UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM T-3
FOR APPLICATION FOR QUALIFICATION OF INDENTURES UNDER THE TRUST
INDENTURE ACT OF 1939
Premium Standard Farms, Inc.
(Name of applicant)
Highway 65 North
Princeton, Missouri 64673
(Address of principal executive offices)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
TITLE OF CLASS AMOUNT
- -------------------------------------------- ----------------------------------
11% Senior Secured Notes Due 2003 $117,500,000
Approximate date of proposed public offering: Securities are to be issued
pursuant to Section 1145 of the United States Bankruptcy Code, 11 U.S.C. Section
101 et. seq., on the Effective Date, as defined in the Plan of Reorganization of
PSF Finance, L.P., et al. It is anticipated that the Effective Date will occur
on or about September 17, 1996.
Name and address of agent for service: William Patterson
Premium Standard Farms, Inc.
Highway 65 North
Princeton, Missouri 64673
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CONTENTS OF APPLICATION FOR QUALIFICATION.
(C) The following exhibits in addition to those filed as a part of the
statement of eligibility and qualification of the trustee.
EXHIBIT DESCRIPTION
Exhibit T3A Certificate of Incorporation of Premium Standard Farms, Inc. (a
Delaware Corporation)*
Exhibit T3B By-laws of Premium Standard Farms, Inc.*
Exhibit T3C(i) Form of Indenture dated as of September __, 1996 among
Premium Standard Farms, Inc., as Issuer, PSF Holdings L.L.C., as
Guarantor, and Fleet National Bank, as Trustee.
Exhibit T3C(ii) Form of Security and Collateral Agent Agreement dated as
of September __, 1996 among Premium Standard Farm, Inc., as
Issuer, PSF Holdings L.L.C., as Guarantor, and Fleet National
Bank, Trustee, as Collateral Agent.
Exhibit T3D Not applicable.
Exhibit T3E1 Debtor's Amended Joint Disclosure Statement Pursuant to Section
1125 of the Bankruptcy Code Relating to Debtor's Amended Joint
Plan of Reorganization, dated July 29, 1996.*
Exhibit T3E2 Order (i) Approving the Debtor's Disclosure Statement, Form
of Ballots and Proposed Solicitation Procedures, (ii) Setting
the Date, Time and Place for Voting on the Debtors' Joint Plan
of Reorganization, (iii) Setting the Date, Time and Place for a
Hearing to Consider Confirmation of the Debtor's Plan and (iv)
Prescribing the Form and Manner of Notice Thereof (United States
Bankruptcy Court for the District of Delaware, August 1, 1996).*
Exhibit T3F Cross-reference sheet.*
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* Previously Filed
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SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
applicant, Premium Standard Farms, Inc., a corporation organized and existing
under the laws of the State of Delaware, has duly caused this application to be
signed on its behalf by the undersigned, thereunto duly authorized, and its seal
to be hereunto affixed and attested, all in the city of Princeton, and State of
Misourri, on the 13th day of September, 1996.
PREMIUM STANDARD FARMS, INC.,
a Delaware Corporation
[SEAL] By: /s/ Dennis Harms
---------------------------
Dennis Harms
President
Attest: /s/ Kristy L. Snapp By: /s/ Dennis Rippe
------------------------ ---------------------------
Kristy L. Snapp Dennis Rippe
Secretary
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
Exhibit T3A Certificate of Incorporation of Premium Standard Farms, Inc. (a
Delaware Corporation)*
Exhibit T3B By-laws of Premium Standard Farms, Inc.*
Exhibit T3C(i) Form of Indenture dated as of September __, 1996 among
Premium Standard Farms, Inc., as Issuer, PSF Holdings L.L.C., as
Guarantor, and Fleet National Bank, as Trustee.
Exhibit T3C(ii) Form of Security and Collateral Agent Agreement dated as
of September __, 1996 among Premium Standard Farm, Inc., as
Issuer, PSF Holdings L.L.C., as Guarantor, and Fleet National
Bank, Trustee, as Collateral Agent.
Exhibit T3D Not applicable.
Exhibit T3E1 Debtor's Amended Joint Disclosure Statement Pursuant to Section
1125 of the Bankruptcy Code Relating to Debtor's Amended Joint
Plan of Reorganization, dated July 29, 1996.*
Exhibit T3E2 Order (i) Approving the Debtor's Disclosure Statement, Form
of Ballots and Proposed Solicitation Procedures, (ii) Setting
the Date, Time and Place for Voting on the Debtors' Joint Plan
of Reorganization, (iii) Setting the Date, Time and Place for a
Hearing to Consider Confirmation of the Debtor's Plan and (iv)
Prescribing the Form and Manner of Notice Thereof (United States
Bankruptcy Court for the District of Delaware, August 1, 1996).*
Exhibit T3F Cross-reference sheet.*
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* Previously Filed
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PREMIUM STANDARD FARMS, INC.
Issuer
PSF HOLDINGS, L.L.C.
Guarantor
FLEET NATIONAL BANK
Trustee
-------------------------------
Indenture
Dated as of September __, 1996
-------------------------------
$117,500,000
11% SENIOR SECURED NOTES
DUE 2003
(Partial Pay-in-Kind)
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Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section
ss.310 (a) (1) ..................................... 6.9
(a) (2) ..................................... 6.9
(a) (3) ..................................... Not
Applicable
(a) (4) ..................................... Not
Applicable
(a) (5) ..................................... Not
Applicable
(b) ..................................... 6.8
(c) ..................................... Not
Applicable
ss.311 (a) ..................................... 6.13
(b) ..................................... 6.13
(c) ..................................... Not
Applicable
ss.312 (a) ..................................... 7.1
7.2 (a)
(b) ..................................... 7.2 (b)
(c) ..................................... 7.2 (c)
ss.313 (a) ..................................... 7.3 (a)
(b) ..................................... 7.3 (a)
(c) ..................................... 7.3 (a)
(d) ..................................... 7.3 (b)
ss.314 (a) ..................................... 7.4;
10.17; 10.22
(b) ..................................... 15.2
(c) (1) ..................................... 1.2
(c) (2) ..................................... 1.2
(c) (3) ..................................... Not
Applicable
(d) ..................................... 15.3
(e) ..................................... 1.2
(f) ..................................... 1.2
ss.315 (a) ..................................... 6.1, 6.3
(b) ..................................... 6.2
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Trust Indenture Indenture
Act Section
(c) ..................................... 6.1
(d) ..................................... 6.1; 6.3
(e) ..................................... 5.14
ss.316 (a) ..................................... 1.1
last sentence
(a)(1)(A) ..................................... 5.12
(a)(1)(B) ..................................... 5.13
(a)(2) ..................................... Not
Applicable
(b) ..................................... 5.8
(c) ..................................... 1.4 (c)
ss.317 (a)(1) ..................................... 5.3
(a)(2) ..................................... 5.4
(b) ..................................... 10.3
ss.318 (a) ..................................... 1.7
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Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
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ARTICLE I
Definitions and Other Provisions
of General Application..........................................................................................2
SECTION 1.1. Definitions...................................................................................2
SECTION 1.2. Compliance Certificates and Opinions.........................................................18
SECTION 1.3. Form of Documents Delivered to Trustee.......................................................19
SECTION 1.4. Acts of Holders; Record Dates................................................................20
SECTION 1.5. Notices, Etc., to Trustee and Company........................................................21
SECTION 1.6. Notice to Holders; Waiver....................................................................21
SECTION 1.7. Application of Trust Indenture Act...........................................................22
SECTION 1.8. Effect of Headings and Table of Contents.....................................................22
SECTION 1.9. Successors and Assigns.......................................................................22
SECTION 1.10. Separability Clause..........................................................................22
SECTION 1.11. Benefits of Indenture........................................................................22
SECTION 1.12. Governing Law................................................................................22
SECTION 1.13. Legal Holidays...............................................................................23
ARTICLE II
Security Forms.................................................................................................23
SECTION 2.1. Forms Generally..............................................................................23
SECTION 2.2. Forms of Face of Security....................................................................24
SECTION 2.3. Form of Reverse of Security..................................................................27
SECTION 2.4. Form of Trustee's Certificate of Authentication..............................................31
SECTION 2.5. Form of Guarantee............................................................................32
SECTION 2.6. Form of Legend...............................................................................32
ARTICLE III
The Securities.................................................................................................32
SECTION 3.1. Title and Terms..............................................................................32
SECTION 3.2. Denominations................................................................................33
SECTION 3.3. Execution, Authentication, Delivery and Dating...............................................33
SECTION 3.4. Temporary Securities.........................................................................34
SECTION 3.5. Registration, Registration of Transfer and Exchange..........................................35
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.............................................36
SECTION 3.7. Payment of Interest; Interest Rights Preserved...............................................37
SECTION 3.8. Persons Deemed Owners........................................................................39
SECTION 3.9. Cancellation.................................................................................39
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SECTION 3.10. Computation of Interest......................................................................39
ARTICLE IV
Satisfaction and Discharge.....................................................................................39
SECTION 4.1. Satisfaction and Discharge of Indenture......................................................39
SECTION 4.2. Application of Trust Money...................................................................40
ARTICLE V
Remedies.......................................................................................................41
SECTION 5.1. Events of Default............................................................................41
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment...........................................43
SECTION 5.3. Collection of Debt and Suits for Enforcement by Trustee......................................44
SECTION 5.4. Trustee May File Proofs of Claim.............................................................45
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities..................................45
SECTION 5.6. Application of Money Collected...............................................................45
SECTION 5.7. Limitation on Suits..........................................................................46
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest.....................................................................................47
SECTION 5.9. Restoration of Rights and Remedies...........................................................47
SECTION 5.10. Rights and Remedies Cumulative...............................................................47
SECTION 5.11. Delay or Omission Not Waiver.................................................................47
SECTION 5.12. Control by Holders...........................................................................48
SECTION 5.13. Waiver of Past Defaults......................................................................48
SECTION 5.14. Undertaking for Costs........................................................................48
SECTION 5.15. Waiver of Stay or Extension Laws.............................................................49
ARTICLE VI
The Trustee....................................................................................................49
SECTION 6.1. Certain Duties and Responsibilities..........................................................49
SECTION 6.2. Notice of Defaults...........................................................................50
SECTION 6.3. Certain Rights of Trustee....................................................................50
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.......................................51
SECTION 6.5. May Hold Securities..........................................................................51
SECTION 6.6. Money Held in Trust..........................................................................52
SECTION 6.7. Compensation and Reimbursement...............................................................52
SECTION 6.8. Disqualification; Conflicting Interests......................................................53
SECTION 6.9. Corporate Trustee Required; Eligibility......................................................53
SECTION 6.10. Resignation and Removal; Appointment of Successor............................................53
SECTION 6.11. Acceptance of Appointment by Successor.......................................................54
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business..................................55
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SECTION 6.13. Preferential Collection of Claims Against Company............................................55
ARTICLE VII
Holders' Lists and Reports by Trustee and Company..............................................................55
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders....................................55
SECTION 7.2. Preservation of Information; Communications to Holders.......................................56
SECTION 7.3. Reports by Trustee...........................................................................56
SECTION 7.4. Reports by Company...........................................................................56
ARTICLE VIII
Merger, Consolidation, Etc.....................................................................................57
SECTION 8.1. Company or the Guarantor May Merge, Consolidate, etc. Only on
Certain Terms................................................................................57
SECTION 8.2. Successor Substituted........................................................................59
ARTICLE IX
Supplemental Indentures........................................................................................59
SECTION 9.1. Supplemental Indentures Without Consent of Holders...........................................59
SECTION 9.2. Supplemental Indentures With Consent of Holders..............................................60
SECTION 9.3. Execution of Supplemental Indentures.........................................................61
SECTION 9.4. Effect of Supplemental Indentures............................................................61
SECTION 9.5. Conformity with Trust Indenture Act..........................................................61
SECTION 9.6. Reference in Securities to Supplemental Indentures...........................................61
SECTION 9.7. Revocation and Effect of Consents............................................................61
ARTICLE X
Covenants......................................................................................................62
SECTION 10.1. Payment of Principal, Premium and Interest...................................................62
SECTION 10.2. Maintenance of Office or Agency..............................................................62
SECTION 10.3. Money for Security Payments to be Held in Trust..............................................62
SECTION 10.4. Existence....................................................................................63
SECTION 10.5. Maintenance of Properties....................................................................64
SECTION 10.6. Payment of Taxes and Other Claims............................................................64
SECTION 10.7. Maintenance of Insurance.....................................................................64
SECTION 10.8. Limitation on Consolidated Debt..............................................................65
SECTION 10.9. Limitation on Restricted Payments............................................................66
SECTION 10.10. Limitations Concerning Disposal of Assets....................................................68
SECTION 10.11. Permitted Investments........................................................................70
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SECTION 10.12. Limitation on Issuance of Capital Stock of Subsidiaries.............................70
SECTION 10.13. Dividends and Distributions; Liens Affecting Subsidiaries...........................70
SECTION 10.14. Limitations on Liens................................................................71
SECTION 10.15. Limitation on Transactions with Affiliates..........................................72
SECTION 10.16. Limitation on Related Business......................................................73
SECTION 10.17. Provision of Financial Information..................................................73
SECTION 10.18. Change of Control...................................................................74
SECTION 10.19. Environmental and Safety Compliance.................................................75
SECTION 10.20. Statement by Officers as to Default.................................................75
SECTION 10.21. Waiver of Certain Covenants.........................................................76
SECTION 10.22. Further Assurances..................................................................76
SECTION 10.23. Compliance with Security Documents..................................................77
ARTICLE XI
Redemption of Securities.......................................................................................77
SECTION 11.1. Right of Optional Redemption.................................................................77
SECTION 11.2. Applicability of Article.....................................................................77
SECTION 11.3. Election to Redeem; Notice to Trustee........................................................77
SECTION 11.4. Selection by Trustee of Securities to be Redeemed............................................77
SECTION 11.5. Notice of Redemption.........................................................................78
SECTION 11.6. Deposit of Redemption Price..................................................................79
SECTION 11.7. Securities Payable on Redemption Date........................................................79
SECTION 11.8. Securities Redeemed in Part..................................................................79
ARTICLE XII
Defeasance and Covenant Defeasance.............................................................................80
SECTION 12.1. Company's Option to Effect Defeasance or Covenant Defeasances................................80
SECTION 12.2. Defeasance and Discharge.....................................................................80
SECTION 12.3. Covenant Defeasance..........................................................................80
SECTION 12.4. Conditions to Defeasance or Covenant Defeasance..............................................81
SECTION 12.5. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions........................................................83
SECTION 12.6. Reinstatement................................................................................83
ARTICLE XIII
Meeting of Holders of Securities ..............................................................................84
SECTION 13.1. Purposes for Which Meetings May Be Called....................................................84
SECTION 13.2. Call, Notice and Place of Meetings...........................................................84
SECTION 13.3. Persons Entitled to Vote at Meetings.........................................................84
SECTION 13.4. Quorum; Action...............................................................................84
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SECTION 13.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.....................................................................................85
SECTION 13.6. Counting Votes and Recording Action of Meetings..............................................86
ARTICLE XIV
Guarantee......................................................................................................87
SECTION 14.1. Guarantee....................................................................................87
SECTION 14.2. Execution and Delivery of Guarantee..........................................................89
SECTION 14.3. Successors and Assigns.......................................................................89
SECTION 14.4. No waiver, etc...............................................................................89
SECTION 14.5. Modification, etc............................................................................89
ARTICLE XV
Security Documents.............................................................................................90
SECTION 15.1. Security Documents...........................................................................90
SECTION 15.2. Recording, Opinion of Counsel, Etc...........................................................91
SECTION 15.3. Trust Indenture Act Requirements; Release of Collateral......................................92
SECTION 15.4. Release of Lien..............................................................................92
SECTION 15.5. Impairment of Security Interest..............................................................93
SECTION 15.6. Authorization of Receipt of Funds by the Trustee Under the Security
Documents....................................................................................93
ARTICLE XVI
Miscellaneous..................................................................................................93
SECTION 16.1. Usury Savings Clause.........................................................................93
EXHIBIT A - Form of Subsidiary Guaranty Agreement......................................................................A-1
EXHIBIT B - Form of Security and Collateral Agency Agreement...........................................................B-1
EXHIBIT C - Form of Pledge Agreement...................................................................................C-1
EXHIBIT D - Form of Indemnity, Subrogation and Contribution Agreement..................................................D-1
EXHIBIT E - Form of Texas Deed of Trust................................................................................E-1
EXHIBIT F - Form of Missouri Deed of Trust.............................................................................F-1
EXHIBIT G - Form of Intercreditor Agreement............................................................................G-1
EXHIBIT H - Form of Assignment of Contracts............................................................................H-1
EXHIBIT I - Form of Consent and Agreement..............................................................................I-1
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INDENTURE, dated as of September __, 1996 between Premium Standard
Farms, Inc., a Delaware corporation (herein called the "Company"), having its
principal office at Highway 65 North, Princeton, Missouri 64673, PSF Holdings,
L.L.C., a Delaware limited liability company (herein called the "Guarantor"),
having its principal office at Highway 65 North, Princeton, Missouri 64673, and
Fleet National Bank, a national banking association having its principal office
at One Monarch Place, Springfield, Massachusetts 01144, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an issue of up
to $117,500,000 aggregate original principal amount of its 11% Senior Secured
Notes due 2003 (the "Securities") of substantially the tenor hereinafter set
forth, and to provide therefor the Company has duly authorized the execution and
delivery of this Indenture.
WHEREAS, all things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company and the Guarantor in accordance with their and
its terms, have been done.
WHEREAS, pursuant to the Amended Joint Plan of Reorganization, dated
July 29, 1996 of PSF Finance L.P., a Delaware limited partnership, and certain
of its affiliates (the "Plan") confirmed on September __, 1996 by an order of
the bankruptcy court pursuant to Section 1129 of the United States Bankruptcy
Code, $117,500,000 aggregate original principal amount of the Securities are to
be issued to the holders of, and in exchange for the claims of, the 12% Senior
Secured Exchange Notes due 2000, 12% Senior Secured Exchange Discount Notes due
2003, 12 1/4% Senior Secured Exchange Notes due 2004, 12 1/4% Senior Secured
Notes due 1997 and 12 1/2% Exchangeable Preference Units of PSF Finance L.P. and
to an affiliate of PSF Finance L.P. in exchange for a specified amount of cash
and cancellation of certain capital contribution notes held by Collings Farm,
Inc., a Missouri corporation.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises, and the exchange of certain
claims and the purchase of the Securities by certain Holders pursuant to the
Plan, the Company and the Guarantor, jointly and severally, covenant and agree,
for the equal and proportionate benefit of all Holders of the Securities, with
the Trustee as follows:
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ARTICLE I
Definitions and Other Provisions
of General Application
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(4) unless otherwise specifically set forth herein, all
calculations or determinations of a person shall be performed or made
on a consolidated basis in accordance with generally accepted
accounting principles; and
(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision; and
(6) whenever the Trustee or Collateral Agent requires
information as to the rights and obligations of the parties to the Note
Agreement (including without limitation the identities of the
Purchasers and holders of Second Priority Notes and the amounts of
Second Priority Obligations for principal, interest and other claims
owed to them each) it may request the Company to provide such
information by an Officers' Certificate, upon which the Trustee and
Collateral Agent may conclusively rely and which the Company covenants
promptly to provide.
Certain terms, used principally in Article VI (The Trustee), are
defined in that Article.
"Act", when used with respect to any Holder, has the meaning specified
in Section 1.4 hereof.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct
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the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" shall mean, with respect to any Person, any sale,
lease, transfer, condemnation, loss in an insured event or other disposition
(including by way of merger, consolidation or sale and leaseback transaction,
but excluding any sales of assets or property that (i) are substantially
concurrently replaced with the proceeds of such sale and (ii) are no longer used
or useful in the business of such Person) in one transaction or a series of
related transactions by such Person or any of its subsidiaries to any Person
other than the Guarantor, the Company or any of its Wholly Owned Subsidiaries of
(a) any of the Capital Stock of any subsidiary of such Person, (b) all or
substantially all of the Real Property, Leaseholds or Personal Property of such
Person or any of its subsidiaries or (c) any other Real Property, Leaseholds or
Personal Property of such Person or any of its subsidiaries, except, in the case
of clause (c), for (i) sales of inventory, livestock, processed pork
inventories, breeding stock, grain, feedstock or Hedge Agreements in the
ordinary course of business and (ii) any sale, lease, transfer or other
disposition in one transaction or a series of related transactions of Real
Property, Leaseholds or Personal Property with a value not in excess of
$250,000.
"Assignment of Contracts" shall mean the Assignment of Contracts
between the Company and the Collateral Agent, substantially in the form of
Exhibit H.
"Average Life" means, as of the date of determination with respect to
any Debt, the quotient obtained by dividing (a) the sum of the products of (i)
the number of years from such date to the date or dates of each successive
scheduled principal payment of such Debt multiplied by (ii) the amount of each
such principal payment by (b) the sum of all such principal payments.
"Benefit Plan" shall mean any employee pension benefit plan (other than
a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
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"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of real or personal property of such
Person which is required to be classified and accounted for as a capital lease
or a liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles. The stated maturity of such obligation
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.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.
"Change of Control" has the meaning specified in Section 10.18.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all of the property and possessions, and the
proceeds thereof, pledged and mortgaged under the Security Documents and all the
"Trust Premises" as defined in each Mortgage.
"Collateral Agent" means the Trustee, in its capacity as Collateral
Agent under the Security Documents.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means Premium Standard Farms, Inc., a Delaware corporation,
until a successor Person shall have become such pursuant to the applicable
provisions of this Indenture and thereafter shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman or Vice-Chairman of the Board,
its President, a
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Vice President, its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Consent and Agreement" shall mean the Consent and Agreement of Pig
Improvement Company, Inc., substantially in the form of Exhibit I.
"Consolidated" means, when used in reference to any term, that term as
applied to the accounts of the Company, the Guarantor and all of their
Subsidiaries, or such of their Subsidiaries as may be specified, consolidated
(or combined) in accordance with generally accepted accounting principles and
with appropriate deductions for minority interests in such Subsidiaries.
"Consolidated EBITDA" means, with respect to any Person for any period,
(a) the sum of the amounts for such period of Consolidated Net Income, plus, to
the extent deducted in determining such Consolidated Net Income, (i)
Consolidated Interest Expense, (ii) federal, state and local income taxes, (iii)
depreciation expense, (iv) amortization expense and (v) any non-cash charges or
non-cash losses, minus (b) to the extent included in determining such
Consolidated Net Income, the sum of the amounts for such period of (i) interest
income, (ii) any non-cash gains and (iii) any extraordinary gains and gains
received by such Person from sales of assets (other than sales of inventory,
breeding stock, grain, feedstock or Hedge Agreements in the ordinary course of
business).
"Consolidated Interest Expense" for any Person means for any period the
Consolidated interest expense included in a Consolidated income statement
(without deduction of interest income) of such Person and its Subsidiaries for
such period included in the Consolidated financial statements in accordance with
generally accepted accounting principles.
"Consolidated Net Income" of any Person means for any period the
Consolidated net income (or loss) of such Person for such period determined on a
Consolidated basis in accordance with generally accepted accounting principles;
provided that there shall be excluded therefrom (a) the net income (or net loss)
of any Person acquired by such Person or a Subsidiary of such Person in a
pooling-of-interests transaction for any period prior to the date of such
transaction, (b) the net income (or net loss) of any Subsidiary of such Person
which is subject to restrictions which prevent the payment of dividends or the
making of distributions to such Person to the extent of such restrictions, (c)
the net income (or net loss) of any Person that is not a Subsidiary of such
Person except to the extent of the amount of dividends or other distributions
actually paid to such Person by such other Person during such period, (d) gains
or losses on Asset Dispositions by such Person, (e) all extraordinary gains and
extraordinary losses and (f) amortization of any discount arising out of the
sale of the Securities.
"Consolidated Net Worth" of any Person as of any date of determination
means the stockholders' equity of such Person and its Subsidiaries at such date
determined in accordance with generally accepted accounting principles on a
Consolidated basis.
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"Corporate Trust Office" means the principal office of the Trustee in
Boston, Massachusetts, New York, New York, or such other jurisdiction within the
United States as the Company may approve, at which at any particular time its
corporate trust business shall be administered.
"Corporation" means a corporation, association, company, joint-stock
company, partnership or business trust.
"Credit Agreement" means the Credit Agreement, dated as of September
__, 1996, among the Company, the lending banks identified therein and The Chase
Manhattan Bank, a New York banking corporation, as administrative agent for such
lending banks, providing initially for a revolving credit loan of up to
$60,000,000 (the "Credit Loan") and a term loan of $30,000,000 (the "Term
Loan"), secured by a first priority lien on substantially all of the assets of
the Company pursuant to the Security Document of even date therewith, as at any
time amended, extended or otherwise modified, restated or refinanced.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Subsidiary against fluctuations in currency values.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments
including obligations Incurred in connection with the acquisition of property,
assets or businesses (but excluding trade accounts payable or similar accrued
liabilities arising in the ordinary course of business), (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptance or similar facilities issued for the account of such Person,
(iv) every obligation of such Person upon which interest charges are customarily
paid, (v) every obligation of such Person issued or assumed as the deferred and
unpaid purchase price of property or services (but excluding trade accounts
payable or similar accrued liabilities arising in the ordinary course of
business), (vi) every Capital Lease Obligation of such Person, (vii) the maximum
fixed mandatory redemption or repurchase price of Redeemable Stock of such
Person at the time of determination, (viii) all Debt of others secured by a Lien
on any asset of such Person, whether or not such Debt is otherwise an obligation
of such Person, and (ix) every obligation of the type referred to in Clauses (i)
through (viii) of another Person and all dividends of another Person the payment
of which, in either case, such Person has guaranteed or is responsible or liable
for, directly or indirectly, as obligor, guarantor or otherwise, if and to the
extent any of the foregoing debt would appear as a liability upon a balance
sheet of such person prepared on a Consolidated basis in accordance with
generally accepted accounting principles.
"Defaulted Interest" has the meaning specified in Section 3.7.
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"Effective Date" means the date of the effectiveness of the Plan.
"Environmental and Safety Laws" mean any applicable treaties, laws,
rules, regulations, codes, ordinances, decrees, judgments, injunctions, or
binding agreements issued, promulgated or entered into by any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, release or threatened release of any
Hazardous Material or to employee health and safety matters, including the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Water Pollution Control Act,
the Clean Air Act, the Toxic Substances Control Act, the Occupational Safety and
Health Act, the Emergency Planning and Community Right-to-Know Act, the
Hazardous Materials Transportation Act and any similar or implementing state or
local law, and all amendments or regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"Event of Default" has the meaning specified in Section 5.1.
"Excess EBITDA" shall mean, for any period of four consecutive fiscal
quarters, the excess, if any, of (a) the Consolidated EBITDA of the Guarantor,
the Company and any Subsidiaries for such period over (b) the Consolidated
EBITDA required to have been achieved for such period pursuant to Section 6.12
of the Credit Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" has the meaning specified in the definition of Offer
to Purchase.
" Governmental Actions" means authorizations, approvals, consents,
waivers, exceptions, licenses, filings, registrations, rulings, permits,
certificates, exemptions and other similar actions or requirements by, with of
from any Governmental Authority.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" means the guarantee contained in Article XIV hereof given
by the Guarantor or any guarantee contained in a Subsidiary Guarantee Agreement,
each as amended, extended or otherwise modified from time to time.
"Guarantor" means PSF Holdings, L.L.C., a Delaware limited liability
company, and its successors and assigns.
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"Hazardous Materials" means all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any Environmental
and Safety Law.
"Hedge Agreement" of any Person means any contract for, or option, put,
Currency Agreement or similar arrangement relating to, the purchase by such
Person of (a) grain, soy meal and other feed ingredients or related hedging
activities conducted in accordance with prudent business practice and (b) hogs
and related hedging activities conducted in accordance with prudent business
practice, in each case that are created to protect such Person against price
fluctuations and not for speculative purposes.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Inactive Subsidiary" shall mean, at any time, any Subsidiary of the
Company that has no Debt at such time, less than $1,000 in assets at such time
and has not engaged in any business activities within the previous 6 months.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing); provided, however, that a
change in generally accepted accounting principles that results in an obligation
of such Person that exists at such time becoming Debt shall not be deemed an
Incurrence of such Debt.
"Indemnity Agreement" shall mean the Indemnity, Subrogation and
Contribution Agreement, dated of even date herewith, substantially in the form
of Exhibit C hereto, as amended, supplemented or otherwise modified from time to
time, among the Company and the Subsidiary Guarantors identified therein.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Intercreditor Agreement" shall mean the Intercreditor Agreement, of
even date herewith, substantially in the form of Exhibit G hereto, among the
Company, the Guarantor, the Collateral Agent and the Senior Collateral Agent.
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"Interest Coverage Ratio" means, with respect to the Company as of any
date, the ratio of (i) the aggregate amount of the Consolidated EBITDA of the
Guarantor, the Company and their Subsidiaries for the period since the Effective
Date but in no event more than four fiscal quarters for which financial
information in respect thereof is available immediately prior to such date to
(ii) the aggregate amount of the Consolidated Interest Expense of the Guarantor,
the Company and their Subsidiaries during such period since the Effective Date
but in no event more than four fiscal quarters.
"Interest Payment Date" has the meaning specified in Section 2.2.
"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution to (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), or purchase or acquisition of Capital
Stock, bonds, notes, debentures or other securities or evidence of Debt issued
by any other Person, other than (i) loans or advances made to employees in the
ordinary course of business not in excess of $100,000 outstanding at any time to
any employee and (ii) advances to customers in the ordinary course of business
that are recorded as accounts receivable on the balance sheet of any Person or
its Subsidiaries and any securities received in settlement thereof.
"Leaseholds" of any Person shall mean all the right, title and interest
of such person as lessee or licensee in, to and under leases or licenses of Real
Property or fixtures annexed or to be annexed thereto.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, 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 property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Majority Holders" means the holders of more than 50% of the sum of (i)
the aggregate outstanding principal amount of the Second Priority Notes and (ii)
the aggregate outstanding amount of the unused Purchase Commitments under the
Note Agreement and (iii) the aggregate outstanding principal amount of the
Securities at the time outstanding, as respectively determined from the records
of the Company and the Security Register, acting as a single class.
"Management Option Plan" means the 1996 Management Option Plan of the
Guarantor.
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"Material Adverse Effect" means (a) a materially adverse effect on the
business, assets, operations or condition, financial or otherwise, of the
Company and its Subsidiaries (taken as a whole) or (b) a material impairment of
the rights of the Holders hereunder.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Member" means a Person admitted as an owner of a membership interest
in a limited liability company.
"Mineral Rights" shall mean rights and interests held by third parties
in the oil, gas and other minerals estate (including mineral and royalty
interests).
"Mortgages" means the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, amendments and modifications thereto pursuant
to Section 2.02 of the Security Agreement or Section 10.22 hereof to effect the
security interests intended by the Security Agreement, substantially in the form
of Exhibits E and F hereto, as amended, supplemented or otherwise modified from
time to time.
"Morgan Stanley Note Agreement" means the commitment to purchase up to
$10,000,000 in aggregate principal amount of Senior Secured Second Priority
Notes due 2002 (the "Second Priority Notes") under the Note Purchase Agreement
dated as of September __, 1996, among the Company, the Guarantor and Morgan
Stanley Group Inc., as the same may from time to time be amended, extended or
otherwise modified, restated or refinanced.
"MSCP" shall mean Morgan Stanley Capital Partners III, L.P., a Delaware
limited liability partnership.
"MS Group" shall mean Morgan Stanley Group Inc., a Delaware
corporation.
"New Finishing Facility" shall mean a hog finishing facility acquired
or constructed by the Company after the Effective Date.
"New Finishing Facility Debt Service" shall mean, with respect to any
New Finishing Facility Debt, for any period the sum of the scheduled principal
and interest payments required to be made with respect to such New Finishing
Facility Debt during such period. For purposes of Section 10.8(vi), New
Finishing Facility Debt that bears interest at a floating rate for any period
shall be deemed to bear interest at a fixed rate for such period equal to the
interest rate thereon at the beginning of such period.
"New Finishing Facility Debt" shall mean Debt of the Company (including
Debt of others guaranteed by the Company) incurred after the Effective Date to
finance the
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construction or acquisition of New Finishing Facilities, so long as the
instruments governing such Debt do not contain (a) any financial covenants or
(b) any other covenants or defaults that are more onerous to the Company than
those contained in this Agreement (except for any such covenants that relate
solely to the New Finishing Facility financed thereby).
"Non-Surviving Combination" shall have the meaning specified in
Section 8.1.
"Note Agreement" means the Morgan Stanley Note Agreement.
"Obligations" shall have the meaning specified in Section 14.1.
"Offer" has the meaning specified in the definition of Offer to
Purchase.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at its address
appearing in the Security Register on the date of the Offer, offering to
purchase up to the principal amount of Securities specified in such Offer at the
purchase price specified in such Offer (as determined pursuant to this
Indenture). Unless otherwise required by applicable law, the Offer shall specify
an expiration date (the "Expiration Date") of the Offer to Purchase which shall
be, subject to any contrary requirements of applicable law, not less than 30
days or more than 65 days after the date of such Offer and a settlement date
(the "Purchase Date") for the purchase of Securities within five Business Days
after the Expiration Date. The Company shall notify the Trustee at least 15
Business Days (or such shorter period as is acceptable to the Trustee) prior to
the mailing of the Offer of the Company's obligation to make an Offer to
Purchase, and the Offer shall be mailed by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The Offer
shall contain information concerning the business of the Company and its
Subsidiaries which the Company in good faith believes will enable such Holders
to make an informed decision with respect to the Offer to Purchase (which at a
minimum will include (i) the most recent annual and quarterly financial
statements, (ii) a description of material developments in the Company's
business subsequent to the date of the latest of such financial statements
referred to in clause (i) (including a description of the events requiring the
Company to make the Offer to Purchase), (iii) if applicable, appropriate pro
forma financial information concerning the Offer to Purchase and the events
requiring the Company to make the Offer to Purchase, and (iv) any other
information required by applicable law to be included therein). The Offer shall
contain all instructions and materials necessary to enable such Holder to tender
Securities pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer
to Purchase is being made;
(2) the Expiration Date and the Purchase Date;
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(3) the aggregate principal amount of the Outstanding
Securities offered to be purchased by the Company pursuant to the Offer
to Purchase (including, if less than 100%, the manner by which such has
been determined pursuant to the Section hereof requiring the Offer to
Purchase) (the "Purchase Amount");
(4) the purchase price (expressed as a percentage of principal
amount) to be paid by the Company for each Security accepted for
payment (as specified pursuant to this Indenture) (the "Purchase
Price");
(5) that the Holder may tender all or any portion of the
Securities registered in the name of such Holder and that Securities
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Securities are to be surrendered
for tender pursuant to the Offer to Purchase;
(7) that interest on any Security not tendered or tendered but
not purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;
(8) that on the Purchase Date the Purchase Price will become
due and payable upon each Security accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on
and after the Purchase Date;
(9) that each Holder electing to tender a Security pursuant to
the Offer to Purchase will be required to surrender such Security at
the place or places specified in the Offer prior to the close of
business on the Expiration Date, such Security being, if the Company or
the Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing;
(10) that Holders will be entitled to withdraw all or any
portion of Securities tendered if the Company (or its Paying Agent)
receives, not later than the close of business two Business Days prior
to the Expiration Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Security the Holder tendered, the certificate number of the
Security the Holder tendered and a statement that such Holder is
withdrawing all or a portion of such tender;
(11) that if Securities in an aggregate principal amount less
than or equal to the Purchase Amount are duly tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall purchase
all such Securities; and
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(12) that in the case of any Holder whose Security is
purchased only in part, the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unpurchased portion of the
Security so tendered.
Any Offer to Purchase shall be governed by and effected in accordance with
applicable securities laws and regulations and the Offer for such Offer to
Purchase. An Offer to Purchase made pursuant to Section 10.10(b) hereof may
require Holders to furnish to the Trustee written notice of intention to have
securities purchased on or before the date 35 days preceding the Purchase Date
as provided in that Section.
"Officer" means the Chairman of the Board, the Chief Executive Officer,
the President, any Vice President, the Chief Financial Officer, the Treasurer,
or the Secretary or Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President or any Vice President and
by the Chief Financial Officer, the Treasurer, the Secretary or the Assistant
Secretary of the Company or the Guarantor and delivered to the Trustee and
containing the statements provided for in Section 1.2.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee, and
containing the statements provided for in Section 1.2.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust for the Holders of such
Securities; provided, that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made; except that if any such Security so called for redemption shall
not be paid upon surrender thereof in accordance with said notice, such
Security shall be deemed Outstanding until such time as it is paid; and
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(iii) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there
shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor of the Securities or an Affiliate of the
Company (other than a Permitted Holder) or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or an Affiliate of the Company (other than a
Permitted Holder) or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Permitted Holders" means any of Morgan Stanley Co. Incorporated,
Putnam Investment Management, GEM Capital Management Inc., The Prudential
Insurance Company of America, Loews Corporation and Hanwa Co., Limited, any of
the Affiliates of any of them and any funds or institutional accounts managed or
advised by any of them.
"Permitted Investments" shall include:
(i) certificates of deposit with final maturities of two years or
less issued by commercial banks organized under the laws of
either the United States of America having capital and surplus
in excess of $100,000,000;
(ii) commercial paper with minimum grade of A1 or P1;
(iii) a direct obligation of the United States of America or of a
United States of America agency with a maturity of two years
or less;
(iv) money market preferred stock rated "A" or above;
(v) shares of money market mutual or similar funds having assets
in excess of $100,000,000;
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(vi) Hedge Agreements entered into by the Company or any Subsidiary
to the extent any such agreement is otherwise permitted
hereunder;
(vii) bank accounts maintained in any commercial bank;
(viii) endorsements of instruments for collection in the ordinary
course of business;
(ix) Investments in Wholly-Owned Subsidiaries;
(x) Guarantees by the Company of New Finishing Facility Debt of
others; and
(xi) any Investment made solely with the Proceeds of an Asset
Disposition, the payment or application of which is not
restricted by Section 10.10;
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.
"Personal Property" of any Person shall mean the right, title and
interest of such person in assets, properties and items other than Real Property
and Leaseholds.
"Plan" has the meaning set forth in the Recitals hereto.
"Pledge Agreement" means the Pledge Agreement of even date herewith,
substantially in the form of Exhibit C hereto, among the Guarantor, the Company,
the Subsidiary Pledgers (as identified therein) and the Collateral Agent, as
amended, supplemented or otherwise modified from time to time.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Proceeds" has the meaning specified in Section 10.10.
"Purchase Amount" has the meaning specified in the definition of Offer
to Purchase.
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"Purchase Commitment" means the commitment to purchase $10,000,000
aggregate principal amount of Second Priority Notes at any time outstanding
under the Note Agreement.
"Purchase Date" has the meaning specified in the definition of Offer to
Purchase.
"Purchase Price" has the meaning specified in the definition of Offer
to Purchase.
"Purchasers" shall mean the Purchasers under the Note Agreement.
"Qualified Capital Stock" of any Person means any and all Capital Stock
of such Person other than Redeemable Stock.
"Real Property" of any Person shall mean all the fee ownership right,
title and interest of such Person in and to land, improvements therein and
thereon, fixtures annexed or to be annexed thereto and any insurance and
condemnation proceeds relating thereto other than Leaseholds.
"Redeemable Stock" of any Person means any equity security of any
Person (not including any warrants/stock issued under the Management Option
Plan) that by its terms or otherwise is required to be redeemed prior to the
Stated Maturity of the Securities or is redeemable at the option of the holder
thereof at any time prior to the Stated Maturity of the Securities.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the fifteenth day of February and August in each year (whether or not
a Business Day), as the case may be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means any
officer of the Trustee assigned by the Trustee to administer its corporate trust
matters and shall include any officer in its corporate trust department.
"Restricted Payments" has the meaning specified in Section 10.9.
"Second Priority Notes" has the meaning specified in the definition of
Morgan Stanley Note Agreement.
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"Second Priority Obligations" means the obligations of the Company and
the Guarantor under the Morgan Stanley Note Agreement and the Second Priority
Notes.
"Secondary Security" has the meaning specified in Section 3.7.
"Securities" means the securities designated as such in the first
Recital hereto, any Secondary Securities and any Securities issued hereunder
upon transfer of, in exchange for or in lieu of any other Security or portion
thereof theretofore issued hereunder.
"Security Agreement" means the Security and Collateral Agency Agreement
of even date herewith, substantially in the form of Exhibit B hereto, among the
Company, the Guarantor, the Subsidiary Guarantors and the Trustee, as Collateral
Agent, for the benefit of the Holders, the Purchasers and the holders of the
Second Priority Notes, as amended, supplemented or otherwise modified from time
to time.
"Security Documents" means the Security Agreement, the Pledge
Agreement, the Indemnity Agreement, the Assignment of Contracts, the Mortgages,
and each of the ancillary agreements required by any of the foregoing and any
agreements and other instruments and documents executed and delivered pursuant
to Section 10.22, each as amended, supplemented or otherwise modified from time
to time.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Senior Collateral Agent" means The Chase Manhattan Bank, as
administrative agent under the Credit Agreement and collateral agent under the
security documents relating to the Credit Agreement, and its successors.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" when used with respect to any Security or any
installment of interest thereof means the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof but shall not include any Inactive Subsidiary.
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"Subsidiary Guarantee Agreement" shall mean any guarantee agreement,
substantially in the form of Exhibit A hereto, executed by a Subsidiary pursuant
to Section 10.22, pursuant to which such Subsidiary guaranties payment of the
Securities on substantially the same terms and conditions set forth in Article
XIV.
"Subsidiary Guarantor" means each Subsidiary which executes a
Subsidiary Guarantee Agreement.
"Successor Company" shall have the meaning specified in Section
8.1(b)(2).
"Surviving Entity" has the meaning specified in Section 8.1(a).
"Term Loan" has the meaning specified in the definition of "Credit
Agreement".
"Term Loan Payout Date" means the date on which the Term Loan is paid
in full, whether upon maturity or by earlier prepayment.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by such amendment, the Trust
Indenture Act of 1939 as so amended
"United States Bankruptcy Code" means Title 11, United States Code, as
amended, or any similar United States Federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"U.S. Government Obligations" has the meaning specified in Section
12.4.
"Vice President" means any vice president, whether or not designated by
a number or a word or words added before or after the title "Vice President".
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
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"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Voting Stock of which (other than director's
qualifying shares) shall at the time be owned by such Person or by one or more
Wholly Owned Subsidiaries of such Person.
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act and under this Indenture. Each such certificate or opinion shall
be given in the form of an Officers' Certificate, if to be given by Officers of
the Company, or an Opinion of Counsel, if to be given by counsel, and shall
comply with the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall be in form
satisfactory to the Trustee and shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.
SECTION 1.3. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons may certify or give an opinion as to such matters in
one or several documents.
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Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of
counsel, unless such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representation with respect to the
matters upon which his certificate or opinion is based are erroneous. Any such
certificate or opinion of counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an Officer or
Officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders must, except as otherwise provided in Article XIII, be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the actions embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the
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Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 7.1) prior to such first solicitation or vote, as the case
may be, with regard to any record date, only the Holders on such date (or their
duly designated proxies) shall be entitled to give or take, or vote on, the
relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
SECTION 1.5. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, One Federal
Street, Boston, Massachusetts 02110, Attention: Corporate Trust
Department; or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class certified postage prepaid, return
receipt requested, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument or
at any other address previously furnished in writing to the Trustee by
the Company.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders.
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Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be equivalent of such notice. Waivers
of notice by Holders shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken in reliance upon
such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.7. Application of Trust Indenture Act.
The Trust Indenture Act shall apply as a matter of law (or to the
extent not so required, as a matter of contract) to this Indenture for purposes
of interpretation, construction and definition of the rights and obligations
hereunder. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Guarantor shall bind their respective successors and assigns, whether so
expressed or not.
SECTION 1.10. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, expressed or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and (subject to Article
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XIII hereof) the Holders of Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
EACH OF THE COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW
OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY OR THE
GUARANTOR IN ANY OTHER JURISDICTION.
SECTION 1.13. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Purchase
Date or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date, Purchase
Date or at the Stated Maturity, provided that no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Purchase Date
or Stated Maturity, as the case may be.
ARTICLE II
Security Forms
SECTION 2.1. Forms Generally.
The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently
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herewith, be determined by the officers executing such Securities, as evidenced
by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
SECTION 2.2. Forms of Face of Security.
The form of the face of the Securities shall be substantially as
follows:
PREMIUM STANDARD FARMS, INC.
11% SENIOR SECURED NOTES DUE 2003
No. $
Premium Standard Farms, Inc., a corporation duly organized and existing
under the laws of Delaware (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to __________________________________________
_____________, or registered assigns, the principal amount of Dollars on
September __, 2003, and to pay interest on the unpaid principal amount from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of the original issuance hereof, at the rate of 11% per
annum in cash in United States dollars until the principal hereof is paid or
made available for payment and at the rate of 11% per annum on any overdue
principal and premium and on any overdue installment of interest (but not to
exceed the maximum rate permitted by applicable law) until paid as specified on
the reverse hereof; provided, that on each Interest Payment Date prior to the
Term Loan Payout Date, the Company may, as hereafter provided, pay such interest
in whole or in part through the issuance of additional Securities ("Secondary
Securities") in an aggregate principal amount equal to the amount of interest
(rounded to the nearest whole dollar) that would be payable with respect to this
Security if such interest were paid in cash; provided, further, that interest
payable on or after the Term Loan Payout Date or on or after the Maturity of
this Security shall be payable only in cash.
The Company shall pay interest semi-annually on March 15 and September
15 of each year, commencing March 15, 1997 or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date"). The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the February 15 or August 15 (whether or not a Business Day), as the case may
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be, next preceding such Interest Payment Date. Any such interest not so
punctually paid or duly provided (including by issuing Secondary Securities as
herein provided) for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for payment of such Defaulted Interest to be
fixed by the Trustee, notice whereof shall be given to Holders of Securities not
less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
On each such Interest Payment Date prior to the Term Loan Payout Date
as provided in the proviso to the first paragraph hereof, the Company may pay
interest by the issuance of Secondary Securities and, the Trustee shall, upon
the Company's Order, authenticate and deliver Secondary Securities for original
issuance to the Holder of this Security on the relevant record date, as shown by
the records of the Security Registrar, in the aggregate principal amount
required to pay such interest (rounded up to the next whole dollar). Each
issuance of Secondary Securities shall be made as nearly as possible pro rata,
and any rounding may be made, with respect to the aggregate principal amount of
Outstanding Securities held by each Holder.
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee, Security Registrar
or Paying Agent maintained for that purpose in New York, New York, 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; provided, however, that at the
option of the Company payment of any interest may be made by mailing a check (or
Secondary Securities, if applicable) therefor to the address of the Person
entitled thereto as such address shall appear in the Security Register.
This Security is one of the Securities issued and to be issued from
time to time and in accordance with the Indenture (as hereinafter defined), all
equally secured by a Security and Collateral Agency Agreement, dated as of even
date with the Indenture (hereinafter as amended and supplemented the "Security
Agreement") among the Guarantor (as hereinafter defined), the Company and the
Trustee, as Collateral Agent, and related Mortgages (collectively, the "Security
Documents"), to which Security Documents reference is made for a description of
the property mortgaged and pledged (the "security"), the nature and extent of
this security, the other indebtedness of the Company secured thereby, and the
other provisions thereof; provided, however, that the liens of said Security
Documents are subject to the terms and provisions of an Intercreditor Agreement,
dated of even date therewith, among the Guarantor, the Company, the Senior
Collateral Agent, and the Trustee, as Collateral Agent, to which reference is
made for a description of the terms and provisions thereof; and provided,
further, that the rights and interests of the holders of the Securities in the
proceeds of the
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security under the Indenture and the Security Documents are junior in priority
to those of the holders of the Second Priority Notes (as hereafter defined) of
the Company.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
PREMIUM STANDARD FARMS, INC.
By_____________________________
SECTION 2.3. Form of Reverse of Security.
The form of the reverse of the Securities shall be substantially as
follows:
This Security is one of a duly authorized issue of Securities of the
Company designated as its 11% Senior Secured Notes due 2003 (the "Securities")
issued under an Indenture, dated as of September __, 1996 (herein called the
"Indenture"), between the Company, PSF, L.L.C., a Delaware limited liability
company (the "Guarantor"), and Fleet National Bank, as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture).
The Securities are limited in aggregate principal amount to $117,500,000 plus
the aggregate principal amount of Secondary Securities issued pursuant to the
Indenture. Reference is hereby made to the Indenture and all indentures
supplemental thereto for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee, and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
The Securities are subject to redemption, in whole or in part, upon not
less than 20 nor more than 60 days' notice by mail, at the election of the
Company at any time at the following Redemption Prices (expressed as percentages
of principal amount), if redeemed during the 12- month period beginning
September of each of the years indicated below:
Redemption
Year Price
---- -----
1996 111%
1997 108%
1998 105%
1999 103%
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2000 101%
2001 100%
The Redemption Prices as defined above, together in the case of any such
redemption with accrued interest to the Redemption Date, shall be paid in cash
upon surrender of such Securities in accordance with such notice, but interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, in cash or Secondary Securities, if applicable,
all as provided in the Indenture.
This Security does not have the benefit of any sinking fund.
The Indenture provides that, subject to certain conditions, if a Change
of Control or Asset Disposition occurs, the Company shall be required to make an
Offer to Purchase for the Securities at a purchase price equal to 101% of the
principal amount thereof or par, as the case may be, together in either case
with all accrued and unpaid interest through the Purchase Date.
Interest on the Debt evidenced by this Security is expressly limited so
that in no contingency or event whatsoever, whether by acceleration of the
maturity of the Debt evidenced by this Security or otherwise, shall the interest
contracted for, charged or received by the Holder exceed the maximum amount
permissible under applicable law. If under any circumstances whatsoever the
fulfillment of any provisions of this Security, the Indenture or any other
document evidencing, securing, guaranteeing or otherwise pertaining to the Debt
evidenced by this Security, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law, then
ipso facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances any Holder shall ever receive
anything of value as interest or deemed interest by applicable law under this
Security, the Indenture or any other document evidencing, securing, guaranteeing
or otherwise pertaining to the Debt evidenced by this Security or otherwise an
amount that would exceed the highest lawful rate, such amount that would be
excessive interest shall be applied to the reduction of the principal amount
owing on the Debt of this Security held by the Holder, and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
of the Debt of this Security held by the Holder, such excess shall be refunded
to the Company. In determining whether or not the interest paid or payable with
respect to any Debt of the Company to the Holder, under any specific
contingency, exceeds the highest lawful rate, the Company and the Holder shall,
to the maximum extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, (c) amortize, prorate,
allocate and spread the total amount of interest throughout the term of such
Debt so that the actual rate of interest on account of such Debt
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does not exceed the maximum amount permitted by applicable law, and/or (d)
allocate interest between portions of such Debt, to the end that no such portion
shall bear interest at a rate greater than that permitted by law. The terms and
provisions of this paragraph shall control and supersede every other conflicting
provision of this Security and the Indenture.
In the event of redemption or purchase pursuant to an Offer to Purchase
of this Security in part only, a new Security or Securities of like tenor for
the unredeemed or unpurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of (i) the
entire Debt of this Security and (ii) certain restrictive covenants and Events
of Default with respect to this Security, in each case upon compliance with
certain conditions set forth further therein.
The Indenture and the Security Documents provide that the security
described therein is pledged and mortgaged to the Collateral Agent for the
benefit of the holders of up to $10,000,000 aggregate principal amount of the
Company's Senior Secured Second Priority Notes due 2002 (the "Second Priority
Notes") and the Holders of the Securities, provided that the proceeds of such
security, if any, shall be applied first to the payment in full of the Second
Priority Notes and thereafter to the payment of the Securities.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages of the aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay (subject to Section 16.1 of said
Indenture) the principal of (and premium, if any) and interest on this Security
at the times, place and rate, and in the coin or currency or through issuance of
Secondary Securities, as herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
Corporate Trust Office or the office or agency of the
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Company in New York, New York, or at any other office designated by the Company
under the Indenture, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and like tenor
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1.00 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like tenor and aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, provided, however, that the Company may require payment of (i) a
service charge with respect to any transfer or exchange as a result of which the
number of Securities not in a denomination of $1,000 or any integral multiple
thereof would be increased, and (ii) of a sum sufficient to cover any tax or
other governmental charge payable in connection with such transfer or exchange.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30- day months.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
--------------------------------
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Sections 10.10 or 10.18 of the Indenture, check the box:
__
[__]
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If you want to elect to have only a part of this Security purchased by
the Company pursuant to Section 10.10 or 10.18 of the Indenture, state the
amount: $
Dated: Your Signature:______________________________
(Sign exactly as name appears on the
other side of this Security)
Signature Guaranteed by:
- ---------------------------------
Participant in a Recognized
Signature Guarantee Medallion
Program
SECTION 2.4. Form of Trustee's Certificate of Authentication.
The form of certificate of authentication shall be substantially as
follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
FLEET NATIONAL BANK,
as Trustee
Dated: By_____________________________
Authorized Signatory
SECTION 2.5. Form of Guarantee.
The form of guarantee shall be substantially as follows:
For value received, PSF Holdings, L.L.C., a Delaware limited liability
company, hereby unconditionally guarantees to the Holder of the Security upon
which this Guarantee is endorsed the due and punctual payment, as set forth in
the Indenture pursuant to which such Security and this Guarantee are issued, of
the principal of, premium (if any) and interest on, such Security when and as
the same shall become due and payable for any reason according to the terms of
such Security and Article XIV of the Indenture. The Guarantee of the Security
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upon which the Guarantee is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Security.
PSF HOLDINGS, L.L.C.
By __________________________
SECTION 2.6. Form of Legend.
The form of legend on each Security as required by the Intercreditor
Agreement shall be substantially as follows:
THE LIENS ON THE COLLATERAL WHICH SECURE THE SECURITIES REFERRED TO IN
THE WITHIN-MENTIONED INDENTURE, OF WHICH THIS SECURITY IS ONE, ARE
SUBJECT TO THE TERMS AND PROVISIONS OF THE WITHIN-MENTIONED
INTERCREDITOR AGREEMENT AND SECURITY AGREEMENT.
ARTICLE III
The Securities
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to $117,500,000 plus the aggregate
principal amount of Secondary Securities issued hereunder, except for Securities
authenticated and delivered upon registration or transfer of, or in exchange
for, or in lieu of, other Securities pursuant to Sections 3.4, 3.5, 3.6, 9.6,
10.10, 10.18 and 11.8.
The Securities shall be known and designated as the "11% Senior Secured
Notes due 2003" of the Company. The Stated Maturity of the Securities shall be
September __, 2003. The Securities shall bear interest on the unpaid principal
amount of such Securities at the rate of 11% per annum, payable semi-annually on
March 15 and September 15, commencing March 15, 1997, until the principal
thereof is paid or made available for payment, in the manner set forth in the
form of Security and in Section 3.7. Interest on any overdue principal, interest
(to the extent lawful) or premium, if any, shall be payable on demand.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Trustee, Security Registrar or
Paying Agent maintained in New York, New York for such purpose and at any other
office or agency maintained for such
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purpose; provided, however, that, at the option of the Company, payment of any
interest may be made by mailing a check (or Secondary Securities, if applicable)
therefor to the address of the Person entitled thereto as such address shall
appear in the Security Register.
The Securities shall be subject to repurchase by the Company pursuant
to an Offer to Purchase as provided in Sections 10.10 and 10.18 of the
Indenture.
The Securities shall be redeemable as provided in Article XI.
The Securities shall be subject to defeasance at the option of the
Company as provided in Article XII.
SECTION 3.2. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1.00 and any integral multiple thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, the Chief Executive Officer, its President or one of its
Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
The Trustee shall authenticate Securities for original issue in an
aggregate principal amount of $117,500,000 upon receipt of the following:
(a) a Company Order for authentication, specifying the name,
address, FID number and principal amount for each Holder as
provided in the Plan;
(b) an executed copy of the Intercreditor Agreement;
(c) executed copies of the Security Documents;
(d) an Officers' Certificate and Opinion of Counsel, each stating,
inter alia, that such Securities have been duly and validly
issued in accordance with the Plan and this Indenture and are
entitled to the rights and benefits set forth herein; and
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(e) an Officer's Certificate stating that the Effective Date has
occurred.
Subject to Section 6.1, the Trustee shall be fully protected in relying
upon the foregoing documents.
At any time and from time to time after the Effective Date, the Company
may deliver Secondary Securities executed by the Company and the Guarantor to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided. In authenticating such Securities, and accepting the
additional responsibilities under the Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon an Officers' Certificate and Opinion of Counsel,
each stating, inter alia, that such Securities have been duly and validly issued
in accordance with the terms of this Indenture and are entitled to the rights
and benefits set forth herein.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such temporary Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the
Corporate Trust Office or any office or agency of the Company designated
pursuant to Section 10.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.
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SECTION 3.5. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.2 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as the Security Registrar may prescribe, the Company
shall provide for the registration of Securities and transfers of Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
By accepting delivery of their Securities, the Holders accept and agree
to be bound by the terms and provisions of this Indenture and the Security
Documents.
Upon surrender for registration of transfer of any Security at the
Corporate Trust Office or an office or agency of the Company designated pursuant
to Section 10.2 for such purpose, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denominations and of a
like tenor and aggregate principal amount as the Security transferred or
tendered.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like tenor and aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company and the Guarantor shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, provided, however, that the Company may require payment
of (i) a service charge with respect to any transfer or exchange as a result of
which the number of Securities not in a denomination of $1,000 or any integral
multiple thereof would be increased, and (ii) of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection
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with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6, 10.10, 10.18 or 11.8.
The Company shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Securities
selected for redemption under Section 11.4 and ending at the close of business
on the day of such mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company and the Guarantor shall execute and upon a Company Order
(which requirement may be waived by the Trustee) the Trustee shall authenticate
and deliver, in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefit of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 3.7. Payment of Interest; Interest Rights Preserved.
On each Interest Payment Date prior to the Term Loan Payout Date, the
Company may pay interest on each Security through the issuance of additional
Securities ("Secondary Securities") in an aggregate principal amount equal to
the amount of interest (rounded up to the next whole dollar) that would be
payable with respect to such Security if such interest were paid in cash;
provided that interest payable on any date on or after the Term Loan Payout Date
or on or after the Maturity of any Security shall be payable solely in cash.
On each such Interest Payment Date, the Trustee shall, upon Company
Order, authenticate and deliver Secondary Securities for original issuance to
each holder of Securities on the relevant record date, as shown by the records
of the Security Register, in the aggregate principal amount required to pay such
interest (rounded up to the next whole dollar). Any Secondary Securities so
issued shall be dated the applicable Interest Payment Date, shall bear interest
from and after such date, shall mature on September __, 2003, and shall be
governed by, and subject to the terms, provisions and conditions of, this
Indenture and shall have the same rights and benefits as Securities previously
issued.
The Company shall have the right to aggregate amounts of interest
payable in the form of Secondary Securities to a Holder of Outstanding
Securities and issue to such Holder a single Secondary Security in payment
thereof.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for (including by the issuance of Secondary Securities as
herein provided), on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount (in the form of money or, if the Term Loan Payout
Date has not occurred, at the Company's option, Secondary Securities)
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the
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proposed payments, such money or Secondary Securities when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register,
not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may establish a procedure to make payment of
any Defaulted Interest consistent with any lawful procedure and with
the requirements of any securities exchange on which the Securities may
be listed, and upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such manner of payment is approved by
the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 3.8. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of, (and premium, if
any) and (subject to Section 3.7) interest on, such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or pursuant to any Offer to Purchase pursuant to Sections
10.10 and 10.18 shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be
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promptly canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of as directed by a Company
Order.
SECTION 3.10. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving obligations of the Company specified below), and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture (including, but not
limited to, Article XII hereof), when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited in trust and
thereafter repaid to the Company or discharged from such
trust, as provided in Section 10.3) have been delivered to the
Trustee for cancellation; or
(B) all such Securities not theretofore delivered to
the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
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and the Company, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for
the purpose money in an amount sufficient to pay and discharge the
entire Debt on such Securities not theretofore delivered to the Trustee
for cancellation, for principal (and premium, if any) and interest to
the date of such deposit (in the case of Securities which have become
due and payable) or to the Stated Maturity or Redemption Date, as the
case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article IV, the Company's obligations with respect to the Securities under
Sections 3.4, 3.5, 3.6, 10.2 and 10.3, obligations of the Company to the Trustee
under Section 6.7 and, if money shall have been deposited with the Trustee
pursuant to subclause (B) of Clause (1) of this Section, the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the obligations of
the Trustee under Section 4.2 and the last paragraph of Section 10.3 shall
survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be segregated and
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee.
ARTICLE V
Remedies
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
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(1) default in the payment of any interest upon any Security
when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security at its Maturity; or
(3) default in the payment of principal (or premium, if any)
or interest pursuant to an Offer to Purchase pursuant to Sections 10.10
and 10.18; or
(4) default in the performance, or breach, of Section 8.1; or
(5) default under the Second Priority Obligations or any other
Debt or other evidence of Debt of the Company or the Guarantor or any
Subsidiary in a principal amount of $10,000,000 or more, or under any
mortgage, indenture or security agreement with respect thereto, which
default shall constitute a failure to pay principal of such Debt when
due at final maturity thereof or shall have resulted in such Debt
becoming or being declared due and payable prior to the date on which
it would otherwise have become due and payable; or
(6) default in the performance, or breach, of any covenant,
representation or warranty of the Company or the Guarantor in this
Indenture (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of
30 days after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding
Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(7) a final judgment or final judgments for the payment of
money are entered against the Company or the Guarantor or any
Subsidiary in an aggregate amount in excess of $10,000,000 by a court
or courts of competent jurisdiction, which judgments remain
undischarged, unstayed or unbonded for a period (during which execution
shall not be effectively stayed) of 60 days; or
(8) the entry by a court having jurisdiction in the premises
of (A) a decree or order for relief in respect of the Company or the
Guarantor or any Subsidiary in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or (B) a decree or order adjudging the Company or
the Guarantor or any Subsidiary a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or the
Guarantor or any Subsidiary or of any substantial part of its property,
or ordering the winding up or liquidation of its
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affairs, and the continuance of any such decree or order for relief or
any such other decree or order unstayed and in effect for a period of
90 consecutive days; or
(9) the commencement by the Company or the Guarantor or any
Subsidiary of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or
order for relief in respect of the Company or the Guarantor or any
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable
Federal or State law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or the Guarantor or any Subsidiary or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of action by the Company or the Guarantor or any Subsidiary in
furtherance of any such action; or
(10) any Security Document shall, at any time, cease to be in
full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the Company or
the Guarantor or the Collateral Agent shall not have or shall cease to
have a valid, perfected and subsisting Lien on the Collateral (other
than Collateral released as provided in the Security Documents and the
Intercreditor Agreement); or any Lien shall have a priority equal to or
greater than the Liens on the Collateral, except as permitted by
Section 10.14; or
(11) this Indenture or the Securities for any reason other
than satisfaction in full of the obligations thereunder shall cease to
be, or shall be asserted by the Company or the Guarantor not to be, in
full force and effect and enforceable in accordance with its terms or
is declared null and void.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(8) or (9)) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 50% in principal amount of Outstanding
Securities may declare the principal amount of all the Securities to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal amount and
any accrued interest shall, subject to Section 16.1 hereof, become immediately
due and payable. If an Event of Default specified in Section 5.1(8) or (9)
occurs, the principal amount of and any accrued interest on the Securities then
Outstanding shall, subject to Section 16.1
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hereof, become immediately due and payable without any declaration or other Act
on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of Outstanding Securities, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
of money (or, if applicable, Secondary Securities) sufficient to pay
(A) all amounts due the Trustee under Section 6.7 and
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel,
(B) all overdue interest on all Securities,
(C) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration (including any Securities required
to have been purchased on the Purchase Date pursuant to an
Offer to Purchase made by the Company) and, interest thereon
at the rate provided by the Securities (but not to exceed the
maximum rate permitted by applicable law), and
(D) interest upon overdue interest at the rate
provided by the Securities but not to exceed the maximum rate
permitted by applicable law; and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3. Collection of Debt and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to
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have been purchased pursuant to an Offer to Purchase made by the
Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee or the Holders of not less than 25%
in principal amount of the Outstanding Securities, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount (in money and/or
Secondary Securities, if applicable) then due and payable on such Securities for
principal (and premium, if any) and interest, and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue principal
(and premium, if any) and on any overdue interest, at the rate provided by the
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, other than costs and expenses incurred through negligence or bad
faith.
If the Company fails to pay such amounts (in money and/or Secondary
Securities, if applicable) forthwith upon such demand, the Trustee, in its own
name and as trustee of an express trust, or subject to Section 5.7 hereof, the
Holders of not less than 25% in principal amount of the Outstanding Securities
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 6.7.
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No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.6. Application of Money Collected.
Any money or Secondary Securities collected by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal (or premium, if any) or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST, to the payment out of any money collected of all
amounts due the Trustee under Section 6.7;
SECOND, out of any money collected, to the payment in full of
the Second Priority Obligations (the amounts so applied to be
distributed among the Purchasers and the holders of the Second Priority
Notes pro rata first in accordance with the amounts of accrued and
unpaid interest on the Second Priority Notes, second in accordance with
the amounts of principal due with respect to the Second Priority Notes
and third in accordance with the other Second Priority Obligations owed
to them on the date of any such distribution);
THIRD, to the payment in full of the Securities Obligations
(the Secondary Securities so applied to be distributed among the
Holders pro rata in accordance with the amounts of interest owed to
them and all moneys so applied to be distributed among the Holders pro
rata in accordance with the amounts of Securities Obligations owed to
them on the date of any such distribution after giving effect to any
contemporaneous distribution of Secondary Securities); and
FOURTH, to the Grantors, their respective successors or
assigns, or as a court of competent jurisdiction may otherwise direct.
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SECTION 5.7. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding (including an involuntary proceeding under the United States
Bankruptcy Code), judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 16.1) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or, in the case of an Offer to Purchase made by the Company and accepted as
to such Security, on the Purchase Date) and to institute suit against the
Company and/or the Guarantor for the enforcement of any such payment (including
the commencement of an involuntary proceeding under the United States Bankruptcy
Code), and such rights may not be impaired without the consent of such Holder.
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SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Guarantor, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6 or to unclaimed moneys paid over to the Company under the last
paragraph of Section 10.3, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or Article
XIV or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 5.12. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
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SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to
have been purchased pursuant to an Offer to Purchase which has been
made by the Company), or
(2) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Trustee.
SECTION 5.15. Waiver of Stay or Extension Laws.
The Company and the Guarantor each covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE VI
The Trustee
SECTION 6.1. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
this Indenture and the Trust Indenture Act. Without limiting the generality of
the foregoing, if an Event of Default 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 their exercise, as a
prudent man would exercise or use under the same circumstances in the conduct of
his own affairs. Notwithstanding the foregoing, no provision of this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. The Trustee shall not be deemed to
have notice of any Event of Default or event which with the passage of time
might become an Event of Default unless (i) the Trustee has received written
notice thereof, addressed to a Responsible Officer or (ii) in the case of an
Event of Default under Section 5.1(1) or 5.1(2), the Trustee to the knowledge of
a Responsible Officer is the sole Paying Agent. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
The Trustee is expressly authorized and directed to enter into (i) the
Intercreditor Agreement, substantially in the form of Exhibit G hereto, for the
purpose of confirming that the lien of the Security Documents on the assets of
the Company or the Guarantor is junior to the lien of the security documents
relating to the Credit Agreement, (ii) the Security Agreement, substantially in
the form of Exhibit B hereto, (iii) any other Security Documents provided for in
the Security Agreement and (iv) any related financing statements or other
required filings, all as specified in any Officers' Certificates and Opinions of
Counsel submitted to the Trustee.
SECTION 6.2. Notice of Defaults.
The Trustee shall give the Holders notice of any default hereunder as
and to the extent provided by the Trust Indenture Act; provided, however, that
in the case of any default of the character specified in Section 5.1(6), no such
notice to Holders need be given until at least 30 days after the delivery of a
Notice of Default as provided herein or such longer period of time as the
Trustee shall determine that the withholding of such notice is in the interests
of the Holders. For the purpose of this Section, the term "default" means any
event which is, or after notice or lapse of time or both would become, an Event
of Default.
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SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of Debt or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture;
(g) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of Debt or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or
attorney; and
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(h) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be responsible for the
statements relating to the Securities set forth in any Offer, registration
statement or private placement memorandum applicable thereto.
SECTION 6.5. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law or this Agreement. 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.
SECTION 6.7. Compensation and Reimbursement.
The Company agrees
(A) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(B) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
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(C) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability, damage, cost or expense incurred without
negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.
The obligations of the Company under this Section 6.7 to compensate or
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustee as such
or otherwise distributable to Holders of Securities, except funds in trust for
the benefit of the holders of particular Securities.
When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in Section 5.1(8) or (9), the
expenses and the compensation for the services are intended to constitute
expenses of administration in proceedings under any law therein referred to. To
the extent that such payment of reasonable compensation, expenses, liabilities
and counsel fees out of the estate in any such proceedings 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, dividends, moneys, securities and other
property which the Holders of the Securities may be entitled to receive in such
proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
"Trustee" for purposes of this Section 6.7 shall include any
predecessor Trustee, but the negligence or bad faith of any Trustee shall not
affect the rights of any other Trustee under this Section 6.7.
SECTION 6.8. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000 and its Corporate Trust
Office in the continental United States. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of a
Federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the
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provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(A) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(B) the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(C) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
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Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the Company
or the Holders and accepted appointment in the manner hereinafter provided, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The successor Trustee shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.6. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided that
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to, or successor to the corporate trust business of,
such authenticating Trustee may adopt such
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authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished pursuant to clause (a) or (b) of this
Section 7.1.
SECTION 7.2. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of
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them shall be held accountable by reason of any disclosure of information as to
names and addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times (May 1, in the case of annual reports) and in
the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when the Securities are listed on any stock exchange.
SECTION 7.4. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE VIII
Merger, Consolidation, Etc.
SECTION 8.1. Company or the Guarantor May Merge, Consolidate, etc.... Only on
Certain Terms.
(a) The Guarantor shall not consolidate with or merge into any other
Person or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all its properties and assets as an entirety, unless either (i)
the Guarantor shall be the continuing Person, or (ii) the Person (if other than
the Guarantor) formed by such consolidation or into which the Guarantor is
merged or the Person which acquires by conveyance, transfer, lease or
disposition the properties and assets of the Guarantor (the "Surviving Entity")
shall be a corporation duly organized and validly existing under the laws of the
United States of America or any state thereof and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the Guarantee and the performance and observance of
any covenant of this Indenture and the Security Documents on the part of the
Guarantor to be performed and observed; and
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(i) immediately after giving effect to such transaction,
and treating any Debt Incurrred by the Guarantor as a
result of such transaction as having been Incurred at
the time of such transaction, (A) the Guarantor or
the Surviving Entity would not be liable with respect
to any Debt which is not permitted under Section 10.8
hereof and (B) the Consolidated Net Worth of the
Guarantor, the Company or the Surviving Entity and
their Subsidiaries would be no less than the
Consolidated Net Worth of the Guarantor, the Company
and their Subsidiaries immediately prior to such
transactions.
(ii) no Event of Default under Section 5.1 has occurred or
is continuing at the time of such transaction; and
(iii) the Guarantor has delivered to the Trustee an
Officers' Certificate stating that the consolidation,
merger, conveyance, transfer, lease or other
disposition and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture complies with this Article and
all conditions precedent herein provided for relating
to such transaction have been complied with.
(b) The Company shall not consolidate with or merge into any other
Person or permit any other Person to consolidate with or merge into the Company
or transfer, convey, sell, lease or otherwise dispose of all or substantially
all of its properties or assets as an entirety, unless:
(1) the Company is the surviving Person; or
(2) in case the Company shall consolidate with or merge with
or into another Person or transfer, convey, sell, lease or otherwise
dispose of all or substantially all of its properties or assets as an
entirety, and the Company is not the surviving Person (a "Non-Surviving
Combination"), the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by transfer,
conveyance, sale, lease or otherwise the assets of the Company
substantially as an entirety (for purposes of this Article VIII, a
"Successor Company") shall be a corporation organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee in
form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities
and the performance of every covenant of this Indenture on the part of
the Company to be performed or observed; and
(i) immediately after giving effect to such transaction, and
treating any Debt Incurred by the Company as a result of such
transaction as having been Incurred
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at the time of such transaction, (A) the Company or the
Successor Company would not be liable with respect to any Debt
which is not permitted under Section 10.8 hereof and (B) the
Consolidated Net Worth of the Guarantor, the Company or the
Successor Company and their Subsidiaries would be no less than
the Consolidated Net Worth of the Guarantor, the Company and
their Subsidiaries immediately prior to such transaction;
(ii) no Event of Default under Section 5.1 has occurred or is
continuing at the time of such transaction; and
(iii) the Company has delivered to the Trustee an Officers'
Certificate stating that such consolidation, merger,
conveyance, transfer, lease or acquisition and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture, complies with this
Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 8.2. Successor Substituted.
Upon any consolidation or merger, or any conveyance, transfer or lease
of the properties and assets of the Company or the Guarantor substantially as an
entirety in accordance with Section 8.1, the successor Person shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
or the Guarantor, as the case may be, under this Indenture with the same effect
as if such successor Person had been named as the Company or the Guarantor, as
the case may be, herein, and thereafter the predecessor Person shall be relieved
of all obligations and covenants under this Indenture and the Securities.
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company or the Guarantor and the assumption by any such successor of
the covenants of the Company or the Guarantor, as the case may be,
herein and in the Securities; or
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(2) to add to the covenants of the Company or the Guarantor
for the benefit of the Holders, or to surrender any right or power
herein conferred upon the Company or the Guarantor; or
(3) to secure the Securities pursuant to the requirements of
Section 10.22 or otherwise; or
(4) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent
with the provisions of this Indenture, provided that such action
pursuant to this Clause (4) shall not adversely affect the interests of
the Holders in any material respect; or
(5) to comply with the requirements of the Commission in order
to effect or maintain the qualification of this Indenture under the
Trust Indenture Act.
The Company shall provide notice of any supplemental indenture to the
Holders of Outstanding Securities promptly after the execution of such
supplemental indenture pursuant to this Section 9.1, such notice to state the
substance of the contents of such supplemental indenture.
SECTION 9.2. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or modifying
in any manner the rights of the Holders under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby;
(1) change the Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or
the coin or currency (including Secondary Securities, if applicable) in
which, any Security or any premium or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Maturity thereof (or, in the case of
redemption, on or after the Redemption Date or in the case of an Offer
to Purchase which has been made, on or after the applicable Purchase
Date), or
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(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13
or Section 10.21, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby, or
(4) following the making of an Offer with respect to an Offer
to Purchase pursuant to Section 10.10 or 10.18, modify the provisions
of this Indenture with respect to such Offer to Purchase in a manner
adverse to such Holder.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise,
except for any supplemental indenture required in order to comply with the
requirements of the Trust Indenture Act.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
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Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article, may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 9.7. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives
written notice of revocation before the date the amendment or waiver becomes
effective. An amendment or waiver becomes effective in accordance with its terms
and thereafter binds every Holder.
ARTICLE X
Covenants
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of (and premium,
if any) and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
SECTION 10.2. Maintenance of Office or Agency.
The Company will maintain in New York, New York an office or agency of
the Trustee, Security Registrar or Paying Agent where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
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The Company may also from time to time designate one or more other
offices or agencies (in or outside New York, New York) where the Securities may
be presented or surrendered for any or all such purposes and may from time to
time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency of the Trustee, Security Registrar or Paying Agent in New
York, New York for such purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
Whenever the Company shall have one or more Paying Agents, it shall,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest on Securities in trust for the
benefit of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
Any money deposited with the Trustee or any Paying Agent in trust for
the payment of the principal of (and premium, if any) or interest on any
Security 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 upon delivery of a Company Request; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money 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
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to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in New
York, New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
SECTION 10.4. Existence.
Subject to Article VIII, the Company and the Guarantor will, and will
cause each of their Subsidiaries to, do or cause to be done all things necessary
to preserve and keep in full force and effect its existence, rights (charter and
statutory) and franchises; provided, however, that the Company or the Guarantor
shall not be required to preserve any such right or franchise if its Board of
Directors or Members, as the case may be, in good faith shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company or the Guarantor, as the case may be, and that the loss thereof is
not disadvantageous in any material respect to the Holders; and, provided,
further, that the Guarantor may convert to a Delaware corporation if its Members
determine that such a conversion to corporate form is in its best interests.
SECTION 10.5. Maintenance of Properties.
The Company and the Guarantor will, and will cause each of their
Subsidiaries to, cause all properties used or useful in the conduct of its
business or the business of each Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company or
the Guarantor may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and to
comply in all material respects with all applicable laws, rules, regulations
(including zoning, building, Environmental and Safety Law, ordinance, code or
approval or agreements that affects its properties) and decrees and orders of
any Governmental Authority, whether now or hereafter enacted; provided, however,
that nothing in this Section shall prevent the Company or the Guarantor from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined by its Board of Directors or Members, as the
case may be, or by an Officer (or other agent employed by the Company or the
Guarantor) of the Company or the Guarantor having managerial responsibility for
any such property, in good faith, desirable in the conduct of its business or
the business of any Subsidiary and not disadvantageous in any material respect
to the Holders.
SECTION 10.6. Payment of Taxes and Other Claims.
The Company and the Guarantor will, and will cause each of their
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (1)
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all taxes, assessments and governmental charges levied upon the income, profits
or property of the Company, the Guarantor or such Subsidiaries, and (2) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a lien upon the property of the Company, the Guarantor or any
Subsidiaries; provided, however, that neither the Company, the Guarantor nor any
Subsidiary shall be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
SECTION 10.7. Maintenance of Insurance.
The Company and the Guarantor shall, and shall cause each of their
Subsidiaries to, keep at all times all of their properties and possessions which
are of an insurable nature insured with insurers believed by the Company to be
responsible and reputable insurance companies or associations against loss or
damage, in such amounts and against such risks as is customary in the hog
production and pork processing businesses, and, in any event, at a minimum to
the same extent that property of similar character is usually so insured by
corporations similarly situated and owning like properties in accordance with
good business practice.
SECTION 10.8. Limitation on Consolidated Debt.
Neither the Guarantor nor the Company will, nor will they cause or
permit any of their respective Subsidiaries to, Incur any Debt except:
(i) Debt of the Company and the Guarantor under (A) the Credit
Agreement, (B) the Morgan Stanley Note Agreement and the
Second Priority Notes and (C) the Securities and this
Indenture;
(ii) Debt of the Company arising from reimbursement and other
obligations in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided in the
ordinary course of business in an aggregate amount not to
exceed $2,500,000 at any time outstanding;
(iii) Debt of the Company (other than Debt permitted by clause (vi)
of this Section) to finance the purchase or lease of
equipment, buildings and real estate in an aggregate principal
amount not to exceed $15,000,000 at any time outstanding;
(iv) Debt of the Company Incurred in the ordinary course of
business arising from Hedge Agreements;
(v) Debt arising from intercompany loans between the Guarantor and
the Company;
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(vi) New Finishing Facility Debt in an aggregate principal amount
not to exceed $15,000,000 at any time outstanding; provided,
however, that the Company -------- ------- shall be permitted
to incur New Finishing Facility Debt only to the extent that
(a) the New Finishing Facility Debt Service with respect
thereto (and with respect to all other New Finishing Facility
Debt incurred in the same quarter) for the period of four
consecutive fiscal quarters following the Incurrence thereof
would not exceed one-third of the Excess EBITDA for the period
of four consecutive fiscal quarters most recently ended (and
until delivery by the Company of the financial statements
required by Section 10.17(a) with respect to the fiscal
quarter ended September 30, 1996, the aggregate principal
amount of New Finishing Facilities Debt that may be Incurred
pursuant to this clause (a) shall be deemed to be an amount
not in excess of $2,000,000) and (b) the lender or, in the
case of any Capital Lease Obligation, the lessor with respect
to any New Finishing Facility shall have entered into an
agreement, whereby it shall (A) waive any statutory or common
law lien it may have on the part of the Collateral located at
such New Finishing Facility and (B) grant the Trustee access
thereto, whether before or after the occurrence of an Event of
Default;
(vii) Debt assumed in connection with any mergers or consolidations
of another Person with the Company or a Subsidiary or in
connection with any acquisitions by the Company or a
Subsidiary of all or part of the assets of another Person to
the extent that the cumulative aggregate consideration
(including all such assumed Debt) paid by the Company or a
Subsidiary in connection therewith does not exceed
$10,000,000, provided, that additional such Debt beyond such
$10,000,000 may be incurred only if the aggregate principal
amount of such additional Debt shall not exceed 50% of the
fair market value of the assets of the other Person being
acquired in such merger, consolidation or acquisition;
(viii) Intercompany loans (A) made by the Company to any Subsidiary
that is a Wholly Owned Subsidiary, or (B) made by any
Subsidiary to the Company or any other Subsidiary that is a
Wholly Owned Subsidiary;
(ix) in addition to the Debt permitted by clauses (i) through
(viii) of this Section 10.8, the Company may become and remain
liable with respect to unsecured Debt, if at the date of and
after giving effect to the Incurrence of such Debt on a pro
forma basis, the Interest Coverage Ratio is equal to or
greater than 2.25 to 1.0; and
(x) Debt issued in exchange for or the net proceeds of which are
used to exchange, refinance or refund outstanding Debt of the
Company; in each case that is otherwise permitted by this
Section 10.8, so long as (A) the principal amount of any Debt
issued pursuant to this clause (x) does not exceed the
principal amount of, premium, if any, and accrued interest on,
and fees and expenses with respect
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to, the respective Debt exchanged, refinanced or refunded,
plus any transaction costs, fees and expenses incurred in
connection with or related to such exchange, refinancing or
refunding, (B) the Debt issued pursuant to this clause (x)
does not mature prior to the stated maturity of, and does not
have an Average Life shorter than the remaining Average Life
of, the respective Debt exchanged, refinanced or refunded, and
(C) where the Debt exchanged, refinanced or refunded is
subordinated to the obligations of the Company or such
Subsidiary under this Indenture, the respective Debt issued
pursuant to this clause (x) is, to the same extent, also
subordinated to such obligations.
SECTION 10.9. Limitation on Restricted Payments.
(a) Neither the Guarantor nor the Company will, nor will they cause or
permit any of their respective Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution, of any
kind or character (whether in cash, property or securities),
in respect of the Capital Stock of the Guarantor, the Company
or any Subsidiary, excluding any dividends or distributions
payable solely in shares of such Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to
acquire such Capital Stock (other than Redeemable Stock);
(ii) purchase, redeem or otherwise acquire or retire for value any
such Capital Stock of the Guarantor, the Company or any
Subsidiary;
(iii) make any Investment in, or payment on a guarantee of any
obligation of, any Person other than the Guarantor, the
Company or a Subsidiary; and
(iv) redeem, defease (including, but not limited to, legal or
covenant defeasance), repurchase, retire or otherwise acquire
or retire for value prior to any scheduled maturity, repayment
or sinking fund payment, Debt (other than the Securities)
which is subordinate in right of payment to the Securities;
(the transactions described in Clauses (i) through (iv) being referred to herein
as "Restricted Payments"), if at the time of and after giving effect to any
proposed Restricted Payment:
(A) an Event of Default, or an event that with the lapse of time or the
giving of notice, or both, would constitute an Event of Default, shall have
occurred and be continuing; or
(B) the aggregate of all Restricted Payments from the date of this
Indenture exceeds the sum of
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(I) 50% of cumulative Consolidated Net Income of the
Guarantor, the Company and their Subsidiaries (or, in the case
Consolidated Net Income of the Guarantor, the Company and
their Subsidiaries shall be negative, less 100% of such
deficit) from the date of this Indenture through the last day
of the last full fiscal quarter immediately preceding such
Restricted Payment; plus
(II) the net proceeds received by the Company or the
Guarantor from the issuance or sale of Debt that is
convertible into Capital Stock after the date of this
Indenture, to the extent that such Debt has been actually
converted into Capital Stock (other than Redeemable Stock)
through the last day of the last full fiscal quarter
immediately preceding such Restricted Payment.
(b) Notwithstanding anything to the contrary contained in this Section
10.9, the following Restricted Payments will be permitted on the respective
terms and conditions specified below:
(i) any Restricted Payment declared or made between Guarantor and
the Company;
(ii) the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the
Guarantor (including options on such shares or related Capital
Stock appreciation rights or similar securities) held by
officers or employees, or former officers or employees (or
their estates or beneficiaries thereunder), or by any Benefit
Plan, upon death, disability, retirement or termination of
employment or pursuant to the terms of such Benefit Plan or
any other related agreement, provided that the aggregate cash
consideration paid for such purchase, redemption, acquisition,
cancellation or other retirement after the Closing Date shall
not exceed $1,000,000 in any one year;
(iii) the purchase of shares of Capital Stock of the Guarantor for
the purpose of contributing such Capital Stock to any Benefit
Plan or permitting any Benefit Plan to make payments to the
participants therein in cash rather than in such shares of
Capital Stock;
(iv) a Wholly Owned Subsidiary of the Company may (x) declare and
pay dividends or make distributions to the Company or any
other Wholly Owned Subsidiary of the Company and (y) transfer
any of its properties or assets to the Company or any other
Wholly Owned Subsidiary of the Company;
(v) Permitted Investments; and
(vi) dividends or other distribution in respect of the Company's
Capital Stock up to 50% of cumulative Consolidated Net Income
of the Guarantor, the Company
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and their Subsidiaries from the date of this Indenture through
the last day of the last full final quarter immediately
preceding such Restricted Payment.
provided that, in the case of any Restricted Payment made pursuant to paragraph
(ii) or (iii) above, no Default or Event of Default shall have occurred and be
continuing, or shall occur as a consequence thereof.
SECTION 10.10. Limitations Concerning Disposal of Assets.
(a) Neither the Guarantor nor the Company will, nor will they cause or
permit any Subsidiary to, make any Asset Disposition unless:
(i) (A) 75% of the consideration received from any such
Asset Disposition is received in cash, net of all
legal, title and recording tax expenses, commissions
and other reasonable fees and expenses incurred, and
any taxes actually payable as a consequence of such
disposition (the "Proceeds") and (B) such
consideration is at least equal to the fair market
value (as determined in good faith by the Board of
Directors or the President or the Chief Financial
Officer or acting Chief Financial Officer of the
Company or the Guarantor) of the assets being sold;
and
(ii) (A) the Proceeds are applied to purchase, or such
Person enters into a definitive agreement to
purchase, within 180 days after receipt of such
Proceeds, assets or businesses used or engaged in the
line of business referred to in Section 10.16 hereof;
and (B) to the extent Proceeds are not applied as
provided in clause (A), either to repay within [180]
days after the date of such receipt with respect to
the Term Loan or Morgan Stanley Note Agreement in the
amount of such Proceeds or to make an Offer to
Purchase in accordance with Section 10.10(b) hereof
Securities at 100% of their principal amount plus
accrued interest, or both.
(b) If all or a portion of the Proceeds of any Asset Disposition are to
be applied to make an Offer to Purchase pursuant to Section 10.10(a)(ii)(B)
hereof, the Company shall, within [180] days after receipt of such Proceeds,
deliver to the Trustee an Officers' Certificate stating its intention to offer
to purchase Securities pursuant to that Section. Within 15 days thereafter, the
Trustee shall in accordance with Section 11.4 hereof select the Securities which
are to be the subject of such offer. Within 15 days thereafter, the Company
shall mail or cause the Trustee to mail an Offer to Purchase to each Holder
whose Securities have been selected to be the subject of such an Offer to
Purchase. The Offer to Purchase shall offer to purchase Securities, the
aggregate principal amount of which (including any Secondary Securities issued
with respect thereto between the date of the offer to Purchase and the Purchase
Date), together with accrued interest thereon to the Purchase Date, shall equal
to the amount of Proceeds required to be so applied.
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A Holder receiving an Offer to Purchase pursuant to this Section may
elect to have purchased the Securities to which the Offer to Purchase relates by
furnishing to the Trustee on or before 35 days preceding the Purchase Date,
written notice of its election to have all such Securities so purchased. In the
event that less than all of the Holders receiving an Offer to Purchase elect to
have the Securities subject thereto purchased, the Company or the Trustee (in
the name of the Company and at its expense) shall, no later than 25 days
preceding the Purchase Date, mail an additional Offer to Purchase to the Holders
of the Securities, if any, who have provided written notice of election to have
Securities purchased and all of whose Securities would not otherwise have been
purchased.
The Company shall perform its obligations specified in the Offer to
Purchase. Prior to the Purchase Date, the Company shall (i) accept for purchase
Securities or portions thereof tendered pursuant to the Offer to Purchase, (ii)
deposit with the Trustee money sufficient to pay the Purchase Price of all
Securities or portions thereof so accepted, and (iii) deliver to the Trustee all
the Securities so accepted together with an Officers' Certificate stating
Securities or portions thereof accepted for payment by the Company. The Trustee
shall promptly mail or deliver to Holders of Securities so accepted payment in
an amount equal to the Purchase Price, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security or Securities
equal in principal amount to any unpurchased portion of the Security surrendered
as requested by the Holder. Any Security not accepted for payment shall be
promptly mailed or delivered by the Company to the Holder thereof.
SECTION 10.11. Permitted Investments.
The Company shall not, nor will any Subsidiary be permitted to, make
any Investment other than a Permitted Investment.
SECTION 10.12. Limitation on Issuance of Capital Stock of Subsidiaries.
The Company and the Guarantor shall not permit, directly or indirectly,
any Subsidiary that owns (or has a Subsidiary that owns) any Collateral or that
guarantees (or has a Subsidiary that guarantees) any obligation under this
Indenture to issue or sell any shares of its Capital Stock, except to the
Company or a Wholly Owned Subsidiary of the Company.
SECTION 10.13. Dividends and Distributions; Liens Affecting Subsidiaries.
The Company and the Guarantor will not, and will not permit any
Subsidiary of the Company to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Subsidiary owned by the Company, the Guarantor or any other Subsidiary, (b) pay
any Debt owed to the Company, the Guarantor or any Subsidiary, (c) make loans or
advances to the Company, the Guarantor or any Subsidiary or (d) transfer any of
its property
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or assets to the Company, the Guarantor or any Subsidiary; provided, however,
that this Section 10.13 shall not restrict or prohibit any such encumbrances or
restrictions existing:
(i) in this Indenture or any agreement in effect on the
Effective Date or in any amendments, restatements, refinancings or
other modifications of this Indenture or any such other agreement,
provided that the encumbrance or restrictions contained therein are
comparable to, or no less restrictive than, those originally set forth
therein;
(ii) under or by reason of applicable law, rule or regulation
(including applicable currency control laws and applicable state
corporate statutes restricting the payment of dividends in certain
circumstances);
(iii) with respect to any Person or the property or assets of
such Person acquired by the Company or any Subsidiary at the time of
such acquisition, which encumbrances or restrictions are not applicable
to any Person or the property or assets of any Person other than such
Person; or
(iv) in the case of clause (d) of this Section 10.13, that
restrict in a customary manner the subletting, assignment or transfer
of any property or asset that is a lease, license, conveyance or
contract or similar property or asset.
SECTION 10.14. Limitations on Liens.
The Guarantor and the Company shall not, and shall not permit any of
their Subsidiaries to, Incur any Lien on property or assets now owned or
hereinafter acquired; except for:
(a) Liens Incurred to secure the Credit Agreement, the Morgan Stanley
Note Agreement and the Securities and this Indenture;
(b) Liens on equipment to secure Debt permitted pursuant to Section
10.8(iii);
(c) Liens securing Debt permitted pursuant to Section 10.8(x) to the
extent issued in exchange for, or the net proceeds of which are used to
exchange, refinance or refund, directly or indirectly, Debt referred to in
Sections 10.8(i)(A) and (B), 10.8(iii), 10.8(vi) or 10.8(vii);
(d) Liens for taxes not yet delinquent or which are being contested in
good faith by appropriate proceedings, provided, that adequate reserves with
respect thereto are maintained on the books of the Company or its Subsidiaries,
as the case may be, in conformity with generally accepted accounting principles;
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(e) Landlords', carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business and
with respect to amounts which are not yet delinquent or are being contested in
good faith by appropriate proceedings;
(f) Pledges or deposits made in the ordinary course of business in
connection with (A) leases, performance bonds and similar obligations, (B)
workers' compensation, unemployment insurance and other social security
legislation, (C) Liens imposed under the Packers and Stockyards Act of 1921, as
amended from time to time, and (D) to secure the performance of surety bonds and
appeal bonds required (1) in the ordinary course of business or in connection
with the enforcement of rights or claims of the Company or a Subsidiary or (2)
in connection with judgments that do not exceed $250,000 in the aggregate;
(g) Liens, easements, rights-of-way, zoning restrictions, Mineral
Rights and other similar restrictions, charges or encumbrances which do not
interfere with the ordinary conduct of the business of the Company and which do
not materially detract from the value of the property to which they attach or
materially impair the use thereof by the Company, the Guarantor or any
Subsidiary;
(h) Any attachment or judgment Lien, unless the judgment it secured
shall not, within 30 calendar days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been discharged
within 30 calendar days after the expiration of any such stay;
(i) Liens securing Debt permitted by Section 10.8(vii), provided that
such Liens attach solely to the assets of the acquired entity and do not extend
to or cover any other assets of the Company or any of its Subsidiaries;
(j) Liens in favor of the Trustee for its own benefit and for the
benefit of the Holders;
(k) Any interest or title of a lessor pursuant to a lease constituting
a Capital Lease Obligation; and
(l) Any renewal of or substitution for any Lien permitted by any of the
preceding clauses, provided that the Debt secured is not increased nor the Lien
extended to any additional assets (other than proceeds and accessions); and
(m) Liens upon New Finishing Facilities to secure New Finishing
Facility Debt permitted hereunder; and
(n) Liens (including Liens consisting of Mineral Rights) in existence
on the Effective Date. and identified on Schedule 10.8(n).
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Notwithstanding the foregoing, the Company shall not grant, or permit
to exist, any lien on or security interest in any Collateral in contravention of
Section 4.03 of the Security Agreement.
SECTION 10.15. Limitation on Transactions with Affiliates.
The Company and the Guarantor shall not, and shall not permit any
Subsidiary to, directly or indirectly, enter into any transaction not in the
ordinary course of its business (excluding (i) transactions between the Company
and Subsidiaries or between or among Subsidiaries, and (ii) transactions
permitted under Section 10.9), with any Affiliate other than Permitted Holders,
unless a majority of its Board of Directors or its Members, as the case may be,
shall determine in its good faith judgment and evidenced by a Board Resolution
that:
(1) the terms of such transaction are in the best interests of
the Company, the Guarantor or such Subsidiary; and
(2) such transaction is on terms no less favorable to the
Company, the Guarantor or such Subsidiary than those that could be
obtained in a comparable arm's-length transaction with an entity that
is not an Affiliate.
Notwithstanding anything to the contrary contained herein, so long as
no Event of Default shall have occurred and be continuing, the foregoing
provisions shall not limit or apply to (i) any transaction or series of
transactions (A) which the Board of Directors of the Company or the Members of
the Guarantor, as the case may be, shall determine, in good faith, is in the
best interest of the Company and (B) as to which the Company shall have
delivered to the Trustee a written opinion of an independent nationally
recognized investment banking firm stating that this transaction is fair to the
Company or the Guarantor, as the case may be, from a financial point of view;
(ii) any Restricted Payment not prohibited by Section 10.9; (iii) payments
pursuant to any tax sharing agreement or arrangement among the Guarantor, the
Company and any Subsidiaries; and (iv) any transactions between the Guarantor,
the Company or any of its Subsidiaries and MS Group or any of its Affiliates
involving the provision of financial, investment banking, management consulting
or underwriting services by MS Group or any of its Affiliates, provided that the
fees payable to MS Group or any of its Affiliates do not exceed the usual and
customary fees of MS Group or any such Affiliate charged to persons that are not
Affiliates of MS Group or any of its Affiliates (through direct equity
ownership, warrants, contract rights or otherwise).
SECTION 10.16. Limitation on Related Business.
The Company and the Guarantor will not, and will not permit any
Subsidiary to, engage in any business other than the businesses in which they
are engaged on the date of this Indenture and business activities reasonably
complementary or incidental thereto.
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SECTION 10.17. Provision of Financial Information.
The Company shall file with the Trustee:
(a) within 45 days after the close of each quarterly accounting period
in each fiscal year of the Company, the Consolidated balance sheets of the
Guarantor, the Company and their Subsidiaries as at the end of such quarterly
accounting period and the related Consolidated statements of income and cash
flow for such quarterly accounting period, together with a management's
discussion and analysis relating thereto, all of which shall be certified by an
Officer of the Company and the Guarantor as fairly presenting the Consolidated
financial condition and results of operations of the Company and the Guarantor
in accordance with generally accepted accounting principles consistently
applied, subject to normal year-end audit adjustments;
(b) within 90 days after the end of each fiscal year of the Company,
the Consolidated balance sheets of the Guarantor, the Company and their
Subsidiaries as at the end of such fiscal year and the related Consolidated
statements of income and cash flow for such fiscal year, certified by
independent certified public accountants of recognized national standing,
together with (i) a management's discussion and analysis relating thereto and
(ii) a statement of such accounting firm that its audit of such financial
statements was conducted in accordance with generally accepted auditing
standards; and
(c) together with the delivery of financial statements under paragraph
(a) or (b) above, a certificate of an Officer of the Company certifying that, as
of the date of such certificate and as to his or her knowledge, the Company is
in compliance with all conditions and covenants under this Indenture and, since
the date of the last such certificate delivered by the Company, no Event of
Default has occurred or, if such Event of Default has occurred, specifying the
nature and extent thereof and any corrective action taken or proposed to be
taken with respect thereto.
(d) The Company shall, upon receipt of notice from any Holder that is
proposes to sell any Securities pursuant to the exemption provided by the
Commission's Rule 144A (or any successor thereto), provide at its expense the
information required by such Rule, including without limitation a brief
statement of the nature of the Company's business and its products and services
and the financial information required by such Rule.
SECTION 10.18. Change of Control.
(a) Upon the occurrence of a Change of Control (as defined below), each
Holder of a Security shall have the right to have such Security repurchased by
the Company. The Company shall, within 30 days following the date of the
consummation of a transaction resulting in a Change of Control, mail an Offer
with respect to an Offer to Purchase all Securities Outstanding on the Purchase
Date at a Purchase Price equal to 101% of their
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principal amount together with all accrued and unpaid interest to the Purchase
Date; provided, however, that installments of interest whose Stated Maturity is
on or prior to the Purchase Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.7. Each Holder shall be entitled to tender all or any
portion of the Securities owned by such Holder or payable to such Holder on any
intervening Interest Payment Date.
(b) The Company shall perform its obligations specified in the Offer
for the Offer to Purchase. Prior to the Purchase Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Offer, (ii) deposit with the Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 10.3) money
sufficient to pay the Purchase Price of all Securities or portions thereof so
accepted and (iii) deliver or cause to be delivered to the Trustee all
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal to the Purchase Price, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security or Securities
equal in principal amount to any unpurchased portion of the Security surrendered
as requested by the Holder. Any Security not accepted for payment shall be
promptly mailed or delivered by the Company to the Holder thereof.
(c) "Change of Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act
of 1934 as in effect on the date hereof) other than one or more Permitted
Holders shall own directly or indirectly, beneficially or of record, shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding membership interests of the Guarantor; (b) a majority
of the seats (other than vacant seats) on the Board of Directors of the Company
shall at any time be occupied by persons who were neither (i) nominated by the
Board of Directors of the Company nor (ii) appointed by directors so nominated;
(c) any change in control (or similar event, however denominated) with respect
to the Company or the Guarantor shall occur under and as defined in any
indenture or agreement in respect of Debt to which the Company or the Guarantor
is a party; or (d) the Company ceases for any reason to be a Wholly Owned
Subsidiary of the Guarantor (other than as a result of the merger of the Company
into the Guarantor).
SECTION 10.19. Environmental and Safety Compliance.
The Company shall, and shall cause its Subsidiaries to, comply with all
Environmental and Safety Laws, except where failure so to comply could not
reasonably be expected to result in a Material Adverse Effect, and provide
prompt written notice to the Trustee following the receipt of any written notice
of any material violation of any Environmental and Safety Laws from any
Governmental Authority.
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SECTION 10.20. Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year ending after the date hereof, an Officers' Certificate,
stating whether or not to the knowledge of the signers thereof the Company and
the Guarantor are in compliance with all conditions and covenants under this
Indenture, including without limitation Section 8.1 and Sections 10.4 to 10.20,
inclusive, and if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge. Said
Officers' Certificate shall be accompanied by or combined with a certificate
signed by an Officer and containing the statements required by Section 314(a)(4)
of the Trust Indenture Act.
(b) The Company shall deliver to the Trustee, as soon as possible and
in any event within 10 days after the Company becomes aware of the occurrence of
an Event of Default or an event which, with notice or the lapse of time or both,
would constitute an Event of Default, an Officers' Certificate setting forth the
details of such Event of Default or default, and the action which the Company
proposes to take with respect thereto.
(c) The Company shall deliver to the Trustee, promptly after becoming
aware thereof, notice of the commencement of, any action, suit or proceeding
that, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect.
SECTION 10.21. Waiver of Certain Covenants.
The Company and the Guarantor may omit in any particular instance to
comply with any covenant or condition set forth in Section 8.1 and Sections 10.4
to 10.20, inclusive, if the Holders of at least a majority in principal amount
of the Outstanding Securities shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect; provided, however, with respect to an Offer to Purchase as to which an
Offer has been mailed, no such waiver may be made or shall be effective against
any Holder tendering Securities pursuant to such Offer, and the Company may not
omit to comply with the terms of such Offer as to such Holder.
SECTION 10.22. Further Assurances.
The Company and the Guarantor shall, upon request of the Trustee,
execute and deliver such further instruments and do such further acts as may
reasonably be necessary or proper to carry out more effectively the provisions
of this Indenture, including without limitation any instruments necessary to
preserve, protect or perfect the validity of security interests created or
intended to be created in the Collateral under the Security Documents.
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The Guarantor and the Company will cause each of their existing and
subsequently acquired or organized Subsidiaries (other than an Inactive
Subsidiary) and each of their Subsidiaries that ceases to be an Inactive
Subsidiary (a) to execute and deliver to the Trustee a Subsidiary Guarantee
Agreement pursuant to which such Subsidiary will guarantee payment of the
Securities on substantially the same terms and conditions as those set forth in
Article XIV, and (b), at such time as there shall be two or more Subsidiary
Guarantors to execute and deliver to the Trustee the Indemnity, Subrogation and
Contribution Agreement (or a supplement thereto) and (c) each other applicable
Security Document in favor of the Trustee as may be deemed necessary by the
Company or the Trustee to create a valid, perfected and enforceable security
interest in the Collateral of such Subsidiary.
In addition, from time to time, each of the Company and the Guarantor
shall, and shall cause each of their existing and subsequently acquired or
organized Subsidiaries (other than an Inactive Subsidiary) and each of their
Subsidiaries that ceases to be an Inactive Subsidiary (a) whenever it files any
further instruments and documents or takes any other action to better assure,
preserve, protect and perfect the security granted to the holders of the First
Priority Debt, it will forthwith notify the Collateral Agent thereof and (b)
will promptly, at its own expense, execute, acknowledge, deliver and cause to be
duly filed comparable instruments and documents and take such comparable actions
to better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby to the same extent as may be granted to the
First Priority Debt.
SECTION 10.23. Compliance with Security Documents.
Each of the Company and the Guarantor shall, and shall cause each of
their Subsidiaries to, comply with all of their respective covenants,
commitments and undertakings under each of the Security Documents to which it is
a party.
ARTICLE XI
Redemption of Securities
SECTION 11.1. Right of Optional Redemption.
The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time and at the Redemption Prices
specified in the form of Security hereinbefore set forth, together with accrued
interest to the Redemption Date.
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SECTION 11.2. Applicability of Article.
Redemption of Securities at the election of the Company, as permitted
or required by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
SECTION 11.3. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 11.1 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company of less than all the Securities, the Company
shall, at least 45 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Securities to be
redeemed.
SECTION 11.4. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000 and which need not, unless the
Company otherwise directs, provide for the selection of amounts which are less
than $1,000.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 11.5. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
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(2) the Redemption Price,
(3) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,
(4) if an Interest Payment date will occur on or before the
Redemption date, that the interest then payable will be paid to the
Holder as of the appropriate Record Date,
(5) that on the Redemption Date the Redemption Price, together
with all accrued and unpaid interest to the Redemption Date, will
become due and payable upon each such Security to be redeemed and that
interest thereon will cease to accrue on and after said date, and
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued and unpaid
interest.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 11.6. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 11.7. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 3.7.
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If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
SECTION 11.8. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 10.2 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Security without service charge (except as
otherwise provided in Section 3.5), a new Security or Securities of like tenor,
of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE XII
Defeasance and Covenant Defeasance
SECTION 12.1. Company's Option to Effect Defeasance or Covenant Defeasances.
The Company may at its option by Board Resolution, at any time, elect
to have either Section 12.2 or Section 12.3 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
XII.
SECTION 12.2. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section 12.1
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid and
discharged the entire Debt represented by the Outstanding Securities and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned (and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of such Securities to receive, solely from
the trust fund described in Section 12.4 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any) and
interest on such Securities when such payments are due, the Company's
obligations with respect to such Securities under Sections 3.4, 3.5, 3.6, 10.2
and 10.3, the rights, powers, trusts, duties and immunities of the Trustee
hereunder and this Article XII. Subject to
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compliance with this Article XII, the Company may exercise its option under this
Section 12.2 notwithstanding the prior exercise of its option under Section
12.3.
SECTION 12.3. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section 12.1
applicable to this Section (i) the Company shall be released from its
obligations under Section 10.5 through 10.19, inclusive, and clauses (i) and
(iii) of Section 8.1(b) and (ii) (except with respect to surviving obligations
of the Company under Section 12.2) the occurrence of an event specified in
Section 5.1(6) shall not be deemed to be an Event of Default, on and after the
date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"). For this purpose, such covenant defeasance means that 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 Section, Clause or Article,
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section, Clause or Article or by reason of any reference in any such
Section, Clause or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 12.4. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
12.2 or Section 12.3 to the then Outstanding Securities:
(1) The Company shall (a) irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 6.9 who shall agree to comply with the
provisions of this Article XII applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms will
provide, no later than one day before the due date of any payment,
money in an amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the
principal of, premium, if any, and each installment of interest on the
Securities at Maturity in accordance with the terms of this Indenture
and of such Securities, and (b) if such payment of any Securities at
Maturity results a redemption of Securities, the Company shall have
given, or made arrangements satisfactory to the Trustee for giving due
notice thereof. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of
America for the payment of which its full faith and credit is pledged
or (y) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the
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payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account
of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
(2) No Event of Default or event which with notice or lapse of
time or both would become an Event of Default shall have occurred and
be continuing on the date of such deposit or, insofar as subsections
5.1(8) and (9) are concerned, at any time during the period ending on
the 121st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of
such period).
(3) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 6.8 and
for purposes of the Trust Indenture Act with respect to any securities
of the Company.
(4) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, this Indenture
or any other agreement or instrument to which the Company is a party or
by which it is bound.
(5) The Company shall have delivered to the Trustee an
Officers' Certificate and Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 12.2 or the covenant defeasance under Section 12.3 (as
the case may be) have been complied with.
(6) In the case of an election under Section 12.2, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Outstanding Securities will not
recognize gain or loss for Federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such deposit, defeasance and
discharge had not occurred.
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(7) In the case of an election under Section 12.3, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities will not recognize gain
or loss for Federal income tax purposes as a result of such deposit and
covenant defeasance and will be subject to Federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such deposit and covenant defeasance had not occurred.
(8) The Company shall have delivered to the Trustee an
Officers' Certificate to the effect that the Securities, if then listed
on any securities exchange, will not be delisted as a result of such
deposit.
(9) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company
as defined in the Investment Company Act of 1940, as amended, or such
trust shall be qualified under such act or exempt from regulation
thereunder.
SECTION 12.5. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee -- collectively, for purposes of
this Section 12.5, the "Trustee") pursuant to Section 12.4 in respect of the
Securities shall be held in trust for the benefit of the Holders of the
Securities and applied by the Trustee in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Holders of such Securities, of all sums due and to
become due thereon in respect of principal (and premium, if any) and interest,
but such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 13.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article XII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 12.4 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance.
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SECTION 12.6. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 12.2 or 12.3 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
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article XII until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 12.2 or 12.3;
provided, however, that if the Company makes any payment of principal of (and
premium, if any) or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
the Paying Agent.
ARTICLE XIII
Meeting of Holders of Securities
SECTION 13.1. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.
SECTION 13.2. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities
for any purpose specified in Section 13.1, to be held at such time and at such
place in New York, New York as the Trustee shall determine. Notice of every
meeting of Holders of Securities, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 1.6, not less than 20 nor more
than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company pursuant to a Board Resolution, or
the Holders of at least 25% in principal amount of the Outstanding Securities
shall have requested the Trustee to call a meeting of the Holders of Securities
for any purpose specified in Section 13.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed a notice of meeting as provided above or shall not
thereafter proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Securities in the amount above specified, as the case
may be, may determine the time and the place in New York, New York for such a
meeting and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section.
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SECTION 13.3. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (1) a Holder of one or more Outstanding Securities, or (2) a
Person appointed by an instrument in writing as proxy of a Holder or Holders.
The only Persons who shall be entitled to be present or to speak at any meeting
of Holders of Securities shall be the Persons entitled to vote at such meeting
and their counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 13.4. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum for a meeting of Holders of
Securities. In the absence of a quorum within 30 minutes of the time appointed
for any such meeting, the meeting shall, if convened at the request of Holders
of Securities, be dissolved, or may, if convened in any other manner, be
adjourned for a period of not less than 10 days as determined by the chairman of
the meeting prior to the adjournment of such meeting. In the absence of a quorum
at any such adjourned meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting. Notice of the
reconvening of any such adjourned meeting shall be given as provided in Section
13.2(a), except that such notice need be given not less than ten days prior to
the date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of any such adjourned meeting shall state expressly the percentage,
as provided above, of the principal amount of the Outstanding Securities which
shall constitute a quorum.
Except as limited by the proviso to Section 9.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities; provided, however,
that, except as limited by the proviso to Section 9.2, any resolution with
respect to any consent or waiver which this Indenture expressly provides may be
given by the Holders of not less than a majority in principal amount of the
Outstanding Securities may be adopted at a meeting or an adjourned meeting duly
convened and at which a quorum is present as aforesaid only by the affirmative
vote of the Holders of a majority in principal amount of the Outstanding
Securities; and provided, further, that, except as limited by the proviso to
Section 9.2, any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in principal amount of the
Outstanding Securities may be adopted at a meeting or any adjourned meeting duly
reconvened and at which a quorum is present by such specified percentage in
principal amount of the Outstanding Securities.
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Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities, whether or not present or represented at the meeting.
SECTION 13.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved in
the manner specified in Section 1.4 and the appointment of any proxy shall be
proved in the manner specified in Section 1.4 or by having the signature of the
person executing the proxy guaranteed by any member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office, branch or
agency in the United States. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be presumed valid and
genuine without the proof specified above.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 13.2(b), in which
case the Company or the Holders of Securities that called the meeting, as the
case may be, shall in like manner appoint a temporary chairman. A permanent
chairman and permanent secretary of the meeting shall be elected by vote of the
Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting.
(c) At any meeting each Holder of a Security or proxy shall be entitled
to one vote for each $1.00 principal amount (or its equivalent) of the
Outstanding Securities held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called pursuant to
Section 13.2 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting; and the meeting may be held as so
adjourned without further notice.
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SECTION 13.6. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts and serial numbers of the Outstanding Securities held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of Holders of
Securities shall be prepared by the Secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 13.2 and, if
applicable, Section 13.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
ARTICLE XIV
Guarantee
SECTION 14.1. Guarantee.
The Guarantor hereby, jointly and severally with any Subsidiary
Guarantors, unconditionally and irrevocably guaranties to each Holder and to the
Trustee, and their respective successors and assigns, the due and punctual
payment of principal of and, within applicable grace periods, interest on the
Securities when due, whether at Stated Maturity, by acceleration, by redemption
or Offer to Purchase or otherwise, and all other monetary obligations of the
Company under this Indenture and the Securities and the due and punctual
performance within applicable grace period of all other obligations of the
Company under this Indenture and the Securities (the foregoing being hereinafter
collectively called the "Obligations"). The Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from the Guarantor, and that the Guarantor will remain bound by
this Article XIV notwithstanding any extension or renewal of any Obligation.
The Guarantor waives presentation to, demand of payment from and
protest to the Company of any of the Obligations, and also waives notice of
protest for nonpayment. The Guarantor waives notice of any default under the
Securities or the Obligations. The Obligations of the Guarantor hereunder shall
not be affected by (a) the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any right or remedy against the
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Company or any other person under this Indenture, the Securities or any other
agreement or otherwise; (b) any extension or renewal of any thereof; (c) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or the Trustee to exercise any right or remedy
against any other guarantor of the Obligations or (f) (except as provided in
Section 14.3 ) any change in the ownership of any Guarantor.
The Guarantor further agrees that its Guarantee herein constitutes a
guaranty of payment when due (and not a guaranty of collection) and waives any
right to require that any resort be had by any Holder or the Trustee to any
security held for payment of the Obligations.
The Obligations of the Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, and recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
Obligations of the Guarantor herein shall not be discharged or impaired or
otherwise affected by the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any remedy under this Indenture, the Securities or
any other agreement, by any waiver or modification of any thereof, by any
default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any act or thing or omission or delay to do any other act or
thing which may or might in any manner or to any extent vary the risk of the
Guarantor or would otherwise act as a discharge of the Guarantor as a matter of
law or equity.
The Guarantor further agrees that its Guarantee herein shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against the
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Obligation when and as the same shall become due, whether
at Stated Maturity, by acceleration, by redemption or otherwise, or to perform
its obligations specified in any Offer to Purchase, the Guarantor hereby,
jointly and severally with any Subsidiary Guarantors, promises to and will, upon
receipt of written demand by the Trustee, forthwith pay or cause to be paid, in
cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Obligations, (ii) accrued and unpaid interest on such
Obligations (but not to exceed the maximum rate permitted by applicable law) and
(iii) all other monetary Obligations of the Company to the Holders and the
Trustee.
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The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Obligations guarantied
hereby until payment in full of all Obligations. The Guarantor further agrees
that, as between the Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guarantied
hereby may be accelerated as provided in Article V for the purposes of such
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guarantied hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article V, such Obligations (whether or not due
and payable) shall forthwith become due and payable by the Guarantor for
purposes of this Section.
The Guarantor also agrees, jointly and severally, with any Subsidiary
Guarantors, to pay any and all costs and expenses (including reasonable
attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights
under this Section.
SECTION 14.2. Execution and Delivery of Guarantee.
To evidence its Guarantee set forth in Section 14.1, the Guarantor
agrees that a notation of such Guarantee substantially in the form set forth in
Section 2.5 hereof, shall be endorsed on each Security authenticated and
delivered by the Trustee and that such endorsement shall be executed on behalf
of the Guarantor by an Officer or a holder of a power of attorney authorized to
execute the Guarantee by manual or facsimile signature.
The Guarantor agrees that its Guarantee set forth in Section 14.1 shall
remain in full force and effect and apply to all the Securities notwithstanding
any failure to endorse on each Security a notation of such Guarantee.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guarantee
is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this indenture on behalf of the Guarantor.
SECTION 14.3. Successors and Assigns.
This Article XIV shall be binding upon the Guarantor and its successors
and assigns and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges conferred upon
that party in this Indenture and in the Securities shall automatically extend to
and be vested in such transferee or assignee, all subject to the terms and
conditions of this Indenture.
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SECTION 14.4. No waiver, etc.
Neither a failure nor a delay on the part of either the Trustee or the
Holders in exercising any right, power or privilege under this Article XIV shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege. The
rights, remedies and benefits of the Trustee and the Holders herein expressly
specified are cumulative and not exclusive of any other rights, remedies and
benefits which either may have under this Article at law, in equity, by statute
or otherwise.
SECTION 14.5. Modification, etc.
No modification, amendment or waiver of any provision of this Article
XIV, nor the consent to any departure by the Guarantor therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Trustee, subject to the prior written consent of the Holders, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Guarantor in any case
shall entitle the Guarantor or any other guarantor to any other or further
notice or demand in the same, similar or other circumstances.
ARTICLE XV
Security Documents
SECTION 15.1. Security Documents.
(a) In order to secure the due and punctual payment of the Second
Priority Notes and the Securities, the Company, the Guarantor and the Trustee,
in its capacity as Collateral Agent, have entered into or will enter into, as
the case may be, the Security Documents to create the security interests
thereunder and for related matters. The Company and the Guarantor covenant and
agree that they have full right, power and lawful authority to grant, bargain,
sell, release, convey, hypothecate, assign, mortgage, pledge, transfer, confirm
and grant a security interest in the property constituting the Collateral, in
the manner and form done in the Security Documents or intended to be done, and
that (a) each will forever warrant and defend the title to the same against the
claims of all Persons whatsoever in each case free and clear of all Liens
whatsoever, except Liens permitted by Section 10.14, (b) each will execute,
acknowledge and deliver to the Trustee, as such Collateral Agent, such further
assignments, transfers, assurances or other instruments and will do or cause to
be done all such acts and things as may be necessary or proper to assure and
confirm to the Trustee, as Collateral Agent, its interest in the Collateral, or
any part thereof, as from time to time constituted, and the right, title and
interest in and to the Security Documents so as to render the same available for
the security and benefit of this Indenture and of the Second Priority Notes and
the Securities.
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(b) Each Holder, by accepting the Securities, consents and agrees to
all of the terms and provisions of the Security Documents, including the
relative priority of the interests of the Second Priority Notes and the
Securities with respect to the Collateral, as the same may be amended from time
to time pursuant to the provisions of the Security Documents and this Indenture,
and authorizes and directs the Trustee to enter into each of Security Documents
to which it is a party and to perform its obligations and exercise its rights
thereunder in accordance therewith; provided, however, that if any provision of
the Security Documents limits, qualifies, or conflicts with the duties imposed
by the provisions of the Trust Indenture Act, the Trust Indenture Act controls.
(c) So long as the Morgan Stanley Note Agreement or any Second Priority
Note remains in effect, as between the holders of the Second Priority Notes and
the Holders of the Securities, the Collateral (including for this purpose the
Real Property covered by the Mortgages) as now or hereafter constituted shall be
held for the benefit of all such holders without distinction as security for the
Second Priority Obligations and the Obligations, except that, after foreclosure
any proceeds shall be applied first to the payment in full of the Second
Priority Obligations pursuant to Section 5.6. Thereafter, as amongst the
Holders, the Collateral (including for this purpose the Real Property covered by
the Mortgages) as now or hereafter constituted shall be held for the equal and
ratable benefit of the Holders without preference, priority or distinction of
any thereof over any other by reason of difference in time of issuance, sale or
otherwise, as security for the Obligations.
SECTION 15.2. Recording, Opinion of Counsel, Etc.
The Company and the Guarantor will cause, at their own expense, this
Indenture, the Security Documents, and all amendments or supplements thereto, to
be registered, recorded and filed and/or re-recorded and/or re-filed and/or
renewed in such manner and in such place or places, if any, as may be required
by law in order fully to preserve and protect the Liens of the Security
Documents and all parts of the Collateral and to effectuate and preserve the
security of the Holders and all rights of the Trustee.
The Company and the Guarantor shall furnish to the Trustee and the
Collateral Agent:
(a) promptly after the execution and delivery of this Indenture and
each of the Security Documents or other instrument of further assurance, an
Opinion of Counsel stating that, in the opinion of such Counsel, the Security
Documents and other instruments of further assurance, and any required financing
statements with respect thereto, have been properly recorded, endorsed,
registered and filed or other action has been taken, so as to make effective the
Liens intended to be created thereby, and reciting the details of such action or
stating that, in the opinion of such Counsel, no such action is necessary to
make such Liens effective; and
(b) within 15 days after September 30 in each year beginning with the
year 1997, an Opinion of Counsel, dated as of such date, either stating that, in
the opinion of such
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counsel, such action has been taken with respect to the recording, registering,
filing, rerecording, re-registering and re-filing of this Indenture and the
Security Documents, financing statements, supplemental indentures, continuation
statements or other instruments of further assurance as is necessary to maintain
the Liens of the Security Documents and reciting the details of such action, or
stating that, in the opinion of counsel, no such action prior to October 31 of
the subsequent year is necessary to maintain such Lien.
The Trustee shall hold in its possession the Security Documents, except
as it from time to time may be required for actions, suits or proceedings
relating to the Security Documents or for the purpose of enforcing or realizing
upon any right or value thereby represented. The Trustee may, from time to time,
in its sole discretion, for the purpose of convenient location of the Security
Documents, appoint one or more agents to hold physical custody, for the account
of the Trustee, of the Security Documents.
SECTION 15.3. Trust Indenture Act Requirements; Release of Collateral.
The release of any Collateral from the terms of any of the Security
Documents or the release, in whole or in part, of the Liens created by any of
the Security Documents, will not be deemed to impair the security interests
thereunder in contravention of the provisions of this Indenture if and to the
extent the Collateral or Liens are released pursuant to, and in accordance with,
the applicable Security Documents and pursuant to, and in accordance with, the
terms hereof. Subject to the provisions of Section 6.06 of the Security
Agreement, to the extent applicable, without limitation, the Company, the
Guarantor and each other obligor on the Securities shall cause ss. 314(d) of the
Trust Indenture Act relating to the release of property or securities from the
Liens of the Security Documents to be complied with. Any certificate required by
ss. 314(d) of the Trust Indenture Act may be made by two Officers of the
Company, except in cases which ss. 314(d) of the Trust Indenture Act requires
that such certificate be made by an independent Person.
SECTION 15.4. Release of Lien.
(a) In the case of releases other than pursuant to Section 6.06 of the
Security Agreement, so long as no Event of Default has occurred and is
continuing, Collateral may be released from the Lien and security interest
created by this Indenture and the Security Documents at any time or from time to
time in accordance with the provisions of the Security Documents, the Trust
Indenture Act (to the extent applicable and except as otherwise provided in the
Security Documents) and as provided hereby.
(b) Upon the request of the Company pursuant to an Officers'
Certificate and an Opinion of Counsel certifying that all conditions precedent
hereunder and under the Security Documents have been met (and at the sole cost
and expense of the Company) and upon the satisfaction of such conditions
precedent, the Collateral Agent may release (i) Collateral which
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may be released with the consent of the Holders pursuant to Article IX hereof
and the Security Agreement, (ii) Collateral which may be released pursuant to
Section 6.07 of the Security Agreement, and (iii) all Collateral upon discharge
or defeasance of this Indenture in accordance with Articles IV or XII hereof and
the Security Agreement.
(c) The release of any Collateral from the terms of this Indenture and
the Security Documents will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms hereof.
(d) Whenever Collateral is to be released in accordance with this
Section 15.4, the Collateral Agent shall execute any reasonable documents or
termination statements necessary to release the Lien of the Security Documents.
SECTION 15.5. Impairment of Security Interest.
The Guarantor and the Company will not, and will not permit any
Subsidiary to, take or omit to take any action which reasonably might or would
have the result of affecting or impairing the security interests with respect to
the Collateral in contravention of this Indenture, and the Company and the
Guarantor shall not (and shall cause the Subsidiaries not to) grant to, or
suffer to exist in favor of, any Person any interest whatsoever in the
Collateral except as permitted by the Security Documents or this Indenture.
Except for the Credit Agreement, the Guarantor and the Company will not, and
will not permit any Subsidiary to, enter into any agreement or instrument that
by its terms expressly requires that the proceeds received from the sale of any
Collateral, including without limitation any Real Property, be applied to repay,
redeem or otherwise retire any Debt of any Person other than as set forth in
this Article XV and the Security Documents.
SECTION 15.6. Authorization of Receipt of Funds by the Trustee Under the
Security Documents.
The Trustee is authorized to receive any funds for the benefit of
Holders of Securities distributed by the Collateral Agent under the Security
Documents, and to make further distributions of such funds to the Holders
according to the provisions of this Indenture.
ARTICLE XVI
Miscellaneous
SECTION 16.1. Usury Savings Clause.
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Interest on the Debt evidenced by the Securities is expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of the Debt evidenced by the Securities or otherwise, shall the
interest contracted for, charged or received by the Holders exceed the maximum
amount permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provisions of this Indenture, the Securities or of any other
document evidencing, securing, guaranteeing or otherwise pertaining to the Debt
evidenced by the Securities, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law, then
ipso facto, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances any Holder shall ever receive
anything of value as interest or deemed interest by applicable law under this
Indenture, the Securities or any other document evidencing, securing,
guaranteeing or otherwise pertaining to the Debt evidenced by the Securities or
otherwise an amount that would exceed the highest lawful rate, such amount that
would be excessive interest shall be applied to the reduction of the principal
amount owing on the Debt of the Securities held by such Holder, and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal of the Debt of the Securities held by such Holder, such excess shall
be refunded to the Company. In determining whether or not the interest paid or
payable with respect to any Debt of the Company to the Holders, under any
specific contingency, exceeds the highest lawful rate, the Company and the
Holders shall, to the maximum extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effects thereof, (c)
amortize, prorate, allocate and spread the total amount of interest throughout
the term of such Debt so that the actual rate of interest on account of such
Debt does not exceed the maximum amount permitted by applicable law, and/or (d)
allocate interest between portions of such Debt, to the end that no such portion
shall bear interest at a rate greater than that permitted by law. The terms and
provisions of this Section shall control and supersede ever other conflicting
provision of this Indenture and the Securities.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PREMIUM STANDARD FARMS, INC.
By____________________________
Name:
Title:
PSF HOLDINGS, L.L.C.
By____________________________
Name:
Title:
FLEET NATIONAL BANK
By____________________________
Name:
Title:
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STATE OF NEW YORK) ss.:
COUNTY OF NEW YORK)
On the _____ day of September __, 1996, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that he is a _____________________ of Premium Standard Farms, Inc., one
of the corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his name thereto by
like authority.
------------------------------
STATE OF NEW YORK) ss.:
COUNTY OF NEW YORK)
On the _____ day of September __, 1996, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that he is a _____________________ of PSF Holdings, L.L.C., the limited
liability company described in and which executed the foregoing instrument; and
that he signed his name thereto by authority of the Members of said limited
liability company.
------------------------------
STATE OF NEW YORK) ss.:
COUNTY OF NEW YORK)
On the _____ day of September __, 1996, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that he is a _____________________ of Fleet National Bank, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
------------------------------
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EXHIBIT A
[FORM OF]
SUBSIDIARY GUARANTY AGREEMENT
[Guarantor], a corporation (such corporation, and its successors and
assigns hereunder, being herein called the "Subsidiary Guarantor"), agrees with
Fleet National Bank, as Trustee under the Indenture referred to below, for the
equal and ratable benefit of the Holders of the 11% Senior Secured Notes due
2003 of Premium Standard Farms, Inc., a Delaware corporation (the "Company"), as
follows:
The Company, PSF Holdings, L.L.C., a Delaware limited liability
company, and Fleet National Bank, as Trustee (the "Trustee"), have entered into
an Indenture dated as of September _____, 1996 (the "Indenture"), relating to
the Securities in order to secure the Holders of the Securities. The Indenture
requires each Subsidiary existing on the date of the Indenture and each
Subsidiary which becomes or comes into existence as a Subsidiary after the date
of the Indenture to execute and deliver to the Trustee a Subsidiary Guaranty
Agreement pursuant to which such Subsidiary will guaranty payment of the
Securities on substantially the same terms and conditions as those set forth in
Article XIV of the Indenture. The undersigned is a Subsidiary and is executing
this Subsidiary Guaranty Agreement in accordance with the requirements of the
Indenture in order to become a Subsidiary Guarantor under the Indenture and as
consideration for Securities previously purchased.
Capitalized terms used herein without definition shall have the
meanings set forth in the Indenture.
ARTICLE I
Guaranty
SECTION 1.01. Guaranty. For value received, the Subsidiary Guarantor
hereby, jointly and severally with the Guarantor and each of the other
Subsidiary Guarantors, unconditionally and irrevocably guaranties to each Holder
and to the Trustee, and their respective successors and assigns, (a) the due and
punctual payment of principal of and, within applicable grace periods, interest
on the Securities when due, whether at Stated Maturity, by acceleration, by
redemption, pursuant to an Offer to Purchase or otherwise, and all other
monetary obligations of the Company under the Indenture and the Securities and
(b) the due and punctual performance within applicable grace periods of all
other obligations of the Company under the Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Obligations").
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The Subsidiary Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice of further assent from
the undersigned, and that the undersigned will remain bound hereby
notwithstanding any extension or renewal of any Obligation.
The Subsidiary Guarantor waives presentation to, demand of payment from
and protest to the Company of any of the Obligations, and also waives notice of
protest for nonpayment. The Subsidiary Guarantor waives notice of any default
under the Securities or the Obligations. The obligations of the Subsidiary
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other person under the Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of the Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations or
any of them; (e) the failure of any Holder or the Trustee to exercise any right
or remedy against any other guarantor of the Obligations or (f) (except as
provided in Section 1.02) any change in the ownership of the Guarantor or any
Subsidiary Guarantor.
The Subsidiary Guarantor further agrees that its Guaranty herein
constitutes a guaranty of payment, performance and compliance when due (and not
a guaranty of collection) and waives any right to require that any Holder or the
Trustee exhaust any right or take any action against the Company or any other
Person or that any resort be had by any Holder or the Trustee to any security
held for payment of the Obligations.
The obligations of the Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, and recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under the Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, wilful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of the Subsidiary Guarantor or would
otherwise act as a discharge of the Subsidiary Guarantor as a matter of law or
equity.
The Subsidiary Guarantor further agrees that its Guaranty herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
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In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against the
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at Stated Maturity, by acceleration, by redemption, Offer to
Purchase or otherwise, or to perform or comply with any other Obligation, the
Subsidiary Guarantor hereby, jointly and severally with the Guarantor and the
other Subsidiary Guarantors, promises to and will, upon receipt of written
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee an amount equal to the sum of (i) the unpaid principal
amount of such Obligations, (ii) accrued and unpaid interest on such Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
Obligations of the Company to the Holders and the Trustee.
The Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Obligations
guarantied hereby until payment in full of all Obligations. The Subsidiary
Guarantor further agrees that, as between the Subsidiary Guarantor, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the Obligations guarantied hereby may be accelerated as provided in Article V of
the Indenture for the purposes of the Subsidiary Guarantor's Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guarantied hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article V of the Indenture, such Obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for purposes
of this Section.
The Subsidiary Guarantor also agrees, jointly and severally with the
Guarantor and any other Subsidiary Guarantors, to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
SECTION 1.02. Releases. Concurrently with any sale, lease, transfer or
other disposition permitted by and in accordance with the terms of the Indenture
(other than to the Company or any Affiliate of the Company), by way of merger,
consolidation or otherwise, of all or substantially all of the assets of the
Subsidiary Guarantor or all of the Capital Stock of the Subsidiary Guarantor
owned by the Company and its Affiliates, the Subsidiary Guarantor (in the event
of such a sale, lease, transfer or other disposition of all such Capital Stock)
or the corporation acquiring the property (in the event of such a sale, lease,
transfer or other disposition, by way of a merger, consolidation or otherwise,
of all or substantially all of the assets of the Subsidiary Guarantor) shall be
released and relieved of its guaranty obligations. Upon delivery by the Company
to the Trustee of an Officers' Certificate and an Opinion of Counsel to the
effect that such sale, lease, transfer or other disposition was made by the
Company as permitted by and in accordance with the provisions of the Indenture,
the Trustee shall execute any documents reasonably required to evidence the
release of the Subsidiary Guarantor from its guaranty obligations.
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SECTION 1.03. Successors and Assigns. Except as provided in Section
1.02, this Guaranty Agreement shall be binding upon the Subsidiary Guarantor and
its successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in the Indenture and in the Securities shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions of the Indenture.
SECTION 1.04. No Waiver, etc. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Subsidiary Guaranty Agreement shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise of any right, power or privilege. The rights, remedies and benefits of
the Trustee and the Holders herein expressly specified are cumulative and not
exclusive of any other rights, remedies and benefits which either may have under
this Subsidiary Guaranty Agreement at law, in equity, by statute or otherwise.
SECTION 1.05. Modification, etc. No modification, amendment or waiver
of any provision of this Subsidiary Guaranty Agreement, nor the consent to any
departure by the Subsidiary Guarantor therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Trustee, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Subsidiary Guarantor in
any case shall entitle the Subsidiary Guarantor or any other guarantor to any
other or further notice or demand in the same, similar or other circumstances.
ARTICLE II
Miscellaneous
SECTION 2.01. Notices. Any notice or communication to the Subsidiary
Guarantor shall be in writing and delivered in person or mailed by first-class
mail addressed to the address for Subsidiary Guarantor set forth below,
SECTION 2.02. Governing Law. This Subsidiary Guaranty Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York but 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.
SECTION 2.03. Successors. All agreements of the Subsidiary Guarantor in
this Subsidiary Guaranty Agreement shall bind its successors.
SECTION 2.04. Multiple Originals. The Subsidiary Guarantor may sign any
number of copies of this Subsidiary Guaranty Agreement. Each signed copy shall
be an original, but
4
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all of them together represent the same agreement. One signed copy is enough to
prove this Subsidiary Guaranty Agreement. Delivery of an executed signature page
of this Agreement by facsimile transmission shall be as effective as delivery of
a manual executed counterpart of the Agreement.
SECTION 2.05. Headings. The headings of the Articles and Sections of
this Subsidiary Guaranty Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
Dated:
[SUBSIDIARY GUARANTOR],
by
-------------------------------
President
Address:
-------------------------------
Secretary
- ------------------------
- ------------------------
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5
SECURITY AND COLLATERAL AGENCY AGREEMENT dated as of
September __, 1996, among PSF HOLDINGS, L.L.C., a Delaware
limited liability company (the "Guarantor"), PREMIUM STANDARD
FARMS, INC., a Delaware corporation and a wholly owned
subsidiary of the Guarantor (the "Company"), each subsidiary
of the Company listed on Schedule I hereto (each such
subsidiary individually, a "Subsidiary Guarantor", and
collectively, the "Subsidiary Guarantors"; the Guarantor, the
Company and the Subsidiary Guarantors are referred to
collectively herein as the "Grantors"), and FLEET NATIONAL
BANK, a national banking association, as collateral agent (in
such capacity, the "Collateral Agent") for the Secured Parties
(as defined herein).
WHEREAS, the Company proposes to issue up to $10,000,000 aggregate
principal amount of its Senior Secured Second Priority Notes due 2002 (the
"Second Priority Notes") pursuant to the Note Purchase Agreement of even date
herewith among the Company, the Guarantor and Morgan Stanley Group, Inc. (as
from time to time amended and in effect, the "Note Agreement"), the Company's
obligations with respect to the Second Priority Notes and under the Note
Agreement and the other Security Documents, including any amendments, extensions
and modifications thereto, being referred to herein as the "Second Priority
Obligations"; and
WHEREAS, the Company proposes to issue its 11% Senior Secured Notes due
2003 in an original aggregate principal amount of $117,500,000 and interest
thereon in the form of additional such Notes (collectively, the "Securities")
pursuant to the Indenture, the Company's obligations with respect to the
Securities and under the Indenture and the other Security Documents, including
any amendments, extensions and modifications thereto, being referred to herein
as the "Securities Obligations"; and
WHEREAS, the Guarantor and Subsidiary Guarantors, pursuant to the Note
Agreement, the Guaranty Agreements (as defined in the Note Agreement), the
Indenture and the Subsidiary Guaranty Agreements, have guaranteed, or will
hereafter guarantee, the due payment and performance of all of the Obligations;
and
WHEREAS, concurrently herewith the Guarantor and the Company have entered
into a Credit Agreement, dated as of September __, 1996 and related security
documents (collectively, as from time to time in effect, the "Senior Loan
Documents") with The Chase Manhattan Bank and other lenders identified therein
with respect to borrowings by the Company of up to an aggregate principal amount
not exceeding $90,000,000 (together with interest thereon and the other fees and
expenses provided for in the Senior Loan Documents, the "First Priority Debt")
and pursuant to which the Grantors have granted a first priority security
interest and lien in the Collateral to secure the First Priority Debt; and
WHEREAS, the Note Agreement and the Indenture contemplate that the Second
Priority Obligations and the Securities Obligations will be secured by the
Collateral assigned, transferred, mortgaged and pledged hereunder and under the
other Security Documents provided for therein or herein by the Grantors to the
Collateral Agent for the benefit of the holders of the Second Priority Notes and
the Securities, any proceeds thereof to be applied first to the payment in full
of
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2
the Second Priority Notes and thereafter to the payment in full of the
Securities, all as herein provided, subject to the prior liens and security
interests in such Collateral granted by the Grantors for the benefit of the
First Priority Creditors (as defined herein); and
WHEREAS, the Guarantor, the Company, the Senior Collateral Agent and the
Collateral Agent have entered into an Intercreditor Agreement of even date
herewith (as from time to time in effect, the "Intercreditor Agreement"),
pursuant to which the parties thereto have acknowledged their respective
interests in the Collateral and have set forth the relative positions with
respect thereto of the First Priority Creditors, on the one hand and the Secured
Parties, on the other hand; and
WHEREAS, the holders of the Second Priority Notes in the Note Agreement
have agreed to be bound by the terms and provisions of the Agreement and the
Intercreditor Agreement and the holders of the Securities, in accepting delivery
thereof, have acknowledged that their rights and interests in any proceeds of
the Collateral and Real Estate are third in priority after those of the holders
of the First Priority Debt and the Second Priority Notes and have agreed to be
bound by the terms and provisions of this Agreement and the Intercreditor
Agreement.
Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Indenture.
SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.
"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right, title
and interest in any returned goods, together with all rights, titles, securities
and guarantees with respect thereto, including any rights to stoppage in
transit, replevin, reclamation and resales, and all related security interests,
liens and pledges, whether voluntary or involuntary, in each case whether now
existing or owned or hereafter arising or acquired.
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3
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents,
(c) Equipment, (d) General Intangibles, (e) Inventory, (f) Proceeds, (g)
Payments, (h) Capital Stock of the Guarantor's and Company's subsidiaries, and
(i) cash and cash accounts (including the Concentration Account, the Collection
Deposit Accounts and any other accounts established in the name of the Company
with the Senior Collateral Agent), whether now owned or hereafter acquired. For
purposes of Article VI hereof, the term Collateral shall also include Real
Property.
"Collection Deposit Account" shall mean a lockbox account of a
Grantor maintained for the benefit of the Secured Parties with the Collateral
Agent or with a Sub-Agent pursuant to a Lockbox and Depository Agreement.
"Concentration Account" shall mean the cash collateral account to be
established at the office of the Collateral Agent in the name of the Collateral
Agent pursuant to the Lockbox and Depository Agreements.
"Copyright License" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in
the Recitals to this Agreement.
"Documents" shall mean all instruments, documents of title, drafts,
notes, acceptances and chattel paper, whether now owned or hereafter acquired,
files, records, ledger sheets and documents covering or relating to any of the
Collateral.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
"Events of Default" shall mean the Events of Default defined in the
Second Priority Notes and in the Indenture.
"First Priority Creditors" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Senior Collateral Agent, (d) the Issuing Bank, (e)
the beneficiaries of each indemnification obligation undertaken by any Grantor
under any Senior Loan Document and (f) the successors and
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4
assigns of each of the foregoing, which capitalized terms if not defined herein
have the meanings provided in the Credit Agreement.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, and other agreements), Intellectual Property,
goodwill, registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts
Receivable.
"Grantor" shall have the meaning assigned to that term in the
opening paragraph of this Agreement.
"Indemnity Agreement" shall mean the Indemnity, Subrogation and
Contribution Agreement of even date herewith among the Company and the
Subsidiary Guarantors, as from time to time in effect.
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Intercreditor Agreement" shall have the meaning assigned to that
term in the Recitals to this Agreement.
"Inventory" shall mean all goods of any Grantor, whether now owned
or hereafter acquired, held for sale or lease, or furnished or to be furnished
by any Grantor under contracts of service, or consumed in any Grantor's
business, including all farm products and inventories of the following types:
(a) all hogs, pigs and swine ("Stock"), Stock in gestation, Stock semen and
Stock embryos, including all increase thereof, issue thereof (including
conceived but unborn young), and products thereof, including processed pork,
owned or held by the Grantor, now or hereafter existing, including any of the
foregoing that are returned to or repossessed by or on behalf of any Grantor,
and all accessions thereto, products thereof and documents therefor and (b) all
stores and supplies now owned or hereafter acquired by any Grantor, including
feed, seed, fertilizer, chemicals, pesticides and all other such supplies used
in any Grantor's operations.
"License" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense to which any Grantor is a
party, including those listed on Schedule
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5
III (other than, to the extent so indicated on Schedule III, those license
agreements in existence on the date hereof and listed on Schedule III and those
license agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
licensee thereunder).
"Lockbox and Depository Agreement" shall mean any Lockbox and
Depository Agreement substantially in the form of Annex 1 hereto among a
Grantor, the Collateral Agent and a Sub-Agent.
"Lockbox System" shall have the meaning assigned to such term in
Section 5.02.
"Majority Holders" shall mean the holders of more than 50% of the
sum of (i) the aggregate outstanding principal amount of the Second Priority
Notes, and (ii) the aggregate outstanding amount of the unused Purchase
Commitments under the Note Agreement, and (iii) the aggregate outstanding
principal amount of the Securities, as respectively determined from the records
of the Company and the Security Register under the Indenture, acting as a single
class.
"Majority Noteholders" shall mean the holders of more than 50% of
the sum of (i) the aggregate outstanding principal amount of the Second Priority
Notes and (ii) the aggregate outstanding amount of the unused Purchase
Commitments under the Note Agreement.
"Majority Securities Holders" shall mean the holders of more than
50% of the outstanding principal amount of the Securities.
"Note Agreement" shall have the meaning assigned to such term in the
Recitals to this Agreement.
"Noteholders" shall mean the Purchasers and the holders of the
Second Priority Notes.
"Obligations" shall mean the Second Priority Obligations and the
Securities Obligations.
"Ordinary Course of Business" means, with respect to sales of
Inventory or services performed, all sales of Inventory or services performed by
the Company in the ordinary course of business, but in any event excluding (i)
"bulk transfers" as defined in Section 6-102 of the Uniform Commercial Code,
(ii) such sales and services after the time there shall have occurred an Event
of Default under Section 6.01(8) or (9) and (iii) such sales and services after
the time the Collateral Agent has taken possession of such Inventory after the
occurrence of an Event of Default and the Company has rights in such Inventory
pursuant to Section 9-506 of the Uniform Commercial Code.
"Patent License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to make, use or sell any
invention on which a Patent, now or hereafter owned by any Grantor or which any
Grantor otherwise has the right to license, is in existence, or granting to any
Grantor any right to make, use or sell any invention on which a
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6
Patent, now or hereafter owned by any third party, is in existence, and all
rights of any Grantor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Payments" shall mean all payments under any governmental subsidy,
loan or payment programs, or the like, including all subsidy deficiency,
diversion, disaster and price support payments and each Grantor's beneficial
interest under any trust or letter of credit established for the benefit of such
Grantor (and others, if applicable) under any Federal or state laws,
Agricultural Commodities Act, the United States Warehouse Act and the like.
"Perfection Certificate" shall mean a certificate substantially in
the form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by the chief financial
officer and the chief legal officer of the Company.
"Pledge Agreement" shall mean the Pledge Agreement of even date
herewith among the Guarantor, the Company and the Subsidiary Pledgors (as
therein defined) and the Collateral Agent, as amended, supplemented or otherwise
modified from time to time.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property that constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
by or held on behalf of the Collateral Agent pursu ant to the Lockbox System,
(b) any claim of any Grantor against any third party for (and the right to sue
and recover for and the rights to damages or profits due or accrued arising out
of or in connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by any Grantor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by any Grantor or licensed under a Trademark License or injury
to the goodwill associated with or symbolized by any Trademark now or hereafter
owned by any Grantor, (iii) past, present or future breach of any License and
(iv) past, present or future infringement of any Copyright now or hereafter
owned by any Grantor or licensed under a Copyright License and (c) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Purchaser" shall mean each Purchaser under the Note Agreement.
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7
"Second Priority Notes" has the meaning assigned to such term in the
Recitals to this Agreement.
"Second Priority Obligations" shall have the meaning assigned to
such term in the Recitals to this Agreement.
"Securities Obligations" shall have the meaning assigned to such
term in the Recitals to this Agreement.
"Secured Notes" shall mean the Second Priority Notes and the
Securities at the time outstanding.
"Secured Parties" shall mean (a) the Purchasers and the holders of
the Second Priority Notes, (b) the holders of the Securities, (c) the Trustee
and (d) the Collateral Agent.
"Securityholders" means the holders of the Secured Notes.
"Security Interest" shall mean the security interests granted under
Section 2.01.
"Senior Loan Documents" shall have the meaning assigned to that term
in the Recitals to this Agreement.
"Senior Security Agreement" shall mean the Security Agreement of
even date herewith among the Grantors and The Chase Manhattan Bank, as
collateral agent for the benefit of the First Priority Creditors, as amended or
modified from time to time.
"Stock" shall have the meaning assigned to that term in the
definition of Inventory.
"Sub-Agent" shall mean a financial institution that shall have
delivered to the Collateral Agent an executed Lockbox and Depository Agreement.
"Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
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SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.1 of the Indenture shall be applicable to this Agreement.
SECTION 1.04. Actions by Securityholders. Any request, demand,
authorization, direction, notice, consent or waiver or other action hereunder to
be given or taken by Securityholders or by Noteholders or Holders must be
embodied in and evidenced by one or more instruments in substantially similar
tenor signed by such Persons in person or by agent duly appointed in writing;
and such action shall become effective when such instrument or instruments are
delivered to the Collateral Agent. Such instrument or instruments (and the
actions embodied therein and evidenced thereby) are herein sometimes referred to
as the "Actions" of the Persons signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Collateral Agent and the Company, if made in the manner provided in this
Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Collateral Agent deems sufficient.
Any request, demand, authorization, direction, notice, comment or
waiver or other Action hereunder of the holder of any Second Priority Note or
any of the Securities shall bind every future holder of the same security and
the holder of any security issued upon the transfer or exchange thereof or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Collateral Agent or any Guarantor in reliance thereon, whether or not notation
of such action is made upon such security.
SECTION 1.05. Application of Trust Indenture Act. The Trust
Indenture Act shall apply as a matter of law (or to the extent not so required,
as a matter of contract) to this Agreement and the other Security Documents for
purposes of interpretation, construction and definition of rights and
obligations hereunder and under the other Security Documents. If any provision
hereof or thereof limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such Act to be a part of and govern this
Agreement, the latter shall control. If any provision hereof or thereof modifies
or excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to the Agreement or such
other Security Document as so modified or excluded, as the case may be.
SECTION 1.06. Respective Rights of Securityholders. The Security
Interest hereunder and the security granted under the other Security Documents
are intended for the benefit of all the Secured Parties, provided, only, that
any proceeds hereunder or thereunder collected by the Collateral Agent are to be
applied, after payment of its fees and expenses, first to payment in full of the
Second Priority Obligations and thereafter to payment of the Securities
Obligations.
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With respect to all other Actions taken by Securityholders hereunder
or thereunder, the holders of the Second Priority Notes and the Securities shall
act as a single class.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, a security
interest in all of such Grantor's right, title and interest in, to and under the
Collateral (the "Security Interest"). Without limiting the foregoing, the
Collateral Agent is hereby authorized to file one or more financing statements
(including fixture filings), continuation statements, filings with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) or other documents
for the purpose of perfecting, confirm ing, continuing, enforcing or protecting
the Security Interest granted by each Grantor, without the signature of any
Grantor, and naming any Grantor or the Grantors as debtors and the Collateral
Agent as secured party.
SECTION 2.02. Other Security. As additional security for the payment
or performance of Obligations, and in confirmation of the grant of the Security
Interest, there are concurrently herewith being, or will hereafter be, delivered
to the Collateral Agent, its successors and assigns, for the benefit of the
Secured Parties, (a) by the Company, the documents identified in Schedule VI
hereto, mortgaging all of its Real Property and the Assignment of Contracts and
(b), by one or more of the Guarantor, the Company and the Subsidiary Pledgors
(as therein defined), the Pledge Agreement, pledging the Capital Stock of the
Subsidiaries, the Indemnity Agreement and the ancillary agreements referred to
therein. The Collateral Agent's rights, interests and duties under such
documents are to be construed and exercised in a manner consistent with the
provisions of this Agreement.
SECTION 2.03. No Assumption of Liability. The Security Interest and
the Mortgages are granted as security only and shall not subject the Collateral
Agent or any other Secured Party to, or in any way alter or modify, any
obligation or liability of any Grantor with respect to or arising out of the
Collateral.
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ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant the Security Interest hereunder and has full power and authority to grant
to the Collateral Agent the Security Interest in such Collateral and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other person other than any
consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Section 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral in
which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements. Each Grantor shall ensure that such financing
statements are filed in said offices promptly after the execution and delivery
of this Agreement.
(b) Each Grantor shall ensure that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property shall have been received and recorded within
three months after the execution of this Agreement with respect to United States
Patents and United States registered Trademarks (and Trademarks for which United
States registration applications are pending) and within one month after the
execution of this Agreement with respect to United States registered Copyrights
by the United States Patent and Trademark Office and the United States Copyright
Office pursuant to 35 U.S.C. ss. 261, 15 U.S.C. ss. 1060 or 17 U.S.C. ss. 205
and the regulations thereunder, as applicable, and otherwise as may be required
pursuant to the laws of any other necessary jurisdiction, to protect the
validity of and to establish a legal, valid and perfected security interest in
favor of the Collateral Agent (for the ratable benefit of the Secured Parties)
in respect of all Collateral consisting of Patents, Trademarks and Copyrights in
which a security interest may be perfected by filing, recording or registration
in the United States (or any political subdivision thereof) and its territories
and possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to
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11
perfect the Security Interest with respect to any Collateral consisting of
Patents, Trademarks and Copyrights (or registration or application for
registration thereof) acquired or developed after the date hereof).
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions and
(c) a security interest that shall be perfected in all Collateral in which a
security interest may be perfected by the filing of such financing statements in
each such jurisdiction and upon the receipt and recording of this Agreement with
the United States Patent and Trademark Office and the United States Copyright
Office, as applicable, within the three month period (commencing as of the date
hereof) pursuant to 35 U.S.C. ss. 261 or 15 U.S.C. ss. 1060 or the one month
period (commencing as of the date hereof) pursuant to 17 U.S.C. ss. 205 and
otherwise as may be required pursuant to the laws of any other necessary
jurisdiction. The Security Interest is and shall be prior to any other Lien on
any of the Collateral, other than Liens expressly permitted to be prior to the
Security Interest pursuant to Section 6.10 of the Note Agreement and Section
10.14 of the Indenture.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.10 of the Note Agreement and Section 10.14 of the
Indenture. Other than the filings made with respect to the First Priority Debt,
the Grantor has not filed or consented to the filing of (a) any financing
statement or analogous document under the Uniform Commercial Code or any other
applicable laws covering any Collateral, (b) any assignment in which any Grantor
assigns any Collateral or any security agreement or similar instrument covering
any Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens expressly
permitted pursuant to Section 10.14 of the Indenture.
ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place
of Business. (a) Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility),
(iii) in its identity or corporate structure or (iv) in
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12
its Federal Taxpayer Identification Number. Each Grantor agrees not to effect or
permit any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code or otherwise that are required in
order for the Collateral Agent to continue at all times following such change to
have a valid, legal and perfected first priority security interest in all the
Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by such Grantor is damaged or
destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the Collateral owned by it as
is consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral.
SECTION 4.02. Periodic Certification. (a) Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 7.4 of the Indenture, the Company shall deliver to the
Collateral Agent a certificate executed by the chief financial officer and the
chief legal officer of the Company (i) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming that there has
been no change in such information since the date of such certificate or the
date of the most recent certificate delivered pursuant to this Section 4.02 and
(ii) certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the Security Interest for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period). Each certificate
delivered pursuant to this Section 4.02 shall identify in the format of Schedule
II, III, IV or V, as applicable, all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.
(b) Concurrently with the delivery of the certificate required by
clause (a) above, the Company shall deliver to the Collateral Agent an Officers'
Certificate certifying that, based upon their review of the Indenture, the
Security Documents and other relevant information and after consulting with
counsel, the Company is in compliance with its covenants in the Indenture, the
Note Agreement, and Security Documents, including without limitation Sections
3.02, 4.01, 4.04, 4.07 and 4.13 of this Agreement, Sections 2, 15 and 23 of the
Pledge Agreement, Sections 16, 18, 19 and 20 of the Texas Deed of Trust,
Sections 16, 18, 19 and 20 of the Missouri Deed of Trust, Section 10.22 of the
Indenture, and Section 6.11 of the Note Agreement, or if a default under any of
the foregoing is continuing, describing the same and setting forth the actions
being undertaken by the Company to cure the same.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof
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13
against any Lien not expressly permitted pursuant to Section 6.10 of the Note
Agreement and Section 10.14 of the Indenture.
SECTION 4.04. Further Assurances. Each Grantor agrees that, whenever
it files any further instruments and documents or takes any other action to
better assure, preserve, protect and perfect the security granted to the holders
of the First Priority Debt or whenever it is necessary to further assure,
preserve, protect or perfect the Security Interests, it will forthwith notify
the Collateral Agent thereof and will promptly, at its own expense, execute,
acknowledge, deliver and cause to be duly filed comparable instruments and
documents and take such comparable actions to better assure, preserve, protect
and perfect the Security Interest and the rights and remedies created hereby to
the same extent as may be granted to the First Priority Debt.
Without limiting the generality of the foregoing, each Grantor
hereby agrees, from time to time, to supplement this Agreement by supplementing
Schedule II, III, IV or V hereto or adding additional schedules hereto to
specifically identify any after-acquired asset or item that may constitute
Copyrights, Licenses, Patents or Trademarks. Each Grantor agrees that it will
use its best efforts to take such action as shall be necessary in order that all
representations and warranties hereunder shall be true and correct with respect
to such Collateral within 30 days after the date it acquires the same.
SECTION 4.05. Inspection and Verification. The Collateral Agent and
such persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantors' own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantors' affairs with the officers of the Grantors and their independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, health or other condition and status of, or any other
matter relating to, the Collateral, including, in the case of Accounts or
Collateral in the possession of any third person, by contacting Account Debtors
or the third person possessing such Collateral for the purpose of making such a
verification. The Collat eral Agent shall have the absolute right to share any
information it gains from such inspection or verification with the Secured
Parties or their respective legal, financial or other advisor.
SECTION 4.06. Taxes; Encumbrances. At its option, the Collateral
Agent may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted pursuant to Section 6.10 of the Note Agreement and Section
10.14 of the Indenture, and may pay for the maintenance and preservation of the
Collateral to the extent any Grantor fails to do so as required by the Note
Agreement, the Indenture or this Agreement, and each Grantor jointly and
severally agrees to reimburse the Collateral Agent on demand for any payment
made or any expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.06 shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the Note Agreement and the Indenture.
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14
SECTION 4.07. Assignment of Security Interest. If at any time any
Grantor shall take a security interest in any property of an Account Debtor or
any other person to secure payment and performance of an Account, such Grantor
shall promptly assign such security interest to the Collateral Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the Account Debtor or other person granting the security interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the
Grantors shall make or permit to be made an assignment, pledge or hypothecation
of the Collateral or shall grant any other Lien in respect of the Collateral,
except as expressly permitted by Section 6.10 of the Note Agreement and Section
10.14 of the Indenture. None of the Grantors shall make or permit to be made any
transfer of the Collateral and each Grantor shall remain at all times in
possession of the Collateral owned by it, except that (a) Inventory and Hedge
Agreements may be sold in the ordinary course of business and (b) unless and
until the Collateral Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in any
lawful manner not inconsistent with the provisions of this Agreement, the Note
Agreement or the Indenture. Without limiting the generality of the foregoing,
each Grantor agrees that it shall not permit any Inventory to be in the
possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None of the
Grantors will grant any extension of the time of payment of any of the Accounts
Receivable, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for the payment
thereof or allow any credit or discount whatsoever thereon, other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business and consistent with its current practices and in
accordance with such prudent and standard practices used in industries that are
the same as or similar to those in which such Grantor is engaged, without first
obtaining the written consent of the Majority Holders.
SECTION 4.11. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
their properties, including the Inventory and Equipment, in accordance with
Section 10.7 of the Indenture, and shall cause such policies to be endorsed or
otherwise amended to name the Collateral Agent as a loss payee, as its interest
may appear, and to provide that such policies may not be terminated without 30
days
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15
prior written notice to the Collateral Agent. Annually with the delivery of the
certificate required by Section 4.02(a) hereof, the Company shall deliver to the
Collateral Agent a list of all the insurance policies maintained by the Company,
together with certification by the insurers that the same are in full force and
effect. Each Grantor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent)
as such Grantor's true and lawful agent (and attorney-in-fact) for the purpose,
during the continuance of an Event of Default, of making, settling and adjusting
claims in respect of Collateral under policies of insurance, endorsing the name
of such Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
hereby or to pay any premium in whole or part relating thereto, the Collateral
Agent may, without having any obligation to do so and without waiving or
releasing any obligation or liability of the Grantors hereunder or any Event of
Default, in its sole discretion, obtain and maintain such policies of insurance
and pay such premium and take any other actions with respect thereto as the
Collateral Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this Section 4.11, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.
SECTION 4.12. Legend. Each Grantor shall legend its Accounts
Receivable and its books, records and documents evidencing or pertaining thereto
with an appropriate reference to the fact that such Accounts Receivable have
been assigned to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has a security interest therein.
SECTION 4.13. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent that is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the
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16
registration of any Trademark or Copyright) with the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, unless it promptly informs the Collateral Agent,
and executes and delivers to the Collateral Agent and files or records any and
all agreements, instruments, documents and papers as may be necessary to
evidence the Collateral Agent's security interest in such Patent, Trademark or
Copyright.
(e) Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of Trademarks and Copyrights that is material to the conduct of any
Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.
(f) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor shall, if consistent
with good business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Collateral.
(g) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or approvals
by the licensor of each Copyright License, Patent License or Trademark License
to effect the assignment of all of such Grantor's right, title and interest
thereunder to the Collateral Agent or its designee.
ARTICLE V
Collections
SECTION 5.01. Senior Lockbox System. (a) The Grantors have
established in the name of the Senior Collateral Agent, and subject to the
control of the Senior Collateral Agent pursuant to certain Lockbox and
Depository Agreements between the Grantors and the Senior Collateral Agent, for
the ratable benefit of the First Priority Creditors, a system of lockboxes and
related deposit accounts into which the Proceeds of all Accounts Receivable and
Inventory shall be deposited and forwarded to the Senior Collateral Agent in
accordance with said Lockbox and Depository Agreements. The Senior Collateral
Agent has been notified of the Security Interest and in the Intercreditor
Agreement the Senior Collateral Agent has acknowledged that it holds any
Collateral in its possession as bailee for the Collateral Agent for the benefit
of the Secured Parties, subject only to the prior rights of the First Priority
Creditors. Until the claims of the First Priority Creditors have been satisfied
in full, the Grantors shall comply with their obligations under the Senior Loan
Documents.
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SECTION 5.02. Successor Lockbox System. (a) Concurrently with the
satisfaction in full of the claims of the First Priority Creditors, the Grantors
shall establish in the name of the Collateral Agent, and subject to the control
of the Collateral Agent, pursuant to the Lockbox and Depository Agreements, for
the benefit of the Collateral Agent and the Secured Parties, a system of
lockboxes and related deposit accounts (the "Lockbox System") into which the
Proceeds of all Accounts Receivable and Inventory, including any then held by
the Senior Collateral Agent as bailee, shall be deposited and forwarded to the
Collateral Agent in accordance with the Lockbox and Depository Agreements and
thereafter shall comply with the provisions of this Article V with respect to
all collections.
(b) All Proceeds of Inventory and Accounts Receivable that have been
received on any Business Day through the Lockbox System will be transferred into
the Concentration Account on such Business Day to the extent required by the
applicable Lockbox and Depository Agreement. All Proceeds stemming from the sale
of a substantial portion of the Collateral (other than Proceeds of Accounts)
that have been received by a Grantor on any Business Day will be transferred
into the Concentration Account on such Business Day. All Proceeds received on
any Business Day by the Collateral Agent pursuant to Section 5.03 will be
transferred into the Concentration Account on such Business Day.
(c) The Concentration Account is, and shall remain, under the sole
dominion and control of the Collateral Agent. Each Grantor acknowledges and
agrees that (i) such Grantor has no right of withdrawal from the Concentration
Account, (ii) the funds on deposit in the Concentration Account shall continue
to be collateral security for all of the Obligations and (iii) upon the
occurrence and during the continuance of an Event of Default, at the Collateral
Agent's election, the funds on deposit in the Concentration Account shall be
applied as provided in Section 6.03. So long as no Event of Default has occurred
and is continuing, the Collateral Agent shall promptly remit any funds on
deposit in the Concentration Account to the General Fund Account and the Company
shall have the right, at any time and from time to time, to withdraw such
amounts from the General Fund Account as it shall deem to be necessary or
desirable.
(d) Effective upon notice to the Grantors from the Collateral Agent
after the occurrence and during the continuance of an Event of Default (which
notice may be given by telephone if promptly confirmed in writing), the
Concentration Account will, without any further action on the part of any
Grantor, the Collateral Agent or any Sub-Agent, convert into a closed lockbox
account under the exclusive dominion and control of the Collateral Agent in
which funds are held subject to the rights of the Collateral Agent hereunder.
Each Grantor irrevocably authorizes the Collateral Agent to notify each
Sub-Agent (i) of the occurrence of an Event of Default and (ii) of the matters
referred to in this paragraph (d). Following the occurrence of an Event of
Default, the Collateral Agent may instruct each Sub-Agent to transfer
immediately all funds held in each deposit account to the Concentration Account.
SECTION 5.03. Collections. (a) Each Grantor agrees after the claims
of the First Priority Creditors have been fully satisfied, (i) to notify and
direct promptly each Account Debtor and every other person obligated to make
payments on Accounts Receivable or in respect of any Inventory to make all such
payments directly to the Lockbox System established in accordance with Section
5.02, (ii) to use all reasonable efforts to cause each Account Debtor and every
other person identified in clause (i) above to make all payments with respect to
Accounts Receivable and Inven tory directly to such Lockbox System and (iii)
promptly to deposit all payments received by it on account of Accounts
Receivable and Inventory, whether in the form of cash, checks, notes, drafts,
bills of exchange, money orders or otherwise, in the Lockbox System in precisely
the form in which received (but with any endorsements of such Grantor necessary
for deposit or collection), and until they are so deposited such payments shall
be held in trust by such Grantor for and as the property of the Collateral
Agent.
(b) Without the prior written consent of the Collateral Agent, no
Grantor shall, in a manner adverse to the Secured Parties, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Lockbox System. Until the Collateral Agent shall have advised
the Grantors to the contrary, each Grantor shall, and the Collateral Agent
hereby authorizes each Grantor to, enforce and collect all amounts owing on the
Inventory and Accounts Receivable, for the benefit and on behalf of the
Collateral Agent and the other Secured Parties; provided, however, that such
privilege may at the option of the Collateral Agent be terminated upon the
occurrence and during the continuance of any Event of Default.
SECTION 5.04. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent and attorney-in-fact, and in such capacity the Collateral Agent shall have
the right, with power of substitution for each Grantor and in each Grantor's
name or otherwise, for the use and benefit of the Collateral Agent and the
Secured Parties, upon the occurrence and during the continuance of an Event of
Default (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent or any
Secured Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become due
in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and agreed that the
appointment of the Collateral Agent as the agent and attorney-in-fact of the
Grantors for the purposes set forth above is coupled with an interest and is
irrevocable. The provisions of this Section shall in no event relieve any
Grantor of any of its obligations hereunder or under any other Security Document
with
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respect to the Collateral or any part thereof or impose any obligation on the
Collateral Agent or any Secured Party to proceed in any particular manner with
respect to the Collateral or any part thereof, or in any way limit the exercise
by the Collateral Agent or any Secured Party of any other or further right that
it may have on the date of this Agreement or hereafter, whether hereunder, under
any other Security Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Subject to the provisions of
the Intercreditor Agreement, upon the occurrence and during the continuance of
an Event of Default, each Grantor agrees to deliver each item of Collateral to
the Collateral Agent on demand, and it is agreed that the Collateral Agent shall
have the right (to the extent permitted by law) to take any of or all the
following actions at the same or different times: (a) with respect to any
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Com mercial Code, the provisions of any Mortgage
related thereto or other applicable law. Without limiting the generality of the
foregoing, each Grantor agrees that the Collateral Agent shall have the right,
subject to the mandatory requirements of applicable law, to sell or otherwise
dispose of all or any part of the Collateral, at public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate. The Collateral
Agent shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal that such Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
The Collateral Agent shall give the Grantors 10 days' written notice
(which each Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions) of the Collateral Agent's intention to
make any sale of Collateral governed by that statute. Such notice, in the case
of a public sale, shall state the time and place for such sale and, in the case
of a sale at a broker's board or on a securities exchange, shall state the board
or exchange at which
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19
such sale is to be made and the day on which the Collateral, or portion thereof,
will first be offered for sale at such board or exchange and in the case of a
private sale, shall state the time after which any such sale is to be made. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix and state in
the notice (if any) of such sale. At any such sale, the Collateral, or a portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid by
the purchaser or purchasers thereof, but the Collateral Agent shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Section, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwith
standing the fact that after the Collateral Agent shall have entered into such
an agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. Acceleration and Directions by the Security Holders.
Upon the occurrence and during the continuance of a Specified Note Agreement
Event of Default, the Majority Noteholders, acting as a single class, may
accelerate the Second Security Notes and request the Collateral Agent to
exercise its rights and the remedies under this Agreement. Upon receipt of such
request, the Collateral Agenda shall give written notice to the Security holders
of the enforcement action proposed by the Majority Noteholders and, unless the
Majority Holders provide other directions to the Collateral Agent as hereinafter
provided written 30 days of such notice, the Collateral Agent shall proceed in
accordance with the Majority Noteholders' request. Thereafter, or upon the
occurrence and during the continuation of any Event of Default, the Majority
Holders, acting as a single class, shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Collateral Agent or exercising any trust or power conferred upon the Collateral
Agent by Actions in accordance with Section 1.04 hereof, provided, that such
direction shall not be in conflict with any rule of law and that the
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Collateral Agent may take any other action deemed proper by the Trustee which is
not inconsistent with such direction. For purposes of this Section, a "Specified
Note Agreement Event of Default" shall mean any Event of Default specified in
clauses (ii) (with respect to the Company's failure to comply with Sections 6.4,
6.5, 6.6, 6.8, 6.9, 6.10 or 6.11 of the Note Agreement), (vi), (vii) or (viii)
of the Second Priority Notes.
SECTION 6.03. Application of Proceeds. After the occurrence and
during the continuance of an Event of Default, any money collected by the
Collateral Agent pursuant to this Agreement or any other Security Document shall
be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent (in its capacity as such hereunder and under the other
Security Documents or as Trustee under the Indenture) in connection with
the management, operation and maintenance of any Collateral after an Event
of Default and any collection or sale of the Collateral or otherwise in
connection with this Agreement, any other Security Document or any of the
Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances
made by the Collateral Agent hereunder or under any other Security
Document on behalf of any Grantor and any other costs or expenses incurred
in connection with the exercise of any right or remedy hereunder or under
any other Security Document;
SECOND, to the payment in full of the Second Priority Obligations
(the amounts so applied to be distributed among the Purchasers and the
holders of the Second Priority Notes pro rata first in accordance with the
amounts of accrued and unpaid interest on the Second Priority Notes,
second in accordance with the amounts of principal due with respect to the
Second Priority Notes and third in accordance with the other Second
Priority Obligations owed to them on the date of any such distribution);
THIRD, to the Trustee for the payment in full of the Securities
Obligations (the amounts so applied to be distributed among the holders of
Securities pro rata in accordance with the amounts of Securities
Obligations owed to them on the date of any such distribution); and
FOURTH, to the Grantors, their respective successors or assigns, or
as a court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.04. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as
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21
the Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to the Grantors) to use, license or sub-license any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
shall be exercised, at the option of the Collateral Agent, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
SECTION 6.05. Trust Indenture Act Requirements; Release of
Collateral.
(a) The release of any Collateral from the terms of, or the release
in whole or in part of the Liens created by this Agreement, any of the Security
Documents or the Indenture, will not be deemed to impair the security interests
thereunder in contravention of the provisions of this Indenture if and to the
extent the Collateral or Liens are released pursuant to, and in accordance with,
the applicable Security Documents and the Indenture.
(b) Subject to the provisions of Sections 6.06 and 6.07 hereof, to
the extent applicable, without limitation, the Company, the Guarantor and each
other obligor on the Secured Notes shall cause Section 314(d) of the Trust
Indenture Act relating to the release of property or securities from the Liens
of the Security Documents to be complied with. Any certificate required by
Section 314(d) of the Trust Indenture Act may be made by two officers of the
company, except in cases which Section 314(d) of the Trust Indenture Act
requires that such certificate be made by an independent Person.
(c) In the case of transaction permitted by 6.06(a), the Company may
effect compliance with the provisions of this Section 6.05(c) by delivering to
the Collateral Agent within 15 days after the end of each of the six-month
periods ended on June 30 and December 31 in each year, an Officers' Certificate
to the effect that all such transactions during the preceding six-month period
were made in the ordinary course of business and that all proceeds therefrom
were used by the Company as permitted herein. The fair value of Collateral
released from the Lien of the Security Documents pursuant to Section 6.06(a)
shall not be considered in determining whether the aggregate fair value of
Collateral released from the Lien of the Security Documents in any calendar year
exceeds the 10% threshold specified in Section 314(d)(1) of the Trust Indenture
Act; provided that the Company's right to rely on this sentence at any time is
conditioned upon the Company having furnished to the Collateral Agent all
certificates described in the preceding sentence that were required to be
furnished to the Collateral Agent at or prior to such time.
SECTION 6.06. Disposition of Certain Collateral without Requesting
Release.
(a) Notwithstanding the provisions of Section 6.05 hereof, so long
as the Company complies with the provisions of Section 6.05(c), the Company and
the Guarantor may, pursuant to and in accordance with this Agreement, the other
Security Documents, the Note Agreement and the Indenture, without requesting the
release or consent of the Collateral Agent:
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22
(i) sell or dispose of in the ordinary course of business,
free from the Liens of the Security Documents, any machinery,
equipment, furniture, apparatus, tools or implements, materials or
supplies or other similar property ("Subject Property") which, in
its reasonable opinion, may have become obsolete or unfit for use in
the conduct of its businesses or the operation of the Collateral
upon replacing the same with or substituting for the same, new
Subject Property constituting Collateral not necessarily of the same
character but being of at least equal value and utility as the
Subject Property so disposed of, so long as such new Subject
Property becomes subject to the Lien of the Security Documents,
which new Subject Property shall without further action become
Collateral subject to the Lien of the Security Documents;
(ii) abandon, sell, assign, transfer, license or otherwise
dispose of in the ordinary course of business any personal property
the use of which is no longer necessary or desirable in the proper
conduct of the business of the Company or the Guarantor and the
maintenance of their respective earnings and is not material to the
conduct of the business of the Company, the Guarantor and their
Subsidiaries taken as a whole;
(iii) grant in the ordinary course of business, rights-of-way
and easements over or in respect of any of the Company's or the
Guarantor's real property, provided that such grant will not, in the
reasonable opinion of the Company's Board of Directors, impair the
usefulness of such property in the conduct of the Company's or the
Guarantor's business, and will not be prejudicial to the interests
of the Securityholders;
(iv) sell, transfer or otherwise dispose of Inventory in
the Ordinary Course of Business; or
(v) sell, collect, liquidate, factor or otherwise
dispose of Accounts and Accounts Receivable in the ordinary course
of business; or
(vi) make cash payments (including for the scheduled repayment
of Debt) from cash that is at any time part of the Collateral in the
Ordinary Course of business that are not otherwise prohibited by the
Indenture and the Security Documents; provided, however, that such
cash payments may not be made from funds on deposit in the
Concentration Account except as provided in Section 5.02 hereof.
(b) Notwithstanding the provisions of Subsection (a) above, (x) the
Company and the Guarantor shall not dispose of or transfer (by lease,
assignment, sale or otherwise), or pledge, mortgage or otherwise encumber (other
than Liens permitted by Section 6.10 of the Note Agreement and Section 10.14 of
the Indenture), Collateral pursuant to the provisions of Subsection (a) above
with a fair value to the Company equal to 10% or more of the aggregate fair
value of all Collateral then existing (as determined in the good faith judgment
of the Company or the Guarantor and, if required by the Trust Indenture Act, an
independent appraiser), in any transaction or any series of related transactions
without complying with Sections 10.10 of the
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Indenture and Section 6.05 hereof; and (y) the right of the Company and the
Guarantor to rely upon the provisions of Subsection (a) above from the date of
this Indenture to December 31, 1996 and for each semiannual period thereafter
shall be conditioned upon the Company and the Guarantor delivering to the
Collateral Agent, on or before February 28, 1997 and thereafter within 60 days
following each June 30 and December 31, an Officer's Certificate to the effect
that all of such dispositions by the Company and the Guarantor during such
preceding semiannual period ending on such dates (other than such dispositions,
collections or payments wherein the Company and the Guarantor have complied with
Section 6.05 hereof) were in the ordinary course of their business and that the
proceeds therefrom were used by the Company in connection with its business.
(c) Any disposition of Collateral made in compliance with the
provisions of this Section 6.06 shall be deemed not to impair the Liens of the
Security Documents in contravention of the provisions of this Indenture.
(d) Upon receipt of a Company Request and subject to Section 314(c)
of the Trust Indenture Act and Section 1.2 of the Indenture, the Collateral
Agent shall execute and deliver, within five business days from the receipt of
the Company Request, any instrument deemed by the Company to be necessary or
appropriate to dispose of portions of the Collateral pursuant to this Section
6.06 if the provisions of this Section 6.06 have been complied with.
SECTION 6.07. Releases.
(a) So long as no Event of Default has occurred and is continuing,
whenever any property of the Company which shall be subject to the Lien of the
Security Documents (including securities pledged under the Pledge Agreement) is
disposed of in accordance with Section 10.10 of the Indenture, the Collateral
Agent shall release the same from the Lien hereof or thereof upon receipt by the
Collateral Agent of the following:
1. A copy of a resolution of the Board of Directors of the Company,
requesting such release;
2. An Officers' Certificate stating in substance as follows:
(a)That the Company has sold or exchanged, or contracted to
sell or exchange, the property so to be released for a
consideration representing, in the opinion of the signers,
its full value to the Company, which consideration may be
cash and/or other property, to be described in reasonable
detail in such certificate;
(b)That the retention of such property is no longer desirable
in the conduct of the business of the Company; and
(c)That any money stated in said certificate to have been
received in consideration for any such sale or exchange is
being applied in accordance with the applicable provisions
of the Senior Loan Documents, the Note Agreement or Section
10.10 of the Indenture.
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3. An Opinion of Counsel to the effect that the Security Documents
or other designated deeds or instruments of conveyance, assignment or transfer
covering any property included in the consideration for such release or acquired
with the proceeds of such sale, are sufficient to subject the same to the
security interest granted by this Agreement or the other Security Documents.
(b) Upon receipt of the Officers' Certificate and Opinion of Counsel
required by Section 15.4(b) of the Indenture, the Collateral Agent must execute,
deliver or acknowledge any necessary or proper instruments of termination,
satisfaction or release to evidence the release of any Collateral permitted to
be released pursuant to this Agreement or the other Security Documents; and
(c) Whenever Collateral is to be released pursuant to Section 15.4 of the
Indenture, the Collateral Agent will execute any reasonable documents or
termination statement necessary to release the Lien of this Agreement and the
other Security Documents.
SECTION 6.08. Suits to Protect the Collateral. Upon the occurrence
of an Event of Default and subject to the provisions of the Security Documents
and the Intercreditor Agreement, (i) the Collateral Agent may, in its sole
discretion and without the consent of the Holders, take all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the
Security Documents and (b) collect and receive any and all amounts payable in
respect of the obligations of the Company and the Guarantor and (ii) the
Collateral Agent shall have the power to institute and to maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts which may be unlawful or in violation of any of the
Security Documents, the Indenture or the Note Agreement, including such suits
and proceedings as the Collateral Agent may deem expedient to preserve or
protect its interests and the interests of the Secured Parties in the Collateral
and in the principal, interest, issues, profits, rents, revenues and other
income arising therefrom (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order would impair the security interests
or be prejudicial to the interests of the Secured Parties or the Collateral
Agent), except as otherwise provided in Sections 7.09(b) and 7.15(b).
SECTION 6.09. Determinations Relating to Collateral. In the event
(i) the Collateral Agent shall receive any written request from the Company or
the Guarantor under any Security Document for consent or approval with respect
to any matter or thing relating to any Collateral or the Company's or the
Guarantor's obligations with respect thereto or (ii) there shall be due to or
from the Collateral Agent under the provisions of any Security Document any
material performance or the delivery of any material instrument, then, in each
such event, the Collateral Agent shall be entitled to hire experts, consultants,
agents and attorneys to advise the Collateral Agent on the manner in which the
Collateral Agent should respond to such request or render any requested
performance. The Collateral Agent shall be fully protected in the taking of any
action recommended or approved by any such expert, consultant, agent or attorney
or agreed to by an Act of the Majority Holders, pursuant to Section 1.04.
SECTION 6.10. Impairment of Security Interest. The Guarantor and the
Company will not, and will not permit any Subsidiary to, take or omit to take
any action which reasonably might or would have the result of affecting or
impairing the security interests with
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25
respect to the Collateral in contravention of this Security Agreement or any
other Security Document and the Company and the Guarantor shall not (and shall
cause the Subsidiaries not to) grant to, or suffer to exist in favor of, any
Person any interest whatsoever in the Collateral except as permitted by the
Security Documents. The Guarantor and the Company will not, and will not permit
any Subsidiary to, enter into any agreement or instrument that by its terms
expressly requires that the proceeds received from the sale of any Collateral or
Real Property be applied to repay, redeem or otherwise retire any Debt of any
Person other than as set forth in Article V of the Indenture, this Article VI
and the other Security Documents.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 8.1 of the Note Agreement and Sections 1.5 and 1.6 of the
Indenture.
SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Note Agreement, the Indenture, any
other Security Document, any agreement with respect to any of the Obligations or
any other agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Note Agreement, the Indenture, any other Security
Document or any other agreement or instrument relating to the foregoing, (c) any
exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the issuance of the Second Priority Notes and
the Securities, regardless of any investigation made by the holders thereof or
on their behalf, and shall continue in full force and effect until this
Agreement shall terminate in accordance with Section 7.14.
SECTION 7.04. Binding Effect; Several Agreement. This Agreement
shall become effective as to any Grantor when a counterpart hereof executed on
behalf of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations
<PAGE>
<PAGE>
26
hereunder or any interest herein or in the Collateral (and any such assignment
or transfer shall be void) except as expressly contemplated by this Agreement or
the Credit Agreement. This Agreement shall be construed as a separate agreement
with respect to each Grantor and may be amended, modified, supplemented, waived
or released with respect to any Grantor without the approval of any other
Grantor and without affecting the obligations of any other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Grantor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.
SECTION 7.06. Certifying Rights of Collateral Agent. The rights,
powers and protections afforded the Trustee by the Indenture, including without
limitation those enumerated in Section 6.3 thereof, are hereby incorporated
herein by reference and made applicable to the Collateral Agent, provided that
references therein to "Holders" shall for this purpose be deemed to mean
"Securityholders".
SECTION 7.07. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable fees and expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents (the Collateral Agent and such counsel, experts and
agents being collectively referred to as "Indemnitees"), that the Collateral
Agent may incur in connection with (i) the administration of this Agreement and
the other Security Documents (including the customary fees and charges of the
Collateral Agent for any audits conducted by it or on its behalf with respect to
the Accounts Receivable or Inventory), (ii) the custody or preservation of, or
the sale of, collection from or other realization upon any of the Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Security Documents, each Grantor jointly and severally agrees to indemnify
the Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, the execution, delivery or performance of this
Agreement or any claim, litigation, investigation or proceeding relating hereto
or to the Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Obliga tions secured hereby. The provisions of this Section 7.07
shall remain operative and in full force and effect regardless of the
termination of this Agreement or any other Security Document, the consummation
of the transactions contemplated hereby, the repayment of any of the Second
<PAGE>
<PAGE>
27
Priority Notes or the Securities, the invalidity or unenforceability of any term
or provision of this Agreement or any other Security Document, or any
investigation made by or on behalf of the Collateral Agent or any Secured Party.
All amounts due under this Section 7.07 shall be payable on written demand
therefor.
SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.09. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and under the other Security Documents and of the Secured Parties under the Note
Agreement or the Indenture are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Security Document or consent to any departure by any
Grantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Grantor in any case shall entitle such Grantor or any
other Grantor to any other or further notice or demand in similar or other
circumstances.
(b) Except for any waivers, amendments or modifications comparable
to those described in Section 9.1 of the Indenture (references therein to
"Holders" being taken to include the Noteholders), neither this Agreement nor
any other Security Document nor any provision hereof or thereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to obtaining
the prior written consent of the Majority Noteholders and the Majority
Securities Holders, each voting as a separate class, in accordance with Section
1.04 hereof.
SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER SECURITY
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER SECURITY DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.10.
SECTION 7.11. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the
<PAGE>
<PAGE>
28
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 7.04. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.
SECTION 7.13. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 7.14. Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Security Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any Secured Party may otherwise have to bring
any action or proceeding relating to this Agreement or the other Security
Documents against any Grantor or its properties in the courts of any
jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 7.15. Termination. (a) This Agreement and the Security
Interest shall terminate when all the Obligations have been paid in full in cash
and the Purchase Commitments (as defined in the Note Agreement) have been
terminated.
<PAGE>
<PAGE>
29
(b) Upon any sale or other transfer by any Grantor of any Collateral
that is permitted under the Note Agreement and the Indenture, or upon the
effectiveness of any written consent to the release of the Security Interest in
any Collateral pursuant to the Note Agreement and the Indenture, the Security
Interest in such Collateral shall be automatically released, provided that in no
event shall all or substantially all of the Collateral be released without the
written consent of the Majority Securities Holders and all the Noteholders.
(c) In connection with any termination or release pursuant to
paragraphs (a) and (b) above, the Collateral Agent shall execute and deliver to
the Grantors, at the Grantors' expense, all Uniform Commercial Code termination
statements and similar documents that the Grantors shall reasonably request to
evidence such termination. Any execution and delivery of termination statements
or documents pursuant to this Section 7.15 shall be without recourse to or
warranty by the Collateral Agent.
SECTION 7.16. Additional Grantors. Pursuant to Section 10.22 of the
Indenture, each Subsidiary (other than any Inactive Subsidiary) of the Company
that was not in existence or not such a Subsidiary on the date of the Indenture
is required to enter into this Security Agreement upon becoming such a
Subsidiary (or upon ceasing to be an Inactive Subsidiary). Upon execution and
delivery by the Collateral Agent and a Subsidiary of an instrument in the form
of Exhibit A to the Indenture, such Subsidiary shall become a Grantor and a
Subsidiary Guarantor hereunder with the same force and effect as if originally
named as a Grantor and a Subsidiary Guarantor herein. The execution and delivery
of any such instrument shall not require the consent of any Subsidiary Guarantor
hereunder. The rights and obligations of each Subsidiary Guarantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Subsidiary Guarantor as a party to this Agreement.
SECTION 7.17. Priorities among Agents. If, as contemplated by
Section 10 of the Intercreditor Agreement, it should become necessary to have
separate collateral agents to act for the Second Priority Notes ("Second
Priority Agent") and for the Securities ("Third Priority Agent"), then (i) all
references in the Intercreditor Agreement to the Junior Collateral Agent shall
be taken to refer to the Second Priority Agent so long as any Second Priority
Obligations exist, and thereafter to the Third Priority Agent, and (ii) all
references in the Security Documents to the Collateral Agent shall be deemed to
refer to the Second Priority Agent and the Third Priority Agent jointly so long
as any Second Priority Obligations exist, and thereafter to the Third Priority
Agent.
<PAGE>
<PAGE>
30
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
PSF HOLDINGS, L.L.C.
by
-----------------------------------
Name:
Title:
PREMIUM STANDARD FARMS, INC.
by
-----------------------------------
Name:
Title:
PRINCETON DEVELOPMENT CORP.
by
-----------------------------------
Name:
Title:
FLEET NATIONAL BANK, as Trustee,
as Collateral Agent,
by
-----------------------------------
Name:
Title:
<PAGE>
<PAGE>
SCHEDULE II
COPYRIGHTS
<PAGE>
<PAGE>
SCHEDULE III
LICENSES
<PAGE>
<PAGE>
SCHEDULE IV
PATENTS
<PAGE>
<PAGE>
SCHEDULE V
TRADEMARKS
<PAGE>
<PAGE>
SCHEDULE VI
LIST OF MORTGAGES
<PAGE>
<PAGE>
Annex 1 to the
Security Agreement
LOCKBOX AND DEPOSITORY AGREEMENT dated as of [ ], 1996, among
[Name of Grantor], a [ ] corporation (the "Grantor"), FLEET NATIONAL
BANK, a national banking corporation, as collateral agent (in such
capacity, the "Collateral Agent") for the Secured Parties (such
term, and each other capitalized term used but not defined herein,
having the meaning given it in the Security and Collateral Agency
Agreement referred to below) and [ ], a [ ] banking corporation (the
"SubAgent").
A. The Grantor and the Collateral Agent are parties to a Security
and Collateral Agency Agreement dated as of [ ], 1996, (as amended, supplemented
or otherwise modified from time to time, the "Security Agreement"). Pursuant to
the terms of the Security Agreement, the Grantor has granted to the Collateral
Agent, for the ratable benefit of the Secured Parties, a security interest in
its Accounts Receivable and other Collateral (including Inventory, cash, cash
accounts and Proceeds) to secure the payment and performance of the Obligations
and has irrevocably appointed the Collateral Agent as its agent to collect
amounts due in respect of Accounts Receivable and Inventory.
B. The Sub-Agent has agreed to act as collection sub-agent of the
Collateral Agent to receive and forward payments with respect to the Accounts
Receivable and Inventory on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Collateral Agent hereby appoints the Sub-Agent as its
collection sub-agent under the Security Agreement and authorizes the Sub-Agent,
on the terms and subject to the condi tions set forth herein, to receive
payments in respect of Collateral consisting of Accounts Receivable and
Inventory.
2. The Sub-Agent has established and shall maintain deposit account
number [] (including all subaccounts thereof) for the benefit of the Collateral
Agent (such account being called the "Collection Deposit Account"). The
Collection Deposit Account shall be designated with the title "Fleet National
Bank, as Collateral Agent under the Premium Standard Farms, Inc. Security and
Collateral Agency Agreement dated as of [ ], 1996" (or a similar title).
[Subject to the Sub-Agent's Terms for Remittance Banking (Lockbox) Services
attached hereto as Exhibit A, to the extent that the terms thereof relate to
procedures or fees and to the extent not inconsistent with the terms hereof,]
all payments received by the Sub-Agent in Lockbox Number [ and [ or any
replacements in respect thereof (the "Lockboxes") shall be promptly deposited in
the Collection Deposit Account and shall not be commingled with other funds. All
funds at any time on deposit in the Collection Deposit Account shall be held by
the SubAgent for application in accordance with the terms of this Agreement. The
Sub-Agent agrees to give the Collateral Agent prompt notice if the Collection
Deposit Account shall become subject to any writ, judgment, warrant of
attachment, execution or similar process. As security for the payment and
performance of the Obligations, the Grantor hereby confirms and pledges, assigns
and transfers to the Collateral Agent, and hereby creates and grants to the
Collateral Agent, a
<PAGE>
<PAGE>
2
security interest in the Collection Deposit Account, all property and assets
held therein and all Proceeds thereof.
3. The Collection Deposit Account shall be under the sole dominion
and control of the Collateral Agent, who shall possess all right, title and
interest in all of the items from time to time in the Collection Deposit Account
and their Proceeds. The Sub-Agent shall be the Collateral Agent's agent for the
purpose of holding and collecting such items and their Proceeds. Neither the
Grantor nor any person or entity claiming by, through or under the Grantor shall
have any right, title or interest in, or control over the use of, or any right
to withdraw any amount from, the Collection Deposit Account, except that the
Collateral Agent shall have the right to withdraw amounts from the Collection
Deposit Account. The Sub-Agent shall be entitled to rely on, and shall act in
accordance with, all instructions given to it by the Collateral Agent with
respect to the Collection Deposit Account. The Collateral Agent shall have the
sole power to agree with the SubAgent as to specifications for Lockbox services.
4. Upon receipt of written, telecopy or telephonic notice (which, in
the case of telephonic notice, shall be promptly confirmed in writing or by
telecopy) from the Collateral Agent, the Sub-Agent shall, if so directed in such
notice (subject to the Sub-Agent's right to request that the Collateral Agent
furnish, in form satisfactory to the Sub-Agent, signature cards and/or other
appropriate documentation), promptly transmit or deliver to the Collateral Agent
at the office specified in paragraph 12 hereof (or such other office as the
Collateral Agent shall specify) (a) all funds, if any, then on deposit in, or
otherwise to the credit of, the Collection Deposit Account (provided that funds
on deposit that are subject to collection may be transmitted promptly upon
availability for withdrawal), (b) all checks, drafts and other instruments for
the payment of money received in the Lockboxes and in the possession of the
Sub-Agent, without depositing such checks, drafts or other instruments in the
Collection Deposit Account or any other account and (c) any checks, drafts and
other instruments for the payment of money received in the Lockboxes by the
Sub-Agent after such notice, in whatever form received, provided that the
Sub-Agent may retain a reasonable reserve in a separate deposit account with the
Sub-Agent in respect of unpaid fees and amounts that may be subject to
collection.
5. The Sub-Agent is hereby instructed and authorized to transfer by
wire transfer or Automated Clearing House ("ACH") from the Collection Deposit
Account all funds that are from time to time deposited or otherwise credited to
such account (after such funds become available to the Sub-Agent, either through
the Federal Reserve System or other clearing mechanism used by the Sub-Agent's
branch and to the extent such funds exceed $[1,000]), to such account as the
Collateral Agent may from time to time direct, provided that, unless the
Collateral Agent otherwise instructs, no such transfer shall be required if such
transfer would result in the transfer of an amount less than $[1,000]. Unless
otherwise directed by the Collateral Agent, such funds shall be transferred on
each business day by wire transfer or ACH and shall be identified as follows:
Fleet National Bank
ABA Number
For credit to Fleet National Bank, Boston, MA 02110
Account Number
Re:[ ] Cash Collateral Account
<PAGE>
<PAGE>
3
These transfer instructions and authorizations may not be amended,
altered or revoked by the Grantor without the prior written consent of the
Collateral Agent. The Collateral Agent, however, shall have the right to amend
or revoke these transfer instructions and authorizations at any time without the
consent of the Grantor.
6. The Sub-Agent shall furnish the Collateral Agent with monthly
statements setting forth the amounts deposited in the Collection Deposit Account
and all transfers and withdrawals therefrom, and shall furnish such other
information at such times as shall be reasonably requested by the Collateral
Agent.
7. The fees for the services of the Sub-Agent shall be mutually
agreed upon between the Grantor and the Sub-Agent and shall be the obligation of
the Grantor; provided, however, that, notwithstanding the terms of any agreement
under which the Collection Deposit Account shall have been established with the
Sub-Agent, the Grantor and the Sub-Agent agree not to terminate such Collection
Deposit Account for any reason (including the failure of the Grantor to pay such
fees) for so long as this Agreement shall remain in effect (it being understood
that the foregoing shall not be construed to prohibit the resignation of the
Sub-Agent in accordance with paragraph 9 below). Neither the Collateral Agent
nor the Secured Parties shall have any liability for the payment of any such
fees. The Sub-Agent may perform any of its duties hereunder by or through its
agents, officers or employees.
8. The Sub-Agent hereby represents and warrants that (a) it is a
banking corporation duly organized, validly existing and in good standing under
the laws of [] and has full corporate power and authority under such laws to
execute, deliver and perform its obligations under this Agreement and (b) the
execution, delivery and performance of this Agree ment by the Sub-Agent have
been duly and effectively authorized by all necessary corporate action and this
Agreement has been duly executed and delivered by the Sub-Agent and constitutes
a valid and binding obligation of the Sub-Agent enforceable in accordance with
its terms.
9. The Sub-Agent may resign at any time as Sub-Agent hereunder by
delivery to the Collateral Agent of written notice of resignation not less than
thirty days prior to the effective date of such resignation. The Sub-Agent may
be removed by the Collateral Agent at any time, with or without cause, by
written, telecopy or telephonic notice (which, in the case of telephonic notice,
shall be promptly confirmed in writing or by telecopy) of removal delivered to
the Sub-Agent. Upon receipt of such notice of removal, or delivery of such
notice of resignation, the Sub-Agent shall (subject to the Sub-Agent's right to
request that the Collateral Agent furnish, in form satisfactory to the
Sub-Agent, signature cards and/or other appropriate documentation), promptly
transmit or deliver to the Collateral Agent at the office specified in paragraph
12 (or such other office as the Collateral Agent shall specify) (a) all funds,
if any, then on deposit in, or otherwise to the credit of, the Collection
Deposit Account (provided that funds on deposit that are subject to collection
may be transmitted promptly upon availability for withdrawal), (b) all checks,
drafts and other instruments for the payment of money received in the Lockboxes
and in the possession of the Sub-Agent, without depositing such checks, drafts
or other instruments in the Collection Deposit Account or any other account and
(c) any checks, drafts and other instruments for the payment of money received
in the Lockboxes by the Sub-Agent after such notice, in whatever form received.
<PAGE>
<PAGE>
4
10. The Grantor consents to the appointment of the Sub-Agent and
agrees that the Sub-Agent shall incur no liability to the Grantor as a result of
any action taken pursuant to an instruction given by the Collateral Agent in
accordance with the provisions of this Agreement. The Grantor agrees to
indemnify and defend the Sub-Agent against any loss, liability, claim or expense
(including reasonable attorneys' fees) arising from the Sub-Agent's entry into
this Agreement and actions taken hereunder, except to the extent resulting from
the Sub-Agent's gross negligence or willful misconduct.
11. The term of this Agreement shall extend from the date hereof
until the earlier of (a) the date on which the Sub-Agent has been notified in
writing by the Collateral Agent that the Sub-Agent has no further duties under
this Agreement and (b) the date of termination specified in the notice of
removal given by the Collateral Agent, or notice of resignation given by the
SubAgent, as the case may be, pursuant to paragraph 9. The obligations of the
Sub-Agent contained in the last sentence of paragraph 9 and in paragraph 15, and
the obligations of the Grantor contained in paragraphs 7 and 10, shall survive
the termination of this Agreement.
12. All notices and communications hereunder shall be in writing and
shall be delivered by hand or by courier service, mailed by certified or
registered mail or sent by telecopy (except where telephonic instructions or
notices are authorized herein) and shall be effective on the day on which
received (a) in the case of the Collateral Agent, to Fleet National Bank, One
Federal Street, Boston, MA 02110, Attention of Corporate Trust Department, and
(b) in the case of the Sub-Agent, addressed to [], Attention of [ purposes of
this Agreement, any officer of the Collateral Agent shall be authorized to act,
and to give instructions and notices, on behalf of the Collateral Agent
hereunder.
13. The Sub-Agent will not assign or transfer any of its rights or
obligations hereunder (other than to the Collateral Agent) without the prior
written consent of the other parties hereto, and any such attempted assignment
or transfer shall be void.
14. Except as provided in paragraph 5 above, this Agreement may be
amended only by a written instrument executed by the Collateral Agent, the
Sub-Agent and the Grantor, acting by their duly authorized representative
officers.
15. The Sub-Agent hereby irrevocably waives any right to set off
against, or otherwise deduct from, any funds held in the Collection Deposit
Account and all items (and Proceeds thereof) that come into its possession in
connection with the Collection Deposit Account any indebtedness or other claim
owed by the Grantor or any affiliate thereof to the Sub-Agent; provided,
however, that this paragraph shall not limit the ability of the Sub-Agent to,
and the SubAgent may, (a) exercise any right to set off against, or otherwise
deduct from, any such funds to the extent necessary for the Sub-Agent to collect
any fees owed to it by the Grantor in connection with the Collection Deposit
Account, (b) charge back and net against the Collection Deposit Account any
returned or dishonored items or other adjustments in accordance with the
Sub-Agent's usual practices and (c) (i) establish the reserves contemplated in
paragraph 4 in respect of unpaid fees and amounts that may be subject to
collection and (ii) transfer funds in respect of such reserves from the
Collection Deposit Account to the separate deposit account with the Sub-Agent as
contemplated in paragraph 4.
<PAGE>
<PAGE>
5
16. This Agreement shall inure to the benefit of and be binding upon
the Collateral Agent, the Sub-Agent, the Grantor and their respective permitted
successors and assigns.
17. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
18. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [ ] GOVERN THE
COLLECTION DEPOSIT ACCOUNT, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
19. The Sub-Agent shall be an independent contractor. This Agreement
does not give rise to any partnership, joint venture or fiduciary relationship.
20. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
[Name of Grantor],
by
Name:
Title:
FLEET NATIONAL BANK,
as Collateral Agent,
by
Name:
Title:
<PAGE>
<PAGE>
6
[Sub-Agent],
by
Name:
Title:
<PAGE>
<PAGE>
Annex 2 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Note Purchase Agreement dated as of
September __, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Note Agreement"), among the Guarantor, the Company and Morgan Stanley
Group, Inc., (b) the Indenture dated as of September __, 1996 (as amended,
supplemented or otherwise identified from time to time as the "Indenture"),
among the Guarantor, the Company and Fleet National Bank, as Trustee, (c) the
Security and Collateral Agency Agreement dated as of September __, 1996, among
the Guarantor, the Company and the Collateral Agent, and (d) the Intercreditor
Agreement dated as of September __, 1996, among the Guarantor, the Company, the
Senior Collateral Agent and the Collateral Agent:
The undersigned, a chief financial officer and a counsel,
respectively, of the Company, hereby certify to the Collateral Agent and each
other Secured Party as follows:
1. Names. (a) The exact corporate or organizational name of each
Grantor, as such name appears in its respective certificate of incorporation, is
as follows:
(b) Set forth below is each other corporate or organizational name
each Grantor has had in the past five years, together with the date of the
relevant change;
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed
its identity or corporate structure in any way within the past five years.
Changes in identity or corporate structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade
names or similar appellations) used by each Grantor or any of its divisions or
other business units in connection with the conduct of its business or the
ownership of its properties at any time during the past five years;
(e) Set forth below is the Federal Taxpayer Identification Number of
each Grantor:
2. Current Locations. (a) The chief executive office of each Grantor
is located at the address set forth opposite its name below:
Grantor Mailing Address County State
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(b) Set forth below opposite the name of each Grantor are all
locations where such Grantor maintains any books or records relating to any
Accounts Receivable (with each location at which chattel paper, if any, is kept
being indicated by an "*"):
Grantor Mailing Address County State
(c) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) or (b) above:
Grantor Mailing Address County State
(d) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
(e) Set forth below opposite the name of each Grantor are the names
and addresses of all persons other than such Grantor that have possession of any
of the Collateral of such Grantor:
Grantor Mailing Address County State
3. Unusual Transactions. All Accounts Receivable have been
originated by the Grantors and all Inventory has been acquired by the Grantors
in the ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true
copies of file search reports from the Uniform Commercial Code filing offices
where filings described in Section 3.19 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
7. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Section 5 above have been paid.
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8. Mortgage Filings. Attached hereto as Schedule 8 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the corporation that owns such property as such name appears in its
certificate of incorporation, (ii) if different from the name identified
pursuant to clause (i), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing office in which
a Mortgage with respect to such property must be filed or recorded in order for
the Collateral Agent to obtain a perfected security interest therein.
IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this [ ] day of [ ].
PREMIUM STANDARD FARMS, INC.
by
Name:
Title: Chief Financial Officer
by
Name:
Title: Counsel
