsidiary;
(c) any Person if as a result of or in connection with such Investment such Person (i) becomes a Restricted Subsidiary that is a Subsidiary Guarantor or (ii) is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, the Company or a Restricted Subsidiary that is a Subsidiary Guarantor;
(d) cash and Temporary Cash Investments;
(e) receivables or advances owing to the Company or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided , however , that such trade terms may include such concessionary trade terms as the Company or such Restricted Subsidiary deems reasonable under the circumstances;
(f) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;
(g) loans and advances to employees made in the ordinary course of business of the Company or such Restricted Subsidiary, as the case may be, provided that such loans and advances do not exceed $10.0 million at any one time outstanding;
(h) stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to the Company or a Restricted Subsidiary or in satisfaction of judgments, including as the result of any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a trade creditor or customer;
(i) any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with an Asset Sale consummated in compliance with Section 4.12 hereof or a transaction not constituting an Asset Sale by reason of the thresholds contained in clause (4) of the second paragraph of the definition of “Asset Sale”;
(j) a lease, utility and other similar deposits in the ordinary course of business;
(k) any assets or Capital Stock of any Person made out of the net cash proceeds of the substantially concurrent sale of Capital Stock of the Company (other than Disqualified Stock) or the consideration for which consists solely of Capital Stock (other than Disqualified Stock) of the Company; provided that the issuance of such Capital Stock shall be included in the calculation set forth in 4.10(a)(iii)(B) hereof at any one time outstanding;
(l) Hedging Obligations entered into for bona fide hedging purposes and not for speculation and otherwise permitted by this Indenture;
(m) any assets acquired as a result of a foreclosure by the Company or such Restricted Subsidiary with respect to any secured Permitted Investment or other transfer of title with respect to any secured Permitted Investment in default;
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(n) purchases and acquisitions of inventory, supplies, materials and equipment or licenses or leases or intellectual property, in any case, in the ordinary course of business and otherwise in accordance with this Indenture;
(o) Investments consisting of Guarantees permitted pursuant to Section 4.09 hereof;
(p) Investments in Permitted Joint Ventures; provided that the aggregate amount of such Investments made pursuant to this clause (p) shall not exceed at any time outstanding the greater of $400.0 million or 10% of Consolidated Net Tangible Assets; and
(q) other Investments made for Fair Market Value that do not exceed $100.0 million in the aggregate outstanding at any one time.
“ Permitted Joint Venture ” means any Person which is, directly or indirectly, through its Subsidiaries or otherwise, engaged principally in a Related Business, and the Capital Stock of which is owned (for the avoidance of doubt, at the time an Investment is made) by (x) the Company or its Restricted Subsidiaries, on the one hand, and (y) one or more Persons other than the Company or any Affiliate of the Company, on the other hand, provided that such Persons in the aggregate owns at least 20% of such Capital Stock.
“ Permitted Liens ” means:
(a) Liens in favor of the Company or any Restricted Subsidiary;
(b) Liens to secure Debt permitted to be Incurred under clause (ii) of Section 4.09(b) hereof;
(c) Liens to secure Debt permitted to be Incurred under clause (iii) of Section 4.09(b) hereof; provided that any such Lien may not extend to any Property of the Company or any Restricted Subsidiary, other than the Property subject to such transaction or acquired, constructed, improved or leased with the proceeds of such Debt and any improvements or accessions to such Property;
(d) Liens for taxes, assessments or governmental charges or levies on the Property of the Company or any Restricted Subsidiary if the same shall not at the time be more than 60 days past due or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision that shall be required in conformity with GAAP shall have been made therefor;
(e) Liens imposed by law, such as carriers’, warehousemen’s, mechanics’, landlords’, vendors’ or Liens and other similar Liens, on the Property of the Company or any Restricted Subsidiary arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings;
(f) Liens in favor of customs and revenue authorities arising in the ordinary course of business and as a matter of law to secure payment of customs duties;
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(g) Liens arising as a result of litigation or legal proceedings that are currently being contested in good faith by appropriate and diligent action, including any Lien arising as a result of any judgment rendered against the Company or its Subsidiaries;
(h) Liens granted in connection with a Qualified Receivables Transaction;
(i) Liens on the Property of the Company or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and Incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of the Company and the Restricted Subsidiaries taken as a whole;
(j) Liens on Property (together with general intangibles and proceeds relating to such property) at the time the Company or any Restricted Subsidiary acquired such Property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided , however , that any such Lien may not extend to any other Property of the Company or any Restricted Subsidiary; provided further , however , that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by the Company or any Restricted Subsidiary;
(k) Liens on the Property or shares of Capital Stock of a Person at the time such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Company or a Restricted Subsidiary; provided , however , that any such Lien may not extend to any other Property of the Company or any other Restricted Subsidiary that is not a direct Subsidiary of such Person; provided further , however , that any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Restricted Subsidiary;
(l) pledges or deposits by the Company or any Restricted Subsidiary under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which the Company or any Restricted Subsidiary is party, or deposits to secure public or statutory obligations of the Company, or deposits for the payment of rent, in each case Incurred in the ordinary course of business;
(m) utility easements, building restrictions, rights-of-ways, irregularities of title and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of a similar character;
(n) Liens to secure Hedging Obligations made in the ordinary course of business and not for the purpose of speculation to the extent otherwise permitted by this Indenture;
(o) Liens existing on the Issue Date not otherwise described in clauses (a) through (n) above;
(p) Liens granted to secure the Notes pursuant to Section 4.11 hereof;
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(q) leases, licenses, subleases and sublicenses of assets (including without limitation, real property and intellectual property rights) in the ordinary course of business and which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;
(r) Liens on the Property of the Company or any Restricted Subsidiary to secure any Refinancing, in whole or in part, of any Debt secured by Liens referred to in clause (c), (j), (k) or (o) above; provided , however , that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property) and the aggregate principal amount of Debt that is secured by such Lien shall not be increased to an amount greater than the sum of:
(1) the outstanding principal amount, or, if greater, the committed amount, of the Debt secured by Liens described under clause (c), (j), (k) or (o) above, as the case may be, at the time the original Lien became a Permitted Lien under this Indenture, and
(2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by the Company or such Restricted Subsidiary in connection with such Refinancing; and
(s) Liens not otherwise permitted by clauses (a) through (r) above encumbering Property having an aggregate Fair Market Value not in excess of the greater of (i) $150.0 million or (ii) 7.5% of Consolidated Net Tangible Assets.
“ Permitted Refinancing Debt ” means any Debt that Refinances any other Debt, including any successive Refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of:
(1) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced, and
(2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing,
(b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced,
(c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced, and
(d) such Debt shall not be senior in right of payment to the Debt that is being Refinanced,
provided , however , that Permitted Refinancing Debt shall not include:
(x) Debt of a Subsidiary that is not a Subsidiary Guarantor that Refinances Debt of the Company or a Subsidiary Guarantor, or
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(y) Debt of the Company or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary.
“ Person ” means any individual, corporation, company (including any limited liability company), association, partnership, joint venture, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
“ Predecessor Note ” of any particular Note means every previous Note evidencing all or a portion of the same Debt as that evidenced by such particular Note; provided that no such Predecessor Note shall be deemed to be outstanding at the same time as such particular Note.
“ Preferred Stock ” of any Person means any Capital Stock of such Person, however designated, which entitles the holder thereof to a preference with respect to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by such Person.
“ Preferred Stock Dividends ” means all dividends with respect to Preferred Stock of Restricted Subsidiaries held by Persons other than the Company or a Restricted Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one and the maximum statutory federal income rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Preferred Stock.
“ Private Placement Legend ” means the legend set forth in Section 2.06(f)(i) hereof to be placed on all Notes issued under this Indenture except as otherwise permitted by the provisions of this Indenture.
“ pro forma ” means, with respect to any calculation made or required to be made pursuant to the terms hereof, (1) a calculation performed in accordance with Article 11 of Regulation S-X promulgated under the Securities Act, as interpreted in good faith by the Board of Directors of the Company after consultation with the independent certified public accountants of the Company, or (2) otherwise a calculation made in good faith by the Board of Directors of the Company after consultation with the independent certified public accountants of the Company, as the case may be, which, in the event any acquisition or disposition of assets outside of the ordinary course of business is to be given pro forma effect, may reflect expense and cost reductions associated with any such acquisition or disposition that are reasonably identifiable, factually supportable and quantifiable and based on actions already taken or expected to be taken within 12 months and for which the full run-rate effect of such actions is expected to be realized within 12 months of such action.
“ Property ” means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to this Indenture, the value of any Property shall be its Fair Market Value.
“ Purchase Money Debt ” means Debt:
(a) consisting of the deferred purchase price of Property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds, in each case where the maturity of such Debt does not exceed the anticipated useful life of the Property being financed, and
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(b) Incurred to finance the acquisition, construction, improvement or lease by the Company or a Restricted Subsidiary of such Property, including additions and improvements thereto (whether through the direct purchase of assets or through the acquisition of at least a majority of the Voting Stock of any Person owning such assets);
provided , however , that such Debt is Incurred within 180 days after the acquisition, construction or lease of such Property by the Company or such Restricted Subsidiary.
“ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.
“ Qualified Equity Issuance ” means a public or private issuance of common stock by the Company of at least $50.0 million to Persons who are not Subsidiaries of the Company.
“ Qualified Receivables Transaction ” means any transaction or series of transactions, including factoring arrangements, that may be entered into by the Company or any Restricted Subsidiary in connection with or reasonably related to a transaction or series of transactions in which the Company or any Restricted Subsidiary may sell, convey or otherwise transfer to (1) a Special Purpose Vehicle or (2) any other Person, or may grant a security interest in, any equipment and related assets (including contract rights) or Receivables or interests therein which may be secured by goods or services financed thereby (whether such Receivables are then existing or arising in the future) of the Company or any Restricted Subsidiary, and any assets relating thereto including, without limitation, all security or ownership interests in goods or services financed thereby, the proceeds of such Receivables, and other assets which are customarily sold or in respect of which security interests are customarily granted in connection with securitization transactions involving such assets, as any agreement governing any such transactions may be renewed, refinanced, amended, restated or modified from time to time.
“ Rating Agencies ” means Moody’s and S&P.
“ Receivables ” means any right of payment from or on behalf of any obligor, whether constituting an account, chattel paper, instrument, general intangible or otherwise, arising from the financing by the Company or any Restricted Subsidiary of goods or services, and monies due thereunder, security or ownership interests in the goods and services financed thereby, records relating thereto, and the right to payment of any interest or finance charges and other obligations with respect thereto, proceeds from claims on insurance policies related thereto, any other proceeds related thereto, and other related rights.
“ Reference Treasury Dealer ” means a primary U.S. Government securities dealer in New York City.
“ Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date.
“ Refinance ” means, in respect of any Debt, to refinance, extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or to issue other Debt, in exchange or replacement for, such Debt. “Refinanced” and “Refinancing” shall have correlative meanings.
“ Regular Record Date ” for the interest payable on any Interest Payment Date means the date specified on the face of the Note.
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“ Regulation S ” means Regulation S promulgated under the Securities Act.
“ Regulation S Global Note ” means the Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S.
“ Related Business ” means any business that is related, ancillary or complementary to the businesses of the Company and the Restricted Subsidiaries on the Issue Date.
“ Related Business Assets ” means assets (other than cash or Temporary Cash Investments) used or useful in a Related Business; provided that any assets received by the Company or a Restricted Subsidiary in exchange for assets transferred by the Company or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.
“ Repay ” means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease or otherwise retire such Debt. “Repayment” and “Repaid” shall have correlative meanings. For purposes of Section 4.12 and the definition of “Consolidated Interest Coverage Ratio,” Debt constituting revolving credit Debt shall be considered to have been Repaid only to the extent the related loan commitment, if any, shall have been permanently reduced in connection therewith.
“ Responsible Officer ,” shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee who shall have direct responsibility for the administration of this Indenture, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject.
“ Restricted Definitive Note ” means one or more Definitive Notes bearing the Private Placement Legend.
“ Restricted Global Notes ” means one or more 144A Global Note and Regulation S Global Notes and any other Global Notes bearing the Private Placement Legend.
“ Restricted Payment ” means:
(a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Company or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into the Company or any Restricted Subsidiary), except for any dividend or distribution that is made solely to the Company or a Restricted Subsidiary or any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of the Company, and except for pro rata dividends or other distributions made by a Subsidiary that is not a wholly owned subsidiary to minority stockholders;
(b) the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Company or any Restricted Subsidiary (other than from the Company or a Restricted Subsidiary) or any securities exchangeable for or convertible into any such Capital Stock, including the exercise of any option to exchange any Capital Stock (other than for or into Capital Stock of the Company that is not Disqualified Stock);
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(c) the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than (x) the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition or (y) Debt permitted to be Incurred under Section 4.09(b)(iv); or
(d) any Investment (other than Permitted Investments) in any Person.
“ Restricted Subsidiary ” means any Subsidiary of the Company other than an Unrestricted Subsidiary.
“ Rule 144 ” means Rule 144 promulgated under the Securities Act.
“ Rule 144A ” means Rule 144A promulgated under the Securities Act.
“ Rule 903 ” means Rule 903 promulgated under the Securities Act.
“ Rule 904 ” means Rule 904 promulgated under the Securities Act.
“ S&P ” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., or any successor to the rating agency business of Standard & Poor’s Ratings Services.
“ Sale and Leaseback Transaction ” means any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such Property to another Person and the Company or a Restricted Subsidiary leases it from such Person.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
“ Significant Subsidiary ” means any Subsidiary that would be a “significant subsidiary” of the Company within the meaning of Rule 1-02(w) under Regulation S-X promulgated by the Commission.
“ Special Purpose Vehicle ” means a bankruptcy-remote entity or trust or other special purpose entity which is formed by the Company, any Subsidiary of the Company or any other Person for the purpose of, and engages in no material business other than in connection with a Qualified Receivables Transaction or other similar transactions of Receivables, including factoring arrangements, or other similar or related assets.
“ Stated Maturity ” means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).
“ Subordinated Obligation ” means any Debt of the Company or any Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes or the applicable Subsidiary Guarantee pursuant to a written agreement to that effect.
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“ Subsidiary ” means, in respect of any Person, any corporation, company (including any limited liability company), association, partnership, joint venture or other business entity of which a majority of the total voting power of the Voting Stock or other interests (including partnership interests) is at the time owned or controlled, directly or indirectly, by:
(a) such Person,
(b) such Person and one or more Subsidiaries of such Person, or
(c) one or more Subsidiaries of such Person.
“ Subsidiary Guarantee ” means the Guarantee of the Notes by each of the Subsidiary Guarantors pursuant to Article 10 hereof and any additional Guarantee of the Notes to be delivered pursuant to a supplemental indenture by any Subsidiary of the Company pursuant to Section 4.17 hereof.
“ Subsidiary Guarantor ” means each Canadian and U.S. Restricted Subsidiary in existence on the Issue Date and any other Person that becomes a Subsidiary Guarantor pursuant to Section 4.17 hereof or who otherwise executes and delivers a supplemental indenture substantially in the form of Exhibit D hereto to the Trustee providing for a Subsidiary Guarantee.
“ Surviving Person ” means the surviving Person formed by a merger, consolidation, liquidation, dissolution, winding-up or amalgamation and, for purposes of Section 5.01 hereof, a Person to whom all or substantially all of the Property of the Company or a Subsidiary Guarantor is sold, transferred, assigned, leased, conveyed or otherwise disposed.
“ Temporary Cash Investments ” means:
(a) Investments in U.S. and Canadian Government Obligations, in each case maturing within 365 days of the date of acquisition thereof;
(b) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within one year of the date of acquisition thereof issued or guaranteed by a bank or trust company organized under the laws of the United States of America or Canada or any state or province, as the case may be, or the District of Columbia or any U.S. or Canadian branch of a foreign bank having, at the date of acquisition thereof, combined capital, surplus and undivided profits aggregating in excess of US$250.0 million and whose long-term debt is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act));
(c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) entered into with:
(1) a bank meeting the qualifications described in clause (b) above, or
(2) any primary government securities dealer reporting to the Market Reports Division of the Federal Reserve Bank of New York;
(d) Investments in commercial paper, maturing not more than one year after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America with a rating at the time as of which any
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Investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act)) or, with respect to commercial paper issued in Canada by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of Canada, having a rating at the time as of which any Investment therein is made of “R-1” (or higher) according to Dominion Bond Rating Service Limited;
(e) direct obligations (or certificates representing an ownership interest in such obligations) of any state of the United States of America, any province of Canada or any foreign country recognized by the United States or any political subdivision of any such state, province or foreign country, as the case may be (including any agency or instrumentality thereof), for the payment of which the full faith and credit of such state is pledged and which are not callable or redeemable at the issuer’s option, provided that:
(1) the long-term debt of such state, province or country is rated “A-3” or “A-” or higher according to Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act)), and
(2) such obligations mature within one year of the date of acquisition thereof; and
(f) Investments in money market funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above.
“ TIA ” means the Trust Indenture Act of 1939, as amended.
“ Total Leverage Ratio ” means, as of any date of determination, the ratio of:
(a) the total Debt of the Company as of such date, to
(b) the aggregate amount of EBITDA for the most recent four consecutive fiscal quarters for which financial statements are publicly available prior to such determination date.
in each case, with such pro forma adjustments as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Consolidated Interest Coverage Ratio (including, for avoidance of doubt, adjustments contemplated within the definition of “pro forma”).
“ Treasury Rate ” means, with respect to any redemption date, the rate per annum equal to the yield to maturity of the Comparable Treasury Issue, compounded semi-annually, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.
“ Trustee ” means the Person named as the “Trustee” in the first paragraph of this instrument or any successor Trustee that shall have become such pursuant to the applicable provisions of this Indenture.
“ Unrestricted Definitive Notes ” means one or more Definitive Notes that do not and are not required to bear the Private Placement Legend.
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“ Unrestricted Global Notes ” means one or more Global Notes that do not and are not required to bear the Private Placement Legend.
“ Unrestricted Subsidiary ” means:
(a) any Subsidiary of the Company that is designated as an Unrestricted Subsidiary as permitted or required pursuant to Section 4.15 hereof and is not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto; and
(b) any Subsidiary of an Unrestricted Subsidiary.
“ U.S. Government Obligations ” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer’s option.
“ Voting Stock ” of any Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
Section 1.02. Other Definitions .
Term |
Defined
in
Section |
|
“Acceleration Notice” | 6.02 | |
“Additional Amounts” | 4.19 | |
“Affiliate Transaction” | 4.14 | |
“Allocable Excess Proceeds” | 4.12 | |
“Asset Sale Offer” | 3.09 | |
“Authentication Order” | 2.02 | |
“Base Currency” | 12.13 | |
“Benefited Party” | 10.01 | |
“Change of Control Offer” | 4.16 | |
“Change of Control Payment Date” | 4.16 | |
“Change of Control Purchase Price” | 4.16 | |
“Covenant Defeasance” | 8.03 | |
“Company” | Preamble | |
“defeasance trust” | 8.04 | |
“DTC” | 2.03 | |
“Event of Default” | 6.01 | |
“Excess Proceeds” | 4.12 | |
“Excluded Taxes” | 4.19(a) | |
“First Currency” | 12.14 | |
“judgment currency” | 12.13 | |
“Legal Defeasance” | 8.02 | |
“losses” | 7.07 | |
“Notes | Preamble | |
“Offer Amount” | 3.09 | |
“Offer Period” | 3.09 | |
“Other Currency” | 12.14 |
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Term |
Defined
in
Section |
|
“Paying Agent” | 2.03 | |
“Permitted Debt” | 4.09 | |
“Purchase Date” | 3.09 | |
“rate(s) of exchange” | 12.13 | |
“Registrar” | 2.03 | |
“retiring Trustee” | 7.08 | |
“Security Register” | 4.16 | |
“Tax Jurisdiction” | 4.19 | |
“Taxes” | 4.19 | |
“Trustee” | Preamble |
Section 1.03. Incorporation by Reference of Trust Indenture Act .
(a) Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.
(b) The following TIA terms used in this Indenture have the following meanings:
“ indenture securities ” means the Notes;
“ indenture security holder ” means a Holder of a Note;
“ indenture to be qualified ” means this Indenture;
“ indenture trustee ” or “ institutional trustee ” means the Trustee; and
“ obligor ” on the Notes means the Company and any successor obligor upon the Notes.
(c) All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule under the TIA and not otherwise defined herein have the meanings so assigned to them.
Section 1.04. Rules of Construction .
(a) Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined herein has the meaning assigned to it in accordance with GAAP;
(iii) “or” is not exclusive;
(iv) words in the singular include the plural, and in the plural include the singular;
(v) all references in this instrument to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed or as amended pursuant to and in accordance with Article 9 hereof;
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(vi) 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.
(vii) “including” means “including without limitation”;
(viii) provisions apply to successive events and transactions; and
(ix) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the Commission from time to time.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating .
(a) General . The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made part of this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage in addition to those set forth on Exhibit A . Each Note shall be dated the date of its authentication. The Notes shall be in denominations of US$2,000 and integral multiples of US$1,000 in excess thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Subsidiary Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Form of Notes . Notes shall be issued initially in global form and shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend provided in Section 2.06(f)(ii) hereof and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend provided in Section 2.06(f)(ii) hereof and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions and transfers of interests therein. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Book-Entry Provisions . This Section 2.01(c) shall only apply to Global Notes deposited with the Trustee, as custodian for the Depositary. Participants and Indirect Participants shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as the custodian for the Depositary or under such Global Note, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, 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 Depositary or impair, as between
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the Depositary and its Participants or Indirect Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(d) Euroclear and Clearstream Procedures Applicable . The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in Global Notes that are held by Participants through Euroclear or Clearstream.
(e) Certificated Securities . If at any time the Depositary notifies the Company that it is unwilling or unable to continue as Depositary or if at any time the Depositary shall no longer be eligible under this Section 2.01, the Company shall appoint a successor Depositary. If a successor Depositary is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company will execute, and the Trustee, upon receipt of a Company order for the authentication and delivery of Definitive Notes, will authenticate and deliver Definitive Notes, in authorized denominations, in an aggregate principal amount and like terms and tenor equal to the principal amount of the Global Notes in exchange for such Global Notes.
The Company may at any time and in its sole discretion determine that Global Notes shall no longer be represented by such Global Notes. In such event, the Company will execute, and the Trustee, upon receipt of a Company order for the authentication and delivery of Definitive Notes of the same terms and tenor, will authenticate and deliver Definitive Notes, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes.
If specified by the Company pursuant to Section 2.06 with respect to Global Notes, the Depositary may surrender Global Notes in exchange in whole or in part for Definitive Notes and of like terms and tenor on such terms as are acceptable to the Company and such Depositary. Thereupon, the Company shall execute, and the Trustee upon receipt of a Company order for the authentication and delivery of Definitive Notes, shall authenticate and deliver, without service charge to the holders:
(i) to each Person specified by such Depositary a new Definitive Note or Notes of the same tenor, in authorized denominations, in an aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the Global Note; and
(ii) to such Depositary a new Global Note in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Note and the aggregate principal amount of the Definitive Notes delivered to holders pursuant to clause (i) above.
Upon the exchange of a Global Note for Definitive Notes, such Global Note shall be cancelled by the Trustee or an agent of the Company or the Trustee. Definitive Notes in exchange for a Global Note pursuant to this Section 2.01 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Company or the Trustee in writing. The Trustee or such agent shall deliver such Notes to or as directed by the Persons in whose names such Notes are so registered or to the Depositary.
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Section 2.02. Execution and Authentication .
(a) One Officer shall sign the Notes for the Company by manual, facsimile or portable document format signature.
(b) If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
(c) A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.
(d) The Trustee shall, upon a written order of the Company signed by an Officer (an “ Authentication Order ”), authenticate Notes for original issue.
(e) The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company or any of their respective Subsidiaries.
(f) The Company may issue Additional Notes from time to time after the offering of the Initial Notes. The issuance of Additional Notes will be subject to the provisions of Section 4.09 hereof. The Initial Notes and any Additional Notes subsequently issued under this Indenture shall be treated as a single class for all purposes under this Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase.
Section 2.03. Registrar and Paying Agent .
(a) The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar ”) and an office or agency where Notes may be presented for payment (“ Paying Agent ”). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
(b) The Company initially appoints The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes.
(c) The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes, and the Trustee hereby initially agrees so to act.
Section 2.04. Paying Agent to Hold Money in Trust .
The Company shall require each Paying Agent other than the Trustee, the Company or a Subsidiary to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders or the
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Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists .
The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date or such shorter time as the Trustee may allow, as the Trustee may reasonably require of the names and addresses of the Holders and the Company shall otherwise comply with TIA § 312(a).
Section 2.06. Transfer and Exchange .
(a) Transfer and Exchange of Global Notes . A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (1) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (2) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; or (3) an Event of Default entitling the Holders to accelerate shall have occurred and be continuing and the Registrar has received a written request from the Depositary to issue Definitive Notes. Upon the occurrence of any of the preceding events in (1), (2) or (3) above, Definitive Notes shall be issued in denominations of US$2,000 or integral multiples of US$1,000 in excess thereof and in such names as the Depositary shall instruct the Trustee in writing. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (g) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either clause (i) or (ii) below, as applicable, as well as one or more of the other following clauses, as applicable:
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(i) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (B)(1) above. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.
(iii) Transfer of Beneficial Interests in a Restricted Global Note to Another Restricted Global Note . A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such transfer is effected pursuant to a registration statement in accordance with the Securities Act; or
(B) the Registrar receives the following:
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(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this clause (B), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to this clause (iv) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this clause (iv).
(v) Transfer or Exchange of Beneficial Interests in Unrestricted Global Notes for Beneficial Interests in Restricted Global Notes Prohibited . Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes .
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes . If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities
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Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail or deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if:
(A) such transfer is effected pursuant to a registration statement in accordance with the Securities Act; or
(B) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this clause (B), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such
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beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and mail or deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail or deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests in the Global Notes .
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes . If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note.
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(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if:
(A) such transfer is effected pursuant to a registration statement in accordance with the Securities Act; or
(B) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this clause (B), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the clauses in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.
(iv) Transfer or Exchange of Unrestricted Definitive Notes to Beneficial Interests in Restricted Global Notes Prohibited . An Unrestricted Definitive Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, beneficial interests in a Restricted Global Note.
(v) Issuance of Unrestricted Global Notes . If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to clauses (ii) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration
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of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes . Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such transfer is effected pursuant to a registration statement in accordance with the Securities Act; or
(B) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this clause (B), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar and the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes . A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of Unrestricted Definitive Notes. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
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(f) Legends . The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend .
(A) Except as permitted by clause (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”
“THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS ONE YEAR AFTER THE LAST DATE OF ORIGINAL ISSUANCE OF THE NOTES, ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S (PROVIDED THAT SUCH NON-U.S. PERSONS AGREE NOT TO RESELL OR OTHERWISE TRANSFER THE SECURITIES IN CANADA OR FOR THE BENEFIT OF A CANADIAN RESIDENT, EXCEPT IN ACCORDANCE WITH APPLICABLE CANADIAN SECURITIES LAWS), (E) TO AN ’ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(l), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF US$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE SECURITIES LAWS OF ANY OTHER JURISDICTION, INCLUDING OF ANY STATE OF THE UNITED STATES OR ANY PROVINCE OF CANADA, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY
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OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.”
“IN CANADA, UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE SEPTEMBER 20, 2015.”
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to clauses (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend; provided , however that any Global Note or Definitive Note issued pursuant to clauses (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), or (e)(iii) of this Section 2.06 shall, if issued before the date that is four months and one day after the date of original issuance of the Note, bear a legend in substantially the following form:
“CANADIAN RESALE LEGEND:
IN CANADA, UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE SEPTEMBER 20, 2015.”
(ii) Global Note Legend . Each Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“ DTC ”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE 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 TO 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.”
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(g) Cancellation and/or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges .
(i) To permit registrations of transfers and exchanges, the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate Global Notes and Definitive Notes upon the Company’s order or at the Registrar’s request.
(ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note 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 or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 4.12, 4.16 and 9.05 hereof).
(iii) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(iv) Neither the Registrar nor the Company shall be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Regular Record Date and the next succeeding Interest Payment Date.
(v) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(vii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or portable document format.
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(viii) The Trustee is hereby authorized to enter into a letter of representation with the Depositary in the form provided by the Company and to act in accordance with such letter.
(ix) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
Section 2.07. Replacement Notes .
If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue, and the Trustee, upon receipt of an Authentication Order, shall authenticate, a replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note.
Any replacement Note authenticated and delivered pursuant to this Section in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same Debt as the mutilated, lost, destroyed or stolen Note and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
In case any such mutilated, destroyed, lost or stolen Note had become or is about to become due and payable, the Company, in its discretion, may, instead of issuing a new Note, pay such Note upon satisfaction of the conditions set forth in the preceding paragraph.
The provisions of this Section 2.07 are exclusive and shall preclude (to the extent lawful) all other rights and remedies of any Holder with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. Outstanding Notes .
(a) The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(c) hereof.
(b) If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
(c) If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
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(d) If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes .
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, amendment, supplement, waiver or consent, Notes owned by the Company, or by any Affiliate of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, amendment, supplement, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes .
Until certificates representing Notes are ready for delivery, the Company may prepare, and the Trustee, upon receipt of an Authentication Order, shall authenticate, temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.
Section 2.11. Cancellation .
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar, or the Paying Agent, upon direction by the Company, and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of such cancelled Notes in accordance with its customary procedures (subject to the record retention requirements of the Exchange Act) or return them to the Company. Certification of the destruction of all cancelled Notes shall be delivered to the Company from time to time upon written request. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Payment of Interest; Defaulted Interest .
Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest payment.
If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the
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Company, the Trustee in the name and at the expense of the Company) shall mail or deliver or cause to be mailed or delivered to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. Notwithstanding the foregoing, the Company may make payment in cash of any defaulted interest 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.
Section 2.13. CUSIP or ISIN Numbers .
The Company in issuing the Notes may use “CUSIP” or “ISIN” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” or “ISIN” numbers in notices of redemption as a convenience to Holders; provided , however , that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the “CUSIP” or “ISIN” numbers.
Section 2.14. Issuance of Additional Notes .
The Company shall be entitled, subject to its compliance with Section 4.09 hereof, to issue Additional Notes under this Indenture which shall have identical terms as the Initial Notes issued on the date hereof, other than with respect to the date of issuance and issue price. The Initial Notes issued on the date hereof and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including without limitation, waivers, amendments, redemptions and offers to purchase.
With respect to any Additional Notes, the Company shall set forth in a resolution of its Board of Directors and an Officers’ Certificate, a copy of each which shall be delivered to the Trustee, the following information:
(a) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;
(b) the issue price, the issue date and the CUSIP number of such Additional Notes; and
(c) whether such Additional Notes shall be subject to restrictions on transfer.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee .
If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof and paragraph 5 of the Notes, it shall furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date unless a shorter notice shall be satisfactory to the Trustee, an Officers’ Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. Any such notice may be cancelled at any time prior to notice of such redemption being mailed or delivered to any Holder and shall, therefore, be void and of no effect.
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Section 3.02. Selection of Notes to Be Redeemed .
If less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed among the Holders of the Notes in compliance with any applicable depositary and legal requirements and the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, at random or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial redemption at random, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected shall be in amounts of US$2,000 or whole multiples of US$1,000 in excess thereof, except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of US$1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption .
At least 30 days but not more than 60 days before a redemption date, the Company shall mail or deliver, or cause to be mailed or delivered, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price or if the redemption is made pursuant to Section 3.07(b) a calculation of the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Notes or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed;
(h) in the case of a redemption being made by a Restricted Subsidiary, the name of such Restricted Subsidiary making the redemption; and
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(i) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.
The Company shall, or, at the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided , however , that the Company shall have delivered to the Trustee, at least 45 days, or such shorter period allowed by the Trustee, prior to the redemption date, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in this Section 3.03.
Section 3.04. Effect of Notice of Redemption .
Once notice of redemption is mailed or delivered in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption Price .
On or before 11:00 a.m. New York City time on any redemption date, the Company shall deposit, or cause to be deposited, with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes (or portions of Notes) to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption, whether or not such Notes are presented for payment. If a Note is redeemed on or after a Regular Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such Regular Record Date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part .
Upon surrender of a Note that is redeemed in part, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption .
(a) The Company may choose to redeem the Notes at any time. If it does so, it may redeem all or any portion of the Notes at once or over time, after giving the required notice hereunder. To redeem the Notes prior to July 15, 2018 the Company must pay a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes to be redeemed, and
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(ii) the sum of the present values of (1) the redemption price of the Notes at July 15, 2018 (as set forth below) and (2) the remaining scheduled payments of interest from the redemption date to July 15, 2018 but excluding accrued and unpaid interest to the redemption date, discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), at the Treasury Rate (determined on the second business day immediately preceding the date of redemption) plus 50 basis points,
plus, in either case, accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Any notice to Holders of Notes of such a redemption will include the appropriate calculation of the redemption price, but need not include the redemption price itself. The actual redemption price, calculated as described above, will be set forth in an Officers’ Certificate delivered to the Trustee no later than two business days prior to the redemption date (unless clause (b) of the definition of “Comparable Treasury Price” is applicable, in which case such Officers’ Certificate shall be delivered on the redemption date).
(b) Beginning on July 15, 2018, the Company may redeem all or any portion of the Notes, at once or over time, after giving the required notice under this Indenture, at the redemption prices set forth below, plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). The following prices are for Notes redeemed during the 12-month period commencing on July 15 of the years set forth below, and are expressed as percentages of principal amount:
Redemption Year | Price | |||
2018 | 104.313 | % | ||
2019 | 102.875 | % | ||
2020 | 101.438 | % | ||
2021 and thereafter | 100.000 | % |
(c) In addition, at any time and from time to time, prior to July 15, 2018, the Company may redeem up to a maximum of 35% of the aggregate principal amount of the Notes (including Additional Notes) with the proceeds of one or more Qualified Equity Issuances, at a redemption price equal to 105.75% of the principal amount thereof, plus accrued and unpaid interest thereon, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however , that after giving effect to any such redemption, at least 65% of the aggregate principal amount of the Notes (including Additional Notes) remains outstanding. Any such redemption shall be made within 180 days of such Qualified Equity Issuance upon not less than 30 days’ nor more than 60 days’ prior notice.
(d) The Company may at any time redeem, in whole but not in part, the outstanding Notes (upon giving notice in accordance with this Indenture, which notice shall be irrevocable) at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption, and all Additional Amounts (if any) then due and which will become due on the date of redemption as a result of the redemption or otherwise, if on the next date on which any amount would be payable in respect of the Notes, the Company has become or would become obligated to pay any Additional Amounts in respect of the Notes, and the Company cannot avoid any such payment obligation by taking reasonable measures available to it, as a result of (i) any change in or amendment to the laws (or regulations promulgated thereunder) of a relevant Tax Jurisdiction, or (ii) any change in or amendment to
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any official position (including an official administrative ruling) regarding the application or interpretation of such laws or regulations (including a change by virtue of a holding, judgment or order by a court of competent jurisdiction), which change or amendment is announced and becomes effective on or after the Issue Date (or, if the applicable relevant Tax Jurisdiction became a Tax Jurisdiction on a date after the Issue Date, such later date). Prior to the giving of any notice of redemption described in this Section 3.07(d), the Company will deliver to the Trustee an Opinion of Counsel to the effect that the Company has or will become obligated to pay such Additional Amounts as a result of a change or amendment described above.
(e) Notwithstanding the foregoing, the Company may elect to effect any redemption pursuant to this Section 3.07 directly or through a Restricted Subsidiary.
Section 3.08. Mandatory Redemption .
Except as set forth in Sections 4.12 and 4.16 hereof, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
Section 3.09. Offer To Purchase by Application of Excess Proceeds .
(a) In the event that, pursuant to Section 4.12 hereof, the Company shall be required to commence an offer to all Holders to purchase Notes (an “ Asset Sale Offer ”), it shall follow the procedures specified below.
(b) The Asset Sale Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the “ Offer Period ”). No later than five Business Days after the termination of the Offer Period (the “ Purchase Date ”), the Company shall purchase the principal amount of Notes required to be purchased pursuant to Section 4.12 hereof (the “ Offer Amount ”) or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after a Regular Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such Regular Record Date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of the Asset Sale Offer, the Company shall deliver a notice to the Trustee and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state:
(i) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.12 hereof and the length of time the Asset Sale Offer shall remain open;
(ii) the Offer Amount, the purchase price and the Purchase Date;
(iii) that any Note not tendered or accepted for payment shall continue to accrue interest;
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(iv) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest after the Purchase Date;
(v) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in amounts of US$2,000 or integral multiples of US$1,000 in excess thereof;
(vi) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;
(vii) that Holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;
(viii) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Company shall select the Notes to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of US$2,000 or integral multiples of US$1,000 in excess thereof shall be purchased); and
(ix) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five Business Days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order in accordance with Section 2.02 hereof from the Company, shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Section 3.01 through Section 3.06 hereof.
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ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes .
The Company shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 11:00 a.m. New York City Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.
The Company shall pay interest (including post-petition interest on any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest on any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful.
Interest shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 4.02. Maintenance of Office or Agency .
(a) The Company shall maintain an office or agency (which may be an office or drop facility of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be presented or surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall 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 Administration of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
(b) The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company shall 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.
(c) The Company hereby designates the Corporate Trust Administration of the Trustee, as one such office, drop facility or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports .
(a) The Company shall deliver to the Trustee no later than fifteen (15) calendar days after the time such report is required to be filed with the Commission pursuant to the Exchange Act (including, without limitation, to the extent applicable, any extension permitted by Rule 12b-25 under the Exchange Act), a copy of each report the Company is required to file or otherwise files with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; provided , however , that the Company shall not be required to deliver to the Trustee any material for which the Company has sought and obtained confidential treatment by the Commission; provided further , each such report will be deemed to be so delivered to the Trustee if the Company files such report with the Commission through the
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Commission’s EDGAR database. In the event the Company is at any time while any Notes are outstanding no longer subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act and no longer files reports thereunder, the Company shall continue to provide to the Trustee and, upon request, to each Holder, no later than fifteen (15) calendar days after the date the Company would have been required to file the same with the Commission, the reports the Company would have been required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act if the Company were subject to the reporting requirements of such sections. The Company also shall comply with the other provisions of TIA § 314(a).
(b) For so long as any Notes remain outstanding and the Company does not have or shall cease to have a class of equity securities registered under Section 12(g) of the Exchange Act or is not or shall cease to be subject to Section 15(d) of the Exchange Act and no longer files reports thereunder, the Company shall furnish to the Holders, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act; provided that each such report requested will be deemed delivered if the Company files such report with the Commission through the Commission’s EDGAR database.
(c) Delivery of these reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates). The Trustee shall not have any responsibility to determine whether such posting of reports with the Commission has occurred.
Section 4.04. Compliance Certificate .
(a) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers’ Certificate (which shall be signed by the principal executive, financial or accounting officer of the Company) stating that in the course of performing their duties as Officers of the Company a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company and its Subsidiaries have kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company and its Subsidiaries are not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto.
(b) The Company shall comply with TIA § 314(a)(2).
(c) The Company shall promptly deliver to the Trustee, after becoming aware of the occurrence thereof, written notice in the form of an Officers’ Certificate of any event that with the giving of notice or the lapse of time (or both) would become an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto; provided , however , that no notice need be delivered under this Section 4.04(c) if the event that with the giving of notice and the lapse of time would become an Event of Default has been cured prior to the time delivery of notice would have otherwise been required.
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Section 4.05. Taxes .
The Company shall pay or discharge, and shall cause each of its Restricted Subsidiaries to pay or discharge, prior to delinquency, all material taxes, assessments, and governmental levies; provided that neither the Company nor any such Restricted Subsidiary shall be required to pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP or where the failure to effect such payment is not adverse in any material respect to the Holders, unless despite such contestation, the Company or any of its Restricted Subsidiaries is nonetheless required to pay such taxes, assessments, or governmental levies under applicable law.
Section 4.06. Stay, Extension and Usury Laws .
The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that 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 shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
Section 4.07. Corporate Existence .
Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate existence, and the corporate, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses and franchises of the Company and its Restricted Subsidiaries; provided , however , that the Company shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Subsidiaries, if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not materially adverse to the Holders of the Notes or such action is otherwise permitted by this Indenture.
Section 4.08. Payments for Consent .
The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.
Section 4.09. Limitation on Debt .
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Debt unless, after giving effect to the application of the proceeds thereof, no Default or Event of Default would occur as a consequence of such Incurrence or be continuing following such Incurrence and either:
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(i) such Debt is Debt of the Company or a Restricted Subsidiary and after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Consolidated Interest Coverage Ratio would be greater than 2.00 to 1.00; provided that Restricted Subsidiaries that are not Subsidiary Guarantors may incur Debt to the extent Debt incurred and outstanding under this clause (i) does not exceed $100.0 million, or
(ii) such Debt is Permitted Debt.
(b) The term “ Permitted Debt ” means:
(i) (1) Debt of the Company evidenced by the Initial Notes and (2) Debt of the Subsidiary Guarantors evidenced by the Subsidiary Guarantees relating to the Initial Notes;
(ii) Debt of the Company, a Subsidiary Guarantor or a Foreign Subsidiary that is a Restricted Subsidiary, in each case under a Credit Facility; provided that, after giving effect to any such Incurrence, the aggregate principal amount of all Debt Incurred pursuant to this clause (ii) and then outstanding shall not exceed the greatest of (i) $1,000.0 million, which amount shall be permanently reduced by the amount of Net Available Cash used to Repay Debt under the Credit Facility, and not subsequently reinvested in Additional Assets or used to purchase Notes or Repay other Debt, pursuant to Section 4.12 hereof, (ii) an aggregate amount equal to (x) the aggregate amount of EBITDA for the most recent four consecutive fiscal quarters for which financial statements are publicly available prior to the date of such incurrence multiplied by (y) 3.50 and (iii) the sum of (A) 60% of the book value of the inventory of the Company and its Restricted Subsidiaries, (B) 80% of the book value of the accounts receivable of the Company and its Restricted Subsidiaries, and (C) $250.0 million, in each case determined on a consolidated basis as of the most recently ended annual or quarterly period of the Company for which financial statements of the Company are publicly available;
(iii) Debt of the Company or a Restricted Subsidiary in respect of Capital Lease Obligations, Purchase Money Debt or Sale and Leaseback Transactions, provided that:
(A) the aggregate principal amount of such Debt does not exceed the Fair Market Value (on the date of the Incurrence thereof) of the Property acquired, constructed, leased or sold, and
(B) the aggregate principal amount of all Debt Incurred and then outstanding pursuant to this clause (iii) (together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred pursuant to this clause (iii)) does not exceed the greater of (x) $150.0 million and (y) 7.5% of Consolidated Net Tangible Assets;
(iv) Debt of the Company owing to and held by any Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by the Company or any Restricted Subsidiary; provided that if the Company or any Subsidiary Guarantor is the obligor on any such Debt Incurred after the Issue Date, then such Debt is expressly subordinated by its terms to the prior payment in full in cash of the Notes or the Subsidiary Guarantees, as the case may be; provided further , however , that any subsequent issue or transfer of Capital Stock or other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Debt (except to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by the issuer thereof;
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(v) Debt under Interest Rate Agreements entered into by the Company or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of the Company or such Restricted Subsidiary and not for speculative purposes, provided that the obligations under such agreements are directly related to payment obligations on Debt otherwise permitted by this Section 4.09;
(vi) Debt under Currency Exchange Protection Agreements entered into by the Company or a Restricted Subsidiary for the purpose of limiting currency exchange rate risks directly related to transactions entered into by the Company or such Restricted Subsidiary in the ordinary course of business and not for speculative purposes;
(vii) Debt under Commodity Price Protection Agreements entered into by the Company or a Restricted Subsidiary in the ordinary course of the financial management of the Company or such Restricted Subsidiary and not for speculative purposes;
(viii) Debt in connection with one or more standby letters of credit or performance bonds issued by the Company or a Restricted Subsidiary in the ordinary course of business or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances or credit;
(ix) Debt of the Company or a Restricted Subsidiary outstanding on the Issue Date not otherwise described in clauses (b)(i) through (viii) above;
(x) Debt of a Restricted Subsidiary outstanding on the date on which such Restricted Subsidiary was acquired by the Company or otherwise became a Restricted Subsidiary (other than Debt Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Subsidiary of the Company or was otherwise acquired by the Company); provided that at the time such Restricted Subsidiary was acquired by the Company or otherwise became a Restricted Subsidiary and after giving pro forma effect to the Incurrence of such Debt and the application of proceeds therefrom, (i) the Company would have been able to Incur $1.00 of additional Debt pursuant to clause (a)(i) of this Section 4.09 or (ii) the Consolidated Interest Coverage Ratio would be equal to or greater than such ratio immediately prior to such transaction;
(xi) Debt of the Company or a Restricted Subsidiary arising from agreements providing for indemnification, adjustment of purchase price, earn-out or other similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or Subsidiary of the Company otherwise permitted by and in accordance with the provisions of this Indenture;
(xii) Debt of the Company or a Restricted Subsidiary evidenced by promissory notes issued to employees, former employees, directors or former directors of the Company or any of its Restricted Subsidiaries in lieu of any cash payment permitted to be made under Section 4.10(b)(vi) hereof;
(xiii) Guarantees by the Company or any Restricted Subsidiary of Debt of the Company or any Restricted Subsidiary that the Company or the Restricted Subsidiary making such Guarantee is otherwise permitted under this Indenture and Guarantees by the Company or any Restricted Subsidiary of Debt of a Permitted Joint Venture constituting a Permitted Investment pursuant to clause (p) of such definition;
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(xiv) Debt of the Company or a Restricted Subsidiary arising from the honoring of a check, draft or similar instrument drawn against insufficient funds, provided such Debt is extinguished within five Business Days of the Company or Restricted Subsidiary receiving notice;
(xv) Debt consisting of take-or-pay obligations contained in supply agreements entered into in the ordinary course of business;
(xvi) Debt of the Company or a Restricted Subsidiary in an aggregate principal amount outstanding at any one time not to exceed the greater of (x) $150.0 million and (y) 6.0% of Consolidated Net Tangible Assets;
(xvii) Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to clause (a)(i) of this Section 4.09 and clauses (b)(i), (ix) and (x) above; provided , however , that in the case of any Debt of the Company owing to and held by any Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by the Company or any Restricted Subsidiary Incurred pursuant to Section 4.09(b)(ix) hereof, the obligee of such Permitted Refinancing Debt shall be either the Company or a Restricted Subsidiary or if the original obligee of the Debt being Refinanced was the Company or a Subsidiary Guarantor then the obligee of such Permitted Refinancing Debt shall be either the Company or a Subsidiary Guarantor; and
(xviii) Debt in connection with a Qualified Receivables Transaction.
(c) Notwithstanding anything to the contrary contained in this Section 4.09, accrual of interest, accretion or amortization of original issue discount and the payment of interest or dividends in the form of additional Debt will be deemed not to be an Incurrence of Debt for purposes of this Section 4.09.
(d) For purposes of determining compliance with this Section 4.09, in the event that an item of Debt meets the criteria of more than one of the categories of Permitted Debt described in clauses (b)(i) through (xviii) of this Section 4.09 or is entitled to be incurred (for avoidance of doubt, in whole or in part) pursuant to clause (a)(i) of this Section 4.09, the Company shall, in its sole discretion, classify in whole or in part (or later reclassify in whole or in part) such item of Debt in any manner that complies with this Section 4.09.
(e) For purposes of determining compliance with any Canadian dollar denominated restriction or amount, the Canadian dollar equivalent principal amount thereof denominated in a foreign currency will be calculated based on the relevant currency exchange rate in effect on the date the Debt or other transaction was incurred or entered into, or first committed, in the case of revolving credit debt, provided that if any Permitted Refinancing Debt is incurred to refinance Debt denominated in a foreign currency, and such refinancing would cause the applicable Canadian dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Canadian dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such Permitted Refinancing Debt does not exceed the principal amount of such Debt being refinanced. Notwithstanding any other provision in this Indenture, no restriction or amount will be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies.
Section 4.10. Limitation on Restricted Payments .
(a) The Company shall not make, and shall not permit any Restricted Subsidiary to make, directly or indirectly, any Restricted Payment if at the time of, and after giving effect to, such proposed Restricted Payment,
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(i) a Default or Event of Default shall have occurred and be continuing,
(ii) the Company could not Incur at least $1.00 of additional Debt pursuant to clause (a)(i) of Section 4.09 hereof, and
(iii) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since the Issue Date (the amount of any Restricted Payment, if made other than in cash, to be based upon Fair Market Value at the time of such Restricted Payment) would exceed an amount equal to the sum of:
(A) 50% of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from July 1, 2014 to the end of the most recent annual or quarterly period for which financial statements have been made publicly available (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit), plus
(B) 100% of Capital Stock Sale Proceeds, plus
(C) the sum of:
(1) the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the issuance or sale after the Issue Date of convertible or exchangeable Debt that has been converted into or exchanged for Capital Stock (other than Disqualified Stock) of the Company, and
(2) the aggregate amount by which Debt (other than Subordinated Obligations) of the Company or any Restricted Subsidiary is reduced on the Company’s consolidated balance sheet on or after the Issue Date upon the conversion or exchange of any Debt issued or sold on or prior to the Issue Date that is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company,
excluding, in the case of clause (1) or (2):
(x) any such Debt issued or sold to the Company or a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees, and
(y) the aggregate amount of any cash or other Property distributed by the Company or any Restricted Subsidiary upon any such conversion or exchange, plus
(D) an amount equal to the sum of:
(1) the net reduction in Investments in any Person other than the Company or a Restricted Subsidiary resulting from dividends, repayments, forgiveness or cancellation of loans or advances or other transfers of Property, in each case to the Company or any Restricted Subsidiary from such Person,
(2) the portion (proportionate to the Company’s equity interest in such Unrestricted Subsidiary) of the Fair Market Value of the net assets of an
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Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary, and
(3) to the extent that any Investment (other than a Permitted Investment) that was made after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, the cash return of capital with respect to such Investment (less the cost of disposition, if any), plus
(E) $50.0 million.
(b) Notwithstanding the foregoing limitation, the Company and Restricted Subsidiaries, as applicable, may:
(i) pay dividends or distributions on its Capital Stock within 60 days of the declaration thereof if, on the declaration date, such dividends or distributions could have been paid in compliance with this Indenture; provided , however , that at the time of such payment of such dividend or distribution, no other Default or Event of Default shall have occurred and be continuing (or result therefrom); provided further , however , that such dividend or distribution shall be included in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above;
(ii) purchase, repurchase, redeem, defease, acquire or retire for value any (i) Capital Stock of the Company, any Restricted Subsidiary or any Permitted Joint Venture, or (ii) Subordinated Obligations, in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees); provided , however , that
(A) such purchase, repurchase, redemption, defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above and
(B) the Capital Stock Sale Proceeds from such exchange or sale shall be excluded from the calculation pursuant to Section 4.10(a)(iii)(B) above;
(iii) purchase, repurchase, redeem, defease, acquire or retire for value any Subordinated Obligations in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt; provided , however , that such purchase, repurchase, redemption, defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above;
(iv) make an Investment, if at the time the Company or any Restricted Subsidiary first Incurred a commitment for such Restricted Payment, such Restricted Payment could have been made; provided , however , that the Investment is made within 90 days from the date in which the Company or the Restricted Subsidiary Incurs the commitment; and provided further , however , that all commitments Incurred and outstanding and not terminated shall be treated as if such commitments were Restricted Payments expended by the Company or the Restricted Subsidiary at the time the commitments were Incurred;
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(v) repurchase equity interests of the Company or any of its Restricted Subsidiaries deemed to occur upon the exercise of stock options upon surrender of equity interests to pay the exercise price of such options; provided , however , that such repurchase shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above;
(vi) repurchase, redeem or retire for value any Capital Stock of the Company or any of its Subsidiaries from current or former employees of the Company or any of its Subsidiaries (or permitted transferees of such current or former employees), pursuant to the terms of agreements (including employment agreements, employee stock options or restricted stock agreements) or plans (or amendments thereto) approved by the Board of Directors of the Company under which such individuals purchase or sell, or are granted the option to purchase or sell, shares of such Capital Stock; provided , however , that:
(A) the aggregate amount of such repurchases shall not exceed $10.0 million in any calendar year, with unused amounts carried over to the next calendar year subject to a maximum of $15.0 million in any calendar year; and
(B) at the time of such repurchase, no Default or Event of Default shall have occurred and be continuing (or result therefrom);
provided further , however , that such repurchases shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above;
(vii) pay dividends or distributions in the ordinary course of business on the Company’s outstanding Capital Stock or Preferred Stock or make open market purchases of shares of the Company’s outstanding Capital Stock pursuant to stock buyback programs approved by the Board of Directors of the Company, in an amount which, when combined with all such dividends, distributions and purchases, does not exceed $50.0 million in the aggregate in any calendar year, with unused amounts carried over to the succeeding calendar year, subject to a maximum of $75.0 million in any calendar year; such $25.0 million increase allowed only if the pro forma Consolidated Interest Coverage Ratio is at least 2.00 to 1.00; provided , however , that at the time of such dividend, distribution or purchase,
(A) the Company could Incur at least $1.00 of additional Debt pursuant to clause (a)(i) of Section 4.09 hereof, after giving pro forma effect to such dividend or distribution; and
(B) no Default or Event of Default shall have occurred and be continuing (or result therefrom);
provided further , however , that such dividends or distributions shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above;
(viii) purchase, repurchase, redeem, defease, acquire or retire for value any Subordinated Obligations from Net Available Cash to the extent permitted by Section 4.12 hereof, provided , however , that such purchase, repurchase, redemption, legal defeasance, acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above;
(ix) purchase or redeem any Subordinated Obligations, to the extent required by the terms of such Debt following a Change of Control; provided , however , that the Company has
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made a Change of Control Offer and has purchased all Notes tendered in connection with that Change of Control Offer; provided further , however , that such purchase or redemption shall be included in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above;
(x) other Restricted Payments in an aggregated amount not to exceed $150.0 million since the Issue Date; provided , however, that at the time of such payment of such dividend or distribution, no other Default or Event of Default shall have occurred and be continuing (or result therefrom); provided further , however , that such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above; and
(xi) any additional Restricted Payment so long as immediately after giving effect to the making of such Restricted Payment, the Company’s Total Leverage Ratio does not exceed 3.50 to 1.00; provided , however , that at the time of such payment of such dividend or distribution, no Default or Event of Default shall have occurred and be continuing (or result therefrom); provided further , however , that such Restricted Payments shall be excluded in the calculation of the amount of Restricted Payments pursuant to Section 4.10(a)(iii) above.
Section 4.11. Limitation on Liens .
The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer to exist, any Lien (other than Permitted Liens) upon any of its Property (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, or any interest therein or any income or profits therefrom, unless it has made or will make effective provision whereby the Notes or the applicable Subsidiary Guarantee will be secured by such Lien equally and ratably with (or, if such other Debt constitutes Subordinated Obligations, prior to) all other Debt of the Company or any Restricted Subsidiary secured by such Lien for so long as such other Debt is secured by such Lien; provided , however , that if the Debt so secured is expressly subordinated to the Notes, then the Lien securing such Debt shall be subordinated and junior to the Lien securing the Notes or the Subsidiary Guarantees.
Section 4.12. Limitation on Asset Sales .
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale unless:
(i) the Company or such Restricted Subsidiary receives consideration, including the relief of liabilities, at the time of such Asset Sale at least equal to the Fair Market Value of the Property subject to such Asset Sale; and
(ii) except in the case of a Permitted Asset Swap, at least 75% of the consideration paid to the Company or such Restricted Subsidiary in connection with such Asset Sale is in the form of cash or Temporary Cash Investments.
Solely for the purposes of clause (a)(ii) of this Section 4.12, the following will be deemed to be cash:
(A) the assumption by the purchaser of liabilities of the Company or any Restricted Subsidiary (other than contingent liabilities or liabilities that are by their terms subordinated to the Notes or the applicable Subsidiary Guarantee) as a result of which the Company and the Restricted Subsidiaries are no longer obligated with respect to such liabilities;
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(B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such Purchaser to the extent they are promptly converted or monetized by the Company or such Restricted Subsidiary into cash (to the extent of the cash received) or by their terms mature or are otherwise to be converted into cash within 180 days; and
(C) any Designated Noncash Consideration the Fair Market Value of which, when taken together with all other Designated Noncash Consideration received pursuant to this clause (C) (and not subsequently converted into cash or Temporary Cash Investments that are treated as Net Available Cash), does not exceed the greater of (1) $150.0 million and (2) 5.0% of the Consolidated Net Tangible Assets at the time of the receipt of such Designated Noncash Consideration, with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value.
(b) The Net Available Cash (or any portion thereof) from Asset Sales may be applied by the Company or a Restricted Subsidiary, to the extent the Company or such Restricted Subsidiary elects (or is required by the terms of any Debt) to any of the following uses:
(i) to Repay
(A) Debt of the Company or any Restricted Subsidiary that is secured by the Property subject to such Asset Sale (excluding any Debt owed to the Company or an Affiliate of the Company) and/or
(B) Debt under the Credit Facility; or
(ii) to invest or reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary); or
(iii) to make capital expenditures to improve existing assets.
Notwithstanding the foregoing, (i) any investment in Additional Assets within 180 days prior to an Asset Sale, shall be deemed to satisfy clause (b)(ii) above with respect to any such Asset Sale and (ii) any capital expenditure made to improve existing assets within 180 days of an Asset Sale shall be deemed to satisfy clause (b)(iii) above with respect to any Asset Sale.
(c) Any Net Available Cash from an Asset Sale not applied in accordance with clause (b) of this Section 4.12 within 450 days from the date of the receipt of such Net Available Cash, or such shorter period which the Company determines or that is not segregated from the general funds of the Company for investment in identified Additional Assets in respect of a project that shall have been commenced, and for which binding contractual commitments have been entered into, prior to the end of such 450-day period and that shall not have been completed or abandoned shall constitute “Excess Proceeds”; provided , however , that the amount of any Net Available Cash that ceases to be so segregated as contemplated above and any Net Available Cash that is segregated in respect of a project that is abandoned or completed shall also constitute “Excess Proceeds” at the time any such Net Available Cash ceases to be so segregated or at the time the relevant project is so abandoned or completed, as applicable; provided further , however , that the amount of any Net Available Cash that continues to be segregated for investment and that is not actually reinvested within 450 days from the date of the receipt of such Net Available Cash shall also constitute “Excess Proceeds.”
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(d) When the aggregate amount of Excess Proceeds exceeds $150.0 million (not taking into account income earned on such Excess Proceeds, if any), the Company will be required to make an Asset Sale Offer, which offer shall be in the amount of the Allocable Excess Proceeds (as defined below), on a pro rata basis, according to principal amount, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the purchase date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the procedures (including prorating in the event of oversubscription) set forth in this Indenture. To the extent that any portion of the amount of Net Available Cash remains after compliance with the preceding sentence and provided that all Holders of Notes have been given the opportunity to tender their Notes for purchase in accordance with this Indenture, the Company or such Restricted Subsidiary may use such remaining amount for any purpose not otherwise prohibited by this Indenture and the amount of Excess Proceeds will be reset to zero.
(e) The term “ Allocable Excess Proceeds ” shall mean the product of:
(i) the Excess Proceeds and
(ii) a fraction,
(A) the numerator of which is the aggregate principal amount of the Notes outstanding on the date of the Asset Sale Offer, and
(B) the denominator of which is the sum of the aggregate principal amount of the Notes outstanding on the date of the Asset Sale Offer and the aggregate principal amount of other Debt of the Company outstanding on the date of the Asset Sale Offer that is pari passu in right of payment with the Notes and subject to terms and conditions in respect of Asset Sales substantially similar to this Section 4.12 and requiring the Company to make an offer to purchase such Debt at substantially the same time as the Asset Sale Offer.
(f) Within five business days after the Company is obligated to make an Asset Sale Offer as described in clause (d) of this Section 4.12, the Company shall deliver a written notice to the Holders of Notes, accompanied by such information regarding the Company and its Subsidiaries as the Company in good faith believes will enable such Holders to make an informed decision with respect to such Asset Sale Offer. Such notice shall state, among other things, the purchase price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a business day no earlier than 30 days nor later than 60 days from the date such notice is delivered.
(g) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with any repurchase of Notes pursuant to this Section 4.12. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.12, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.12 by virtue thereof.
Section 4.13. Limitation on Restrictions on Distributions from Restricted Subsidiaries .
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist any consensual restriction on the right of any Restricted Subsidiary to:
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(i) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Company or any other Restricted Subsidiary,
(ii) make any loans or advances to the Company or any other Restricted Subsidiary, or
(iii) transfer any of its Property to the Company or any other Restricted Subsidiary.
(b) The foregoing limitations will not apply:
(i) with respect to clauses (a)(i), (ii) and (iii), to restrictions:
(A) in effect on the Issue Date, including, without limitation, restrictions pursuant to the Notes, this Indenture, the indentures governing the Company’s notes outstanding on the Issue Date and the Credit Facility or pursuant to a credit agreement or credit agreements which may be entered into after the Issue Date under which one or more Foreign Subsidiaries that are Restricted Subsidiaries can Incur Debt so long as such Debt is Incurred pursuant to Section 4.09(b)(ii) hereof and, as determined in good faith by the Company, that are no more restrictive, taken as a whole, than those contained in the Credit Facility on the Issue Date,
(B) relating to Debt of a Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company,
(C) that result from the Refinancing of Debt Incurred pursuant to an agreement referred to in clause (i)(A) or (B) above or in clause (ii)(A) or (B) below, provided such restrictions taken as a whole, as determined in good faith by the Company, are no less favorable to the Holders than those under the agreement evidencing the Debt so Refinanced,
(D) arising in connection with a Qualified Receivables Transaction (including limitations set forth in the governing documents of a Special Purpose Vehicle), or
(E) existing under or by reason of applicable law, and
(ii) with respect to clause (a)(iii) only, to restrictions:
(A) relating to Debt that is permitted to be Incurred and secured without also securing the Notes or the applicable Subsidiary Guarantee pursuant to Sections 4.09 and 4.11 hereof, that limit the right of the debtor to dispose of the Property securing such Debt,
(B) encumbering Property at the time such Property was acquired by the Company or any Restricted Subsidiary, so long as such restriction relates solely to the Property so acquired and was not created in connection with or in anticipation of such acquisition,
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(C) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder,
(D) that constitute customary restrictions contained in sale agreements limiting the transfer of Capital Stock or Property pending the closing of such sale,
(E) that constitute customary restrictions contained in joint venture agreements entered into in good faith and not otherwise prohibited under this Indenture, or
(F) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any Property of the Company or any Restricted Subsidiary not otherwise prohibited by this Indenture.
Section 4.14. Limitations on Affiliate Transactions .
(a) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into or suffer to exist any transaction or series of transactions (including the purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service) with, or for the benefit of, any Affiliate of the Company involving aggregate payments or value in excess of $25.0 million (an “ Affiliate Transaction ”), unless:
(i) the terms of such Affiliate Transaction, taken as a whole, are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that would reasonably be expected to be obtained in a comparable arm’s-length transaction at the time of the transaction with a Person that is not an Affiliate of the Company,
(ii) if such Affiliate Transaction involves aggregate payments or value in excess of $50.0 million, the Board of Directors of the Company (including at least a majority of the disinterested members of the Board of Directors of the Company) approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (a)(i) of this Section 4.14 as evidenced by a Board Resolution delivered to the Trustee, and
(iii) if such Affiliate Transaction involves aggregate payments or value in excess of $75.0 million, the Company obtains a written opinion from an Independent Financial Advisor to the effect that the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to the Company and the Restricted Subsidiaries.
(b) Notwithstanding (and without the need to comply with) the foregoing limitation, the Company or any Restricted Subsidiary may enter into or suffer to exist the following:
(i) any transaction or series of transactions between the Company and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries; provided that if one of the parties to such transaction or series of transactions is a Restricted Subsidiary that is not a Subsidiary Guarantor, no more than 5% of the total voting power of the Voting Stock (on a fully diluted basis) of such Restricted Subsidiary is owned by a stockholder of the Company that is an Affiliate;
(ii) any Restricted Payment permitted to be made pursuant to Section 4.10 hereof, or any Permitted Investment;
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(iii) any disposition of Property of the Company or any Subsidiary in connection with the transfer of the Company’s Larochette mill to Reno de Medici S.p.A.;
(iv) the payment of compensation (including amounts paid pursuant to employee benefit plans) for the personal services of officers, directors and employees of the Company or any of the Restricted Subsidiaries, whether in cash, securities or otherwise, so long as the Board of Directors of the Company in good faith shall have approved the terms thereof and deemed the services theretofore or thereafter to be performed for such compensation to be fair consideration therefor;
(v) loans and advances to employees made in the ordinary course of business and consistent with the past practices of the Company or such Restricted Subsidiary, as the case may be; provided that such loans and advances do not exceed $10.0 million in the aggregate at any one time outstanding;
(vi) the issuance or sale of any Capital Stock (other than Disqualified Capital Stock) of the Company;
(vii) transactions with customers, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services, in each case which are in the ordinary course of business and consistent with industry practice (including, without limitation, pursuant to agreements in existence on the date of this Indenture) and otherwise in compliance with the terms of this Indenture and, taken as a whole, are on terms no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that would reasonably be expected to be obtained in a comparable arm’s-length transaction at the time of the transaction with a Person that is not an Affiliate of the Company;
(viii) payments or other transactions pursuant to any tax-sharing agreement approved by the Board of Directors of the Company and entered into in good faith between the Company and any other Person with which the Company files a consolidated tax return or with which the Company is a part of a consolidated group for tax purposes;
(ix) payments from Affiliates to the Company or a Restricted Subsidiary for operational, management and financial services pursuant to agreements that are on terms no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company;
(x) any sale, conveyance or other transfer of Receivables and other related assets customarily transferred in a Qualified Receivables Transaction; and
(xi) director and officer indemnification agreements entered into in good faith and approved by the Board of Directors of the Company.
Section 4.15. Designation of Restricted and Unrestricted Subsidiaries .
(a) The Board of Directors of the Company may designate any Subsidiary of the Company to be an Unrestricted Subsidiary if such designation is permitted under Section 4.10 and the Subsidiary to be so designated:
(i) has no Debt other than Non-Recourse Debt;
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(ii) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe for additional Capital Stock or (2) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and
(iii) has not Guaranteed or otherwise directly or indirectly provided credit support for any Debt of the Company or any of its Restricted Subsidiaries.
(b) Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of the Company will be classified as a Restricted Subsidiary; provided , however , that such Subsidiary shall not be designated a Restricted Subsidiary and shall be automatically classified as an Unrestricted Subsidiary if (1) either of the requirements set forth in Sections 4.15(d)(x) and (y) shall not be satisfied after giving pro forma effect to such classification, (2) if such Person is a Subsidiary of an Unrestricted Subsidiary or (3) unless the Company elects otherwise, such Subsidiary is formed and exists solely for the purpose of effecting a transaction or series of transactions otherwise permitted by this Indenture and such Subsidiary will be merged, consolidated, liquidated, dissolved, wound-up or amalgamated into the Company or a Restricted Subsidiary as part of such transaction or series of transactions.
(c) Except as provided in the first sentence of clause (b) of this Section 4.15, no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary, and neither the Company nor any Restricted Subsidiary shall at any time be directly or indirectly liable for any Debt that provides that the holder thereof may (with the passage of time or notice or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its Stated Maturity upon the occurrence of a default with respect to any Debt, Lien or other obligation of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary). Upon designation of a Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this Section 4.15, such Restricted Subsidiary shall automatically be released from any Subsidiary Guarantee previously made by such Restricted Subsidiary upon receipt by the Trustee of an Officers’ Certificate and a Board Resolution in respect thereof.
(d) The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if, immediately after giving pro forma effect to such designation,
(x) the Company could Incur at least $1.00 of additional Debt pursuant to clause (a)(i) of Section 4.09 hereof, and
(y) no default or Event of Default shall have occurred and be continuing or would result therefrom.
(e) Any such designation or redesignation by the Board of Directors of the Company will be evidenced to the Trustee by delivery to the Trustee a Board Resolution giving effect to such designation or redesignation and an Officers’ Certificate that:
(1) certifies that such designation or redesignation complies with the preceding provisions, and
(2) gives the effective date of such designation or redesignation,
such delivery with the Trustee to occur within 45 days after the end of the fiscal quarter of the Company in which such designation or redesignation is made (or, in the case of a designation or redesignation made
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during the last fiscal quarter of the Company’s fiscal year, within 90 days after the end of such fiscal year).
(f) As of the Issue Date, the Board of Directors of the Company has designated Cascades Recovery Inc., Greenpac Holding LLC (and its direct parent holding company), Reno de Medici S.p.A. and Norcan Flexible Packing Inc. (and their respective Subsidiaries) as Unrestricted Subsidiaries.
Section 4.16. Repurchase at the Option of Holders Upon a Change of Control .
(a) Upon the occurrence of a Change of Control, the Company shall offer to repurchase all or any part (equal to US$2,000 or an integral multiple of US$1,000 in excess thereof) of the Notes pursuant to the offer described below (the “ Change of Control Offer ”) at a purchase price, in cash (the “ Change of Control Purchase Price ”), equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest on the Notes repurchased to the purchase date (subject to the right of Holders on the relevant record date to receive interest to, but excluding, the Change of Control Payment Date (as defined below)). Each Holder shall have the right to require the Company to repurchase all or any part (equal to US$2,000 or an integral multiple of US$1,000 in excess thereof) of such Holder’s Notes pursuant to such offer.
Within 30 days following any Change of Control, unless the Company has mailed or delivered a redemption notice with respect to all of the outstanding Notes in accordance with Section 3.07, the Company shall:
(i) cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service or similar business news service in the United States and
(ii) deliver, with a copy to the Trustee, to each Holder of Notes, at such Holder’s address appearing in the securities register maintained in respect of the Notes by the Registrar (the “ Security Register ”), a notice stating:
(A) that a Change of Control has occurred and a Change of Control Offer is being made pursuant to this Section 4.16 and that all Notes timely tendered will be accepted for repurchase;
(B) the Change of Control Purchase Price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 days and no later than 60 days from the date such notice is delivered (the “ Change of Control Payment Date ”);
(C) the circumstances and relevant facts regarding the Change of Control; and
(D) the procedures that Holders must follow in order to tender their Notes (or portions thereof) for payment, and the procedures that Holders must follow in order to withdraw an election to tender Notes (or portions thereof) for payment.
The Company will comply, to the extent applicable, with the requirements of Section 14(e) under the Exchange Act and any other securities laws and regulations thereunder in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.16 or other provisions of this Indenture, the
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Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.16 by virtue of such compliance.
(b) On the Change of Control Payment Date, the Company shall, to the extent lawful:
(i) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and
(iii) deliver or cause to be delivered to the Trustee or Paying Agent, on its behalf, the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being tendered and purchased by the Company.
The Paying Agent shall promptly mail or deliver to each Holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail or deliver (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount of US$2,000 or an integral multiple of US$1,000 in excess thereof.
(c) If the Change of Control Payment Date is on or after a Regular Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered, at the close of business on such Regular Record Date, and no additional interest shall be payable to Holders who tender pursuant to the Change of Control Offer.
(d) The provisions described above that require the Company to make a Change of Control Offer following a Change of Control shall be applicable whether or not any other provisions of this Indenture are applicable. This Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction that does not involve a Change of Control.
(e) The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes a Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer.
Section 4.17. Future Subsidiary Guarantors .
The Company shall cause each Person that becomes a Canadian or U.S. Restricted Subsidiary, excluding any Special Purpose Vehicle, following the Issue Date to execute and deliver to the Trustee a supplemental indenture substantially in the form of Exhibit D hereto providing a Subsidiary Guarantee within 30 days after such time such Person becomes a Canadian or U.S. Restricted Subsidiary; provided , however , that if any such Canadian or U.S. Restricted Subsidiary has assets or annual revenues, in each case, of less than $5.0 million individually (and $15.0 million in assets or annual revenues in the aggregate in respect of all Canadian or U.S. Restricted Subsidiaries that do not provide a Subsidiary Guarantee), and in each case, does not Guarantee or Incur Debt under any Credit Facility or any capital markets debt, issued after the Issue Date, such Restricted Subsidiary shall not be required to provide a Subsidiary Guarantee.
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Section 4.18. Covenant Termination .
(a) All of the covenants set forth in Article 4 hereof shall be applicable to the Company and its Restricted Subsidiaries unless the Company reaches Investment Grade Status. After the Company has reached Investment Grade Status, and notwithstanding that the Company may later cease to have an Investment Grade Rating from either or both of the Rating Agencies, the Company and its Restricted Subsidiaries shall be released from their obligations to comply with Sections 4.09, 4.10, 4.12, 4.13, 4.14 and 4.16 but shall remain obligated to comply with the following:
(i) Sections 4.01 through 4.08;
(ii) Section 4.11;
(iii) Section 4.15 (other than clause (x) of Section 4.15(d) (and such clause (x) as referred to in Section 4.15(b)(1)));
(iv) Section 4.17; and
(v) Section 4.19.
(b) The Company and the Subsidiary Guarantors shall also, upon reaching Investment Grade Status, remain obligated to comply with Section 5.01 (other than clauses (a)(v) and (b)(v) thereunder).
(c) The Company shall notify the Trustee upon reaching Investment Grade Status.
Section 4.19. Additional Amounts .
(a) Payments made by the Company under or with respect to the Notes or any of the Subsidiary Guarantors with respect to any Subsidiary Guarantee shall be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, assessment or other governmental charge (“ Taxes ”) unless the withholding or deduction of such Taxes is then required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of (1) any jurisdiction in which the Company or any Subsidiary Guarantor is at any relevant time organized, engaged in business for tax purposes or resident for tax purposes or any political subdivision thereof or therein or (2) any jurisdiction from or through which payment is made by or on behalf of the Company or any Subsidiary Guarantor (including the jurisdiction of any paying agent) or any political subdivision thereof or therein (each, a “ Tax Jurisdiction ”) will at any time be required to be made from any payments made by the Company under or with respect to the Notes or any of the Subsidiary Guarantors with respect to any Subsidiary Guarantee, the Company or the relevant Subsidiary Guarantor, as applicable, will pay to each Holder of Notes that are outstanding on the date of the required payment, such additional amounts (“ Additional Amounts ”) as may be necessary so that the net amount received by the applicable beneficial owner (including the Additional Amounts) after such withholding or deduction (including any such withholding or deduction in respect of Additional Amounts) will equal the amount such beneficial owner would have received if such Taxes had not been withheld or deducted; provided that no Additional Amounts will be payable with respect to a payment to a Holder or beneficial owner of the Notes in respect of the following Taxes (“ Excluded Taxes ”):
(i) Canadian Taxes imposed because the Company does not deal at arm’s-length (within the meaning of the Income Tax Act (Canada)) with such Holder or beneficial owner at the time of making such payment,
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(ii) Taxes imposed by reason of such Holder or beneficial owner being connected with a relevant Tax Jurisdiction or any province or territory thereof otherwise than by the mere holding of the Notes or the receipt of payments in respect of, or enforcement of, such Note or a Subsidiary Guarantee,
(iii) Taxes payable as a result of such Holder’s or beneficial owner’s failure to comply with a timely request of the Company to comply with any certification, identification, documentation or other reporting requirements if compliance is required by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or a reduction in the rate of deduction or withholding of, Taxes imposed by a relevant Tax Jurisdiction to which such Holder or beneficial owner is entitled,
(iv) estate, inheritance, gift, sales, transfer or similar Taxes,
(v) Taxes in respect of which the payment could have been made without deduction or withholding for such Taxes if such Holder or beneficial owner had presented such Notes for payment within 30 days after the date on which such payment on such Notes became due and payable or the date on which payment thereof is duly provided for, whichever is later (except to the extent that such Holder or beneficial owner would have been entitled to Additional Amounts had such Notes been presented on the last day of such 30-day period),
(vi) Canadian Taxes imposed because such payment is deemed (under subsection 214(16) of the Income Tax Act (Canada) ) to be a dividend paid by the Company to such Holder or beneficial owner because such Holder or beneficial owner is a “specified shareholder” (within the meaning of subsection 18(5) of the Income Tax Act (Canada) ),
(vii) any withholding or deduction imposed pursuant to Sections 1471 through 1474 of the Code or any amended or successor version that is substantively comparable and not materially more onerous to comply with, any current or future regulations or official interpretations thereof, and any agreement entered into pursuant to current Section 1471(b)(1) of the Code or any amended or successor provision that is substantively comparable and not materially more onerous to comply with, or
(viii) any combination of the Taxes described in the above clauses in this proviso.
(b) If it is the applicable withholding agent, the Company or the relevant Subsidiary Guarantor shall also:
(i) make such withholding or deduction, and
(ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law.
(c) The Company or the relevant Subsidiary Guarantor will furnish, within 30 days after the date on which the payment of any Taxes is due pursuant to applicable law, to the trustee on behalf of the Holders of Notes that are outstanding on the date of the required payment, copies of tax receipts, if any (or other documentation), evidencing the payments of Taxes made by the Company, or a Subsidiary Guarantor, as the case may be on behalf of the Holders or beneficial owners of the Notes. The Company and the Subsidiary Guarantors will indemnify and hold harmless each Holder (for itself and its applicable beneficial owners) and upon written request reimburse each such Holder for the amount of:
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(i) any Taxes (other than Excluded Taxes) so levied or imposed by a relevant Tax Jurisdiction and paid by such Holder or beneficial owners as a result of payments made under or with respect to the Notes or any Subsidiary Guarantee,
(ii) any liability (including penalties, interest and expense) arising therefrom or with respect thereto, and
(iii) any Taxes (other than Excluded Taxes) imposed by a relevant Tax Jurisdiction with respect to any reimbursement under clause (c)(i) or (ii) above.
In addition to the foregoing, the Company and the Subsidiary Guarantors will also pay and indemnify each Holder (for itself and its applicable beneficial owners) for any present or future stamp, issue, registration, transfer, court or documentary taxes, or any other excise or property taxes, charges or similar levies (including penalties, interest and any other liabilities related thereto) which are levied by any relevant Tax Jurisdiction on the execution, delivery, issuance, or registration of any of the Notes, this Indenture, any Subsidiary Guarantee or any other document referred to therein, or the receipt of any payments with respect thereto, or enforcement of, any of the Notes or any Subsidiary Guarantee.
(d) At least 30 days prior to each date on which any payment under or with respect to the Notes is due and payable (unless such obligation to pay Additional Amounts arises shortly before or after the 30 th day prior to such date, in which case it shall be promptly thereafter), if the Company or a Subsidiary Guarantor becomes obligated to pay Additional Amounts with respect to such payment, the Company or the relevant Subsidiary Guarantor, as applicable, shall deliver to the Trustee an Officers’ Certificate stating the fact that such Additional Amounts shall be payable, and the amounts so payable and shall set forth such other information as is necessary to enable the Trustee to pay such Additional Amounts to the Holders of the Notes on the payment date. Whenever in this Indenture there is mentioned, in any context:
(i) the payment of principal (and premium, if any),
(ii) purchase prices in connection with a repurchase of Notes,
(iii) interest, or
(iv) any other amount payable on or with respect to any of the Notes or any Subsidiary Guarantee,
such mention shall be deemed to include mention of the payment of Additional Amounts provided for in this Section 4.19 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.
(e) The obligations in this Section 4.19 will survive any termination, defeasance or discharge of this Indenture, any transfer by a Holder or beneficial owner of its Notes, and will apply, mutatis mutandis , to any jurisdiction in which any successor Person to the Company or any Subsidiary Guarantor is organized, engaged in business for tax purposes or resident for tax purposes or any jurisdiction from or through which such Person makes any payment on the Notes (or any Subsidiary Guarantee) or any political subdivision thereof or therein.
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ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation and Sale of Assets .
(a) The Company shall not merge, consolidate, liquidate, dissolve, wind-up or amalgamate with or into any other Person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all its Property in any one transaction or series of transactions unless:
(i) the Company shall be the Surviving Person in such merger, consolidation, liquidation, dissolution, winding-up or amalgamation, or the Surviving Person (if other than the Company) formed by such merger, consolidation, liquidation, dissolution, winding-up or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized and existing under the federal laws of Canada or the laws of any province thereof or the laws of the United States of America, any State thereof or the District of Columbia;
(ii) the Surviving Person (if other than the Company) expressly assumes, by supplemental indenture, executed and delivered to the Trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and accrued and unpaid interest on, all the Notes, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be performed by the Company;
(iii) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of the Company, such Property shall have been transferred as an entirety or virtually as an entirety to one Person;
(iv) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (iv) and clause (v) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing;
(v) immediately after giving effect to such transaction or series of transactions on a pro forma basis, either (i) the Company or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Debt under clause (a)(i) of Section 4.09 hereof or (ii) the Consolidated Interest Coverage Ratio of the Company or the Surviving Person, as the case may be, would be equal to or greater than such ratio immediately prior to such transaction; and
(vi) the Company shall deliver, or cause to be delivered, to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such transaction and the supplemental indenture, if any, with respect thereto comply with this Section 5.01 and that all conditions precedent herein provided for relating to such transaction have been satisfied.
(b) The Company shall not permit any Subsidiary Guarantor to merge, consolidate, liquidate, dissolve, wind-up or amalgamate with or into any other Person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all its Property in any one transaction or series of transactions unless:
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(i) the Surviving Person (if not such Subsidiary Guarantor) formed by such merger, consolidation, liquidation, dissolution, winding-up or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall organized and existing under the federal laws of Canada or the laws of any province thereof or the laws of the United States of America, any State thereof or the District of Columbia;
(ii) the Surviving Person (if other than such Subsidiary Guarantor) expressly assumes, by supplemental indenture providing for a Subsidiary Guarantee, executed and delivered to the Trustee by such Surviving Person, the due and punctual performance and observance of all the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee;
(iii) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of such Subsidiary Guarantor, such Property shall have been transferred as an entirety or virtually as an entirety to one Person;
(iv) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (iv) and clause (v) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person, the Company or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person, the Company or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing;
(v) immediately after giving effect to such transaction or series of transactions on a pro forma basis, either (i) the Company would be able to Incur at least $1.00 of additional Debt under clause (a)(i) of Section 4.09 hereof or (ii) the Consolidated Interest Coverage Ratio of the Company would be equal to or greater than such ratio immediately prior to such transaction; and
(vi) the Company shall deliver, or cause to be delivered, to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such transaction and such Subsidiary Guarantee, if any, with respect thereto comply with this Section 5.01 and that all conditions precedent herein provided for relating to such transaction have been satisfied.
(c) This Section 5.01 shall not prohibit any Subsidiary Guarantor from consolidating with, merging into or transferring all or part of its assets to the Company or any other Canadian or U.S. Subsidiary Guarantor. In addition, the foregoing provisions (other than clause (iv) in paragraphs (a) and (b) of this Section 5.01) shall not apply to (i) any transactions which constitute an Asset Sale (or would constitute an Asset Sale, but for the transaction falling within the list of exceptions within the definition of “Asset Sale”) if the Company has not violated Section 4.12 hereof, effective upon consummation of such Asset Sale (or other qualifying transaction referenced within this clause (i)), with the Company thereafter required to apply any Net Available Cash as so required thereunder and (ii) any transactions which result in the release of a Subsidiary Guarantor as described in Section 10.05 hereof.
Section 5.02. Successor Corporation Substituted .
The Surviving Person, if applicable, shall succeed to, and be substituted for, and may exercise every right and power of the Company under this Indenture (or of the Subsidiary Guarantor under the Subsidiary Guarantee, as the case may be), but the predecessor Company in the case of:
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(a) a sale, transfer, assignment, conveyance or other disposition (unless such sale, transfer, assignment, conveyance or other disposition is of all the assets of the Company as an entirety or virtually as an entirety), or
(b) a lease,
shall not be released from any of the obligations or covenants under this Indenture, including with respect to the payment of the Notes.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default .
(a) Each of the following is an “ Event of Default ”:
(i) failure to make the payment of any interest (including Additional Amounts) on the Notes when the same becomes due and payable, and such failure continues for a period of 30 days;
(ii) failure to make the payment of any principal of, or premium, if any, on, any of the Notes when the same becomes due and payable at its Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise;
(iii) failure to comply with the provisions of Section 5.01 hereof and such failure continues for a period of 30 days;
(iv) failure to make a Change of Control Offer pursuant to Section 4.16 hereof;
(v) failure to make an Asset Sale Offer pursuant to Section 4.12 hereof, and such failure continues for 30 days after written notice is given to the Company as provided below;
(vi) failure to comply with the provisions of Section 4.03 hereof and such failure continues for a period of 120 days after written notice is given to the Company as provided below;
(vii) failure to comply with any other covenant or agreement in the Notes or in this Indenture (other than a failure that is the subject of the foregoing clause (i), (ii), (iii), (iv), (v) or (vi)) and such failure continues for 60 days after written notice is given to the Company as provided below;
(viii) a default under any Debt for money borrowed by the Company or any Restricted Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an aggregate amount greater than $75.0 million or its foreign currency equivalent at the time and such acceleration has not been rescinded or annulled within ten Business Days after the date of such acceleration;
(ix) any judgment or judgments for the payment of money in an aggregate amount in excess of $75.0 million (or its foreign currency equivalent at the time) that shall be rendered against the Company or any Restricted Subsidiary and that shall not be waived, satisfied (net of
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any amounts that are reduced by insurance or bonded) or discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect;
(x) the Company or any of its Significant Subsidiaries:
(A) commences a voluntary case or gives notice of intention to make a proposal under any Bankruptcy Law;
(B) consents to the entry of an order for relief against it in an involuntary case or consents to its dissolution or winding-up;
(C) consents to the appointment of a custodian of it or for all or substantially all of its property;
(D) makes a general assignment for the benefit of its creditors;
(E) admits in writing its inability to pay its debts as they become due or otherwise admits its insolvency; or
(F) seeks a stay of proceedings against it or proposes or gives notice of intention to propose a compromise, arrangement or reorganization of any of its debts or obligations under any Bankruptcy Law;
(xi) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(A) is for relief against the Company or any of its Significant Subsidiaries in an involuntary case; or
(B) appoints a receiver, interim receiver, receiver and manager, liquidator, trustee or custodian of the Company or any of its Significant Subsidiaries or for all or substantially all of the property of the Company or any of its Significant Subsidiaries;
(C) orders the liquidation dissolution or winding-up of the Company or any of its Significant Subsidiaries; or
(D) orders the presentation of any plan or arrangement, compromise or reorganization of the Company or any of its Significant Subsidiaries or any group of subsidiaries that when taken together would constitute Significant Subsidiaries;
and the order or decree remains unstayed and in effect for 60 consecutive days; and
(xii) any Subsidiary Guarantee of one or more Subsidiary Guarantors, which by themselves or taken together would constitute a Significant Subsidiary, ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guarantee or this Indenture) or any Subsidiary Guarantor of one or more Subsidiary Guarantors, which by themselves or taken together would constitute a Significant Subsidiary, denies or disaffirms its obligations under its Subsidiary Guarantee.
A Default under clause (v), (vi), (vii) or (viii) is not an Event of Default until the trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding notify the
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Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.”
Section 6.02. Acceleration .
If any Event of Default (other than those of the type described in Section 6.01(x) or (xi)) shall have occurred and is continuing, the Trustee may, and the Trustee upon the request of Holders of 25% in principal amount of the outstanding Notes shall, or the Holders of at least 25% in principal amount of outstanding Notes may, declare the principal of all the Notes, together with all accrued and unpaid interest, premium, if any, to be due and payable by notice in writing to the Company and the Trustee specifying the respective Event of Default and that such notice is a notice of acceleration (the “ Acceleration Notice ”), and the same shall become immediately due and payable.
In the case of an Event of Default specified in Section (x) or (xi) of Section 6.01 hereof, such amount with respect to all the Notes will become due and payable immediately without any declaration or other act on the part of the Trustee or the Holders of the Notes. Holders may not enforce this Indenture or the Notes except as provided in this Indenture.
At any time after a declaration of acceleration with respect to the Notes, but before a judgment or decree based on acceleration is obtained by the Trustee, the Holders of a majority in principal amount of the Notes then outstanding (by notice to the Trustee) may rescind and cancel that declaration and its consequences if:
(a) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction;
(b) all existing Defaults and Events of Default have been cured or waived except nonpayment of principal of or interest on the Notes that has become due solely by such declaration of acceleration;
(c) to the extent the payment of such interest is lawful, interest (at the same rate specified in the Notes) on overdue installments of interest and overdue payments of principal which has become due otherwise than by such declaration of acceleration has been paid;
(d) the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and advances; and
(e) in the event of the cure or waiver of an Event of Default of the type described in Section 6.01(x) or (xi), the Trustee has received an Officers’ Certificate and Opinion of Counsel that such Event of Default has been cured or waived.
In the case of an Event of Default occurring by reason of any willful action or inaction taken or not taken by the Company or on the Company’s behalf with the intention of avoiding payment of the premium that the Company would have been required to pay if the Company had then elected to redeem the Notes pursuant to Section 3.07 hereof, an equivalent premium will also become and be immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to July 15, 2018, by reason of any willful action or inaction taken or not taken by the Company or on the Company’s behalf with the intention of avoiding the prohibition on redemption of the Notes prior to July 15, 2018, then the premium specified in Section 3.07 will also become immediately due and payable to the extent permitted by law upon acceleration of the Notes.
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Section 6.03. Other Remedies .
If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults .
The Holders of a majority in principal amount of the Notes may waive by consent (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) any then existing or potential Default and its consequences, except a default in the payment of the principal of or interest on any Notes. In the event of any Event of Default specified in clause (a)(vii) of Section 6.01 hereof, such Event of Default and all consequences of that Event of Default, including without limitation any acceleration or resulting payment default, will be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders of the Notes, if within 60 days after the Event of Default arose:
(a) the Debt that is the basis for the Event of Default has been discharged;
(b) the holders of that Debt have rescinded or waived the acceleration, notice or action, as the case may be, giving rise to the Event of Default; or
(c) if the default that is the basis for such Event of Default has been cured.
When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right.
Section 6.05. Control by Majority .
Subject to Section 7.01, Section 7.02(f) (including the Trustee’s receipt of the security or indemnification described therein) and Section 7.07, in case an Event of Default shall occur and be continuing, the Holders of a majority in aggregate principal amount of the Notes then outstanding will 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 Notes.
Section 6.06. Limitation on Suits .
No Holder will have any right to institute any proceeding with respect to this Indenture, or for the appointment of a receiver or trustee, or for any remedy thereunder, unless:
(a) such Holder has previously given to the Trustee written notice of a continuing Event of Default,
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(b) Holders of at least 25% in aggregate principal amount of the Notes then outstanding have made a written request and offered indemnity to the Trustee to institute such proceeding as trustee, and
(c) the Trustee shall not have received from the Holders of a majority in aggregate principal amount of the Notes then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days.
A Holder may not use this Indenture to affect, disturb or prejudice the rights of another Holder or to obtain a preference or priority over another Holder.
Section 6.07. Rights of Holders to Receive Payment .
Notwithstanding any other provision of this Indenture (including, without limitation, Section 6.06), the right of any Holder to receive payment of principal, premium, if any, and interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.
Section 6.08. Collection Suit by Trustee .
If an Event of Default specified in Section 6.01(i) or (ii) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium, if any, and interest then due and owing (together with interest on overdue principal and, to the extent lawful, interest) and 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.
Section 6.09. Trustee May File Proofs of Claim .
The Trustee is authorized to file such proofs of claim and 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 agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company, the Subsidiary Guarantors (or any other obligor upon the Notes), their creditors or their property and shall be entitled and empowered to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matter and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian 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 to 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 7.07 hereof. To the extent that any such compensation, expenses and advances of the Trustee and its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, moneys, securities and any other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or any plan of reorganization or arrangement or otherwise. 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 Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
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Section 6.10. Priorities .
If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order:
First : to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
Second : to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and
Third : to the Company or to such party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs .
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 or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee .
(a) If an Event of Default which the Trustee has, or is deemed to have, notice hereunder has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee undertakes to perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided , however , that in the case of any such certificates or opinions which are specifically required to be
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furnished to the Trustee pursuant to this Indenture, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein or otherwise verify the contents thereof).
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof; and
(4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) Except for information provided by the Trustee concerning the Trustee, the Trustee shall have no responsibility for any information in any prospectus or other disclosure material distributed with respect to the Notes.
Section 7.02. Rights of Trustee .
(a) The Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in any such document. Any facsimile or portable document format signature of any Person on a document required or permitted in this Indenture to be delivered to the Trustee shall constitute a valid and binding execution thereof by such Person.
(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel of its choice and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) 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 the misconduct or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture, provided , however that the Trustee’s conduct does not constitute willful misconduct or negligence.
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(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(f) 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 unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has received written notice of any event which is in fact such a Default or Event of Default from the Company or the Holders of 25% in aggregate principal amount of the outstanding Notes, and such notice references the specific Default or Event of Default, the Notes and this Indenture and, in the absence of any such notice, the Trustee may conclusively assume that no such Default or Event of Default exists.
(h) Money held by the Trustee in trust hereunder 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 in writing with the Company.
(i) The Trustee shall not be required to give any bond or surety in respect of the performance of its power and duties hereunder.
(j) The Trustee shall have no duty to inquire as to the performance of the Company’s covenants herein.
(k) The Trustee’s immunities and protections from liability and its right to indemnification in connection with the performance of its duties under this Indenture shall extend to the Trustee’s officers, directors, agents, attorneys and employees. Such immunities and protections and right to indemnification, together with the Trustee’s right to compensation, shall survive the Trustee’s resignation or removal, the defeasance or discharge of this Indenture and final payment of the Notes.
(l) The right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty to do so.
(m) The Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.
(n) In no event shall the Trustee be liable for any special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(o) The permissive rights of the Trustee enumerated herein shall not be construed as duties.
Section 7.03. Individual Rights of Trustee .
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it
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would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must comply with TIA § 310. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee’s Disclaimer .
The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults .
If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders a notice of the Default or Event of Default within 90 days after it occurs unless such Default or Event of Default has since been cured. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders.
Section 7.06. Reports by Trustee to Holders .
Within 60 days after each July 15 beginning with the July 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders a brief report dated as of such reporting date that complies with TIA § 313(a) (but if no event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA § 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA § 313(c).
A copy of each report at the time of its mailing to the Holders shall be mailed to the Company and filed with the Commission and each stock exchange on which the Notes are listed in accordance with TIA § 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange and any delisting thereof.
Section 7.07. Compensation and Indemnity .
The Company shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder as the Company and the Trustee shall agree in writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee) or any predecessor Trustee (in its capacity as Trustee) against any and all losses, claims, damages, penalties, fines, liabilities or expenses, including reasonable incidental and out-of-pocket expenses and reasonable attorneys' fees (“ losses ”) incurred by it arising out of or in connection with the acceptance or administration of its duties
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under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim, and the Trustee shall cooperate in the defense. The Trustee may have separate counsel, and the Company shall pay the reasonable fees and expenses of such counsel, if the Trustee has been reasonably advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. Notwithstanding the forgoing, the Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee and caused by the Trustee’s own willful misconduct, gross negligence or bad faith.
The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture, the resignation or removal of the Trustee and payment in full of the Notes.
To secure the Company’s payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal, premium, if any, and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(a)(x) or (a)(xi) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee .
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time upon 30 days prior notice to the Company and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the “ retiring Trustee ”), the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the
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Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction, at the expense of the Company, for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. Subject to the Lien provided for in Section 7.07 hereof, the retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc .
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or banking association, the successor corporation or banking association without any further act shall, if such successor corporation or banking association is otherwise eligible hereunder, be the successor Trustee.
Section 7.10. Eligibility; Disqualification .
There shall at all times be a Trustee hereunder that is a Person organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 (or a wholly-owned subsidiary of a bank or trust company, or of a bank holding company, the principal subsidiary of which is a bank or trust company having a combined capital and surplus of at least $50,000,000) as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).
Section 7.11. Preferential Collection of Claims Against Company .
The Trustee is subject to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.
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ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance .
The Company may, at its option and at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the applicable conditions set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge .
Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company shall, subject to the satisfaction of the applicable conditions set forth in Section 8.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”) and each Guarantor shall be released from all of its obligations under its Guarantee. For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Debt represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (a), (b), (c) and (d) below, and to have satisfied all its other obligations under the Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, or interest on such Notes when such payments are due, (b) the Company’s obligations with respect to such Notes under Article 2 and the payment terms of the Notes, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company’s obligations in connection therewith and (d) this Article 8. If the Company exercises under Section 8.01 hereof the option applicable to this Section 8.02, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance .
Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company shall, subject to the satisfaction of the applicable conditions set forth in Section 8.04 hereof, be released from its obligations under the covenants contained in Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.09 through 4.17 hereof, and the operation of Sections 5.01(a)(iv) and (a)(v) and Sections 5.01(b) hereof, with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “ Covenant Defeasance ”) and each Guarantor shall be released from all of its obligations under its Guarantee with respect to such covenants in connection with such outstanding Notes and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes may not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in
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any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. If the Company exercises under Section 8.01 hereof the option applicable to this Section 8.03, subject to the satisfaction of the applicable conditions set forth in Section 8.04 hereof, payment of the Notes may not be accelerated because of an Event of Default specified in clause (a)(iii), (a)(iv), (a)(v), (a)(vi), (a)(vii) (with respect to the covenants contained in Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.09 through 4.17 hereof), (a)(viii), (a)(ix), (a)(x), (a)(xi) or (a)(xii) (but in the case of (a)(x) and (a)(xi) of Section 6.01 hereof, with respect to Significant Subsidiaries only) or because of the Company’s failure to comply with clauses (a)(iv), (a)(v), (b) of Section 5.01.
Section 8.04. Conditions to Legal or Covenant Defeasance .
The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes.
Legal Defeasance or Covenant Defeasance may be exercised only if:
(a) the Company irrevocably deposits with the Trustee, in trust (the “ defeasance trust ”), for the benefit of the Holders of the Notes, cash in U.S. dollars, U.S. Government Obligations, or a combination of cash in U.S. dollars and U.S. Government Obligations for the payment of principal, premium, if any, and interest on the Notes to maturity or redemption, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to such redemption date;
(b) the Company, if required by the Trustee, delivers to the Trustee a certificate from a firm of independent public accountants of recognized international standing expressing their opinion that the payments of principal, premium, if any, and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and accrued and unpaid interest when due on all the Notes to maturity or redemption, as the case may be;
(c) no Default or Event of Default has occurred and is continuing as of the date of such deposit of funds with the Trustee and after giving effect thereto;
(d) in the case of Legal Defeasance, the Company delivers to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling and/or from the Canada Reserve Agency an advance tax ruling, as applicable, or (b) since the date hereof, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders and beneficial owners of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax or Canadian federal, provincial or territorial income or withholding tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax or Canadian federal, provincial or territorial income or withholding tax, as applicable, on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;
(e) [reserved];
(f) in the case of Covenant Defeasance, the Company delivers to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders and beneficial owners of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax or Canadian federal, provincial or territorial income or withholding tax
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purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax or Canadian federal, provincial or territorial income tax or withholding tax, as applicable, 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;
(g) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound;
(h) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended;
(i) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to Legal Defeasance or Covenant Defeasance have been complied with; and
(j) notwithstanding the foregoing, the Opinion of Counsel required by clause (d) above with respect to Legal Defeasance need not be delivered if all Notes not theretofore delivered to the Trustee for cancellation (A) have become due and payable, (B) will become due and payable on the maturity date within one year or (C) as to which a redemption notice has been or will be given calling the Notes 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.
Section 8.05. Deposited Cash and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions .
Subject to Section 8.06 hereof, all cash and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such cash and securities need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Obligations deposited pursuant to Section 8.04 hereof 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 Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any cash or U.S. Government Obligations held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent certified public accountants of recognized international standing expressed in a written certification thereof delivered to the Trustee (which may be the certification delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
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Section 8.06. Repayment to Company .
Any cash or U.S. Government Obligations deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder shall thereafter, as an unsecured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such cash and securities, 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 The New York Times and The Wall Street Journal (national edition), notice that such cash and securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such cash and securities then remaining shall be repaid to the Company.
Section 8.07. Reinstatement .
If the Trustee or Paying Agent is unable to apply any cash or U.S. Government Obligations in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such cash and securities in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided , however , that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders to receive such payment from the cash and securities held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes .
Notwithstanding Section 9.02 hereof, the Company and the Trustee may amend or supplement this Indenture or the Notes without the consent of any Holder to:
(a) cure any ambiguity, omission, defect or inconsistency;
(b) provide for the assumption by a Surviving Person of the obligations of the Company under this Indenture;
(c) provide for uncertificated Notes in addition to or in place of certificated Notes ( provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);
(d) add additional Subsidiary Guarantees with respect to the Notes or to release Subsidiary Guarantors from Subsidiary Guarantees as provided or permitted under this Indenture;
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(e) make any change that would provide additional rights or benefits to the Holders or that does not adversely affect the legal rights hereunder of any such Holder;
(f) provide for the issuance of Additional Notes in accordance with this Indenture;
(g) make any change to comply with any requirement of the Commission in order to effect or maintain the qualification of this Indenture under the TIA or other applicable trust indenture legislation; and
(h) to conform the text of this Indenture or the Notes to any provision of the “Description of Notes” section in the Offering Memorandum to the extent that such provision therein is intended to be a substantially verbatim recitation of a provision in this Indenture or the Notes.
Section 9.02. With Consent of Holders of Notes .
Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture and the Notes with the consent of the Holders of a majority in principal amount of the Notes, including Additional Notes, if any, then outstanding voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (except a continuing Default or Event of Default in the payment of principal, premium, if any, or interest on the Notes) or compliance with any provision of this Indenture or the Notes (except for certain covenants and provisions of this Indenture which cannot be amended without the consent of each Holder) may be waived with the consent of the Holders of a majority in principal amount of the Notes, including Additional Notes, if any, then outstanding voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes).
Without the consent of each Holder affected (whether in the aggregate holding a majority in principal amount of Notes or not), an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(b) reduce the rate of or change the time for payment of interest on any Notes;
(c) reduce the principal of or change the Stated Maturity of any Notes or change the date on which any Notes may be subject to redemption or repurchase (which excludes minimum notice requirements), or reduce the redemption or repurchase price for those Notes (except, in the case of repurchases, as would otherwise be permitted under clauses (g) and (j) hereof);
(d) make any Note payable in money other than that stated in the Note and this Indenture;
(e) impair the right of any Holder to receive payment of principal, premium and interest on that Holder’s Notes on or after the due dates for those payments, or to bring suit to enforce that payment on or with respect to such Holder’s Notes or any Subsidiary Guarantee;
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(f) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed (which excludes modifying minimum notice requirements), as described in Sections 3.07 and 4.19 hereof;
(g) after the Company’s obligation to purchase the Notes arises under Section 4.16 hereof, amend, modify or change the obligation of the Company to make or consummate a Change of Control Offer or waive any default in the performance of that Change of Control Offer or modify any of the provisions or definitions with respect to any such offer;
(h) subordinate the Notes or any Subsidiary Guarantee to any other obligation of the Company or the applicable Subsidiary Guarantor (for the avoidance of doubt, the granting of a security interest in any Property shall not constitute a subordinated interest);
(i) make any change to this Indenture or the Notes that would result in the Company or any Subsidiary Guarantor being required to make any withholding or deduction from payments made under or with respect to the Notes (including payments made with pursuant to any Subsidiary Guarantee);
(j) make any change in the provisions of this Article 9 which require the consent of each Holder;
(k) make any change in the provisions of Section 4.19 hereof that adversely affects the rights of any Holder or beneficial owner or amend the terms of the Notes or this Indenture in a way that would result in a loss to any Holder of an exemption from any of the Taxes described thereunder;
(l) at any time after the Company is obligated to make an Asset Sale Offer pursuant to Section 4.12 hereof, change the time at which such offer to purchase must be made or at which the Notes must be repurchased pursuant thereto; or
(m) make any change in any Subsidiary Guarantee that would adversely affect the rights of Holders to receive payments under the Subsidiary Guarantee, other than any release of a Subsidiary Guarantor in accordance with the provisions of this Indenture.
The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any waiver or supplemental indenture. If a record date is fixed, the Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to consent to such waiver or supplemental indenture, whether or not such Holders remain Holders after such record date; provided that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 120 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail or deliver to the Holder of each Note affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail or deliver such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or
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supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes, including Additional Notes, if any, then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture or the Notes.
Section 9.03. Compliance with Trust Indenture Act .
Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended or supplemental indenture that complies with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents .
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion thereof that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to its Note or portion thereof if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective (notwithstanding that it may become operative at a later date, whether upon the satisfaction of certain conditions or otherwise). An amendment, supplement or waiver becomes effective (notwithstanding that it may become operative at a later date, whether upon the satisfaction of certain conditions or otherwise) in accordance with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes .
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc .
In executing any amended or supplemental indenture, the Trustee shall receive and (subject to Section 7.01 hereof) shall be fully protected in conclusively relying upon in addition to the documents required by Section 12.04, an Officers’ Certificate and an Opinion of Counsel stating that (i) the execution of such amended or supplemental indenture is authorized or permitted by this Indenture, (ii) such amended or supplemental indenture is the valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to customary exceptions, and (iii) such amended or supplemental indenture complies with the provisions hereof (including Section 9.03); provided , however , that such Opinion of Counsel need not address the matters set forth in clause (ii) above in connection with any supplemental indenture executed and delivered to the Trustee the sole purpose of which is to add an additional Subsidiary Guarantor pursuant to Section 4.17 hereof. The Trustee may, but shall not be obligated to, sign any amended or supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture.
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ARTICLE 10.
SUBSIDIARY GUARANTEES
Section 10.01. Subsidiary Guarantees .
Subject to this Article 10, each of the Subsidiary Guarantors hereby unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns that: (a) the principal of, premium, if any, and interest on the Notes shall be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, and interest on, the Notes, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration pursuant to Section 6.02 hereof, redemption or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
Each Subsidiary Guarantor hereby agrees that its obligations with regard to this Subsidiary Guarantee shall be joint and several, unconditional, irrespective of the validity or enforceability of the Notes or the obligations of the Company under this Indenture, the absence of any action to enforce the same, the recovery of any judgment against the Company or any other obligor with respect to this Indenture, the Notes or the Obligations of the Company under this Indenture or the Notes, any action to enforce the same or any other circumstances (other than complete performance) which might otherwise constitute a legal or equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary Guarantor further, to the extent permitted by law, waives and relinquishes all claims, rights and remedies accorded by applicable law to guarantors and agrees not to assert or take advantage of any such claims, rights or remedies, including but not limited to: (a) any right to require any of the Trustee, the Holders or the Company (each a “ Benefited Party ”), as a condition of payment or performance by such Subsidiary Guarantor, to (1) proceed against the Company, any other guarantor (including any other Subsidiary Guarantor) of the Obligations under the Subsidiary Guarantees or any other Person, (2) proceed against or exhaust any security held from the Company, any such other guarantor or any other Person, (3) proceed against or have resort to any balance of any deposit account or credit on the books of any Benefited Party in favor of the Company or any other Person, or (4) pursue any other remedy in the power of any Benefited Party whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of the Company including any defense based on or arising out of the lack of validity or the unenforceability of the Obligations under the Subsidiary Guarantees or any agreement or instrument relating thereto or by reason of the cessation of the liability of the Company from any cause other than payment in full of the Obligations under the Subsidiary Guarantees; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Benefited Party’s errors or omissions in the administration of the Obligations under the Subsidiary Guarantees, except behavior which amounts to bad faith; (e)(1) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of the Subsidiary Guarantees and any legal or equitable discharge of such Subsidiary Guarantor’s obligations hereunder, (2) the benefit of any statute of limitations affecting such Subsidiary Guarantor’s liability hereunder or the enforcement hereof, (3) any rights to set-offs, recoupments and counterclaims and (4) promptness, diligence and any requirement that any Benefited Party protect, secure, perfect or insure any security interest or lien or any
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property subject thereto; (f) notices, demands, presentations, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of the Subsidiary Guarantees, notices of default under the Notes or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Obligations under the Subsidiary Guarantees or any agreement related thereto, and notices of any extension of credit to the Company and any right to consent to any thereof; (g) to the extent permitted under applicable law, the benefits of any “One Action” rule; and (h) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of the Subsidiary Guarantees. Except to the extent expressly provided herein, including Sections 8.02, 8.03 and 10.05 hereof, each Subsidiary Guarantor hereby covenants that its Subsidiary Guarantee shall not be discharged except by complete performance of the obligations contained in its Subsidiary Guarantee and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors, any amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 6.02 hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby and (y) in the event of any declaration of acceleration of such obligations as provided in Section 6.02 hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantee.
Section 10.02. Limitation on Subsidiary Guarantor Liability .
Each Subsidiary Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law or Canadian federal or provincial law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of such Subsidiary Guarantor under this Article 10 shall be limited to the maximum amount as shall, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such laws, including, if applicable, its guarantee of all obligations under the Credit Facility, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under this Article 10, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.
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Section 10.03. Evidence of Subsidiary Guarantee .
To evidence its Subsidiary Guarantee set forth in Section 10.01 hereof, each Subsidiary Guarantor hereby agrees that this Indenture shall be executed on behalf of such Subsidiary Guarantor by an Officer of such Subsidiary Guarantor.
Each Person that is required to become a Subsidiary Guarantor after the Issue Date pursuant to Section 4.17 of this Indenture shall execute and deliver to the Trustee a supplemental indenture substantially in the form of Exhibit D hereto which subjects such Person to the provisions of this Indenture as a guarantor of the Notes.
If an Officer whose signature is on this Indenture or on the Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantors.
Section 10.04. Subsidiary Guarantors May Consolidate, etc., on Certain Terms .
Except as otherwise provided in Section 10.05 hereof, no Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person whether or not affiliated with such Subsidiary Guarantor unless:
(a) subject to Section 10.05 hereof, the Person formed by or surviving any such consolidation or merger (if other than a Subsidiary Guarantor or the Company) unconditionally assumes all the obligations of such Subsidiary Guarantor, pursuant to a supplemental indenture under this Indenture, the Subsidiary Guarantee; or
(b) the Subsidiary Guarantor complies with the requirements of Article 5 hereof.
In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee of the Subsidiary Guarantee and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Subsidiary Guarantor, such successor Person shall succeed to and be substituted for the Subsidiary Guarantor with the same effect as if it had been named herein as a Subsidiary Guarantor. All the Subsidiary Guarantees so issued shall in all respects have the same legal rank and benefit under this Indenture as the Subsidiary Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Subsidiary Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses (a) and (b) above, nothing contained in this Indenture or in any of the Notes shall prevent any consolidation or merger of a Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor, or shall prevent any sale or conveyance of the property of a Subsidiary Guarantor as an entirety or substantially as an entirety to the Company or another Subsidiary Guarantor.
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Section 10.05. Releases Following Sale or Other Disposition of Assets .
In the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, in each case to a Person that is not (either before or after giving effect to such transactions) a Subsidiary of the Company, then (1) such Subsidiary Guarantor (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor) shall be released and relieved of any obligations under its Subsidiary Guarantee and (2) the corporation acquiring the property (in the event of a sale or other disposition, by way of merger, consolidation or otherwise, of all or substantially all of the assets of such Subsidiary Guarantor) shall not be required to deliver a Subsidiary Guarantee. Upon delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that such sale or other disposition was made by the Company in accordance with the provisions of this Indenture, including without limitation Section 4.12 hereof to the extent applicable, if applicable ( provided that such opinion shall not, to the extent Section 4.12 is applicable, address the required application of Net Available Cash, if any), the Trustee shall execute any documents reasonably required in order to evidence the release of any Subsidiary Guarantor from its obligations under its Subsidiary Guarantee.
Any Subsidiary Guarantor not released from its obligations under its Subsidiary Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Subsidiary Guarantor under this Indenture as provided in this Article 10.
ARTICLE 11.
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge .
This Indenture will be discharged and will cease to be of further effect, except as to surviving rights of registration of transfer or exchange of the Notes, as to all Notes issued hereunder, when:
(a) either:
(i) all Notes that have been previously authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has previously been deposited in trust or segregated and held in trust by the Company and is thereafter repaid to the Company or discharged from the trust) have been delivered to the Trustee for cancellation; or
(ii) all Notes that have not been previously delivered to the Trustee for cancellation (A) have become due and payable or (B) will become due and payable at their maturity within one year or (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of a notice of redemption by the Trustee, and the Company has irrevocably deposited or caused to be deposited with the Trustee solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Debt on the Notes not previously delivered to the Trustee for cancellation for principal, premium, if any, and interest on the Notes to the date of deposit, in the case of Notes that have become due
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and payable, or to the Stated Maturity or redemption date, as the case may be (for the avoidance of doubt, in the case of a discharge that occurs in connection with a redemption that is to occur on a redemption date, and the amount required to pay and discharge the entire Debt on the Notes with certainty, the amount to be deposited shall be the amount that, as of the date of such deposit, is deemed sufficient to make such payment and discharge on the redemption date, in the good faith determination of the Company as set forth in an Officers’ Certificate);
(b) the Company has paid or caused to be paid all other sums payable by it under this Indenture; and
(c) the Company delivers to the Trustee an Officers’ Certificate and Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been satisfied.
Section 11.02. Deposited Cash and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions .
Subject to Section 11.03 hereof, all cash and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 11.02, the “Trustee”) pursuant to Section 11.01 hereof in respect of the outstanding Notes shall be held and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such cash and securities need not be segregated from other funds except to the extent required by law.
Section 11.03. Repayment to Company .
Any cash or U.S. Government Obligations deposited with the Trustee or any Paying Agent, or then held by the Company, for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged; and the Holder shall thereafter, as an unsecured creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such cash and securities, 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 The New York Times and The Wall Street Journal (national edition), notice that such cash and securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such cash and securities then remaining will be repaid to the Company.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls .
If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, including the duties imposed by TIA §318(c), the provision required by the TIA, including the duties imposed by TIA §318(c), shall control.
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Section 12.02. Notices .
Any notice or communication by the Company or the Trustee to the other is duly given if in writing and delivered in person or mailed by first class mail (registered or certified, return receipt requested), facsimile or overnight air courier guaranteeing next-day delivery, to the other’s address:
If to the Company or a Subsidiary
Guarantor:
Cascades Inc.
404 Marie-Victorin Blvd.
P.O. Box 30
Kingsey Falls, Québec
Canada J0A 1B0
Attention: Chief Financial Officer
Facsimile No.: (819) 363-5155
With a copy to:
Jones Day
222 East 41st Street
New York, New York 10017
Attention: J. Eric Maki, Esq.
Facsimile No.: (212) 755-7306
If to the Trustee:
Wells Fargo Bank, National Association
150 East 42nd Street, 40th Floor
New York, New York 10017
Attention: Corporate Trust Services — Administrator for Cascades Inc.
Facsimile No.: (917) 260-1593
The Company or the Trustee, by notice to the other, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to the Trustee) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; upon being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if via facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next-day delivery. All notices and communications to the Trustee shall be deemed duly given and effective only upon receipt.
Any notice or communication to a Holder shall be delivered to the facilities of DTC or mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next-day delivery to its address shown on the Security Register. Any notice or communication shall also be so mailed to any Person described in TIA § 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.
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If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes .
Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent .
Upon any request or application by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee:
(a) an Officers’ Certificate (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with.
Section 12.05. Statements Required in Certificate or Opinion .
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
With respect to matters of fact, an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.
Section 12.06. Rules by Trustee and Agents .
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
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Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders .
No past, present or future director, officer, employee, incorporator or stockholder of the Company or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or of the Subsidiary Guarantors under the Notes, this Indenture, the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.
Section 12.08. Governing Law; Waiver of Jury Trial .
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
EACH OF THE PARTIES HERETO AND EACH HOLDER OF A SECURITY BY ITS ACCEPTANCE THEREOF, HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING AMONG THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 12.09. No Adverse Interpretation of Other Agreements .
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 12.10. Successors .
All covenants and agreements of the Company in this Indenture and the Notes shall bind its successors. All covenants and agreements of the Trustee in this Indenture shall bind its successors.
Section 12.11. Severability .
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12. Consent to Jurisdiction and Service of Process .
(a) The Company irrevocably consents to the jurisdiction of the courts of the State of New York and the courts of the United States of America located in the Borough of Manhattan, City and State of New York over any suit, action or proceeding with respect to this Indenture or the transactions contemplated hereby. The Company waives any objection that it may have to the venue of any suit, action or proceeding with respect to this Indenture or the transactions contemplated hereby in the courts of the State of New York or the courts of the United States of America, in each case, located in the Borough of Manhattan, City and State of New York, or that such suit, action or proceeding brought in the
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courts of the State of New York or the United States of America, in each case, located in the Borough of Manhattan, City and State of New York was brought in an inconvenient court and agrees not to plead or claim the same.
(b) The Company irrevocably appoints Cascades USA Inc., as its authorized agent in the State of New York upon which process may be served in any such suit or proceedings, and agrees that service of process upon such agent, and written notice of said service to Cascades USA Inc., by the person serving the same to the address provided in Section 12.02 hereof, shall be deemed in every respect effective service of process upon the Company in any such suit or proceeding. The Company further agrees to take any and all action as may be necessary to maintain such designation and appointment of such agent in full force and effect for a period of 10 years from the date of this Indenture.
Section 12.13. Conversion of Currency .
The Company covenants and agrees that the following provisions shall apply to conversion of currency in the case of the Notes and this Indenture:
(a) (i) If, for the purpose of obtaining judgment in, or enforcing the judgment of, any court in any country, it becomes necessary to convert into a currency (the “ judgment currency ”) an amount due in any other currency (the “ Base Currency ”), then the conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which the judgment is given or the order of enforcement is made, as the case may be (unless a court shall otherwise determine).
(b) (ii) If there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given or an order of enforcement is made, as the case may be (or such other date as a court shall determine), and the date of receipt of the amount due, the Company will pay such additional (or, as the case may be, such lesser) amount, if any, as may be necessary so that the amount paid in the judgment currency when converted at the rate of exchange prevailing on the date of receipt will produce the amount in the Base Currency originally due.
(c) In the event of the winding-up of the Company at any time while any amount or damages owing under the Notes and this Indenture, or any judgment or order rendered in respect thereof, shall remain outstanding, the Company shall indemnify and hold the Holders and the Trustee harmless against any deficiency arising or resulting from any variation in rates of exchange between (1) the date as of which the equivalent of the amount in U.S. Dollars or Canadian Dollars, as the case may be, due or contingently due under the Notes and this Indenture (other than under this Subsection (b)) is calculated for the purposes of such winding-up and (2) the final date for the filing of proofs of claim in such winding-up. For the purpose of this Subsection (b), the final date for the filing of proofs of claim in the winding-up of the Company shall be the date fixed by the liquidator or otherwise in accordance with the relevant provisions of applicable law as being the latest practicable date as at which liabilities of the Company may be ascertained for such winding-up prior to payment by the liquidator or otherwise in respect thereto.
(d) The obligations contained in Subsections (a)(ii) and (b) of this Section 12.13 shall constitute obligations of the Company separate and independent from its other respective obligations under the Notes and this Indenture, shall give rise to separate and independent causes of action against the Company, shall apply irrespective of any waiver or extension granted by any Holder or the Trustee or any of them from time to time and shall continue in full force and effect notwithstanding any judgment or order or the filing of any proof of claim in the winding-up of the
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Company for a liquidated sum in respect of amounts due hereunder (other than under Subsection (b) above) or under any such judgment or order. Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Holders or the Trustee, as the case may be, and no proof or evidence of any actual loss shall be required by the Company or the liquidator or otherwise any of them. In the case of Subsection (b) above, the amount of such deficiency shall not be deemed to be reduced by any variation in rates of exchange occurring between the said final date and the date of any liquidating distribution.
(e) The term “rate(s) of exchange” shall mean the noon buying rate for cable transfers as certified for customs purposes by the Bank of Canada between the Base Currency and judgment currency other than the Base Currency referred to in Subsections (a) and (b) above and includes any premiums and costs of exchange payable.
(f) The Trustee shall have no duty or liability with respect to monitoring or enforcing this Section 12.13.
Section 12.14. Currency Equivalent .
Except as provided in Section 12.13 hereof, for purposes of the construction of the terms of this Indenture or of the Notes, in the event that any amount is stated herein in the currency of one nation (the “ First Currency ”), as of any date such amount shall also be deemed to represent the amount in the currency of any other relevant nation (the “ Other Currency ”) which is required to purchase such amount in the First Currency at the noon buying rate for cable transfers confirmed for customs purposes by the Bank of Canada between the First Currency and Other Currency on the date of determination.
Section 12.15. Counterpart Originals .
The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.
Section 12.16. Table of Contents, Headings, etc .
The Table of Contents, Cross Reference Table and Headings in this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
Section 12.17. U.S.A. Patriot Act
The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as is required to satisfy the requirements of the U.S.A. Patriot Act.
[Signatures on following page]
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SIGNATURES
COMPANY: | |||
CASCADES INC. | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Vice President, Legal Affairs and | ||
Corporate Secretary |
GUARANTORS: | |
401 47 th STREET HOLDING LLC | |
4626 ROYAL AVENUE HOLDING LLC | |
CASCADES HOLDING US INC. | |
CASCADES TISSUE GROUP – NEW YORK INC. | |
CASCADES USA INC. | |
NORAMPAC INDUSTRIES INC. | |
NORAMPAC NEW YORK CITY INC. | |
NORAMPAC SCHENECTADY INC. |
By: | /s/ Louise Paul | ||
Name: | Louise Paul | ||
Title: | Assistant Secretary |
7251637 CANADA INC. | |
7678169 CANADA INC. | |
CASCADES CANADA ULC | |
CASCADES FINE PAPERS GROUP INC. | |
CASCADES GIE INC. | |
CASCADES PAPERBOARD INTERNATIONAL INC. | |
CASCADES MARITIME INC. | |
CASCADES TENDERCO INC. | |
CASCADES TRANSPORT INC. | |
CASCADES TRANSPORT CABANO INC. | |
KINGSEY FALLS INVESTMENTS INC. | |
NORAMPAC EXPORT SALES CORP. |
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Secretary or Assistant Secretary |
[Cascades - Signature Page to Indenture]
TRUSTEE: | |||
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee | |||
By: | /s/ Martin Reed | ||
Name: | Martin Reed | ||
Title: | Vice President |
[Cascades - Signature Page to Indenture]
EXHIBIT A
(Face of Note)
5.75% Senior Notes due 2023
CUSIP 144A: 146900AQ8
ISIN 144A: S146900AQ85
CUSIP REG S: C2174EAH5
ISIN REG S: USC2174EAH56
No. ___ | $ _____________ |
CASCADES INC.
promises to pay to ___________________ or registered assigns, the principal sum of _________________ United States Dollars ($______________) on July 15, 2023
Interest Payment Dates: January 15 and July 15, commencing January 15, 2016.
Record Dates: January 1 and July 1
Dated: ________________
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IN WITNESS WHEREOF, the Company has caused this Note to be signed manually, by facsimile or by portable document format by its duly authorized officer.
CASCADES INC. | |||
By: | |||
Name: | |||
Title: |
This is one of the [Global] Notes referred
to in the within-mentioned Indenture:
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Trustee
By: | ||
Authorized Signatory |
Dated : __________________
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(Back of Note)
5.75% Senior Notes due 2023
[Insert the Global Note Legend, if applicable pursuant to the terms of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the terms of the Indenture]
[Insert the Canadian Resale Legend, if applicable pursuant to the terms of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest . Cascades Inc., a company organized under the laws of Québec, Canada (the “ Company ”), promises to pay interest on the principal amount of this Note at 5.75% per annum until maturity. The Company shall pay interest semi-annually on January 15 and July 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an “ Interest Payment Date ”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided , however , that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided , further , that the first Interest Payment Date shall be the first of January 15 or July 15 to occur after the date of issuance, unless such January 15 or July 15 occurs within one calendar month of such date of issuance, in which case the first Interest Payment Date shall be the second of January 15 or July 15 to occur after the date of issuance. The Company shall pay interest on overdue principal and premium, if any, from time to time at a rate that is 1% per annum in excess of the interest rate then in effect under the Indenture and this Note; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time at the same rate to the extent lawful. Interest shall be computed on the basis of a 360 day year of twelve 30 day months. For the purposes of the Interest Act (Canada), the yearly rate of interest which is equivalent to the rate payable hereunder is the rate payable multiplied by the actual number of days in the year and divided by 360.
2. Method of Payment . The Company shall pay interest on the Notes (except defaulted interest) to the Persons in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the January 1 or July 1 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose, or, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses set forth in the Security Register; provided , however , that payment by wire transfer of immediately available funds shall be required with respect to principal of and interest and premium, if any, on all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar . Initially, Wells Fargo Bank, National Association, the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.
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4. Indenture . The Company issued the Notes under an Indenture dated as of May 19, 2015 (“ Indenture ”) among the Company, the subsidiary guarantors party thereto (the “ Guarantors ”) and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb)(the “TIA”). The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the provisions of the Indenture, as it may be amended or supplemented, the provisions of the Indenture shall govern and be controlling.
5. Optional Redemption .
(a) The Company may choose to redeem the Notes at any time. If it does so, it may redeem all or any portion of the Notes, at once or over time, after giving the required notice under the Indenture. To redeem the Notes prior to July 15, 2018, the Company must pay a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes to be redeemed, and
(ii) the sum of the present values of (1) the redemption price of the Notes at July 15, 2018 (as set forth below) and (2) the remaining scheduled payments of interest from the redemption date to July 15, 2018 but excluding accrued and unpaid interest to the redemption date, discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months), at the Treasury Rate (determined on the second business day immediately preceding the date of redemption) plus 50 basis points,
plus, in either case, accrued and unpaid interest to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).
Any notice to Holders of Notes of such a redemption will include the appropriate calculation of the redemption price, but need not include the redemption price itself. The actual redemption price, calculated as described above, will be set forth in an Officers’ Certificate delivered to the Trustee no later than two business days prior to the redemption date (unless clause (b) of the definition of “Comparable Treasury Price” is applicable, in which case such Officers’ Certificate shall be delivered on the redemption date).
(b) Beginning on July 15, 2018, the Company may redeem all or any portion of the Notes, at once or over time, after giving the required notice under this Indenture, at the redemption prices set forth below, plus accrued and unpaid interest on the Notes redeemed to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). The following prices are for Notes redeemed during the 12-month period commencing on July 15 of the years set forth below, and are expressed as percentages of principal amount:
Redemption Year | Price | |||
2018 | 104.313 | % | ||
2019 | 102.875 | % | ||
2020 | 101.438 | % | ||
2021 and thereafter | 100.000 | % |
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(c) In addition, at any time and from time to time, prior to July 15, 2018, the Company may redeem up to a maximum of 35% of the aggregate principal amount of the Notes (including Additional Notes) with the proceeds of one or more Qualified Equity Issuances, at a redemption price equal to 105.75% of the principal amount thereof, plus accrued and unpaid interest thereon, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided , however , that after giving effect to any such redemption, at least 65% of the aggregate principal amount of the Notes (including Additional Notes) remains outstanding. Any such redemption shall be made within 180 days of such Qualified Equity Issuance upon not less than 30 days’ nor more than 60 days’ prior notice.
(d) The Company may at any time redeem, in whole but not in part, the outstanding Notes (upon giving notice in accordance with the Indenture, which notice shall be irrevocable) at a redemption price of 100% of the principal amount thereof, plus accrued and unpaid interest to the date of redemption, and all Additional Amounts (if any) then due and which will become due on the date of redemption as a result of the redemption or otherwise, if on the next date on which any amount would be payable in respect of the Notes, the Company has become or would become obligated to pay any Additional Amounts in respect of the Notes, and the Company cannot avoid any such payment obligation by taking reasonable measures available to it, as a result of (i) any change in or amendment to the laws (or regulations promulgated thereunder) of a relevant Tax Jurisdiction, or (ii) any change in or amendment to any official position (including an official administrative ruling) regarding the application or interpretation of such laws or regulations (including a change by virtue of a holding, judgment or order by a court of competent jurisdiction), which change or amendment is announced and becomes effective on or after the Issue Date (or, if the applicable relevant Tax Jurisdiction became a Tax Jurisdiction on a date after the Issue Date, such later date).
(e) Any prepayment pursuant to this paragraph shall be made pursuant to the provisions of Sections 3.01 through 3.07 of the Indenture.
(f) Notwithstanding the foregoing, the Company may elect to effect any optional redemption directly or through a Restricted Subsidiary.
6. Mandatory Redemption . Except as set forth in Sections 4.12 and 4.16 of the Indenture, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. Repurchase at Option of Holder .
(a) Upon the occurrence of a Change of Control, the Company shall offer to repurchase all or any part (equal to US$2,000 or an integral multiple of US$1,000 in excess thereof) of the Notes (a “ Change of Control Offer ”) at a purchase price in cash equal to 101% of the aggregate principal amount of the Notes repurchased, plus accrued and unpaid interest on the Notes repurchased to the purchase date (subject to the right of Holders on the relevant record date to receive interest to, but excluding, the Change of Control Payment Date). Each Holder shall have the right to require the Company to repurchase all or any part (equal to US$2,000 or an integral multiple of US$1,000 in excess thereof) of such Holder’s Notes pursuant to such offer.
(b) Any Net Available Cash from Asset Sales that is not applied as provided in Section 4.12(b) of the Indenture will constitute Excess Proceeds (“ Excess Proceeds ”). When the aggregate amount of Excess Proceeds exceeds $150.0 million (not taking into account income earned on such Excess Proceeds, if any), the Company shall commence an offer to all Holders by applying the Allocable Excess Proceeds (an “ Asset Sale Offer ”) pursuant to Section 3.09 of the Indenture to purchase
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the maximum principal amount of Notes (including any Additional Notes) that may be purchased out of the Net Available Cash at an offer price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest to the date fixed for the closing of such offer in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Notes (including Additional Notes) tendered pursuant to an Asset Sale Offer is less than the Net Available Cash, the Company (or such Restricted Subsidiary) may use such deficiency for any purpose not prohibited by the Indenture. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Net Available Cash, the Trustee shall select the Notes to be purchased on a pro rata basis. Holders of Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes.
8. Notice of Redemption . Notice of redemption shall be mailed or delivered at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than US$2,000 may be redeemed in part but only in whole multiples of US$1,000 in excess thereof, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption.
9. Denominations, Transfer, Exchange . The Notes are in registered form without coupons in denominations of US$2,000 and integral multiples of US$1,000 in excess thereof. This Note shall represent the aggregate principal amount of outstanding Notes from time to time endorsed hereon and the aggregate principal amount of Notes represented hereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date.
10. Persons Deemed Owners . The registered Holder of a Note shall be treated as its owner for all purposes.
11. Amendment, Supplement and Waiver . Subject to certain exceptions, the Company and the Trustee may amend or supplement the Indenture or the Notes with the consent of the Holders of a majority in principal amount of the then outstanding Notes, including Additional Notes, if any, voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 of the Indenture, any existing Default or Event of Default (except a continuing Default or Event of Default in the payment of principal, premium, if any, interest on the Notes) or compliance with any provision of the Indenture or the Notes (except for certain covenants and provisions of the Indenture which cannot be amended without the consent of each affected Holder (whether in the aggregate holding a majority principal amount of Notes or not) may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, including Additional Notes, if any, then outstanding voting as a single class (including consents obtained in connection with a purchase of or tender offer or exchange offer for the Notes). Without the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, omission, defect or inconsistency, to provide for the assumption by a Surviving Person of the obligations of the Company under the Indenture, to provide for uncertificated Notes in addition to or in place of certificated Notes, to add additional Subsidiary Guarantees with respect
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to the Notes or release Subsidiary Guarantors from Subsidiary Guarantees pursuant to the Indenture, to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to make any change to comply with any requirement of the Commission in order to effect or maintain the qualification of the Indenture under the TIA or other applicable trust indenture legislation, to provide for the issuance of Additional Notes or to conform the text of the Indenture or this Note to any provision of the “Description of Notes” section of the Offering Memorandum to the extent that such provision is intended to be a substantially verbatim recitation of a provision in the Indenture or this Note.
12. Defaults and Remedies . Each of the following is an Event of Default under the Indenture: (i) failure to make the payment of any interest (including Additional Amounts) on the Notes when the same becomes due and payable, and such failure continues for a period of 30 days; (ii) failure to make the payment of any principal of, or premium, if any, on, any of the Notes when the same becomes due and payable at its Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise; (iii) failure to comply with the provisions of Section 5.01 of the Indenture and such failure continues for a period of 30 days; (iv) failure to make a Change of Control Offer pursuant to Section 4.16 of the Indenture; (v) failure to make an Asset Sale Offer pursuant to Section 4.12 of the Indenture and such failure continues for 30 days after written notice is given to the Company as provided below; (vi) failure to comply with the provisions of Section 4.03 of the Indenture and such failure continues for a period of 120 days after written notice is given to the Company as provided below; (vii) failure to comply with any other covenant or agreement in the Notes or in the Indenture (other than a failure that is the subject of the foregoing clause (i), (ii), (iii), (iv), (v), (vi) or (vii)) and such failure continues for 60 days after written notice is given to the Company as provided below; (viii) a default under any Debt for money borrowed by the Company or any Restricted Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an aggregate amount greater than $75.0 million or its foreign currency equivalent at the time and such acceleration has not been rescinded or annulled within ten Business Days after the date of such acceleration; (ix) any judgment or judgments for the payment of money in an aggregate amount in excess of $75.0 million (or its foreign currency equivalent at the time) that shall be rendered against the Company or any Restricted Subsidiary and that shall not be waived, satisfied (net of any amounts that are reduced by insurance or bonded) or discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect; (x) certain events of bankruptcy, insolvency or reorganization affecting the Company or any of its Significant Subsidiaries described in Section 6.01(a)(x) and 6.01(a)(xi) of the Indenture; and (xi) any Subsidiary Guarantee of one or more Subsidiary Guarantors, which by themselves or taken together would constitute a Significant Subsidiary, ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guarantee or the Indenture) or any Subsidiary Guarantor of one or more Subsidiary Guarantors, which by themselves or taken together would constitute a Significant Subsidiary, denies or disaffirms its obligations under its Subsidiary Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal of all the Notes, together with all accrued and unpaid interest, premium, if any, to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency described in the Indenture, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its
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consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or the principal of, the Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and subject to the proviso contained in Section 4.04(c) of the Indenture the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.
13. Trustee Dealings with Company . Subject to certain limitations, the Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee.
14. No Recourse Against Others . No past, present or future director, officer, employee, incorporator or stockholder of the Company or of any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Indenture, the Notes, the Subsidiary Guarantees 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.
15. Authentication . This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations . Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
17. CUSIP Numbers . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:
Cascades Inc.
404 Marie-Victorin Blvd.
P.O. Box 30
Kingsey Falls, Québec
Canada J0A 1B0
Attention: Chief Financial Officer
18. Governing Law . The internal law of the State of New York shall govern and be used to construe this Note without giving effect to applicable principals of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
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Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant to Section 4.12 or 4.16 of the Indenture, check the box below:
¨ | Section 4.12 |
¨ | Section 4.16 |
If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.12 or Section 4.16 of the Indenture, state the amount you elect to have purchased: $__________________.
Date: | Your Signature: | |||
(Sign exactly as your name appears on the Note) | ||||
Tax Identification No.: |
SIGNATURE GUARANTEE: | |
Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“ 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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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 other tax I.D. no.) |
(Print or type assignee’s name, address and zip code) |
and irrevocably appoint ______________________________________________________________________ as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
Your Signature: | ||
(Sign exactly as your name appears on the Note) |
Signature Guarantee: |
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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Date of Exchange |
Amount of
decrease in Principal Amount of this Global Note |
Amount of
increase in Principal Amount of this Global Note |
Principal Amount
of this Global Note following such decrease (or increase) |
Signature of
authorized signatory of Trustee or Note Custodian |
||||
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EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Cascades Inc.
404 Marie-Victorin Blvd.
P.O. Box 30
Kingsey Falls, Québec
Canada J0A 1B0
Attention: Chief Financial Officer
Wells Fargo Bank, National Association – DAPS Reorg
6th & Marquette Avenue – 12th Floor
Minneapolis, MN 55479
MAC N9303-121
Telephone: 1-800-344-5128
Facsimile: 1-866-969-1290
Email: DAPSReorg@wellsfargo.com
Re: 5.75% Senior Notes due 2023
Reference is hereby made to the Indenture, dated as of May 19, 2015 (the “ Indenture ”), among Cascades Inc., as issuer (the “ Company ”), the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
___________________ (the “ Transferor ”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the “ Transfer ”), to ___________________________ (the “ Transferee ”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. ¨ Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest in the Global Note or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest in the Global Note or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States and applicable securities laws of any other applicable jurisdiction. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest in the Global Note or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.
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2. ¨ Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(a) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Distribution Compliance Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an initial purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act.
3. ¨ Check and complete if Transferee will take delivery of a beneficial interest in the Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States and the securities laws of any other applicable jurisdiction, and accordingly the Transferor hereby further certifies that (check one):
(a) ¨ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) ¨ such Transfer is being effected to the Company or a subsidiary thereof;
or
(c) ¨ such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;
4. ¨ Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) ¨ Check if Transfer is pursuant to Rule 144 . (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and the securities laws of any other applicable jurisdiction and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
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(b) ¨ Check if Transfer is Pursuant to Regulation S . (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and the securities laws of any other applicable jurisdiction and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) ¨ Check if Transfer is Pursuant to Other Exemption . (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and the securities laws of any other applicable jurisdiction and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
[Insert Name of Transferor] | |||
By: | |||
Name: | |||
Title: |
Dated: ______________________
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ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) ¨ a beneficial interest in the:
(i) ¨ 144A Global Note (CUSIP _________), or
(ii) ¨ Regulation S Global Note (CUSIP _________); or
(b) ¨ a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE OF (a) OR (b) OR (c)]
(a) ¨ a beneficial interest in the:
(i) ¨ 144A Global Note (CUSIP _________), or
(ii) ¨ Regulation S Global Note (CUSIP _________), or
(iii) ¨ Unrestricted Global Note (CUSIP _________); or
(b) ¨ a Restricted Definitive Note; or
(c) ¨ an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Cascades Inc.
404 Marie-Victorin Blvd.
P.O. Box 30
Kingsey Falls, Québec
Canada J0A 1B0
Attention: Chief Financial Officer
Wells Fargo Bank, National Association – DAPS Reorg
6th & Marquette Avenue – 12th Floor
Minneapolis, MN 55479
MAC N9303-121
Telephone: 1-800-344-5128
Facsimile: 1-866-969-1290
Email: DAPSReorg@wellsfargo.com
Re: 5.75% Senior Notes due 2023
Reference is hereby made to the Indenture, dated as of May 19, 2015 (the “ Indenture ”), among Cascades Inc., as issuer (the “ Company ”), the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
__________________________ (the “ Owner ”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the “ Exchange ”). In connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note
(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Note and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “ Securities Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(b) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted
Global Note and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(c) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
(d) ¨ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes
(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
(b) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note . In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CIRCLE ONE] 144A Global Note, Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Definitive Note and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
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This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
[Insert Name of Transferor] | |||
By: | |||
Name: | |||
Title: |
Dated: ______________________
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EXHIBIT D
Form of Supplemental Indenture FOR ADDITIONAL Subsidiary Guarantors
SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), dated as of [__________], 20[ ], among [_________] (the “ Guaranteeing Subsidiary ”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.
W I T N E S S E T H :
WHEREAS, each of the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and delivered an indenture dated as of May 19, 2015 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of its 5.75% Senior Notes due 2023 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms . As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE II
AGREEMENT TO BE BOUND; GUARANTEE
SECTION 2.1. Agreement to be Bound . The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
SECTION 2.2. Subsidiary Guarantee . The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to
D- 1 |
Article 10 of the Indenture on a senior basis and this Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Notices . All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.
SECTION 3.2. Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.
SECTION 3.3. Governing Law . This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
SECTION 3.4. Severability . In case any provision in this Supplemental Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
SECTION 3.5. Benefits Acknowledged . The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.
SECTION 3.6. Ratification of Indenture; Supplemental Indentures Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 3.7. The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.
SECTION 3.8. Counterparts . The parties hereto may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
SECTION 3.9. Execution and Delivery . The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.
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SECTION 3.10. Headings . The headings of the Articles and the Sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
CASCADES INC. | |||
By: | |||
Name: | |||
Title: | |||
[GUARANTEEING SUBSIDIARY], | |||
as the Guaranteeing Subsidiary | |||
By: | |||
Name: | |||
Title: | |||
WELLS FARGO BANK, national association, | |||
as Trustee | |||
By: | |||
Name: | |||
Title: |
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Exhibit 4.10
FIRST SUPPLEMENTAL INDENTURE
dated as of September 23, 2015
to the
INDENTURE
dated as of May 19, 2015
among
CASCADES INC.,
THE SUBSIDIARY GUARANTORS named therein, and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this “ First Supplemental Indenture ”), dated as of September 23, 2015, among Cascades Flexible Packaging Inc. (the “ Guaranteeing Subsidiary ”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.
W I T N E S S ET H :
WHEREAS, each of the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and delivered an indenture dated as of May 19, 2015 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of its 5.75% Senior Notes due 2023 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiary shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this First Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms . As used in this First Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE II
AGREEMENT TO BE BOUND; GUARANTEE
SECTION 2.1. Agreement to be Bound . The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
SECTION 2.2. Subsidiary Guarantee . The Guaranteeing Subsidiary agrees to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this First Supplemental Indenture shall constitute evidence of the Guaranteeing Subsidiary’s Subsidiary Guarantee.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Notices . All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, with a copy to the Company as provided in the Indenture for notices to the Company.
SECTION 3.2. Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this First Supplemental Indenture or the Indenture or any provision herein or therein contained.
SECTION 3.3. Governing Law . This First Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
SECTION 3.4. Severability . In case any provision in this First Supplemental Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
SECTION 3.5. Benefits Acknowledged . The Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by it pursuant to this Guarantee are knowingly made in contemplation of such benefits.
SECTION 3.6. Ratification of Indenture; First Supplemental Indenture Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 3.7. The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this First Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.
SECTION 3.8. Counterparts . The parties hereto may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this First Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this First Supplemental Indenture as to the parties hereto and may be used in lieu of the original First Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
SECTION 3.9. Execution and Delivery . The Guaranteeing Subsidiary agrees that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.
SECTION 3.10. Headings . The headings of the Articles and the Sections in this First Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
SECTION 3.11. FATCA . This First Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.
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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first above written.
CASCADES INC. | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Vice President, Legal Affairs | ||
and Corporate Secretary | |||
CASCADES FLEXIBLE PACKAGING INC., | |||
as the Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary |
WELLS FARGO BANK, NATIONAL ASSOCIATION, | |||
as Trustee | |||
By: | /s/ Yana Kislenko | ||
Name: | Yana Kislenko | ||
Title: | Vice President |
Exhibit 4.11
SECOND SUPPLEMENTAL INDENTURE
dated as of December 9, 2015
to the
INDENTURE
dated as of May 19, 2015
among
CASCADES INC.,
THE SUBSIDIARY GUARANTORS named therein, and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (this “ Second Supplemental Indenture ”), dated as of December 9, 2015, among Cascades Recovery Inc., a Canadian corporation, Cascades Recovery U.S., Inc., a Delaware corporation, and Metro Retail Recycling Services, LLC, a Delaware limited liability company (collectively, the “ Guaranteeing Subsidiaries ”), Cascades Inc., a corporation organized under the laws of the Province of Quebec, Canada (the “ Company ”), and Wells Fargo Bank, National Association, as Trustee under the Indenture referred to below.
W I T N E S S ET H :
WHEREAS, each of the Company, the Subsidiary Guarantors named therein and the Trustee have heretofore executed and delivered an indenture dated as of May 19, 2015 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of its 5.75% Senior Notes due 2023 (the “ Notes ”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiaries shall execute and deliver to the Trustee a supplemental indenture to which the Guaranteeing Subsidiaries shall unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “ Guarantee ”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the Trustee are authorized to execute and deliver this Second Supplemental Indenture to amend or supplement the Indenture, without the consent of any Holder;
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiaries, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms . As used in this Second Supplemental Indenture, terms defined in the Indenture or in the preamble or recitals hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE II
AGREEMENT TO BE BOUND; GUARANTEE
SECTION 2.1. Agreement to be Bound . The Guaranteeing Subsidiaries hereby become parties to the Indenture as Subsidiary Guarantors and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
SECTION 2.2. Subsidiary Guarantee . The Guaranteeing Subsidiaries agree to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article 10 of the Indenture on a senior basis and this Second Supplemental Indenture shall
constitute evidence of each Guaranteeing Subsidiary’s Subsidiary Guarantee.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. Notices . All notices and other communications to the Guaranteeing Subsidiaries shall be given as provided in the Indenture to the Guaranteeing Subsidiaries, with a copy to the Company as provided in the Indenture for notices to the Company.
SECTION 3.2. Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Second Supplemental Indenture or the Indenture or any provision herein or therein contained.
SECTION 3.3. Governing Law . This Second Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
SECTION 3.4. Severability . In case any provision in this Second Supplemental Indenture 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 and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
SECTION 3.5. Benefits Acknowledged . Each Guaranteeing Subsidiary’s Guarantee is subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiaries acknowledge that they will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and that the guarantee and waivers made by them pursuant to this Guarantee are knowingly made in contemplation of such benefits.
SECTION 3.6. Ratification of Indenture; Second Supplemental Indenture Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
SECTION 3.7. The Trustee . The Trustee makes no representation or warranty as to the validity or sufficiency of this Second Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.
SECTION 3.8. Counterparts . The parties hereto may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Second Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Second Supplemental Indenture as to the parties hereto and may be used in lieu of the original Second Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
SECTION 3.9. Execution and Delivery . The Guaranteeing Subsidiaries agree that the Guarantee shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of any such Guarantee.
SECTION 3.10. Headings . The headings of the Articles and the Sections in this Second Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
SECTION 3.11. FATCA . This Second Supplemental Indenture has not resulted in a material modification of the issuance for purposes of the Foreign Account Tax Compliance Act (FATCA) provisions of the Internal Revenue Code.
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IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.
CASCADES INC. | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Vice President, Legal Affairs | ||
and Corporate Secretary | |||
CASCADES RECOVERY INC., | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary | ||
CASCADES RECOVERY U.S., INC., | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary | ||
METRO RETAIL RECYCLING SERVICES, LLC | |||
as a Guaranteeing Subsidiary | |||
By: | /s/ Robert F. Hall | ||
Name: | Robert F. Hall | ||
Title: | Assistant Secretary |
WELLS FARGO BANK, NATIONAL ASSOCIATION, | |||
as Trustee | |||
By: | /s/ Yana Kislenko | ||
Name: | Yana Kislenko | ||
Title: | Vice President |
Exhibit 10.1
Execution Copy
Cdn. $750,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of July 7, 2015
Among
Cascades Inc.
Cascades USA Inc.
Cascades Europe SAS
( as Borrowers )
- and -
National Bank Financial Inc.
Scotia Capital
( as Co-Lead Arrangers and Joint Bookrunners )
- and -
National Bank of Canada
( as Administrative Agent )
- and -
The Bank of Nova Scotia
( as Collateral Agent and Syndication Agent )
- and -
Canadian Imperial Bank of Commerce
Caisse centrale Desjardins
Wells Fargo Bank, National Association, Canadian Branch
( as Co-Documentation Agents )
- and -
The Lenders
from Time to Time Party Hereto
McCarthy Tétrault LLP
Table of Contents
Page | |
No table of contents entries found. |
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This Agreement is made as of July 7, 2015 among Cascades Inc., a corporation incorporated under the laws of the province of Quebec (“ Cascades ”), Cascades USA Inc. , a corporation incorporated under the laws of the State of Delaware (“ Cascades US ”) and Cascades Europe SAS , a corporation incorporated under the laws of France (“ Cascades Europe ”) (each a “ Borrower ” and, collectively the “ Borrowers ”), National Bank of Canada , a Canadian bank, as administrative agent, The Bank of Nova Scotia , a Canadian bank, as collateral agent, and each of the financial institutions having executed this Agreement as Lender.
Recitals
A. | Pursuant to a credit agreement dated as of December 29, 2006 (as amended and restated as of February 10, 2011 and as further amended prior to the date hereof, the “ Initial Credit Agreement ”), the Lenders agreed to make available to the Borrowers a Facility in a principal amount of $750,000,000 for general corporate purposes. |
B. | Each of the Borrowers other than Cascades is a Subsidiary of Cascades. |
C. | The Borrowers and the Lenders wish to amend the Initial Credit Agreement for the purposes of, among other things, (i) extending the Facility Maturity Date to July 6, 2019, (ii) adding an annual extension option, (iii) increasing the accordion feature, (iv) modifying certain definitions and covenants including in relation to the Security, (v) changing the pricing of the Facility, and (vi) updating and making consequential changes to other provisions. |
D. | Upon this Agreement becoming effective, the Commitments of the Lenders will be as set out on the signature pages of this Agreement and the outstanding Borrowings under the Initial Credit Agreement will be allocated among the Lenders in the proportions of their Commitments under this Agreement. |
Therefore , the parties agree as follows :
Article 1 - Interpretation
1.1 | Amendment and Restatement |
The Initial Credit Agreement is hereby amended and restated in its entirety, without novation of the Initial Credit Agreement and without derogation of the rights and obligations of the parties thereunder (save as amended hereunder). However, from the Effective Date, this Agreement will evidence the agreement of the parties with respect to the matters which are the subject of the Initial Credit Agreement and this Agreement.
1.2 | Definitions |
In this Agreement, unless the context otherwise requires, the following terms have the respective meanings set out below or in the preamble (and all such terms that are defined in the singular have the corresponding meaning in the plural and vice versa ).
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“ Acceptance ” means:
(a) | in respect of a Lender who is a bank that customarily accepts bankers' acceptances, at such Lender’s discretion, either a depository bill subject to the Depository Bills and Notes Act (Canada) or a bill of exchange subject to the Bills of Exchange Act (Canada), in each case, drawn by Cascades on and accepted by such Lender; and |
(b) | in respect of any other Lender, a promissory note bearing no interest, made by Cascades to such Lender; |
“ Adjusted Consolidated Basis ” means, in relation to Cascades, a consolidation that excludes all Persons who are not Credit Parties;
“ Administrative Agent ” means National Bank of Canada or any successor administrative agent appointed pursuant to Section 18.13;
“ Administrative Agent’s Office ” means the office of the Administrative Agent designated by it from time to time as its administrative office for the purposes hereof, after notice to the Lenders;
“ Affiliate ” means, with respect to a Person, any other Person that directly or indirectly Controls, or is Controlled by, or is under common Control with, that Person;
“ Agents ” means collectively the Administrative Agent and the Collateral Agent;
“ Applicable Margin (or Rate) ” means a margin (or rate) determined in accordance with Schedule A;
“ Borrowing Base ” means the amount (expressed in Dollars) determined by the Administrative Agent as being the sum of:
(a) | 80% of the book value of the trade accounts receivable of the Credit Parties which are subject to the Security and are owed by customers located in Canada, the United States and Europe, but excluding accounts that have been outstanding for more than 90 days, accounts owed by Credit Parties, accounts subject to set-off, accounts in dispute and doubtful accounts, provided that, |
(i) | such 80% percentage will be increased to 90% for accounts receivable insured for at least 90% of their amounts by Export Development Canada or another credit insurer acceptable to the Majority Lenders but on the condition that the Collateral Agent be named as loss payee under the related policy, |
(ii) | if a Securitization or Factoring Program is in effect, the accounts receivable which are subject (in whole or in part) to such program will be excluded from the Borrowing Base (as provided in Section 13.3(b)(iv)) and the aggregate of the amounts determined pursuant to paragraphs (b) |
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and (c) below will be included in the Borrowing Base only up to 300% of the amount determined under paragraph (a);
(b) | 60% of the book value of the inventory of the Credit Parties which is subject to the Security and is located in Canada, the United States and Europe, but excluding work in process; and |
(c) | the lesser of $320,000,000 and 60% (rounded upwards to the next $5,000,000) of the market value of the Charged Fixed Assets; |
less the excess of (i) a reasonable estimate of the aggregate of all amounts owing to creditors (including governments) whose claims are secured or protected by a Lien capable of ranking pari passu with or prior to the Security with respect to such accounts receivables and inventory, over (ii) $10,000,000;
“ Borrowings ” means the Prime Rate Loans, the US Base Rate Loans, the Acceptances, the Libor Loans, the European Loans and the Letters of Credit;
“ Branch of Account ” means, with respect to any Tranche of the Facility, a branch of a bank where the Administrative Agent has established an account for such Tranche, in each case as may be designated by the Administrative Agent from time to time as the applicable branch of account, after consultation with the applicable Borrower, it being understood that unless otherwise agreed between the Administrative Agent and the Borrower under Tranche C, the Branch of Account for such Tranche will be located in Canada;
“ Business Day ” means a day on which banks are open for business in Montreal and in Toronto, excluding Saturday and Sunday; where such term is used in the context of a US Base Rate Loan, such day must also be a day on which banks are open for business in New York City (and in Paris in the case of a US Base Rate Loan under Tranche C) and where such term is used in the context of a Libor Loan or an European Loan, such day must also be a day on which banks are open for business in London, England, in Paris and in the city where the applicable Branch of Account is located;
“ Cascades Indentures ” refers collectively to (i) the indenture dated as of June 19, 2014 between Cascades and Computershare Trust Company of Canada providing for the issue of notes due in 2021, (ii) the indenture dated as of June 19, 2014 between Cascades and Wells Fargo Bank, National Association providing for the issue of notes due in 2022, (iii) the indenture dated May 19, 2015 between Cascades and Wells Fargo Bank National Association providing for the issue of notes due in 2023, (in each case, as any such indenture may be amended or supplemented from time to time), and (iv) any other indenture or instrument providing for the issue or incurrence of Funded Debt the proceeds of which are used to refinance any of the notes issued under the indentures referred to in clauses (i) to (iii) inclusively or for any other general corporate purposes provided that such Funded Debt has a stated maturity falling beyond the Facility Maturity Date;
“ CDOR Rate ” means, for any day, the arithmetic average of the Dollar bankers’ acceptances offered discount rates for the applicable period which appear on the Reuters service
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at 10:00 a.m., or if such day is not a Business Day, then on the immediately preceding Business Day; provided however, that if such rates are not available, then the CDOR Rate for any day will be the bankers’ acceptances discount rate of the Administrative Agent for the applicable period as of 10:00 a.m. on such day, or if said day is not a Business Day, then on the immediately preceding Business Day;
“ Charged Fixed Assets ” means the fixed assets of the Credit Parties which are subject to the Security in accordance with Section 10.3;
“Collateral Agent” means The Bank of Nova Scotia or any successor collateral agent appointed pursuant to Section 18.13;
“ Commitment ” means, with respect to each Lender, its proportion (expressed as a percentage or as an amount, as the case may be) of the amount of the Facility or, as the case may be, of any of Tranche A, Tranche B or Tranche C, as specified opposite its name on the signature pages of this Agreement, subject however to any readjustment resulting from an increase or a reduction in the amount of the Facility, a change in the amount of any Tranche or from an assignment of Commitment made pursuant to this Agreement;
“ Control ” (including any correlative term) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through ownership of securities or partnership or trust interests, by contract or otherwise); without limiting the generality of the foregoing (i) a Person is deemed to Control a corporation if such Person (or such Person and its Affiliates) holds outstanding shares or other rights carrying more than 50% of the voting power in the election of the board of directors of the corporation, (ii) a Person is deemed to Control a partnership if such Person (or such Person and its Affiliates) holds more than 50% in value of the equity of the partnership, (iii) a Person is deemed to Control a trust if such Person (or such Person and its Affiliates) holds more than 50% in value of the beneficial interests in the trust, and (iv) a Person that controls another Person is deemed to Control any Person controlled by that other Person;
“ Corporate Structure Chart ” means the corporate and capital structure of Cascades and its Subsidiaries and the other information relating to them, as described in the chart dated as of the date of this Agreement to be delivered by Cascades pursuant to Section 9.1;
“ Credit Card Creditor ” has the meaning given to such term in Section 10.5;
“ Credit Documents ” means this Agreement, the Security Documents, any note issued pursuant to Section 20.6 and any other present and future document relating to any of the foregoing, in each case, as amended, supplemented or restated;
“ Credit Parties ” means each of the Borrowers and their Subsidiaries, but excluding (i) Persons in which investments are classified under GAAP as joint ventures or minority investments, (ii) Cascades Recovery Inc. and its Subsidiaries until such time as all shares of Cascades Recovery Inc. carrying voting power in all circumstances are owned by Cascades or a wholly-owned Subsidiary thereof, (iii) Reno de Medici S.p.A. and its Subsidiaries until such time as all shares of Reno de Medici S.p.A. carrying voting power in all circumstances are
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owned by Cascades or a wholly-owned Subsidiary thereof, (iv) 27102009 USA Inc. and its Subsidiaries until such time as all shares of the project vehicle formed for the purposes of the construction and operation of the “Greenpac” project carrying voting power in all circumstances are owned by Cascades or a wholly-owned Subsidiary thereof , and (v) Norcan Flexible Packaging Inc. and its Subsidiaries;
“ Default ” means any event or circumstance which constitutes an Event of Default or which, with the passage of time, the giving of a notice or both, would constitute an Event of Default;
“ Designated Subsidiaries ” means the Subsidiaries of Cascades (other than a Borrower) designated as Designated Subsidiaries pursuant to Section 1.3;
“ Discount Rate ” means on any day,
(a) | in respect of any Acceptance accepted by a Lender that is a Canadian Schedule I bank, the CDOR Rate on such day for the applicable period; and |
(b) | in respect of any Acceptance to which clause (a) does not apply, the lesser of (x) the discount rate of such Lender in effect at or about 10:00 a.m. on the relevant date for bankers’ acceptances (or equivalent instruments if such Lender does not customarily accept bankers’ acceptances) of such Lender for a period comparable to the period of such Acceptance and (y) the CDOR Rate plus 0.10%, provided that for greater certainty such latter rate will apply to any Lender that does not have a discount rate as contemplated in (x); |
“ Discounted Proceeds ” means , with respect to any issue of Acceptances, an amount (rounded to the nearest whole cent and with one-half of one cent being rounded up) calculated by multiplying:
(a) | the aggregate face amount of such Acceptances; by |
(b) | the price, where the price is determined by dividing one by the sum of one plus the product of: |
(i) | the Discount Rate applicable to such Acceptances (expressed as a decimal); and |
(ii) | a fraction, the numerator of which is the number of days in the period of such Acceptances and the denominator of which is 365; |
with the price as so determined being rounded up or down to the fifth decimal place and .000005 being rounded up;
“ Distribution ” means any payment in cash or in kind that provides an income (including interest or dividend) or a return on, or constitutes a distribution or redemption of, the equity or capital of a Person (other than by way of the issuance of new equity interests);
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“ Dollar ” and the symbol $ mean lawful money of Canada;
“ EBITDA ” means, with respect to Cascades, the net income of Cascades for the rolling four-quarter period ending on the date that EBITDA is determined, plus the following items, to the extent such items have been deducted in calculating net income:
(a) | Interest Expense; |
(b) | income taxes; |
(c) | depreciation; |
(d) | non-cash compensation expenses for grants of performance shares or stock options to the extent same are not redeemable for cash; |
(e) | non-cash restructuring charges or reserves, including in relation to severance and termination costs, pension settlement, future lease commitments, consolidation of facilities and employee relocation costs; and |
(f) | other non-cash items, including resulting from amortization, write-up, write-down or write-off of any kind of tangible assets (other than inventory) or intangible assets (including goodwill and deferred financing costs), but to the extent that they do not represent an accrual of or reserve for cash expenditures in any future period; |
minus the following item:
(g) | cash payments made during such period in respect of non-cash items referred to above which had been added to net income during a prior period; |
provided that net income is calculated excluding:
(h) | the equity of Cascades in the net income of any other Person that is not a Credit Party to the extent same has not been distributed in cash to a Credit Party by way of Distributions (it being understood that all cash dividends received by a Credit Party from non-Credit Parties are included in its net income); |
(i) | gains or losses arising from (i) the translation of any long-term debt payable in a foreign currency, (ii) Hedging Agreements and other derivative agreements, (iii) any refinancing, repurchase or extinguishment of Funded Debt, and (iv) extraordinary, unusual or non-recurring items not otherwise dealt with in the definition of EBITDA including fees and expenses relating to any event or transactions giving rise to such items; |
(j) | non-cash items that will not result in the receipt of cash payments in any future period; and |
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(k) | the net income of any Subsidiary to the extent that the payment of Distributions of net income by that Subsidiary is not at the date of determination permitted (i) without prior governmental approval (that has not been obtained), or (ii) pursuant to the terms of its constitutive documents or any agreement, order, law or regulation applicable to such Subsidiary or its shareholders; |
“ Effective Date ” means the date this Agreement becomes effective as provided in the first sentence of Section 9.1;
“ Environmental Laws ” shall mean all laws, rules and regulations, and any orders or legally binding policies, in each case as now or hereafter in effect, relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes;
“ Equity Derivative ” means any derivative agreement entered into by a Credit Party in connection with the Credit Parties’ stock option plans or grant of performance shares and capable to protect Credit Parties against fluctuations of equity securities;
“ ERISA ” means the Employee Retirement Income Security Act of 1974 of the United States, as amended from time to time;
“ ERISA Affiliate ” means any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the US Revenue Code of which any Credit Party is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the US Revenue Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the US Revenue Code, described in Section 414(m) or (o) of the US Revenue Code of which any Credit Party is a member;
“ European Loan ” means a Loan denominated in Euros, Swedish Kronor or British Pounds and bearing interest at the European Rate, plus the Applicable Margin;
“ European Rate ” means, for any day, the annual rate of interest for deposits in Euros, Swedish Kronor or British Pounds (as applicable) with a term of 30 days in the Paris, London or Stockholm (respectively) interbank market which is shown on the applicable page of the Reuters Service as of 11:00 a.m. (Paris, London or Stockholm time, as applicable) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day; provided however that if such rate is not available, then the European Rate for any day will be the annual rate announced by the Swingline Lender under Tranche C as being its rate for similar deposits then in effect on the relevant day, provided further that (i) if any annual rate so determined is a negative rate (below zero percent (0%)), then the European Rate will be deemed equal to zero percent (0%), and (ii) the Swingline Lender under Tranche C and the Borrower concerned may also agree on an alternate reference rate for the determination of the European Rate;
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“ Exiting Lender ” means Caisse de dépôt et placement du Québec;
“ Facility ” means the revolving facility made available to the Borrowers pursuant to Section 2.1, by way of Tranche A, Tranche B and Tranche C;
“ Facility Maturity Date ” means July 7, 2019, or such subsequent date as may be agreed on pursuant to Section 2.14;
“ Funded Debt ” means, with respect to a Person, and without duplication, all obligations that under GAAP should be classified on such Person’s balance sheet as liabilities or to which reference should be made by footnotes thereto, (i) including, whether or not so classified, Guarantees and Liens granted in respect of Funded Debt of another Person, but (ii) excluding Subordinated Debt, future income taxes, employees future benefits, the negative market value of unrealized losses on Hedging Agreements and Equity Derivatives, assets retirement obligations, deferred revenues, as well as trade accounts payable, obligations under operating leases and all other accrued obligations and liabilities incurred in the ordinary course of business;
“ Funded Debt to Capitalization Ratio ” means the ratio of Funded Debt to the sum of Funded Debt and shareholders’ equity (with shareholders’ equity being calculated including Subordinated Debt ), provided that for the purposes of calculating this ratio:
(a) | the mark-to-market value of Hedging Agreements relating to obligations for monies borrowed or raised in US Dollars (i) if positive, will be deducted from Funded Debt and (ii) if negative, will be included in Funded Debt; |
(b) | cash and cash equivalents will be deducted from Funded Debt to the extent that the requirements of Section 10.2(b) are met, but only up to an aggregate amount not exceeding $50,000,000; |
(c) | preferred shares redeemable in cash at the option of the issuer with no possibility of redemption prior to the Facility Maturity Date or convertible in shares of another class at the option of the issuer or holder thereof may be included in shareholders’ equity (and excluded from Funded Debt) even if they are treated as liabilities under GAAP; and |
(d) | other adjustments in shareholders equity as a result of changes in GAAP coming into effect on January 1, 2011 will not reduce shareholders equity for the portion thereof that is not in excess of $225,000,000; |
“ GAAP ” means generally accepted accounting principles in Canada (including the International Financing Reporting Standards to the extent applicable) which are in effect from time to time (subject however to Section 1.5(b));
“ Guarantee ” means any obligation or arrangement, contingent or not, directly or indirectly (i) guaranteeing any liability or indebtedness of any Person, or (ii) protecting a creditor of any Person from a loss in respect of any such liability or indebtedness, or (iii) intended to ensure that any Person will maintain certain financial conditions such as financial ratios or
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solvency or liquidity requirements, or (iv) having the same economic effect as any of the foregoing;
“ Hedging Agreement ” means any foreign exchange contract, interest rate hedging contract and any other financial contract or arrangement capable to protect a Credit Party against fluctuations in currencies, interest rates or commodities ;
“ Hedging Creditor ” has the meaning given to such term in Section 10.5;
“ Initial Credit Agreement ” has the meaning given to such term in the Recitals;
“ Interest Coverage Ratio ” means the ratio of EBITDA to Interest Expense for the period EBITDA has been calculated;
“ Interest Expense ” means, for any period, the aggregate amount of interest and other financing expenses during such period, net of interest income, in each case determined in accordance with GAAP, but (i) including interest and other financing charges which have been capitalized, but however (ii) excluding amortization of financing expenses and debt discount or premium, deferred gains or losses on the translation of any long-term debt payable in foreign currency or non-recurrent upfront and financing costs, (iii) excluding unrealized gains or losses arising from Hedging Agreements, (iv) excluding any gain or loss arising from any refinancing, repurchase or extinguishment of Funded Debt, and (v) excluding the non-cash portion of the net interest expense related to the net position of defined benefit liability (asset);
“ Issuing Lender ” means, in respect of any Tranche, the Lender who is the Swingline Lender under such Tranche, provided that the Borrower concerned will be entitled with the consent of the Administrative Agent to replace an Issuing Lender by another Lender who has a Commitment under the applicable Tranche and is willing to issue Letters of Credit;
“ Lender ” means each of the Persons having executed this Agreement as Lender and any other Person who becomes a Lender pursuant to an assignment or a designation made in accordance with Section 20.4 or Section 20.5;
“ Letter of Credit ” means a documentary or standby letter of credit or a letter of guarantee issued pursuant to this Agreement;
“ Libor ” means, with respect to any Libor Loan, the annual rate of interest determined by the Administrative Agent as being the average (rounded upwards to the nearest multiple of 0,01%) of the rates for deposits in US Dollars or in Euros (as applicable) in the London interbank market which is shown on the applicable page of the Reuters service as of 11:00 a.m. (London, England time) on the second Business Day prior to the commencement of the applicable Libor Loan and for a comparable period, or if such rate is not available, the annual rate (rounded up to the nearest 0,01%) which the Administrative Agent is prepared to offer in the London interbank market for taking deposits in U.S. Dollars or Euros (as applicable) at approximately 11:00 a.m. (London time) on the second Business Day prior to the commencement of the applicable Libor Loan and for a comparable period; provided that if any annual rate so determined is a negative
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rate (below zero percent (0%)), then in such case Libor for the applicable Libor Loan will be deemed equal to zero percent (0%) for the period of such Loan;
“ Libor Loan ” means a loan denominated in US Dollars or in Euros bearing interest at Libor for US Dollars or Euros, as applicable, plus the Applicable Margin;
“ Lien ” means any hypothec, security interest, mortgage, lien, right of preference, pledge, assignment by way of security or any other agreement or encumbrance of any nature that secures the performance of an obligation, and a Person is deemed to own subject to a Lien any property or assets that it has acquired or holds subject to the right of a vendor or lessor under any conditional sale agreement, capital or synthetic lease or similar agreement (other than an operating lease) relating to such property or assets;
“ Majority Lenders ” means any group of Lenders whose Commitments amount in the aggregate to more than 50% of the aggregate amount of the Facility;
“ Material Adverse Change ” means any change, condition, event or occurrence which, when considered individually or together with other changes, conditions, events or occurrences, could reasonably be expected to have a Material Adverse Effect;
“ Material Adverse Effect ” means (i) a material adverse effect on the condition (financial or otherwise), business, operations, assets, liabilities (absolute or contingent) or prospects of the Credit Parties taken as a whole, (ii) a material adverse effect on the ability of Cascades or of the Credit Parties taken as a whole to perform their obligations under any Credit Document, or, (iii) a material impairment of the rights or remedies of the Lenders under any Credit Document;
“ Net Tangible Assets ” means, in respect of Cascades, total assets, after deducting current liabilities and non-controlling interests, and less, to the extent otherwise included in total assets, the amounts of (without duplication) (i) reevaluations and other write-ups of assets subsequent to June 30, 2015, and (ii) goodwill and other intangible assets, in each case calculated on an Adjusted Consolidated Basis;
“ Non-Designated Subsidiaries ” means the Subsidiaries of Cascades (other than Borrowers and non-Credit Parties) that are not Designated Subsidiaries;
“ PBGC ” shall mean the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA;
“ Permitted Liens ” means:
(a) | Liens imposed or arising by operation of law, in each case, in respect of obligations which have not been enforced or are being contested in good faith and by appropriate proceedings to the extent that adequate reserves are maintained; |
(b) | pledges or deposits made in the ordinary course of business in connection with bids, or tenders or to obtain performance bonds or to comply or ensure |
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compliance with the requirements of any law or regulation applicable to a Credit Party or its business or assets;
(c) | Liens granted by Credit Parties incorporated in a member state of the European Union on their accounts receivable and inventory not subject to the Security and securing credit facilities made available to such Credit Parties in an aggregate amount at any time not exceeding $ [REDACTED] ; |
(d) | Liens (other than Liens permitted pursuant to paragraph (e) below) securing obligations incurred in connection with the purchase or the lease of any real or immovable property, improvement thereto and equipment or securing any renewal, extension or replacement of such obligations, provided that any such Lien charges only the property so purchased or leased and for an amount not in excess of the related obligation and that the aggregate of all outstanding amounts secured by such Liens does not at any time exceed for all Credit Parties the greater of $150,000,000 and 7.5% of the Net Tangible Assets of Cascades and provided further that no such property is part of Charged Fixed Assets or is material to the operations of such assets; |
(e) | Liens existing on the date hereof and listed in the Permitted Liens list dated February 10, 2011 delivered to the Administrative Agent on that date and any renewal, extension or replacement of any such Lien provided that no such renewal, extension or replacement may extend to property other than that initially charged by such Lien and that the aggregate of all outstanding amounts secured by Liens permitted under this paragraph does not at any time exceed $50,000,000 and provided further that no property charged by such Liens is part of Charged Fixed Assets or is material to the operation of such assets [REDACTED] it being agreed that Cascades will deliver to the Administrative Agent by September 30, 2015 an update of such list removing therefrom the Liens securing obligations which have been paid or satisfied; |
(f) | Liens securing loans and advances made by a Credit Party to another Credit Party, provided such loans and advances are subject to the Security; |
(g) | Liens securing obligations under a Securitization or Factoring Program, provided that such Liens charge only accounts receivable sold pursuant to such program; and |
(h) | Liens by way of deposits or pledges of segregated property consisting of cash and cash equivalents (including marketable securities) to secure obligations under (i) Hedging Agreements with counterparties other than Hedging Creditors, and (ii) Equity Derivatives with counterparties who are Lenders, provided that the aggregate value of the property subject to all such Liens does not at any time exceed $25,000,000; |
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“ Person” means any natural person, legal person, corporation, company, partnership, joint venture, unincorporated organization, business trust or any other entity;
“ Plan ” means an employee benefit or other plan established or maintained by a Credit Party or any ERISA Affiliate and that is covered by Title IV of ERISA;
“ Prime Rate ” means, for any day, the greater of:
(a) | the annual rate of interest established by the Administrative Agent (or the Swingline Lender concerned where Section 2.8 applies) as being its reference rate then in effect for determining interest rates for commercial loans denominated in Dollars made in Canada; and |
(b) | the CDOR Rate for bankers’ acceptances with a period of one month, plus 0.75%; |
“ Prime Rate Loan ” means a loan denominated in Dollars bearing interest at the Prime Rate, plus the Applicable Margin;
“ Securitization or Factoring Program ” means any securitization or factoring program providing for the sale of accounts receivable of any Credit Party, provided for greater certainty that no such program may permit borrowings against the value of accounts receivable;
“ Security ” means the security, the guarantees and the loss payee designations contemplated in Article 10;
“ Security Documents ” means any document or agreement evidencing or relating to the Security, including any subordination agreement contemplated herein;
“ Solvent ” means, with respect to any Person, that as of the date of determination such Person is “solvent” within the meaning given to that term and similar terms under applicable corporations laws or laws relating to voidable transactions or fraudulent transfers or conveyances;
“ Subordinated Debt ” means any debt of Cascades which is fully subordinated and postponed to the obligations of the Credit Parties to the Lenders, the Hedging Creditors and the Credit Card Creditors under the Facility, the Hedging Agreements and credit card obligations (respectively), and that the Administrative Agent, acting with the consent of the Majority Lenders, has agreed in writing to consider as such for the purposes of this Agreement;
“ Subsidiary ” means a Person that is under the Control of another Person;
“ Swingline Lender ” means, in respect of Tranche A, The Bank of Nova Scotia as Lender, in respect of Tranche B, Comerica Bank as Lender, and in respect of Tranche C, BNP Paribas as Lender, provided that the Borrower concerned will be entitled with the consent of the Administrative Agent to replace a Swingline Lender by another Lender who agrees to become a Swingline Lender and has a Commitment under the applicable Tranche;
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“ Tranche ” means any of Tranche “A”, Tranche “B” and Tranche “C”; “ Tranche A ” means the portion of the Facility made available to Cascades as provided in Section 2.1; “ Tranche B ” means the portion of the Facility made available to Cascades US as provided in Section 2.1; “ Tranche C ” means the portion of the Facility made available to Cascades Europe as provided in Section 2.1;
“ US Base Rate ” means, for any day, the greater of:
(a) | the annual rate of interest established by the Administrative Agent (or the Swingline Lender concerned where Section 2.8 applies) as being its reference rate then in effect for determining interest rates for commercial loans denominated in US Dollars made in Canada (in the case of US Base Rate Loans made under Tranche A) or made in New York City (in the case of US Base Rate Loans made under Tranches B and C); |
(b) | the federal funds effective rate in effect on such day (and if such day is not a Business Day, then on the preceding Business Day), [REDACTED] ; the term “federal funds effective rate” means the rate usually designated as such and as published by the Federal Reserve Bank of New York for the relevant Business Day, or if such rate is not available on any Business Day, the rate that the Administrative Agent is prepared to offer, at approximately 9:00 a.m. on such day, for overnight deposits in US Dollars in New York; and |
(c) | but only in the case of US Base Rate Loans made under Tranche B and C, the Libor that would apply on such day for a period of one month, [REDACTED] ; |
“ US Base Rate Loan ” means a loan denominated in US Dollars and bearing interest at the US Base Rate, plus the Applicable Margin;
“ US Revenue Code ” shall mean the Internal Revenue Code of 1986 of the United States, as amended from time to time;
1.3 | Designated Subsidiaries |
(a) | The Subsidiaries of Cascades listed in Schedule B hereof are hereby designated as Designated Subsidiaries. |
(b) | Cascades may designate any other of its Subsidiaries that is a Credit Party (other than a Borrower) as a Designated Subsidiary upon giving prior notice to the Agents specifying the date of effectiveness of the designation (which must be not less than 30 days after the date of the notice). Any such designation will be effective on the date specified in the notice and no such designation may be cancelled or revoked. |
(c) | Each Designated Subsidiary must be at all times a wholly-owned Subsidiary of Cascades and must provide Security as and to the extent required by Article 10. |
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(d) | Cascades covenants and agrees that the Non-Designated Subsidiaries will include no Subsidiary of Cascades who is directly or indirectly liable for the payment of obligations under any of the Cascades Indentures or Funded Debt issued thereunder. |
(e) | Notwithstanding Section 1.3(c), Cascades may designate Cascades Recovery Inc. (and any Subsidiary thereof) as a Designated Subsidiary once Cascades Recovery Inc. becomes a Credit Party regardless of the fact that Cascades Recovery Inc. may not be at such time or thereafter a wholly-owned Subsidiary of Cascades. |
1.4 | Currency Conversions |
Where any amount expressed in any currency has to be converted or expressed in another currency, or where its equivalent in another currency has to be determined, the calculation is made at the spot rate announced or quoted by the Bank of Canada in accordance with its normal practices at or around noon on the previous Business Day for the relevant currency against the other currency.
1.5 | GAAP, Calculations and Historical Adjustments |
(a) | Unless otherwise provided, (i) terms and expressions of an accounting or financial nature have the respective meanings given to such terms and expressions under GAAP; (ii) calculations must be made and financial statements must be prepared in accordance with GAAP insofar as applicable, and (iii) financial ratios must be calculated on an Adjusted Consolidated Basis. |
(b) | In the event of a change in GAAP having a material effect on the intent or the application of the provisions of this Agreement which are of a financial nature, Cascades and the Administrative Agent, at the request of either of them, will use reasonable efforts to negotiate amendments to the affected provisions in order to preserve their original intent or to facilitate their application provided that all such amendments will be subject to Article 19. Should no such amendments be agreed on by Cascades and the Majority Lenders within 120 days from any such request, then the affected provisions will be applied as if the change in GAAP giving rise to the request had not occurred. |
(c) | If any business is acquired, discontinued or disposed of during any period in respect of which EBITDA or Interest Expense has to be calculated, the historical financial results of such business will be included or excluded (as applicable) in the relevant calculations for that period as if the acquisition, disposition or discontinuance had occurred on the first day of said calculation period, but with such adjustments to said historical results as may be made by Cascades and are acceptable to the Majority Lenders. |
1.6 | Time |
Except where otherwise indicated, any reference to time means local time in Montreal.
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1.7 | Headings and Table of Contents |
The headings and the Table of Contents are inserted for convenience of reference only and do not affect the construction or interpretation of this Agreement.
1.8 | Governing Law and Jurisdiction |
(a) | This Agreement is governed by and construed in accordance with the laws of the Province of Quebec and the laws of Canada applicable therein. |
(b) | Any legal proceedings arising out of this Agreement may be instituted in the Superior Court of the district of Montreal (Quebec) and the parties submit to the non-exclusive jurisdiction of such Court. |
1.9 | Previous Agreements |
This Agreement supersedes any previous agreement in connection with the Facility.
1.10 | Inconsistency |
In the event of inconsistency between this Agreement and any other Credit Document, the provisions of this Agreement must be accorded precedence.
Article 2 - The Facility
2.1 | The Facility |
The Lenders, individually, and not solidarily (and not jointly and severally), agree to make available to the Borrowers a revolving credit facility (the “ Facility ”) in an aggregate maximum amount at any time not exceeding the total of the Commitments in effect at such time. As of the date hereof, the Commitment of each Lender under the Facility is as specified opposite its name on the signature pages of this Agreement and the collective Commitments of the Lenders with respect to the Facility aggregate to $750,000,000. The Facility will be available in three tranches, Tranche A, Tranche B and Tranche C, as follows:
(a) | Tranche A, in the amount of $400,000,000 on the date hereof, will be available to Cascades in the proportion as to each Lender of its Commitment under Tranche A; |
(b) | Tranche B, in the amount of $125,000,000 on the date hereof, will be available to Cascades US in the proportion as to each Lender of its Commitment under Tranche B; and |
(c) | Tranche C, in the amount of $225,000,000 on the date hereof, will be available to Cascades Europe in the proportion as to each Lender of its Commitment under Tranche C. |
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2.2 | Reallocation among Tranches |
(a) | Upon giving not less than ten Business Days prior notice to the Administrative Agent, Cascades may change the allocations among Tranches set forth in Section 2.1 (and, accordingly, the resulting available amounts of Tranche A, Tranche B and Tranche C), in multiples of $5,000,000; |
(b) | Any reallocation will result in a corresponding adjustment in the amounts of the Commitments of the Lenders under Tranche A, Tranche B and Tranche C, in order that the percentage of each Lender’s Commitment under any Tranche be in the same percentage as under the Facility; |
(c) | Reallocations will be effective on the first Business Day of the quarter following the expiry of said ten-day notice period. Any reallocation will remain in effect until the effective date of any subsequent reallocation replacing same; |
(d) | No reallocation will be effective if, after giving effect thereto, the outstanding Borrowings under any Tranche would exceed on the intended effective date of such reallocation the intended new amount of such Tranche. |
2.3 | Purpose and Nature of the Facility |
(a) | The Borrowers will use the Facility for general corporate purposes. |
(b) | The Facility will revolve and, accordingly, Borrowings may be obtained, repaid and re-borrowed by the Borrowers under any Tranche until the Facility Maturity Date. |
2.4 | Borrowing Options |
(a) | Borrowings may be obtained by Cascades under Tranche A in the form of: |
(i) | Prime Rate Loans; |
(ii) | Acceptances; |
(iii) | US Base Rate Loans; |
(iv) | Libor Loans in US Dollars or Euros; and |
(v) | Letters of Credit; |
(b) | Borrowings may be obtained by Cascades US under Tranche B in the form of: |
(i) | US Base Rate Loans; |
(ii) | Libor Loans in US Dollars; and |
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(iii) | Letters of Credit; |
(c) | Borrowings may be obtained by Cascades Europe under Tranche C in the form of: |
(i) | Libor Loans in US Dollars or Euros; |
(ii) | US Base Rate Loans; |
(iii) | Letters of Credit; and |
(iv) | European Loans, but only with the Swingline Lender under Tranche C. |
2.5 | Borrowing Base Limitations |
The Borrowers must ensure that the aggregate amount of all outstanding Borrowings (expressed in Dollars) will not at any time exceed the lesser of (i) the amount at such time of the Facility, and (ii) the Borrowing Base. Accordingly, no Borrower may request a Borrowing if the making of such Borrowing would result in such limit being exceeded.
2.6 | Borrowings Proportionate to Commitments |
Each Borrowing will be made through the Administrative Agent at the applicable Branch of Account and will be allocated by the Administrative Agent among the Lenders approximately in the proportion of their respective Commitments under the relevant Tranche subject however to the provisions of Section 2.8 (Swingline Utilizations) and of Article 5 (Letters of Credit).
2.7 | Notice of Borrowings |
To obtain a Borrowing (other than a Letter of Credit), the Borrower concerned must give a notice to the Administrative Agent specifying:
(a) | the applicable Tranche and the selected form of Borrowing; |
(b) | the amount of the Borrowing, with a minimum of (i) $5,000,000 (or US$5,000,000 or Euros 5,000,000 as the case may be) per Borrowing (other than Borrowings under Tranche B and Tranche C) and (ii) $2,000,000 (or US$2,000,000 or Euros 2,000,000 as the case may be) per Borrowing under Tranche B and Tranche C; |
(c) | the date of the Borrowing, which must be a Business Day; and |
(d) | to the extent applicable, the period of the Borrowing. |
The notice must be given by telephone not later than 11:00 a.m. two Business Days prior to the Borrowing, except in the case of a Libor Loan where the notice must be given not later than 10:00 a.m. three Business Days prior to the date of such Libor Loan. Each telephone notice must be followed by a written confirmation on the same date, in the form of Schedule B
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or in any other manner as may be agreed between the Administrative Agent and the relevant Borrower.
2.8 | Swingline Utilizations |
(a) | The notice and minimum amount requirements otherwise applicable to Borrowings do not apply to Borrowings in the form of Prime Rate Loans, US Base Rate Loans or European Loans (as applicable) obtained from any Swingline Lender by way of overdrafts in accounts opened and pursuant to agreements made for such purposes with the applicable Swingline Lender, up to a maximum outstanding amount not exceeding $50,000,000 in Tranche A, $35,000,000 in Tranche B and $30,000,000 in Tranche C (subject however, in the case of Tranche C, to such currency sublimits as may be agreed upon between the Borrower concerned and the Swingline Lender). Any cheque or payment instruction or debit authorization from the Borrower concerned and resulting in an overdraft in any such account will be deemed to be a request for such a Borrowing, in an amount that is sufficient to cover the overdraft. |
(b) | Such accounts may include accounts of the Borrower concerned and of other Credit Parties in respect of which set-off and netting arrangements have been made with the applicable Swingline Lender, including any notional account reflecting any such arrangements. The outstanding Borrowings owed to any Swingline Lender may be calculated after giving effect to said arrangements. |
(c) | The Administrative Agent may permit that Prime Rate Loans, US Base Rate Loans and European Loans (as applicable) under Tranche A, Tranche B or Tranche C be owing to the Lenders in proportions other than those of their respective Commitments under Tranche A, Tranche B or Tranche C, as the case may be. However, the Administrative Agent may from time to time, and will at the request of the applicable Swingline Lender (which may be made at any time), make adjustments among the Lenders under any Tranche so that all Borrowings under such Tranche be approximately in the proportion of the respective Commitments of the Lenders (including the Swingline Lender) under said Tranche. In addition, if outstanding Borrowings by way of overdrafts with a Swingline Lender exceed for three consecutive Business Days US$10,000,000 in the case of Tranche B or 6,000,000 Euros in the case of Tranche C, the applicable Swingline Lender will so notify the Administrative Agent and the latter will make adjustments among the Lenders under the applicable Tranche in amounts sufficient to eliminate the excess. |
(d) | For greater certainty, (i) this Section 2.8 does not authorize the Administrative Agent to allow that Borrowings owing to a Lender (other than a Swingline Lender) under any Tranche exceed the amount of the Commitment of such Lender under such Tranche, and (ii) the aggregate amount of the Borrowings outstanding under any Tranche (including Borrowings from the applicable Swingline Lender) may not exceed the amount of such Tranche, as determined pursuant to Sections 2.1 and 2.2. |
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2.9 | Funding |
(a) | At the request of the Administrative Agent, (including following a request from a Swingline Lender), each Lender will promptly pay to the Administrative Agent such Lender’s share of any Borrowing made or to be made by the Administrative Agent on behalf of the Lenders and of any adjustment payable pursuant to Section 2.8(c). The Administrative Agent will provide the Lenders with such information as may be necessary in order for the Lenders to make payments to the Administrative Agent and fund their respective shares of any Borrowing. |
(b) | Any amount to be paid by a Lender to the Administrative Agent must be available to the Administrative Agent at the Administrative Agent’s Office by 2:00 p.m. on the applicable day. Any amount to be disbursed by the Administrative Agent to a Borrower will be made available to the relevant Borrower by crediting such Borrower’s account at the applicable Branch of Account or at any other place to be agreed upon from time to time between the relevant Borrower and the Administrative Agent. |
2.10 | Lender’s Failure to Fund |
If a Lender fails to advance its share of any Borrowing and, despite such failure, the Administrative Agent advances such amount to a Borrower, the Administrative Agent may recover such amount from such Lender or, if it is unable to do so, from such Borrower, with interest from the date of disbursement at the rate applicable to Borrowings in the same form under the relevant Tranche. Nothing in this Section obliges the Administrative Agent to fund any Borrowing or advance any sums on behalf of a Lender who has failed to comply with its obligations.
2.11 | Conversions and Renewals |
(a) | A Borrower may convert from one form of permitted Borrowings to another form of permitted Borrowings the whole or any part of the outstanding Borrowings under the applicable Tranche and renew Acceptances and Libor Loans, provided that (i) Acceptances and Libor Loans may not be converted prior to the maturity of their respective periods and (ii) Letters of Credit may not be converted. |
(b) | Sections 2.4 to 2.10 apply to a conversion or a renewal with such modifications as may be required. |
(c) | Unless they are repaid, converted or renewed upon the maturity date of their respective periods, (i) Acceptances will then become Prime Rate Loans for the face amount of such Acceptances, (ii) Libor Loans in US Dollars will then become US Base Rate Loans, (iii) Libor Loans in Euros under Tranche A will then become Prime Rate Loans, and (iv) Libor Loans in Euros under Tranche C will then become US Base Rate Loans. |
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(d) | When making adjustments among Lenders pursuant to Section 2.8(c), the Administrative Agent may convert outstanding European Loans into US Base Rate Loans. |
(e) | Any conversion to Borrowings in another currency will be effected by the repayment of the Borrowings to be so converted and by the re-borrowing of an equivalent amount in the other currency. |
2.12 | Limitations on Lender’s Obligation to Fund |
Each Lender’s obligation to fund Borrowings is limited to such Lender’s Commitment under the relevant Tranche, subject however to the agreements made with Swingline Lenders pursuant to Section 2.8(a). The obligations of the Lenders hereunder are not solidary and are not joint and several and no Lender is responsible for the obligations of any other Lender.
2.13 | Increase of the Facility |
(a) | At any time following the execution of this Agreement but no later than the 180 th day preceding the Facility Maturity Date and so long as the amount of the Facility has not been voluntarily reduced by Cascades pursuant to Section 7.5 solely, Cascades may, by notice to the Administrative Agent, request an increase up to $250,000,000 in the amount of the Facility (an “ increase ”). The notice must specify: |
(i) | the amount of the proposed increase, which must be a multiple of $10,000,000, provided that the aggregate amount of all increases made pursuant to this Section 2.13 may not exceed $250,000,000; and |
(ii) | the allocation of the proposed increase among the Tranches. |
(b) | Upon receipt of such notice, the Administrative Agent will offer to the Lenders to participate in the increase pro rata to their Commitments. If some but not all of the Lenders accept the offer, then the Administrative Agent will offer to the Lenders who have then accepted a portion of the increase to participate in the remaining unaccepted portion of the increase pro rata to the Commitments of such Lenders. If after such offers , any portion of the increase remains unaccepted, then Cascades will have the right to offer such portion to Persons who are not Lenders, provided that any offer to any such Person would qualify as an assignment of Commitment hereunder, as if such offer were an assignment. |
(c) | If offers made pursuant to Section 2.13(b) have been accepted, the Administrative Agent, the Borrowers and the Lenders and other Persons who have accepted such offers will execute an amendment to this Agreement: |
(i) | providing that each Person who has accepted to participate in the increase will have a Commitment equal to the amount of its participation in the |
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increase (or an additional Commitment equal to such amount in the case of a Person who is already a Lender); and
(ii) | containing such other provisions as may be necessary to give effect to the increase including as to the absence of a Default and the delivery of legal opinions. |
(d) | For greater certainty, (i) nothing in this Section is intended to commit any Lender to participate or the Administrative Agent to arrange for a participation in an increase, and (ii) the aggregate amount of all increases made pursuant to this Section 2.13 may not exceed $250,000,000. Notwithstanding any other provision of this Agreement, an amendment agreement giving effect to an increase under this Section 2.13 will not require the consent of Lenders other than those participating in the increase and the Agents, any Swingline Lender and any Issuing Lender. |
2.14 | Extension of the Facility Maturity Date |
(a) | Cascades may request that the Facility Maturity Date be extended for a one-year period by delivering to the Administrative Agent a written notice to that effect between April 1 and April 30 of each year (other than the year of the Facility Maturity Date). If all Lenders agree to the extension request within 60 days from the receipt of such notice, the Administrative Agent will notify Cascades of same and the Facility Maturity Date will be extended for a period of one year from its then current date. Subject to Section 2.14(b), unless all Lenders agree in writing to the extension request within said 60-day period, the Facility Maturity Date will not be extended. |
(b) | If a group of Lenders whose Commitments amount in the aggregate to more than 66⅔% (but less than 100%) of the Facility have agreed to an extension of the Facility Maturity Date within the 60-day period specified in Section 2.14(a), the Administrative Agent will notify Cascades of same together with specifying the names of the Lenders who have not provided their consent with such 60-day period (the “ declining Lenders ”). After receipt of such notice and for a period of 45 days, Cascades will be entitled to exercise any of the following options (or a combination of them): |
(i) | Cascades may require that any declining Lender assign its rights under the Facility to another Person who has agreed to assume the Commitment of such declining Lender and to consent to the extension, provided that no such assignment and assumption will be effective unless Section 20.4 be complied with and the consideration paid to such declining Lender for the assignment include all amounts owed to such declining Lender in respect of the Facility (plus breakage costs, if any); |
(ii) | Cascades may cancel in its entirety the Commitment of any declining Lender provided that no such cancellation will be effective unless all |
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amounts owed to such declining Lender in respect of the Facility (plus breakage costs, if any) be paid to it.
(c) | If the Commitments of all declining Lenders have been assumed or cancelled in accordance with Section 2.14(b) within the period of time therein specified, the Administrative Agent will notify the Lenders of same and the Facility Maturity Date will be extended for a period of one year from its then current date. However, if the Commitments of all declining Lenders in respect of the Facility have not been so assumed or cancelled within such period of time, the Facility Maturity Date will not be extended and the Administrative Agent will notify Cascades and the Lenders of same. |
(d) | For greater certainty, if an extension request is not made during any particular year or does not give rise to an extension, such fact will not preclude Cascades from making an extension request during any subsequent year (other than the year of the Facility Maturity Date). |
Article 3 - Acceptances
3.1 | Period and Amounts |
Acceptances
(a) | are for periods of one, two, three or six months, but must mature on a date which is a Business Day and which is no later than the Facility Maturity Date; |
(b) | are denominated in Dollars, in multiples of $100,000 with a minimum of $5,000,000 per issue, provided that the Administrative Agent may round each Lender’s allocation of such issue to the nearest $100,000 increment; |
(c) | constitute outstanding Borrowings for their face amount; |
(d) | do not bear interest nor carry any days of grace; and |
(e) | may be discounted by the Lenders for their own account or may be sold to third parties. |
3.2 | Disbursement |
(a) | The amount to be disbursed to Cascades with respect to Acceptances discounted by the Lenders is the Discounted Proceeds of such Acceptances, less the applicable acceptance fee. |
(b) | In the case of an issue of Acceptances for the purposes of replacing existing Borrowings, Cascades must, concurrently with such issue, pay to the Administrative Agent an amount equal to the aggregate amount of the Borrowings so replaced. The amount so paid to the Administrative Agent will be applied to the portion of the Borrowings which have been replaced by such Acceptances. |
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3.3 | Power of Attorney |
(a) | Upon any issue of Acceptances, each Lender is authorized to sign, complete, endorse and deliver on behalf of Cascades the Acceptances to be so issued and to do all things necessary or useful in order to facilitate such issuance. The Administrative Agent is also authorized to make the necessary arrangements for the negotiation of Acceptances intended to be sold on the money market. |
(b) | In the case of an issue of Acceptances by way of promissory notes to the order of Lenders who do not customarily accept banker’s acceptances (as provided in paragraph (b) of the definition of Acceptances), Cascades will be deemed to have issued the corresponding notes to such Lenders, without the necessity of physical execution and delivery of any note. |
3.4 | Depository Bills |
A Lender who accepts Acceptances that are “depository bills” within the meaning of the Depository Bills and Notes Act (Canada) may deposit same with the CDS Clearing and Depository Services Inc. and such Acceptances may be dealt with in accordance with the rules and procedures of such entity.
3.5 | Availability |
(a) | The availability of Acceptances (including by way of conversions or renewals) is subject (i) to funds being available for such purpose in the Canadian money market and the CDOR Rate being available, and (ii) with respect to any Lender, such Lender not having advised the Administrative Agent and Cascades that the Discount Rate is less than its effective funding cost for Acceptances issued by Cascades to be sold on the Canadian money market. The Administrative Agent will notify Cascades if Acceptances cease to be so available (either generally or with any particular Lender) as well as when availability resumes. For so long as Acceptances are not available with any particular Lender, Borrowings with such Lender that otherwise would have been made by way of Acceptances will be made by way of Prime Rate Loans, notwithstanding Section 2.6. |
(b) | Cascades must ensure that no more than ten different issues of Acceptances be outstanding at any time, provided that on an occasional basis the Administrative Agent may permit such limit to be exceeded. |
Article 4 - Libor Loans
4.1 | Amounts and Periods |
(a) | Libor Loans may be obtained for periods of one, two, three or six months, but must mature on a Business Day which is not later than the Facility Maturity Date; |
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(b) | Libor Loans must be in multiples of US$100,000 (or 100,000 Euros), with a minimum of (i) US$5,000,000 (or 5,000,000 Euros) under Tranche A or (ii) US$2,000,000 (or 2,000,000 Euros) under Tranche B and Tranche C; and |
(c) | The Borrowers must ensure that no more than ten different Borrowings by way of Libor Loans be outstanding at any time under the Facility, provided that on an occasional basis the Administrative Agent may permit such limit to be exceeded. |
4.2 | Changed Circumstances |
If a Lender determines that:
(a) | it is unable to obtain US Dollars or Euros in the London inter-bank market, |
(b) | a law, regulation, administrative decision or guideline, or a Court decision has made it unlawful or prohibits such Lender from making or maintaining Libor Loans in US Dollars or in Euros, or has imposed costs or constraints on such Lender that do not exist on the date hereof in respect of Libor Loans in US Dollars or in Euros, or |
(c) | Libor is less than its effective funding cost for making or maintaining Libor Loans in the applicable currency, |
the affected Lender may so notify the Administrative Agent and the Borrowers concerned and no Libor Loans (including by way of conversions or renewals) in the applicable currency may be made with such Lender from the date of the notice until the cause of such determination has ceased to exist. In any such case, Borrowings with such Lender that otherwise would have been made by way of Libor Loans in the applicable currency will be made by way of US Base Rate Loans notwithstanding Section 2.6.
4.3 | Conversion Prior to Maturity |
If it becomes unlawful or prohibited for a Lender to maintain Libor Loans in US Dollars or in Euros, all Libor Loans owed to such Lender (in US Dollars or Euros, as applicable) will become US Base Rate Loans on the date of the notice given pursuant to Section 4.2.
Article 5 - Letters of Credit
5.1 | Availability |
Letters of Credit will be issued by the applicable Issuing Lender in Dollars, US Dollars, Euros or any other freely tradable currency acceptable to such Issuing Lender, for such transactions and on such terms and conditions as are mutually agreed upon between the Borrower concerned and the applicable Issuing Lender and are not inconsistent with the provisions of this Article 5. Letters of Credit are available only up to an aggregate outstanding amount (expressed in Dollars) at any time not exceeding, in respect of any Tranche, 20% of the amount of such Tranche. The applicable Issuing Lender will notify the Administrative Agent of any request for the issuance of a Letter of Credit.
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5.2 | Maturity of Letters of Credit |
No Letter of Credit may have at any time a remaining term exceeding 365 days from such time or extending beyond the 180 th day following the Facility Maturity Date.
5.3 | Borrowings |
(a) | Any Letter of Credit constitutes from the date of its issue an outstanding Borrowing under the applicable Tranche in a principal amount equal to the maximum amount of the obligation of the applicable Issuing Lender. Any Issuing Lender will notify the Administrative Agent of the issue of any Letter of Credit at least one Business Day prior to the date of such issue. |
(b) | For greater certainty, if Letters of Credit under any Tranche are outstanding on the Facility Maturity Date or on any other date the Borrowings hereunder become due, the aggregate amount of such outstanding Letters of Credit must be prepaid on such date by the Borrower concerned to the Administrative Agent (for the account of the applicable Issuing Lender). However, if any such Letter of Credit expires or is cancelled without having been drawn, the amount prepaid in respect of same will be reimbursed to the Borrower concerned but only if no indebtedness of the Borrowers hereunder is due and payable; otherwise, any such amount will be remitted to the Administrative Agent to be applied to such indebtedness. |
5.4 | Payments under Letters of Credit |
(a) | Any amount paid by an Issuing Lender under a Letter of Credit issued under Tranche A (and not repaid on the same day or already prepaid) will constitute, as of the date of payment, a Prime Rate Loan, if the payment is made in Dollars or in a currency other than the US Dollar, and a US Base Rate Loan if the payment is made in US Dollars. Any amount paid by an Issuing Lender under a Letter of Credit issued under Tranche B or Tranche C (and not repaid on the same day or already prepaid) will constitute, as of the date of payment, a US Base Rate Loan. Any such Loan will be allocated among the Lenders pro rata to their respective Commitments under the applicable Tranche. Each Lender must fund such loan by remitting to the Administrative Agent (for the account of the applicable Issuing Lender) the amount of its share of such loan. The provisions of Section 2.10 will apply in the event of non-disbursement by a Lender. |
(b) | If an Issuing Lender has paid an amount under a Letter of Credit in a currency other than the currency of the resulting Loan, such amount will be converted into the applicable currency on the date of payment. |
5.5 | Indemnity |
The Borrower concerned will reimburse and indemnify the Agents, any Issuing Lender and the Lenders in respect of any reasonable cost, loss or damage incurred or suffered by them in connection with Letters of Credit or litigation relating thereto (including proceedings to restrain
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an Issuing Lender from making or to compel it to make a payment), including reasonable legal fees and other costs of litigation, except for any cost, loss or damage resulting from the wilful misconduct or gross negligence of any Agent, any Issuing Lender or the Lenders.
5.6 | I.C.C. Rules |
Unless otherwise provided in this Agreement or in any agreement relating to their issue, Letters of Credit are governed by the Uniform Customs and Practice for Documentary Credits (I.C.C. Publication 600, 2007 revision).
Article 6 - Fees And Interest
6.1 | Letter of Credit Fees |
The Borrower concerned must pay a fee for each Letter of Credit. The fee for each Letter of Credit which is either a non-documentary letter of credit or a letter of guarantee will be at an annual rate equal to the Applicable Rate. The fee for each documentary Letter of Credit will be determined on the basis of the rate then offered by the applicable Issuing Lender to its customers for similar documentary letters of credit. Fees are calculated on the face amount of each Letter of Credit for the number of days included in the period of same. Any such fee must be paid to the applicable Issuing Lender quarterly in arrears on the first Business Day of each calendar quarter (commencing with the quarter of the issue of the relevant Letter of Credit), for distribution to the Lenders pro rata to their Commitments under the relevant Tranche. Concurrently with the payment of any such fee, the Borrower concerned must also pay to the applicable Issuing Lender, for its own account, a fronting fee at an annual rate equal to [REDACTED] %, calculated as aforesaid.
6.2 | Administrative Charges with respect to Letters of Credit |
The Borrower concerned must pay to the applicable Issuing Lender administrative charges in connection with Letters of Credit at the rates and on the terms generally applicable to the other customers of such Issuing Lender.
6.3 | Standby Fee |
Cascades must pay to the Administrative Agent, for distribution to the Lenders pro rata to their Commitments a standby fee on the unused portion of the Facility. The standby fee will be calculated daily from the most recent date on which it has been paid under the Initial Credit Agreement, will be calculated for any day at the Applicable Rate and will be payable quarterly in arrears on the first Business Day of the following quarter.
6.4 | Acceptance Fees |
Upon the issue of any Acceptance, Cascades must pay to the relevant Lender (or to the Administrative Agent for the account of such Lender) an acceptance fee at an annual rate equal to the Applicable Rate. The acceptance fee will be calculated on the face amount of the applicable Acceptance and for the number of days included in the period of same. Any such payment may be made in the manner provided in Section 3.2(a).
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6.5 | Other Fees |
Cascades must pay, on the Effective Date, the fees specified in the fee letter and the agency fee letter executed by Cascades prior to the date of this Agreement.
6.6 | Interest on Prime Rate Loans |
Prime Rate Loans bear interest until they are converted or repaid in full (both before and after any Event of Default or judgment) at the Prime Rate in effect from time to time, plus the Applicable Margin. The interest is payable by the Borrower concerned monthly in arrears on the first Business Day of the following month.
6.7 | Interest on US Base Rate Loans |
US Base Rate Loans bear interest until they are converted or repaid in full (both before and after an Event of Default or judgment) at the US Base Rate in effect from time to time, plus the Applicable Margin. The interest is payable by the Borrower concerned monthly in arrears on the first Business Day of the following month.
6.8 | Interest on European Loans |
European Loans bear interest until they are converted or repaid in full (both before and after an Event of Default or judgment) at the European Rate in effect from time to time, plus the Applicable Margin. The interest is payable by the Borrower concerned monthly in arrears on the first Business Day of the following month.
6.9 | Interest on Libor Loans |
Each Libor Loan bears interest at the Libor applicable to each such loan, plus the Applicable Margin. The interest is payable by the Borrower concerned at the maturity of the period of the loan or, if the period of such loan is more than three months, at three-month intervals during the period of the loan.
6.10 | Calculation of Interest Rates |
(a) | Interest rates and fees calculated at the Applicable Margins or Rates are annual rates and are calculated daily on the basis of a 365-day year, except for (i) Libor Loans, (ii) US Base Rate Loans under Tranche A when paragraph (b) of the definition of US Base Rate applies to such loans, (iii) US Base Rate Loans under Tranche B and Tranche C, and (iv) European Loans, where in each case rates are calculated on the basis of a 360-day year. |
(b) | For the purposes of the Interest Act (Canada) only, the annual rate of interest equivalent to a rate otherwise calculated under this Agreement is equal to the rate so calculated multiplied by the actual number of days included in a given year and divided by 365 days (or by 360 days, in the case of a rate calculated on the basis of a 360-day year). |
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6.11 | Interest on Arrears |
(a) | Any amount (other than an amount due on account of principal or interest) which is not paid when due will bear interest at the Prime Rate in effect from time to time, increased by 2%, in the case of an amount to be paid in Dollars, at the European Rate in effect from time to time, increased by 3%, in the case of an amount payable in Euros and at the US Base Rate in effect from time to time, increased by 2%, in the case of an amount to be paid in US Dollars or any other currency (other than the Dollar or the Euro). |
(b) | Any interest which is not paid when due will bear interest at the rate that has been used to calculate such unpaid interest. |
(c) | Interest on arrears is compounded monthly and is payable on demand. |
Article 7 - Repayment, Prepayment and Reduction
7.1 | Repayment of the Facility |
Cascades must repay in full the outstanding Borrowings and pay all other amounts owing under Tranche A on the Facility Maturity Date. Cascades US must repay in full all outstanding Borrowings and pay all other amounts owing under Tranche B on the Facility Maturity Date. Cascades Europe must repay in full its outstanding Borrowings and pay all other amounts owing by it under Tranche C on the Facility Maturity Date.
7.2 | Mandatory Prepayments |
Cascades must make (or cause other Borrowers to make) such prepayments as may be necessary to ensure that the aggregate amount of the outstanding Borrowings (expressed in Dollars) will not at any time exceed the lesser of (i) the amount of the Facility, and (ii) the Borrowing Base. Any such prepayment will be applied by the Administrative Agent to outstanding Borrowings under the Tranche made available to the Borrower making payment.
7.3 | Optional Prepayments |
(a) | The Borrower concerned may at any time make prepayments on Borrowings outstanding under Tranche A, Tranche B or Tranche C (as applicable) without affecting their right to re-borrow under such Tranche up to its maximum available amount. Any such prepayment (except for a prepayment applied to overdraft utilizations pursuant to Section 2.8) must be in an amount of at least $2,000,000, US$2,000,000 or 2,000,000 Euros (as applicable) and is subject to the Borrower concerned giving a one-Business Day prior notice to the Administrative Agent. |
(b) | No optional prepayment may be made in respect of Acceptances before the maturity date of their respective periods. For greater certainty, any prepayment in respect of Libor Loans is subject to Section 20.10(c). |
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7.4 | Exchange Rate Fluctuations |
If, at any time, due to fluctuations in the rate of exchange of a currency against another currency, the outstanding amount of the Borrowings under any Tranche, expressed in Dollars, exceeds the amount of such Tranche, Cascades must pay to the Administrative Agent, three Business Days following a demand to that effect, the amount of such excess. However, no such demand may be made as long as the excess is not more than 5% and the Borrowing Base is not exceeded.
7.5 | Reduction of the Facility |
Cascades may, on giving not less than ten Business Days prior notice to the Administrative Agent, permanently reduce the aggregate amount of the Facility by amounts of not less than $5,000,000. Any such reduction will result in a corresponding reduction of each of Tranche A, Tranche B and Tranche C, on a pro rata basis (such reduction to also apply on a pro rata basis as to each Lender). The notice of reduction must specify the amount of the reduction, and the Business Day when the reduction will be become effective. On such date, the Borrowers must make repayments in amounts sufficient for the outstanding Borrowings under any Tranche not to exceed the new amount of such Tranche.
Article 8 – Place of Payment, Currency and Taxes
8.1 | Payments to the Administrative Agent |
Unless otherwise provided or agreed between the Borrower concerned and the Administrative Agent, (i) all payments to be made by a Borrower must be made to the Administrative Agent at the applicable Branch of Account, except that interest payments on outstanding Borrowings owing to a Swingline Lender pursuant to Section 2.8 must be made to such Swingline Lender and interest payments to Lenders under Tranche C whose lending offices are in France must be made directly to such Lenders, and (ii) all payments made to the Administrative Agent will be deemed to have been made for the rateable benefit of the applicable Lenders. Any payment due by a Borrower may be charged to an account maintained by such Borrower with the Administrative Agent or the applicable Lender.
8.2 | Manner of Payments |
Any payment that is due on a day that is not a Business Day may be made on the next Business Day but will bear interest until received in full. All payments must be made free of any set-off or other deduction and in funds which are immediately available on the date on which payment is due.
8.3 | Currency |
Unless otherwise provided, (i) all amounts owing under any Borrowing are payable in the currency of such Borrowing, (ii) Letter of Credit fees under Tranche A are payable in Dollars, except that any such fee owing as a result of a Letter of Credit issued in US Dollars is payable in US Dollars, (iii) Letter of Credit fees under Tranche B are payable in US Dollars, (iv) Letter of
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Credit fees under Tranche C are payable in Euros, (v) standby fees are payable in Dollars, and (vi) all other amounts are payable in Dollars, US Dollars or Euros, as may be specified by the Administrative Agent.
8.4 | Judgment Currency |
If a judgment is rendered against a Borrower for an amount owed hereunder and if the judgment is rendered in a currency (“ other currency ”) other than that in which such amount is owed under this Agreement (“ currency of the Agreement ”), such Borrower will pay, if applicable, at the date of payment of the judgment, an additional amount equal to the excess (i) of the said amount owed under this Agreement, expressed into the other currency as at the date of payment of the judgment, over (ii) the amount of the judgment. For the purposes of obtaining the judgment and making the calculation referred to in (i), the exchange rate will be the spot rate at which the Administrative Agent, on the relevant date, may in Montreal, sell the currency of the Agreement to obtain the other currency. Any additional amount owed under this Section will constitute a cause of action distinct from the cause of action which gave rise to the judgment, and said judgment shall not constitute res judicata in that respect.
8.5 | Payments Net of Taxes |
If a Borrower, any Agent or any Lender is compelled by law to make any withholding or deduction due to any tax or if a Lender is liable to pay tax in respect of any payment due or made by a Borrower, the Borrower concerned must pay to such Agent or such Lender such additional amount as may be necessary in order that the payment actually received be equal to the payment which otherwise would have been received in the absence of such withholding or deduction or tax (including in the absence of any additional withholding or deduction or tax in respect of any additional amount payable pursuant to this Section). However, this Section 8.5 will not apply in respect of (i) a tax on the overall net income or capital of a Lender or (ii) a withholding, deduction or tax from which a Lender would have been exempted but for its failure to fulfill applicable exemption formalities.
Article 9 - Conditions Precedent
9.1 | Conditions Precedent to the Effectiveness of this Agreement |
This Agreement will become effective on the date (the “ Effective Date ”) the Administrative Agent confirms to Cascades and the Lenders that the following documents have been received by the Administrative Agent, in form and substance satisfactory to the Lenders:
(a) | a copy of this Agreement executed by all parties thereto; |
(b) | a certificate as to the legal existence of the Borrowers, an updated version of their constitutive documents and a resolution of their board of directors evidencing the authority of the Persons acting on behalf of the Borrowers; |
(c) | the Corporate Structure Chart; |
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(d) | financial forecasts of Cascades for its 2015, 2016, 2017, 2018 and 2019 financial years (on an Adjusted Consolidated Basis), including yearly financial covenant projections; |
(e) | an acknowledgement by the Borrowers and the Designated Subsidiaries that the Security Documents executed pursuant to the Initial Credit Agreement are still in full force and effect; |
(f) | a pay-out letter and release of Security from the Exiting Lender; |
(g) | legal opinions addressed to the Agents and the Lenders from counsel to the Agents and counsel to the Borrowers, relating to such matters as the Agents may reasonably require; and |
(h) | payment instructions by Cascades for all fees and expenses owing by the Borrowers to the Agents and the Lenders on the Effective Date. |
9.2 | Conditions Precedent to all Borrowings |
The Borrowers may not obtain any Borrowing or convert or renew any Borrowing:
(a) | if the Administrative Agent has not received timely notice of such Borrowing, conversion or renewal; or |
(b) | if a Default has occurred and is continuing or would occur after giving effect to such Borrowing, conversion or renewal. |
Each notice of Borrowing or of the renewal or conversion of a Borrowing constitutes a certification by the Borrowers that no Default has occurred and is continuing or would occur after giving effect thereto.
9.3 | Waiver of Conditions Precedent |
The conditions precedent provided for in this Article 9 are for the sole benefit of the Agents and the Lenders. The Agents and the Lenders may waive such conditions precedent, in whole or in part, with or without conditions, without prejudice to any other rights that they might have against the Borrowers and any other Person.
9.4 | Early Termination of this Agreement |
If all of the conditions precedent provided for in Section 9.1 have not been fulfilled or waived on or before July 17, 2015, this Agreement will not come into effect.
9.5 | Borrowings under the Initial Credit Agreement |
(a) | Subject to paragraphs (d) and (e) below, on the Effective Date (i) the outstanding Borrowings and other amounts owing to the Exiting Lender will be paid in full, and (ii) the Borrowers will make such Borrowings and the Administrative Agent |
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will make such adjustments among the Lenders as may be necessary to ensure that such payment be made and that Borrowings remaining outstanding thereafter be owed to the Lenders pro rata to their Commitments under the Facility.
(b) | After payment in full of all Borrowings and other amounts owing to it under the Initial Credit Agreement, the Exiting Lender will cease to be a lender and be released from its obligations under the Initial Credit Agreement. |
(c) | Any adjustment whereby an amount is paid by a Lender to another Lender under this Section 9.5 will be deemed to be an assignment to the paying Lender by the other Lender of the portion of the Borrowings to which such payment relates. |
(d) | Acceptances issued prior to the Effective Date and then outstanding will be deemed to be, from such date, Acceptances accepted by the Lenders pro rata to their Commitments. From such date, the provisions of this Agreement with respect to acceptance fees will apply to all such Acceptances as if the terms thereof had commenced on such date. The Lenders acknowledge that the Exiting Lender is released from any liability for such Acceptances and accordingly, the Lenders, pro rata to their Commitments, will indemnify the Exiting Lender from any such liability. The Borrowers will make to the Administrative Agent all such payments and the Administrative Agent will make among the Lenders and the Exiting Lender all such adjustments as are necessary to give effect to the foregoing, including to ensure that the non-accrued portion of any acceptance fee relating to such Acceptances is paid and received by the Lenders at the Applicable Rate and pro rata to their Commitments. |
(e) | (i) Libor Loans made prior to the Effective Date and outstanding on such date will continue from said date to be owing to the Lenders and the Exiting Lender in the proportion of their commitments under the Initial Credit Agreement and Section 2.11 will apply to such loans on the maturity of their respective period, subject however to adjustments among the Lenders to give effect to their Commitments and also to the following paragraph with respect to existing Libor Loans owing to the Exiting Lender; |
(ii) Existing Libor Loans owing to the Exiting Lender must be repaid by each Borrower concerned on the maturity of their respective period. Should any Borrower concerned fail to pay on such date the principal amount of such existing Libor Loans together with accrued and unpaid interest thereon, the Lenders (in the proportion of their Commitments under the applicable Tranche) will make such payments on behalf of such Borrower as may be necessary to ensure that the said amounts are paid to the Exiting Lender. Any such payment made by a Lender will constitute from the date of payment a US Base Rate Loan;
(f) | the Administrative Agent is authorized to confirm to the Exiting Lender the indemnification provisions in its favour pursuant to this Section 9.5. |
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Article 10 - S ecurity
10.1 | Guarantees |
Each Borrower must guarantee in favour of the Collateral Agent and the Lenders the performance of all obligations of the other Borrowers under the Facility and each Designated Subsidiary must guarantee in favour of the Collateral Agent and the Lenders the performance of all obligations of the Borrowers under the Facility.
10.2 | Security over Current Assets |
(a) | To secure the performance of the obligations of the Borrowers under the Facility, each of the Borrowers and the Designated Subsidiaries that owns material inventory and accounts receivable must provide in favour of the Collateral Agent (for the benefit of the Agents and the Lenders) security over all of its present and future inventory and accounts receivable and other claims (including related assets), present and future. |
(b) | Any cash and cash equivalents deducted in the calculation of the Funded Debt to Capitalization Ratio (as contemplated by the definition of such ratio) must be held by Cascades, Cascades USA Inc. and Cascades Canada ULC in a bank account in Canada or the United States and be specifically subject to perfected security for the benefit of the Agents and the Lenders. |
10.3 | Charged Fixed Assets |
(a) | To secure the performance of the obligations of the Borrowers under the Facility, Cascades Canada ULC (formerly Cascades Canada Inc.) must provide in favour of the Collateral Agent and the Lenders security over the following plants and related assets: 467 Marie-Victorin Street, Kingsey Falls, Quebec, 75 Marie-Victorin Street, Candiac, Quebec, 200 Cascades Street, Cabano, Quebec, 601, 655 and 701 Creditstone Road, Vaughan, Ontario and 115 de la Princesse, Lachute, Quebec (together with other fixed assets which may become subject to the Security pursuant to this Section 10.3, the “ Charged Fixed Assets ”). |
(b) | For Borrowing Base purposes, the market value of the Charged Fixed Assets will be determined by the Agents using a market value amount in an aggregate amount of $530,000,000 until such amount is revised as a result of the delivery to the Administrative Agent of a valuation report in accordance with the other provisions of this Section 10.3. |
(c) | Within one year from the date of this Agreement, Cascades will deliver to the Administrative Agent a valuation report of a date not older than three months prior to its delivery date for each Charged Fixed Asset. Any such valuation will remain in effect until the Facility Maturity Date falling on July 7, 2019 unless a new valuation report is required pursuant to Section 10.3(e). |
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(d) | After the date hereof, Cascades will have the option, but not the obligation, to increase the market value of the Charged Fixed Assets component of the Borrowing Base by providing, or causing Designated Subsidiaries to provide, security over other fixed assets acceptable to the Majority Lenders by an amount equal to the market value of such assets as determined by a valuation report to be furnished to the Administrative Agent prior to the grant of the related security. |
(e) | If, at any time after the date of this Agreement, the Majority Lenders have reasonable grounds to believe that the market value of the Charged Fixed Assets has reduced below the most recent value determined pursuant to this Section 10.3 (or below $530,000,000 if such most recent value is greater than $530,000,000), Cascades will provide to the Administrative Agent, within 30 days from a request by the Administrative Agent, a valuation report on such assets. |
(f) | From the date a valuation report is provided to the Administrative Agent and until such time a new valuation report is so provided pursuant to this Section 10.3, the market value of the Charged Fixed Assets will be determined for Borrowing Base purposes on the basis of the most recent valuation. |
(g) | If there has been a decrease in the market value of the Charged Fixed Assets or if a Credit Party proposes to sell assets which are part of the Charged Fixed Assets, Cascades will have the option, but not the obligation, to provide or to cause Designated Subsidiaries to provide security over other fixed assets acceptable to the Majority Lenders to increase at a higher level (or to maintain at a certain level in the event of a proposed sale) the market value of the Charged Fixed Assets component of the Borrowing Base. The market value of such other fixed assets will be determined on the basis of a valuation report which Cascades undertakes to provide to the Administrative Agent at the time of any request made to the Majority Lenders pursuant to this paragraph. For greater certainty, (i) no such sale may be made unless same is otherwise permitted by Section 13.3(b) and (ii) from the date of any such sale, the market value of the fixed assets so sold will no longer be included in the Charged Fixed Assets component of the Borrowing Base. |
(h) | Any valuation report to be provided to the Administrative Agent pursuant to this Section 10.3 must use the same methodology as used for the valuation reports delivered pursuant to the Initial Credit Agreement and may be prepared using a combination of internal analysis and independent assessments; the conclusion of each report must be validated by an independent firm acceptable to the Majority Lenders. Each such report must be accompanied by an environmental review acceptable to the Majority Lenders. |
10.4 | Insurance |
The Borrowers will cause the Collateral Agent to be named as loss payee on all insurance policies relating to the property and assets covered by the Security. Each policy covering immovable property and equipment must contain a “mortgage clause”.
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10.5 | Security for Hedging Agreements and Credit Card Obligations |
(a) | The guarantees, security and loss payee designations provided for under the other sections of this Article 10 (the “ Security ”) will also secure the performance of the obligations of (i) the Borrowers to the Lenders and their Affiliates in their capacity as counterparties under Hedging Agreements (the “ Hedging Creditors ”) and (ii) the Credit Parties to the Lenders in their capacities as creditors of obligations arising from credit card agreements with Credit Parties (the “ Credit Card Creditors ”). The Collateral Agent will act as agent for the Hedging Creditors and the Credit Card Creditors for all purposes of the Security Documents, including the enforcement or release thereof. For such purposes, the provisions of Article 17, Article 18 and Article 19 (adapted accordingly) will also apply to the Hedging Creditors and the Credit Card Creditors. However, until termination and repayment in full of the Facility, the claims of the Hedging Creditors and the Credit Card Creditors will not be taken into account in any situation where a decision regarding the Security has to be made by the Lenders, including any enforcement or release thereof. |
(b) | The rights of the Lenders, the Hedging Creditors and the Credit Card Creditors under the Security will rank pari passu , but only to the extent of an aggregate maximum amount of $135,000,000 in respect of the claims of the Hedging Creditors under Hedging Agreements (such amount to be calculated as provided in Section 10.5(c)) and of $15,000,000 in respect of the claims of the Credit Card Creditors under credit card obligations . Any excess will rank after the rights of the Lenders under the Facility. Any proceeds of realization of the Security to be distributed to the Hedging Creditors and the Credit Card Creditors will be allocated among them pro rata to their claims (irrespective of the dates of the related agreements or transactions). |
(c) | Each Hedging Creditor will calculate its claim under any Hedging Agreement in accordance with normal market practices (using the mark-to-market method whenever applicable) and after giving effect to any close-out, netting arrangement or right of set-off provided by contract or permitted by law. |
(d) | The Hedging Agreements and credit card obligations secured by the Security will consist of Hedging Agreements made or credit card obligations incurred at a time when the counterparty or creditor thereof was a Lender (or an Affiliate of a Lender in the case of Hedging Agreements). For greater certainty, the Security (to the extent not released by the Lenders) will continue to secure the obligations of any Borrower to any Hedging Creditor or any Credit Party to any Credit Card Creditor (i) after termination and repayment in full of the Facility, or (ii) after such Hedging Creditor (or the Lender affiliated with it) or Credit Card Creditor has ceased to be a Lender. |
(e) | The Agents will be entitled at any time to assume that the only Lenders or Affiliates thereof with a Hedging Creditor or Credit Card Creditor status are those |
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who have notified the Agents of such status before such time. Cascades represents and warrants to the Agents that the Exiting Lender has no such status.
10.6 | Validity and Contents of Security Documents |
The Security must be valid, perfected and first-ranking at all times with respect to all property intended to be covered thereby, subject however to Liens described in paragraph (a) and in the exception at the end of paragraph (e) of the definition of Permitted Liens. Each Security Document must be in form and substance satisfactory to the Collateral Agent and remain valid and in force at all times. The Security Documents will include such legal opinions, Lien searches and certificates of location or surveys as the Collateral Agent may reasonably require.
10.7 | Exceptions for certain Credit Parties |
Notwithstanding any other provision of the Credit Documents, but except as otherwise provided in agreements subsequent to the date hereof, (i) the obligations of Cascades Europe under the Credit Documents will exclude any obligation of any other Credit Party, and (ii) Cascades Europe will not be required to guarantee the performance of any obligation of the other Borrowers or to provide security over its inventory and accounts receivable.
10.8 | Release of the Security |
The Collateral Agent is authorized to act alone to release the Security with respect to any property which is the subject of a disposition permitted by this Agreement. The Collateral Agent is authorized to determine whether any disposition is so permitted by relying on a certificate from Cascades.
Article 11 - Representations and Warranties
Each of the Borrowers represents and warrants that:
11.1 | Corporate Existence and Capacity |
Each of the Credit Parties
(a) | is a Person duly constituted and organized, validly existing and in good standing under the laws of the jurisdiction of its constitution; |
(b) | has all requisite corporate or other power necessary to own its assets and carry on its business as now being or as proposed to be conducted; and |
(c) | is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could have a Material Adverse Effect. |
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11.2 | Authorization and Validity |
Each Credit Party has all necessary power, authority and legal right to execute, deliver and perform its obligations under the Credit Documents to which it is a party, has duly authorized by all necessary action the execution, delivery and performance of its obligations under such Credit Documents and has duly and validly executed and delivered the Credit Documents to which it is a party. The obligations of each Credit Party under the Credit Documents to which it is a party constitute legal, valid and binding obligations, enforceable against such Credit Party in accordance with their terms.
11.3 | No Breach |
The execution and delivery of the Credit Documents and the performance by the Credit Parties of their respective obligations thereunder will not conflict with, result in a breach of or require any consent under, the constitutive documents or by-laws of any Credit Party, or any applicable law or regulation in any material respect, or any order or decision of any court or governmental authority or agency, or any agreement (including the Cascades Indentures) to which any Credit Party is a party or by which it or any of its property is bound.
11.4 | Approvals |
Except for filings or registrations required to perfect the Security, no authorization, approval or consent of, nor any filing or registration with, any governmental or regulatory authority or agency, is necessary for the execution, delivery or performance by each Credit Party of any Credit Document to which it is a party or to ensure its legality, validity or enforceability.
11.5 | Compliance with Laws and Permits |
Each of the Credit Parties is in compliance in all material respects with all laws and regulations applicable to it and its business and assets, including Environmental Laws and anti-bribery, anti-money laundering and anti-terrorism laws. Each of the Credit Parties holds all material permits, licenses, approvals, consents and other authorizations required under all such laws and regulations to own its assets and to carry on its business.
11.6 | Title to Assets |
The assets of the Credit Parties, taken as a whole, are not subject to title defects or restrictions which could materially and adversely impair their value or normal use. The Credit Parties own or have rights of use for all property and assets (including intellectual property) necessary to carry on their businesses.
11.7 | Litigation |
There are no legal or arbitration proceedings, or any proceedings by or before any governmental or regulatory authority or agency, or, to the best of its knowledge, any claim or investigation by any such authority or agency, or any labour disputes, now pending or, to the best of its knowledge, threatened against any of the Credit Parties or any of their properties or rights that, if adversely determined, could have a Material Adverse Effect.
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11.8 | No Default |
No Default has occurred and is continuing.
11.9 | Solvency |
Each of the Credit Parties is Solvent.
11.10 | Taxes |
Each of the Credit Parties has filed all income tax returns and all other material tax returns and paid all taxes material in their amount that are required to be filed or paid by them. The charges, accruals and reserves on the books of the Credit Parties in respect of taxes and other governmental charges are adequate.
11.11 | ERISA and Pension Plans |
Each Plan and each other pension or employee benefit plan of any Credit Party is in compliance in all material respects with the applicable provisions of ERISA, the US Revenue Code and any other applicable law. No Credit Party has any material unfunded liability under any pension plan on an ongoing or termination basis.
11.12 | Margin Stock Restrictions |
None of the Credit Parties is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, of buying or carrying margin stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any margin stock in violation of Regulations U and X issued by the Board of Governors of the Federal Reserve System of the United States.
11.13 | Investment Company Act |
None of the Credit Parties is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940 of the United States, as amended.
11.14 | Restriction on Payments |
Except as provided in the Cascades Indentures, none of the Credit Parties is subject to any law, regulation, agreement or legal impediment that prohibits, restricts or imposes any condition upon the ability of a Credit Party to pay Distributions or to make or repay loans or advances.
11.15 | Corporate Structure and Location of Assets |
The Corporate Structure Chart contains a complete and correct list of all of the Subsidiaries of Cascades and indicates (i) the jurisdiction of formation of each such entity, (ii) each Person holding ownership interests in each such entity, (iii) the nature of the ownership
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interests held by each such Person and the percentage of ownership represented by such ownership interests, (iv) the location of the registered and chief executive offices of each Credit Party that must provide Security, (v) any prior name (including any pre-merger corporate name) of each such Credit Party and (vi) the jurisdictions where the material inventory and accounts receivable of each such Credit Party are located.
11.16 | Financial Statements and Financial Year |
The last audited financial statements of Cascades are complete and correct and fairly present the consolidated financial condition and results of operation of Cascades as at their stated date, all in accordance with GAAP. Except as reflected or disclosed in such financial statements, none of the Credit Parties has on the date hereof any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavourable commitments that have not been disclosed in writing to the Administrative Agent and the Lenders. The fiscal year of each of the Credit Parties ends on December 31 of each year.
11.17 | No Material Change |
There has been no Material Adverse Change since December 31, 2014.
11.18 | True and Complete Disclosure |
The information, reports, financial statements and documents furnished or to be furnished by or on behalf of the Credit Parties to the Agents or any Lender in connection with the negotiation, preparation, execution, delivery or performance of the Credit Documents, when taken as a whole, do not and will not contain any untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
Article 12 - Affirmative Covenants
12.1 | General Covenants |
Each of the Borrowers will, and will cause each of the other Credit Parties to:
(a) | Legal Existence – subject to Section 13.3, preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises; |
(b) | Legal Compliance – comply in all material respects with the requirements of all laws and regulations applicable to it and its business and assets (including Environmental Laws and anti-bribery, anti-money laundering and anti-terrorism laws) and with all orders of governmental or regulatory authorities; |
(c) | Payment of Taxes – pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property or assets prior to the date on which penalties or interest attach thereto, except for any such tax, assessment, charge or levy the payment of which is being |
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contested in good faith and by proper proceedings and against which adequate reserves are being maintained;
(d) | Maintenance of Property – maintain all of its properties and assets used or useful in its business in good working order and condition, ordinary wear and tear excepted; |
(e) | Material Agreements – perform its obligations under and preserve and maintain in force all agreements to which it is a party that are necessary for or material to its operations and business; |
(f) | Insurance – insure and keep insured its property, assets and business, and will maintain business interruption and civil liability (including product and environmental liability) insurance for such coverage as a prudent administrator would obtain for similar property, assets and businesses, in each case, with financially sound and reputable insurance companies; |
(g) | Records – keep adequate records and books of account, in which complete entries will be made in accordance with GAAP; and |
(h) | Access – permit representatives of any Agent and any Lender, upon reasonable prior notice and during normal business hours, to examine, copy and make extracts from its books and records, to inspect any of its properties or assets, and to discuss its business and affairs with its officers and auditors. |
12.2 | Use of Proceeds and Compliance with Indenture Limitations |
(a) | The Borrowers will use the proceeds of the Facility only for the purposes permitted under this Agreement. The Borrowers will not use the Facility to finance any private or public tender offer for the shares or other securities of a Person whose governing body has not approved such offer (“hostile take-over”). |
(b) | The Borrowers will ensure that the outstanding obligations secured by the Security and that the value of the assets subject to Permitted Liens will not at any time exceed any maximum amount permitted under any of the Cascades Indentures. |
12.3 | Know Your Customer Laws |
Promptly, following a request by any Lender, the Borrowers will provide all documentation and other information which such Lender may reasonably request in order to comply with its ongoing obligations under applicable “know your customer” laws and regulations in effect in Canada, the United States and France, including without limitation the USA Patriot Act (as amended) and any similar law. The Borrowers authorize any Lender to request and obtain such information from any Person. The Borrowers also acknowledge that pursuant to such laws and regulations each Lender is or may be required to obtain, verify and
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record information which allows such Lender to identify each Borrower in accordance with said laws and regulations.
12.4 | Further Assurances |
Each of the Borrowers will, and will cause each of the other Credit Parties to, cooperate with the Lenders and the Agents and execute such further instruments and documents as the applicable Agent may reasonably request to carry out to its satisfaction the transactions contemplated in the Credit Documents.
12.5 | Representations and Warranties |
Each of the Borrowers will ensure that all representations made in this Agreement are true and correct at all times, except for representations made as of a date expressly stated therein.
Article 13 - Negative Covenants
Each of the Borrowers covenants and agrees that:
13.1 | Negative Pledge |
None of the Credit Parties will create, incur, assume or suffer to exist any Lien on their present and future property or assets except for the Security and Permitted Liens.
13.2 | Indebtedness |
None of the Credit Parties other than Cascades will create, incur, assume or permit to exist any Funded Debt other than:
(a) | indebtedness to the Agents and the Lenders under the Credit Documents; |
(b) | indebtedness among the Credit Parties; |
(c) | indebtedness permitted to be secured by Permitted Liens; |
(d) | indebtedness under Hedging Agreements and Equity Derivatives, provided that none of the Credit Parties (including Cascades) will enter into Hedging Agreements, Equity Derivatives or other derivative agreements for speculative purposes; |
(e) | indebtedness under any of the Cascades Indentures; and |
(f) | indebtedness up to an aggregate outstanding amount for all Credit Parties other than Cascades not exceeding at any time the greater of $150,000,000 and 6% of Net Tangible Assets. |
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13.3 | Limitations on Fundamental Changes |
None of the Credit Parties will:
(a) | enter into any transaction of merger or amalgamation, or liquidate, wind up or dissolve itself, except that any Credit Party may merge or amalgamate with any other Credit Party provided that the following conditions are fulfilled: |
(i) | no Default occurs as a result of the merger or amalgamation; |
(ii) | if any of the merging or amalgamating entity is a Borrower or a Designated Subsidiary, the surviving or amalgamated entity must be a Borrower or a Designated Subsidiary and must execute and deliver to the applicable Agent all such documents as may be necessary or advisable to confirm that such entity is bound as successor of the merging or amalgamating entities by all Credit Documents to which such entities were parties; |
(iii) | the Administrative Agent has been provided prior to or concurrently with the merger or amalgamation with satisfactory evidence of compliance with the requirements of clauses (i) and (ii) including such financial information, certificates, documents and legal or other professional opinions as the Administrative Agent may reasonably request; and |
(iv) | a seven-day prior notice is given to the Administrative Agent in the case of an amalgamation or merger involving a Borrower. |
(b) | sell, lease, transfer or otherwise dispose of, in one transaction or a series of related transactions to any Person (in each case, a “ disposition ”), any property (other than inventory sold in the ordinary course of business), except for the following dispositions (in each case, provided that no Default occurs as a result of the disposition): |
(i) | a disposition of property with a market value of less than $50,000,000; |
(ii) | a disposition to another Credit Party provided the conditions of paragraph (a) above are fulfilled (as if the disposition were a merger and the transferee were the surviving entity) and provided further that if the disposition relates to substantially all of the property of the transferor, the latter (if not a Borrower) may wind-up or dissolve itself after completion of such disposition; |
(iii) | a disposition to any non-Credit Party (other than pursuant to a Securitization or Factoring Program), provided that the disposition is made for a consideration at least equal to the fair market value of the related property, at least 75% of the consideration is paid in cash or through assumption of liabilities and the available cash proceeds of the disposition |
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are used to permanently reduce the Facility by no later than the 360 th day following their receipt; for purposes of the foregoing, the available cash proceeds of a disposition are the cash proceeds of such disposition (net of related expenses and payments made to repay indebtedness secured by Liens on the property sold), less the portion of such cash proceeds which has been reinvested in Credit Parties within 360 days from the date of their receipt or allocated by Cascades to the funding of an investment made in Credit Parties within 180 days prior to the date of the disposition; notwithstanding the foregoing:
(x) | [REDACTED] |
(y) | [REDACTED] |
(z) | [REDACTED] . |
(iv) | dispositions of accounts receivable pursuant to a Securitization or Factoring Program to the extent such accounts receivable are not generated by a disposition of inventory subject to the Security made after the occurrence of an Event of Default specified in Section 16.1(f) or Section 16.1(g)) or after the date the outstanding Borrowings become repayable pursuant to Section 16.2 and provided that no account receivable subject (in whole or in part) to a Securitization or Factoring Program will be included in the Borrowing Base, it being understood however that accounts receivable permitted to be disposed of pursuant to this clause (iv) will be excluded from the Security from the date of any such permitted disposition; and |
(v) | a disposition of property to any non-Credit Party in exchange for other property to be used in the business of the Credit Parties, provided that the market value of the property so received in exchange is not less than that of the property so disposed; |
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(c) | carry on any business, directly or indirectly, other than the businesses currently carried on by them and activities ancillary or reasonably related thereto (the “ core business ”), or make any investment (other than investments referred to in clauses (ii) and (iii) of Section 13.4(b)) in a non-Credit Party who is not in the same line of business as the core business, provided that businesses other than the core business may be carried on by Credit Parties and by non-Credit Parties in which investments are made to the extent that the aggregate of the combined assets of such Credit Parties and of the value of all such investments in such non-Credit Parties does not at any time exceed 5% of Cascades’ Net Tangible Assets, provided however that the foregoing limitation will not apply to the investments made by Cascades in Boralex Inc. prior to December 31, 2010. |
13.4 | Investments |
(a) | None of the Credit Parties will, directly or indirectly, make any investment in any Person who is not a Credit Party, if such investment would result in the aggregate amount of all investments made after July 1, 2015 in non-Credit Parties being in excess of $300,000,000. |
(b) | However, the foregoing limitation will not apply to (i) investments funded from the proceeds of any issue of equity made by Cascades after July 1, 2015, (ii) cash or cash equivalent investments made for cash management purposes, and (iii) loans and advances to employees in an aggregate amount not exceeding $5,000,000 at any time. |
13.5 | Distributions |
(a) | None of the Credit Parties will make any Distribution (other than a direct or indirect Distribution to a Credit Party) if there is a Default or if such Distribution could result in a Default or if, after giving effect to the Distribution, the aggregate amount of all Distributions made from July 1, 2015 to non-Credit Parties were to exceed 50% of the net income of Cascades (calculated on an Adjusted Consolidated Basis but with the increases, exclusions or reductions resulting from the application of paragraphs (d) to (k) of the definition of EBITDA) for the period from July 1, 2015 to the end of its most recent fiscal quarter (treated as one accounting period) plus the sum of (i) the proceeds of any new issue of equity made by Cascades during the same period less the portion of same which is used to fund investments in non-Credit Parties (other than investments permitted by Sections 13.4(b)(ii) and (iii)), and (ii) $150,000,000. |
(b) | However, the foregoing limitation will not apply to (i) Distributions made pursuant to stock option plans and other plans or agreements with or for the benefit of employees or directors up to an aggregate amount not exceeding $10,000,000 per fiscal year (with the unused portion being permitted to be carried forward but to the next year only and up to $5,000,000 only) and (ii) ordinary course of business Distributions on Cascades’ shares and open market purchases of Cascades’ shares pursuant to stock buyback programs, up to an aggregate |
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amount of $50,000,000 per fiscal year (with the unused portion being permitted to be carried forward but to the next year only and up to $25,000,000 only).
13.6 | Transactions with Related Parties |
None of the Credit Parties will engage in any material transactions with any related party on terms and conditions not less favourable in any material respect to the relevant Credit Party than those that could be obtained on an arm’s length basis from unrelated third parties, provided that the foregoing requirement will not apply to transactions among the Credit Parties. For the purposes of this Section 13.6, (i) related party means, with respect to a Person, another Person that Controls or is Controlled by or is under common Control with the relevant Person, and (ii) the definition of Control must be read replacing 50% by 20%.
Article 14 - Financial Ratios
14.1 | Funded Debt to Capitalization Ratio |
Cascades must maintain at all times, on an Adjusted Consolidated Basis, a Funded Debt to Capitalization Ratio of not more than 65%.
14.2 | Interest Coverage Ratio |
Cascades must maintain at all times, on an Adjusted Consolidated Basis, an Interest Coverage Ratio not less than 2.25:1.00 .
Article 15 - Reporting Requirements
15.1 | Annual Reporting |
The Borrowers will deliver to the Administrative Agent, for distribution to the Lenders, as soon as possible but within 90 days after the end of each fiscal year of the Borrowers:
(a) | the unqualified audited annual financial statements of Cascades, on a consolidated basis and the unaudited annual financial statements of Cascades, on an Adjusted Consolidated Basis; |
(b) | the unaudited annual financial statements of each of the other Borrowers on a consolidated basis; |
(c) | the annual business plans and annual operating and capital budgets for the current fiscal year of Cascades, on a consolidated and Adjusted Consolidated Basis; |
(d) | the unaudited annual financial statements of each of the businesses operated with the Charged Fixed Assets; and |
(e) | a certificate evidencing the insurance coverage required to be maintained by the Credit Parties pursuant to this Agreement. |
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15.2 | Quarterly Reports |
The Borrowers will deliver to the Administrative Agent, for distribution to the Lenders, as soon as possible but within 60 days after the end of each of their fiscal quarters (including the fourth quarter):
(a) | the unaudited financial statements of Cascades for the relevant fiscal quarter, on a consolidated and Adjusted Consolidated Basis; |
(b) | the unaudited financial statements for the relevant fiscal quarter of each of the other Borrowers on a consolidated basis; |
(c) | the unaudited financial statements for the relevant quarter of each of the businesses operated with the Charged Fixed Assets; |
(d) | a compliance certificate relating to the covenants herein in the form of Schedule D (with sufficient details to reconcile the financial statements with the calculation base of the financial covenants); |
(e) | a Borrowing Base report in the form of Schedule D; and |
(f) | copy of any filing with securities regulators. |
15.3 | ERISA |
Cascades US will notify the Administrative Agent of the occurrence of any of the following events, within 10 days after it knows or has reason to believe that the relevant event has occurred (and will provide a copy of any report or notice required in that connection to be filed with or given to PBGC):
(a) | any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, unless the 30-day notice requirement in respect thereof has been waived by the PBGC; |
(b) | a notice of intent to terminate any Plan or any action taken by a Credit Party to terminate any Plan, provided notice of intent to terminate is required pursuant to Section 4041(a)(2) of ERISA; |
(c) | the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan; and |
(d) | the adoption of an amendment to any Plan that, pursuant to Section 401(a)(29) of the US Revenue Code or Section 307 of ERISA, would result in the loss of tax-exempt status of the trust of which such Plan is a part if security has not been provided in accordance with the provisions of these Sections. |
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15.4 | Reporting from Time to Time |
The Borrowers will promptly notify the Administrative Agent of any Default and deliver to the Administrative Agent any auditor letter highlighting issues or deficiencies that, if not addressed or corrected, could reasonably result in a Material Adverse Change. The Borrowers will also furnish the Administrative Agent all information, documents and records and allow any enquiry, study, audit or inspection that the Administrative Agent or, when an Event of Default is continuing, any Lender may reasonably request in connection with the business, financial condition, property, assets or prospects of the Credit Parties, or to verify compliance with the obligations of any of the Credit Parties under any Credit Document.
15.5 | Hedging Agreements, Securitization and Factoring |
(a) | The Borrowers will provide to the Administrative Agent, concurrently with the compliance certificates required to be delivered pursuant to Section 15.2, a report listing all outstanding Hedging Agreements secured by the Security and all outstanding Hedging Agreements and Equity Derivatives secured by a Permitted Lien, and specifying the counterparties, notional amounts, dates, maturities and marked-to-market value of all such agreements (as applicable). |
(b) | Prior to or concurrently with the coming into effect of any Securitization or Factoring Program (or any material amendment thereto), Cascades will provide to the Administrative Agent (i) a description of such program (or of such material amendment), such description to include the criteria permitting the identification of the accounts receivable subject to the program as well as the amount and term of any such program, and (ii) an update (giving effect to the program or the amendment) of the most recent Borrowing Base report delivered pursuant to Section 15.2(e) |
Article 16 - Events of Default and Remedies
16.1 | Events of Default |
The occurrence of one or more of the following events constitutes an event of default (“ Event of Default ”) under the Credit Documents:
(a) | a Borrower defaults in the payment when due of any amount owing under any Facility in respect of principal, interest or acceptance fee, or defaults for more than five Business Days in the payment of any other amount owing under a Credit Document or any Hedging Agreement with a Lender or an Affiliate thereof; |
(b) | anyone or more of the Credit Parties (i) fails or fail to make a payment or payments exceeding in the aggregate $ [REDACTED] in respect of any obligation or obligations (other than the Facility), when and as due, or (ii) is or are in default under any of the Cascades Indentures and, in each case, such failure or default continues after the applicable notice or grace period, if any; |
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(c) | any representation, warranty or certification made or deemed made by a Credit Party in any Credit Document proves to be false or misleading as of the time made in any material respect; |
(d) | any of the provisions of Article 10 is not complied with; |
(e) | any of the covenants contained in Article 13 and Sections 14.1 and 14.2 is not complied with; |
(f) | a Credit Party becomes unable to pay its debts generally as such debts become due or is adjudicated bankrupt or insolvent; |
(g) | a Credit Party (i) applies for or consents to or is the subject of an order for the appointment of a receiver, interim receiver, trustee (or any Person performing similar functions) in respect of itself or of all or a substantial part of its assets, (ii) makes a general assignment for the benefit of its creditors, (iii) takes advantage of any law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or (iv) takes any action for the purpose of effecting any of the foregoing; |
(h) | a proceeding is commenced or any similar action is taken against a Credit Party seeking (i) its bankruptcy, reorganization, liquidation, dissolution, arrangement or winding-up, or similar relief, (ii) the appointment of a receiver, interim receiver, trustee (or any Person performing similar functions) in respect of itself or of all or any substantial part of its assets, or (iii) the seizure or the attachment of, or the enforcement of remedies on, any part of the assets of the Credit Parties having a value of more than $ [REDACTED] and, in each case, such proceeding (or similar action) is not dismissed or withdrawn after a period of 60 days, provided that such grace period will apply only if such proceeding (or action) is diligently contested in good faith and does not disrupt the business or normal operations of the Credit Party concerned; |
(i) | a Credit Party defaults in the performance of any of its other obligations under a Credit Document and such default continues unremedied for a period of 30 days after notice by the Administrative Agent to the Borrowers; |
(j) | the Control of Cascades is acquired by any Person (or by a group of Persons acting in concert) other than Bernard Lemaire, Laurent Lemaire or Alain Lemaire (the term “Control” being read for the purposes of this Section 16.1(j) by referring only to clauses (i) through (iv) of the definition of Control in Section 1.1); or |
(k) | a Material Adverse Change. |
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16.2 | Remedies |
If an Event of Default occurs and is continuing, the Administrative Agent (or the Collateral Agent in the case of paragraph (c) below) may, on giving a notice to the Borrowers take any one or more of the following actions:
(a) | terminate the right of the Borrowers to use the Facility; |
(b) | declare all indebtedness of the Borrowers under the Credit Documents to be immediately payable and demand immediate payment of the whole or part thereof; |
(c) | exercise all of the rights of the Agents and the Lenders under the Security Documents; and |
(d) | exercise all of the other rights of the Agents and the Lenders; |
provided that all indebtedness of the Borrowers under the Credit Documents will automatically become due and payable without any notice upon the occurrence of any Event of Default specified in Section 16.1(f) or Section 16.1(g).
Article 17 - Equality Among Lenders
17.1 | Distribution among Lenders |
Any payment received by any Agent on account of the Facility, including any amount received through the exercise of any right of set-off and the enforcement of any Security, must be distributed among the Lenders proportionately to the amount of the indebtedness owing to them hereunder and which is then payable. Any such distribution must be made forthwith but no later than the Business Day following the date of receipt of the payment.
17.2 | Other Security |
No Lender may take any Security or Lien in connection with the Facility, Hedging Agreements or credit card obligations except in accordance with Article 10.
17.3 | Direct Payment to a Lender |
Subject to the other provisions of this Agreement permitting direct payment to Lenders, if a Lender receives, otherwise than through an Agent, a payment on account of the Facility (including any payment received through the exercise of any right of set-off), such Lender will remit the payment to the Administrative Agent, for distribution among all Lenders.
17.4 | Adjustments |
If, at any time, the amount of Borrowings owing to a Lender under the Facility compared to the aggregate amount of all outstanding Borrowings under the Facility is not proportional to such Lender’s Commitment, expressed as a percentage, the Administrative Agent may (and will,
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after termination of the Facility) make from time to time such adjustments as may be necessary in order that the outstanding Borrowings under the Facility are in the proportions of the Commitments and the Lenders will make all such payments as the Administrative Agent may direct to give full effect to such adjustments. The Borrowers will be bound by such adjustments.
Article 18 - The Agents and The Lenders
18.1 | Appointment of the Agents |
Each Lender irrevocably appoints the Administrative Agent and the Collateral Agent to exercise on its behalf the rights and powers delegated to the Administrative Agent or the Collateral Agent (as applicable) hereunder and authorizes each Agent to take any action necessary for the performance of its duties. Whenever acting in such capacity, the Agent concerned represents and binds all Lenders.
18.2 | Restrictions on the Powers of the Lenders |
No Lender may exercise individually the rights and powers delegated to the Agents, including the enforcement of remedies after the occurrence of an Event of Default.
18.3 | Security Documents |
The Collateral Agent is authorized to hold any Security on behalf of the Lenders and to execute in their name any Security Document. For greater certainty, the Collateral Agent is authorized to act as representative ( fondé de pouvoir ) of the Lenders (notwithstanding that the Collateral Agent is also a Lender) for the purposes of any hypothec granted by any Credit Party pursuant to article 2692 of the Civil Code of Quebe c to secure debentures or similar instruments issued for the benefit of the Lenders pursuant to the Security.
18.4 | Action by the Agents |
The duties of each Agent are limited to those specifically conferred upon it in the Credit Documents. Except as otherwise provided, the Administrative Agent or the Collateral Agent is not required to exercise any discretion or to take any action under the Credit Documents, unless it has been so required by the Majority Lenders (or by all Lenders where the consent of all Lenders is required). In no event, will an Agent be required to exercise any right or power, if in its judgment, doing so would contravene any Credit Document or applicable law or where the Agent concerned determines that the indemnity provided in Section 18.6 may not be available or adequate.
18.5 | Enforcement Measures |
Any legal proceedings and enforcement measures on behalf of the Lenders will be taken by the applicable Agent; at such Agent’s request, all Lenders must join it in such proceedings or enforcement measures.
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18.6 | Indemnification |
Each Lender will indemnify any Agent (and their directors, officers, employees and agents), proportionately to its respective Commitment, from and against all losses suffered or liabilities or expenses incurred by such Agent of any kind or nature when exercising its rights and powers, save any losses, liabilities or expenses resulting from the wilful misconduct or gross negligence of the applicable Agent (or their directors, officers, employees or agents).
18.7 | Reliance on Reports |
The Administrative Agent will be entitled to make any determination of the Borrowing Base based on the most recent reports or certificates furnished by Cascades in relation to such matter.
18.8 | Liability of the Agents |
The Administrative Agent or the Collateral Agent (as applicable) will only be liable to the Lenders for willful misconduct or gross negligence, and will have no liability as a consequence of a failure of any Person to fulfil its obligations or any action authorized by the Majority Lenders (or by all Lenders where the consent of all Lenders is required). Each Agent will be entitled to assume that there exists no Default, unless it has been notified in writing of the existence of a Default.
18.9 | Liability of Lenders |
Each Lender acknowledges that it has been and will continue to be solely responsible for making its own independent appraisal and investigation of the financial condition of the Borrowers and any other Credit Party, and for the assessment of the risks arising from the Facility. No Lender may rely on any Agent in this regard nor will any Agent be responsible for ensuring the validity or enforceability of any Credit Document.
18.10 | Rights of an Agent as Lender |
In its capacity as Lender, each Agent has the same rights as the other Lenders and may exercise such rights independently of its role as Agent; unless the context otherwise requires, the expression “Lender” also refers to the Lender which is the Administrative Agent or Collateral Agent.
18.11 | Sharing of Information |
(a) | The Lenders may share with each other any information held by them regarding the financial condition, business or property of any Credit Party or relating to matters contemplated in the Credit Documents or the Hedging Agreements. The Lenders may provide such information on a confidential and need-to-know basis to their Affiliates, any assignee or prospective assignee of Commitments, any participant in the Facility and any counterparty or prospective counterparty to any Hedging Agreement. |
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(b) | Any Agent may disclose to any agency or organization that assigns standard identification numbers to credit facilities such basic information describing the Facility as is necessary to assign unique identifiers (and, if requested, supply a copy of this Agreement), it being understood that the Person to whom such disclosure is made will be informed of the confidential nature of such information and instructed to make available to the public only such information as such person normally makes available in the course of its business of assigning identification numbers. In addition, but after consultation with Cascades, any Agent may provide to Loan Pricing Corporation or other recognized publishers of information for circulation in the loan market information of the type customarily provided by financial institutions to Loan Pricing Corporation. |
18.12 | Competition |
Subject to the other provisions of this Agreement, any Agent, and each of the Lenders may enter into other transactions with any Credit Party and they are not required to notify each other of such transactions.
18.13 | Successor Agent |
Any Agent may resign by giving notice thereof to the Borrowers and to the Lenders. Any Agent may also be replaced by the Majority Lenders following its failure to perform its obligations under this Agreement. The resignation or replacement of an Agent will be effective upon the appointment by the Majority Lenders of a successor Agent from among the Lenders. Promptly after being so appointed, any successor Agent must give notice thereof to the Borrowers and the Lenders. From the effective date of its appointment, any successor Agent will be vested with all the rights, powers and duties of the Administrative Agent or Collateral Agent (as applicable) under the Credit Documents.
Article 19 - Decisions, Waivers and Amendments
19.1 | Amendments and Waivers by the Majority Lenders |
Subject to Section 19.2, the provisions of the Credit Documents may be amended or waived, and consents thereunder may be given, only by an instrument signed by the Administrative Agent or the Collateral Agent (as applicable), with the approval of the Majority Lenders, and in the case of an amendment, also signed by the relevant Credit Party.
19.2 | Amendments and Waivers by Unanimous Approval |
Except as otherwise expressly provided in this Agreement, an amendment, waiver or consent that relates to any of the following matters must be made or given by an instrument signed by the Administrative Agent (or the Collateral Agent in the case of paragraph (d) below), with the prior consent of all Lenders, and in the case of an amendment, also signed by the relevant Credit Party:
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(a) | any increase in the amount of the Facility (other than pursuant to Section 2.13) or the extension of the maturity date of the Facility (other than pursuant to Section 2.14); |
(b) | any postponement of the due date, any subordination or any reduction of any amount payable hereunder; |
(c) | the reduction of any interest rate, discount rate or fee (including an amendment to Schedule A which would have the same economic effect); |
(d) | the release or subordination of any portion of the Security; and |
(e) | the definition of the “Majority Lenders” and the provisions of Section 9.1, Sections 16.1(a), 16.1(f) and 16.1(g), Article 17, Article 18, Article 19 and Section 20.3. |
19.3 | Amendments requiring the consent of the Affected Party |
No amendment affecting the rights and obligations of an Agent, an Issuing Lender or a Swingline Lender may be made without the consent of such Agent, such Issuing Lender or such Swingline Lender (as applicable). No increase in the amount of the Commitment of any Lender, may be made without the consent of such Lender.
19.4 | Dissenting and Affected Lenders |
(a) | Where an amendment or waiver referred to in Section 19.2 has been approved by the Majority Lenders, but not by all the Lenders, the Administrative Agent will notify Cascades and each Lender of such fact and will identify the Lenders approving of such amendment or waiver and the Lenders disapproving of such amendment or waiver (each a “ dissenting Lender ”). |
(b) | Where a Lender claims the benefit of Sections 3.5(a) or 4.2 or claims amounts under Sections 8.5 or 20.10(b) such Lender (the “ affected Lender ”) will notify Cascades of that fact. |
(c) | At any time following the date of a notification under Section 19.4(a) or Section 19.4(b), Cascades will be entitled to require that each such dissenting Lender or affected Lender, as applicable, assign its rights under the Facility to another Lender (or a Person who would be a permitted assignee under Section 20.4) who has agreed to assume the Commitment of such dissenting Lender or affected Lender, and to consent as the case may be to the amendment or waiver, provided that no such assignment and assumption will be effective unless the consideration payable to such dissenting Lender or affected Lender, for the assignment includes all amounts owed to such dissenting Lender or affected Lender, in respect of the Facility and is paid to the latter by the assignee (together with breakage costs if any); Section 20.4 will apply (adapted accordingly) to the said assignment and assumption. |
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(d) | Notwithstanding Section 19.4(c), Cascades will not be entitled to require the replacement of a dissenting Lender after the expiry of a 45-day time period following the date of the notification under Section 19.4(a) relating to such dissenting Lender. |
19.5 | Defaulting Lenders |
(a) | Where a Lender has become in default (a “ defaulting Lender ”), the Administrative Agent will notify Cascades and each Lender of that fact after having acquired actual knowledge of same. For the purposes of this Agreement, a Lender will be deemed to be in default if (i) such Lender has failed to fund its share of any requested or outstanding Borrowing hereunder (including any related adjustment), (ii) such Lender has notified the Borrower, the Administrative Agent, any Swingline Lender or any Issuing Lender that it does not intend to comply with its funding obligations hereunder or has made a public statement to such effect (except if such position is based on the existence of a Default), or (iii) if any of the events listed in Sections 16.1(f), (g) and (h) occurs in respect of such Lender or a Person who Controls such Lender. |
(b) | At any time following the date of a notification under Section 19.5(a), Cascades will be entitled to require that each such defaulting Lender assign its rights under the Facility to a Person who would be a permitted assignee under Section 20.4 who has agreed to assume the Commitment of such defaulting Lender. However, no such assignment and assumption will be effective unless the consideration payable to such defaulting Lender for the assignment includes all amounts owed to such defaulting Lender in respect of the Facility and is paid to the latter by the assignee (together with breakage costs if any). Section 20.4 will apply (adapted accordingly) to the said assignment and assumption and any defaulting Lender will take all such actions as are required to promptly effect same. |
(c) | Notwithstanding any other provision of this Agreement, from the time a Lender becomes a defaulting Lender: |
(i) | such defaulting Lender will not be entitled to vote on any issue (other than on a reduction of a principal amount payable to it and any increase or extension of its Commitment) and, subject to the foregoing exceptions, the entirety of its Commitment will be disregarded in the calculation of all Majority Lenders’ or Lenders’ unanimous decisions; |
(ii) | standby fees and Letter of Credit fees will not accrue and be payable in respect of such defaulting Lender’s Commitment provided that Letter of Credit fees relating to such defaulting Lender’s obligations that are reallocated pursuant to clause (iv) below will be payable to the Lenders to whom such obligations have been reallocated; |
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(iii) | such defaulting Lender will not participate in any new Borrowing and its Commitment will be disregarded in the calculation of the pro rata share of the Lenders in any new Borrowing; |
(iv) | the funding obligations of the defaulting Lender under Section 2.9 in respect of Borrowings made by any Swingline Lender and under Section 5.4 in respect of payments made by any Issuing Lender under Letters of Credit will be reallocated among the other Lenders and will be calculated excluding the defaulting Lender’s Commitment from the pro rata share of the funding obligations of the other Lenders, but only to the extent such reallocation and calculation does not cause the outstanding Borrowings owing to any non-defaulting Lender to exceed the amount of its Commitment and provided that no such reallocation will release the defaulting Lender from its obligations hereunder; |
(v) | if a reallocation contemplated in clause (iv) above cannot be effected (in full or in part), the Borrower will (y) repay to any Swingline Lender the portion of any outstanding Borrowings under Section 2.6 which has not been so reallocated, and (z) prepay, or provide cash collateral to secure the unreallocated portion of the funding obligations referred to in Section 5.4 in respect of Letters of Credit; |
(vi) | any Swingline Lender or any Issuing Lender may decline to provide Borrowings under Section 2.8 or issue Letters of Credit under Article 5 (as applicable) if it has an exposure to a defaulting Lender as a result of any reallocation pursuant to clause (iv) not being fully effected; and |
(vii) | the Administrative Agent will be entitled to withhold any amount that would otherwise be distributed or payable to a defaulting Lender and to apply (in the order determined by the Administrative Agent) any such amount to the obligations of such defaulting Lender hereunder or to outstanding Borrowings owing to the non-defaulting Lenders. |
(d) | A Lender who becomes a defaulting Lender will retain such status until the Administrative Agent, any Issuing Lender and any Swingline Lender notify such defaulting Lender that they are satisfied that all existing defaults in respect of such Lender have been remedied and that such Lender has the financial ability to perform its obligations hereunder. Concurrently with such notification, the Administrative Agent will make such adjustments among the Lenders as are necessary to give effect to the foregoing and to the fact that Section 19.5(c) has ceased to apply in respect of the Lender concerned, provided that no retroactive adjustments will be made (including with respect to interest and fees). |
(e) | For greater certainty, (i) the default by a Lender to perform its obligations hereunder will not relieve any other Lender from its obligations hereunder (including to fund Borrowings in the proportion of its Commitment), and (ii) an assignment of the Commitment of a defaulting Lender will not relieve such |
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defaulting Lender from its obligations to indemnify any other party from the consequences of its default.
Article 20 - Miscellaneous
20.1 | Books and Accounts |
The Administrative Agent will keep books and accounts evidencing the transactions made pursuant to this Agreement. Absent manifest error, such books and accounts will be deemed to represent accurately such transactions and the indebtedness of the Borrowers.
20.2 | Determination |
In the absence of manifest error, any determination made by the Administrative Agent of the amounts payable hereunder will be conclusive and binding upon the Lenders and the Borrowers.
20.3 | Prohibition on Assignment by Borrowers |
No Borrower may assign its rights under this Agreement.
20.4 | Assignments and Participations |
(a) | A Lender (the “ assignor ”) may assign, in whole or in part, its Commitment under the Facility, including outstanding Borrowings owing to it, to any Person who makes purchases or otherwise invests in commercial loans in the ordinary course of its business (the “ assignee ”). The assignment must be substantially in the form of Schedule E. The assignor must pay to the Administrative Agent, for its own account, an assignment fee of $5,000. When the assignment becomes effective, the assignee will become a Lender and will benefit from the rights and be liable for the obligations of the assignor, proportionally to the assigned Commitment, and, to the same extent, the assignor will be released from its obligations. The assignor and the assignee will be liable for all expenses incurred by the Administrative Agent in connection with such assignment. |
(b) | No partial assignment of a Commitment may be made (i) if the residual amount of the Commitment of the assignor or if the total Commitment of the assignee is less than $10,000,000 or (ii) if the assigned portion is not allocated among Tranches A, B and C in the same proportion as the Commitment of the assignor. |
(c) | Concurrently with any assignment in favour of an assignee who is not, at the time of the assignment, party to this Agreement, the Borrowers and the Designated Subsidiaries (if so required by the Collateral Agent) must acknowledge that the assignee is entitled to the benefit of the Security. |
(d) | Each assignment by a Lender is subject to the prior consent of the Agents, of any Issuing Lender and of any Swingline Lender, and, if made at a time when no Default is continuing, to the prior consent of the Borrowers (which consents will |
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not be unreasonably withheld). However, no such consent will be required if the assignee is another Lender.
(e) | Sections 20.4(a) to 20.4(d) do not apply to (i) a participation that a Lender may grant to another financial institution or to an assignment by way of security to a Federal Reserve Bank provided that no such participation or assignment will release any Lender of its obligations under the Credit Documents or confer upon any participant any right against any Agent, and (ii) an assignment made after Default to effect any adjustment required to be made pursuant to Section 17.4. |
(f) | No assignment or participation made at the time when no Default is continuing may increase for any Borrower the costs of the Borrowings pursuant to Section 8.5. |
20.5 | Designated Lenders |
(a) | With the written consent of the Administrative Agent (which will not be unreasonably withheld), a Lender (the “ designating Lender ”) may designate one of its Affiliates or another Lender or an Affiliate thereof (the “ designated Lender ”) for the purposes of making available its Commitment in respect of Tranche B or Tranche C. Upon its acceptance of the designation and as long as such designation has not been terminated, the designated Lender (if not already a Lender) will be deemed to be a Lender for all purposes of the Credit Documents, with a Commitment (or an additional Commitment if it is already a Lender) corresponding to the portion of the applicable Tranche to be made available to it and with the designating Lender’s Commitment under the Facility being reduced accordingly. No such designation will reduce the obligations of the designating Lender under any Tranche in which it remains a Lender, including as a result of an increase in its Commitment due to a reallocation made pursuant to Section 2.2. |
(b) | A designating Lender may not make an assignment of its Commitment under the Facility without terminating the designation prior to making the assignment. For greater certainty, the assignee may also avail itself of the provisions of Section 20.5(a). A designated Lender may not make an assignment in respect of the Tranche which is the subject of the designation. Any termination of a designation will result in the outstanding Borrowings owing to the designated Lender in respect of the Tranche which was the subject of the designation being automatically assigned to its designating Lender (notwithstanding anything to the contrary in Section 20.4 but subject to Section 20.4(f)), with the designating Lender being obligated to pay to the designated Lender the price of the assignment in accordance with their agreement relating to the designation. |
(c) | Each of Caisse centrale Desjardins, Wells Fargo Bank, National Association and The Toronto-Dominion Bank designates as its designated Lender its Affiliate specified below its name on the signature pages of this Agreement for the purposes of making available its Commitment in respect of Tranche B. Each such designated Lender hereby accepts the designation made by its designating Lender. |
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(d) | Sections 20.4(c) and 20.4(f) will apply to any designation of a designated Lender made after the date of this Agreement, as if the designation were an assignment and the designated Lender were an assignee. |
(e) | The parties acknowledge that the designation of CIBC Inc. will terminate on the Effective Date and that BNP Paribas has become the assignee of the entire Commitment of and all Borrowings owing to BNP Paribas (Canada). |
20.6 | Notes |
At the request of a Lender, any Borrower will execute in favour of such Lender a note evidencing its indebtedness to such Lender under this Agreement.
20.7 | No Waiver |
The omission by any Agent or any Lender to exercise any of its rights will not be deemed to be a waiver of the exercise of any such right subsequently. The omission by any Agent or any Lender to notify any Credit Party of the occurrence of a Default will not be deemed to be a waiver of the right of such Agent or of such Lender to avail itself of such Default.
20.8 | Irrevocability of Notices of Borrowings |
No Borrower may cancel a notice of Borrowing, conversion, renewal, reduction or prepayment. The Borrower concerned must indemnify the Lenders in respect of any loss resulting from its failure to act in accordance with such notice.
20.9 | Set-off |
If an Event of Default occurs and is continuing, any Agent and any Lender are authorized to set off and to apply any and all deposits held for any Credit Party against any amount due and payable by any Credit Party under the Credit Documents.
20.10 | Indemnification |
(a) | The Borrowers must pay on demand the amount of all reasonable costs and expenses (including legal and other professional fees) incurred by any Agent in connection with the implementation of the Facility and the preparation, negotiation, execution, syndication and administration of the Credit Documents, as well as the reasonable costs and expenses incurred by any Agent or the Lenders in connection with the enforcement of, or the preservation of any rights under, any Credit Document. |
(b) | If any law, regulation, administrative decision or guideline or decision of a Court (i) increases the cost of the Facility for any Lender or (ii) reduces the income receivable by any Lender from the Facility (including, without limitation, by reason of the imposition of reserves, taxes or requirements as to the capital adequacy of such Lender but in no event by reason of taxes on the overall net income of a Lender), such Lender may send to the Borrower concerned a |
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statement indicating the amount of such additional cost or reduction of income; in the absence of manifest error, this statement shall be conclusive evidence of the amount of such additional cost or reduction of income and the Borrower concerned must pay forthwith said amount to such Lender.
(c) | The Borrowers must pay on demand the amount of any breakage cost and other loss suffered by a Lender as a result of the conversion or repayment of a Borrowing before the maturity date of its period, irrespective of the cause of such conversion or repayment (including a repayment resulting from a demand for payment after the occurrence of an Event of Default). In the absence of manifest error, a statement prepared by the affected Lender indicating the amount of such cost or other loss and the method by which same was calculated will be binding and conclusive. |
(d) | The Borrowers must indemnify the Administrative Agent, the Collateral Agent, the Lenders, their Affiliates and their respective officers, directors, employees and agents (each, an “ indemnitee ”) and hold them harmless from and against all losses, liabilities, claims, damages or expenses (including costs to defend any claim) suffered or incurred by or made against any of them in any manner whatsoever arising from or related to the Credit Documents or the transactions contemplated thereby (including the use of the proceeds from any Borrowing or as a result of any Default or non-compliance by any Credit Party with any Environmental Laws or of any claim under Environmental Laws in connection with the operations of, or any property owned or operated by, any Credit Party). The foregoing indemnity will not however apply as to any indemnitee to losses, liabilities, claims, damages or expenses resulting from the gross negligence or wilful misconduct of such indemnitee or from a breach in bad faith by such indemnitee of its obligations under a Credit Document. |
20.11 | Mitigation of costs |
Each Lender will use its best efforts to avoid any additional cost or reduction of income for which a Borrower is required to indemnify such Lender pursuant to Section 20.10(b). However, nothing herein will require any Lender to take any action which would cause such Lender to incur any expense which would not materially reduce any amount to be received pursuant to Section 20.10(b) or which the Lender determines in its sole judgment to be inadvisable for regulatory, competitive or internal management reasons. The Borrowers will reimburse any Lender for any expense incurred by such Lender in taking any action pursuant to this Section 20.11.
20.12 | Corrections of Errors |
The Administrative Agent is authorized to correct any typographical error or other error of an editorial nature in this Agreement and to substitute such corrected text in the counterparts of this Agreement, provided that such corrections do not modify the meaning or the interpretation of this Agreement and provided that copies of the corrected texts are remitted to each party.
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20.13 | Communications |
Any Agent is entitled to rely in its dealings with any Borrower upon any instruction or notice which such Agent believes in good faith to have been given by a Person authorized to give such instruction or notice or to make the applicable transaction.
20.14 | Counterparts |
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered will be deemed to be an original and all of which taken together will constitute the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier or by electronic mail will be effective as delivery of a manually executed counterpart of this Agreement.
20.15 | Waiver of Jury Trial |
EACH OF THE BORROWERS, THE AGENTS AND THE LENDERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS.
Article 21 - Notices
21.1 | Sending of Notices |
Unless otherwise provided, any notice to be given to a party in connection with this Agreement will be given in writing and will be given by personal delivery, by a reputable delivery service, by telecopier or (except for any notice pursuant to Article 16) by electronic mail, addressed to the recipient at its address specified in Schedule F hereof in the case of a notice to a Borrower or an Agent or at its address provided to the Administrative Agent in the case of a notice to another party or, in each case, at such other address as may be notified by such party to the others pursuant to this Article.
21.2 | Receipt of Notices |
Any notice given by personal delivery or by a delivery service will be conclusively deemed to have been given at the time of such delivery and, if given by telecopier or by electronic mail, on the day of transmittal if before 3:00 p.m. on a Business Day, or on the following Business Day if such transmission occurs on a day which is not a Business Day or after 3:00 p.m. on a Business Day. If the telecopy or electronic transmission system suffers any interruptions by way of a strike, slow-down, a force majeure , or any other cause, a party giving a notice must do so using another means of communication not affected by the disruption.
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IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed as of the date and year first above written.
Cascades Inc. | ||
Per: | ||
Per: | ||
Cascades USA Inc. | ||
Per: | ||
Per: | ||
Cascades Europe SAS | ||
Per: | ||
National Bank of Canada , as Administrative Agent | ||
Per: | ||
Per: | ||
The Bank of Nova Scotia, as Collateral Agent | ||
Per: | ||
Per: | ||
(the names and signatures of the Lenders are on the next pages) |
[Signature page – July 7, 2015 Cascades Credit Agreement]
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[Signature page – July 7, 2015 Cascades Credit Agreement]
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[Signature page – July 7, 2015 Cascades Credit Agreement]
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[Signature page – July 7, 2015 Cascades Credit Agreement]
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[Signature page – July 7, 2015 Cascades Credit Agreement]
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Schedule A
Applicable Margins or Rates
Rating |
Prime, US Base |
Acceptance Fee / Libor European Rate/L/C Fee |
Stand-By Fee | |||
BBB/Baa2 or Higher | [REDACTED] bps | [REDACTED] bps | [REDACTED] bps | |||
BBB-/Baa3 | [REDACTED] bps | [REDACTED] bps | [REDACTED] bps | |||
BB+/Bal | [REDACTED] bps | [REDACTED] bps | [REDACTED] bps | |||
BB/Ba2 | [REDACTED] bps | [REDACTED] bps | [REDACTED] bps | |||
BB-/Ba3 or Lower | [REDACTED] bps | [REDACTED] bps | [REDACTED] bps |
DETERMINATION OF APPLICABLE MARGIN OR RATE
1. | The rates of the margins applicable to Prime Rate, US Base Rate, European Rate and Libor and the rates of the Acceptance Fees, stand-by fees and Letter of Credit fees under the Facility (the “ Rates ”) will be determined as set forth in this Schedule. |
2. | During any day that Cascades has a senior secured long-term debt rating from S&P or Moody’s without third-party credit enhancement (a “ Rating ”), the applicable Rates will be those which correspond to the Rating in effect at the close of business on such day, as specified in the above grids. If, on any day, Cascades has a Rating from both of S&P and Moody’s but the two Ratings are not at the same level, then (i) the higher Rating will apply if the Ratings are not more than one level apart, and (ii) the Rating which is at mid-point will apply if the Ratings are more than one level apart; if there is no mid-point level, the higher of the two intermediate Ratings will apply. |
3. | If, on any day, Cascades has no Rating, then the applicable Rates will be those which correspond to the Rating that would be one level higher than the S&P or Moody’s rating in effect on such day for the senior unsecured long-term debt rating of Cascades; if on any day, Cascades has received different senior unsecured long-term debt ratings from both S&P and Moody’s, then the applicable Rates will be determined using the same formula as in paragraph 2 for differentials in Ratings. If there exists any day that Cascades does not have any Rating or senior unsecured long-term debt rating from S&P and Moody’s, the applicable Rates for such day will be those which correspond to a Rating of lower than BB-/Ba3. |
4. | Interest, Letter of Credit fees and stand-by fees will be calculated, for any day, using the applicable Rate in effect on the relevant day. Acceptance fees will be calculated using the Rate in effect on the date such fees are payable. Any change of Rate (including on the Effective Date or as a result of an amendment to this Agreement) will give rise to |
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adjustments to Acceptance fees previously calculated if the period of calculation extended beyond the date of the modification. The adjustments will apply to the number of days remaining to accrue from the date of the modification. The adjustments will be calculated by the Administrative Agent and be payable by the Cascades or the Lenders (as applicable) within three Business Days from the date of a demand therefor by the Administrative Agent.
5. | The Applicable Rate will be 66⅔% of the rate otherwise applicable (as specified in the column governing Letter of Credit fees) for fees payable in respect of Letters of Credit securing the performance by the Credit Parties of contracts (including bids) for the supply of goods or services by the Credit Parties to their customers. |
6. | This Schedule does not apply to the Letter of Credit fee applicable to a documentary Letter of Credit. As provided in Section 6.2 of the Credit Agreement, the fee payable in respect of any documentary Letter of Credit will be based on the rate then offered by the applicable Issuing Lender to its customers for similar documentary letters of credit. |
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Schedule B
Schedule C List of Designated Subsidiaries
Name | Jurisdiction | Shareholder | ||
401 47 th Street Holding LLC | New York | Norampac Industries Inc. | ||
4626 Royal Avenue Holding LLC | New York | Norampac Industries Inc. | ||
7251637 Canada Inc. | Canada | Cascades Canada ULC | ||
7678169 Canada Inc. | Canada | Cascades Canada ULC | ||
Cascades Canada ULC | Alberta |
Cascades Inc. Cascades Paperboard International Inc. |
||
Cascades Fine Papers Group Inc. | Canada | Cascades Inc. | ||
Cascades GIE Inc. | Canada | Cascades Canada ULC | ||
Cascades Holding US Inc. | Delaware | Cascades USA Inc. | ||
Cascades Maritime Inc. | Canada | Cascades Inc. | ||
Cascades Paperboard International Inc. | Canada | Cascades Inc. | ||
Cascades Tenderco Inc. | Canada | Cascades Inc. | ||
Cascades Tissue Group – New York Inc. | Delaware | Cascades Holding US Inc. | ||
Cascades Transport Cabano Inc. | Canada | Cascades Inc. | ||
Cascades Transport Inc. | Canada | Cascades Inc. | ||
Kingsey Falls Investments Inc. | Canada | Cascades Inc. | ||
Norampac Export Sales Corp. | Nevada | Cascades USA Inc. | ||
Norampac Inc. | Canada | Cascades Inc. | ||
Norampac Industries Inc. | New York | Norampac Finance US Inc. | ||
Norampac New York City Inc. | New York | Cascades USA Inc. | ||
Norampac Schenectady Inc. | New York | Cascades USA Inc. |
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[REDACTED]
[REDACTED]
[REDACTED]
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[REDACTED]
[REDACTED]
[REDACTED]
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[REDACTED]
[REDACTED]
[REDACTED]
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[REDACTED]
[REDACTED]
[REDACTED]
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[REDACTED]
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[REDACTED]
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[REDACTED]
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[REDACTED]
[REDACTED]
[REDACTED]
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EXHIBIT 13.1
ANNUAL INFORMATION FORM
For the year ended December 31, 2015
March 30, 2016
TABLE OF CONTENTS
Annual Information Form for the year ended December 31, 2015 | Page |
Documents incorporated by reference | |
Forward Looking Statements | |
Item 1 - Date of the Annual Information Form | 1 |
Item 2 - Corporate Structure | 1 |
2.1 Name, Address and Incorporation | 1 |
2.2 Intercorporate Relationships | 1 |
Item 3 - General Development of the Business | 1 |
3.1 Three Year History | 1 |
3.2 Significant Acquisitions | 3 |
3.3 Trends | 3 |
Item 4 - Description of the Business | 3 |
4.1 General | 3 |
4.2 Industry Sector Information | 4 |
4.2.1 Packaging Products Sector | 4 |
4.2.1.1 Boxboard Europe Group | 4 |
4.2.1.2 Containerboard Group | 4 |
4.2.1.3 Specialty Products Group | 6 |
4.2.2 Tissue Papers Sector | 8 |
4.3 Research, Development and Innovation | 9 |
4.4 Competitive Conditions | 10 |
4.4.1 Our Markets | 10 |
4.4.2 Our Competitive Strengths | 10 |
4.5 Cyclical Considerations | 10 |
4.6 Environmental Protection | 11 |
4.6.1 Regulations | 11 |
4.6.2 Environmental Mission | 11 |
4.7 Reorganizations | 11 |
4.8 Social Policies | 11 |
4.9 Risk Factors | 11 |
Item 5 - Dividends and Distributions | 11 |
Item 6 - Capital Structure | 12 |
6.1 General Description of Capital Structure | 12 |
6.2 Ratings | 12 |
Item 7 - Market for Securities | 13 |
7.1 Trading Price and Volume | 13 |
Item 8 - Directors and Officers | 14 |
8.1 Name, Occupation and Security Holding | 14 |
8.2 Cease Trade Orders, Bankruptcies, Penalties or Sanctions | 19 |
8.3 Information concerning Executive Officers | 19 |
Item 9 - Legal Proceedings and Regulatory Actions | 20 |
Item 10 - Transfer Agents and Registrars | 20 |
Item 11 - Material Contracts | 20 |
Item 12 - Interests of Experts | 20 |
Item 13 - Audit and Finance Committee | 21 |
13.1 Composition and Mandate | 21 |
13.2 Relevant Education and Experience of the Members | 21 |
13.3 Independent Auditor Services Fees | 21 |
13.4 Policies and Procedures for the Engagement of Audit and Non-Audit Services | 22 |
Item 14 - Additional Information | 22 |
Schedule A - Charter of the Audit and Finance Committee | 23 |
In this Annual Information Form, the terms “We”, “Us”, “Our”, “Corporation” and “Cascades” refer to Cascades Inc., its subsidiaries, divisions and its interests in joint ventures and associates. Except as otherwise indicated, all dollar amounts are expressed in Canadian dollars. The information in this Annual Information Form is stated as at December 31, 2015, except as otherwise indicated, and except for information in documents incorporated by reference that have a different date.
DOCUMENTS INCORPORATED BY REFERENCE
The documents in the table below contain information that is incorporated by reference into this Annual Information Form.
Documents | Where they are incorporated in this Annual Information Form |
Cascades Inc.’s 2015 Annual Report - Management’s Discussion and Analysis, NEAR-TERM OUTLOOK, page 68, RISK FACTORS, page 72 | Items 3.3, 4.6.1 and 4.9 |
FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Information Form or in documents incorporated by reference, including statements regarding future results and performance, are forward-looking statements within the meaning of the “Safe Harbour” provision of the United States Private Securities Litigation Reform Act of 1995 based on current expectations. The accuracy of these statements is subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, decreases in demand for the Corporation’s products, the prices and availability of raw materials, changes in the relative values of certain currencies, fluctuations in selling prices and adverse changes in general market and industry conditions (See heading Risk Factors).
|
Annual Information Form |
ITEM 1 - DATE OF THE ANNUAL INFORMATION FORM
This Annual Information Form (“AIF”) is dated as at March 30, 2016. Except as otherwise indicated, the information contained in this AIF is stated as at December 31, 2015.
ITEM 2 - CORPORATE STRUCTURE
2.1 | Name, Address and Incorporation |
Cascades Inc. was incorporated under the name Papier Cascades Inc./Cascades Paper Inc. under the laws of the Province of Québec by letters patent issued on March 26, 1964. Supplementary letters patent were issued on March 11, 1968, July 4, 1979 and October 19, 1979 to amend the authorized capital stock and the restrictions and privileges attached to certain classes of shares of the Corporation.
Cascades was continued under the name Cascades Inc. under Part 1A of the Companies Act (Québec) by Certificate of Continuance dated October 26, 1982. Certificates of Amendment were issued on July 5, 1984, September 16, 1985 and May 13, 1986 to permit the subdivision of the Corporation's Common Shares, as well as on July 15, 1992, July 24, 1992, December 17, 1992 and July 20, 1993 in order to modify the authorized share-capital and/or the restrictions and privileges of certain classes of shares of the Corporation.
On December 30, 2003, in accordance with Article 123.129 of the Companies Act (Québec), Cascades, by simplified amalgamation, merged with 9135-2591 Québec Inc., a wholly owned subsidiary of the Corporation. The articles of amalgamation and schedules as well as the composition of the Board of Directors of the new company following the amalgamation are exactly the same as those of Cascades Inc. prior to the amalgamation.
Since February 14, 2011, all Québec corporations incorporated under Part IA of the Companies Act (Québec) are governed by the Business Corporations Act (Québec).
On July 27, 2011, the Corporation amended its Articles which essentially provide that (i) the Board of Directors may, at its discretion, appoint one or more directors, who shall hold office for a term expiring no later that the close of the next annual meeting of shareholders following their appointment, but the total number of directors so appointed may not exceed one-third of the number of directors elected at the annual meeting of shareholders preceding their appointment; and (ii) the Board of Directors may, at its discretion and from time to time, determine the place, whether within or outside of the Province of Québec, where a meeting of shareholders may be held outside of the Province of Québec.
The head office and corporate offices of Cascades are located at 404 Marie Victorin Blvd, Kingsey Falls (Québec) J0A 1B0. Cascades also has executive offices located at 772 Sherbrooke Street West, Suite 100, Montréal (Québec) H3A 1G1. Cascades’ website can be found at www.cascades.com .
2.2 | Intercorporate Relationships |
The following list sets out the principal wholly-owned subsidiaries of the Corporation and their respective jurisdiction as at December 31, 2015 :
Corporate Name | Jurisdiction |
Cascades Canada ULC Cascades USA Inc Cascades Europe SAS |
Alberta, Canada Delaware, USA France |
ITEM 3 - GENERAL DEVELOPMENT OF THE BUSINESS
3.1 | Three Year History |
Financing activities
Bank Financing
On July 7, 2015, the Corporation entered into an agreement with its lenders to extend and amend its existing $750 million credit facility. The amendment provides that the term of the facility is extended to July 2019. The applicable pricing grid is slightly lowered to better reflect market conditions. The other existing financial conditions are essentially unchanged.
Debt Refinancing
In 2013, the Corporation repurchased US$4 million of its 7.25% unsecured senior notes for an amount of US$4 million ($4 million) and US$6 million of its 6.75% unsecured senior notes for an amount of US$6 million ($6 million). No gain or loss resulted from these transactions.
In 2013, the Corporation also paid US$4 million ($4 million) for the settlement of derivative financial instruments related to its 7.25% unsecured senior notes and US$10 million ($10 million) for the settlement of derivative financial instruments related to its 6.75% unsecured senior notes.
In 2014, the Corporation refinanced its 7.75% unsecured senior notes of US$500 million ($540 million) and $200 million, due in 2017 and in 2016, respectively. The Corporation issued 5.50% unsecured senior notes of US$550 million ($596 million), due in 2022, and 5.50% unsecured senior notes of $250 million, due in 2021.
1 |
|
Annual Information Form |
The proceeds of these new notes were allocated towards the repurchase of the US$500 million ($540 million) notes due in 2017 and the $200 million notes due in 2016. The remaining amounts (US$50 million ($56 million) and $50 million) were used to pay a premium totalling $31 million plus refinancing costs of $13 million and to reduce our credit facility utilization. The refinancing of these notes reduces our future interest expense by approximately US$8 million and $6 million annually.
In 2015, the Corporation issued US$250 million ($305 million) aggregate principal amount of 5.75% senior notes due in 2023. The Corporation used the proceeds from this offering of notes to repurchase a total of US$250 million aggregate principal amount of 7.875% senior notes due in 2020 for a total consideration of US$250 million ($305 million). The Corporation also paid premiums of US$11 million ($13 million) to repurchase the 2020 notes as well as fees and expenses in connection with the offering and the tender offer totalling $5 million. The refinancing of these notes will reduce the Corporation's future interest expense by approximately US$6 million annually.
Corporate Activities
On May 9th, 2013, the Corporation announced the appointment of Mr. Mario Plourde as President and Chief Executive Officer of the Corporation. On August 12, 2014, the Corporation announced the appointment of Ms. Suzanne Blanchet to the position of Senior Vice-President, Corporate Development.
Packaging Products Sector
Boxboard Europe Group
Further to a Combination Agreement entered into with Reno de Medici S.p.A. ("RdM") in 2007, the Corporation entered into a put and call agreement with Industria E Innovazione (“Industria”) in 2010, whereby Cascades had the option to buy all of the shares held by Industria in the capital stock of RdM (which represented 9.07% of the outstanding shares of RdM) (100% of the shares held by Industria) for €0.43 per share between March 1, 2011 and December 31, 2012. Industria also had the option of requiring the Corporation to purchase the shares for €0.41 per share between January 1, 2013 and March 31, 2014. As the put option held by Industria became effective on January 1, 2013 and the Corporation expected it would be exercised after the first quarter of 2013, an obligation in the amount of €14 million ($18 million) was recorded by the Corporation as at March 31, 2013. Consequently, the non-controlling interest has been adjusted by 9.07% effective January 1, 2013, to 42.39%. Industria did raise the put option in the second quarter of 2013, resulting in a cash payment for the Corporation of €14 million ($19 million). The Corporation's share in the equity of RdM as at December 31, 2015, stood at 57.61%.
On April 9, 2014, following a consultation process with the unions, the Corporation announced the closure of its subsidiary, Cascades Djupafors, located in Ronneby, Sweden, which definitely ceased its operations on June 15, 2014.
In 2015, in keeping with its objective of focusing resources on the facilities that are more efficient and present higher growth potential, RdM announced that its mill in Spain was no longer a strategic asset. Negotiations with potential buyers were held during the year. The company announced in January 2016 the sale of this asset to Arpafino S.l.ù. The sale of Reno De Medici Ibérica S.l.ù. took place at an overall value of 800,000 euro, in line with book value. The transaction implied a reduction of approximately €4 million in the net financial indebtedness of Reno De Medici as at December 31, 2015.
Containerboard Group
In 2013, the Containerboard Group increased its production capacity through its 59.7% participation in Greenpac Mill LLC ("Greenpac"). The new mill manufactures light weight linerboard made with 100% recycled fibre and has an annual production capacity of 540,000 short tons. The Greenpac mill is located on a property adjacent to an existing Norampac containerboard mill in Niagara Falls (New York, USA).
On January 31, 2014, the Corporation concluded the creation of Maritime Paper Products Limited Partnership (MPPLP), a new joint venture for converting corrugated board activities in the Atlantic provinces with Maritime Paper Products Limited (MPPL), announced on November 27, 2013. The creation of this joint venture will position the Containerboard Group to achieve future growth in the Atlantic provinces and to remain at the forefront in this market, by offering an improved and more comprehensive range of products to its customers. Furthermore, the creation of MPPLP aims to provide customers with better service through the combined strengths of the Containerboard Group and MPPL. The containerboard operations located in St. John’s, Newfoundland, and Moncton, New Brunswick, were integrated with those of MPPL on February 1, 2014, and the Corporation received a 40% ownership in the joint venture.
During the fourth quarter of 2014, the Corporation announced the acquisition and installation, for $13 million, of two new printing presses for the Containerboard activities in the Vaudreuil and Drummondville, Québec plants, which specialize in manufacturing corrugated packaging products.
On February 4, 2015, Cascades confirmed completion of the transaction relating to the sale of its North American boxboard manufacturing and converting assets to Graphic Packaging Holding Company for a cash consideration of $40 million, net of transactions fees. Included in the transaction are the Cascades boxboard units in East Angus and Jonquière (Québec), Winnipeg (Manitoba), Mississauga and Cobourg (Ontario). This move, which reflects Cascades’ intention to refocus its activities on the strategic sectors in which it excels, does not affect the Corporation's European-based boxboard operations.
During the second quarter of 2015, Cascades announced major investments in a biorefinery project at its Cabano plant. This project, worth a total of $26 million, represents a major advance in biorefinery development in Canada. Backed by a $10 million investment from Natural Resources Canada’s Investments in Forest Industry Transformation (IFIT) program and an additional $4 million from the Québec Ministère des Forêts, de la Faune et des Parcs, the Cabano plant will replace its current process - the production of sodium carbonate-based chemical pulp - with this new, more environmentally friendly and economical one that was developed in conjunction with a U.S. partner.
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In addition, Cascades invested $14 million in 2015, part of a global project of $26 million announced on November 3, 2015 in the Drummondville plant, for the expansion of the building and the installation of a new corrugator. It officially started operating at the beginning of 2016, and should positively contribute to Cascades' results during the year.
On January 13, 2016, the Corporation announced Mr. Marc-André Dépin's decision to step down as President and Chief Executive Officer of the Norampac Group. Mr. Charles Malo succeeded him as President and Chief Operating Officer.
Specialty Products Group
On July 1, 2014, Cascades announced that it had reached an agreement with Rolland Enterprises Inc., a subsidiary of H.I.G. Capital for the sale of its fine papers activities for $39 million. The units covered by this transaction were the Rolland Division, an uncoated fine papers and security papers plant located in Saint-Jérôme (Québec), the Converting Centre, a fine papers processing and distribution plant, also located in Saint-Jérôme (Québec) and Fibres Breakey, a de-inked bleached kraft pulp manufacturing plant located in Sainte-Hélène-de Breakeyville (Québec).
On July 9, 2014, Cascades announced the definitive closure of its kraft paper manufacturing activities at the East Angus (Québec) mill due to unfavorable market conditions and the failure of discussions concerning the mill's transfer and turnaround. This announcement is not related to the boxboard manufacturing plant also located in East Angus (Québec).
In the third quarter of 2015, the Specialty Products Group proceeded with the legal restructuring of its Norcan Flexible Packaging subsidiary, which was owned at 62.1%. As a result of the restructuring, the Corporation now owns 100% of the net assets of this business through its Cascades Flexible Packaging subsidiary.
On November 27, 2015, the Corporation entered into an agreement for the acquisition of the 27% minority interest of Cascades Recovery Inc. for a cash consideration of $32 million, payable over a ten-year period.
Tissue Papers Group
During the third quarter of 2013, the Corporation announced plans to increase tissue paper production capacity at its St. Helens (Oregon, USA) mill. The project consists in converting and starting up a second paper machine. The retrofitting of an existing machine will contribute additional capacity of 55,000 short tons to this market at a lower capital cost and on a faster timeline than if a new machine was to be built. The project started its ramp-up period on October 25, 2014.
On August 12, 2014, the Corporation announced the appointment of Mr. Jean Jobin as President and Chief Operating Officer of Cascades Tissue Papers Group.
On August 18, 2014, Cascades announced the strategic optimization and expansion of its tissue papers activities in the Southeastern United States with the installation of a new tissue converting facility in Wagram (North Carolina, USA). This investment is intended to reorganize and expand the converting activities in this area, which is a targeted region of growth for the Corporation. New equipment was installed progressively in 2014 and continued throughout the first half of 2015. Some production started in December 2014, however some converting lines were still ramping-up production as at December 31, 2015.
On April 17, 2015, Cascades announced the installation of a new state-of-the-art converting line in the Candiac plant, located in Québec, for the manufacturing of high-quality paper towels. In addition, two converting lines were upgraded in Candiac and Kingsey Falls (Québec) that will also produce high-end tissue products more effectively. The new line in Candiac started production in July 2015, while the improved converting lines are scheduled to begin production in the second quarter of 2016.
3.2 | Significant Acquisitions |
No significant acquisition was completed by the Corporation during the financial year ended December 31, 2015 for which disclosure would have been required under Part 8 of National Instrument 51-102 of the Canadian Securities Administrators, namely the filing of a Business Acquisition Report.
3.3 | Trends |
Reference is made to Management’s Discussion and Analysis in the 2015 Annual Report, specifically on page 68 under the heading “NEAR-TERM OUTLOOK”, which is incorporated by reference.
ITEM 4 - DESCRIPTION OF THE BUSINESS
4.1 | General |
Established in 1964, Cascades is the parent company of a North American and European group of companies involved in the production, conversion and marketing of packaging products and tissue papers principally composed of recycled fibre. In 2015, including its equity investment in Reno De Medici S.p.A. ("RdM"), Cascades consumed approximately 3.314 million short tons of fibre. Recycled fibre, wood fibre (chips and logs) and pulp respectively accounted for 80%, 12% and 8% of the total fibre consumption. Cascades sources most of its supply of recycled fibre through its own recovery network as well as through mid- to long-term agreements with independent suppliers. Cascades sources its supply of wood fibre and pulp through contractual agreements with independent sawmills, timberland owners and pulp producers.
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Cascades conducts its business principally through four (4) reporting groups in two (2) operating sectors, namely:
1) | The Packaging Products sector which includes: |
i) | The Boxboard Europe Group , a manufacturer of premium coated boxboard in Europe; |
ii) | The Containerboard Group , a manufacturer of containerboard and leading converter of corrugated products in North America; and |
iii) | The Specialty Products Group , which manufactures industrial packaging, consumer packaging products, and is also involved in recovery and recycling. |
2) | The Tissue Papers sector operates units that manufacture and convert tissue papers for the Away-from-Home and consumer products markets. |
These two sectors include about 90 operating units located in Canada, the United States and Europe. As at December 31, 2015, the Corporation employed approximately 10,700 employees, of which 9,000 were employees of its Canadian and United States operations. Approximately 29% of the Corporation's manpower is unionized under 26 separate collective bargaining agreements. In addition, in Europe, some of the Corporation's operations are subject to national industry collective bargaining agreements that are renewed on an annual basis. Of the 26 collective bargaining agreements in North America, 2 are expired and are currently under negotiation, 4 will expire in 2016 and 6 in 2017.
Cascades sets the overall strategic guidelines and ensures that corporate policies concerning acquisition and financing strategies, legal affairs, human resources management and environmental protection are applied by its subsidiaries, divisions and affiliated companies.
4.2 | Industry Sector Information |
4.2.1 | Packaging Products sector |
4.2.1.1 | The Boxboard Europe Group |
In Europe, Cascades operates the La Rochette mill in France that produces coated boxboard made of virgin fibre. With a total annual production capacity of 165,000 metric tonnes, this plant employs close to 330 employees.
As at December 31, 2015, the Corporation also held a 57.61% investment in Reno de Medici S.p.A. (“RdM”), the second largest European producer of recycled coated boxboard. RdM operates five (5) mills and two (2) sheeting centers. Its annual production capacity is 885,000 metric tonnes and it employs approximately 1,170 employees. RdM is a public company listed on the Milan and Madrid stock exchanges. Information concerning RdM’s production facilities can be found at www.renodemedici.it .
Excluding discontinued operations, sales for the Boxboard Europe Group stood at $825 million in 2015 compared to $841 million in 2014, including the sales of RdM which are fully consolidated.
4.2.1.2 | Containerboard Group |
As of December 31, 2015, the Containerboard Group, doing business under the name Norampac, employed more than 3,400 employees in its five (5) mills and nineteen (19) converting plants located in Canada and in the United States. This network produces a broad range of products for sale to both regional and national customers in a variety of industries, including the food, beverage and consumer products industries. The Containerboard Group operates five (5) linerboard and corrugated medium mills having a combined annual production capacity of 987,000 short tons. Except for one corrugated medium mill in the United States, all of the Group’s mills are located in Canada. The products manufactured by the five (5) manufacturing mills consist of 29% linerboard and 71% corrugated medium. In 2015, approximately 51% of their output was converted by Norampac’s nineteen (19) corrugated products converting plants, all strategically located across Canada and the Northeastern United States. The Containerboard Group purchases all of its needs in virgin fibre in Québec and Ontario, and purchases 54% of its recycled fibre in Canada and the rest in the United States. Recycled fibre accounts for approximately 80% of their total pulp and fibre consumption. Products are delivered mainly by truck or rail.
In 2015, consolidated sales of this Group amounted to $1,301 million, compared to $1,181 million in 2014, mainly allocated as follows: external sales related to manufacturing activities amounted to $285 million, compared to $252 million in 2014, while the converting activities sales amounted to $1,016 million, compared to $929 million in 2014. 70% of the consolidated sales were made in Canada, 29% in the United States and 1% in other countries. In 2015, sales in the amount of $30 million were made to Niagara Sheets, LLC, held by Norampac at 24.5%, $12 million of sales were made to MPPLP, held by Norampac at 40 %, $10 million of sales were made to New England Sheets LLC, held by Norampac at 18 %, and lastly, sales in the amount of $3 million were made to Abzac Inc., held by Cascades at 40 %. Its own sales force carries out the sales of this Group together with sales agents for export purposes.
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The following table lists the mills and converting plants of the Containerboard Group and the approximate annual production capacity or shipments of each facility as well as the products manufactured or, where applicable, their activities in 2015:
Facilities | Products / Services |
Annual capacity or Shipments |
|
Manufacturing |
Annual Capacity in short tons |
||
Norampac Industries Inc. Niagara Falls Division, New York, USA | 100% recycled corrugating medium | 275,000 | |
Kingsey Falls, Québec | 100% recycled linerboard | 103,000 | |
Cabano, Québec | Corrugating medium in various basis weights | 242,000 | |
Trenton, Ontario | Corrugating medium in various basis weights | 194,000 | |
Mississauga, Ontario | 100% recycled linerboard | 173,000 | |
Converting |
Shipments in square feet (000) |
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Drummondville, Québec | Corrugated packaging | 1,030,000 | |
Victoriaville, Québec | Corrugated packaging | 285,000 | |
Vaudreuil, Québec | Corrugated packaging | 965,000 | |
Viau, Montréal, Québec | Corrugated packaging | 772,000 | |
Belleville, Ontario | Corrugated packaging | 240,000 | |
Etobicoke, Ontario | Corrugated packaging | 523,000 | |
Jellco, Barrie, Ontario | Corrugated packaging | 207,000 | |
St. Marys, Ontario | Corrugated packaging | 1,118,000 | |
Vaughan, Ontario | Corrugated packaging | 2,325,000 | |
Lithotech, Scarborough, Ontario | Micro-Litho packaging | 239,000 | |
Bird, Guelph, Kitchener and Windsor, Ontario | Corrugated packaging | 214,000 | |
Winnipeg, Manitoba | Corrugated packaging | 683,000 | |
Calgary, Alberta | Corrugated packaging | 633,000 | |
Richmond, British Columbia | Corrugated packaging | 549,000 | |
Norampac New York City Inc., New York, USA | Corrugated packaging | 788,000 | |
Norampac Schenectady Inc., New York, USA | Corrugated packaging | 620,000 | |
Norampac Industries, Inc., Lancaster Division, New York, USA | Corrugated packaging | 382,000 | |
Norampac New England, Thompson, Connecticut, USA | Corrugated packaging | 264,000 | |
Montréal, Québec | Micro-Litho Packaging | 398,000 | |
Services | |||
Art & Die, Etobicoke, Ontario | Graphic art and printing plates | N/A |
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4.2.1.3 | Specialty Products Group |
The Specialty Products Group operates in three main sub-segments, namely: industrial packaging, consumer products packaging, and recovery and recycling. This Group operates thirty-nine (39) facilities located in North America and Europe, including nineteen (19) recovery centers in Canada and the United States. It employs more than 2,100 employees. In 2015, sales of this Group amounted to $579 million compared to $568 million in 2014.
a) | Industrial Packaging |
The Industrial Packaging sub-segment is active in four (4) markets: protective packaging, specialty containers, structural components and paperboard and fibre composites. Products include Technicomb ® and Flexicomb ® honeycomb paperboard, Multiboard™ laminated paperboard and uncoated recycled paperboard (URB).
Cascades Conversion Inc., Converdis Inc. and Cascades Sonoco Inc., joint venture companies, convert uncoated paperboard, obtained in part within the Cascades network, into industrial packaging materials. The core product line is used by the pulp and paper industry, such as roll headers and paperboard packaging for rolls of newspaper. The sales for these mills are driven by their own sales force. In 2015, one customer accounted for 11% of sales and the principal geographic markets are the United States with 76%, and Canada with 24% of sales.
Cascades Rollpack S.A.S operates two (2) plants in France at Saulcy-sur-Meurthe and Châtenois, which manufacture roll headers made of linerboard. Uncoated paperboard is supplied by the European paper mills. The sales of these mills are made through their own sales forces. In 2015, the principal geographic market was Europe, with 100% of sales.
Cascades Multi-Pro, located in Drummondville (Québec) manufactures laminated paperboard used in many industrial sectors such as furniture backing and specialty containers. Cascades Enviropac in Berthierville (Québec) and Cascades Enviropac in Grand Rapids (Michigan, USA) manufacture honeycomb paperboard used as industrial packaging in general. Cascades Enviropac in St-Césaire (Québec) and Aurora (Illinois, USA) manufacture uncoated paperboard partitions for beer, wine and glass container producers. The sales of these converting plants are handled by their own sales representatives and by sales agents. In 2015, the principal geographic market is the United States at 67% and Canada with 33%. The supply of uncoated paperboard is principally obtained within the Cascades network.
Cascades Papier Kingsey Falls (Québec) produces uncoated recycled paperboard (URB) using 100% recycled fibre. This board is mainly used by packaging converters and industrial users of headers and wrappers for the paper industry, as well as partitions used as protective packaging. 57% of total sales are made to customers located in Canada, followed by the United States with sales at 40%. Raw material is sourced principally in Québec (75%).
The following table lists the main plants (including joint ventures) of the industrial packaging business sector and the approximate annual production capacity of each facility as well as the products manufactured or, where applicable, their activities in 2015:
Facilities | Products | Annual capacity in metric tonnes | |
Cascades Conversion Inc., Kingsey Falls, Québec | Roll headers and wrappers | 65,000 | |
Converdis inc., Berthierville, Québec | Roll headers and wrappers | 50,000 | |
Cascades Sonoco Inc., Birmingham, Alabama, USA | Roll headers and wrappers | 50,000 | |
Cascades Sonoco Inc., Tacoma, Washington, USA | Roll headers and wrappers | 30,000 | |
Cascades Rollpack S.A.S., Saulcy-sur-Meurthe, France | Roll headers and packaging reams | 40,000 | |
Cascades Rollpack S.A.S., Châtenois, France | Packaging reams | 25,000 | |
Cascades Multi-Pro, Drummondville, Québec | Laminated paperboard and specialty containers | 18,000 | |
Cascades Enviropac, Berthierville, Québec | Honeycomb packaging products | 12,600 | |
Cascades Enviropac, St-Césaire, Québec | Uncoated paperboard partitions | 9,000 | |
Cascades Enviropac, Grand Rapids, Michigan, USA | Honeycomb packaging products and other packaging products | 10,000 | |
Cascades Enviropac, Aurora, Illinois, USA | Uncoated paperboard partitions | 13,200 | |
Cascades Papier Kingsey Falls, Kingsey Falls, Québec | Uncoated paperboard | 95,000 |
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b) | Consumer Products Packaging |
The Consumer Products Packaging sub-segment designs and manufactures packaging for fresh foods, catering to the food processing and retailing industries. It is comprised of two (2) moulded pulp plants, two (2) plants manufacturing polystyrene foam trays, a plant manufacturing rigid plastic trays and containers and a flexible film converting plant.
The two (2) plants manufacturing moulded pulp products are Cascades Forma-Pak in Kingsey Falls (Québec), and Cascades Moulded Pulp in Rockingham (North Carolina, USA). They manufacture two types of products, namely, egg filler flats branded as UltraCell™, destined to poultry farms and egg processors and four-cup carriers, branded as UltraFit™, for the quick-service restaurant industry in Canada and the United States. Sales representatives and a network of sales agents serve customers in Canada and in United States. Raw material for these moulded pulp products is composed of 100% recycled material.
The two (2) plants manufacturing polystyrene foam trays are Plastiques Cascades, located in Kingsey Falls (Québec), and Cascades Plastics, located in Warrenton (Missouri, USA), catering to the food industry such as processors and retailers. These food trays package fresh meats, poultry and seafood. The Kingsey Falls plant also produces a complete line of plates and bowls made of foamed polystyrene, marketed under the EVOK ® brands, destined to the food service industry. The principal raw material used is foamed polystyrene. The Warrenton plant uses standard polystyrene foam and the Kingsey Falls plant uses EVOK ® , a polystyrene foam made with 25% recycled material, UL validated. Sales representatives and a network of sales agents serve customers in Canada and the United States.
Cascades Inopak, located in Drummondville (Québec), manufactures rigid plastic packaging primarily for the food industry, for processors and retailers. The plant converts plastic sheets by thermoforming them into a variety of packaging and containers. These packaging and container lines are sold under the various brands, namely, Frig-O-Seal ® , a reusable food container line sold through retailers to consumers. It also markets a complete product line of coin wrappers to the numismatic industry. Products are sold through distributors and agents. Mainly, the raw materials which are used are a blend of virgin polyethylene terephthalate (PETE) and 60% Recycled PETE (RPETE).
Since July 28, 2015, Cascades Flexible Packaging Inc. is a wholly-owned subsidiary of Cascades. Located in Mississauga (Ontario), it is specialized in the manufacturing of flexible film for packaging. This company offers a wide variety of resin and additives to meet customers’ needs mainly in the frozen foods, bakery and ice industries.
In 2015, the principal geographic markets of all these units were the United States with 63% and Canada with 37% of sales. The Consumer Products Packaging sub-segment has launched and marketed four new product lines and has expanded its EVOK ® tray offering. These new lines are Integral TM (a barrier tray line for fresh proteins), Ultratill TM (a new mushroom till line), Poultray TM (an innovative full bird container) and UltraCell TM Expo-30 (a totally new egg filler flat line).
The following table lists the plants and mills in the consumer packaging sub-segment and the approximate annual production capacity of each facility as well as the products manufactured or, where applicable, their activities in 2015:
c) | Recovery and Recycling |
In 2015, Cascades Récupération, through its recovery center located in Lachine (Québec), and its brokerage activities handled more than 66,000 metric tonnes of recyclable materials. 100% of its sales were in Canada. Most of its business is done through the distribution channels of Cascades Recovery Inc. Recovered paper supply is mainly obtained from industrial, commercial and institutional users.
Since November 27, 2015, Cascades Recovery Inc. is wholly-owned by Cascades. It provides services to recover and process discarded materials for municipal, graphic, industrial, commercial, consumer products and institutional sectors. Services are offered across Canada and the Northeastern United States with 19 recovery facilities. Marketing and brokerage offices are located in Boston (Massachusetts, USA), Charlotte (North Carolina, USA), Chicago (Illinois, USA), Montréal (Québec) and Toronto (Ontario). In 2015, the Group shipped over 1.27 million metric tonnes through its recovery facilities and brokerage business with 80% of sales in Canada, 17% in the United States and 3% in other countries.
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4.2.2 | Tissue Papers Sector |
The Tissue Papers Group is a manufacturer, converter and marketer of a wide variety of paper products intended for the Away-from-Home and consumer products markets. Its lines of bathroom tissue, facial tissue, paper towels, paper hand towels, paper napkins and other related products are sold under the labels Decor ® , North River ® , Cascades ® , Cascades Moka ® , Tandem ® , Tandem+ ® , Cascades Elite ® and Wiping Solutions ® in the Away-from-Home Canadian and American markets. In the consumer products market, products are principally marketed under private labels and under the label Cascades ® and April Soft ® in Canada and Nature’s Choice ® and under some secondary marks in the United States. In 2015, one client accounted for 30% of sales in the consumer products market. In addition, the Tissue Papers Group also sells parent rolls of bathroom tissue, paper towels, paper hand towels and specialty papers to a large number of converters. One client accounted for 87% of external parent roll sales. In 2015, one client accounted for 15% of overall sales in the consumer products, Away-from-Home markets, and parent rolls. Products are sold principally through a direct sales force, and are delivered by truck.
The Tissue Papers Group’s sales for 2015 amounted to $1,236 million compared to $1,054 million in 2014. In 2015, 75% of the sales were made in the United States and the remainder 25% of the sales in Canada. The Canadian mills generated 53% of total revenues in Canada and 47% in the United States. The American mills generated 97% of total revenues in the United States. 20 manufacturing and converting plants employ more than 2,200 employees.
The Candiac mill in Québec manufactures tissue paper and converts it into bathroom tissue and paper towels. These products are mainly sold in the consumer products market in Canada and in the United States. The production not converted is transferred to the Laval, Lachute and Granby (Québec), and Waterford (New York, USA) plants or is sold in parent rolls to other converters.
The Lachute mill in Québec specializes in the manufacturing and converting of industrial use paper hand towels and converting of industrial use bathroom tissue. These products are mainly destined to the Canadian and American Away-from-Home markets.
The Kingsey Falls mill in Québec manufactures tissue paper made from recycled fibre and converts it into bathroom tissue and facial tissue. These products are mainly sold in the consumer products market as well as the Away-from-Home markets, both in Canada and the United States. The production not converted is transferred to the Laval, Lachute and Granby (Québec),and Waterford (New York, USA) facilities or is sold in parent rolls to other converters.
Cascades Tissue Group - Wisconsin, in Eau Claire (Wisconsin, USA), manufactures tissue paper made from recycled fibre and converts it into bathroom tissue, paper towels, facial tissue and paper napkins. These products are mainly sold in the consumer products market in the United States. The non-converted production is sold in parent rolls to other converters.
The two (2) Toronto mills (Ontario), Cascades Tissue Group - Tennessee (Memphis, Tennessee, USA), Cascades Tissue Group - Rockingham (Rockingham, North Carolina, USA) and the Mechanicville Division of Cascades Tissue Group - New York Inc. (Mechanicville, New York, USA) produce parent rolls of tissue paper made from virgin fibre and recycled fibre. The production is transferred to the Kingman (Arizona, USA), Waterford (New York, USA), Wagram and Kinston, (North Carolina, USA), Granby (Québec) and Toronto (Ontario) plants or sold to other converters.
Cascades Tissue Group - Oregon, in St. Helens (Oregon, USA), produces parent rolls made of 100% virgin fibre. The production is transferred to the Kingman (Arizona, USA) plant or is sold to other converters. In 2014, the Tissue Papers Group acquired the specialty paper machine previously operated by Boise which is located adjacent to its existing tissue machine in St. Helens. This machine was reconfigured to produce 55,000 short tons of tissue paper annually, bringing the total tissue paper capacity of the St. Helens site to 127,000 short tons annually. The start-up occurred on October 25, 2014.
Cascades Tissue Group - Pennsylvania, with facilities in Ransom and Pittston (Pennsylvania, USA), manufactures tissue paper made from recycled fibre and converts it into bathroom tissue, paper towels, facial tissue and paper napkins. These products are mainly sold in the consumer products market in the United States. The non-converted production is transferred to the Waterford (New York, USA), Kingsey Falls (Québec), and Brownsville (Tennessee, USA) plants or is sold in parent rolls to other converters.
The Toronto plant (Ontario), the Laval and Granby plants (Québec), Cascades Tissue Group - Arizona (Kingman, Arizona, USA), the Waterford Division of Cascades Tissue Group - New York Inc. (Waterford, New York, USA) and Cascades Tissue Group - Wagram (Wagram, North Carolina, USA) specialize in the converting of tissue paper into bathroom tissue, paper hand towels, facial tissue, paper napkins and industrial paper hand towels. These products are mainly sold in the consumer products market as well as the Away-from-Home markets in Canada and the United States.
Best Diamond Packaging, LLC, a joint venture, operates a plant in Kinston (North Carolina, USA) and specializes in the conversion of tissue paper into paper napkins for the American food and quick-service restaurant markets.
Cascades Tissue Group - IFC Disposables plant, located in Brownsville (Tennessee, USA), specializes in the converting of non-woven fibre into industrial wipes sold in the Away-from-Home markets in the United States and Canada.
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The following table lists the plants and mills of the Tissue Papers Group and the approximate annual production capacity of each facility as well as the products manufactured or, where applicable, their activities in 2015:
Facilities | Products / Services |
Annual capacity in short tons (Manufacturing only) |
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Manufacturing / Converting | |||
Candiac, Québec | Parent rolls, paper towels, bathroom tissue | 66,000 | |
Lachute, Québec | Parent rolls, paper hand towels, bathroom tissue | 35,000 | |
Kingsey Falls, Québec | Parent rolls, facial tissue, bathroom tissue | 100,000 | |
Cascades Tissue Group - Wisconsin, Eau Claire, Wisconsin, USA | Parent rolls, paper towels, bathroom tissue, facial tissue and paper napkins | 60,000 | |
Manufacturing | |||
Toronto PM, Ontario | Parent rolls | 55,000 | |
Cascades Tissue Group - Oregon , St-Helens, Oregon, USA |
Parent rolls | 127,000 | |
Cascades Tissue Group - Pennsylvania, Ransom plant, Ransom, Pennsylvania, USA | Parent rolls | 57,000 | |
Cascades Tissue Group - Tennessee, Memphis, Tennessee, USA |
Parent rolls | 40,000 | |
Cascades Tissue Group - Rockingham, Rockingham, North Carolina, USA | Parent rolls | 60,000 | |
Cascades Tissue Group - New York Inc., Mechanicville Div., Mechanicville, New York, USA | Parent rolls | 57,000 | |
Converting | |||
Toronto, Ontario | Paper towels, bathroom tissue, paper napkins | N/A | |
Laval, Québec | Paper napkins | N/A | |
Granby, Québec | Bathroom tissue, facial tissue and paper hand towels | N/A | |
Cascades Tissue Group - Arizona, Kingman, Arizona, USA | Paper towels, bathroom tissue, paper hand towels, paper napkins | N/A | |
Cascades Tissue Group - New York Inc., Waterford Division, Waterford, New York, USA | Paper towels, bathroom tissue, paper hand towels, paper napkins | N/A | |
Cascades Tissue Group - Pennsylvania, Pittston plant, Pittston, Pennsylvania, USA | Paper towels, bathroom tissue, facial tissue and paper napkins | N/A | |
Cascades Tissue Group - Wagram, Wagram, North Carolina, USA | Paper towels, bathroom tissue, paper hand towels, paper napkins | N/A | |
Best Diamond Packaging, LLC, Kinston, North Carolina, USA | Paper napkins | N/A | |
Cascades Tissue Group - IFC Disposables, Brownsville, Tennessee, USA |
Industrial wipes | N/A |
4.3 | Research, Development and Innovation |
Cascades has its own research and development centre («the Centre») located in Kingsey Falls (Québec), composed of a staff of more than 40 employees. The Centre provides Cascades’ business units with technical support in solving production problems and improving quality as well as the development of new products and processes. Moreover, the Centre is strongly involved in innovation and sustainable development through its scientific support to the Corporation’s marketing teams.
Following the implementation of its Innovation Management System, which was expanded to all Cascades’ activities, namely finance, production, human resources, services, logistics, and sales and marketing to enhance efficiency and performance at all levels, as well as to develop a culture of innovation. The Cascades innovation management committee (CIMC) is now implementing this strategy. To support the culture of innovation, several articles on innovation are integrated into the Corporation’s quarterly newsletter to employees. The CIMC meets on a monthly basis to implement the strategy into the different groups and units.
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In 2012, Cascades consolidated its Information Technology (IT) Service under one single entity, providing a complete IT portfolio of services to all Cascades’ business units. The IT staff is composed approximately of 220 employees. Regarding the implementation of an integrated Enterprise Resource Planning (ERP) system, the Corporation identified the risks associated with said project and adopted a step-by-step plan to address any risks related to the implementation process. The Corporation dedicated a project team, required corporate oversight with the appropriate skills and knowledge and retained the services of consultants to provide expertise and training. Supported by senior management and key personnel, the Corporation undertook a detailed analysis of its requirements during 2010, and in November of 2010 successfully completed a pilot project in one of its plants. The project team has finalized a detailed blueprint for its manufacturing and some of its converting operations and started implementing the solution in its business units in 2012. In 2012 and 2013, Cascades invested $29 million and $14 million respectively, for the modernization of its financial information system to an ERP information technology system. The implementation is still ongoing as the Corporation is reviewing its internal processes to maximize the realization of benefits and reduce risks. In 2015, the Corporation also invested $8 million in intangible and other assets compared to $5 million in 2014, for the modernization of the financial system to an ERP information technology system.
4.4 | Competitive Conditions |
4.4.1 | Our Markets |
Cascades operates in large, highly competitive markets. Our products and services compete with similar products manufactured and distributed by others both domestically and globally. The success in our markets is influenced by many factors, including customer service, price, geographic location, quality, breadth and performance characteristics of our products. Given our products, integration level, markets and geographic diversification, we believe that we are well-positioned to compete in our packaging and tissue sectors.
According to RISI and CCCA, the total containerboard production in North America was approximately 37.7 million tons in 2015 while total containerboard production capacity totaled approximately 39.9 million tons. The five largest manufacturers, International Paper Company, WestRock Company, Georgia-Pacific LLC, Packaging Corporation of America and KapStone Paper and Packaging Corporation accounted for approximately 76% of total production capacity. Total U.S. containerboard production increased by 1.3% in 2015. With respect to demand, while the containerboard market is cyclical and impacted by economic conditions, it tends to be more resilient given that approximately 75% of the end demand for corrugated boxes comes from the non durable goods industries according to the Fibre Box Association .
According to RISI, demand in the U.S. tissue paper market reached approximately 8.9 million tons in 2015. Total tissue production capacity in North America totaled approximately 9.8 million tons during the same period. We estimate the five largest manufacturers, Georgia-Pacific LLC, The Procter & Gamble Company, Kimberly-Clark Corporation, Svenska Cellulosa Aktiebolaget (SCA) and Cascades Inc. to account for approximately 74% of total production capacity. The tissue paper market consists of both the consumer products and Away-from-Home markets. Shipments of consumer products and Away-from-Home tissue products represented approximately 68% and 32%, respectively, of total U.S. tissue paper shipments in 2015. The tissue market is considered to be the most stable paper sector with demand in North America growing at a 1.2% compound annual growth rate since 2005.
4.4.2 | Our Competitive Strengths |
Leading Market Positions with Environmentally Sustainable Product Focus . We are one of the two leaders in Canada and hold one of the leading market positions in the packaging industry in North America. We also are a leading producer of recycled coated boxboard in Europe through our ownership of Reno de Medici, S.p.A. We believe our leading market positions and our environmental focus give us an advantage over many of our competitors. We believe the demand for green products is growing and we are well-positioned to take advantage of the growing environmental trend due to our strengths and diversity of product offerings.
Fully Integrated Recycling Solutions Provider . We are an integrated manufacturer with both downstream recycled paper collection and processing capabilities and upstream manufacturing and converting operations. We have created the closed-loop system TM that enables us to manufacture our products efficiently for our customers. In North America, 28% of the recycled fibre that we use in our products come from our own recovery facilities. We continually look for opportunities to increase our integration to further ensure the supply of raw materials to our mills and grow the development of our environmentally sustainable products.
Diversified Portfolio of Products, Markets and Geographic Locations . We manufacture and sell a diversified portfolio of packaging, tissue and specialty products for commercial, industrial and consumer products end markets in Canada, the United States, Europe and other regions. Our customers include Fortune 500, medium and small-sized companies across a broad range of industries. We believe that our product, geographic and customer diversification help us maintain our operating performance through economic downturns and changing market conditions. The size and diversity of our operations also allow us to cost-effectively serve customers on a regional and multinational basis, reducing delivery times and enhancing customer service.
Strong Presence in Consumer-Oriented End Markets . Our packaging, tissue and other products are sold primarily to consumer-oriented end markets, which tend to be less sensitive to economic cycles. As a result, products sold to these markets tend to exhibit a greater degree of stability and predictability in demand and product prices than products sold to commercial or industrial-oriented end markets. Our participation in consumer-oriented end markets has increased with our focus on selling tissue products.
4.5 | Cyclical Considerations |
Cascades is a diversified producer of packaging products and tissue paper with operations in Canada, the United States and Europe. The Corporation has leading market positions for many of its products in North America and is one of the foremost producers of recycled coated boxboard in Europe through its ownership of Reno de Medici, S.p.A.
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Although the Corporation believes that its products, integration level, market, and geographical diversification help to mitigate the adverse effects of industry conditions, the markets, for some of its products, notably containerboard and boxboard, remain cyclical. These markets are influenced by changes in the North American and global economies, industry capacity and inventory levels maintained by customers, all of which affect selling prices and profitability. The Corporation is also affected by the variation of the Canadian dollar against the U.S. dollar and the Euro, and the effect of the volatility of the costs of the raw materials, particularly recycled fibre.
4.6 | Environmental Protection |
4.6.1 | Regulations |
The Corporation’s activities are subject to environmental laws and regulations imposed by various governmental and regulatory authorities in all the countries where it operates. The Corporation is in compliance, in all material respects, with all applicable environmental legislation and regulations. However, ongoing capital and operating expenses are expected to be incurred to achieve and maintain compliance with applicable environmental requirements. For more information, reference is made to the heading “RISK FACTORS”, on page 72 of Management’s Discussion and Analysis in the 2015 Annual Report, which item is incorporated by reference.
In 2015, environmental protection requirements and the application of Cascades’ environmental mission required capital expenditures and led to operating costs as follows :
Country | Capital Expenses | Operating Costs |
Canada | $1,280,530 | $28,989,691 |
United States | $137,689 | $26,493,426 |
Europe | $58,399 | $3,302,355 |
Total | $1,476,618 | $58,785,472 |
4.6.2 | Environmental Mission |
Since one of the deeply ingrained values of the Corporation is protecting the environment, Cascades has adopted an Environmental Mission, which is available on the Corporation’s website at www.cascades.com .
4.7 | Reorganizations |
In 2015, no major legal reorganizations were undertaken by Cascades. In the normal course of business, some reorganizations of the subsidiaries of the Corporation could occasionally occur in order to improve the organizational structure, none of them having a material impact on the activities, operations or financial results of the Corporation.
The Corporation is actively implementing ONE Cascades, a major program to streamline its business processes. ONE Cascades aims to strengthen the customer approach by optimizing and standardizing internal procedures. This program will include improving the supply chain to allow a better response to customers; discharging the plants from repetitive administrative tasks to allow them to focus on improving production; and improving the human resources processes to provide better support to the organization.
4.8 | Social Policies |
The Corporation has adopted a Code of Ethics (the “Code”), which is meant to provide directors, officers, and employees with general guidelines for acceptable behaviour in all relationships with each other, customers, suppliers, partners, and the communities where the Corporation operates. A copy of the Code is available on the Corporation' website at www.cascades.com .
4.9 | Risk Factors |
We refer the reader to Management’s Discussion and Analysis in the 2015 Annual Report, specifically on page 72 under the heading “RISK FACTORS”, incorporated by reference herein.
ITEM 5 - DIVIDENDS AND DISTRIBUTIONS
In 2013, 2014 and 2015, Cascades paid dividends on its Common Shares at the current rate of $0.04 per Common Share per quarter. Other than pursuant to the Indentures, which govern its Senior Notes, and the Credit Facilities, there are no material contractual restrictions on Cascades’ ability to declare and pay dividends on its Common Shares.
The dividend amount is reviewed annually by the Board of Directors and is determined taking into account Cascades’ financial situation, its results from operations, its capital requirements and any other factor deemed pertinent by the Board of Directors.
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ITEM 6 - CAPITAL STRUCTURE
6.1 | General description of capital structure |
The share capital of the Corporation is composed of an unlimited number of Common Shares without par value, an unlimited number of Class “A” Preferred Shares without par value which may be issued in series and an unlimited number of Class “B” Preferred Shares without par value which may be issued in series.
The holders of common shares are entitled to the right to vote on the basis of one vote per share at any meetings of shareholders and the right to receive dividends and to share in the remaining assets in the event of a liquidation of the Corporation. As at March 16, 2016, there were 95,358,629 Common Shares issued and outstanding.
The Class “A” and “B” Preferred Shares are issuable in series and rank equally within their respective classes as to dividends and capital. Registered holders of any series of Class “A” or Class “B” are entitled to receive, in each fiscal year of the Corporation or on any other basis, cumulative or non-cumulative preferred dividends payable at the time, at the rates and for such amounts and at the place or places determined by the directors with respect to each series prior to the issuance of any Class “A” or Class “B” Preferred Shares. In the event of the liquidation, winding-up or dissolution of the Corporation or any other distribution of its assets to its shareholders, the holders of Class “A” and “B” Preferred Shares are entitled to receive, out of the assets of the Corporation, the amount paid in consideration of each share held by them. The holders of Class “A” and “B” Preferred Shares are not entitled as such to receive notice of or to attend or to vote at any meetings of shareholders. None of the Class “A” or “B” Preferred Shares of the capital stock of the Corporation are, as of the date hereof, issued and outstanding.
6.2 | Ratings |
Credit ratings are intended to provide investors with an independent measure of credit quality of an issuer or a security. Rating for issuers or for debt instruments are presented in ranges by each of the rating agencies. The highest qualities of securities are rated AAA in the case of Standard & Poor’s ("S&P") and Dominion Bond Rating Services (“DBRS”), or Aaa in the case of Moody’s Investors Service ("Moody’s”). The lowest quality of securities are rated D in the case of S&P and DBRS, or C in the case of Moody’s.
According to the S&P rating system (http://www.spratings.com/en_US/understanding-ratings), notes rated BB, B, CCC, CC, and C are regarded as having from low to significant speculative characteristics. A BB rating indicates the least degree of speculation and C the highest. While such notes will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. Notes rated BBB are less vulnerable for non-payment than other speculative economic conditions, which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation. The ratings from AAA to B may be modified by the addition of a plus (+) or minus (-) to show relative standing within the major rating categories.
According to the Moody’s rating system (https://www.moodys.com/Pages/amr002002.aspx), notes, which are rated Ba, are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Moody’s applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking and the modifier 3 indicates a ranking in the lower end of that generic rating category.
According to the DBRS rating system (http://dbrs.com/ratingPolicies/list/name/rating+scales), long-term debt rated BB is defined to be speculative and non-investment grade, where the degree of protection afforded interest and principal is uncertain, particularly during periods of economic recession. Entities in the BB range typically have limited access to capital markets and additional liquidity support. In many cases, deficiencies in critical mass, diversification, and competitive strength are additional negative considerations. The absence of either a high or low designation indicates the rating is in the middle of the category.
Credit Risk | Moody's | S & P | DBRS |
Highest quality | Aaa | AAA | AAA |
High quality (very strong) | Aa | AA | AA |
Upper medium grade (strong) | A | A | A |
Medium grade | Baa | BBB | BBB |
Lower medium grade (somewhat speculative) | Ba | BB | BB |
Low grade (speculative) | B | B | B |
Poor quality (may default) | Caa | CCC | CCC |
Most speculative | Ca | CC | CC |
No interest being paid or bankruptcy petition filed | C | C | C |
In default | C | D | D |
Source: Securities Industry and Financial Markets Association and “Dominion Bond Rating Services”
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Cascades is rated by S&P, Moody’s and DBRS. The Corporation’s issuer rating by these three agencies are listed below:
Rating agency |
Issuer Rating | Qualitative | Most recent update |
S&P | B+ | Stable outlook | May 2015 |
Moody’s | Ba2 | Stable outlook | May 2015 |
DBRS | BB | Stable outlook | January 2015 |
It is to be noted that the credit ratings given by the rating agencies are not recommendations to purchase, hold or sell Cascades' notes or securities as such, given these ratings do not comment as to market price or suitability for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn by a rating agency in the future if in its judgment circumstances so warrant. The Corporation is not responsible for credit ratings given by the rating agencies.
ITEM 7 - MARKET FOR SECURITIES
7.1 | Trading Price and Volume |
Cascades’ Common Shares are traded on the Toronto Stock Exchange and alternative trading systems under the ticker symbol “CAS”. The following table sets forth the market price range, in Canadian dollars, and trading volumes of the Corporation’s Common Shares on the Toronto Stock Exchange for each month of the most recently completed financial year:
Toronto Stock Exchange - Market price range - Year 2015
Month | High | Low |
Closing Market
Price |
Trading Volume | |
January | 7.96 | 6.96 | 7.85 | 3,229,424 | |
February | 8.30 | 7.82 | 8.01 | 2,233,044 | |
March | 8.18 | 6.58 | 7.63 | 5,197,720 | |
April | 7.65 | 6.93 | 7.00 | 2,158,727 | |
May | 7.78 | 6.49 | 7.74 | 3,740,407 | |
June | 7.98 | 6.95 | 7.15 | 1,781,647 | |
July | 7.79 | 6.86 | 7.63 | 1,481,388 | |
August | 9.22 | 7.35 | 8.58 | 4,149,254 | |
September | 8.94 | 8.04 | 8.61 | 2,149,029 | |
October | 9.50 | 8.31 | 9.32 | 2,880,183 | |
November | 11.62 | 9.27 | 11.55 | 5,438,268 | |
December | 13.00 | 11.40 | 12.71 | 5,428,390 |
In 2014, in the normal course of business, the Corporation renewed its redemption program. Purchases began on March 17, 2014 and continued until March 16, 2015. The notice enabled Cascades to acquire up to 1,502,206 Common Shares, representing approximately 1.6% of the issued and outstanding Common Shares as of March 1, 2014. As of March 16, 2015, the Corporation had redeemed 49,000 Common Shares at an average weighted cost of $5.93.
In 2015, in the normal course of business, the Corporation renewed its redemption program. Purchases began on March 17, 2015 and continued until March 16, 2016. The notice enabled Cascades to acquire up to 942,194 Common Shares, representing approximately 1% of the issued and outstanding Common Shares as of February 27, 2015. As of March 16, 2016, the Corporation had redeemed 188,405 Common Shares at an average weighted cost of $7.99.
On March 15, 2016, Cascades announced that the Toronto Stock Exchange had accepted its notice of intention to begin a normal course issuer bid in respect of its Common Shares. Purchases pursuant to the normal course issuer bid commenced on March 17, 2016 and will cease on March 16, 2017. The Common Shares purchased shall be cancelled. The notice will enable Cascades to acquire up to 953,586 Common Shares, which represents approximately 1% of the 95,358,629 issued and outstanding Common Shares as at March 4, 2016.
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ITEM 8 - DIRECTORS AND OFFICERS
The Directors of the Corporation are elected annually to hold office until the next annual general meeting or until a successor is elected or appointed.
8.1 | Name, Occupation and Security Holding |
The following table sets out the name, age and place of residence of each director, its principal occupation, the year in which he or she first became a director of the Corporation, the number of common shares of the Corporation beneficially owned directly or indirectly by him or her, their independence status, the number of deferred share units he or she holds, if the Director sits on boards of directors and committees of other public companies, membership on the committees of the Board of Directors of the Corporation, their value of at-risk holdings as at December 31, 2015 and the percentage of votes voted in favour of their election at last year's meeting.
INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES (2) | DSUs (6) | SHARES (2) | DSUs | ||
12,261,080 | — | 12,616,651 | — | (355,571) | 155,838,327 |
|
Principal occupation :
|
Executive Chair of the Board | |
Committee(s) :
|
N.A. | ||
2015 Annual Meeting Votes in favour (%) : 94.37
Skills and Experience Former CEO / Pulp and Paper Industry / Environment, Health and Safety and Sustainable Development / International Experience |
|||
Alain Lemaire Age 68 Kingsey Falls (Québec)
Canada
Director since 1967 |
One of the founders of Cascades, Mr. Lemaire is Executive Chair of the Board of the Corporation. He held the position of President and Chief Executive Officer from 2004 to May 2013. He was Executive Vice-President of the Corporation from 1992 to 2004 and was President and Chief Executive Officer of Norampac Inc., from 1998 to 2004. A former student of the Institut des pâtes et papiers of Trois-Rivières (Québec), he holds an Honorary Doctorate in Business Administration from the University of Sherbrooke (Québec). In 2013, he received an Honorary Doctorate in Civil Law from Bishop's University in Lennoxville (Québec). Mr. Lemaire is an Officer of the Order of Canada and was named a Chevalier de l'Ordre National du Québec in 2015 . |
INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES (3) | DSUs (6) | SHARES (3) | DSUs | ||
4,969,465 | — | 4,969,405 | — | 60 | 63,161,900 |
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Principal occupation :
|
President, Louis Garneau Sports Inc. | |
Committee(s) :
|
Human Resources (Member) | ||
2015 Annual Meeting Votes in favour (%) : 95.57
Skills and Experience CEO / Human Resources and Compensation / Pulp and Paper Industry / Sales and Marketing |
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Louis Garneau
Age 57
Director since 1996 |
Mr. Garneau is President of Louis Garneau Sports Inc., a manufacturer and distributor of sports clothing and accessories throughout the world. He is a member of the Human Resources Committee. A former international cycle racer, Mr. Garneau participated in the 1984 Olympic Games in Los Angeles. He is a Chevalier de l’Ordre national of Québec and an Officer of the Order of Canada. In June 2007, he was awarded an Honorary Doctorate from the Faculty of Administration of the University of Ottawa. In 2008, he received the “Gloire de l’Escolle” medal as a former graduate having honored Université Laval due to the extent of his professional activities and his contribution to society. In November 2014, he was awarded the Medal of Honour of the National Assembly of Québec. This medal is awarded to public figures who are deserving of recognition by the Members of the Assembly. |
INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES | DSUs (6) | SHARES | DSUs | ||
5,018 | 45,061 | 5,018 | 42,534 | 2,527 | 636,504 |
|
Principal occupation :
|
Partner, McCarthy Tétrault | |
Committee(s) : |
Human Resources (Chair)
Audit and Finance (Member)
|
||
2015 Annual Meeting Votes in favour (%) : 95.14
Skills and Experience International Senior Executive / Corporate Governance / Human Resources and Compensation / Mergers and Acquisitions |
|||
David McAusland Age 62
Beaconsfield (Québec)
Independent (1) Director since 2003 |
Mr. McAusland is a partner in the law firm of McCarthy Tétrault. From 1999 to February 2008, he held among others, the position of Executive Vice-President, Corporate Development and Chief Legal Officer of Alcan Inc., a large multinational industrial company. He is Chair of the Human Resources Committee, Chair of the Corporate Governance and Nominating Committee and member of the Audit and Finance Committee. Mr. McAusland sits on the Boards of Directors of Cogeco Inc., and Cogeco Cable Inc., two companies involved in the communications sector where he is a member of the Corporate Governance Committee and Chair of the Strategic Opportunities Committee of both these issuers. He sits on the Board of Directors of Khan Resources Inc., a uranium exploration and development company, where he is a member of the Compensation Committee. He is the Chairman of the Board of Directors of ATS Automation Tooling Systems, a leader in automation manufacturing solutions. He is also a member of the Accounting Standards Oversight Council. Furthermore, he is a director of certain non-for-profit organizations, such as the General Hospital Foundation and Chairman of the Board of the Fondation de l’École nationale du cirque . |
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INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES | DSUs (6) | SHARES | DSUs | ||
4,000 | 55,838 | 4,000 | 50,738 | 5,100 | 760,541 |
|
Principal occupation :
|
Director of companies | |
Committee(s) : |
Audit and Finance (Chair)
Lead Director
|
||
2015 Annual Meeting Votes in favour (%) : 97.95
Skills and Experience Senior Executive / Pulp and Paper Industry / Finance and Accounting / Environment, Health and Safety and Sustainable Development |
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Georges Kobrynsky Age 69
Outremont (Québec)
Independent (1) Director since 2010 |
Mr. Kobrynsky is a director of companies. He is Lead Director of the Board of Directors, Chair of the Audit and Finance Committee, member of the Corporate Governance and Nominating Committee and a member of the Environment, Health and Safety and Sustainable Development Committee. He held the position of Senior Vice-President, Investments, Forest Products of the Société générale de financement du Québec from 2005 to 2010. Mr. Kobrynsky has held for more than 30 years, various senior positions at Domtar Inc., including Senior Vice-President, Pulp and Paper Sales, Marketing and Customer Relations Group from 2001 to 2005 and Senior Vice-President, Communication Papers Division from 1995 to 2001. He sat on the Board of Directors of Norampac Inc., from 1998 to 2006. He holds a Master of Business Administration from McGill University (Québec), a Bachelor’s degree in Forest Engineering from Université Laval (Québec) and a Bachelor of Arts from the Université de Montréal (Québec) . He is a member of the Board of Directors of Supremex Inc., a Canadian manufacturer of stock and custom envelopes, Chair of the Pension Investment Committee and a member of the Audit and Human Resources Committees. |
INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES | DSUs (6) | SHARES | DSUs | ||
— | 21,355 | — | 19,123 | 2,232 | 271,422 |
|
Principal occupation :
|
Director | |
Committee(s) : |
Human Resources (Member) Environment, Health and Safety and Sustainable Development (Member)
|
||
2015 Annual Meeting Votes in favour (%) : 96.31
Skills and Experience Senior Executive / Pulp and Paper Industry / Human Resources and Compensation / Environment, Health and Safety and Sustainable Development |
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Élise Pelletier Age 55
Chambly (Québec)
Independent (1) Director since 2011 |
Retired since 2003, Ms. Pelletier accumulated over twenty years of experience within the Corporation, having held the position of Vice-President, Human Resources of the Corporation during the period between 1995 and 1998, and thereafter, the position of Vice-President with Norampac Inc., during the period between 1998 to 2003. She has extensive knowledge of the pulp and paper sector and was a member of the Board of Directors of the Corporation from 1993 to 2001. She is a member of the Human Resources Committee and of the Environment, Health and Safety and Sustainable Development Committee. She holds a Certificate in governance of companies from the Collège des administrateurs de sociétés , Université Laval (Québec). She holds the degree of Bachelor in Industrial Relations from the Université de Montréal (Québec) . |
INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES | DSUs (6) | SHARES | DSUs | ||
1,000 | 13,917 | 1,000 | 11,777 | 2,140 | 189,595 |
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INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES | DSUs (6) | SHARES | DSUs | ||
— | 8,183 | — | 6,114 | 2,069 | 104,006 |
INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES | DSUs (6) | SHARES | DSUs | ||
20,000 | 16,358 | 20,000 | 12,221 | 4,137 | 462,110 |
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Principal occupation :
|
President and Chief Executive Officer | |
Committee(s) :
|
N.A. | ||
2015 Annual Meeting Votes in favour (%) : 95.51
Skills and Experience CEO / Pulp and Paper Industry / Finance and Accounting / International Experience |
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Mario Plourde Age 54
Kingsey Falls (Québec)
Non-Independent Director since 2014 |
Mr. Plourde is President and Chief Executive Officer of the Corporation since May 2013. He has been in the employ of the Corporation since 1985 and has held several senior management positions such as Vice-President and Chief Operating Officer of Cascades' Specialty Products Group. He was named President of this Group in 2000. In 2011, he was appointed Chief Operating Officer of the Corporation. He joined the Board of Directors of Cascades on November 6, 2014. Mr. Plourde sits on the Board of Directors of Transcontinental Inc., where he is a member of the Governance Committee and also sits on the Board of Directors of the Fondation Centre de Cancérologie Charles-Bruneau . Actively involved in social and community affairs, he was awarded in 2012, the Prix bâtisseur - Tour CIBC Charles Bruneau, (a foundation for pediatric cancer research) . Mr. Plourde holds a Bachelor's degree in Business Administration, majoring in Finance from the Université du Québec in Montréal. |
INFORMATION ON EQUITY HOLDINGS | |||||
DECEMBER 31, 2015 | DECEMBER 31, 2014 | TOTAL NET CHANGE (#) |
TOTAL VALUE AT RISK
AS OF DECEMBER 31, 2015 ($) (5) |
||
SHARES | DSUs (6) | SHARES | DSUs | ||
115,622 | — | 103,910 | — | 11,712 | 1,469,556 |
(1) | "Independent" refers to the standards of independence established under Section 1.2 of the Canadian Securities Administrators’ National Instrument 58-101 (Disclosure of Corporate Governance Practices). |
(2) | Held directly or indirectly by Gestion Laurent Lemaire Inc., of which Laurent Lemaire is the sole voting shareholder. |
(3) | Held directly or indirectly by Gestion Alain Lemaire Inc., of which Alain Lemaire is the sole voting shareholder. |
(4) | 86,277 shares are held directly or indirectly by Tremer II Inc., a company in which Ms. Lemaire holds a 50% shareholding. |
(5) | The total value at risk is based on the closing share price of the Common Shares of the Corporation on the Toronto Stock Exchange (TSX) on December 31, 2015 ($12.71). |
(6) | DSUs are now paid annually, as described in section 3.8.2 "Deferred Share Unit Plan" on page 27 of this Circular. DSUs for 2015 were attributed on January 15, 2016. |
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8.2 | Cease Trade Orders, Bankruptcies, Penalties or Sanctions |
To the Corporation’s knowledge, no director or executive officer of the Corporation and no shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation:
a) | is or has been in the past ten years before the date of this Annual Information Form a director or executive officer of any other company that, while that person was acting in that capacity, |
i) | was the subject of a cease trade or similar order, or an order that denied the other issuer access to any exemption under securities legislation for a period or more than 30 consecutive days; |
ii) | was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the Corporation being the subject of a cease trade or similar order or an order that denied the other issuer access to any exemption under securities legislation for a period of more than 30 consecutive days; or |
iii) | within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets; |
b) | was subject to court-imposed penalties or sanctions relating to securities legislation or by a securities regulatory authority, or entered into a settlement agreement with such authority; or |
c) | was subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision. |
To the Corporation’s knowledge, no director or executive officer of the Corporation and no shareholder holding a sufficient number of securities of the Corporation to affect materially the control of the Corporation, or a personal holding company of any such persons, has within the 10 years before the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his or its assets.
Furthermore, to the knowledge of the Corporation, no proposed director of the Corporation has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable shareholder in deciding whether to vote for a proposed director.
8.3 | Information concerning Executive Officers |
Executive Officers | Occupation in the Corporation |
Alain Lemaire Kingsey Falls, Québec |
Executive Chair of the Board of Directors |
Mario Plourde Kingsey Falls, Québec |
President and Chief Executive Officer |
Allan Hogg Kingsey Falls, Québec |
Vice-President and Chief Financial Officer |
Maryse Fernet Kingsey Falls, Québec |
Chief Human Resources Officer |
Dominic Doré Mont-Saint-Hilaire, Québec |
Chief Information Officer |
Hugo D'Amours Saint-Bruno de Montarville, Québec |
Vice-President, Communications and Public Affairs |
Léon Marineau Kingsey Falls, Québec |
Vice-President, Environment |
Robert F. Hall Canton de Hatley, Québec |
Chief Legal Officer and Corporate Secretary |
Suzanne Blanchet La Prairie, Québec |
Senior Vice-President, Corporate Development |
Pascal Aguettaz Kingsey Falls, Québec |
Vice-President, Corporate Services |
Jean Jobin Sainte-Catherine, Québec |
President and Chief Operating Officer, Tissue Papers Group |
Marc-André Dépin (1) Boucherville, Québec |
President and Chief Executive Officer, Containerboard Group (Norampac) |
Charles Malo (2) Boucherville, Québec |
President and Chief Operating Officer, Containerboard Group (Norampac) |
Luc Langevin Notre-Dame-des-Prairies, Québec |
President and Chief Operating Officer, Specialty Products Group |
(1) Left the employ of Norampac at the end of the financial year
(2) Was appointed in January 2016
19 |
|
Annual Information Form |
During the past five years, each of the Executive Officers of the Corporation have been engaged in their present principal occupations or in other executive capacities for the Corporation or with related or affiliated companies indicated opposite their name, except for Mr. Hugo D'Amours, who was appointed Vice-President, Communications and Public Affairs, on January 21, 2013. Prior thereto, Mr. D'Amours was Press Secretary and Director of Media Relations for the Premier of Québec. On January 13, 2016, the Corporation announced that Mr. Marc-André Dépin had stepped down as President and Chief Executive Officer of the Containerboard Group (Norampac) at the end of fiscal 2015. Mr. Charles Malo succeeded him as President and Chief Operating Officer.
As at December 31, 2015, the Directors and Executive Officers of the Corporation listed herein beneficially owned as a group, or exercised control or direction over, directly or indirectly, 17,930,898 Common Shares representing 18.81% of the Common Shares issued and outstanding.
ITEM 9 - LEGAL PROCEEDINGS
In the normal course of operations, the Corporation is party to various legal actions and contingencies, mostly related to contract disputes, environmental, product claims, and labour issues. While the final outcome with respect to legal actions outstanding or pending as at December 31, 2015 cannot be predicted with certainty, it is management’s opinion that the outcome will not have a material adverse effect on the Corporation’s consolidated financial position, results of its operations or its cash flows.
ITEM 10 - TRANSFER AGENTS AND REGISTRARS
Cascades’ transfer agent and registrar is Computershare Investor Services Inc. (“Computershare”), having its place of business in Montréal, Québec, Canada at 1500 Robert-Bourassa Blvd., 7 th Floor, H3A 3S8. The register of transfers of the Common Shares of the Corporation is located in the same office in Montreal.
ITEM 11 - MATERIAL CONTRACTS
The only material contracts entered into during the year ended December 31, 2015 or in prior years that are still in effect and filed on SEDAR and EDGAR, as required by applicable legislations, are :
Second Amended and Restated Credit Agreement dated July 7, 2015 (the "Second Amended and Restated Credit Agreement"), amongst Cascades Inc., Cascades USA Inc., Cascades Europe SAS, National Bank of Canada, as administrative agent, The Bank of Nova Scotia, as collateral agent, and a syndicate of lenders named therein, as lenders. Upon the terms of the Second Amended and Restated Credit Agreement, among other amendments, the Facility Maturity Date has been extended until July 7, 2019.
Indenture dated May 19, 2015, amongst Cascades, the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, pursuant to which Cascades issued 5.75% Senior Notes due 2023, as amended by Supplemental Indentures dated September 23, 2015 and December 9, 2015.
Indenture dated June 19, 2014, amongst Cascades, the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee, pursuant to which Cascades issued 5.50% senior notes due in 2022, as amended by Supplemental Indentures dated March 16, 2015, September 23, 2015 and December 9, 2015.
Indenture dated June 19, 2014, amongst Cascades, the Subsidiary Guarantors party thereto Computershare Trust Company of Canada, as Trustee, pursuant to which Cascades issued 5.50% Senior Notes due 2021, as amended by Supplemental Indentures dated March 16, 2015, September 23, 2015 and December 9, 2015.
Amended and Restated Credit Agreement, by and among Greenpac Holding LLC, as borrower, Caisse de dépôt et placement du Québec et Cascades USA Inc., as Lenders, and Caisse de dépôt et placement du Québec, as Agent to the Lenders, dated as of May 14, 2012.
Joint Venture Formation Agreement between Maritime Paper Products Limited (MPPL) and Cascades Canada ULC in respect of Maritime Paper Products Limited Partnership relating to the integration of the Containerboard Group's Newfoundland and Moncton (New Brunswick) plants dated as of November 27, 2013. Filed on SEDAR only.
ITEM 12 - INTERESTS OF EXPERTS
PricewaterhouseCoopers LLP, Partnership of Chartered Professional Accountants (“PwC”), is the Independent Auditor of the Corporation who have prepared the Independent Auditor’s report dated March 10, 2016 in respect of the Corporation’s consolidated financial statements with accompanying notes as at and for the years ended December 31, 2015 and 2014. PwC has advised that they are independent with respect to the Corporation within the meaning of the Code of Ethics of the Ordre des comptables professionnels agréés du Québec.
20 |
|
Annual Information Form |
ITEM 13 - AUDIT AND FINANCE COMMITTEE
13.1 | Composition and mandate |
The Audit and Finance Committee (the “Committee”) is composed of Messrs Georges Kobrynsky, (Chair), Laurence G. Sellyn and David McAusland. The Committee is governed by a charter which is attached to this AIF as Schedule A. All the members of the Committee are independent in accordance with the definition provided in section 1.4 of Multilateral Instrument 52-110 of the Canadian Securities Administrators and are financially literate.
13.2 | Relevant Education and Experience of the Members |
The following describes the relevant education and experience of each member of the Committee that provides him with (a) an understanding of the accounting principles used by the Corporation to prepare its financial statements, (b) the ability to assess the general application of such accounting principles, (c) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to those that can reasonably be expected to be raised by the Corporation’s financial statements or experience actively supervising one or more persons engaged in such activities and (d) an understanding of internal controls and procedures for financial reporting.
13.3 Independent Auditor Services Fees
The following table sets out the fees incurred and paid to the Independent Auditor PricewaterhouseCoopers LLP, Partnership of chartered professional accountants in Canadian dollars in the past two fiscal years for various services provided to the Corporation and its subsidiaries:
SERVICES | FEES | |||
December 31, 2014 | December 31, 2015 | |||
Audit Fees (1) | $1,665,094 | $1,675,465 | ||
Audit-Related Fees (2) | $557,936 | $524,585 | ||
Tax Fees (3) | $191,241 | $136,247 | ||
Other Fees (4) | N/A | N/A | ||
Total | $2,414,271 | $2,336,297 |
(1) Professional services provided in connection with statutory and regulatory filings and audit of the annual financial statements of the Corporation.
(2) Professional services related to auditing as well as consultations on accounting and regulatory matters.
(3) Professional services regarding compliance with income tax laws.
(4) Various other services.
21 |
|
Annual Information Form |
13.4 | Policies and Procedures for the Engagement of Audit and Non-Audit Services |
The Corporation’s Audit and Finance Committee has adopted a Pre-approval Policy and Procedures, as amended, for services provided by the Independent Auditor (the “Policy”) which sets forth the procedures and the conditions pursuant to which permissible services proposed to be performed by the Independent Auditor are pre-approved. Under the terms of the Policy, services that involve annual fees of less than $25,000 up to an annual limit of $50,000 are pre-approved. The Committee has delegated to the Chairman of the Committee pre-approval authority for any services not previously approved by the Committee that involve the payment of unbudgeted fees up to a maximum of $100,000 per mandate. Services that involve fees of more than $100,000 require pre-approval of all the members of the Committee.
ITEM 14 - ADDITIONAL INFORMATION
Additional information, including Directors' and Senior Officers' remuneration and indebtedness, principal holders of the securities of Cascades and options to purchase securities, and interests of insiders in material transactions, if any, is contained in the Management Proxy Circular dated March 16, 2016 for the Annual General Meeting of Shareholders.
Also, additional financial information pertaining to the fiscal year ended December 31, 2015 including Management’s Discussion and Analysis is presented in the Corporation’s 2015 Annual Report.
In addition, the following documents may be obtained, upon written request, from the Corporation’s Corporate Secretary:
(a) | When Cascades is in the course of a distribution of its securities pursuant to a short form prospectus or has filed a preliminary short form prospectus in respect of a proposed distribution of its securities: |
(i) | one copy of the latest Annual Information Form of the Corporation, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the Annual Information Form; |
(ii) | one copy of the latest Annual Report of the Corporation, a copy of the comparative financial statements of the Corporation for its most recently completed financial year for which financial statements have been filed together with the accompanying Independent Auditor’s report, and the Management's Discussion and Analysis and one copy of any interim financial statements of the Corporation that have been filed, if any, for any period after the end of its most recently completed financial year; |
(iii) | one copy of the Corporation’s Management Proxy Circular in respect of its most recent Annual General Meeting of Shareholders that involved the election of Directors ; and |
(iv) | one copy of any other documents which are incorporated by reference into the preliminary short form prospectus or the short form prospectus; or |
(b) | at any other time, a copy of the documents referred to in a) i) to iii) above, may be obtained from the Corporate Secretary of the Corporation, at the address indicated below, provided that the Corporation may require the payment of a reasonable fee if the request is made by a person or company who is not a security holder of Cascades. |
Most of the above-mentioned information relating to the Corporation may be found on SEDAR at www.sedar.com and on the Corporation’s website at www.cascades.com .
Cascades Inc.
Corporate Secretariat
404 Marie-Victorin Blvd., P.O. Box 30
Kingsey Falls, Québec J0A 1B0
Telephone: (819) 363-5100
Telecopier: (819) 363-5127
22 |
|
Annual Information Form |
SCHEDULE A
CHARTER
OF THE AUDIT AND FINANCE COMMITTEE
OF THE BOARD OF DIRECTORS OF CASCADES INC. (the « Corporation »)
1. | Purpose |
The purpose of this charter is to describe the role of the Audit and Finance Committee (the « Committee ») as well as its duties and responsibilities delegated by the Board of Directors (« the Board »). The main duty of the Committee is to assist the Board in fulfilling its oversight responsibilities with respect to the following issues:
• | the quality and integrity of the Corporation’s financial statements; |
• | the enterprise risk management process; |
• | accounting and financial reporting process; |
• | systems of internal accounting and financial controls; |
• | independent auditor’s qualifications, independence and performance; |
• | internal audit function and process; |
• | the Corporation’s compliance with legal and regulatory requirements relating to the Corporation’s financial statements; |
• | fulfill any other responsibilities assigned to it from time to time by the Board. |
2. | Division of responsibilities |
In carrying out the duties of the Committee described in this charter, the members of the Committee recognize that its function is to oversee the Corporation’s financial reporting process on behalf of the Board as well as to report its activities regularly to the Board. Management of the Corporation is responsible for the preparation, the presentation and the integrity of the Corporation’s financial statements and for the effectiveness of internal control over financial reporting.
Management is responsible for maintaining appropriate accounting and financial reporting principles and policies as well as internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The independent auditor is responsible for planning and carrying out audits of the Corporation’s annual and interim financial statements and annually auditing management’s assessment of the effectiveness of internal control over financial reporting and other auditing procedures.
In performing their duties, the members of the Committee must have open and free discussions with the Board, the independent auditor, the internal auditor and management of the Corporation.
3. | Composition and organization |
The Committee shall be composed of a minimum of three independent directors, as appointed by the Board at its first meeting following the annual shareholders meeting. Each member of the Committee shall satisfy the applicable independence and experience requirements of the laws governing the Corporation, the applicable stock exchanges on which the Corporation’s securities are listed and applicable securities regulatory authorities.
Each Committee member must be financially literate in accordance with applicable laws and at least one member must have accounting or related financial management expertise, as determined by the Board.
The Committee will appoint one of its members as Chairman and the Secretary or Assistant Secretary of the Corporation or the person designated as Secretary will be secretary for all meetings of the Committee and will keep minutes of the Committee’s deliberations.
4. | Meetings and resources |
The Committee shall meet at least four times a year, or more frequently if circumstances so dictate. By virtue of its mandate to foster open relations, the Committee shall also meet separately and in camera for discussions with the internal auditor, management and with the independent auditor, as required.
The Committee shall establish its own rules and procedures (subject to any specific guidelines from the Board) and shall meet at the place and in accordance with the terms prescribed by its rules. A quorum shall not be less than a majority of the members of the Committee.
23 |
|
Annual Information Form |
The Chairman of the Committee determines the agenda for each meeting in consultation with the Vice-President and Chief Financial Officer, the Secretary and the internal auditor. The agenda and supporting documentation are distributed to the members of the Committee within a reasonable timeframe prior to the meetings.
The Chairman of the Committee shall report quarterly and when required to the Board on the Committee’s activities and will make recommendations concerning all matters it deems necessary or appropriate.
The Committee shall at all times have free and open access to management, to the internal auditor and to the independent auditor in order to seek explanations or information on specific questions.
The Committee shall have the resources and the authority appropriate to carry out its duties, including the authority to retain, as it deems necessary, counsel and other external consultants and to set and pay their remuneration, without further Board approval.
In carrying out its duties and to meet its responsibilities, the Committee shall examine the books and relevant accounts of the Corporation, its divisions and its subsidiaries.
5. | Duties and responsibilities |
In addition to, the above-mentioned responsibilities, the Committee shall address the following questions:
5.1 | Financial reporting |
• | Reviews the quality and integrity of the Corporation’s accounting and financial reporting system through discussions with management, the independent auditor and the internal auditor; |
• | reviews with management and the independent auditor the annual audited financial statements of the Corporation, including the information contained in management’s discussion and analysis, related press releases and the independent auditor’s report on the annual audited financial statements prior to public disclosure and filing with the Securities Regulatory Authorities; |
• | reviews the unaudited interim financial statements, including management’s discussion and analysis for each interim period of the fiscal year and related press releases prior to public disclosure and filing with the Securities Regulatory Authorities; |
reviews the financial information contained in prospectuses, offering memoranda, the annual information form and other reports that include audited or unaudited financial information submitted for approval by the Board;
• | reviews with the independent auditor and management, the quality, appropriateness and disclosure of the Corporation’s accounting principles and policies, the underlying assumptions and reporting practices, and any proposed changes thereto; |
• | reviews financial analysis and other written communications prepared by management, the internal auditor or the independent auditor, setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative methods in conformity with International Financial Reporting Standards («IFRS») on the financial statements; |
• | verifies the compliance of management certification of financial reports with applicable legislation; |
• | reviews important litigation and any regulatory or accounting initiatives that could have a material effect on the Corporation's s financial situation or operating results and the appropriateness of the disclosure thereof in the documents reviewed by the Committee; |
• | reviews the results of the external audit, and any significant problems encountered in the performance of the audit, and management's response or action plan related to any Management Letter issued by the independent auditor. |
5.2 | Risk management and internal control |
• | periodically receives management’s report assessing the adequacy and effectiveness of the Corporation’s disclosure controls and procedures and systems of internal control; |
• | reviews insurance coverage for the Corporation annually and as may otherwise be appropriate; |
• | monitors the capital structure of the Corporation and ensures that it has the capacity and the flexibility required to implement its strategic plan to meet the demands of debt repayment; |
• | evaluates the effectiveness of the Corporation’s overall system of internal controls as well as the process of identifying and managing key risks; |
• | examines the relevance of any form of financing where the total value of the indebtedness exceeds 5% of the net book value of the Corporation; |
24 |
|
Annual Information Form |
• | reviews significant capital costs and other major expenditures, related party transactions and any other transactions which could alter the Corporation’s financial or organizational structure, including off-balance sheet items; |
• | periodically enquires as to the funding of the retirement plans as well as the investment management, the structure and performance of the retirement plans; |
• | assists the Board in carrying out its responsibility for ensuring that the Corporation is compliant with applicable legal and regulatory requirements relating to the financial statements; |
• | while ensuring confidentiality and anonymity, establishes procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, including employee concerns regarding accounting or auditing matters. |
• | periodically reviews with the Board, the internal auditors and the independent auditor of the Corporation and senior management, the Corporation’s antifraud program and practices. |
5.3 | Internal Audit Function |
• | reviews with management, the internal audit staff qualifications and experience and, if required, recommends the appointment or replacement of the internal auditor; |
• | regularly assesses the internal audit function’s performance, its responsibilities, its staffing, budget and the compensation of its members; |
• | annually reviews the internal audit plan; |
• | undertakes private discussions with the internal auditor to establish internal audit independence, the level of co-operation received from management, the degree of interaction with the independent auditor, and any unresolved differences of opinion or disputes. |
5.4 | Independent Auditor |
• | recommends to the Board, the appointment of the independent auditor and, if appropriate, their removal (in both cases, subject to shareholder approval), evaluates and compensates them and assesses their qualifications, performance and independence; |
• | ensures that as representatives of the shareholders, the independent auditor reports to the Committee and to the Board; |
• | approves all audit services provided by the independent auditor and determines and approves in advance, non audit services provided, in compliance with applicable legal and regulatory requirements; |
• | discusses with the independent auditor the quality and not just the acceptability of the Corporation’s accounting principles, including: i) all critical accounting policies and practices used ; ii) any alternative treatments of financial information that have been discussed with management, the ramification of their use as well as iii) any other material written communications between the Corporation and the independent auditor, including any disagreement or unresolved differences of opinion between management and the independent auditor that could have an impact on the financial statements; |
• | reviews at least once a year the independent auditor’s report stating all relationships the independent auditor has with the Corporation and confirming their independence, and holding discussions with the independent auditor as to any relationship or services that may impact the quality of the audit services, or their objectivity and independence; |
• | reviews and approves policies for the Corporation’s hiring of partners and employees or former partners and employees of the independent auditor. |
5.5 | Performance Evaluation of the Committee |
• | prepares and reviews with the Board, an annual performance evaluation of the Committee and its members and assesses once a year, the adequacy of its mandate and, if required, makes recommendations to the Board. |
Approved by the Board of Directors on March 12, 2014.
25 |
/s/
Mario Plourde
MARIO
PLOURDE
|
|
/s/
Allan Hogg
ALLAN
HOGG
|
|
|
|
PRESIDENT
AND CHIEF EXECUTIVE OFFICER
KINGSEY
FALLS, CANADA
|
|
VICE-PRESIDENT
AND CHIEF FINANCIAL OFFICER
KINGSEY
FALLS, CANADA
|
|
1
|
|
1
|
FCPA
auditor, FCA, public accountancy permit No. A108517
|
|
2
|
|
(in
millions of Canadian dollars)
|
NOTE
|
December
31, 2015
|
|
December
31, 2014
|
|
Assets
|
|
|
|
||
Current
assets
|
|
|
|
||
Cash
and cash equivalents
|
|
60
|
|
29
|
|
Accounts
receivable
|
6
and 14
|
540
|
|
453
|
|
Current
income tax assets
|
|
30
|
|
13
|
|
Inventories
|
7
and 14
|
494
|
|
462
|
|
Financial
assets
|
26
|
1
|
|
1
|
|
Assets
of disposal group classified as held for sale
|
5
|
—
|
|
72
|
|
|
|
1,125
|
|
1,030
|
|
Long-term
assets
|
|
|
|
||
Investments
in associates and joint ventures
|
8
|
322
|
|
259
|
|
Property,
plant and equipment
|
9
and 14
|
1,608
|
|
1,573
|
|
Intangible
assets with finite useful life
|
10
|
174
|
|
183
|
|
Financial
assets
|
26
|
12
|
|
25
|
|
Other
assets
|
11
|
80
|
|
83
|
|
Deferred
income tax assets
|
17
|
181
|
|
185
|
|
Goodwill
and other intangible assets with indefinite useful life
|
10
|
346
|
|
335
|
|
|
|
3,848
|
|
3,673
|
|
Liabilities
and Equity
|
|
|
|
||
Current
liabilities
|
|
|
|
||
Bank
loans and advances
|
|
37
|
|
46
|
|
Trade
and other payables
|
12
|
613
|
|
557
|
|
Current
income tax liabilities
|
|
1
|
|
5
|
|
Current
portion of long-term debt
|
14
|
34
|
|
40
|
|
Current
portion of provisions for contingencies and charges
|
13
|
5
|
|
11
|
|
Current
portion of financial liabilities and other liabilities
|
15
and 26
|
37
|
|
16
|
|
Liabilities
of disposal group classified as held for sale
|
5
|
—
|
|
32
|
|
|
|
727
|
|
707
|
|
Long-term
liabilities
|
|
|
|
||
Long-term
debt
|
14
|
1,710
|
|
1,556
|
|
Provisions
for contingencies and charges
|
13
|
34
|
|
33
|
|
Financial
liabilities
|
26
|
47
|
|
45
|
|
Other
liabilities
|
15
|
178
|
|
191
|
|
Deferred
income tax liabilities
|
17
|
189
|
|
138
|
|
|
|
2,885
|
|
2,670
|
|
Equity
attributable to Shareholders
|
|
|
|
||
Capital
stock
|
18
|
490
|
|
483
|
|
Contributed
surplus
|
19
|
17
|
|
18
|
|
Retained
earnings
|
|
387
|
|
454
|
|
Accumulated
other comprehensive loss
|
20
|
(27
|
)
|
(62
|
)
|
|
|
867
|
|
893
|
|
Non-controlling
interest
|
|
96
|
|
110
|
|
Total
equity
|
|
963
|
|
1,003
|
|
|
|
3,848
|
|
3,673
|
|
/s/
Alain Lemaire
|
/s/
Georges Kobrynsky
|
Alain
Lemaire - DIRECTOR
|
Georges
Kobrynsky - DIRECTOR
|
|
3
|
|
For
the years ended December 31 (in millions of Canadian dollars, except
per-common share amounts and number of common shares)
|
NOTE
|
2015
|
|
2014
|
|
||
Sales
|
|
3,861
|
|
3,561
|
|
||
Cost
of sales and expenses
|
|
|
|
||||
Cost
of sales (including depreciation and amortization of $190 million; 2014 —
$174 million)
|
21
|
3,261
|
|
3,063
|
|
||
Selling
and administrative expenses
|
21
|
360
|
|
334
|
|
||
Gain
on acquisitions, disposals and others
|
23
|
(1
|
)
|
—
|
|
||
Impairment
charges and restructuring costs
|
24
|
66
|
|
23
|
|
||
Foreign
exchange gain
|
|
(6
|
)
|
(2
|
)
|
||
Loss
on derivative financial instruments
|
26
|
28
|
|
6
|
|
||
|
|
3,708
|
|
3,424
|
|
||
Operating
income
|
|
153
|
|
137
|
|
||
Financing
expense
|
25
|
91
|
|
101
|
|
||
Interest
expense on employee future benefits
|
25
|
6
|
|
6
|
|
||
Loss
on refinancing of long-term debt
|
14
|
19
|
|
44
|
|
||
Foreign
exchange loss on long-term debt and financial instruments
|
|
91
|
|
30
|
|
||
Share
of results of associates and joint ventures
|
8
|
(37
|
)
|
—
|
|
||
Loss
before income taxes
|
|
(17
|
)
|
(44
|
)
|
||
Provision
for income taxes
|
17
|
40
|
|
16
|
|
||
Net
loss from continuing operations including non-controlling interest for the
year
|
|
(57
|
)
|
(60
|
)
|
||
Net
earnings (loss) from discontinued operations
|
5
|
1
|
|
(83
|
)
|
||
Net
loss including non-controlling interest for the year
|
|
(56
|
)
|
(143
|
)
|
||
Net
earnings attributable to non-controlling interest
|
|
9
|
|
4
|
|
||
Net
loss attributable to Shareholders for the year
|
|
(65
|
)
|
(147
|
)
|
||
Net
loss from continuing operations per common share
|
|
|
|
|
|
||
Basic
and diluted
|
|
$
|
(0.70
|
)
|
$
|
(0.68
|
)
|
Net
loss per common share
|
|
|
|
|
|
||
Basic
and diluted
|
|
$
|
(0.69
|
)
|
$
|
(1.57
|
)
|
Weighted
average basic and diluted number of common shares
outstanding
|
|
94,384,308
|
|
94,025,600
|
|
||
|
|
|
|
||||
Net
loss attributable to Shareholders:
|
|
|
|
||||
Continuing
operations
|
|
(66
|
)
|
(64
|
)
|
||
Discontinued
operations
|
5
|
1
|
|
(83
|
)
|
||
Net
loss
|
|
(65
|
)
|
(147
|
)
|
|
4
|
|
For
the years ended December 31 (in millions of Canadian
dollars)
|
NOTE
|
2015
|
|
2014
|
|
Net
loss including non-controlling interest for the year
|
|
(56
|
)
|
(143
|
)
|
Other
comprehensive income (loss)
|
|
|
|
||
Items
that may be reclassified subsequently to earnings
|
|
|
|
||
Translation
adjustments
|
20
|
|
|
||
Change
in foreign currency translation of foreign subsidiaries
|
|
118
|
|
37
|
|
Change
in foreign currency translation related to net investment hedging
activities
|
|
(101
|
)
|
(44
|
)
|
Income
taxes
|
|
13
|
|
6
|
|
Cash
flow hedges
|
20
|
|
|
||
Change
in fair value of foreign exchange forward contracts
|
|
2
|
|
3
|
|
Change
in fair value of interest rate swaps
|
|
12
|
|
(13
|
)
|
Change
in fair value of commodity derivative financial
instruments
|
|
1
|
|
(1
|
)
|
Income
taxes
|
|
(5
|
)
|
5
|
|
Available-for-sale
financial assets
|
|
2
|
|
—
|
|
|
|
42
|
|
(7
|
)
|
Items
that are reclassified to retained earnings
|
|
|
|
||
Actuarial
gain (loss) on post-employment benefit obligations
|
16
|
25
|
|
(39
|
)
|
Income
taxes
|
17
|
(7
|
)
|
11
|
|
|
|
18
|
|
(28
|
)
|
Other
comprehensive income (loss)
|
|
60
|
|
(35
|
)
|
Comprehensive
loss including non-controlling interest for the year
|
|
4
|
|
(178
|
)
|
Comprehensive
income (loss) attributable to non-controlling interest for the
year
|
|
16
|
|
(3
|
)
|
Comprehensive
loss attributable to Shareholders for the year
|
|
(12
|
)
|
(175
|
)
|
Comprehensive
income (loss) attributable to Shareholders:
|
|
|
|
||
Continuing
operations
|
|
(13
|
)
|
(84
|
)
|
Discontinued
operations
|
|
1
|
|
(91
|
)
|
Comprehensive
loss
|
|
(12
|
)
|
(175
|
)
|
|
5
|
|
|
For
the year ended December 31, 2015
|
|
||||||||||||
(in
millions of Canadian dollars)
|
CAPITAL
STOCK
|
|
CONTRIBUTED
SURPLUS
|
|
RETAINED
EARNINGS
|
|
ACCUMULATED
OTHER COMPREHENSIVE LOSS
|
|
TOTAL
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
|
|
NON-CONTROLLING
INTEREST
|
|
TOTAL
EQUITY
|
|
Balance
- Beginning of year
|
483
|
|
18
|
|
454
|
|
(62
|
)
|
893
|
|
110
|
|
1,003
|
|
Comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
||||||
Net
earnings (loss)
|
—
|
|
—
|
|
(65
|
)
|
—
|
|
(65
|
)
|
9
|
|
(56
|
)
|
Other
comprehensive income
|
—
|
|
—
|
|
18
|
|
35
|
|
53
|
|
7
|
|
60
|
|
|
—
|
|
—
|
|
(47
|
)
|
35
|
|
(12
|
)
|
16
|
|
4
|
|
Dividends
|
—
|
|
—
|
|
(15
|
)
|
—
|
|
(15
|
)
|
—
|
|
(15
|
)
|
Stock
options
|
2
|
|
(1
|
)
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
Issuance
of common shares
|
5
|
|
—
|
|
—
|
|
—
|
|
5
|
|
—
|
|
5
|
|
Acquisition
of non-controlling interest
|
—
|
|
—
|
|
(5
|
)
|
—
|
|
(5
|
)
|
(30
|
)
|
(35
|
)
|
Balance
- End of year
|
490
|
|
17
|
|
387
|
|
(27
|
)
|
867
|
|
96
|
|
963
|
|
|
|
|
|
|
|
|
|
|||||||
|
For
the year ended December 31, 2014
|
|
||||||||||||
(in
millions of Canadian dollars)
|
CAPITAL
STOCK
|
|
CONTRIBUTED
SURPLUS
|
|
RETAINED
EARNINGS
|
|
ACCUMULATED
OTHER COMPREHENSIVE LOSS
|
|
TOTAL
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
|
|
NON-CONTROLLING
INTEREST
|
|
TOTAL
EQUITY
|
|
Balance
- Beginning of year
|
482
|
|
17
|
|
642
|
|
(60
|
)
|
1,081
|
|
113
|
|
1,194
|
|
Comprehensive
loss
|
|
|
|
|
|
|
|
|
||||||
Net
earnings (loss)
|
—
|
|
—
|
|
(147
|
)
|
—
|
|
(147
|
)
|
4
|
|
(143
|
)
|
Other
comprehensive loss
|
—
|
|
—
|
|
(26
|
)
|
(2
|
)
|
(28
|
)
|
(7
|
)
|
(35
|
)
|
|
—
|
|
—
|
|
(173
|
)
|
(2
|
)
|
(175
|
)
|
(3
|
)
|
(178
|
)
|
Dividends
|
—
|
|
—
|
|
(15
|
)
|
—
|
|
(15
|
)
|
—
|
|
(15
|
)
|
Stock
options
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
Issuance
of common shares
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
Balance
- End of year
|
483
|
|
18
|
|
454
|
|
(62
|
)
|
893
|
|
110
|
|
1,003
|
|
|
6
|
|
For
the years ended December 31 (in millions of Canadian
dollars)
|
NOTE
|
|
2015
|
|
2014
|
|
Operating
activities from continuing operations
|
|
|
|
|
||
Net
loss attributable to Shareholders for the year
|
|
|
(65
|
)
|
(147
|
)
|
Net
loss (earnings) from discontinued operations
|
|
|
(1
|
)
|
83
|
|
Net
loss from continuing operations
|
|
|
(66
|
)
|
(64
|
)
|
Adjustments
for:
|
|
|
|
|
||
Financing
expense and interest expense on employee future benefits
|
25
|
|
97
|
|
107
|
|
Loss
on refinancing of long-term debt
|
|
|
19
|
|
44
|
|
Depreciation
and amortization
|
|
|
190
|
|
174
|
|
Gain
on acquisitions, disposals and others
|
23
|
|
(1
|
)
|
—
|
|
Impairment
charges and restructuring costs
|
24
|
|
64
|
|
21
|
|
Unrealized
loss on derivative financial instruments
|
|
|
18
|
|
6
|
|
Foreign
exchange loss on long-term debt and financial instruments
|
|
|
91
|
|
30
|
|
Provision
for income taxes
|
17
|
|
40
|
|
16
|
|
Share
of results of associates and joint ventures
|
8
|
|
(37
|
)
|
—
|
|
Net
earnings attributable to non-controlling interest
|
|
|
9
|
|
4
|
|
Net
financing expense paid
|
|
|
(89
|
)
|
(73
|
)
|
Premium
paid on long-term debt refinancing
|
14
|
|
(13
|
)
|
(31
|
)
|
Net
income taxes received (paid)
|
|
|
(14
|
)
|
14
|
|
Dividend
received
|
8
|
|
17
|
|
15
|
|
Employee
future benefits and others
|
|
|
(3
|
)
|
(19
|
)
|
|
|
|
322
|
|
244
|
|
Changes
in non-cash working capital components
|
25
|
|
(38
|
)
|
(13
|
)
|
|
|
|
284
|
|
231
|
|
Investing
activities from continuing operations
|
|
|
|
|
||
Investments
in associates and joint ventures
|
|
|
(2
|
)
|
—
|
|
Payments
for property, plant and equipment
|
|
|
(163
|
)
|
(178
|
)
|
Proceeds
on disposals of property, plant and equipment
|
|
|
4
|
|
7
|
|
Change
in intangible and other assets
|
|
|
8
|
|
(2
|
)
|
|
|
|
(153
|
)
|
(173
|
)
|
Financing
activities from continuing operations
|
|
|
|
|
||
Bank
loans and advances
|
|
|
(14
|
)
|
(3
|
)
|
Change
in revolving credit facilities
|
|
|
(120
|
)
|
(154
|
)
|
Issuance
of senior notes, net of related expenses
|
14
|
|
300
|
|
833
|
|
Repayment
of senior notes
|
14
|
|
(305
|
)
|
(740
|
)
|
Increase
in other long-term debt
|
|
|
73
|
|
23
|
|
Payments
of other long-term debt
|
|
|
(48
|
)
|
(50
|
)
|
Issuance
of common shares
|
18
|
|
5
|
|
1
|
|
Acquisition
of non-controlling interest
|
|
|
(5
|
)
|
—
|
|
Dividends
paid to the Corporation's Shareholders
|
18
|
|
(15
|
)
|
(15
|
)
|
|
|
|
(129
|
)
|
(105
|
)
|
Change
in cash and cash equivalents during the year from continuing
operations
|
|
|
2
|
|
(47
|
)
|
Change
in cash and cash equivalents during the year from discontinued
operations
|
5
|
|
30
|
|
54
|
|
Net
change in cash and cash equivalents during the year
|
|
|
32
|
|
7
|
|
Currency
translation on cash and cash equivalents
|
|
|
(1
|
)
|
(1
|
)
|
Cash
and cash equivalents - Beginning of year
|
|
|
29
|
|
23
|
|
Cash
and cash equivalents - End of year
|
|
|
60
|
|
29
|
|
|
7
|
|
|
SALES
|
|||
For
the years ended December 31 (in millions of Canadian
dollars)
|
2015
|
|
2014
|
|
Packaging
Products
|
|
|
||
Containerboard
|
1,301
|
|
1,181
|
|
Boxboard
Europe
|
825
|
|
841
|
|
Specialty
Products
|
579
|
|
568
|
|
Intersegment
sales
|
(55
|
)
|
(49
|
)
|
|
2,650
|
|
2,541
|
|
Tissue
Papers
|
1,236
|
|
1,054
|
|
Intersegment
sales and others
|
(25
|
)
|
(34
|
)
|
|
3,861
|
|
3,561
|
|
|
OPERATING
INCOME (LOSS)
BEFORE DEPRECIATION AND AMORTIZATION (OIBD) |
|||
For
the years ended December 31 (in millions of Canadian
dollars)
|
2015
|
|
2014
|
|
Packaging
Products
|
|
|
||
Containerboard
|
233
|
|
164
|
|
Boxboard
Europe
|
6
|
|
64
|
|
Specialty
Products
|
52
|
|
26
|
|
|
291
|
|
254
|
|
Tissue
Papers
|
119
|
|
95
|
|
Corporate
|
(67
|
)
|
(38
|
)
|
Operating
income before depreciation and amortization
|
343
|
|
311
|
|
Depreciation
and amortization
|
(190
|
)
|
(174
|
)
|
Financing
expense and interest expense on employee future benefits
|
(97
|
)
|
(107
|
)
|
Loss
on refinancing of long-term debt
|
(19
|
)
|
(44
|
)
|
Foreign
exchange loss on long-term debt and financial instruments
|
(91
|
)
|
(30
|
)
|
Share
of results of associates and joint ventures
|
37
|
|
—
|
|
Loss
before income taxes
|
(17
|
)
|
(44
|
)
|
|
8
|
|
|
PAYMENTS
FOR PROPERTY, PLANT AND EQUIPMENT
|
|||
For
the years ended December 31 (in millions of Canadian
dollars)
|
2015
|
|
2014
|
|
Packaging
Products
|
|
|
||
Containerboard
|
64
|
|
32
|
|
Boxboard
Europe
|
23
|
|
33
|
|
Specialty
Products
|
14
|
|
18
|
|
|
101
|
|
83
|
|
Tissue
Papers
|
57
|
|
88
|
|
Corporate
|
7
|
|
8
|
|
Total
acquisitions
|
165
|
|
179
|
|
Proceeds
on disposals of property, plant and equipment
|
(4
|
)
|
(7
|
)
|
Capital-lease
acquisitions and included in other debts
|
(3
|
)
|
(14
|
)
|
|
158
|
|
158
|
|
Acquisitions
of property, plant and equipment included in ''Trade and other
payables''
|
|
|
||
Beginning
of year
|
20
|
|
33
|
|
End
of year
|
(19
|
)
|
(20
|
)
|
Payments
for property, plant and equipment net of proceeds on
disposals
|
159
|
|
171
|
|
|
TOTAL
ASSETS
|
|||
(in
millions of Canadian dollars)
|
December
31, 2015
|
|
December
31, 2014
|
|
Packaging
Products
|
|
|
||
Containerboard
|
1,277
|
|
1,250
|
|
Boxboard
Europe
|
620
|
|
637
|
|
Specialty
Products
|
330
|
|
355
|
|
|
2,227
|
|
2,242
|
|
Tissue
Papers
|
940
|
|
834
|
|
Corporate
|
381
|
|
414
|
|
Intersegment
eliminations
|
(29
|
)
|
(83
|
)
|
|
3,519
|
|
3,407
|
|
Investments
in associates and joint ventures
|
322
|
|
259
|
|
Other
investments
|
7
|
|
7
|
|
|
3,848
|
|
3,673
|
|
|
9
|
|
For
the years ended December 31 (in millions of Canadian
dollars)
|
2015
|
|
2014
|
|
Sales
|
|
|
||
Operations
located in Canada
|
|
|
||
Within
Canada
|
1,376
|
|
1,249
|
|
To
the United States
|
542
|
|
509
|
|
Offshore
|
21
|
|
24
|
|
|
1,939
|
|
1,782
|
|
Operations
located in the United States
|
|
|
||
Within
the United States
|
976
|
|
839
|
|
To
Canada
|
62
|
|
50
|
|
Offshore
|
6
|
|
1
|
|
|
1,044
|
|
890
|
|
Operations
located in Italy
|
|
|
||
Within
Italy
|
232
|
|
240
|
|
Other
countries
|
151
|
|
146
|
|
|
383
|
|
386
|
|
Operations
located in other countries
|
|
|
||
Within
Europe
|
376
|
|
378
|
|
Other
countries
|
119
|
|
125
|
|
|
495
|
|
503
|
|
|
3,861
|
|
3,561
|
|
(in
millions of Canadian dollars)
|
December
31, 2015
|
|
December
31, 2014
|
|
Goodwill,
customer relationships and client lists, and other finite and indefinite
useful life intangible assets
|
|
|
||
Canada
|
447
|
|
457
|
|
United
States
|
64
|
|
54
|
|
Italy
|
9
|
|
7
|
|
|
520
|
|
518
|
|
|
10
|
|
A.
|
SUBSIDIARIES
|
|
PERCENTAGE
OWNED (%)
|
JURISDICTION
|
Cascades
Canada ULC
|
100
|
Canada
|
Cascades
Recovery Inc.
|
100
|
Canada
|
Cascades
USA Inc.
|
100
|
Delaware
|
Cascades
S.A.S. (France)
|
100
|
France
|
Cascades
Europe S.A.S.
|
100
|
France
|
Reno
de Medici S.p.A.
|
57.61
|
Italy
|
|
11
|
|
B.
|
TRANSACTIONS
AND CHANGE IN OWNERSHIP
|
C.
|
ASSOCIATES
|
D.
|
JOINT
VENTURES
|
A.
|
FINANCIAL
ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR
LOSS
|
B.
|
HELD
TO MATURITY
|
|
12
|
|
C.
|
AVAILABLE-FOR-SALE
FINANCIAL ASSETS
|
D.
|
LOANS
AND RECEIVABLES
|
E.
|
FINANCIAL
LIABILITIES AT AMORTIZED COST
|
i)
|
Financial
assets carried at amortized cost: The impairment loss is the difference
between the amortized cost of the loan or receivable and the present value
of the estimated future cash flows, discounted using the instrument's
original effective interest rate. The carrying amount of the asset is
reduced by this amount either directly or indirectly through the use of an
allowance account.
|
ii)
|
AFS
financial assets: The impairment loss is the difference between the
original cost of the asset and its permanent fair value decrease at the
measurement date, less any impairment losses previously recognized in the
consolidated statement of earnings. This amount represents the cumulative
loss in ''Accumulated other comprehensive income (loss)'' that is
reclassified to net earnings (loss).
|
i)
|
hedges
of the fair value of recognized assets or liabilities or a firm commitment
(fair value hedge);
|
ii)
|
hedges
of a particular risk associated with a recognized asset or liability or a
highly probable forecast transaction (cash flow hedge);
or
|
iii)
|
hedges
of a net investment in a foreign operation (net investment
hedge).
|
|
13
|
|
A.
|
CASH
FLOW HEDGE
|
B.
|
NET
INVESTMENT HEDGE
|
|
14
|
|
A.
|
PROPERTY,
PLANT AND EQUIPMENT AND INTANGIBLE ASSETS WITH FINITE USEFUL
LIFE
|
B.
|
GOODWILL
AND OTHER INTANGIBLE ASSETS WITH INDEFINITE USEFUL
LIFE
|
|
15
|
|
C.
|
RECOVERABLE
AMOUNTS
|
|
16
|
|
A.
|
FOREIGN
CURRENCY TRANSACTIONS
|
B.
|
FOREIGN
OPERATIONS
|
|
17
|
|
|
18
|
|
|
19
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
||
Condensed
net earnings (loss) from discontinued operations
|
1
|
|
(83
|
)
|
||
Condensed
net earnings (loss) from discontinued operations per common
share
|
|
|
|
|
||
Basic
and diluted
|
$
|
0.01
|
|
$
|
(0.89
|
)
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Consolidated
cash flow from discontinued operations
|
|
|
||
Cash
flow from (used for):
|
|
|
|
|
Operating
activities
|
(14
|
)
|
19
|
|
Investing
activities
|
45
|
|
35
|
|
Financing
activities
|
(1
|
)
|
—
|
|
|
30
|
|
54
|
|
|
20
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Results
of the discontinued operations of North American boxboard
activities
|
|
|
||
Sales,
net of intercompany transactions
|
24
|
|
226
|
|
Cost
of sales and expenses (excluding depreciation and amortization), net of
intercompany transactions
|
22
|
|
207
|
|
Depreciation
and amortization
|
—
|
|
6
|
|
Selling
and administrative expenses
|
3
|
|
11
|
|
Loss
on acquisitions, disposals and others
|
4
|
|
1
|
|
Impairment
charges and restructuring costs (gain)
|
(4
|
)
|
64
|
|
Foreign
exchange gain
|
(1
|
)
|
(1
|
)
|
Operating
loss
|
—
|
|
(62
|
)
|
Recovery
of income tax
|
—
|
|
(18
|
)
|
Net
loss from discontinued operations
|
—
|
|
(44
|
)
|
|
21
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Net
cash flow of discontinued operations of North American boxboard
activities
|
|
|
||
Cash
flow from :
|
|
|
|
|
Operating
activities
|
—
|
|
9
|
|
Investing
activities
|
40
|
|
—
|
|
|
40
|
|
9
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Results
of the discontinued operations of Swedish virgin boxboard
activities
|
|
|
||
Sales,
net of intercompany transactions
|
—
|
|
32
|
|
Cost
of sales and expenses (excluding depreciation and amortization), net of
intercompany transactions
|
—
|
|
32
|
|
Selling
and administrative expenses
|
—
|
|
2
|
|
Impairment
charges and restructuring costs
|
—
|
|
12
|
|
Net
loss from discontinued operations
|
—
|
|
(14
|
)
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Net
cash flow of the discontinued operations of Swedish virgin boxboard
activities
|
|
|
||
Cash
flow from (used for):
|
|
|
|
|
Operating
activities
|
(4
|
)
|
3
|
|
Investing
activities
|
1
|
|
—
|
|
|
(3
|
)
|
3
|
|
|
BUSINESS
SEGMENT
|
SPECIALTY
PRODUCTS GROUP
|
|
|
|
Fine
Papers Activities
|
|
(in
millions of Canadian dollars)
|
|
||
Accounts
receivables
|
26
|
|
|
Inventories
|
33
|
|
|
Property,
plant and equipment
|
62
|
|
|
Other
assets
|
9
|
|
|
|
|
130
|
|
|
|
|
|
Trade
and other payables
|
30
|
|
|
Provisions
for contingencies and charges
|
1
|
|
|
Other
liabilities
|
23
|
|
|
|
|
54
|
|
|
|
76
|
|
Loss
on disposal before tax and transaction fees
|
(42
|
)
|
|
Transaction
fees
|
(1
|
)
|
|
Non-cash
provision for working capital adjustment
|
3
|
|
|
Total
consideration received
|
36
|
|
|
22
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Results
of the discontinued operations of specialty papers sector
|
|
|
||
Sales,
net of intercompany transactions
|
—
|
|
148
|
|
Cost
of sales and expenses (excluding depreciation and amortization), net of
intercompany transactions
|
—
|
|
128
|
|
Depreciation
and amortization
|
—
|
|
3
|
|
Selling
and administrative expenses
|
2
|
|
9
|
|
Loss
(gain) on acquisitions, disposals and others
|
(1
|
)
|
43
|
|
Impairment
charges (reversal) and restructuring costs (gain)
|
(1
|
)
|
(2
|
)
|
Operating
loss
|
—
|
|
(33
|
)
|
Interest
expense on employee future benefits
|
—
|
|
1
|
|
Recovery
of income tax
|
(1
|
)
|
(9
|
)
|
Net
earnings (loss) from discontinued operations
|
1
|
|
(25
|
)
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Net
cash flow of discontinued operations of specialty papers
sector
|
|
|
||
Cash
flow from (used for):
|
|
|
|
|
Operating
activities
|
(10
|
)
|
7
|
|
Investing
activities
|
4
|
|
35
|
|
Financing
activities
|
(1
|
)
|
—
|
|
|
(7
|
)
|
42
|
|
|
23
|
|
(in
millions of Canadian dollars)
|
NOTE
|
2015
|
|
2014
|
|
Accounts
receivable - Trade
|
|
494
|
|
415
|
|
Receivables
from related parties
|
28
|
30
|
|
20
|
|
Less:
provision for doubtful accounts
|
|
(12
|
)
|
(12
|
)
|
Trade
receivables - net
|
|
512
|
|
423
|
|
Provisions
for volume rebates
|
|
(35
|
)
|
(31
|
)
|
Other
|
|
63
|
|
61
|
|
|
|
540
|
|
453
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Balance
at beginning of year
|
12
|
|
13
|
|
Provision
for doubtful accounts, net of unused beginning balance
|
4
|
|
4
|
|
Receivables
written off during the year as uncollectable
|
(4
|
)
|
(4
|
)
|
Business
disposals
|
—
|
|
(1
|
)
|
Balance
at end of year
|
12
|
|
12
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Finished
goods
|
230
|
|
218
|
|
Raw
materials
|
113
|
|
99
|
|
Supplies
and spare parts
|
151
|
|
145
|
|
|
494
|
|
462
|
|
|
24
|
|
A.
|
INVESTMENTS
IN ASSOCIATES AND JOINT VENTURES ARE DETAILED AS
FOLLOWS:
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Investments
in associates
|
275
|
|
217
|
|
Investments
in joint ventures
|
47
|
|
42
|
|
|
322
|
|
259
|
|
B.
|
INVESTMENTS
IN ASSOCIATES
|
|
PERCENTAGE
OF EQUITY OWNED (%)
|
PRINCIPAL
ESTABLISHMENT
|
Boralex
Inc.
1
|
20.29
|
Kingsey
Falls, Québec, Canada
|
Greenpac
Holding LLC
2
|
59.7
|
Niagara
Falls, New York, United
States
|
|
2015
|
|
2014
|
|
||||
(in
millions of Canadian dollars)
|
BORALEX
INC.
|
|
GREENPAC
HOLDING LLC
|
|
BORALEX
INC.
|
|
GREENPAC
HOLDING LLC
|
|
Balance
sheet
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
100
|
|
69
|
|
75
|
|
56
|
|
Current
assets
|
100
|
|
141
|
|
158
|
|
114
|
|
Current
financial assets
|
1
|
|
—
|
|
1
|
|
—
|
|
Long-term
assets
|
2,241
|
|
575
|
|
1,756
|
|
504
|
|
Long-term
financial assets
|
—
|
|
—
|
|
3
|
|
—
|
|
Current
liabilities
|
94
|
|
53
|
|
59
|
|
47
|
|
Current
financial liabilities
|
187
|
|
49
|
|
206
|
|
41
|
|
Long-term
liabilities
|
163
|
|
—
|
|
61
|
|
—
|
|
Long-term
financial liabilities
|
1,446
|
|
285
|
|
1,256
|
|
341
|
|
|
|
|
|
|
|
|
|
|
Statements
of earnings (loss)
|
|
|
|
|
|
|
|
|
Sales
|
266
|
|
314
|
|
193
|
|
246
|
|
Depreciation
and amortization
|
97
|
|
30
|
|
60
|
|
24
|
|
Financing
expense
|
74
|
|
26
|
|
58
|
|
25
|
|
Recovery
of income taxes
|
(1
|
)
|
—
|
|
(1
|
)
|
—
|
|
Net
earnings (loss)
|
(8
|
)
|
32
|
|
(11
|
)
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Translation
adjustment
|
14
|
|
(2
|
)
|
(2
|
)
|
(2
|
)
|
Cash
flow hedges
|
(2
|
)
|
(1
|
)
|
(28
|
)
|
(1
|
)
|
|
12
|
|
(3
|
)
|
(30
|
)
|
(3
|
)
|
Total
comprehensive income (loss)
|
4
|
|
29
|
|
(41
|
)
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flow
|
|
|
|
|
|
|
|
|
Dividend
received from associates
|
7
|
|
—
|
|
7
|
|
—
|
|
|
25
|
|
C.
|
INVESTMENT
IN JOINT VENTURES
|
|
PERCENTAGE
EQUITY OWNED (%)
|
PRINCIPAL
ESTABLISHMENT
|
Cascades
Sonoco Inc.
1
|
50
|
Birmingham,
Alabama and Tacoma, Washington, United States
|
Cascades
Conversion Inc.
1
|
50
|
Kingsey
Falls, Québec, Canada
|
Converdis
Inc.
1
|
50
|
Berthierville,
Québec, Canada
|
Maritime
Paper Products Limited Partnership (MPPLP)
2
|
40
|
Dartmouth,
Nova Scotia, Canada
|
|
2015
|
|
||||||
(in
millions of Canadian dollars)
|
CASCADES
SONOCO INC.
|
|
CASCADES
CONVERSION INC.
|
|
CONVERDIS
INC.
|
|
MARITIME
PAPER PRODUCTS LIMITED PARTNERSHIP
|
|
Balance
sheet
|
|
|
|
|
||||
Cash
and cash equivalents
|
2
|
|
2
|
|
1
|
|
—
|
|
Current
assets
|
28
|
|
16
|
|
8
|
|
18
|
|
Long-term
assets
|
15
|
|
21
|
|
5
|
|
32
|
|
Current
liabilities
|
5
|
|
3
|
|
2
|
|
5
|
|
Current
financial liabilities
|
1
|
|
1
|
|
2
|
|
3
|
|
Long-term
liabilities
|
4
|
|
2
|
|
1
|
|
—
|
|
Long-term
financial liabilities
|
1
|
|
—
|
|
—
|
|
12
|
|
|
|
|
|
|
||||
Statement
of earnings (loss)
|
|
|
|
|
||||
Sales
|
120
|
|
64
|
|
25
|
|
96
|
|
Depreciation
and amortization
|
1
|
|
1
|
|
—
|
|
2
|
|
Provision
for income taxes
|
4
|
|
2
|
|
—
|
|
—
|
|
Net
earnings (loss)
|
9
|
|
7
|
|
1
|
|
(1
|
)
|
|
|
|
|
|
||||
Other
comprehensive income (loss)
|
|
|
|
|
||||
Translation
adjustment
|
5
|
|
—
|
|
—
|
|
—
|
|
Total
comprehensive income (loss)
|
14
|
|
7
|
|
1
|
|
(1
|
)
|
|
|
|
|
|
||||
Cash
flow
|
|
|
|
|
||||
Dividend
received from joint ventures
|
4
|
|
3
|
|
—
|
|
—
|
|
|
26
|
|
|
2014
|
|
||||||
(in
millions of Canadian dollars)
|
CASCADES
SONOCO INC.
|
|
CASCADES
CONVERSION INC.
|
|
CONVERDIS
INC.
|
|
MARITIME
PAPER PRODUCTS LIMITED PARTNERSHIP
|
|
Balance
sheet
|
|
|
|
|
||||
Cash
and cash equivalents
|
4
|
|
1
|
|
—
|
|
—
|
|
Current
assets
|
25
|
|
14
|
|
6
|
|
24
|
|
Long-term
assets
|
12
|
|
26
|
|
5
|
|
34
|
|
Current
liabilities
|
6
|
|
3
|
|
2
|
|
—
|
|
Current
financial liabilities
|
2
|
|
1
|
|
—
|
|
19
|
|
Long-term
liabilities
|
3
|
|
2
|
|
1
|
|
6
|
|
Long-term
financial liabilities
|
—
|
|
—
|
|
—
|
|
4
|
|
|
|
|
|
|
||||
Statement
of earnings (loss)
|
|
|
|
|
||||
Sales
|
104
|
|
62
|
|
23
|
|
86
|
|
Depreciation
and amortization
|
2
|
|
1
|
|
—
|
|
2
|
|
Provision
for income taxes
|
3
|
|
2
|
|
—
|
|
—
|
|
Net
earnings (loss)
|
7
|
|
6
|
|
1
|
|
(4
|
)
|
|
|
|
|
|
||||
Other
comprehensive income (loss)
|
|
|
|
|
||||
Translation
adjustment
|
2
|
|
—
|
|
—
|
|
—
|
|
Total
comprehensive income (loss)
|
9
|
|
6
|
|
1
|
|
(4
|
)
|
|
|
|
|
|
||||
Cash
flow
|
|
|
|
|
||||
Dividend
received from joint ventures
|
3
|
|
3
|
|
—
|
|
—
|
|
D.
|
SUBSIDIARIES
WITH NON-CONTROLLING INTEREST
|
|
As
at December 31, 2015
|
|
As
at December 31, 2014
|
|
||||||||
(in
millions of Canadian dollars, unless otherwise noted)
|
RENO
DE MEDICI S.p.A.
|
|
NORCAN
FLEXIBLE PACKAGING
|
|
CASCADES
RECOVERY INC.
|
|
RENO
DE MEDICI S.p.A.
|
|
NORCAN
FLEXIBLE PACKAGING
|
|
CASCADES
RECOVERY INC.
|
|
Principal
establishment
|
Milan,
Italy
|
|
Mississauga,
Ontario, Canada
|
|
Toronto,
Ontario, Canada
|
|
Milan,
Italy
|
|
Mississauga,
Ontario, Canada
|
|
Toronto,
Ontario, Canada
|
|
%
of shares held by non-controlling interest
|
42.39
|
%
|
—
|
%
|
—
|
%
|
42.39
|
%
|
37.9
|
%
|
27
|
%
|
Net
earnings (loss) attributable to non-controlling interest
|
6
|
|
1
|
|
2
|
|
5
|
|
(3
|
)
|
2
|
|
Non-controlling
interest accumulated at the end of the year
|
96
|
|
N/A
|
|
N/A
|
|
83
|
|
(1
|
)
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiaries
financial information
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
549
|
|
N/A
|
|
N/A
|
|
508
|
|
10
|
|
132
|
|
Liabilities
|
324
|
|
N/A
|
|
N/A
|
|
313
|
|
12
|
|
39
|
|
Net
earnings (loss)
|
8
|
|
4
|
|
8
|
|
6
|
|
(4
|
)
|
6
|
|
Cash
flows from (used for) operating activities
|
41
|
|
1
|
|
12
|
|
37
|
|
—
|
|
16
|
|
Cash
flows from (used for) investing activities
|
(24
|
)
|
—
|
|
(6
|
)
|
(20
|
)
|
—
|
|
(9
|
)
|
Cash
flows from (used for) financing activities
|
12
|
|
—
|
|
(7
|
)
|
(17
|
)
|
—
|
|
(2
|
)
|
|
27
|
|
E.
|
NON-SIGNIFICANT
ASSOCIATES AND JOINT VENTURES
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Non-significant
associates
|
14
|
|
13
|
|
Non-significant
joint ventures
|
10
|
|
8
|
|
|
24
|
|
21
|
|
F.
|
CONTRIBUTION
TO A JOINT VENTURE
|
|
28
|
|
|
BUSINESS
SEGMENT
|
CONTAINERBOARD
|
|
|
Joint
venture created
|
Maritime
Paper Products Limited Partnership (MPPLP)
|
|
(in
millions of Canadian dollars)
|
|
||
Book
value of identifiable assets and liabilities contributed:
|
|
||
Accounts
receivable and prepaid expenses
|
(4
|
)
|
|
Inventories
|
(3
|
)
|
|
Property,
plant and equipment
|
(5
|
)
|
|
Total
assets
|
(12
|
)
|
|
Accounts
payable
|
3
|
|
|
Net
assets contributed
|
(9
|
)
|
|
|
|
||
Fair
value of share in the joint venture
|
14
|
|
|
Notes
receivable from MPPLP
|
4
|
|
|
Total
consideration received
|
18
|
|
|
Total
gain
|
9
|
|
|
Deferred
gain on equity already owned
|
(4
|
)
|
|
Net
gain recorded on the transaction
|
5
|
|
|
|
|
|
|
Net
investment on balance sheet:
|
|
||
Fair
value of share in the joint venture
|
14
|
|
|
Deferred
gain on share already owned
|
(4
|
)
|
|
|
10
|
|
|
29
|
|
(in
millions of Canadian dollars)
|
NOTE
|
LAND
|
|
BUILDINGS
|
|
MACHINERY
AND EQUIPMENT
|
|
AUTOMOTIVE
EQUIPMENT
|
|
OTHER
|
|
TOTAL
|
|
As
at January 1, 2014
|
|
|
|
|
|
|
|
||||||
Cost
|
|
111
|
|
721
|
|
2,831
|
|
84
|
|
215
|
|
3,962
|
|
Accumulated
depreciation and impairment
|
|
2
|
|
322
|
|
1,799
|
|
59
|
|
96
|
|
2,278
|
|
Net
book amount
|
|
109
|
|
399
|
|
1,032
|
|
25
|
|
119
|
|
1,684
|
|
Year
ended December 31, 2014
|
|
|
|
|
|
|
|
||||||
Opening
net book amount
|
|
109
|
|
399
|
|
1,032
|
|
25
|
|
119
|
|
1,684
|
|
Additions
|
|
1
|
|
7
|
|
17
|
|
16
|
|
141
|
|
182
|
|
Disposals
|
|
—
|
|
(2
|
)
|
(1
|
)
|
—
|
|
(7
|
)
|
(10
|
)
|
Depreciation
|
|
—
|
|
(26
|
)
|
(128
|
)
|
(7
|
)
|
(5
|
)
|
(166
|
)
|
Business
disposal
|
5
|
(1
|
)
|
(17
|
)
|
(42
|
)
|
(1
|
)
|
(1
|
)
|
(62
|
)
|
Contribution
to a joint venture
|
8
|
—
|
|
(2
|
)
|
(3
|
)
|
—
|
|
—
|
|
(5
|
)
|
Assets
of disposal group classified as held for sale
|
5
|
—
|
|
(8
|
)
|
(9
|
)
|
(1
|
)
|
(1
|
)
|
(19
|
)
|
Impairment
charges
|
5
and 24
|
(2
|
)
|
(2
|
)
|
(46
|
)
|
—
|
|
—
|
|
(50
|
)
|
Other
|
|
1
|
|
16
|
|
141
|
|
1
|
|
(156
|
)
|
3
|
|
Exchange
differences
|
|
(1
|
)
|
3
|
|
6
|
|
—
|
|
8
|
|
16
|
|
Closing
net book amount
|
|
107
|
|
368
|
|
967
|
|
33
|
|
98
|
|
1,573
|
|
As
at December 31, 2014
|
|
|
|
|
|
|
|
||||||
Cost
|
|
110
|
|
681
|
|
2,554
|
|
93
|
|
195
|
|
3,633
|
|
Accumulated
depreciation and impairment
|
|
3
|
|
313
|
|
1,587
|
|
60
|
|
97
|
|
2,060
|
|
Net
book amount
|
|
107
|
|
368
|
|
967
|
|
33
|
|
98
|
|
1,573
|
|
Year
ended December 31, 2015
|
|
|
|
|
|
|
|
||||||
Opening
net book amount
|
|
107
|
|
368
|
|
967
|
|
33
|
|
98
|
|
1,573
|
|
Additions
|
|
—
|
|
4
|
|
32
|
|
11
|
|
118
|
|
165
|
|
Disposals
|
|
—
|
|
(1
|
)
|
(2
|
)
|
—
|
|
(2
|
)
|
(5
|
)
|
Depreciation
|
|
—
|
|
(25
|
)
|
(130
|
)
|
(9
|
)
|
(8
|
)
|
(172
|
)
|
Impairment
charges
|
24
|
—
|
|
(9
|
)
|
(43
|
)
|
—
|
|
(3
|
)
|
(55
|
)
|
Other
|
|
—
|
|
11
|
|
66
|
|
1
|
|
(74
|
)
|
4
|
|
Exchange
differences
|
|
4
|
|
18
|
|
63
|
|
1
|
|
12
|
|
98
|
|
Closing
net book amount
|
|
111
|
|
366
|
|
953
|
|
37
|
|
141
|
|
1,608
|
|
As
at December 31, 2015
|
|
|
|
|
|
|
|
||||||
Cost
|
|
113
|
|
717
|
|
2,675
|
|
104
|
|
272
|
|
3,881
|
|
Accumulated
depreciation and impairment
|
|
2
|
|
351
|
|
1,722
|
|
67
|
|
131
|
|
2,273
|
|
Net
book amount
|
|
111
|
|
366
|
|
953
|
|
37
|
|
141
|
|
1,608
|
|
|
30
|
|
(in
millions of Canadian dollars)
|
NOTE
|
APPLICATION
SOFTWARE AND ERP
|
|
CUSTOMER
RELATIONSHIPS AND CLIENT LISTS
|
|
OTHER
INTANGIBLE ASSETS WITH FINITE USEFUL LIFE
|
|
TOTAL
INTANGIBLE ASSETS WITH FINITE USEFUL LIFE
|
|
GOODWILL
|
|
OTHER
INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE
|
|
TOTAL
INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIFE
|
|
As
at January 1, 2014
|
|
|
|
|
|
|
|
|
|||||||
Cost
|
|
97
|
|
180
|
|
41
|
|
318
|
|
330
|
|
8
|
|
338
|
|
Accumulated
amortization and impairment
|
|
24
|
|
66
|
|
32
|
|
122
|
|
4
|
|
1
|
|
5
|
|
Net
book amount
|
|
73
|
|
114
|
|
9
|
|
196
|
|
326
|
|
7
|
|
333
|
|
Year
ended December 31, 2014
|
|
|
|
|
|
|
|
|
|||||||
Opening
net book amount
|
|
73
|
|
114
|
|
9
|
|
196
|
|
326
|
|
7
|
|
333
|
|
Additions
|
|
6
|
|
—
|
|
—
|
|
6
|
|
—
|
|
—
|
|
—
|
|
Impairment
charges
|
5
|
—
|
|
(2
|
)
|
—
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
Amortization
|
|
(5
|
)
|
(10
|
)
|
(2
|
)
|
(17
|
)
|
—
|
|
—
|
|
—
|
|
Exchange
differences
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
—
|
|
2
|
|
Closing
net book amount
|
|
74
|
|
102
|
|
7
|
|
183
|
|
328
|
|
7
|
|
335
|
|
As
at December 31, 2014
|
|
|
|
|
|
|
|
|
|||||||
Cost
|
|
102
|
|
170
|
|
35
|
|
307
|
|
332
|
|
8
|
|
340
|
|
Accumulated
amortization and impairment
|
|
28
|
|
68
|
|
28
|
|
124
|
|
4
|
|
1
|
|
5
|
|
Net
book amount
|
|
74
|
|
102
|
|
7
|
|
183
|
|
328
|
|
7
|
|
335
|
|
Year
ended December 31, 2015
|
|
|
|
|
|
|
|
|
|||||||
Opening
net book amount
|
|
74
|
|
102
|
|
7
|
|
183
|
|
328
|
|
7
|
|
335
|
|
Additions
|
|
9
|
|
—
|
|
—
|
|
9
|
|
—
|
|
—
|
|
—
|
|
Amortization
|
|
(7
|
)
|
(10
|
)
|
(1
|
)
|
(18
|
)
|
—
|
|
—
|
|
—
|
|
Exchange
differences
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
—
|
|
11
|
|
Closing
net book amount
|
|
76
|
|
92
|
|
6
|
|
174
|
|
339
|
|
7
|
|
346
|
|
As
at December 31, 2015
|
|
|
|
|
|
|
|
|
|||||||
Cost
|
|
110
|
|
170
|
|
35
|
|
315
|
|
343
|
|
8
|
|
351
|
|
Accumulated
amortization and impairment
|
|
34
|
|
78
|
|
29
|
|
141
|
|
4
|
|
1
|
|
5
|
|
Net
book amount
|
|
76
|
|
92
|
|
6
|
|
174
|
|
339
|
|
7
|
|
346
|
|
(in
millions of Canadian dollars)
|
NOTE
|
|
2015
|
|
2014
|
|
Notes
receivable from business disposals
|
|
|
12
|
|
13
|
|
Other
investments
|
|
7
|
|
7
|
|
|
Other
assets
|
|
40
|
|
48
|
|
|
Deferred
financing costs
|
|
3
|
|
2
|
|
|
Employee
future benefits
|
16
|
|
33
|
|
20
|
|
|
|
95
|
|
90
|
|
|
Less:
Current portion, included in accounts receivables
|
|
(15
|
)
|
(7
|
)
|
|
|
|
80
|
|
83
|
|
|
31
|
|
(in
millions of Canadian dollars)
|
NOTE
|
2015
|
|
2014
|
|
Trade
payables
|
|
440
|
|
390
|
|
Payables
to related parties
|
28
|
31
|
|
27
|
|
Accrued
expenses
|
|
142
|
|
140
|
|
|
|
613
|
|
557
|
|
(in
millions of Canadian dollars)
|
NOTE
|
ENVIRONMENTAL
RESTORATION OBLIGATIONS
|
|
ENVIRONMENTAL
COSTS
|
|
LEGAL
CLAIMS
|
|
SEVERANCES
|
|
ONEROUS
CONTRACT
|
|
OTHER
|
|
TOTAL
PROVISIONS
|
|
As
at January 1, 2014
|
|
8
|
|
13
|
|
6
|
|
4
|
|
4
|
|
4
|
|
39
|
|
Additional
provision
|
|
—
|
|
1
|
|
1
|
|
10
|
|
4
|
|
4
|
|
20
|
|
Payments
|
|
—
|
|
—
|
|
—
|
|
(12
|
)
|
(2
|
)
|
(1
|
)
|
(15
|
)
|
Revaluation
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
Business
disposal
|
5
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
Unwinding
of discount
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
Other
|
|
—
|
|
—
|
|
(4
|
)
|
4
|
|
—
|
|
—
|
|
—
|
|
Exchange
differences
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
(1
|
)
|
As
at December 31, 2014
|
|
8
|
|
14
|
|
3
|
|
5
|
|
7
|
|
7
|
|
44
|
|
Additional
provision
|
|
—
|
|
1
|
|
—
|
|
2
|
|
—
|
|
4
|
|
7
|
|
Reversal
of provision
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
(2
|
)
|
Payments
|
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
(6
|
)
|
(1
|
)
|
(4
|
)
|
(14
|
)
|
Revaluation
|
|
2
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
3
|
|
Exchange
differences
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
As
at December 31, 2015
|
|
9
|
|
14
|
|
3
|
|
2
|
|
5
|
|
6
|
|
39
|
|
|
32
|
|
(in
millions of Canadian dollars)
|
MATURITY
|
2015
|
|
2014
|
|
Revolving
credit facility, weighted average interest rate of 1.97% as at December
31, 2015, consists of $(11)
million;
US$151 million and €27 million (December 31, 2014 - $103 million; US$50
million and €123
million)
|
2019
|
238
|
|
332
|
|
7.875%
Unsecured senior notes of US$250 million repurchased in
2015
|
2020
|
—
|
|
287
|
|
5.50%
Unsecured senior notes of $250 million
|
2021
|
250
|
|
250
|
|
5.50%
Unsecured senior notes of US$550 million
|
2022
|
761
|
|
638
|
|
5.75%
Unsecured senior notes of US$250 million
|
2023
|
346
|
|
—
|
|
Other
debts of subsidiaries
|
|
61
|
|
31
|
|
Other
debts without recourse to the Corporation
|
|
106
|
|
73
|
|
|
|
1,762
|
|
1,611
|
|
Less:
Unamortized financing costs
|
|
18
|
|
15
|
|
Total
long-term debt
|
|
1,744
|
|
1,596
|
|
Less:
|
|
|
|
||
Current
portion of debts of subsidiaries
|
|
10
|
|
10
|
|
Current
portion of debts without recourse to the Corporation
|
|
24
|
|
30
|
|
|
|
34
|
|
40
|
|
|
|
1,710
|
|
1,556
|
|
a.
|
On
May 19, 2015, the Corporation issued US$250 million ($305 million)
aggregate principal amount of 5.75% senior notes due in 2023. The
Corporation used the proceeds from this offering of notes to repurchase a
total of US$250 million aggregate principal amount of 7.875% senior notes
due in 2020 for a total consideration of US$250 million ($305 million).
The Corporation also paid premiums of US$11 million ($13 million) to
repurchase the 2020 notes, as well as fees and expenses in connection with
the offering and the tender offer totalling
$5 million.
|
|
33
|
|
(in
millions of Canadian dollars)
|
|
|
2015
|
|
Debt
issuance
|
|
|
305
|
|
Offering
and tender offer fees
|
|
|
(5
|
)
|
Refinanced
debt repurchase
|
|
|
(305
|
)
|
Premium
paid on refinanced debt
|
|
|
(13
|
)
|
Increase
of credit facility
|
|
|
18
|
|
b.
|
On
July 7, 2015, the Corporation entered into an agreement with its lenders
to extend and amend its existing $750 million credit facility. The
amendment provides that the term of the facility is extended to July 2019,
and that the applicable pricing grid is slightly lowered to better reflect
market conditions. The other existing financial conditions are essentially
unchanged.
|
c.
|
On
June 19, 2014, the Corporation issued US$550 million aggregate principal
amount of 5.50% senior notes due in 2022 and $250 million aggregate
principal amount of 5.50% due in 2021. The Corporation used the proceeds
from this offering of notes to fund the purchase of the Corporation's
unsecured senior notes maturing in 2016 and 2017. The Corporation used
part of the proceeds of the offering to pay fees and expenses in
connection with the offering and the tender offer totaling $13 million. As
well, the Corporation purchased for a total consideration of US$521
million ($563 million) and $208 million, including premiums of US$21
million ($23 million) and $8 million, a total of US$500 million aggregate
principal amount of 7.75% senior notes due in 2017 and $200 million
aggregate principal amount of 7.75 % senior notes due in
2016.
|
(in
millions of Canadian dollars)
|
|
|
2014
|
|
Debt
issuance
|
|
|
846
|
|
Offering
and tender offer fees
|
|
|
(13
|
)
|
Refinanced
debt repurchase
|
|
|
(740
|
)
|
Premium
paid on refinanced debt
|
|
|
(31
|
)
|
Decrease
of credit facility
|
|
|
(62
|
)
|
d.
|
As
at December 31,
2015
,
accounts receivable and inventories totaling approximately $
672
million
(December 31,
2014
- $
627
million)
as well as property, plant and equipment totaling approximately
$
265
million
(December 31,
2014
- $
249
million)
were pledged as collateral for the Corporation's revolving credit
facility.
|
e.
|
The
Corporation has finance leases for various items of property, plant and
equipment. Renewals and purchase options are specific to the entity that
holds the lease. Lease liabilities are effectively secured as the rights
to the leased asset revert to the lessor in the event of
default.
|
|
2015
|
|
2014
|
|
||||
(in
millions of Canadian dollars)
|
MINIMUM
PAYMENTS
|
|
PRESENT
VALUE OF PAYMENTS
|
|
MINIMUM
PAYMENTS
|
|
PRESENT
VALUE OF PAYMENTS
|
|
Within
one year
|
5
|
|
4
|
|
6
|
|
5
|
|
Later
than 1 year but no later than 5 years
|
16
|
|
13
|
|
12
|
|
9
|
|
More
than 5 years
|
8
|
|
6
|
|
8
|
|
6
|
|
Total
minimum lease payments
|
29
|
|
23
|
|
26
|
|
20
|
|
Less:
amounts representing finance charges
|
6
|
|
—
|
|
6
|
|
—
|
|
Present
value of minimum lease payments
|
23
|
|
23
|
|
20
|
|
20
|
|
|
34
|
|
(in
millions of Canadian dollars)
|
NOTE
|
|
2015
|
|
2014
|
|
Employee
future benefits
|
16
|
|
174
|
|
188
|
|
Other
|
|
9
|
|
5
|
|
|
|
|
183
|
|
193
|
|
|
Less:
Current portion, included in Trade and other payables
|
|
(5
|
)
|
(2
|
)
|
|
|
|
178
|
|
191
|
|
(in
millions of Canadian dollars)
|
NOTE
|
2015
|
|
2014
|
|
Balance
sheet obligations for
|
|
|
|
||
Defined
pension benefits
|
16(a)
|
36
|
|
59
|
|
Post-employment
benefits other than defined benefit pension plans
|
16(b)
|
105
|
|
109
|
|
Net
liabilities on balance sheet
|
|
141
|
|
168
|
|
Allocated
as follows:
|
|
|
|
|
|
Long-term
|
|
141
|
|
168
|
|
Net
liabilities on balance sheet
|
|
141
|
|
168
|
|
|
|
|
|
|
|
Income
statement charge for
|
|
|
|
|
|
Defined
pension benefits
|
|
9
|
|
8
|
|
Defined
contribution benefits
|
|
20
|
|
19
|
|
Post-employment
benefits other than defined benefit pension plans
|
|
8
|
|
6
|
|
Included
in discontinued operations
|
|
—
|
|
(2
|
)
|
|
|
37
|
|
31
|
|
Remeasurements
for
|
|
|
|
|
|
Defined
pension benefits
|
16(a)
|
(22
|
)
|
30
|
|
Post-employment
benefits other than defined benefit pension plans
|
16(b)
|
(3
|
)
|
9
|
|
|
|
(25
|
)
|
39
|
|
A.
|
DEFINED
BENEFIT PENSION PLANS
|
|
35
|
|
(in
millions of Canadian dollars)
|
PRESENT
VALUE OF OBLIGATION
|
|
FAIR
VALUE OF PLAN ASSETS
|
|
TOTAL
|
|
IMPACT
OF MINIMUM FUNDING REQUIREMENT (ASSET CEILING)
|
|
TOTAL
|
|
As
at January 1, 2014
|
654
|
|
(624
|
)
|
30
|
|
14
|
|
44
|
|
Current
service cost
|
8
|
|
—
|
|
8
|
|
—
|
|
8
|
|
Interest
expense (income)
|
27
|
|
(24
|
)
|
3
|
|
—
|
|
3
|
|
Plan
changes
|
1
|
|
—
|
|
1
|
|
—
|
|
1
|
|
Business
closures
|
(7
|
)
|
—
|
|
(7
|
)
|
—
|
|
(7
|
)
|
Other
|
7
|
|
(7
|
)
|
—
|
|
—
|
|
—
|
|
Impact
on profit or loss
|
36
|
|
(31
|
)
|
5
|
|
—
|
|
5
|
|
Remeasurements
|
|
|
|
|
|
|
|
|
|
|
Return
on plan assets, excluding amounts included in interest expense
(income)
|
—
|
|
(37
|
)
|
(37
|
)
|
—
|
|
(37
|
)
|
Loss
from change in demographic assumptions
|
2
|
|
—
|
|
2
|
|
—
|
|
2
|
|
Loss
from change in financial assumptions
|
66
|
|
—
|
|
66
|
|
—
|
|
66
|
|
Experience
losses
|
10
|
|
—
|
|
10
|
|
—
|
|
10
|
|
Change
in asset ceiling, excluding amounts included in interest
expense
|
—
|
|
—
|
|
—
|
|
(11
|
)
|
(11
|
)
|
Impact
of remeasurements on other comprehensive income
|
78
|
|
(37
|
)
|
41
|
|
(11
|
)
|
30
|
|
Exchange
differences
|
—
|
|
(1
|
)
|
(1
|
)
|
—
|
|
(1
|
)
|
Business
disposal
|
(134
|
)
|
131
|
|
(3
|
)
|
(3
|
)
|
(6
|
)
|
Included
in assets of disposal group classified as held for sale
|
(51
|
)
|
47
|
|
(4
|
)
|
—
|
|
(4
|
)
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
Employers
|
—
|
|
(9
|
)
|
(9
|
)
|
—
|
|
(9
|
)
|
Plan
participants
|
2
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
Benefit
payments
|
(73
|
)
|
73
|
|
—
|
|
—
|
|
—
|
|
As
at December 31, 2014
|
512
|
|
(453
|
)
|
59
|
|
—
|
|
59
|
|
Current
service cost
|
6
|
|
—
|
|
6
|
|
—
|
|
6
|
|
Interest
expense (income)
|
18
|
|
(15
|
)
|
3
|
|
—
|
|
3
|
|
Impact
on profit or loss
|
24
|
|
(15
|
)
|
9
|
|
—
|
|
9
|
|
Remeasurements
|
|
|
|
|
|
|
|
|
|
|
Return
on plan assets, excluding amounts included in interest expense
(income)
|
—
|
|
(16
|
)
|
(16
|
)
|
—
|
|
(16
|
)
|
Gain
from change in financial assumptions
|
(10
|
)
|
—
|
|
(10
|
)
|
—
|
|
(10
|
)
|
Experience
gains
|
(2
|
)
|
—
|
|
(2
|
)
|
—
|
|
(2
|
)
|
Change
in asset ceiling, excluding amounts included in interest
expense
|
—
|
|
—
|
|
—
|
|
6
|
|
6
|
|
Impact
of remeasurements on other comprehensive income
|
(12
|
)
|
(16
|
)
|
(28
|
)
|
6
|
|
(22
|
)
|
Exchange
differences
|
3
|
|
(1
|
)
|
2
|
|
—
|
|
2
|
|
Business
disposal
|
—
|
|
2
|
|
2
|
|
—
|
|
2
|
|
Contributions
|
|
|
|
|
|
|
|
|
|
|
Employers
|
—
|
|
(14
|
)
|
(14
|
)
|
—
|
|
(14
|
)
|
Plan
participants
|
2
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
Benefit
payments
|
(45
|
)
|
45
|
|
—
|
|
—
|
|
—
|
|
As
at December 31, 2015
|
484
|
|
(454
|
)
|
30
|
|
6
|
|
36
|
|
|
36
|
|
|
2015
|
|
||||||
(in
millions of Canadian dollars)
|
CANADA
|
|
UNITED
STATES
|
|
EUROPE
|
|
TOTAL
|
|
Present
value of funded obligations
|
413
|
|
10
|
|
—
|
|
423
|
|
Fair
value of plan assets
|
448
|
|
6
|
|
—
|
|
454
|
|
Deficit
(surplus) of funded plans
|
(35
|
)
|
4
|
|
—
|
|
(31
|
)
|
Impact
of minimum funding requirement (asset ceiling)
|
6
|
|
—
|
|
—
|
|
6
|
|
Present
value of unfunded obligations
|
36
|
|
—
|
|
25
|
|
61
|
|
Liabilities
on balance sheet
|
7
|
|
4
|
|
25
|
|
36
|
|
|
2015
|
|
||||||||||
(in
millions of Canadian dollars)
|
CONTAINERBOARD
|
|
BOXBOARD
EUROPE
|
|
SPECIALTY
PRODUCTS
|
|
TISSUE
PAPERS
|
|
CORPORATE
|
|
TOTAL
|
|
Present
value of funded obligations
|
388
|
|
—
|
|
—
|
|
34
|
|
1
|
|
423
|
|
Fair
value of plan assets
|
422
|
|
—
|
|
—
|
|
30
|
|
2
|
|
454
|
|
Deficit
(surplus) of funded plans
|
(34
|
)
|
—
|
|
—
|
|
4
|
|
(1
|
)
|
(31
|
)
|
Impact
of minimum funding requirement (asset ceiling)
|
6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
Present
value of unfunded obligations
|
8
|
|
25
|
|
1
|
|
2
|
|
25
|
|
61
|
|
Liabilities
on balance sheet
|
(20
|
)
|
25
|
|
1
|
|
6
|
|
24
|
|
36
|
|
|
2014
|
|
||||||
(in
millions of Canadian dollars)
|
CANADA
|
|
UNITED
STATES
|
|
EUROPE
|
|
TOTAL
|
|
Present
value of funded obligations
|
443
|
|
9
|
|
—
|
|
452
|
|
Fair
value of plan assets
|
448
|
|
5
|
|
—
|
|
453
|
|
Deficit
(surplus) of funded plans
|
(5
|
)
|
4
|
|
—
|
|
(1
|
)
|
Present
value of unfunded obligations
|
36
|
|
—
|
|
24
|
|
60
|
|
Liabilities
on balance sheet
|
31
|
|
4
|
|
24
|
|
59
|
|
|
2014
|
|
||||||||||
(in
millions of Canadian dollars)
|
CONTAINERBOARD
|
|
BOXBOARD
EUROPE
|
|
SPECIALTY
PRODUCTS
|
|
TISSUE
PAPERS
|
|
CORPORATE
|
|
TOTAL
|
|
Present
value of funded obligations
|
398
|
|
—
|
|
19
|
|
34
|
|
1
|
|
452
|
|
Fair
value of plan assets
|
409
|
|
—
|
|
13
|
|
29
|
|
2
|
|
453
|
|
Deficit
(surplus) of funded plans
|
(11
|
)
|
—
|
|
6
|
|
5
|
|
(1
|
)
|
(1
|
)
|
Present
value of unfunded obligations
|
8
|
|
24
|
|
2
|
|
2
|
|
24
|
|
60
|
|
Liabilities
on balance sheet
|
(3
|
)
|
24
|
|
8
|
|
7
|
|
23
|
|
59
|
|
|
2015
|
|
2014
|
|
||||||||
|
CANADA
|
|
UNITED
STATES
|
|
EUROPE
|
|
CANADA
|
|
UNITED
STATES
|
|
EUROPE
|
|
Discount
rate
|
3.9
|
%
|
3.9
|
%
|
2.1
|
%
|
3.75
|
%
|
3.62
|
%
|
1.9
|
%
|
Salary
growth rate
|
Between
1.75% and 3%
|
|
N/A
|
|
—
|
|
Between
2.5% and 3%
|
|
N/A
|
|
—
|
|
Inflation
rate
|
Between
2.25% and 2.5%
|
|
N/A
|
|
1.75
|
%
|
2.5
|
%
|
N/A
|
|
1.75
|
%
|
|
37
|
|
|
2015
|
|
2014
|
|
Retiring
at the end of the year
|
|
|
|
|
Male
|
21.6
|
|
21.5
|
|
Female
|
24
|
|
24
|
|
Retiring
20 years after the end of the reporting year
|
|
|
|
|
Male
|
22.7
|
|
22.6
|
|
Female
|
25
|
|
25
|
|
|
2015
|
|
||||||||
(in
millions of Canadian dollars)
|
LEVEL
1
|
|
LEVEL
2
|
|
LEVEL
3
|
|
TOTAL
|
|
%
|
|
Cash
and short-term investments
|
17
|
|
—
|
|
—
|
|
17
|
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Bonds
|
|
|
|
|
|
|
|
|
||
Canadian
bonds
|
57
|
|
72
|
|
—
|
|
129
|
|
28.4
|
%
|
|
|
|
|
|
|
|
|
|
||
Shares
|
|
|
|
|
|
|
|
|
||
Canadian
shares
|
65
|
|
—
|
|
—
|
|
65
|
|
|
|
Foreign
shares
|
15
|
|
—
|
|
—
|
|
15
|
|
|
|
|
|
|
|
|
|
|
80
|
|
17.6
|
%
|
Mutual
funds
|
|
|
|
|
|
|
|
|
||
Foreign
bond mutual funds
|
—
|
|
2
|
|
—
|
|
2
|
|
|
|
Canadian
equity mutual funds
|
—
|
|
18
|
|
—
|
|
18
|
|
|
|
Foreign
equity mutual funds
|
—
|
|
118
|
|
—
|
|
118
|
|
|
|
Alternative
investments funds
|
—
|
|
20
|
|
—
|
|
20
|
|
|
|
|
|
|
|
|
|
|
158
|
|
34.8
|
%
|
Other
|
|
|
|
|
|
|
|
|
||
Insured
annuities
|
—
|
|
63
|
|
—
|
|
63
|
|
|
|
Derivatives
contract, net
|
7
|
|
—
|
|
—
|
|
7
|
|
|
|
|
|
|
|
|
|
|
70
|
|
15.4
|
%
|
|
161
|
|
293
|
|
—
|
|
454
|
|
|
|
|
38
|
|
B.
|
POST-EMPLOYMENT
BENEFITS OTHER THAN DEFINED BENEFIT PENSION
PLANS
|
|
2015
|
|
||||||
(in
millions of Canadian dollars)
|
CANADA
|
|
UNITED
STATES
|
|
EUROPE
|
|
TOTAL
|
|
Present
value of unfunded obligations
|
77
|
|
4
|
|
24
|
|
105
|
|
Liabilities
on balance sheet
|
77
|
|
4
|
|
24
|
|
105
|
|
|
2015
|
|
||||||||||
(in
millions of Canadian dollars)
|
CONTAINERBOARD
|
|
BOXBOARD
EUROPE
|
|
SPECIALTY
PRODUCTS
|
|
TISSUE
PAPERS
|
|
CORPORATE
|
|
TOTAL
|
|
Present
value of unfunded obligations
|
42
|
|
24
|
|
6
|
|
13
|
|
20
|
|
105
|
|
Liabilities
on balance sheet
|
42
|
|
24
|
|
6
|
|
13
|
|
20
|
|
105
|
|
|
2014
|
|
||||||
(in
millions of Canadian dollars)
|
CANADA
|
|
UNITED
STATES
|
|
EUROPE
|
|
TOTAL
|
|
Present
value of unfunded obligations
|
81
|
|
4
|
|
24
|
|
109
|
|
Liabilities
on balance sheet
|
81
|
|
4
|
|
24
|
|
109
|
|
|
2014
|
|
||||||||||
(in
millions of Canadian dollars)
|
CONTAINERBOARD
|
|
BOXBOARD
EUROPE
|
|
SPECIALTY
PRODUCTS
|
|
TISSUE
PAPERS
|
|
CORPORATE
|
|
TOTAL
|
|
Present
value of unfunded obligations
|
48
|
|
24
|
|
6
|
|
13
|
|
18
|
|
109
|
|
Liabilities
on balance sheet
|
48
|
|
24
|
|
6
|
|
13
|
|
18
|
|
109
|
|
|
39
|
|
(in
millions of Canadian dollars)
|
PRESENT
VALUE OF OBLIGATION
|
|
FAIR
VALUE OF PLAN ASSET
|
|
TOTAL
|
|
As
at January 1, 2014
|
114
|
|
—
|
|
114
|
|
Current
service cost
|
2
|
|
—
|
|
2
|
|
Interest
expense
|
5
|
|
—
|
|
5
|
|
Plan
changes
|
1
|
|
—
|
|
1
|
|
Business
acquisitions, disposals and closures
|
(2
|
)
|
—
|
|
(2
|
)
|
Impact
on profit or loss
|
6
|
|
—
|
|
6
|
|
Remeasurements
|
|
|
|
|||
Loss
from change in financial assumptions
|
9
|
|
—
|
|
9
|
|
Impact
of remeasurements on other comprehensive income
|
9
|
|
—
|
|
9
|
|
Business
disposal
|
(9
|
)
|
—
|
|
(9
|
)
|
Contributions
and premiums paid by the employer
|
—
|
|
(11
|
)
|
(11
|
)
|
Benefit
payments
|
(11
|
)
|
11
|
|
—
|
|
As
at December 31, 2014
|
109
|
|
—
|
|
109
|
|
Current
service cost
|
2
|
|
—
|
|
2
|
|
Interest
expense
|
4
|
|
—
|
|
4
|
|
Plan
changes
|
3
|
|
—
|
|
3
|
|
Impact
on profit or loss
|
9
|
|
—
|
|
9
|
|
Remeasurements
|
|
|
|
|
|
|
Gain
from change in financial assumptions
|
(1
|
)
|
—
|
|
(1
|
)
|
Experience
gains
|
(2
|
)
|
—
|
|
(2
|
)
|
Impact
of remeasurements on other comprehensive income
|
(3
|
)
|
—
|
|
(3
|
)
|
Exchange
differences
|
2
|
|
—
|
|
2
|
|
Business
disposal
|
(4
|
)
|
—
|
|
(4
|
)
|
Contributions
and premiums paid by the employer
|
—
|
|
(8
|
)
|
(8
|
)
|
Benefit
payments
|
(8
|
)
|
8
|
|
—
|
|
As
at December 31, 2015
|
105
|
|
—
|
|
105
|
|
|
40
|
|
C.
|
RISKS
AND OTHER CONSIDERATIONS RELATIVE TO POST-EMPLOYMENT
BENEFITS
|
(in
millions of Canadian dollars)
|
LESS
THAN A YEAR
|
|
BETWEEN
1-2 YEARS
|
|
BETWEEN
2-5 YEARS
|
|
OVER
5 YEARS
|
|
TOTAL
|
|
Pension
benefits
|
27
|
|
28
|
|
86
|
|
823
|
|
964
|
|
Post-employment
benefits other than defined benefit pension plans
|
9
|
|
8
|
|
27
|
|
134
|
|
178
|
|
As
at December 31, 2015
|
36
|
|
36
|
|
113
|
|
957
|
|
1,142
|
|
|
41
|
|
a.
|
The
provision for (recovery of) income taxes is as
follows:
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Current
taxes
|
(1
|
)
|
16
|
|
Deferred
taxes
|
41
|
|
—
|
|
|
40
|
|
16
|
|
b.
|
The
provision for income taxes based on the effective income tax rate differs
from the recovery of income taxes based on the combined basic rate for
the following reasons:
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Recovery
of income taxes based on the combined basic Canadian and provincial income
tax rate
|
(4
|
)
|
(12
|
)
|
Adjustment
of recovery of income taxes arising from the following:
|
|
|
||
Difference
in statutory income tax rate of foreign operations
|
(4
|
)
|
1
|
|
Reassessment
|
5
|
|
3
|
|
Reversal
of deferred tax assets on tax losses
|
18
|
|
—
|
|
Permanent
differences - others
|
7
|
|
22
|
|
Change
in temporary differences
|
18
|
|
2
|
|
|
44
|
|
28
|
|
Provision
for income taxes
|
40
|
|
16
|
|
c.
|
The
recovery of income taxes relating to components of other comprehensive
income is as follows:
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Foreign
currency translation related to hedging activities
|
(13
|
)
|
(6
|
)
|
Cash
flow hedge
|
1
|
|
—
|
|
Actuarial
gain (loss) on post-employment benefit obligations
|
7
|
|
(11
|
)
|
|
(5
|
)
|
(17
|
)
|
d.
|
The
analysis of deferred tax assets and deferred tax liabilities, without
taking into consideration the offsetting of balances within the same tax
jurisdiction, is as follows:
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Deferred
income tax assets:
|
|
|
||
Deferred
income tax assets to be recovered after more than 12
months
|
297
|
|
328
|
|
Deferred
income tax liabilities:
|
|
|
||
Deferred
income tax liabilities to be used after more than 12
months
|
305
|
|
281
|
|
|
(8
|
)
|
47
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
As
at January 1
|
47
|
|
9
|
|
Through
statement of earnings (loss)
|
(41
|
)
|
—
|
|
Through
statement of comprehensive income (loss)
|
5
|
|
17
|
|
Included
in discontinued operations
|
1
|
|
29
|
|
Exchange
differences
|
(20
|
)
|
(8
|
)
|
As
at December 31
|
(8
|
)
|
47
|
|
|
42
|
|
(in
millions of Canadian dollars)
|
RECOGNIZED
TAX BENEFIT ARISING FROM INCOME TAX LOSSES
|
|
EMPLOYEE
FUTURE BENEFITS
|
|
EXPENSE
ON RESEARCH
|
|
UNUSED
TAX CREDITS
|
|
FINANCIAL
INSTRUMENTS
|
|
FOREIGN
EXCHANGE LOSS ON LONG-TERM DEBT
|
|
OTHERS
|
|
TOTAL
|
|
As
at January 1, 2014
|
174
|
|
32
|
|
63
|
|
54
|
|
7
|
|
—
|
|
10
|
|
340
|
|
Through
statement of earnings (loss)
|
(17
|
)
|
(11
|
)
|
7
|
|
(15
|
)
|
1
|
|
—
|
|
12
|
|
(23
|
)
|
Through
statement of comprehensive income (loss)
|
—
|
|
11
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
Included
in discontinued operations
|
5
|
|
2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8
|
)
|
(1
|
)
|
Exchange
differences
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
As
at December 31, 2014
|
163
|
|
34
|
|
70
|
|
39
|
|
8
|
|
—
|
|
14
|
|
328
|
|
Through
statement of earnings (loss)
|
(24
|
)
|
(3
|
)
|
(32
|
)
|
(1
|
)
|
7
|
|
23
|
|
1
|
|
(29
|
)
|
Through
statement of comprehensive income (loss)
|
—
|
|
(7
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(7
|
)
|
Exchange
differences
|
2
|
|
1
|
|
—
|
|
1
|
|
1
|
|
—
|
|
—
|
|
5
|
|
As
at December 31, 2015
|
141
|
|
25
|
|
38
|
|
39
|
|
16
|
|
23
|
|
15
|
|
297
|
|
(in
millions of Canadian dollars)
|
PROPERTY,
PLANT AND EQUIPMENT
|
|
FOREIGN
EXCHANGE GAIN ON LONG-TERM DEBT
|
|
INTANGIBLE
ASSETS
|
|
INVESTMENTS
|
|
OTHERS
|
|
TOTAL
|
|
As
at January 1, 2014
|
166
|
|
43
|
|
52
|
|
54
|
|
16
|
|
331
|
|
Through
statement of earnings (loss)
|
(12
|
)
|
(20
|
)
|
—
|
|
14
|
|
(5
|
)
|
(23
|
)
|
Through
statement of comprehensive loss
|
—
|
|
(6
|
)
|
—
|
|
—
|
|
—
|
|
(6
|
)
|
Included
in discontinued operations
|
(25
|
)
|
—
|
|
(1
|
)
|
(4
|
)
|
—
|
|
(30
|
)
|
Exchange
differences
|
5
|
|
—
|
|
—
|
|
4
|
|
—
|
|
9
|
|
As
at December 31, 2014
|
134
|
|
17
|
|
51
|
|
68
|
|
11
|
|
281
|
|
Through
statement of earnings (loss)
|
22
|
|
(5
|
)
|
(1
|
)
|
5
|
|
(9
|
)
|
12
|
|
Through
statement of comprehensive loss
|
—
|
|
(12
|
)
|
—
|
|
—
|
|
—
|
|
(12
|
)
|
Included
in discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
Exchange
differences
|
13
|
|
—
|
|
1
|
|
11
|
|
—
|
|
25
|
|
As
at December 31, 2015
|
169
|
|
—
|
|
51
|
|
84
|
|
1
|
|
305
|
|
|
43
|
|
e.
|
The
Corporation has accumulated losses for income tax purposes amounting to
approximately $
836
million,
which may be carried forward to reduce taxable income in future years. The
future tax benefit of $
141
million
resulting from the deferral of these losses has been recognized in the
accounts as a deferred income tax asset. Deferred income tax assets are
recognized for tax loss carry-forward to the extent that the realization
of the related tax benefits through future taxable profits is probable.
Income tax losses as at December 31,
2015
are detailed as follows:
|
(in
millions of Canadian dollars)
|
UNRECOGNIZED
TAX LOSSES
|
|
RECOGNIZED
TAX LOSSES
|
|
TOTAL
TAX LOSSES
|
|
MATURITY
|
Canada
|
—
|
|
9
|
|
9
|
|
2026
|
|
—
|
|
14
|
|
14
|
|
2027
|
|
—
|
|
2
|
|
2
|
|
2029
|
|
—
|
|
9
|
|
9
|
|
2030
|
|
—
|
|
77
|
|
77
|
|
2031
|
|
—
|
|
128
|
|
128
|
|
2032
|
|
—
|
|
84
|
|
84
|
|
2033
|
|
—
|
|
126
|
|
126
|
|
2034
|
|
—
|
|
3
|
|
3
|
|
2035
|
United
States
|
—
|
|
5
|
|
5
|
|
2018
|
|
—
|
|
12
|
|
12
|
|
2019
|
|
—
|
|
7
|
|
7
|
|
2020
|
|
2
|
|
—
|
|
2
|
|
2029
|
|
2
|
|
—
|
|
2
|
|
2031
|
|
3
|
|
—
|
|
3
|
|
2032
|
|
2
|
|
—
|
|
2
|
|
2033
|
|
1
|
|
—
|
|
1
|
|
2034
|
|
1
|
|
—
|
|
1
|
|
2035
|
Europe
|
320
|
|
29
|
|
349
|
|
Indefinitely
|
|
331
|
|
505
|
|
836
|
|
|
A.
|
CAPITAL
MANAGEMENT
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Cash
and cash equivalents
|
(60
|
)
|
(29
|
)
|
Bank
loans and advances
|
37
|
|
46
|
|
Long-term
debt, including current portion
|
1,744
|
|
1,596
|
|
|
1,721
|
|
1,613
|
|
Total
equity
|
963
|
|
1,003
|
|
Total
capital
|
2,684
|
|
2,616
|
|
•
|
to
safeguard the Corporation's ability to continue as a going concern in
order to provide returns to Shareholders;
|
•
|
to
maintain an optimal capital structure and reduce the cost of
capital;
|
•
|
to
make proper capital investments that are significant to ensure the
Corporation remains competitive; and
|
•
|
to
redeem common shares based on an annual redemption
program.
|
|
44
|
|
B.
|
ISSUED
AND OUTSTANDING
|
|
|
2015
|
|
2014
|
|
||||
|
NOTE
|
NUMBER
OF COMMON SHARES
|
|
IN
MILLIONS OF CANADIAN DOLLARS
|
|
NUMBER
OF COMMON SHARES
|
|
IN
MILLIONS OF CANADIAN DOLLARS
|
|
Balance
- beginning of year
|
|
94,186,474
|
|
483
|
|
93,887,849
|
|
482
|
|
Common
shares issued on exercise of stock options
|
18(d)
|
1,168,349
|
|
5
|
|
376,025
|
|
1
|
|
Reversal
of contributed surplus on exercise of stock options
|
|
—
|
|
2
|
|
—
|
|
—
|
|
Redemption
of common shares
|
18(c)
|
(43,900
|
)
|
—
|
|
(77,400
|
)
|
—
|
|
Balance
- end of year
|
|
95,310,923
|
|
490
|
|
94,186,474
|
|
483
|
|
|
45
|
|
C.
|
REDEMPTION
OF COMMON SHARES
|
D.
|
COMMON
SHARE ISSUANCE
|
E.
|
NET
LOSS PER COMMON SHARE
|
|
2015
|
|
2014
|
|
||
Net
loss available to common shareholders (in millions of Canadian
dollars)
|
(65
|
)
|
(147
|
)
|
||
Weighted
average basic number of basic and diluted common shares outstanding (in
millions)
|
94
|
|
94
|
|
||
Basic
and diluted net loss per common share (in Canadian
dollars)
|
$
|
(0.69
|
)
|
$
|
(1.57
|
)
|
F.
|
DETAILS
OF DIVIDENDS DECLARED PER COMMON SHARE ARE AS
FOLLOWS
|
|
2015
|
|
2014
|
|
||
Dividends
declared per common share
|
$
|
0.16
|
|
$
|
0.16
|
|
a.
|
Under
the terms of a share option plan adopted on December 15, 1998, and amended
on March 15, 2013, and approved by Shareholders on May 8, 2013, for
officers and key employees of the Corporation, a remaining balance of
2,456,099
common shares has been specifically reserved for issuance. Each option
will expire at a date not to exceed 10 years following the grant date of
the option. The exercise price of an option shall not be lower than the
market value of the share at the date of grant, determined as the average
of the closing price of the share on the Toronto Stock Exchange on the
five trading days preceding the date of grant. The terms for exercising
the options are 25% of the number of shares under option within 12 months
after the first anniversary date of grant, and up to an additional 25%
every 12 months after the second, third and fourth anniversaries of grant
date. Options cannot be exercised if the market value of the share at
exercise date is lower than the book value at the date of grant. Options
exercised are settled in shares. The stock-based compensation cost related
to these options amounted to $
1
million
(
2014
- $
1
million).
|
|
2015
|
|
2014
|
|
||||
|
NUMBER
OF OPTIONS
|
|
WEIGHTED
AVERAGE EXERCISE PRICE $
|
|
NUMBER
OF OPTIONS
|
|
WEIGHTED
AVERAGE EXERCISE PRICE $
|
|
Beginning
of year
|
6,432,328
|
|
5.96
|
|
6,656,423
|
|
6.22
|
|
Granted
|
462,644
|
|
7.66
|
|
546,155
|
|
6.10
|
|
Exercised
|
(1,168,349
|
)
|
4.44
|
|
(376,025
|
)
|
4.56
|
|
Expired
|
(258,090
|
)
|
11.85
|
|
(383,424
|
)
|
12.11
|
|
Forfeited
|
(205,737
|
)
|
5.92
|
|
(10,801
|
)
|
5.42
|
|
End
of year
|
5,262,796
|
|
6.16
|
|
6,432,328
|
|
5.96
|
|
Options
exercisable - end of year
|
4,027,950
|
|
6.17
|
|
4,728,990
|
|
6.18
|
|
|
46
|
|
|
OPTIONS
OUTSTANDING
|
OPTIONS
EXERCISABLE
|
|
||||||
YEAR
GRANTED
|
NUMBER
OF OPTIONS
|
|
WEIGHTED
AVERAGE EXERCISE PRICE $
|
|
NUMBER
OF OPTIONS
|
|
WEIGHTED
AVERAGE EXERCISE PRICE $
|
|
EXPIRATION
DATE
|
2006
|
257,885
|
|
11.49
|
|
257,885
|
|
11.49
|
|
2016
|
2007
|
282,383
|
|
11.83
|
|
282,383
|
|
11.83
|
|
2017
|
2008
|
426,150
|
|
7.81
|
|
426,150
|
|
7.81
|
|
2017-2018
|
2009
|
49,298
|
|
2.28
|
|
49,298
|
|
2.28
|
|
2019
|
2009
|
968,333
|
|
3.92
|
|
968,333
|
|
3.92
|
|
2019
|
2010
|
444,124
|
|
6.43
|
|
444,124
|
|
6.43
|
|
2020
|
2011
|
526,517
|
|
6.26
|
|
526,517
|
|
6.26
|
|
2017-2021
|
2012
|
933,598
|
|
4.46
|
|
693,744
|
|
4.46
|
|
2017-2022
|
2013
|
491,611
|
|
5.18
|
|
255,978
|
|
5.18
|
|
2017-2023
|
2014
|
472,991
|
|
6.10
|
|
123,538
|
|
6.10
|
|
2017-2024
|
2015
|
409,906
|
|
7.66
|
|
—
|
|
—
|
|
2025
|
|
5,262,796
|
|
|
|
4,027,950
|
|
|
|
|
|
2015
|
|
2014
|
|
||
Grant
date share price
|
$
|
7.76
|
|
$
|
6.65
|
|
Exercise
price
|
$
|
7.66
|
|
$
|
6.10
|
|
Risk-free
interest rate
|
1.29
|
%
|
1.79
|
%
|
||
Expected
dividend yield
|
2.06
|
%
|
2.41
|
%
|
||
Expected
life of options
|
6
years
|
|
6
years
|
|
||
Expected
volatility
|
32
|
%
|
45
|
%
|
b.
|
The
Corporation offers its Canadian employees a share purchase plan for its
common shares. Employees can voluntarily contribute up to a maximum of 5%
of their salary and, if certain conditions are met, the Corporation will
contribute to the plan for 25% of the employee's
contribution.
|
c.
|
The
Corporation has a Deferred Share Unit Plan for the benefit of its external
directors, allowing them to receive all or a portion of their annual
compensation in the form of Deferred Share Units (DSUs). A DSU is a
notional unit equivalent in value to the Corporation's common share. Upon
resignation from the Board of Directors, participants are entitled to
receive the payment of their cumulated DSUs in the form of cash based on
the average price of the Corporation's common shares as traded on the open
market during the five days before the date of the participant's
resignation.
|
d.
|
In
2013, the Corporation put in place a Performance Share Unit (PSU) Plan for
the benefit of officers and key employees, allowing them to receive a
portion of their annual compensation in the form of PSUs. A PSU is a
notional unit equivalent in value to the Corporation's common share.
Periodically, the number of PSUs forming part of the award shall be
adjusted depending upon the three-year average return on capital employed
of the Corporation (ROCE). Such adjusted number shall be obtained by
multiplying the number of PSUs forming part of the award by the applicable
multiplier based on the ROCE level. Participants are entitled to receive
the payment of their PSUs in the form of cash based on the average price
of the Corporation's common shares as traded on the open market during the
five days before the vesting date.
|
|
47
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Foreign
currency translation, net of hedging activities and related income tax of
$19 million (December 31, 2014 - $6
million)
|
(2
|
)
|
(25
|
)
|
Unrealized
loss arising from foreign exchange forward contracts designated as cash
flow hedges, net of related income taxes of nil (December 31, 2014 -
nil)
|
—
|
|
(2
|
)
|
Unrealized
loss arising from interest rate swap agreements designated as cash flow
hedges, net of related income taxes of $9 million (December 31, 2014 - $14
million)
|
(13
|
)
|
(20
|
)
|
Unrealized
loss arising from commodity derivative financial instruments designated as
cash flow hedges, net of related income taxes of $5 million (December 31,
2014 - $5 million)
|
(13
|
)
|
(14
|
)
|
Unrealized
gain (loss) on available-for-sale financial assets, net of related income
taxes of nil (December 31, 2014 - nil)
|
1
|
|
(1
|
)
|
|
(27
|
)
|
(62
|
)
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Raw
materials
|
1,532
|
|
1,405
|
|
Wages
and employee benefits expenses
|
641
|
|
600
|
|
Energy
|
266
|
|
270
|
|
Delivery
|
259
|
|
255
|
|
Depreciation
and amortization
|
190
|
|
174
|
|
Other
|
373
|
|
359
|
|
|
3,261
|
|
3,063
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Wages
and employee benefits expenses
|
244
|
|
233
|
|
Information
technology
|
28
|
|
20
|
|
Publicity
and marketing
|
16
|
|
11
|
|
Other
|
72
|
|
70
|
|
|
360
|
|
334
|
|
|
48
|
|
(in
millions of Canadian dollars)
|
NOTE
|
|
2015
|
|
2014
|
|
Wages
and employee benefits expenses
|
21
|
|
885
|
|
833
|
|
Share
options granted to directors and employees
|
19(a)
|
|
1
|
|
1
|
|
Pension
costs - defined benefit plans
|
16
|
|
9
|
|
8
|
|
Pension
costs - defined contribution benefits
|
16
|
|
20
|
|
19
|
|
Post-employment
benefits other than defined benefit pension plans
|
16
|
|
8
|
|
6
|
|
|
|
923
|
|
867
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Salaries
and other short-term benefits
|
11
|
|
9
|
|
Post-employment
benefits
|
—
|
|
1
|
|
Share-based
payments
|
4
|
|
4
|
|
|
15
|
|
14
|
|
(in
millions of Canadian dollars)
|
NOTE
|
2015
|
|
2014
|
|
Gain
on disposal of property, plant and equipment
|
|
(1
|
)
|
—
|
|
Class
action settlement
|
|
—
|
|
5
|
|
Gain
on joint-venture contribution
|
8(f)
|
—
|
|
(5
|
)
|
|
|
(1
|
)
|
—
|
|
|
49
|
|
A.
|
IMPAIRMENT
CHARGES ON PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS WITH FINITE
USEFUL LIFE AND OTHER ASSETS
|
|
50
|
|
B.
|
GOODWILL
AND OTHER INDEFINITE USEFUL LIFE INTANGIBLE
ASSETS
|
•
|
Containerboard's
goodwill of $
287
million
is allocated to all Containerboard's
CGUs.
|
•
|
Specialty
Products' goodwill is allocated to all Cascades Recovery CGUs,
$
13
million,
and the partitioning activities CGU, $
3
million.
|
•
|
Tissue
Papers' goodwill of $
36
million
and trademarks of $
2
million
are allocated to all Tissue Papers' CGUs.
|
•
|
Water
rights of $
5
million
are allocated to RdM's CGU.
|
|
2015
|
|
2014
|
|
||
|
CONTAINERBOARD
|
|
CONTAINERBOARD
|
|
||
Discounting
rate
|
9.5
|
%
|
9.5
|
%
|
||
Terminal
exchange rate (CA$/US$)
|
$
|
1.25
|
|
$
|
1.15
|
|
Terminal
shipments (manufacturing only)
|
930,000
s.t.
|
|
888,000
s.t.
|
|
C.
|
RESTRUCTURING
COSTS (GAIN)
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Boxboard
Europe
|
1
|
|
1
|
|
Specialty
Products
|
(5
|
)
|
—
|
|
Tissue
Papers
|
—
|
|
1
|
|
Corporate
activities
|
1
|
|
—
|
|
|
(3
|
)
|
2
|
|
|
51
|
|
A.
|
CHANGES
IN NON-CASH WORKING CAPITAL COMPONENTS ARE DETAILED AS
FOLLOWS:
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Accounts
receivable
|
(57
|
)
|
18
|
|
Current
income tax assets
|
(3
|
)
|
(6
|
)
|
Inventories
|
(9
|
)
|
(7
|
)
|
Trade
and other payables
|
33
|
|
(19
|
)
|
Current
income tax liabilities
|
(2
|
)
|
1
|
|
|
(38
|
)
|
(13
|
)
|
B.
|
FINANCING
EXPENSE AND INTEREST EXPENSE ON EMPLOYEE FUTURE
BENEFITS
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Interest
on long-term debt
|
88
|
|
97
|
|
Interest
income
|
(4
|
)
|
(5
|
)
|
Amortization
of financing costs
|
4
|
|
5
|
|
Other
interest and banking fees
|
3
|
|
4
|
|
Interest
on employee future benefits
|
6
|
|
6
|
|
|
97
|
|
107
|
|
|
|
2015
|
|
2014
|
|
|||||
(in
millions of Canadian dollars)
|
NOTE
|
|
CARRYING
AMOUNT
|
|
FAIR
VALUE
|
|
CARRYING
AMOUNT
|
|
FAIR
VALUE
|
|
Financial
assets at fair value through profit or loss
|
|
|
|
|
|
|||||
Derivatives
|
26.4
|
|
13
|
|
13
|
|
25
|
|
25
|
|
Financial
assets available for sale
|
|
|
|
|
|
|||||
Other
investments
|
|
2
|
|
2
|
|
3
|
|
3
|
|
|
Investments
in shares held for trading
|
|
1
|
|
1
|
|
1
|
|
1
|
|
|
Financial
liabilities at fair value through profit or loss
|
|
|
|
|
|
|||||
Derivatives
|
26.4
|
|
(63
|
)
|
(63
|
)
|
(41
|
)
|
(41
|
)
|
Financial
liabilities at amortized cost
|
|
|
|
|
|
|||||
Long-term
debt
|
|
(1,743
|
)
|
(1,729
|
)
|
(1,596
|
)
|
(1,608
|
)
|
|
Derivatives
designated as hedge
|
|
|
|
|
|
|||||
Asset
derivatives
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Liability
derivatives
|
|
(16
|
)
|
(16
|
)
|
(18
|
)
|
(18
|
)
|
|
52
|
|
(i)
|
The
fair values of cash and cash equivalents, accounts receivable, notes
receivable, bank loans and advances, trade and other payables and
provisions approximate their carrying amounts due to their relatively
short maturities.
|
(ii)
|
The
fair value of investments in shares held for trading is based on
observable market data and mainly represents the Corporation's investment
in Junex Inc., which is quoted on the Toronto Stock
Exchange.
|
(iii)
|
The
fair value of long-term debt is based on observable market data and on the
calculation of discounted cash flows. Discount rates were determined based
on local government bond yields adjusted for the risks specific to each of
the borrowings and the credit market liquidity
conditions.
|
|
|
|
2015
|
|
||||
(in
millions of Canadian dollars)
|
CARRYING
AMOUNT
|
|
QUOTED
PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)
|
|
SIGNIFICANT
OBSERVABLE INPUTS (LEVEL 2)
|
|
SIGNIFICANT
UNOBSERVABLE INPUTS (LEVEL 3)
|
|
Financial
assets
|
|
|
|
|
||||
Other
investments
|
2
|
|
—
|
|
2
|
|
—
|
|
Investments
in shares held for trading
|
1
|
|
1
|
|
—
|
|
—
|
|
Derivative
financial assets
|
13
|
|
—
|
|
13
|
|
—
|
|
|
16
|
|
1
|
|
15
|
|
—
|
|
Financial
liabilities
|
|
|
|
|
||||
Derivative
financial liabilities
|
(79
|
)
|
—
|
|
(79
|
)
|
—
|
|
|
(79
|
)
|
—
|
|
(79
|
)
|
—
|
|
|
|
|
2014
|
|
||||
(in
millions of Canadian dollars)
|
CARRYING
AMOUNT
|
|
QUOTED
PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL1)
|
|
SIGNIFICANT
OBSERVABLE INPUTS (LEVEL 2)
|
|
SIGNIFICANT
UNOBSERVABLE INPUTS (LEVEL 3)
|
|
Financial
assets
|
|
|
|
|
||||
Other
investments
|
3
|
|
—
|
|
3
|
|
—
|
|
Investments
in shares held for trading
|
1
|
|
1
|
|
—
|
|
—
|
|
Derivative
financial assets
|
25
|
|
—
|
|
25
|
|
—
|
|
|
29
|
|
1
|
|
28
|
|
—
|
|
Financial
liabilities
|
|
|
|
|
||||
Derivative
financial liabilities
|
(59
|
)
|
—
|
|
(59
|
)
|
—
|
|
|
(59
|
)
|
—
|
|
(59
|
)
|
—
|
|
|
53
|
|
|
|
2015
|
|
||||||||||
(in
millions of Canadian dollars)
|
|
ASSETS
|
LIABILITIES
|
||||||||||
RISK
|
NOTE
|
SHORT-TERM
|
|
LONG-TERM
|
|
TOTAL
|
|
SHORT-TERM
|
|
LONG-TERM
|
|
TOTAL
|
|
Currency
risk
|
26.4
A) (i)
|
—
|
|
1
|
|
1
|
|
(23
|
)
|
(38
|
)
|
(61
|
)
|
Price
risk
|
26.4
A) (ii)
|
1
|
|
11
|
|
12
|
|
(9
|
)
|
(8
|
)
|
(17
|
)
|
Interest
risk
|
26.4
A) (iii)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
|
|
1
|
|
12
|
|
13
|
|
(32
|
)
|
(47
|
)
|
(79
|
)
|
|
|
2014
|
|
||||||||||
(in
millions of Canadian dollars)
|
|
ASSETS
|
LIABILITIES
|
||||||||||
RISK
|
NOTE
|
SHORT-TERM
|
|
LONG-TERM
|
|
TOTAL
|
|
SHORT-TERM
|
|
LONG-TERM
|
|
TOTAL
|
|
Currency
risk
|
26.4
A) (i)
|
—
|
|
16
|
|
16
|
|
(3
|
)
|
(37
|
)
|
(40
|
)
|
Price
risk
|
26.4
A) (ii)
|
1
|
|
8
|
|
9
|
|
(11
|
)
|
(8
|
)
|
(19
|
)
|
|
|
1
|
|
24
|
|
25
|
|
(14
|
)
|
(45
|
)
|
(59
|
)
|
A.
|
MARKET
RISK
|
(i)
|
Currency
risk
|
|
54
|
|
|
55
|
|
|
2015
|
|
2014
|
|
||||||||
(in
millions of Canadian dollars)
|
BEFORE
HEDGES
|
|
HEDGES
|
|
NET
IMPACT
|
|
BEFORE
HEDGES
|
|
HEDGES
|
|
NET
IMPACT
|
|
10%
change in the CAN$/US$ rate
|
111
|
|
64
|
|
47
|
|
93
|
|
52
|
|
41
|
|
10%
change in the CAN$/euro rate
|
1
|
|
—
|
|
1
|
|
4
|
|
—
|
|
4
|
|
|
56
|
|
|
57
|
|
|
2015
|
|
2014
|
|
||||||||
(in
millions of Canadian dollars
1
)
|
BEFORE
HEDGES
|
|
HEDGES
|
|
NET
IMPACT
|
|
BEFORE
HEDGES
|
|
HEDGES
|
|
NET
IMPACT
|
|
US$15/s.t.
change in recycled paper price
|
33
|
|
—
|
|
33
|
|
28
|
|
—
|
|
28
|
|
US$30/s.t.
change in commercial pulp price
|
7
|
|
—
|
|
7
|
|
5
|
|
—
|
|
5
|
|
US$1/mmBTU.
change in natural gas price
|
12
|
|
6
|
|
6
|
|
9
|
|
5
|
|
4
|
|
US$1/MWh
change in electricity price
|
2
|
|
—
|
|
2
|
|
2
|
|
—
|
|
2
|
|
1
|
Sensitivity
calculated with an exchange rate of
1.38
CAN$/US$ for
2015
and
1.16
CAN$/US$ for
2014
.
|
(iv)
|
Loss
on derivative financial instruments is as
follows:
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Unrealized
loss on derivative financial instruments
|
18
|
|
6
|
|
Realized
loss on derivative financial instruments
|
10
|
|
—
|
|
|
28
|
|
6
|
|
|
58
|
|
B.
|
CREDIT
RISK
|
|
59
|
|
C.
|
LIQUIDITY
RISK
|
|
2015
|
|
||||||||||
(in
millions of Canadian dollars)
|
CARRYING
AMOUNT
|
|
CONTRACTUAL
CASH FLOWS
|
|
LESS
THAN ONE YEAR
|
|
BETWEEN
ONE AND TWO YEARS
|
|
BETWEEN
TWO AND FIVE YEARS
|
|
MORE
THAN FIVE YEARS
|
|
Non-derivative
financial liabilities:
|
|
|
|
|
|
|
||||||
Bank
loans and advances
|
37
|
|
37
|
|
37
|
|
—
|
|
—
|
|
—
|
|
Trade
and other payables
|
613
|
|
613
|
|
613
|
|
—
|
|
—
|
|
—
|
|
Revolving
credit facility
|
238
|
|
271
|
|
10
|
|
10
|
|
251
|
|
—
|
|
Unsecured
senior notes
|
1,357
|
|
1,854
|
|
76
|
|
76
|
|
226
|
|
1,476
|
|
Other
debts of subsidiaries
|
61
|
|
67
|
|
12
|
|
10
|
|
22
|
|
23
|
|
Other
debts without recourse to the Corporation
|
106
|
|
106
|
|
25
|
|
24
|
|
46
|
|
11
|
|
Derivative
financial liabilities
|
79
|
|
79
|
|
32
|
|
35
|
|
12
|
|
—
|
|
|
2,491
|
|
3,027
|
|
805
|
|
155
|
|
557
|
|
1,510
|
|
|
2014
|
|
||||||||||
(in
millions of Canadian dollars)
|
CARRYING
AMOUNT
|
|
CONTRACTUAL
CASH FLOWS
|
|
LESS
THAN ONE YEAR
|
|
BETWEEN
ONE AND TWO YEARS
|
|
BETWEEN
TWO AND FIVE YEARS
|
|
MORE
THAN FIVE YEARS
|
|
Non-derivative
financial liabilities:
|
|
|
|
|
|
|
||||||
Bank
loans and advances
|
46
|
|
46
|
|
46
|
|
—
|
|
—
|
|
—
|
|
Trade
and other payables
|
557
|
|
557
|
|
557
|
|
—
|
|
—
|
|
—
|
|
Revolving
credit facility
|
332
|
|
347
|
|
13
|
|
334
|
|
—
|
|
—
|
|
Unsecured
senior notes
|
1,175
|
|
1,647
|
|
72
|
|
71
|
|
215
|
|
1,289
|
|
Other
debts of subsidiaries
|
31
|
|
37
|
|
11
|
|
6
|
|
11
|
|
9
|
|
Other
debts without recourse to the Corporation
|
73
|
|
77
|
|
36
|
|
17
|
|
19
|
|
5
|
|
Derivative
financial liabilities
|
59
|
|
59
|
|
14
|
|
8
|
|
24
|
|
13
|
|
|
2,273
|
|
2,770
|
|
749
|
|
436
|
|
269
|
|
1,316
|
|
D.
|
OTHER
RISK
|
|
60
|
|
a.
|
The
Corporation leases various properties, vehicles and equipment under
non-cancellable operating lease
agreements.
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
No
later than one year
|
24
|
|
22
|
|
Later
than one year but no later than five years
|
39
|
|
36
|
|
More
than five years
|
11
|
|
6
|
|
b.
|
Capital
and raw materials commitments
|
|
|
2015
|
|
2014
|
|
||||||||
(in
millions of Canadian dollars)
|
NOTE
|
PROPERTY,
PLANT AND EQUIPMENT
|
|
INTANGIBLE
ASSETS
|
|
RAW
MATERIALS
|
|
PROPERTY,
PLANT AND EQUIPMENT
|
|
INTANGIBLE
ASSETS
|
|
RAW
MATERIALS
|
|
No
later than one year
|
28
|
24
|
|
2
|
|
75
|
|
6
|
|
2
|
|
71
|
|
Later
than one year but no later than five years
|
28
|
1
|
|
4
|
|
301
|
|
—
|
|
—
|
|
287
|
|
More
than five years
|
28
|
—
|
|
1
|
|
38
|
|
—
|
|
—
|
|
107
|
|
|
|
25
|
|
7
|
|
414
|
|
6
|
|
2
|
|
465
|
|
|
61
|
|
(in
millions of Canadian dollars)
|
JOINT
VENTURES
|
|
ASSOCIATES
|
|
2015
|
|
|
||
Sales
to related parties
|
68
|
|
77
|
|
Purchases
from related parties
|
27
|
|
169
|
|
2014
|
|
|
||
Sales
to related parties
|
67
|
|
69
|
|
Purchases
from related parties
|
28
|
|
153
|
|
|
62
|
|
SALES
BREAKDOWN
1
|
OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION BREAKDOWN
2
|
|
1
|
|
•
|
OIBD
excludes certain income tax payments that may represent a reduction in
cash available to us.
|
•
|
OIBD
does not reflect our cash expenditures, or future requirements for capital
expenditures or contractual commitments.
|
•
|
OIBD
does not reflect changes in, or cash requirements for, our working capital
needs.
|
•
|
OIBD
does not reflect the interest expense, or the cash requirements necessary
to service interest or principal payments on our
debt
|
•
|
Although
depreciation and amortization expenses are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the
future, and OIBD does not reflect any cash requirements for such
replacements.
|
•
|
The
specific items excluded from OIBD, operating income, financing expense,
net earnings (loss) and cash flow from operating activities from
continuing operations mainly include charges for (reversals of) impairment
of assets, restructuring gains or costs, accelerated depreciation of
assets due to restructuring measures, loss on refinancing of long-term
debt, deferred tax assets reversals, premiums paid on long-term debt
refinancing, gains or losses on the acquisition or sale of a business
unit, gains or losses on the share of results of associates and joint
ventures, unrealized gains or losses on derivative financial instruments
that do not qualify for hedge accounting, unrealized gains or losses on
interest rate swaps, foreign exchange gains or losses on long-term debt,
specific items of discontinued operations and other significant items of
an unusual or non-recurring nature. Although we consider these items to be
non-recurring and less relevant to evaluating our performance, some of
them might take place in the future and will reduce the cash available to
us.
|
|
2
|
|
SALES
+
|
|
COSTS
-
|
-
Selling prices
|
|
-
Freight
|
-
Demand for packaging products and tissue papers
|
|
-
Energy prices, mainly electricity and natural gas
|
-
Trend towards sustainable products, mainly made of recycled
fibres
|
|
-
Fibre prices and availability (recycled papers, virgin pulp and woodchips)
and production recipes
|
-
Foreign exchange rates
|
|
-
Foreign exchange rates
|
-
Population growth
|
|
-
Labour
|
-
Industrial production
|
|
-
Chemical product prices
|
-
Product mix, substitution and innovation
|
|
-
Capacity utilization rates and production downtime
|
|
|
|
EXCHANGE
RATES
|
|
ENERGY
COSTS
|
Cascades’
results are impacted by fluctuations of the Canadian dollar against the
U.S. dollar and euro. Please refer to the "Sensitivity Table" section for
more details on these impacts.
For
the year 2015, the average value of the Canadian dollar lost 14% against
the U.S. dollar compared to 2014. Each $0.01 change in the U.S. dollar
against its Canadian counterpart has an impact of approximately $3 million
on our annual OIBD.
Against
the euro, the Canadian currency appreciated by 3% in 2015 compared to
2014. Each €0.02 change of the euro against the Canadian dollar has an
impact of approximately $1 million on our annual OIBD.
|
|
The
variation of energy costs directly impacts our results as illustrated in
the "Sensitivity Table" section. It can also indirectly impact our results
through its influence on other costs, such as chemical product prices,
freight and other costs that are sensitive to energy prices.
With
regard to energy costs, the average price of natural gas decreased by 40%
in 2015 compared to the previous year.
In
the case of crude oil, the average price was 49% lower in 2015 than in
2014. This decrease was caused by the oversupply on the global
market.
|
|
3
|
|
|
SHIPMENTS/CONSUMPTION
(’000 SHORT TONS, ’000 MMBTU FOR NATURAL GAS)
|
|
INCREASE
|
OIBD
IMPACT (IN MILLIONS OF CAN$)
|
|
SELLING
PRICE (MANUFACTURING AND CONVERTING)
2
|
|
|
|
||
North
America
|
|
|
|
||
Containerboard
|
1,120
|
|
US$25/s.t.
|
36
|
|
Specialty
Products (Industrial Packaging only)
|
170
|
|
US$25/s.t.
|
6
|
|
Tissue
Papers
|
600
|
|
US$25/s.t.
|
19
|
|
|
1,890
|
|
|
61
|
|
Europe
|
|
|
|
||
Boxboard
|
1,110
|
|
€25/s.t.
|
39
|
|
|
3,000
|
|
|
100
|
|
RAW
MATERIALS
2
|
|
|
|
||
Recycled
Papers
|
|
|
|
||
North
America
|
|
|
|
||
Brown
grades (OCC and others)
|
1,010
|
|
US$15/s.t.
|
(20
|
)
|
Groundwood
grades (ONP and others)
|
60
|
|
US$15/s.t.
|
(1
|
)
|
White
grades (SOP and others)
|
540
|
|
US$15/s.t.
|
(10
|
)
|
|
1,610
|
|
|
(31
|
)
|
Europe
|
|
|
|
||
Brown
grades (OCC and others)
|
770
|
|
€15/s.t.
|
(16
|
)
|
Groundwood
grades (ONP and others)
|
170
|
|
€15/s.t.
|
(4
|
)
|
White
grades (SOP and others)
|
90
|
|
€15/s.t.
|
(2
|
)
|
|
1,030
|
|
|
(22
|
)
|
|
2,640
|
|
|
(53
|
)
|
Virgin
pulp
|
|
|
|
||
North
America
|
140
|
|
US$30/s.t.
|
(6
|
)
|
Europe
|
90
|
|
€30/s.t.
|
(4
|
)
|
|
230
|
|
|
(10
|
)
|
Natural
gas
|
|
|
|
||
North
America
|
8,500
|
|
US1.00/mmBtu
|
(12
|
)
|
Europe
|
4,500
|
|
€1.00/mmBtu
|
(6
|
)
|
|
13,000
|
|
|
(18
|
)
|
Exchange
rate
3
|
|
|
|
||
Sales
less purchases in US$ from Canadian operations
|
|
CAN$/US$
|
|
||
|
|
0.01
change
|
2
|
|
|
U.S.
subsidiaries translation
|
|
CAN$/US$
|
|
||
|
|
0.01
change
|
1
|
|
|
European
subsidiaries translation
|
|
CAN$/€
|
|
||
|
|
0.02
change
|
1
|
|
|
|
|
|
|
|
4
|
|
|
|
2013
|
|
2014
|
|
2015
|
|
||||||||||||||||
|
|
TOTAL
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
TOTAL
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
TOTAL
|
|
OPERATIONAL
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
shipments (in ’000 s.t.)
1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Packaging
Products
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Containerboard
|
1,063
|
|
254
|
|
286
|
|
287
|
|
277
|
|
1,104
|
|
268
|
|
282
|
|
296
|
|
268
|
|
1,114
|
|
|
Boxboard
Europe
|
1,085
|
|
290
|
|
283
|
|
257
|
|
263
|
|
1,093
|
|
296
|
|
286
|
|
266
|
|
263
|
|
1,111
|
|
|
Specialty
Products
2
|
168
|
|
41
|
|
41
|
|
41
|
|
37
|
|
160
|
|
41
|
|
44
|
|
45
|
|
40
|
|
170
|
|
|
|
|
2,316
|
|
585
|
|
610
|
|
585
|
|
577
|
|
2,357
|
|
605
|
|
612
|
|
607
|
|
571
|
|
2,395
|
|
Tissue
Papers
|
583
|
|
130
|
|
140
|
|
153
|
|
144
|
|
567
|
|
137
|
|
152
|
|
163
|
|
145
|
|
597
|
|
|
Total
|
2,899
|
|
715
|
|
750
|
|
738
|
|
721
|
|
2,924
|
|
742
|
|
764
|
|
770
|
|
716
|
|
2,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration
rate
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Containerboard
|
55
|
%
|
55
|
%
|
50
|
%
|
54
|
%
|
49
|
%
|
52
|
%
|
52
|
%
|
50
|
%
|
51
|
%
|
54
|
%
|
51
|
%
|
|
Tissue
Papers
|
70
|
%
|
71
|
%
|
70
|
%
|
69
|
%
|
69
|
%
|
70
|
%
|
68
|
%
|
64
|
%
|
65
|
%
|
70
|
%
|
67
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
capacity utilization rate
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Packaging
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Containerboard
|
89
|
%
|
85
|
%
|
93
|
%
|
94
|
%
|
90
|
%
|
91
|
%
|
91
|
%
|
91
|
%
|
95
|
%
|
90
|
%
|
92
|
%
|
|
Boxboard
Europe
|
95
|
%
|
101
|
%
|
98
|
%
|
89
|
%
|
91
|
%
|
95
|
%
|
101
|
%
|
97
|
%
|
91
|
%
|
89
|
%
|
94
|
%
|
|
Tissue
Papers
|
97
|
%
|
90
|
%
|
95
|
%
|
100
|
%
|
89
|
%
|
93
|
%
|
84
|
%
|
90
|
%
|
95
|
%
|
89
|
%
|
90
|
%
|
|
Consolidated
total
|
93
|
%
|
93
|
%
|
96
|
%
|
93
|
%
|
90
|
%
|
93
|
%
|
93
|
%
|
93
|
%
|
93
|
%
|
89
|
%
|
92
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
cons.
5
-
GJ/ton
|
11.22
|
|
11.92
|
|
11.07
|
|
10.36
|
|
10.69
|
|
11.03
|
|
11.19
|
|
10.29
|
|
10.14
|
|
10.18
|
|
10.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Work
accidents
6
-
OSHA frequency rate
|
3.2
|
|
3.3
|
|
3.5
|
|
3.5
|
|
2.9
|
|
3.3
|
|
3.0
|
|
1.9
|
|
3.1
|
|
2.6
|
|
2.6
|
|
|
FINANCIAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on assets
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Packaging
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Containerboard
|
11
|
%
|
12
|
%
|
13
|
%
|
13
|
%
|
13
|
%
|
13
|
%
|
15
|
%
|
16
|
%
|
18
|
%
|
19
|
%
|
19
|
%
|
|
Boxboard
Europe
|
7
|
%
|
9
|
%
|
10
|
%
|
11
|
%
|
10
|
%
|
10
|
%
|
10
|
%
|
10
|
%
|
10
|
%
|
10
|
%
|
10
|
%
|
|
Specialty
Products
|
12
|
%
|
12
|
%
|
12
|
%
|
14
|
%
|
13
|
%
|
13
|
%
|
14
|
%
|
14
|
%
|
15
|
%
|
17
|
%
|
17
|
%
|
|
Tissue
Papers
|
18
|
%
|
17
|
%
|
15
|
%
|
13
|
%
|
12
|
%
|
12
|
%
|
11
|
%
|
11
|
%
|
12
|
%
|
13
|
%
|
13
|
%
|
|
Consolidated
return on assets
|
9.3
|
%
|
9.5
|
%
|
9.7
|
%
|
9.9
|
%
|
9.4
|
%
|
9.4
|
%
|
9.7
|
%
|
10.0
|
%
|
10.8
|
%
|
11.2
|
%
|
11.2
|
%
|
|
Return
on capital employed
8
|
4.0
|
%
|
4.1
|
%
|
4.2
|
%
|
4.4
|
%
|
4.1
|
%
|
4.1
|
%
|
4.4
|
%
|
4.8
|
%
|
5.5
|
%
|
5.6
|
%
|
5.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
millions of $, at end of period
|
455
|
|
526
|
|
469
|
|
460
|
|
379
|
|
379
|
|
409
|
|
428
|
|
472
|
|
406
|
|
406
|
|
|
%
of sales
10
|
12.9
|
%
|
12.9
|
%
|
12.7
|
%
|
12.6
|
%
|
12.3
|
%
|
12.3
|
%
|
11.9
|
%
|
11.6
|
%
|
11.3
|
%
|
11.3
|
%
|
11.3
|
%
|
|
5
|
|
|
2013
|
|
2014
|
|
2015
|
|
|||||||||||||||||||||||||||
(in
millions of Canadian dollars, unless otherwise noted)
|
TOTAL
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
TOTAL
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
TOTAL
|
|
|||||||||||
Sales
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Packaging
Products
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Containerboard
|
1,095
|
|
271
|
|
305
|
|
310
|
|
295
|
|
1,181
|
|
300
|
|
322
|
|
353
|
|
326
|
|
1,301
|
|
|||||||||||
Boxboard
Europe
|
786
|
|
232
|
|
220
|
|
193
|
|
196
|
|
841
|
|
216
|
|
202
|
|
205
|
|
202
|
|
825
|
|
|||||||||||
Specialty
Products
|
548
|
|
140
|
|
146
|
|
145
|
|
137
|
|
568
|
|
135
|
|
146
|
|
151
|
|
147
|
|
579
|
|
|||||||||||
Inter-segment
sales
|
(50
|
)
|
(13
|
)
|
(13
|
)
|
(10
|
)
|
(13
|
)
|
(49
|
)
|
(12
|
)
|
(13
|
)
|
(15
|
)
|
(15
|
)
|
(55
|
)
|
|||||||||||
|
2,379
|
|
630
|
|
658
|
|
638
|
|
615
|
|
2,541
|
|
639
|
|
657
|
|
694
|
|
660
|
|
2,650
|
|
|||||||||||
Tissue
Papers
|
1,033
|
|
245
|
|
257
|
|
282
|
|
270
|
|
1,054
|
|
274
|
|
299
|
|
341
|
|
322
|
|
1,236
|
|
|||||||||||
Inter-segment
sales and Corporate activities
|
(42
|
)
|
(12
|
)
|
(5
|
)
|
(11
|
)
|
(6
|
)
|
(34
|
)
|
(3
|
)
|
(6
|
)
|
(9
|
)
|
(7
|
)
|
(25
|
)
|
|||||||||||
Total
|
3,370
|
|
863
|
|
910
|
|
909
|
|
879
|
|
3,561
|
|
910
|
|
950
|
|
1,026
|
|
975
|
|
3,861
|
|
|||||||||||
Operating
income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Packaging
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Containerboard
|
104
|
|
22
|
|
29
|
|
34
|
|
23
|
|
108
|
|
39
|
|
41
|
|
58
|
|
32
|
|
170
|
|
|||||||||||
Boxboard
Europe
|
11
|
|
15
|
|
11
|
|
4
|
|
(1
|
)
|
29
|
|
9
|
|
9
|
|
5
|
|
(51
|
)
|
(28
|
)
|
|||||||||||
Specialty
Products
|
16
|
|
4
|
|
(4
|
)
|
8
|
|
(2
|
)
|
6
|
|
5
|
|
9
|
|
6
|
|
11
|
|
31
|
|
|||||||||||
|
131
|
|
41
|
|
36
|
|
46
|
|
20
|
|
143
|
|
53
|
|
59
|
|
69
|
|
(8
|
)
|
173
|
|
|||||||||||
Tissue
Papers
|
106
|
|
9
|
|
11
|
|
20
|
|
8
|
|
48
|
|
2
|
|
10
|
|
30
|
|
22
|
|
64
|
|
|||||||||||
Corporate
activities
|
(61
|
)
|
(14
|
)
|
(10
|
)
|
(15
|
)
|
(15
|
)
|
(54
|
)
|
(27
|
)
|
(8
|
)
|
(22
|
)
|
(27
|
)
|
(84
|
)
|
|||||||||||
Total
|
176
|
|
36
|
|
37
|
|
51
|
|
13
|
|
137
|
|
28
|
|
61
|
|
77
|
|
(13
|
)
|
153
|
|
|||||||||||
OIBD
excluding specific items
1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Packaging
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Containerboard
|
150
|
|
31
|
|
43
|
|
46
|
|
44
|
|
164
|
|
52
|
|
55
|
|
68
|
|
56
|
|
231
|
|
|||||||||||
Boxboard
Europe
|
57
|
|
24
|
|
20
|
|
14
|
|
14
|
|
72
|
|
17
|
|
19
|
|
14
|
|
13
|
|
63
|
|
|||||||||||
Specialty
Products
|
41
|
|
8
|
|
10
|
|
12
|
|
10
|
|
40
|
|
10
|
|
14
|
|
18
|
|
16
|
|
58
|
|
|||||||||||
|
248
|
|
63
|
|
73
|
|
72
|
|
68
|
|
276
|
|
79
|
|
88
|
|
100
|
|
85
|
|
352
|
|
|||||||||||
Tissue
Papers
|
133
|
|
20
|
|
23
|
|
32
|
|
21
|
|
96
|
|
15
|
|
23
|
|
43
|
|
38
|
|
119
|
|
|||||||||||
Corporate
activities
|
(39
|
)
|
(8
|
)
|
(6
|
)
|
(11
|
)
|
(7
|
)
|
(32
|
)
|
(9
|
)
|
(8
|
)
|
(9
|
)
|
(19
|
)
|
(45
|
)
|
|||||||||||
Total
|
342
|
|
75
|
|
90
|
|
93
|
|
82
|
|
340
|
|
85
|
|
103
|
|
134
|
|
104
|
|
426
|
|
|||||||||||
Net
earnings (loss)
|
11
|
|
(1
|
)
|
(83
|
)
|
(16
|
)
|
(47
|
)
|
(147
|
)
|
(35
|
)
|
24
|
|
22
|
|
(76
|
)
|
(65
|
)
|
|||||||||||
Excluding
specific items
1
|
29
|
|
1
|
|
7
|
|
4
|
|
8
|
|
20
|
|
17
|
|
24
|
|
49
|
|
22
|
|
112
|
|
|||||||||||
Net
earnings (loss) per common share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Basic
|
$
|
0.11
|
|
$
|
(0.01
|
)
|
$
|
(0.88
|
)
|
$
|
(0.17
|
)
|
$
|
(0.51
|
)
|
$
|
(1.57
|
)
|
$
|
(0.37
|
)
|
$
|
0.25
|
|
$
|
0.24
|
|
$
|
(0.81
|
)
|
$
|
(0.69
|
)
|
Basic,
excluding specific items
1
|
$
|
0.31
|
|
$
|
0.01
|
|
$
|
0.08
|
|
$
|
0.04
|
|
$
|
0.08
|
|
$
|
0.21
|
|
$
|
0.18
|
|
$
|
0.25
|
|
$
|
0.52
|
|
$
|
0.23
|
|
$
|
1.18
|
|
Net
earnings (loss) from continuing operations per basic common share (in
dollars)
|
$
|
0.44
|
|
$
|
(0.02
|
)
|
$
|
(0.23
|
)
|
$
|
(0.20
|
)
|
$
|
(0.23
|
)
|
$
|
(0.68
|
)
|
$
|
(0.39
|
)
|
$
|
0.27
|
|
$
|
0.24
|
|
$
|
(0.82
|
)
|
$
|
(0.70
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash
flow from continuing operations
|
231
|
|
57
|
|
34
|
|
82
|
|
71
|
|
244
|
|
35
|
|
70
|
|
110
|
|
107
|
|
322
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net
debt
2
|
1,612
|
|
1,708
|
|
1,645
|
|
1,640
|
|
1,613
|
|
1,613
|
|
1,691
|
|
1,693
|
|
1,741
|
|
1,721
|
|
1,721
|
|
|||||||||||
US$/CAN$
- Average
|
$
|
0.97
|
|
$
|
0.91
|
|
$
|
0.92
|
|
$
|
0.92
|
|
$
|
0.88
|
|
$
|
0.91
|
|
$
|
0.81
|
|
$
|
0.81
|
|
$
|
0.76
|
|
$
|
0.75
|
|
$
|
0.78
|
|
EURO€/CAN$
- Average
|
$
|
0.73
|
|
$
|
0.66
|
|
$
|
0.67
|
|
$
|
0.69
|
|
$
|
0.70
|
|
$
|
0.68
|
|
$
|
0.72
|
|
$
|
0.74
|
|
$
|
0.69
|
|
$
|
0.68
|
|
$
|
0.70
|
|
Natural
Gas Henry Hub - US$/mmBtu
|
$
|
3.65
|
|
$
|
4.94
|
|
$
|
4.67
|
|
$
|
4.06
|
|
$
|
4.00
|
|
$
|
4.42
|
|
$
|
2.98
|
|
$
|
2.64
|
|
$
|
2.77
|
|
$
|
2.27
|
|
$
|
2.67
|
|
|
6
|
|
•
|
On
April 9, 2014, following a consultation process with the unions, the
Corporation announced the closure of its subsidiary Cascades Djupafors,
located in Ronneby, Sweden, which definitively ceased its operations on
June 15, 2014. Results and cash flows are classified as discontinued
operations for the current and comparative
periods.
|
•
|
On
July 9, 2014, we announced the permanent closure of our kraft paper
manufacturing activities located in East Angus, Québec. On September 26,
2014, we definitively ceased operations of the mill. Results and cash
flows are classified as discontinued operations for the current and
comparative periods.
|
•
|
On
June 30, 2014, we sold our fine papers activities to Les Entreprises
Rolland, a subsidiary of H.I.G. Capital. Results and cash flows are
classified as discontinued operations for the current and comparative
periods.
|
•
|
On
December 11, 2014, the Corporation announced that it had reached an
agreement for the sale of its North American boxboard manufacturing and
converting assets and the transaction was closed on February 4, 2015.
Results and cash flows are classified as discontinued operations for the
current and comparative periods.
|
•
|
On
November 27, 2013, the Corporation announced the creation of a new joint
venture with Maritime Paper Products Limited in the Atlantic provinces
related to our plants in St. John’s, Newfoundland, and Moncton, New
Brunswick. The transaction was closed on January 31,
2014.
|
|
7
|
|
|
2015
|
|||||
(in
millions of Canadian dollars)
|
Containerboard
|
Boxboard
Europe
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating
income (loss)
|
170
|
(28)
|
31
|
64
|
(84)
|
153
|
Depreciation
and amortization
|
63
|
34
|
21
|
55
|
17
|
190
|
Operating
income (loss) before depreciation and amortization
|
233
|
6
|
52
|
119
|
(67)
|
343
|
Specific
items:
|
|
|
|
|
|
|
Gain
on acquisitions, disposals and others
|
(1)
|
—
|
—
|
—
|
—
|
(1)
|
Impairment
charges
|
—
|
56
|
11
|
—
|
2
|
69
|
Restructuring
costs (gain)
|
—
|
1
|
(5)
|
—
|
1
|
(3)
|
Unrealized
loss (gain) on financial instruments
|
(1)
|
—
|
—
|
—
|
19
|
18
|
|
(2)
|
57
|
6
|
—
|
22
|
83
|
Operating
income (loss) before depreciation and amortization - excluding specific
items
|
231
|
63
|
58
|
119
|
(45)
|
426
|
Operating
income (loss) - excluding specific items
|
168
|
29
|
37
|
64
|
(62)
|
236
|
|
2014
|
|||||
(in
millions of Canadian dollars)
|
Containerboard
|
Boxboard
Europe
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating
income (loss)
|
108
|
29
|
6
|
48
|
(54)
|
137
|
Depreciation
and amortization
|
56
|
35
|
20
|
47
|
16
|
174
|
Operating
income (loss) before depreciation and amortization
|
164
|
64
|
26
|
95
|
(38)
|
311
|
Specific
items :
|
|
|
|
|
|
|
Impairment
charges
|
—
|
7
|
14
|
—
|
—
|
21
|
Restructuring
costs
|
—
|
1
|
—
|
1
|
—
|
2
|
Unrealized
loss on financial instruments
|
—
|
—
|
—
|
—
|
6
|
6
|
|
—
|
8
|
14
|
1
|
6
|
29
|
Operating
income (loss) before depreciation and amortization - excluding specific
items
|
164
|
72
|
40
|
96
|
(32)
|
340
|
Operating
income (loss) - excluding specific items
|
108
|
37
|
20
|
49
|
(48)
|
166
|
|
8
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Gain
on disposal of property, plant and equipment
|
(1
|
)
|
—
|
|
Class
action settlement
|
—
|
|
5
|
|
Gain
on a joint-venture contribution
|
—
|
|
(5
|
)
|
|
(1
|
)
|
—
|
|
|
2015
|
|
2014
|
|
||||
(in
millions of Canadian dollars)
|
Impairment
charges
|
|
Restructuring
costs (gain)
|
|
Impairment
charges
|
|
Restructuring
costs (gain)
|
|
Boxboard
Europe Group
|
56
|
|
1
|
|
7
|
|
1
|
|
Specialty
Products Group
|
11
|
|
(5
|
)
|
14
|
|
—
|
|
Tissue
Papers Group
|
—
|
|
—
|
|
—
|
|
1
|
|
Corporate
activities
|
2
|
|
1
|
|
—
|
|
—
|
|
|
69
|
|
(3
|
)
|
21
|
|
2
|
|
|
9
|
|
|
10
|
|
|
11
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Net
loss attributable to Shareholders for the year
|
(65
|
)
|
(147
|
)
|
Net
earnings attributable to non-controlling interest
|
9
|
|
4
|
|
Net
loss (earnings) from discontinued operations
|
(1
|
)
|
83
|
|
Provision
for income taxes
|
40
|
|
16
|
|
Share
of results of associates and joint ventures
|
(37
|
)
|
—
|
|
Foreign
exchange loss on long-term debt and financial instruments
|
91
|
|
30
|
|
Financing
expense, interest expense on employee future benefits and loss on
refinancing of long-term debt
|
116
|
|
151
|
|
Operating
income
|
153
|
|
137
|
|
Specific
items:
|
|
|
|
|
Gain
on acquisitions, disposals and others
|
(1
|
)
|
—
|
|
Impairment
charges
|
69
|
|
21
|
|
Restructuring
costs (gain)
|
(3
|
)
|
2
|
|
Unrealized
loss on financial instruments
|
18
|
|
6
|
|
|
83
|
|
29
|
|
Operating
income - excluding specific items
|
236
|
|
166
|
|
Depreciation
and amortization
|
190
|
|
174
|
|
Operating
income before depreciation and amortization - excluding specific
items
|
426
|
|
340
|
|
|
NET
EARNINGS (LOSS)
|
NET
EARNINGS (LOSS) PER COMMON SHARE
1
|
||||||||
(in
millions of Canadian dollars, except amount per common
share)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
||
As
per IFRS
|
(65
|
)
|
(147
|
)
|
$
|
(0.69
|
)
|
$
|
(1.57
|
)
|
Specific
items:
|
|
|
|
|
||||||
Gain
on acquisitions, disposals and others
|
(1
|
)
|
—
|
|
$
|
(0.01
|
)
|
—
|
|
|
Impairment
charges
|
69
|
|
21
|
|
$
|
0.67
|
|
$
|
0.13
|
|
Restructuring
costs (gain)
|
(3
|
)
|
2
|
|
$
|
(0.03
|
)
|
$
|
0.02
|
|
Unrealized
loss on financial instruments
|
18
|
|
6
|
|
$
|
0.14
|
|
$
|
0.05
|
|
Loss
on refinancing of long-term debt
|
19
|
|
44
|
|
$
|
0.15
|
|
$
|
0.35
|
|
Unrealized
loss on interest rate swaps
|
1
|
|
—
|
|
$
|
0.01
|
|
—
|
|
|
Foreign
exchange loss on long-term debt and financial instruments
|
91
|
|
30
|
|
$
|
0.83
|
|
$
|
0.28
|
|
Share
of results of associates and joint ventures
|
(9
|
)
|
2
|
|
$
|
(0.07
|
)
|
$
|
0.01
|
|
Included
in discontinued operations, net of tax
|
(2
|
)
|
87
|
|
$
|
(0.02
|
)
|
$
|
0.94
|
|
Tax
effect on specific items, other tax adjustments and attributable to
non-controlling interest
1
|
(6
|
)
|
(25
|
)
|
$
|
0.20
|
|
—
|
|
|
|
177
|
|
167
|
|
$
|
1.87
|
|
$
|
1.78
|
|
Excluding
specific items
|
112
|
|
20
|
|
$
|
1.18
|
|
$
|
0.21
|
|
|
12
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Cash
flow from operating activities from continuing operations
|
284
|
|
231
|
|
Changes
in non-cash working capital components
|
38
|
|
13
|
|
Depreciation
and amortization
|
(190
|
)
|
(174
|
)
|
Net
income taxes paid (received)
|
14
|
|
(14
|
)
|
Net
financing expense paid
|
89
|
|
73
|
|
Premium
paid on long-term debt refinancing
|
13
|
|
31
|
|
Gain
on acquisitions, disposals and others
|
1
|
|
—
|
|
Impairment
charges and restructuring costs
|
(64
|
)
|
(21
|
)
|
Unrealized
loss on financial instruments
|
(18
|
)
|
(6
|
)
|
Dividend
received, employee future benefits and others
|
(14
|
)
|
4
|
|
Operating
income
|
153
|
|
137
|
|
Depreciation
and amortization
|
190
|
|
174
|
|
Operating
income before depreciation and amortization
|
343
|
|
311
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Cash
flow from continuing operations
|
284
|
|
231
|
|
Changes
in non-cash working capital components
|
38
|
|
13
|
|
Cash
flow from continuing operations (adjusted)
|
322
|
|
244
|
|
Specific
items, net of current income taxes:
|
|
|
|
|
Restructuring
costs
|
2
|
|
2
|
|
Premium
paid on long-term debt refinancing
|
13
|
|
31
|
|
Excluding
specific items
|
337
|
|
277
|
|
(in
millions of Canadian dollars)
|
December
31, 2015
|
|
December
31, 2014
|
|
Long-term
debt
|
1,710
|
|
1,556
|
|
Current
portion of long-term debt
|
34
|
|
40
|
|
Bank
loans and advances
|
37
|
|
46
|
|
Total
debt
|
1,781
|
|
1,642
|
|
Less:
Cash and cash equivalents
|
60
|
|
29
|
|
Net
debt
|
1,721
|
|
1,613
|
|
OIBD
excluding specific items on a last twelve months basis
|
426
|
|
340
|
|
Net
debt / OIBD excluding specific items ratio
|
4.0
|
|
4.7
|
|
|
13
|
|
Sales
from (in %):
|
|
Sales
to (in %):
|
|
|
|
Production
units and sorting facilities (in %)
1
|
|
Property,
plant and equipment by geographic segment (in %)
|
|
|
|
|
14
|
|
Sales
($M)
|
|
Operating
income ($M)
|
|
|
|
|
15
|
|
U.S.
containerboard industry production and capacity utilization rate
1
|
|
U.S.
containerboard inventories at box plants and mills
2
|
In
2015, the U.S. containerboard production grew by 1% compared to 2014.
Despite new capacity additions coming to the market during the year, the
capacity utilization rate remained close to 96%.
|
|
In
2015, the average inventory level was 7% higher than in 2014 as major
producers chose to increase inventories to reduce logistics costs. Weeks
of supply averaged 4.3 for the year.
|
|
|
|
Canadian
corrugated box industry shipments
3
|
|
Reference
prices - recovered papers (brown grade)
1
|
Canadian
corrugated box shipments increased for a second consecutive year. The 2%
increase in 2015 compared to 2014 was mainly due to the depreciation of
the Canadian dollar, which boosted demand for Canadian corrugated boxes
from U.S. customers.
|
|
The
average reference price of old corrugated containers no.11 (usually
referred to as OCC) decreased by as much as 17% in 2015 due to a
five-month West Coast port congestion and increased domestic generation,
which resulted in oversupply in the domestic market.
|
|
|
|
Reference
prices - containerboard
1
|
|
|
The
linerboard reference price remained stable for a second consecutive year
in 2015. As for the corrugating medium reference price, it decreased by 3%
during 2015 due to new corrugating medium production capacity coming to
market in the Northeast.
|
|
|
|
|
|
1
Source: RISI
|
||
2
Source: Fibre Box Association
|
||
3
Source: Canadian Corrugated and Containerboard Association
|
|
16
|
|
Sales
($M)
|
|
Operating
income ($M)
|
|
|
|
|
17
|
|
|
18
|
|
Coated
recycled boxboard industry’s order inflow from Europe
(White-lined
chipboard (WLC) - 5-week weekly moving average)
|
|
Virgin
coated duplex boxboard industry’s order inflow from Europe
(Folding
boxboard (FBB) - 5-week weekly moving average)
|
|
|
|
Reference
prices - boxboard in Europe
4
|
|
Reference
prices - recovered papers in Europe
4
|
After
a decrease at the beginning of 2015, recycled WLC reference prices
improved throughout 2015 in major Western European countries to reach an
average price slightly below the level of 2014. Virgin coated duplex
reference prices dropped by
€
20
in January 2015 in some European countries, and then remained stable for
the remainder of the year. In 2015, the average price was 3% lower than in
2014.
|
|
In
2015, recovered paper prices were more volatile than in 2014. As a result,
our recovered paper reference index in Europe was about 6% higher than in
2014, with higher average prices for brown grades and lower average prices
for white and groundwood grades.
|
|
|
|
|
|
|
1
Source: CEPI Cartonboard
|
||
2
The Cascades recycled white-lined chipboard selling prices index
represents an approximation of Cascades’ recycled grade selling prices in
Europe. It is weighted by country. For each country, we use an average of
PPI Europe prices for white-lined chipboard.
|
||
3
The Cascades virgin coated duplex boxboard selling prices index represents
an approximation of Cascades’ virgin grade selling prices in Europe. It is
weighted by country. For each country, we use an average of PPI Europe
prices for coated duplex boxboard.
|
||
4
Source: RISI
|
||
5
The Recovered paper index represents an approximation of Cascades’
recovered paper purchase prices in Europe. It is weighted by country. For
each country, we use an average of PPI Europe prices for recovered papers.
This index should only be used as a trend indicator and may differ from
our actual purchasing costs and our purchase mix.
|
|
19
|
|
Sales
($M)
|
|
Operating
income (loss) ($M)
|
|
|
|
|
20
|
|
|
21
|
|
Reference
prices - market pulp
1
|
|
Reference
prices - uncoated recycled boxboard
1
|
In
2015, the reference price for NBSK decreased by 5% compared to 2014 due to
a strong U.S. dollar and high inventories. As for the NBHK reference
price, it increased by 2% in 2015 on tight supply. Finally, the reference
price for deinked pulp remained stable in 2015 compared to
2014.
|
|
In
2015, the reference price for uncoated recycled boxboard increased by 2%
compared to 2014. This increase was driven by changes in supply and better
demand in cartons, tubes and cores.
|
|
|
|
Total
U.S. exports of recycled papers to China - all grades
|
|
Major
grades exported by the U.S.
|
|
|
|
Total
Chinese imports of recycled papers - all grades
|
|
Major
grades imported by China
|
|
|
|
1
Source: RISI
|
|
22
|
|
Sales
($M)
|
|
Operating
income ($M)
|
|
|
|
|
23
|
|
|
24
|
|
U.S.
tissue paper industry production (parent rolls) and capacity utilization
rate
1
|
|
U.S.
tissue paper industry converted product shipments
1
|
Total
parent roll production increased by 2% in 2015 compared to 2014. The
average capacity utilization rate during the year remained close to the
level of 2014 and 2013 at 94%, as higher demand offset the new capacity in
the market.
|
|
In
2015, shipments for the retail and the away-from-home markets increased by
2% and 3%, respectively, compared to 2014.
|
|
|
|
Reference
prices - parent rolls
1
|
|
Reference
prices - recovered papers (white grade)
1
|
In
2015, the reference price for recycled parent rolls decreased by 5%
compared to 2014, mainly due to favourable recovered paper prices. The
reference price for virgin parent rolls declined by 1% during the year due
to lower virgin pulp prices for NBSK.
|
|
The
reference price of Sorted office papers no.37 (usually referred to as SOP)
decreased by 3% in 2015 compared to 2014 due to a strong U.S. dollar that
reduced exports and increased usage of virgin pulp by some tissue paper
mills.
|
|
|
|
U.S.
producer price index - yearly changes in converted tissue
prices
2
|
|
|
In
the U.S., prices for retail toilet tissue remained stable in 2015 compared
to 2014. Prices for industrial paper towels were slightly up while prices
for retail paper towels were down on average by about 3% during the year,
indicative of increased promotional activities.
|
|
|
|
|
|
1
Source: RISI
|
||
2
Source: U.S. Bureau of Labor Statistics
|
|
|
|
25
|
|
Sales
($M)
|
|
Operating
income ($M)
|
|
|
|
|
26
|
|
|
27
|
|
(in
millions of Canadian dollars)
|
2015
|
|
2014
|
|
Recovery
of income taxes based on the combined basic Canadian and provincial income
tax rate
|
(4
|
)
|
(12
|
)
|
Adjustment
of recovery of income taxes arising from the following:
|
|
|
||
Difference
in statutory income tax rate of foreign operations
|
(4
|
)
|
1
|
|
Reassessment
|
5
|
|
3
|
|
Reversal
of deferred tax assets on tax losses
|
18
|
|
—
|
|
Permanent
differences - others
|
7
|
|
22
|
|
Change
in temporary differences
|
18
|
|
2
|
|
|
44
|
|
28
|
|
Provision
for income taxes
|
40
|
|
16
|
|
|
28
|
|
|
29
|
|
|
•
|
$14
million investment for the expansion of the building and the installation
of a new corrugator at our Drummondville, Québec, plant which will improve
the quality of our products and the efficiency of the
plant.
|
•
|
$9
million for which grants were awarded, at our Cabano, Québec, mill, for
the installation of a new water pulp process, which will increase our
return on wood-chips and reduce chemical usage and atmospheric
emissions.
|
•
|
$
7
million for new converting equipment at our Vaughan, Ontario, plant that
will allow shorter set-up time, better productivity and improved product
quality.
|
•
|
$4
million at our containerboard mill in Niagara Falls, New York to replace
the recycled brown grades reception building following the fire incidents
that happened in 2014.
|
•
|
$
17
million for a new building and new converting lines, part of the Wagram
project started in 2014 in North Carolina, which will allow us to increase
our production capacity.
|
•
|
$
11
million to complete the installation of a second paper machine at our
Oregon mill.
|
•
|
$7
million for the new state-of-the-art converting line at the Candiac,
Québec, plant, for the manufacturing of high-quality paper
towels.
|
•
|
Greenpac
repaid $18 million on its bridge loan from the
Corporation.
|
•
|
$8
million invested for the modernization of our financial information system
to an ERP information technology system.
|
•
|
$2
million invested in our Greenpac associate following the reception of
investment tax credits as required by the partnership
agreement.
|
•
|
Greenpac
repaid $
2
million
on its bridge loan from the Corporation.
|
•
|
$
5
million invested for the modernization of our financial information system
to an ERP information technology system.
|
•
|
$1
million received from the reimbursement of notes receivable from a
business sold in 2011.
|
|
30
|
|
|
31
|
|
(in
millions of Canadian dollars, unless otherwise noted)
|
December
31, 2015
|
|
December
31, 2014
|
|
December
31, 2013
|
|
|||
Cash
and cash equivalents
|
60
|
|
29
|
|
23
|
|
|||
Working
capital
1
|
406
|
|
379
|
|
455
|
|
|||
%
of sales
2
|
11.3
|
%
|
12.3
|
%
|
12.9
|
%
|
|||
Bank
loans and advances
|
37
|
|
46
|
|
56
|
|
|||
Current
portion of long-term debt
|
34
|
|
40
|
|
39
|
|
|||
Long-term
debt
|
1,710
|
|
1,556
|
|
1,540
|
|
|||
Total
debt
|
1,781
|
|
1,642
|
|
1,635
|
|
|||
Net
debt (total debt less cash and cash equivalents)
|
1,721
|
|
1,613
|
|
1,612
|
|
|||
Equity
attributable to Shareholders
|
867
|
|
893
|
|
1,081
|
|
|||
Non-controlling
interest
|
96
|
|
110
|
|
113
|
|
|||
Total
equity
|
963
|
|
1,003
|
|
1,194
|
|
|||
Total
equity and net debt
|
2,684
|
|
2,616
|
|
2,806
|
|
|||
Ratio
of net debt/(total equity and net debt)
|
64.1
|
%
|
61.7
|
%
|
57.4
|
%
|
|||
Shareholders’
equity per common share (in dollars)
|
$
|
9.09
|
|
$
|
9.48
|
|
$
|
11.52
|
|
|
340
|
OIBD
excluding specific items (last twelve months)
|
426
|
4.7
|
Net
debt/OIBD excluding specific items
|
4.0
|
|
32
|
|
•
|
a
$75 million impairment charge (including $18 million of deferred income
tax assets reversal) mainly on the assets of our virgin boxboard mill in
France;
|
•
|
a
$1 million gain related to restructuring measures charges
reversal;
|
•
|
a
$4 million unrealized loss on derivative financial
instruments;
|
•
|
a
$23 million foreign exchange loss on long-term debt and financial
instruments;
|
•
|
a
$3 million loss related to the share of results of associates,
joint-ventures.
|
|
33
|
|
|
For
the 3-month period ended December 31, 2015
|
|||||
(in
millions of Canadian dollars)
|
Containerboard
|
Boxboard
Europe
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating
income (loss)
|
32
|
(51)
|
11
|
22
|
(27)
|
(13)
|
Depreciation
and amortization
|
23
|
9
|
5
|
16
|
4
|
57
|
Operating
income (loss) before depreciation and amortization
|
55
|
(42)
|
16
|
38
|
(23)
|
44
|
Specific
items :
|
|
|
|
|
|
|
Impairment
charges
|
—
|
55
|
—
|
—
|
2
|
57
|
Restructuring
gain
|
—
|
—
|
—
|
—
|
(1)
|
(1)
|
Unrealized
loss on financial instruments
|
1
|
—
|
—
|
—
|
3
|
4
|
|
1
|
55
|
—
|
—
|
4
|
60
|
Operating
income (loss) before depreciation and amortization - excluding specific
items
|
56
|
13
|
16
|
38
|
(19)
|
104
|
Operating
income (loss) - excluding specific items
|
33
|
4
|
11
|
22
|
(23)
|
47
|
|
For
the 3-month period ended December 31, 2014
|
|||||
(in
millions of Canadian dollars)
|
Containerboard
|
Boxboard
Europe
|
Specialty
Products
|
Tissue
Papers
|
Corporate
Activities
|
Consolidated
|
Operating
income (loss)
|
23
|
(1)
|
(2)
|
8
|
(15)
|
13
|
Depreciation
and amortization
|
15
|
7
|
6
|
12
|
4
|
44
|
Operating
income (loss) before depreciation and amortization
|
38
|
6
|
4
|
20
|
(11)
|
57
|
Specific
items :
|
|
|
|
|
|
|
Loss
on acquisitions, disposals and others
|
5
|
—
|
—
|
—
|
—
|
5
|
Impairment
charges
|
—
|
7
|
6
|
—
|
—
|
13
|
Restructuring
costs
|
—
|
1
|
—
|
1
|
—
|
2
|
Unrealized
loss on financial instruments
|
1
|
—
|
—
|
—
|
4
|
5
|
|
6
|
8
|
6
|
1
|
4
|
25
|
Operating
income (loss) before depreciation and amortization - excluding specific
items
|
44
|
14
|
10
|
21
|
(7)
|
82
|
Operating
income (loss) - excluding specific items
|
29
|
7
|
4
|
9
|
(11)
|
38
|
Sales
($M)
|
|
Operating
income (loss) ($M)
|
|
|
|
|
34
|
|
Payment
due by period (in millions of Canadian dollars)
|
TOTAL
|
|
LESS
THAN A YEAR
|
|
BETWEEN
1-2 YEARS
|
|
BETWEEN
2-5 YEARS
|
|
OVER
5 YEARS
|
|
Long-term
debt and capital-leases, including capital and interest
|
2,298
|
|
122
|
|
119
|
|
547
|
|
1,510
|
|
Operating
leases
|
74
|
|
24
|
|
15
|
|
24
|
|
11
|
|
Pension
plans and other post-employment benefits
1
|
1,142
|
|
36
|
|
36
|
|
113
|
|
957
|
|
Total
contractual obligations
|
3,514
|
|
182
|
|
170
|
|
684
|
|
2,478
|
|
|
35
|
|
|
36
|
|
|
37
|
|
|
38
|
|
a)
|
The
markets for some of the Corporation’s products tend to be cyclical in
nature and prices for some of its products, as well as raw materials and
energy costs, may fluctuate significantly, which can adversely affect its
business, operating results, profitability and financial
position.
|
|
UNITED
STATES
|
|
CANADA
|
|
||
Electricity
consumption
|
40
|
%
|
60
|
%
|
||
Electricity
consumption in a regulated market
|
56
|
%
|
66
|
%
|
||
%
of consumption hedged in a de-regulated market (2016)
|
28
|
%
|
—
|
%
|
||
Average
prices (2016 - 2017) (in US$, per KWh)
|
$
|
0.04
|
|
$
|
—
|
|
Fair
value as at December 31, 2015 (in millions of CAN$)
|
$
|
(1
|
)
|
$
|
—
|
|
|
39
|
|
|
UNITED
STATES
|
|
CANADA
|
|
||
Natural
gas consumption
|
44
|
%
|
56
|
%
|
||
%
of consumption hedged (2016)
|
36
|
%
|
61
|
%
|
||
Average
prices (2016 - 2020) (in US$, per mmBTU) (in CAN$, per GJ)
|
$
|
3.96
|
|
$
|
3.91
|
|
Fair
value as at December 31, 2015 (in millions of CAN$)
|
$
|
(6.9
|
)
|
$
|
(9.6
|
)
|
b)
|
Cascades
faces significant competition and some of its competitors may have greater
cost advantages or be able to achieve greater economies of scale, or be
able to better withstand periods of declining prices and adverse operating
conditions, which could negatively affect the Corporation’s market share
and profitability.
|
•
|
its
ability to maintain high plant efficiencies, operating rates and lower
manufacturing costs
|
•
|
the
availability, quality and cost of raw materials, particularly recycled and
virgin fibre, and labour, and
|
•
|
the
cost of energy.
|
c)
|
Because
of the Corporation’s international operations, it faces political, social
and exchange rate risks that can negatively affect its business, operating
results, profitability and financial
condition.
|
•
|
the
effective marketing of its products in other
countries
|
•
|
tariffs
and other trade barriers, and
|
•
|
different
regulatory schemes and political environments applicable to the
Corporation’s operations, in areas such as environmental
and health and safety
compliance.
|
|
40
|
|
Sell
contracts and currency options on net exposure to $US:
|
2016
|
|
2017
|
|
2018
|
|
|||
Total
amount (in millions of US$)
|
$
45 to 90
|
$
35 to 60
|
|
$
5 to 20
|
|
||||
Estimated
% of sales, net of expenses from Canadian operations (excluding
subsidiaries with non-controlling interest)
|
27%
to 54%
|
|
21%
to 36%
|
|
3%
to 12%
|
|
|||
Average
rate (US$/CAN$)
|
0.875
to 0.855
|
|
0.789
to 0.779
|
|
0.730
to 0.704
|
|
|||
Fair
value as at December 31, 2015 (in millions of CAN$)
|
$
|
(19
|
)
|
$
|
(6
|
)
|
$
|
(1
|
)
|
1
|
See
Note 26 of the audited consolidated financial statements for more details
on derivatives.
|
•
|
air
emissions
|
•
|
water
discharges
|
•
|
use
and handling of hazardous materials
|
•
|
use,
handling and disposal of waste, and
|
•
|
remediation
of environmental contamination.
|
|
41
|
|
•
|
require
site remediation or other costs to maintain compliance or correct
violations of environmental laws and regulations,
or
|
•
|
result
in governmental or private claims for damage to person, property or the
environment.
|
|
42
|
|
•
|
three
50%-owned joint ventures with Sonoco Products Corporation, of which two
are in Canada and one in the United States, that produce specialty paper
packaging products such as headers, rolls and
wrappers
|
•
|
a
20.29% interest in Boralex Inc., a Canadian public corporation and a major
electricity producer whose core business is the development and operation
of power stations that generate renewable energy, with operations in
Canada, the North-eastern United States and France.
|
•
|
a
57.61%-owned subsidiary, RdM, a European manufacturer of recycled
boxboard, and
|
•
|
a
59.7% interest in Greenpac Mill LLC, an American corporation that
manufactures a light-weight linerboard made with 100% recycled fibres.
|
•
|
difficulty
in integrating and managing newly acquired operations, and in improving
their operating efficiency
|
•
|
difficulty
in maintaining uniform standards, controls, procedures and policies across
all of the Corporation’s businesses
|
•
|
entry
into markets in which Cascades has little or no direct prior
experience
|
•
|
the
Corporation’s ability to retain key employees of the acquired
corporation
|
•
|
disruptions
to the Corporation’s ongoing business,
and
|
•
|
diversion
of management time and resources.
|
|
43
|
|
i)
|
The
Corporation undertakes impairment tests, which could result in a
write-down of the value of assets and, as a result, have a material
adverse effect.
|
•
|
elect
all of the Corporation’s directors and, as a result, control matters
requiring Board approval
|
•
|
control
matters submitted to a Shareholder vote, including mergers, acquisitions
and consolidations with third parties, and the sale of all or
substantially all of the Corporation’s assets,
and
|
•
|
otherwise
control or influence the Corporation’s business direction and
policies.
|
l)
|
Risks
relating to the Corporation’s indebtedness and
liquidity.
|
|
44
|
|
Credit
rating (outlook)
|
MOODY’S
|
STANDARD
& POOR’S
|
2004
|
Ba1/Ba2/Ba3
(stable)
|
BBB-/BB+/BB+
(negative)
|
2005
- 2006
|
Ba1/Ba2/Ba3
(stable)
|
BB+/BB/BB-
(negative)
|
2007
|
Baa3/Ba2/Ba3
(stable)
|
BBB-/BB/BB-
(stable)
|
2008
|
Baa3/Ba2/Ba3
(negative)
|
BB+/BB-/B+
(negative)
|
2009
- 2010
|
Baa3/Ba2/Ba3
(stable)
|
BB+/BB-/B+
(stable)
|
2011
|
Baa3/Ba2/Ba3
(stable)
|
BB+/BB-/B+
(positive)
|
2012
|
Baa3/Ba2/Ba3
(stable)
|
BB+/BB-/B+
(negative)
|
2013
|
Baa3/Ba2/Ba3
(stable)
|
BB/B+/B
(stable)
|
2014
|
Baa3/Ba2/Ba3
(stable)
|
BB/B+/B+
(stable)
|
2015
|
Baa3/Ba2/Ba3
(stable)
|
BB/B+/B+
(stable)
|
•
|
make
it more difficult for the Corporation to satisfy its obligations with
respect to its indebtedness
|
•
|
increase
the Corporation’s vulnerability to competitive pressures and to general
adverse economic or market conditions, and require it to dedicate a
substantial portion of its cash flow from operations to servicing debt,
reducing the availability of its cash flow to fund working capital,
capital expenditures, acquisitions and other general corporate
purposes
|
•
|
limit
its flexibility in planning for, or reacting to, changes in its business
and industry, and
|
•
|
limit
its ability to obtain additional sources of
financing.
|
•
|
borrow
money
|
•
|
pay
dividends on stock or redeem stock or subordinated
debt
|
•
|
make
investments
|
•
|
sell
assets, including capital stock in
subsidiaries
|
•
|
guarantee
other indebtedness
|
•
|
enter
into agreements that restrict dividends or other distributions from
restricted subsidiaries
|
•
|
enter
into transactions with affiliates
|
•
|
create
or assume liens
|
•
|
enter
into sale and leaseback transactions
|
•
|
engage
in mergers or consolidations, and
|
•
|
enter
into a sale of all or substantially all of our
assets.
|
|
45
|
|
|
46
|
|
o)
|
Cash-flow
and fair-value interest rate risks.
|
|
47
|
|
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Annual Report on Form 40-F for the year ended December 31, 2015 of Cascades Inc. of our report dated March 10, 2016, relating to the consolidated financial statements, which appears in the Exhibit incorporated by reference in this Annual Report.
/s/ PricewaterhouseCoopers LLP 1
Montréal, Canada
March 30, 2016
1 FCPA auditor, FCA, public accountancy permit No. A108517
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER IN ACCORDANCE
WITH SECTION 302 OF THE SARBANES – OXLEY ACT OF 2002
I, Mario Plourde, certify that:
1. | I have reviewed this annual report on Form 40-F of Cascades Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 30, 2016
/s/ Mario Plourde |
Mario Plourde |
Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER IN ACCORDANCE
WITH SECTION 302 OF THE SARBANES – OXLEY ACT OF 2002
I, Allan Hogg, certify that:
1. | I have reviewed this annual report on Form 40-F of Cascades Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: March 30, 2016
/s/ Allan Hogg |
Allan Hogg |
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND
OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES OXLEY ACT OF 2002
In accordance with Section 906 of the Sarbanes Oxley Act of 2002, each of the undersigned officers of Cascades Inc. (the “Corporation”), does hereby certify, to such officer’s knowledge, that:
1) | the Annual Report on Form 40-F (the “Report”) for the year ended December 31, 2015 of the Corporation as filed with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
Dated March 30, 2016
/s/ Mario Plourde |
Name: Mario Plourde |
Title: President and Chief Executive Officer |
/s/ Allan Hogg |
Name: Allan Hogg |
Title: Vice - President and Chief Financial Officer |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.