As filed with the Securities and Exchange Commission on July 16, 1999
Registration Statement No.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SFC NEW HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 2022 52-2173533
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Identification
organization) Code Number) Number)
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
(847) 405-5300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive office)
Larry S. Benjamin
President and Chief Executive Officer
SFC New Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, Illinois 60015
(847) 405-5300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With A Copy To:
Mitchell S. Fishman, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.|_|
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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Title of Each Class Amount to Be Proposed Maximum Proposed Maximum Amount of
of Securities to Be Registered Registered Offering Price Per Aggregate Offering registration fee (2)
Security Price
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<S> <C> <C> <C> <C>
11 1/4% Senior Notes due 2001 ........ $225,000,000 100% $225,000,000 (1) $62,550
12 1/8% Senior Notes due 2002 ........ $150,000,000 100% $150,000,000 (1) $41,700
13 1/4% Subordinated Notes due 2003 .. $200,000,000 100% $200,000,000 (1) $55,600
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2) of the Securities Act of 1933.
(2) The registration fee has been calculated pursuant to Rule 457(f)(2) under
the Securities Act of 1933. The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act of
1933 or until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to said Section 8(a), may
determine.
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The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state
Subject To Completion, Dated July 16, 1999
PRELIMINARY PROSPECTUS
SFC New Holdings, Inc.
Exchange Offers for:
$220,695,000 of our 11 1/4% Senior Notes due 2001
$149,925,000 of our 12 1/8% Senior Notes due 2002
$197,646,000 of our 13 1/4% Subordinated Notes due 2003
and
$4,305,000 of 10 1/4% Senior Notes due 2001 of Specialty Foods Corporation
$75,000 of 11 1/8% Senior Notes due 2002 of Specialty Foods Corporation
$2,354,000 of 11 1/4% Subordinated Notes due 2003 of Specialty Foods Corporation
Terms of the exchange offers:
o They expire at 5:00 p.m., New York City time, on , 1999, unless
extended.
o All notes that are validly tendered and not withdrawn will be exchanged.
o Tenders of notes may be withdrawn at any time before the expiration of the
exchange offer.
o The terms of the exchange notes we will issue in the exchange offer are
substantially identical to those of our initial notes, except that
transfer restrictions and registration rights relating to the initial
notes will not apply to the exchange notes.
o The notes of Specialty Foods Corporation which we are offering to acquire
in exchange for exchange notes are all structurally subordinated to both
our initial notes and the exchange notes.
o The exchange notes are new securities and there is currently no
established market for them.
Before participating in these exchange offers please refer to the section in
this prospectus entitled "Risk Factors" beginning on page 12.
Neither the Securities and Exchange Commission nor any state commission
has approved the notes to be distributed in the exchange offers, nor have any of
these organizations determined that this prospectus is truthful or complete. Any
representation to the contrary is a criminal offence.
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The date of this prospectus is __________, 1999.
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TABLE OF CONTENTS
Page No.
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Prospectus Summary ....................................................... 1
Risk Factors ............................................................. 13
Use of Proceeds .......................................................... 23
Pro Forma Capitalization ................................................. 24
Selected Consolidated Financial Data ..................................... 25
Management's Discussion and Analysis of Financial Condition
and Results of Operations .............................................. 26
Business ................................................................. 34
Management ............................................................... 44
Security Ownership ....................................................... 54
Relationships and Related Transactions ................................... 57
The Exchange Offers ...................................................... 59
Description of the Other Indebtedness and Our Accounts
Receivable Transfer Program ........................................... 74
Description of the Exchange Notes ........................................ 82
Description of the Initial Notes ......................................... 132
Description of the SFC Notes ............................................. 133
Plan of Distribution ..................................................... 160
United States Federal Income Tax Considerations .......................... 161
Legal Matters ............................................................ 172
Experts .................................................................. 172
Where You Can Obtain Additional Information .............................. 173
Index to Financial Information ........................................... F-1
Report of Independent Auditors ........................................... F-2
ii
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PROSPECTUS SUMMARY
This summary highlights some information from this prospectus. Because it
is a summary, it does not contain all of the information that you should
consider before participating in the exchange offers. You should read the entire
prospectus carefully, including the section entitled "Risk Factors" and the
financial statements and the related notes to those statements included in this
prospectus.
About Our Business
General
SFAC New Holdings, Inc. is a holding corporation which, through us, SFC
New Holdings, Inc., owns a group of specialty food businesses. We are a leading
producer, marketer and distributor of retail bread, cookies and other baked
goods throughout the United States and we are now the nation's third largest
cookie company. Our operations include Metz Baking Company, Mother's Cake &
Cookie Co., Archway Cookies, Inc. and Andre-Boudin Bakeries, Inc.
Since 1996, we have increased our focus on our core baked goods businesses
while divesting non-core businesses including B&G Foods/Burns & Ricker, Inc.,
Gai's Seattle French Baking Co. and San Francisco French Bread. In addition, in
1997 we sold Stella Foods, Inc., a producer of specialty and Italian cheeses,
for $405 million, and, in April 1999, we sold H&M Foods Systems Company, Inc., a
manufacturer and distributor of specialty meats and meat-based prepared foods to
restaurants and food manufacturers, for $132 million. The net proceeds that we
received from the sales have been used to reduce our indebtedness, invest in our
businesses or acquire baked goods companies. In recent years, the baked goods
industry has undergone substantial consolidation, which is being driven by
opportunities to reduce costs by combining manufacturing, distribution and
administrative capabilities.
These exchange offers are being made to fulfill our obligations under the
registration rights agreement that we entered in connection with the
restructuring transaction and prior exchange offers that we completed on June
11, 1999. The restructuring and prior exchange offers were designed to give us
added flexibility to pursue our strategic plan and to allow us to maximize value
through selective acquisitions.
Since May 1998, we have completed seven acquisitions of baking companies
that complement our existing business, expand our geographic scope and
strengthen our competitive position. In October 1998, we acquired Archway for
approximately $90 million and used an additional $26 million to repay some of
Archway's indebtedness. The Archway acquisition created, together with Mother's,
the nation's third largest cookie business and provides us with a strong,
established brand name, a more diversified product line and a nation-wide
presence. The Archway acquisition also provides us with opportunities to realize
significant operational and distribution synergies.
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In June 1999, we acquired Grocers Baking Company of Grand Rapids, Michigan
for $33.2 million plus an additional $5.8 million of indebtedness. Grocers,
which had 1998 sales of approximately $60 million, sells a variety of bread,
buns, sweet goods, cookie dough and other frozen products throughout Michigan.
Additionally, in July 1999, we completed a small add-on acquisition of a
Detroit-based baker, Blue-Bird Products, Inc. These acquisitions will provide
our Metz business unit with both cost savings and new revenue opportunities.
We also completed four smaller, strategic bread acquisitions in 1998 for a
total aggregate consideration of $19.6 million. We acquired Pane Corporation,
which does business as San Diego Bread Company and sells a variety of specialty
breads, including a sourdough product that complements Boudin's premium
sourdough bread brand in California. This acquisition provides our Boudin
operating unit with the opportunity to strengthen its position in Southern
California. Our Metz business also acquired three bakery companies in 1998:
Clear Lake Bakery, Inc., which bakes and distributes a variety of bread, buns,
rolls, doughnuts and sweet rolls throughout Iowa; Grandma Sycamore's, which
distributes its brand name bread throughout Utah and neighboring states; and
Eagle (Rock Island) Bakery, which produces private label bread and buns
distributed in Iowa and Illinois. These bread acquisitions provide us with
significant opportunities to reduce our manufacturing and distribution costs and
to strengthen Metz's competitive position in its core Midwestern territory.
Business Strategy
Our strategy is to build the enterprise value of our operating companies,
which we believe is best attained in the current baking industry environment by
realizing significant cost synergies from acquisitions. Since May 1998, we have
consummated seven bakery acquisitions and we intend to continue to acquire
bakery businesses to the extent our financial resources allow. We have
identified potential acquisition candidates that would provide us with a range
of synergy opportunities if they were combined with our existing bakery
business. When our financial capabilities preclude us from pursuing additional
acquisitions, we will explore available options to maximize the value of our
stakeholders' investments.
SFC New Holdings, Inc. was formed in 1998 and is a Delaware corporation.
Our principal executive offices are located at 520 Lake Cook Road, Suite 550,
Deerfield, Illinois 60015. Our telephone number is (847) 405-5300.
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Summary of The Exchange Offers
We are offering to exchange $220,695,000 aggregate principal amount of our
new 11 1/4% Senior Notes due 2001, which we refer to as "11 1/4% Senior Notes,"
$149,925,000 aggregate principal amount of our new 12 1/8% Senior Notes due
2002, which we refer to as "12 1/8% Senior Notes," and $197,646,000 aggregate
principal amount of our new 13 1/4% Subordinated Notes due 2003, which we refer
to as "Subordinated Notes," for the same aggregate principal amount of
substantially identical notes that we issued in a private transaction on June
11, 1999. We refer to the notes that we are offering to acquire collectively as
our "private exchange notes."
In addition, we are offering to exchange
o $4,305,000 aggregate principal amount of our 11 1/4% Senior Notes,
for the same principal amount of the 10 1/4% Senior Notes due 2001
(CUSIP No. 847499-AC-4) of Specialty Foods Corporation, which we
refer to as "SFC 10 1/4% Senior Notes;"
o $75,000 aggregate principal amount of our 12 1/8% Senior Notes for
the same principal amount of the 11 1/8% Senior Notes due 2002
(CUSIP No. 847499-AF-7) of Specialty Foods Corporation, which we
refer to as "SFC 11 1/8% Senior Notes;" and
o $2,354,000 aggregate principal amount of our Subordinated Notes for
the same principal amount of the 11 1/4% Subordinated Notes due 2003
(CUSIP No. 847499-AD-2) of Specialty Foods Corporation, which we
refer to as "SFC Subordinated Notes." In this prospectus, we refer
to the SFC 10 1/4% Senior Notes, the SFC 11 1/8% Senior Notes and
the SFC Subordinated Notes collectively as the "SFC Notes."
We refer to our private exchange notes and the SFC Notes collectively as
"initial notes." In order to exchange your initial notes, you must properly
tender them and we must accept your tender. We will exchange all outstanding
initial notes that are validly tendered and not validly withdrawn. We refer to
the exchange offer for our private exchange notes and the exchange offer for the
SFC Notes collectively as the "exchange offers."
On June 11, 1999, in a private transaction, we exchanged:
o $220,695,000 aggregate principal amount of our initial 11 1/4%
Senior Notes (CUSIP No. 784123-AA-9), $5,551,086 aggregate principal
amount of 11% Senior Subordinated Discount Debentures due 2009
issued by SFC Sub, Inc., a Delaware corporation, which we refer to
as "11% Debentures," for $220,695,000 aggregate principal amount of
SFC 10 1/4% Senior Notes;
o $149,925,000 aggregate principal amount of our initial 12 1/8%
Senior Notes (CUSIP No. 784123-AB-7) and $3,771,026 aggregate
principal amount of
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11% Debentures for $149,925,000 aggregate principal amount of SFC
11 1/8% Senior Notes; and
o $197,646,000 aggregate principal amount of our initial 13 1/4%
Subordinated Notes (CUSIP No. 784123-AC-5) and $18,642,522 of 11%
Debentures for $197,646,000 aggregate principal amount of SFC
Subordinated Notes.
Expiration Date
The exchange offers will expire at 5:00 p.m., New York City time, on
____________, 1999, unless we decide to extend it.
Conditions to the Exchange offers
The exchange offers are subject to the following customary conditions:
o there is no change in the laws and regulations which would impair
our ability to proceed with the exchange offer,
o there is no change in the current interpretation of the staff of the
Securities and Exchange Commission which permits resales of the
exchange notes,
o there is no stop order issued by the staff of the Securities and
Exchange Commission which would suspend the effectiveness of the
registration statement of which this prospectus is a part,
o there is no litigation which would impair our ability to proceed
with the exchange offers,
o we obtain all the governmental approvals we deem necessary for the
exchange offers, and
o there is no change or development involving a prospective change in
our business or financial affairs which might materially impair our
ability to proceed with the exchange offers.
Please refer to the section in this prospectus entitled "The Exchange
Offers--Terms of the Exchange Offers--Conditions."
Procedures for Tendering Initial Notes
To participate in the exchange offers, you must complete, sign and date
the letter of transmittal, or a facsimile of the letter of transmittal, and
transmit it together with all other documents required by the letter of
transmittal, including the initial notes to be exchanged, to United States Trust
Company of New York, as exchange agent, at the address indicated on the cover
page of the letter of transmittal. In the alternative, you can tender your
initial notes by following the procedure for book-entry transfer described in
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this prospectus. If your initial notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee, we urge you to contact
that person promptly to tender your initial notes in the exchange offers. For
more information on tendering your initial notes, please refer to the sections
in this prospectus entitled "The Exchange Offers--Terms of the Exchange
Offers--Procedures for Tendering" and "--Book Entry Transfer."
Guaranteed Delivery Procedures
If you wish to tender your initial notes and you cannot get your required
documents to the exchange agent on time, you may tender your initial notes
according to the guaranteed delivery procedures described under the section of
this prospectus entitled "The Exchange Offers--Terms of the Exchange
Offers--Guaranteed Delivery Procedure."
Withdrawal Rights
You may withdraw the tender of your initial notes at any time before 5:00
p.m., New York City time, on the expiration date of the exchange offers. To
withdraw, you must send a written or facsimile transmission notice of withdrawal
to the exchange agent at its address indicated under the "The Exchange
Offers--Terms of the Exchange Offers--Exchange Agent" before 5:00 pm., New York
City time, on the expiration date of the exchange offers.
Acceptance of Initial Notes and Delivery of Exchange Notes
If all conditions required for proper acceptance of initial notes are
fulfilled, we will accept any and all initial notes that are properly tendered
in the exchange offers on or before 5:00 p.m., New York City time, on the
expiration date. We will return any initial note that we do not accept for
exchange to you without expense as promptly as practicable after the expiration
date. We will deliver the exchange notes as promptly as practicable after the
expiration date and acceptance of the initial notes for exchange. Please refer
to the section in this prospectus entitled "The Exchange Offers--Terms of the
Exchange Offers."
Federal Income Tax Considerations Relating to the Exchange Offers
If you are a holder of our private exchange notes, exchanging your private
exchange notes for exchange notes will not be a taxable event to you for United
States Federal income tax purposes. If you are a holder of SFC Notes, exchanging
your SFC Notes for exchange notes should be a taxable event to you for United
States Federal income tax purposes, and you should recognize gain or loss equal
to the difference between the issue price of any exchange notes received in the
exchange and your adjusted tax basis in your SFC Notes exchanged therefor.
Please refer to the section of this prospectus entitled "United States Federal
Income Tax Considerations."
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Exchange Agent
United States Trust Company of New York is serving as exchange agent in
the exchange offers.
Fees and Expenses
We will bear all expenses related to the exchange offers. Please refer to
the section in this prospectus entitled "The Exchange Offers--Terms of the
Exchange Offers--Fees and Expenses."
Use of Proceeds
We will not receive any proceeds from the issuance of the exchange notes.
We are making these exchange offers solely to satisfy certain of our obligations
under our registration rights agreement. Please refer to the sections in this
prospectus entitled "Use of Proceeds" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources" for a discussion of our use of the proceeds from the original
issuance of the initial notes.
Consequences of Failure to Exchange Initial Notes
If you do not exchange your initial notes in these exchange offers, or if
you do not properly tender your initial notes in these exchange offers,
o you will no longer be able to obligate us to register our private
exchange notes under the Securities Act except in the limited
circumstances provided under our registration rights agreement, and
you will not be entitled to obligate us to register the SFC Notes at
all;
o you will not be able to resell, offer to resell or otherwise
transfer our private exchange notes unless they are registered under
the Securities Act or unless you resell them, offer to resell or
otherwise transfer them under an exemption from the registration
requirements of, or in a transaction not subject to, the Securities
Act;
o SFC Notes that are not exchanged will be subordinated and junior in
right of payment to the exchange notes, the 11% Debentures and the
13% Senior Secured Discount Debentures due 2009 issued by SFAC New
Holdings, which we refer to as "New 13% Debentures"; and
o SFC Notes that are not exchanged will not be entitled to any
increase in the interest rate.
Please refer to the section in this prospectus entitled "Risk
Factors--Your failure to participate in the exchange offers will have adverse
consequences."
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Summary of Terms of the Exchange Notes
Issuer
SFC New Holdings, Inc.
Notes Offered
$225,000,000 aggregate principal amount of our 11 1/4% Senior Notes,
$150,000,000 aggregate principal amount of our 12 1/8% Senior Notes, and
$200,000,000 aggregate principal amount of our Subordinated Notes. The form and
terms of the exchange notes received in exchange for our private exchange notes
are the same as the form and terms of our private exchange notes except that the
exchange notes will be registered under the Securities Act, will not bear
legends restricting their transfer and will not be entitled to registration
rights under our registration rights agreement. The exchange notes will evidence
the same debt as our private exchange notes and both our private exchange notes
and the exchange notes will be governed by the same indenture.
The form and terms of the exchange notes received in exchange for the SFC
Notes are substantially the same as the form of the SFC Notes but the terms of
the exchange notes provide that the exchange notes will be issued by us, accrue
interest at higher rates than the SFC Notes, require us to make cash payments to
the holders of the Subordinated Notes if the Subordinated Notes are not redeemed
by November 15, 2002 and provide for restrictive covenants and events of
default. In addition, the exchange notes evidence our debt and not the debt of
Specialty Foods and the SFC Notes and the exchange notes are not governed by the
same indenture.
Maturity Dates
o 11 1/4% Senior Notes -- August 15, 2001
o 12 1/8% Senior Notes -- October 1, 2002
o Subordinated Notes -- August 15, 2003
Interest on the Exchange Notes
Interest on the 11 1/4% Senior Notes will accrue at 11 1/4% per annum and
will be payable semi-annually in arrears on February 15 and August 15 of each
year, commencing on August 15, 1999, to holders of record on the immediately
preceding February 1 and August 1.
Interest on the 12 1/8% Senior Notes will accrue at 12 1/8% per annum and
will be payable semi-annually in arrears on April 1 and October 1 of each year,
commencing on October 1, 1999, to holders of record on the immediately preceding
March 15 and September 15.
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Interest on the Subordinated Notes will accrue at 13 1/4% per annum and
all but 1% of such accrued interest will be payable semi-annually in arrears in
cash on February 15 and August 15 of each year, commencing on August 15, 1999,
to holders of record on the immediately preceding February 1 and August 1. The
remaining interest on the Subordinated Notes will be payable through the
issuance of Subordinated Notes required to be issued as interest payable in
kind, which we refer to as "PIK Subordinated Notes." We will issue PIK
Subordinated Notes at the rate of 1% per annum payable semi-annually in arrears
on February 15 and August 15 of each year, commencing August 15, 1999.
We will pay all accrued but unpaid interest on the SFC Notes on the first
interest payment date of each of our private exchange notes. In addition, on the
SFC Notes that we acquired on June 11, 1999, we will pay (i) additional interest
on each of those SFC Notes at the rate of 1% per annum, commencing April 1,
1999, on the first interest payment date of each of our private exchange notes,
and (ii) additional interest on the SFC Subordinated Notes that we acquired on
June 11, 1999 through the issuance of PIK Subordinated Notes at the rate of 1%
per annum, commencing April 1, 1999, on August 15, 1999. The effective date of
the additional interest that we will pay is April 1, 1999.
Interest on the exchange notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Original Issue Discount
If you are a holder of our private exchange notes tendering to the
exchange, the 11 1/4% Senior Notes, the 12 1/8% Senior Notes, and the
Subordinated Notes will have "original issue discount" for Federal income tax
purposes. If you are a holder of SFC Notes tendering to the exchange, the
Subordinated Notes will have "original issue discount" for Federal income tax
purposes. Consequently, holders will be required to include amounts in gross
income for Federal income tax purposes in advance of the receipt of cash
attributable thereto. See "United States Federal Income Tax Considerations."
Sinking Funds
None.
Optional Redemption
We will be able to redeem the 11 1/4% Senior Notes and Subordinated Notes,
in whole or in part, at our option, at any time, at the redemption prices
contained in this prospectus under the heading "Description of the Exchange
Notes--Optional Redemption," plus accrued and unpaid interest on the notes
redeemed to the redemption date. However, if we do not redeem the Subordinated
Notes, in whole, on or before November 15, 2002, we will be required to pay the
holders of the Subordinated Notes $50.00 per $1,000
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principal amount of their Subordinated Notes, which we refer to as the
"Non-Redemption Payment," on November 16, 2002.
We are not entitled to redeem the 12 1/8% Senior Notes before October 1,
1999. After that date, we may redeem the 12 1/8% Senior Notes, in whole or in
part, at our option, at any time, at the redemption prices set forth of page
____ in this prospectus, plus accrued and unpaid interest on the notes redeemed
to the redemption date.
Change of Control
Upon a change of control of SFC New Holdings, you will have the right to
require us to repurchase all of your exchange notes at a repurchase price equal
to 101% of the aggregate principal amount of these exchange notes, together with
accrued and unpaid interest, if any, to the date of repurchase. We cannot assure
you that we will have available or that we will be able to obtain sufficient
funds to repurchase your exchange notes when required upon a change of control.
Please refer to the section in this prospectus entitled "Description of the
Exchange Notes --Repurchase at the Option of Holders--Change of Control."
Ranking
Except as described below, the exchange notes will:
o be general unsecured obligations,
o rank without preference with all our other existing and future
unsecured senior indebtedness,
o be effectively junior in right of payment to all our existing and
future secured indebtedness to the extent of the assets that secure
this indebtedness, and
o be effectively junior in right of payment to all of our
subsidiaries' existing or future indebtedness, whether or not
secured.
The Subordinated Notes are subordinated in right of payment to the prior
payment in full in cash or cash equivalents of all of our senior debt, including
the 11 1/4% Senior Notes and the 12 1/8% Senior Notes.
Restrictive Covenants
The indentures under which the exchange notes will be issued limit our and
our subsidiaries' ability to:
o pay dividends on, and repurchase or redeem our capital stock and our
subsidiaries' capital stock and repurchase or redeem our
subordinated obligations,
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o incur additional indebtedness or issue preferred stock,
o grant or suffer to exist additional secured claims against our and
our subsidiaries' properties,
o invest and sell assets and subsidiary stock, and
o engage in transactions with related entities.
In addition, the indentures limit our ability to consolidate, merge and
transfer substantially all of our assets, and also contain restrictions on
distributions from our subsidiaries. All of these limitations and prohibitions
have a number of important qualifications and exceptions. Please refer to the
sections in this prospectus entitled "Risk Factors--Restrictions imposed by our
debt agreement may significantly limit our ability to execute our business
strategy and increase the risk of default under our debt obligations" and
"Description of the Exchange Notes--Certain Covenants."
Absence of a Public Market for the Notes
The exchange notes are new securities and there is currently no
established market for them. We cannot assure you that a market for the exchange
notes will develop or be liquid. The SFC Notes, but not our private exchange
notes, are currently freely tradable in the over-the-counter market. Our private
exchange notes are not eligible for trading in the Private Offerings, Resales
and Trading through Automated Linkages market. Following commencement of the
exchange offers, you may continue to trade the SFC Notes in the over-the-counter
market, but the exchange notes will not be eligible for trading in this market
until the exchange offers have been completed.
Form of Exchange Notes
The exchange notes will be represented by one or more permanent global
securities in bearer form deposited on behalf of The Depository Trust Company
with United States Trust Company of New York, as custodian in connection with
the 11 1/4% Senior Notes and the 12 1/8% Senior Notes, and with United States
Trust Company of Texas, N.A., as custodian in connection with the Subordinated
Notes. You will not receive exchange notes in registered form unless one of the
events described in the section of this prospectus entitled "Description of the
Exchange Notes--Book Entry; Delivery and Form" occurs. Instead, beneficial
interests in the exchange notes will be shown on, and transfers of these
interests will be effected only through, records maintained in book-entry form
by The Depository Trust Company with respect to its participants.
Risk Factors
You should consider carefully the information provided in the section
in this prospectus entitled "Risk Factors" beginning on page 12 and all the
other information
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provided to you in this prospectus in deciding whether to tender your initial
notes in the exchange offers.
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Ratio of Earnings to Fixed Charges
The following table contains our ratio of earnings to fixed charges and
the resulting deficiencies for each of the periods indicated. The data used to
compute the ratio has been derived from Specialty Foods Corporation's
consolidated financial statements. Our earnings were insufficient to cover our
fixed charges for the periods presented.
<TABLE>
<CAPTION>
Year ended December 31,
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Quarter ended
1994 1995 1996 1997 1998 March 31, 1999
---- ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges ......... 0.29 0.47 0.18 0.32 0.43 0.07
Deficiency (in millions) . $64.1 $51.7 $81.5 $67.2 $56.4 $22.9
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
RISK FACTORS
Before tendering your initial notes in the exchange offers, you should
carefully consider the information below, as well as all other information
provided to you in this prospectus, including information in the section of this
prospectus entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Special Note Regarding Forward-looking Statements."
We have substantial debt which may limit our ability to borrow, restrict
the use of our cash flows, constrain our business strategy and prevent us from
meeting our debt obligations.
We have substantial debt and debt service requirements. Our substantial
debt may have the following consequences:
o limiting our ability to borrow additional amounts for working
capital, capital expenditures or other purposes;
o preventing us from satisfying our obligations with respect to the
exchange notes;
o consuming a substantial portion of our cash flow from operations in
the form of debt service payments; and
o limiting our ability to complete acquisitions, to capitalize on
significant business opportunities and to react to changes in
general economic conditions, interest rates, competitive pressures
and adverse changes in government regulation.
We cannot assure you that our cash flow and capital resources will be
sufficient to repay the initial or exchange notes, our other existing
indebtedness and any indebtedness that we may incur in the future, or that we
will be successful in obtaining alternative financing. If we are unable to repay
our debts, we may be forced to reduce or cease some of our operations, sell
additional assets, obtain additional equity capital or refinance or restructure
our debt. Please refer to the sections in this prospectus entitled "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Business."
We expect to continue to incur negative cash flow from operations and may
continue to incur net losses due to the high level of interest expense arising
from our substantial debt.
Since 1997, we have reported positive operating profits in our financial
statements. However, due to the high level of our interest expense, we have
reported net losses and negative cash flows from operating activities. Our
interest expense was $84.8 million in fiscal 1998 and $90.8 million in fiscal
1997. Given our current levels of debt and higher interest costs on the exchange
notes, we expect to continue to incur high interest expense
13
<PAGE>
which will result in reported net losses and negative cash flows from operating
activities for the foreseeable future.
Continued losses and negative cash flow may prevent us from pursuing our
strategies for growth and could limit our ability to meet our debt service
obligations, including our obligations under the initial and exchange notes,
capital expenditure requirements or working capital needs. Please refer to the
section in the prospectus entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
Restrictions imposed by our debt agreements may significantly limit our
ability to execute our business strategy and increase the risk of default under
our debt obligations.
The indentures for the initial and exchange notes contain a number of
significant covenants. These covenants will limit our ability to, among other
things:
o borrow additional money;
o make capital expenditures and other investments;
o pay dividends;
o merge, consolidate, or dispose of our assets; and
o enter into transactions with related entities.
If we fail to comply with these covenants we will default under the
indentures. A default, if not waived, could result in acceleration of our
indebtedness, in which case the debt would become immediately due and payable.
If this occurs, we may not be able to repay our debt or borrow sufficient funds
to refinance it. Even if new financing is available, it may not be on terms that
are acceptable to us. In addition, complying with these covenants may cause us
to take actions that we otherwise would not take, or not take actions that we
otherwise would take. Please refer to the sections in this prospectus entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Business--Strategy" and
"Description of the Exchange Notes."
Factors affecting our business operations may limit our ability to
increase our future earnings and cash flows.
Our continued and future success depends on our ability to increase our
earnings and cash flow which, in turn, depends on factors specific to the food
industry and numerous other factors beyond our control. These include changes in
general economic conditions; adverse changes in local markets; limited shelf
life of food products; lack of attractiveness of a particular food product line
after its novelty has worn off; evolving consumer preferences and nutritional
and health-related concerns; federal, state and local
14
<PAGE>
food processing controls; consumer product liability claims; risks of product
tampering; our continued ability to hire and retain qualified management
personnel; and the availability and expense of liability insurance and other
overhead expenses.
In the future, we may acquire or try to acquire products and businesses
from, make investments in, or enter into strategic alliances with, companies
which have products or distribution networks in our current markets or in areas
into which we intend to expand our distribution network. Any future
acquisitions, investments, strategic alliances or related efforts will be
accompanied by risks such as:
o the difficulty of assimilating the operations of the respective
entities;
o the potential disruption of our ongoing business;
o the inability of management to capitalize on the opportunities
presented by acquisitions, investments, strategic alliances or
related efforts;
o the inability to maintain uniform standards, controls, procedures
and policies; and
o the impairment of relationships with employees and customers as a
result of changes in management.
We cannot assure you that we would be successful in overcoming these risks
or any other problems encountered with these acquisitions, investments,
strategic alliances or related efforts. Please refer to the section in this
prospectus entitled "Business--Strategy."
The baking industry is highly competitive, which might adversely affect
our results of operations and cause us to be unable to implement our business
strategy.
The baking industry is highly competitive. Competition in the baking
industry is based on a variety of factors including price, breadth of products
offered, product quality and customer service. Significant changes in marketing
or pricing strategies by one or more of our competitors could adversely affect
our business. Some of our competitors have greater financial, marketing and
other resources than we have, while smaller competitors may have lower fixed
costs and greater operating flexibility. Generally, our competitors generate
positive cash flows and have substantially less debt than we have. Please refer
to the section of this prospectus entitled "Business--Competition."
Our inability to compete adequately in the baking industry could result in
price reductions, reduced margins and losses of our market share.
We may suffer adverse effects from changes in demographic trends and
consumer preferences.
15
<PAGE>
The baking industry is affected by changes in consumer preferences, tastes
and eating habits, local, regional and national economic conditions and
demographic trends. Factors such as increased raw material, labor and benefits
costs, the availability of experienced management and hourly employees and
difficulties or delays in developing and introducing new products to suit
consumer preferences may adversely affect the baking industry in general and our
businesses in particular. Consequently, our success will depend on our ability
to recognize and react to such trends adequately. Any changes in these factors
could adversely affect our profitability. In addition, the failure of customers
to respond favorably to our marketing or new products, could have an adverse
effect on our profitability.
Many of our employees are unionized and a prolonged work stoppage at any
of our facilities could have a material adverse effect on our business and
results of operations.
We, through our subsidiaries, are parties to numerous collective
bargaining agreements with unions representing employees involved in the
manufacture and distribution of our bakery products. These contracts generally
run for periods of three to five years. While we believe that our relations with
our employees are generally good, we cannot assure you that there will not be
one or more localized work stoppages in the future. Any prolonged work stoppage
at a subsidiary could have a material adverse effect on the subsidiary and us.
Fluctuations in the price of raw materials may adversely affect our
financial performance.
Flour, sugar, vegetable oils and other agricultural products, and plastic
and paper for packaging, constitute significant components of our cost of goods
sold. The prices of these commodity raw materials often fluctuate, which may
adversely affect our financial performance. Please refer to the sections of this
prospectus entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business--Raw Materials."
The heavy regulation of the food industry may limit our growth and affect
our competitive position.
Our operations are extensively regulated by the United States Food and
Drug Administration and other state and local authorities. These regulations
apply to the processing, packaging, storage, distribution and labeling of our
products, as well as environmental compliance. Our processing facilities and
products may be inspected periodically by federal, state and local authorities.
We believe that our operating subsidiaries are currently in substantial
compliance with all material governmental laws and regulations, and that they
maintain all material permits and licenses relating to their operations.
Nevertheless, we cannot assure you that these subsidiaries currently comply with
those laws and regulations in all respects, that they will be able to maintain
compliance with existing laws or regulations, or that they will comply with any
future laws and regulations. If any of our subsidiaries fail to comply with any
applicable laws
16
<PAGE>
and regulations, both civil remedies, including fines, injunctions, recalls or
seizures, and criminal sanctions may be imposed on the subsidiary. Any penalty
imposed on any of our subsidiaries could have an adverse effect on that
subsidiary and on us. See "Business--Legal and Regulatory Matters--Regulation."
Complying with environmental laws may adversely affect our results of
operations.
Extensive and changing federal, state, local and foreign environmental
laws and regulations govern our and our subsidiaries' past and present business
operations, and ownership and operation of real property. These laws and
regulations apply to the discharge of materials into the environment, the
handling and disposition of wastes (including solid and hazardous wastes), and
other matters relating to protecting the environment. Although we do not expect
the costs of complying with federal, state, local and foreign environmental laws
and regulations to have a material impact on our capital expenditures, earnings
or competitive position, we cannot assure you that additional environmental
issues will not require additional investigation, assessment or expenditures
beyond what we currently expect. Please refer to the section of this prospectus
entitled "Business--Environmental Matters."
Failure to address the year 2000 problem may cause disruptions in our
operations and in our services to our customers, which would affect our results
of operations and financial condition.
Many computer systems and software products will not function properly in
the year 2000 and beyond due to a once-common programming standard that
represents years using two digits. This problem is often referred to as the
"year 2000 problem." It is possible that our currently installed computer
systems, software products or other information technology systems, including
imbedded technology, or those of our suppliers, contractors or major systems
developers, working either alone or in conjunction with other software or
systems, will not properly function in the year 2000 because of the year 2000
problem. If we or our customers, suppliers, contractors and major systems
developers are unable to address these year 2000 issues in a timely manner, we
could suffer a material adverse effect on our results of operations and
financial condition. Although we currently believe we have addressed our year
2000 problem, we are not able to determine the potential impact of a failure of
some or all of our systems if our compliance efforts are not completely
successful. Similarly, we are unable to assess the potential impact on our
business of a failure or disruption to any of our suppliers, customers, service
providers or major third parties. Please also refer to the section of this
prospectus entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Year 2000."
There may be a negative effect on our financial condition if our
subsidiaries' trademarks are challenged.
We believe that trademarks owned or licensed by us or by our subsidiaries
have significant value and are important to the marketing of our products.
Although these
17
<PAGE>
trademarks are registered in the United States, we cannot be sure that these
trademarks cannot be circumvented, or that the trademarks do not or will not
violate the proprietary rights of others, or would be upheld if challenged, or
that we or our subsidiaries would not be prevented from using our trademarks.
Any challenge to our use of these trademarks could have an adverse effect on our
financial condition and results of operations, either as a result of a negative
ruling with regards to our use, validity or enforceability of the trademarks, or
because of the time consumed and the legal costs of defending against a claim.
In addition, we cannot be sure that we will have the financial resources
necessary to enforce or defend our trademarks. Please refer to the section of
this prospectus entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
Our financial condition and results may be affected by adverse publicity.
Our ability to compete depends in part on maintaining our and our
subsidiaries' reputations with the consumer. Publicity resulting from food
quality, illness, injury, or other health concerns, including food-borne illness
claims, or operating issues stemming from any or all of our subsidiaries'
operations, or even a competitor's operations, can adversely affect a business
such as ours. As a result, it is possible that such adverse publicity may
adversely affect our financial condition and results of operations.
Litigation against us could have an adverse effect on our business.
We are involved in a litigation pertaining to one of our former
subsidiaries, and routine litigation in the ordinary course of business. Please
refer to the section of this prospectus entitled "Business--Legal Matters."
Although we are not currently subject to any material product liability
litigation, product liability litigation involving any of our products may arise
in the future. Our quality control programs are designed to maintain high
standards for the food and materials and food preparation procedures that we
use. Products are inspected periodically by our personnel at both the
point-of-sale locations and the manufacturing facilities to ensure that they
conform to our standards. In addition to insurance held by our suppliers, we
maintain insurance relating to personal injury and product liability in amounts
that we consider adequate for the baking industry. While we have been able to
obtain this insurance in the past, we may not be able to do so in the future.
Any successful claim against us in an amount materially exceeding our coverage
could have a material adverse effect on our business, financial condition and
results of operations.
Payment of principal and interest on the exchange notes effectively
depends on receiving income from our subsidiaries which have no obligations to
make any payments on the exchange notes.
We are a holding company with few direct operations and few assets of
significance other than the stock of our subsidiaries. As such, we are dependent
on the cash flows of our subsidiaries to meet our obligations, including the
payment of principal and interest on the exchange notes. Our subsidiaries are
separate legal entities that have
18
<PAGE>
no obligation to pay any amounts due under the exchange notes or to make any
funds available for payments due under the exchange notes, whether by dividends,
loans or other payments. Our subsidiaries do not guarantee the payment of the
exchange notes. The exchange notes therefore will be effectively junior in right
of payment to the claims of the creditors of our subsidiaries, including trade
creditors and holders of indebtedness of our subsidiaries. Our current and
future subsidiaries have and will continue to have significant amounts of
financing and other indebtedness in connection their operations. Please refer to
the sections of this prospectus entitled "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Business" and "Description of Our Other Indebtedness and Our
Accounts Receivable Transfer Program."
Payment of principal and interest on the exchange notes is effectively
junior in right of payment to the claims of our secured creditors and our
subsidiaries' creditors who would be entitled to realize their claims on our
assets before you.
The exchange notes are unsecured and will be effectively junior in right
of payment to all our existing and future secured indebtedness to the extent of
the value of the assets securing that indebtedness. If any of our subsidiaries
is dissolved, liquidated, reorganized or becomes bankrupt, the assets of that
subsidiary will be available to satisfy obligations of any secured debt before
any payment may be made on the exchange notes. In addition, to the extent our
assets cannot satisfy in full the secured indebtedness, the holders of this
indebtedness would have a claim for any shortfall that would rank equally in
right of payment with the exchange notes. If the indebtedness were issued by a
subsidiary, the holders' claim for any shortfall would effectively rank senior
to the exchange notes with respect to such subsidiary's assets.
In addition, the exchange notes also will be effectively junior in right
of payment to all of our subsidiaries' existing or future indebtedness, whether
or not secured. The indenture for the initial and exchange notes permits us and
our subsidiaries to incur additional indebtedness in certain circumstances.
Please refer to the section of this prospectus entitled "Description of the
Exchange Notes." Accordingly, there might only be a limited amount of assets
available to satisfy your claims as a holder of the exchange notes upon an
acceleration of the maturity of the exchange notes.
Our controlling stockholder may take actions that may be contrary to your
interests.
SFAC New Holdings owns all of our capital stock. As a result, SFAC New
Holdings is in a position to elect all of our directors who, in turn, appoint
all of our executive officers. In addition, SFAC New Holdings is in a position
to amend our certificate of incorporation and by-laws, effect corporate
transactions such as mergers and asset sales and otherwise control our
management and policies without the approval of any other security holder,
subject to the provisions of the indenture. Accordingly, SFAC New Holdings will
be able to, directly or indirectly, control all of our affairs in a manner that
may be contrary to your interests. Please refer to the section of this
prospectus entitled "Security Ownership."
19
<PAGE>
We may be unable to pay our debt obligations if a change of control occurs
under the indenture.
Upon certain change of control events, you may require us to repurchase
all or a portion of your exchange notes at a purchase price equal to 101% of the
principal amount of the notes plus any additional amounts and any accrued and
unpaid interest on the notes. Our ability to repurchase the notes upon a change
in control event will be limited by the terms of our other debt agreements. Upon
a change of control event, we may be required immediately to repay the
outstanding principal and other amounts owed by us under our credit facility or
other financing agreements.
We may not be able to repay amounts outstanding under that credit facility
or obtain necessary consents under that facility to repurchase these notes. Any
requirement to offer to purchase the notes may result in our having to refinance
our outstanding indebtedness, which we may not be able to do. The term "change
of control" is defined in the section of this prospectus entitled "Description
of the Exchange Notes."
A court could declare the exchange notes void, junior in right of payment
or take other actions detrimental to you.
An unpaid creditor or representative of creditors, such as a trustee in
bankruptcy or SFC New Holdings as a debtor-in-possession in a bankruptcy
proceeding, could file a lawsuit claiming that the issuance of the private
exchange notes constitutes a fraudulent conveyance. If the court were to make
such a finding, it may also find that the issuance of the exchange notes is part
of the fraudulent conveyance. If it did so, the court could:
o void our obligations under the exchange notes;
o declare the exchange notes junior in right of payment to other
indebtedness; or
o take other actions detrimental to you as a holder of the exchange
notes.
To make this determination, a court would have to find that:
o we did not receive fair consideration or reasonably equivalent value
for the private exchange notes, and that,
o at the time the private exchange notes were issued, we were
insolvent or rendered insolvent by the issuance of the private
exchange notes; were engaged in a business or transaction for which
our remaining assets constituted unreasonably small capital; or
intended to incur, or believed that we would incur, debts which it
would be beyond our ability to pay as they matured.
20
<PAGE>
The measure of insolvency for these purposes will vary depending upon the
law of the jurisdiction and upon the valuation assumptions and the methodology
applied by the court.
Moreover, regardless of solvency, a court could also void the issuance of
the exchange notes if it determined that the transaction or the private exchange
transactions were made with intent to hinder, delay or defraud creditors, or a
court could subordinate the exchange notes to the claims of all existing and
future creditors on similar grounds.
You may find it difficult to sell your exchange notes.
The exchange notes will be registered under the Securities Act but will
not be eligible for trading on the Private Offerings, Resales and Trading
through Automated Linkages market. The exchange notes will constitute a new
issue of securities with no established trading market, and there can be no
assurance as to:
o the development of any market for the exchange notes;
o the liquidity of any market for the exchange notes that may develop;
o your ability to sell your exchange notes; or
o the price at which you would be able to sell your exchange notes.
If a market for the exchange notes were to exist, the exchange notes could
trade at prices that may be higher or lower than their principal amount or
purchase price, depending on many factors, including prevailing interest rates,
the market for similar debentures and the financial performance of SFC New
Holdings. Historically, the market for non-investment grade debt has been
subject to disruptions that have caused substantial volatility in the prices of
securities similar to the exchange notes. We cannot assure you that the market
for the exchange notes, if any, will not be subject to similar disruptions. Any
disruption may adversely affect you as a holder of the exchange notes.
Holders of SFC Notes who do not participate in the exchange offers will
not be entitled to an increased interest rate and will be subordinated and
junior in right of payment to the exchange notes and our private exchange notes,
the 11% Debentures and the New 13% Debentures.
Once the exchange offers have been completed, holders of outstanding SFC
Notes will not be entitled to any increase in the interest rate on their notes
or have any further rights to have their outstanding notes registered. The SFC
Notes will be subordinated and junior in right of payment to the exchange notes
and any untendered and tendered but unaccepted initial notes, 11% Debentures and
New 13% Debentures.
21
<PAGE>
Your failure to participate in the exchange offers will have adverse
consequences.
Our private exchange notes were not registered under the Securities Act or
under the securities laws of any state and you may not resell them, offer them
for resale or otherwise transfer them unless they are subsequently registered or
resold under an exemption from the registration requirements of the Securities
Act and applicable state securities laws. If you do not exchange your private
exchange notes for exchange notes pursuant to the exchange offers, or if you do
not properly tender your private exchange notes in the exchange offers, you will
not be able to resell, offer to resell or otherwise transfer the private
exchange notes unless they are registered under the Securities Act or unless you
resell them, offer to resell or otherwise transfer them under an exemption from
the registration requirements of, or in a transaction not subject to, the
Securities Act. In addition, you will no longer be able to obligate us to
register our private exchange notes under the Securities Act except in the
limited circumstances provided under our registration rights agreement.
If you do not exchange your SFC Notes for exchange notes pursuant to the
exchange offers or if you do not properly tender your SFC Notes you will no
longer be able to obligate us to register additional exchange notes under the
Securities Act.
Certain persons who participate in the exchange offers must deliver a
prospectus in connection with resales of the exchange notes.
Based on no-action letters issued by the staff of the Securities and
Exchange Commission, we believe that you may offer for resale, resell or
otherwise transfer the exchange notes without compliance with the registration
and prospectus delivery requirements of the Securities Act. However, in some
instances described in this prospectus under "The Exchange Offers," you will
remain obligated to comply with the registration and prospectus delivery
requirements of the Securities Act to transfer your exchange notes. In these
cases, if you transfer any exchange note without delivering a prospectus meeting
the requirements of the Securities Act or without an exemption from registration
of your exchange notes under this Act, you may incur liability under the
Securities Act. We do not and will not assume or indemnify you against this
liability.
If you wish to participate, you must make sure that you comply with the
exchange offer procedures.
We will only issue exchange notes to you after we timely receive your
initial notes, a properly completed and duly executed letter of transmittal, and
all other required documents. Therefore, you should allow enough time to ensure
timely delivery of your initial notes. We are under no duty to notify you of
defects or irregularities with respect to your tender of initial notes for
exchange. If your initial notes are not tendered or are tendered but not
accepted, they will, after the exchange offers end, continue to have the
existing restrictions upon transfer. In addition, when the exchange offers end,
certain registration rights under the Registration Rights Agreement will
terminate.
22
<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes in exchange for the outstanding initial notes. We are making these
exchange offers solely to satisfy our obligations under our registration rights
agreement.
The original issuance of the SFC 10 1/4% Senior Notes and the SFC
Subordinated Notes occurred in 1993 and resulted in an aggregate of
approximately $413 million in net proceeds to Specialty Foods. The net proceeds
were used to finance the 1993 acquisition of the underlying businesses of
Specialty Foods.
The original issuance of the SFC 11 1/8% Senior Notes in 1995 resulted in
an aggregate of approximately $145 million in net proceeds to Specialty Foods.
The net proceeds were used to refinance a portion of the Term Loan Agreement and
to pay fees and expenses incurred in connection with the refinancing undertaken
by Specialty Foods at the time.
23
<PAGE>
PRO FORMA CAPITALIZATION
The following table shows our pro forma capitalization as of March 31,
1999 reflecting the impact of the exchange offers on our capitalization. You
should read this table together with the consolidated financial statements and
related notes included in this prospectus beginning on page F-1 and the
information in the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
As of March 31, 1999
--------------------
(dollars in thousands)
Cash and Cash Equivalents (1) ....................... $ --
Long-term debt, including current portion
SFC New Holdings, Inc.:
Term Loan ................................. 168,646
Revolving Credit Facility ................. 99,708
11 1/4% Senior Notes due 2001 ............. 220,695
12 1/8% Senior Notes due 2002 ............. 149,925
13 1/4% Subordinated Notes due 2003 ....... 197,646
Other ..................................... 4,245
-----------
Subtotal ........................ 840,865
SFAC New Holdings, Inc. ........................
13% Senior Secured Debentures ............. 304,583
SFC Sub, Inc. ..................................
11% Senior Secured Debentures ............. 166,317
-----------
Specialty Foods Corporation
10 1/4% Senior Notes due 2001 ............. 4,305
11 1/8% Senior Notes due 2002 .............. 75
11 1/4% Subordinated Notes due 2003 ....... 2,354
-----------
Subtotal .......................... 6,734
Specialty Foods Acquisition Corporation
13% Senior Secured Debentures ............. 53
-----------
Total long-term debt, including current portion ..... 1,318,552
===========
Preferred stock ..................................... 19,500
Stockholders' equity (2) ............................ (938,626)
-----------
Total capitalization ................................ $399,426
===========
- ----------
(1) Includes a pro forma adjustment to reflect the estimated fees of
approximately $18.9 million paid in connection with our private exchange
offer that was completed on June 11, 1999.
(2) Includes a pro forma adjustment to reflect the write-off of deferred debt
issuance costs on the original SFAC and SFC Notes of $16.9 million.
24
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected net sales and income (loss) from operations data for 1998,
1997 and 1996 and the total assets and long-term debt data as of December 31,
1998 and 1997 presented below have been derived from Specialty Foods
Corporation's consolidated financial statements included in this prospectus
beginning on page F-1. The selected net sales and income (loss) from operations
data for 1995 and 1994 and the total assets and long-term debt data as of
December 31, 1996, 1995 and 1994 presented below have been derived from
Specialty Foods Corporation's consolidated financial statements that are not
included in this prospectus.
You should read the following information in conjunction with
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business," our consolidated financial statements
and the related notes and the other financial data appearing in this prospectus.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(In millions)
<S> <C> <C> <C> <C> <C>
Net sales $ 742 $ 718 $ 706 $ 704 $ 667
======= ======= ======= ======= =======
Loss from continuing
operations (1) $ (56) $ (67) $ (285) $ (209) $ (65)
======= ======= ======= ======= =======
Income (loss) from discontinued
operations (2)(3) $ 10 $ 165 $ (161) $ (61) $ 45
======= ======= ======= ======= =======
Total assets $ 530 $ 513 $ 522 $ 985 $ 1,242
======= ======= ======= ======= =======
Long-term debt $ 820 $ 753 $ 834 $ 831 $ 802
======= ======= ======= ======= =======
</TABLE>
- ----------
(1) Included in continuing operations is a goodwill writedown of $203 million
in 1996 and $157 million in 1995.
(2) Included in discontinued operations is a goodwill writedown of $152
million in 1996 and $97 million in 1995. Additionally, discontinued
operations included a gain on disposal of $133 million in 1997.
(3) Interest expense is not allocated to discontinued operations.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following table provides information about the percentage of our net
sales represented by certain items in our statements of operations for the
periods presented. The data used to compute the percentages has been derived
from Specialty Foods Corporation's financial statements.
<TABLE>
<CAPTION>
Quarter ended
Year ended December 31, March 31,
------------------------------ ----------------
1998 1997 1996 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.00%
Cost of sales 44.4 44.8 46.5 44.7 44.7
----- ----- ----- ----- ------
Gross profit 55.6 55.2 53.5 55.3 55.3
Operating expenses:
Selling, distribution, general and 51.1 51.2 49.4 54.2 55.2
administrative
Amortization of intangible assets 0.2 0.1 1.0 0.4 0.1
Goodwill write-down -- -- 28.9 -- --
----- ----- ----- ----- ------
Total operating expenses 51.3 51.3 79.3 54.6 55.3
----- ----- ----- ----- ------
Operating profit (loss) 4.3 3.9 (25.8) 0.7 0.0
Interest expense, net 11.4 12.6 13.2 11.8 11.5
Other expenses, net 0.4 0.7 1.4 0.4 0.5
----- ----- ----- ----- ------
Loss from continuing operations (7.5)% (9.4)% (40.4)% (11.5)% (12.0)%
===== ===== ===== ===== ======
</TABLE>
Results of Operations
First Quarter 1999 Compared to First Quarter 1998
Our consolidated net sales from continuing operations increased 17.2% to
$200.3 million in 1999 compared to $170.9 million in 1998. This increase in net
sales was primarily due to the inclusion of Archway's sales in 1999, price
increases taken at Metz and higher cafe sales at Boudin.
Our gross profit margin remained constant at 55.3% in 1999 and 1998. Our
gross profit margin benefitted from higher pricing, a volume shift to higher
margin products and moderately favorable commodities. However, the benefit was
offset by inflationary cost increases and higher depreciation expense.
Our selling, distribution, and general and administrative expenses, which
we refer to as "SDG&A", increased $14.1 million in 1999 to $108.5 million
primarily due to the inclusion of acquisitions completed in 1998. However, as a
percentage of sales, SDG&A
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expenses decreased one percentage point to 54.2% in 1999 due to the fact that we
realized cost synergies as a result of the 1998 acquisitions.
Our net interest expense increased $3.9 million in 1999 to $23.5 million
from $19.6 million in 1998. The increase is primarily due to higher borrowings
under our Revolving Credit Facility and lower interest income earned on our cash
equivalents in 1999.
Our net other expense in 1999 and 1998 consists principally of discount
expense on our Accounts Receivable Facility.
As a result of the above factors, our net loss from continuing operations
increased to $23.0 million in 1999 compared to $20.4 million in 1998.
As a result of our net operating loss position, for tax purposes we report
minimal state income tax and no federal income tax due.
1998 Compared to 1997
Our consolidated net sales from continuing operations increased 3.4% to
$742.3 million in 1998, compared to $718.1 million in 1997. This increase was
due to increased sales volume at Metz and the inclusion of ten weeks of
Archway's sales in 1998. However, the increase was partially offset by our
having one less week of sales in 1998 (because 1997 was a fifty-three week
fiscal year for our operating units), changes in our customer mix and lower
pricing at Mother's. The increase in volume at Metz was the result of its
expansion into central Illinois and its increased private label business.
Our gross profit margin increased to 55.6% in 1998 from 55.2% in 1997. Our
gross profit margin benefitted from a shift at Mother's towards higher margin
products and customers and lower commodity costs at Metz. However, the benefit
was partially offset by increases in manufacturing costs and higher depreciation
expense.
Our SDG&A increased $12.7 million, or 3.5%, in 1998 to $379.8 million.
However, as a percentage of sales, SDG&A expenses remained constant in 1998. The
increase in SDG&A in 1998 was caused by the inclusion of ten weeks of Archway's
operations, contractual wage increases, increased marketing expenses at Mother's
and Metz's new business initiatives. However, staff reductions at both Mother's
and Metz tempered the increased level of our 1998 SDG&A expenditures.
Our net interest expense in 1998 decreased $6.0 million, or 6.6%, to $84.8
million from $90.8 million in 1997. The decrease was primarily due to lower
borrowings under our Revolving Credit Facility and the interest we earned on our
cash equivalents. Proceeds from the sale of Stella increased our available cash
and decreased our required borrowing levels in 1998.
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Our net other expense was $3.1 million in 1998 compared to $4.7 million in
1997, a decrease of $1.6 million or 34%. This reduction in 1998 was primarily
due to a decrease in our loss on disposals of property, plant and equipment.
As a result of all these factors, our net loss from continuing operations
decreased to $55.9 million in 1998 compared to $67.5 million in 1997, a decrease
of 17.2%.
As a result of our net operating loss position, for tax purposes we report
minimal state income tax and no federal income tax due.
1997 Compared to 1996
Our consolidated net sales from continuing operations increased 1.7% to
$718.1 million in 1997, compared to $706.0 million in 1996. The $12.1 million
increase was principally due to increased cafe sales at Boudin and an additional
week of sales resulting from 1997 being a fifty-three week fiscal year.
Our gross profit margin increased to 55.2% in 1997 from 53.5% in 1996,
primarily as a result of lower commodity costs.
SDG&A expenses increased by $17.6 million, or 5.0%, in 1997 to $367.1
million. Selling expenses increased primarily because we increased the number of
Boudin's cafe locations and increased promotional spending at Mother's.
Distribution expenses increased due to contractual wage increases in Metz's and
Mother's direct-store-delivery systems. General and administrative expenses
decreased, primarily as a result of reduced corporate overhead expenses at
Specialty Foods and the fact that severance expenses in 1996 related to some of
our former senior executives were non-recurring.
Our net interest expense decreased in 1997 by $2.7 million, or 2.9%, to
$90.8 million from $93.5 million in 1996, principally because we had lower
borrowings under the Revolving Credit Facility.
Our net other expense was $4.7 million in 1997, compared to $9.1 million
in 1996. The decrease was due primarily to a decrease in our loss on disposals
of property, plant and equipment in 1997. This decrease occurred due to our
recording in 1996 a non-recurring loss on disposals of property, plant and
equipment in connection with a sale-leaseback transaction.
As a result of the above factors and a goodwill write-off of $203.3
million in 1996, our net loss from continuing operations decreased to $67.5
million in 1997 compared to $285.8 million in 1996.
As a result of our net operating loss position, for tax purposes we report
minimal state income tax and no federal income tax due.
Our extraordinary loss of $5.7 million in 1997 resulted from writing off
deferred financing costs associated with the Revolving Credit Facility, the Term
Loan Facility and
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the Accounts Receivable Transfer Facility, each of which we refinanced in the
first quarter of 1998.
In view of our highly leveraged capital structure, we and many of our
stakeholders consider EBITDA to be an important performance measure. EBITDA
consists of earnings (loss) before income taxes plus all net interest expense
and all depreciation and amortization expense. You should not think of EBITDA as
an alternative measure of operating results or cash flows from operating
activities, as determined in accordance with generally accepted accounting
principles. However, EBITDA is a widely used financial measure of the potential
capacity of a company to incur and service debt, and accordingly we believe that
EBITDA provides additional information for determining our ability to meet our
future obligations and debt service requirements. Our reported EBITDA may not be
comparable to similarly titled measures used by other companies. Our EBITDA from
continuing operations for the twelve months ended December 31, 1998, 1997 and
1996 and the three months ended March 31, 1999 and 1998 is calculated as
follows:
<TABLE>
<CAPTION>
Twelve Months Ended Three Months Ended
December 31, March 31,
------------ ---------
(In thousands)
--------------
1998 1997 1996 1999 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Continuing operations:
Operating profit (loss) $ 31,483 $ 28,303 $(182,225) $ 1,267 $ 29
Goodwill write-down -- -- 203,304 -- --
Amortization 1,471 900 7,032 1,017 212
Depreciation 25,733 20,187 20,836 8,314 5,441
--------- --------- --------- --------- ---------
EBITDA $ 58,687 $ 49,390 $ 48,947 $ 10,598 $ 5,682
========= ========= ========= ========= =========
</TABLE>
Liquidity and Capital Resources
In 1998, our net cash used in operating activities totaled $44.0 million,
including cash requirements of $18.8 million related to continuing operations,
$13.5 million related to working capital and $11.7 million for discontinued
businesses. Net of the effects of acquisitions, our use of cash related to
working capital was primarily related to reducing our accounts payable by $8.5
million through taking advantage of certain discount opportunities and
expenditures associated with acquisition liabilities and restructuring payments
which contributed to our $12.4 million reduction in accrued liabilities. Our use
of cash related to working capital was offset by $8.9 million provided by
increased funding under the Accounts Receivable Transfer Facility.
Our net cash used in operating activities in 1997 was $95.6 million. Our
increase in net cash used in operating activities in 1997 compared to 1996 was
primarily due to increased cash requirements related to discontinued operations,
payments of accrued acquisition liabilities, restructuring payments and
reductions in accounts payable and accrued expenses.
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In 1998, we invested a total of $239.6 million in our business. This
amount included $135.0 million to acquire businesses, $35.4 million to purchase
previously leased transportation and production equipment and $56 million to
make planned capital expenditures.
Our net cash provided by financing activities amounted to $55.1 million in
1998, primarily as a result of additional borrowings under the Revolving Credit
Facility, offset by refinancing costs and scheduled payments on long-term debt.
Our net cash used in financing activities amounted to $63.1 million in 1997, as
a paydown of revolving credit borrowings and normal payments on long-term debt
were partially offset by our issuance of redeemable preferred stock. In 1996,
our cash used by financing activities, $3.2 million, was primarily due to
payments of long-term debt and refinancing costs, slightly offset by increased
revolver borrowings.
As of March 31, 1999, we had a cash balance of $17.0 million and $97.8
million of borrowings under our $122.8 million Revolving Credit Facility.
Outstanding letters of credit of $10.2 million as of March 31, 1999 reduce our
available funds under the facility.
We expect our 1999 working capital requirements to be lower than 1998, and
our planned 1999 capital expenditures are substantially reduced from 1998
levels. Our liquidity was significantly enhanced by the $110 million of net
proceeds that we received on the sale of H&M on April 12, 1999. We believe that
our available funds and the proceeds from the H&M sale will be adequate to fund
our 1999 operations, capital expenditures and certain targeted bakery
acquisitions. To satisfy our debt service obligations beyond 1999, we may need
to sell additional assets, refinance or restructure our existing indebtedness or
issue new equity. However, we cannot assure you that our available funds will be
adequate to meet our needs.
On June 11, 1999, we completed our private exchange transactions. In
addition, in June 1999, we amended and restated the Revolving Credit Facility,
the Term Loan Facility and the Accounts Receivable Transfer Facility. The
Revolving Credit Facility and the Term Loan Facility contain restrictive
covenants that require us to maintain specified leverage and interest coverage
ratios and other limitations regarding capital expenditures, sales of assets,
loans and investments and encumbrances of assets. In addition, those facilities
significantly limit our ability to incur additional debt. The Revolving Credit
Facility and Term Loan Facility mature in January 2001. The Accounts Receivable
Transfer Facility begins to amortize December 15, 2000 and matures in January
2001.
Year 2000
The year 2000 issue is the result of computer programs using a two-digit
format to define the applicable year. For example, "1999" is recorded as "99."
Computer systems using a two-digit date format will be unable to interpret dates
beyond the year 1999, as the computer will be unable to differentiate between
"1900" and "2000." Consequently, the year 2000 issue could cause system failures
and other computer errors, resulting in business and operational disruptions. We
developed a three-phase program to address the year 2000 issue as it relates to
our information systems and other computer-based
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operations. Phase I was the identification of which of our systems could be
affected by the year 2000 issue. Phase I was completed in 1998.
Phase II, which was completed during 1999, included the development and
implementation of the corrective steps necessary to ensure year 2000 issue
compliance. Phase III, the final testing of all systems potentially at risk to
ensure remediation of any year 2000 related problems, was completed during 1999.
We have completed our review of our systems and have contacted software
suppliers to assess major areas of potential exposure due to the year 2000
issue. While a number of our systems have been determined to be year 2000 issue
compliant, certain applications required remediation. We have completed our
remediation and have replaced certain non-year 2000 issue compliant hardware and
software. We have completed our testing of year 2000 issue related software
changes. In addition, we have contacted key third parties to assess their level
of year 2000 issue compliance. Our significant suppliers have informed us that
they have completed their year 2000 issue compliance changes.
We have spent approximately $1.3 million on our year 2000 compliance
program.
We are not able to determine the potential impact of a failure of some or
all of our systems in the event our compliance efforts are not completely
successful. We are also unable to assess the potential effect on our operations
and financial condition of a systems failure or disruption to any of our
suppliers, customers, service providers or other major third parties.
Quantitative and Qualitative Disclosure about Market Risk
During 1998, we entered into interest rate swap agreements to reduce our
exposure to changes in the cost of our variable rate borrowings, as required by
our term loan facility. Under the interest rate swap agreements, which expire in
January 2000, we receive floating rate payments from the counterparties based
upon the three-month LIBOR and we make fixed rate payments at 5.753% and 5.765%
to the respective counterparties. The payments are calculated based upon a
notional principal amount of $100 million. We recognize the net differential of
interest to be paid or received under the remaining agreements as it is
incurred. In 1998, we made net payments totaling $30,000 to the counterparties.
Off-balance-sheet risk from the interest rate swap agreements includes the risk
associated with changes in market values and interest rates. The counterparties
to the agreements are major financial institutions.
Special Note Regarding Forward-looking Statements
Any statements in this prospectus about our expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical facts
and are forward-looking statements. These statements are often, but not always,
made through the use of words or phrases such as "will likely result," "expect,"
"will continue," "anticipate," "estimate," "intend," "plan," "projection,"
"would" and "outlook." Accordingly, these statements involve estimates,
assumptions and uncertainties which could cause actual
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results to differ materially from those expressed in them. Any forward-looking
statements are qualified in their entirety by reference to the factors discussed
throughout this prospectus. The following cautionary statements identify
important factors that could cause our actual results to differ materially from
those projected in the forward-looking statements made in this prospectus. Among
the key factors that have a direct bearing on our results of operations are:
o general economic and business conditions; the existence or absence
of adverse publicity; the existence or absence and effect of
litigation; changes in, or failure to comply with, government
regulations; changes in marketing and technology; changes in
political, social and economic conditions; changes in interest
rates;
o industry conditions, including competition and consolidation in the
baking industry and excess industry capacity;
o our highly leveraged capital structure and substantial principal
repayment and interest payment obligations;
o cost and availability of raw materials such as flour and sugar;
o weather in geographic areas where grain and other raw materials used
in the baking industry are grown and produced;
o success of acquisitions and operating initiatives; changes in
business strategy or development plans;
o timing of and value received in connection with asset divestitures;
o costs and other effects of legal and administrative proceedings;
o costs and timely success of year 2000 issue compliance;
o dependence on senior management; availability of qualified
personnel; and labor and employee benefit costs;
o access to capital markets and other risks relating to the
availability of financing; and
o other factors referenced in this prospectus, including in the
section entitled "Risk Factors."
Because the risk factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any of our forward-looking
statements, you should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement speaks only as of the date on
which it is made and we undertake no obligation to update any forward-looking
statement or statements to reflect
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events or circumstances after the date on which such statement is made or to
reflect the occurrence of unanticipated events. New factors emerge from time to
time, and it is not possible for us to predict which will arise. In addition, we
cannot assess the impact of each factor on our business or the extent to which
any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
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BUSINESS
We produce, market and distribute bakery products, including bread,
cookies and other baked goods, throughout the United States. Our operations,
which we collectively refer to as the "Businesses," are comprised of:
o Metz Baking Company, a retail bread company;
o Mother's Cake and Cookie Co. and Archway Cookies, Inc., retail
cookie marketers and distributors;
o Andre-Boudin Bakeries, Inc., a marketer of premium branded specialty
breads and related products.
As of June 11, 1999, in private transactions, we and SFAC New Holdings
acquired debt securities of Specialty Foods and Specialty Foods Acquisition
Corp., in exchange for our securities and securities of SFAC New Holdings. SFAC
New Holdings owns all of our capital stock. We, SFAC New Holdings and each of
our subsidiaries, including the Businesses, are separate corporate entities.
Unless otherwise stated, references to the terms "we," "our," "Company" and
other terms similar to those terms used in this prospectus mean, collectively,
Specialty Foods Corporation, Specialty Foods Acquisition Corporation, SFC New
Holdings, SFAC New Holdings and all of those entities' subsidiaries, including
the Businesses.
General
We operate principally in one business segment--bakery products, including
bread, cookies, baked goods and bakery cafes. We believe our cookie operations
are the third largest in the United States. We also believe that we have a
leading regional position in multiple product lines within the bread and baked
goods markets of the baking industry. We operate one of the largest food
distribution systems in the country, with a network of more than 2,490
direct-store-delivery routes in 45 states.
Metz, established in 1922 and headquartered in Deerfield, Illinois, is a
leading retail bread company serving a 17 state area of the Midwestern United
States. Metz's product line includes breads, buns, rolls and sweet goods. These
products are marketed by Metz under a large number of brand names, including
Taystee, Holsum, Old Home, Master, Country Hearth, Egekvist, D'Italiano,
Pillsbury, Healthy Choice and numerous private labels. Metz manufactures its
products in 23 bakeries located in 8 states and distributes its products through
a network of approximately 1,550 company-owned direct-store-delivery system
routes to retail grocers, club stores, mass merchandisers, convenience stores
and other outlets.
Our cookie business consists of two companies, Mother's and Archway, and
is headquartered in Oakland, California. Combined, Mother's and Archway are the
nation's third largest cookie company. Our cookies are distributed through an
extensive direct-store-delivery system with over 900 routes serving 45 states.
We sell our cookies
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primarily to retail grocers, club stores and mass merchandisers. Additionally,
Archway cookies are sold through franchisees that resell the cookies through
similar distribution channels in certain U.S. geographical areas and Canada.
Mother's, founded in 1914, is the second largest retail cookie marketer
and distributor in the Western United States. Mother's products are marketed
under the Mother's, Mrs. Wheatley's, Bakery Wagon and Marie Lu brand names.
Mother's also distributes imported cookies under the Lu brand. Mother's has the
leading share position in the Western United States in many "variety" cookie
segments (such as oatmeal). Archway, established in 1936, is the nation's
leading producer of home style soft cookie varieties. Archway bakes more than
one billion cookies annually, and produces more than 60 varieties of cookies,
including home style, holiday and sugar free products, all under the Archway
brand name. Mother's products are manufactured in a bakery located in
California. Archway products are manufactured at our facilities in Iowa and
Ohio.
Boudin, which was founded in 1849 and is based in San Francisco, is a
marketer of premium branded specialty breads and bread-related products. Boudin
sells most of its products through more than 40 company-owned and operated
bakery cafes in California and the Chicago area. Boudin also distributes some of
its products through its own direct-mail catalog, restaurants and supermarkets.
History and Development
Specialty Foods was formed in June 1993 to acquire the North American food
businesses of a subsidiary of Artal Group S.A. Specialty Foods commenced
operations in August 1993. Specialty Foods Acquisition Corp. owns all of
Specialty Foods' capital stock.
In 1996, we adopted a strategy of divesting certain brands, regions and
product lines to improve the focus of our businesses. In December 1996, we sold
Bloch & Guggenheimer, Inc. and Burns & Ricker, Inc. Under our ownership, Bloch &
Guggenheimer manufactured, marketed and distributed pickles, peppers and spices,
primarily through retail grocers in the greater New York metropolitan area.
Burns & Ricker manufactured, marketed and distributed baked premium snack
products through brokers and distributors to grocery stores.
In February 1997, we divested our subsidiary, Gai's Seattle French Baking
Company, a restaurant and institutional bakery operation serving the
northwestern United States. In March 1997, we divested our subsidiary San
Francisco French Bread Company, a sourdough bread operation located in
California. In August 1997, we divested a restaurant and institutional bakery
operated by Metz located in Illinois. In December 1997, we sold our subsidiary
Stella Foods, Inc., which was one of the largest specialty cheese producers in
the United States, for $405 million. On April 14, 1999, we divested our
subsidiary H&M Food Systems Company, Inc. by selling all the stock of its
holding company for approximately $132 million.
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In 1998, as part of our strategy to strengthen our remaining core bakery
operations, we completed five acquisitions of bakery companies. The acquired
companies complement our existing businesses, expand our geographic scope and
strengthen our competitive position. In October 1998, we acquired Archway,
which, added to Mother's, represents the nation's third largest cookie business.
The Archway acquisition provides us with a strong established brand name, a more
diversified product line and a nation-wide presence. The Archway acquisition
also provides opportunities to realize significant operational and distribution
synergies. We acquired the capital stock of Archway for approximately $90
million, and used an additional approximately $26 million to repay certain
indebtedness of Archway.
In 1998, we also completed four smaller, strategic bread acquisitions for
a total aggregate consideration of $19.6 million. Boudin acquired Pane
Corporation, which does business as San Diego Bread Company. San Diego Bread
Company sells a variety of specialty breads, including a private label sourdough
that complements Boudin's premium sourdough bread brand in California. The
acquisition of the San Diego Bread Company provides Boudin with the opportunity
to strengthen its position in Southern California.
Metz also acquired three bakery companies in 1998:
o Clear Lake Bakery, Inc., which bakes and distributes a variety of
bread, buns, rolls, doughnuts and sweet rolls throughout Iowa;
o Grandma Sycamore's Bakery, which distributes its brand name bread
throughout Utah and neighboring states; and
o Eagle (Rock Island) Bakery, which produces private label bread and
buns distributed in Iowa and Illinois.
We believe these bread acquisitions provide significant opportunities for
reducing Metz's costs and for strengthening Metz's competitive position in its
core Midwestern service area.
On June 7, 1999, we acquired Grocers Baking Company of Grand Rapids,
Michigan for $33.2 million plus the assumption of an additional $5.8 million of
indebtedness. Grocers had 1998 sales of approximately $60 million. Grocers sells
a variety of bread, buns, sweet goods, cookie dough and other frozen products in
Western Michigan under several leading brands, including Oven Fresh, Lumber Jack
and April Hill. Additionally, in July 1999, we completed a small add-on
acquisition of a Detroit-based baker, Blue-Bird Products, Inc.
We intend to continue to selectively acquire bakery businesses in order to
build enterprise value by realizing significant cost synergies. We have
identified additional potential acquisition candidates, each of which will
provide a range of opportunities for synergy if they are combined with our
existing bakery businesses. However, since we have a significant amount of debt,
we might be unable to complete all of our targeted acquisitions.
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Financing Structure
Our financing structure at the date of this prospectus consists of the
following:
o $122.8 million Revolving Credit Facility at the operating company
level, which we refer to as our "Revolving Credit Facility";
o $168.2 million Term Loan Facility at the SFC New Holdings level,
which we refer to as our "Term Loan Facility";
o $220.7 million of 11 1/4% Senior Notes;
o $149.9 million of 12 1/8% Senior Notes;
o $197.7 million of Subordinated Notes;
o New 13% Debentures, with an accreted value at June 30, 1999 of
$314.4 million; and
o 11% Senior Subordinated Discount Debentures due 2009 issued by SFC
Sub, Inc., a Delaware corporation which is the direct parent of SFAC
New Holdings, with an accreted value at June 30, 1999 of $170.3
million.
In addition, because not all holders of outstanding debt securities of
Specialty Foods and Specialty Foods Acquisition Corp. exchanged them for our
securities in the private transactions that were completed on June 11, 1999,
there are also outstanding the following securities:
o $4,305,000 of SFC 10 1/4% Senior Notes;
o $75,000 of SFC 11 1/8% Senior Notes;
o $2,354,000 of SFC Subordinated Notes;
o $54,176 of 13% Senior Secured Discount Debentures issued by
Specialty Foods Acquisition Corp., which we refer to as "13%
Debentures."
We are also a party to an accounts receivable securitization facility
under which the accounts receivable of our operating subsidiaries are
transferred to a master trust, which we refer to as our "Accounts Receivable
Transfer Facility." The maximum amount of accounts receivable that can be sold
to the Accounts Receivable Transfer Facility is $50 million.
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Refinancing Transaction
The Revolving Credit Facility, the Term Loan Facility and the Accounts
Receivable Facility were refinanced in March 1998 and again in June 1999. As a
result, the Term Loan and Revolving Credit Facilities have a final maturity date
of January 31, 2001. The Accounts Receivable Facility also has a final maturity
date of January 31, 2001 and begins to amortize on December 15, 2000. For
additional information, see the section of this prospectus entitled "Description
of Our Other Indebtedness and Our Accounts Receivable Transfer Program."
Private Exchange Transactions
In May 1999, we commenced private transactions to exchange our private
exchange notes for debt securities of both Specialty Foods and Specialty Foods
Acquisition Corp. Those private transactions were completed on June 11, 1999.
Specialty Foods Acquisition Corp. offered holders of its 13% Debentures who were
"accredited investors" within Rule 501(a)(1)(2) or (3) of the Securities Act the
opportunity to exchange their existing debt for New 13% Debentures of SFAC New
Holdings and an aggregate of 31,925 shares of common stock of SFAC New Holdings.
The New 13% Debentures include provisions which (as compared to the terms of the
existing 13% Debentures):
o extend the first date on which interest must be paid in cash to
December 15, 2004 and extend the final maturity date to June 15,
2009;
o give SFAC New Holdings the right to redeem the New 13% Debentures,
in whole or in part, at any time, at specified percentages of their
accreted value, commencing at 50% of such amount until June 15,
2000;
o resulted in consenting holders of its 13% Debentures holding an
aggregate of 9.99% of the equity interest of SFAC New Holdings.
We offered to exchange an aggregate of up to $225,000,000 aggregate
principal amount of our initial 11 1/4% Senior Notes, up to $150,000,000
aggregate principal amount of our initial 12 1/8% Senior Notes, up to
$200,000,000 aggregate principal amount of our initial Subordinated Notes and up
to $28,296,838 of 11% Debentures, for the SFC Notes.
The exchange notes we are offering by means of this prospectus have
substantially the same terms and covenants as our private exchange notes for
which they will be exchanged, and will remain structurally senior to the New 13%
Debentures. Those exchange offers were made only to "accredited investors" under
the Securities Act. The holders of the SFC Subordinated Notes were offered a
consent payment of $35 per $1,000 note to consent to the transaction, and the
holders of the SFC 11 1/8% Senior Notes and the SFC 10 1/4% Senior Notes were
offered a consent payment of $10 per $1,000 note. In addition, we obtained the
consent of the lenders to our Revolving Credit Facility and Term Loan Facility
to amend their agreements to conform to our new holding company structure.
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We conduct substantially all of our business through our subsidiaries.
Consequently, our ability and the ability of SFAC New Holdings or of any new
intermediate holding company to meet our individual obligations to our creditors
depends on our subsidiaries' earnings, cash flow, ability to pay dividends and
ability to advance funds to SFC New Holdings. In addition, if a subsidiary is
liquidated or reorganized, our rights and the rights of SFAC New Holdings and of
any new intermediate holding company, and of these companies' creditors and
securities holders, including the holders of debt securities, to participate in
the subsidiary's assets will be limited by prior claims of the subsidiary's
creditors (except to the extent that we are, or SFAC New Holdings or the
intermediate holding company is, also a creditor with recognized claims against
the subsidiary).
Strategy
Our strategy is to build the enterprise value of our operating companies,
which we believe is best attained in the current baking industry environment by
realizing significant cost synergies from acquisitions. Since May 1998, we have
consummated seven bakery acquisitions and we intend to continue to acquire
bakery businesses to the extent our financial resources allow. We have
identified potential acquisition candidates that would provide us with a range
of synergy opportunities if they were combined with our existing bakery
business. When our financial capabilities preclude us from pursuing additional
acquisitions, we will explore available options to maximize the value of our
stakeholders' investments.
Competition
Our bakery businesses compete in the highly competitive bakery products
industry. Competition is likely to increase due to continued industry
consolidation and overcapacity in certain areas of the country. Our competitors
include large multi-product food companies (such as Bestfoods), national bakers
(such as Interstate Brands and Earthgrains), cookie companies with national
distribution (such as Keebler and Nabisco) and numerous smaller regional and
local companies. Many of our larger competitors have significantly greater
financial, marketing and other resources than we do, while smaller competitors
may have lower fixed costs and greater operating flexibility. We are also more
highly leveraged than most of our competitors, which may place us at a
competitive disadvantage or restrict our ability to implement our acquisition
strategy in a consolidating industry. We do not encounter material foreign
competition. Competition in our industry is based on a number of factors
including price, quality, brand loyalty, service, freshness, marketing
effectiveness and obtaining access to retail outlets and adequate shelf space.
Raw Materials
We are a major purchaser of flour, sugar, vegetable oils and other
agricultural products, as well as of plastic, paper and corrugated products for
packaging materials. Although we have some long-term contracts, we buy the bulk
of our raw materials on the open market or under short-term agreements. The
prices we pay for food product raw materials generally reflect external forces,
among which weather conditions and
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commodity market activities are the most significant. Although the prices of our
principal raw materials fluctuate as a result of government actions and/or
market forces (which directly affect the cost of products and value of
inventories), raw materials are generally in adequate supply and readily
available from numerous sources. Occasionally, and where possible, we make
advance purchases of important commodities in order to lock in what we perceive
to be favorable prices and to limit exposure to short-term market price
fluctuations. We attempt to pass through increases in the costs of purchased
ingredients to our customers where possible. Our ability to do so depends
primarily upon competitive conditions and the pricing methodologies we use in
our various geographical areas.
Seasonality
Our business is moderately seasonal, with higher sales, operating profit
and cash flows generally occurring in the second, third and fourth quarters of
the year. This seasonality is due primarily to higher bread, bun and cookie
sales in the summer and fall months and during the year-end holiday season.
Customers, Sales and Backlog
No single customer accounts for more than 10% of our net sales. Our
principal customers are retail food outlets, club stores, mass merchandisers and
consumers who buy directly through our bakery cafes. In general, we do not
believe that our order backlog is significant or material for an understanding
of our business.
Legal and Regulatory Matters
Litigation
On May 20, 1993, prior to our acquisition of our former subsidiary Stella
Foods, Inc. from Artal, Cacique, Inc. commenced proceedings against Stella in
the California Superior Court, Alameda County. Cacique's action relates to
"Hispanic"-style cheese, which was produced by Stella between 1993 and September
1994. In November 1997, we sold Stella to a third party, but we retained
liability with respect to Cacique's action. We have indemnified the purchaser in
connection with the action, and we continue to control the defense of the
action.
Cacique's complaint asserts claims for misappropriation of trade secrets,
trademark interference, inducing breach of contract, interference with business
relations, unfair competition, and conspiracy to commit certain of these causes
of action.
Cacique claims damages for lost profits of approximately $14 million, as
well as punitive damages and attorneys' fees. Stella has filed a cross-complaint
seeking approximately $14 million in damages that alleges that Cacique engaged
in predatory pricing practices.
A trial on this matter is currently being conducted and is expected to
conclude during the third quarter of 1999. Although litigation always has an
element of
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uncertainty, and we can give no assurances about the impact that this litigation
will have on us, our management believes that the ultimate resolution of this
matter will not have a material adverse effect on our financial condition or
results of operations.
We are also involved in contractual disputes, administrative and legal
proceedings and investigations of various types, arising out of the ordinary
course of business. Although litigation always has an element of uncertainty,
and we therefore cannot give any assurances about the impact that these matters
will have on us, we do not believe that any single matter, if adversely
determined, would have a material adverse effect on our financial condition or
results of operations. We do not currently believe that there is a reasonable
possibility that all or a majority of these matters will be decided against us.
Regulation
Public Health
We must comply with the Federal Food, Drug and Cosmetic Act and
regulations administered by the Food and Drug Administration. This comprehensive
regulatory scheme governs, among other things, the manufacture, composition,
ingredient labeling, packaging and safety of food. For example, the FDA
regulates manufacturing practices for food through its current "good
manufacturing practices" regulations, specifies the recipes for certain foods,
including many of the kinds of products marketed by our subsidiaries, and
prescribes the format and content of certain information required to appear on
the labels of food products.
We have revised the labeling of our products to comply with regulations
administered by the FDA under the Nutrition Labeling and Education Act of 1990.
These regulations require nutritional labeling on all foods that are a
meaningful source of nutrition, including many of our products. Furthermore,
these regulations limit the use of certain terms on labels, while requiring the
use of certain other terms.
Our operations and products are also governed by state and local
regulation through measures such as licensing of plants, enforcement by state
health agencies of various state standards and inspection of our facilities.
A party who violates federal, state or local regulations may be subject to
cease and desist orders, injunctions and/or monetary penalties. Offending
products also may be seized and condemned. We believe that our facilities and
practices will continue to comply with applicable government regulations in all
material respects.
Employee Safety Regulations
We must comply with health and safety regulations, including regulations
issued under the Occupational Safety and Health Act. These regulations, which
are aimed at protecting our employees from accidents, require us to comply with
manufacturing, health and safety standards.
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Other
We also must comply with regulations imposed by other governmental
agencies, including the United States Department of Agriculture and the Federal
Trade Commission. For example, under the Federal Trade Commission Act and its
related regulations, the FTC is permitted to regulate advertising by our
businesses.
Environmental Matters
Our business operations and our ownership and operation of real property
are governed by extensive and changing federal, state, local and foreign
environmental laws and regulations. These regulations pertain to the discharge
of materials into the environment, the handling and disposition of wastes
(including solid and hazardous wastes), and other matters relating to protection
of the environment. We do not expect that the costs of complying with
environmental laws and regulations will have a material impact on our capital
expenditures, earnings or competitive position. However, we cannot assure you
that new environmental issues relating to any matter or any site, whether
presently known or not, will not require additional, currently unanticipated
investigation, assessment or expenditures.
Trademarks, Patents and Licenses
We own or license a number of trademarks and trade names which our
management believes provide significant value to several of the Businesses
because of their recognition by customers and consumers. We own or license a
number of patents, but those patents and licenses are not considered to be
material to the conduct of the Businesses, and we do not believe that any of our
businesses are substantially dependent upon patent protection.
Employees
As of June 30, 1999, we employed approximately 8,500 persons.
Approximately 62% of our labor force is or will be covered by collective
bargaining agreements when we complete currently on-going negotiations. Our
collective bargaining agreements generally run for three to five years. We
believe that our relations with our employees are generally good.
Properties
We use various owned and leased plants, warehouses, and other facilities
in our operations. These facilities are located primarily in the Midwest and
California. Our management believes that the facilities are properly equipped
with suitable machinery. These facilities and related equipment are generally
well maintained and are adequate for the conduct of our current operations. Our
management also believes that our facilities have sufficient capability and
capacity to meet our long-term needs.
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The following is a summary of significant facilities that we were
operating as of June 30, 1999.
Number of Facilities
Owned Leased Total
----- ------ -----
32 66 98
We have mortgages on substantially all of our owned facilities for the
benefit of the lenders under our Revolving Credit Facility.
We also operate 349 retail outlets and retail bakery stores.
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MANAGEMENT
Executive Officers and Directors
The following table provides you with information about our executive
officers and directors, and executive officers of our subsidiaries who may be
deemed to be our executive officers.
Name Age Position
- ---- --- --------
Executive Officers
Lawrence S. Benjamin............... 43 Chief Executive Officer, President
and Director
Robert B. Aiken.................... 36 President and Chief Executive
Officer of Metz
Robert L. Fishbune................. 43 Vice President and Chief Financial
Officer
Henry J. Metz...................... 48 Chairman of Metz
Patrick J. O'Dea................... 38 President and Chief Executive
Officer of Mother's
David E. Schreibman................ 31 Vice President, Secretary & General
Counsel
Lawrence J. Strain................. 46 President of Boudin
Directors
Robert B. Haas..................... 52 Chairman of the Board of Directors
Thomas J. Baldwin.................. 40 Director
J. Taylor Crandall................. 45 Director
Jerry M. Meyer..................... 58 Director
Andrew J. Nathanson................ 41 Director
David G. Offensend................. 46 Director
Marc C. Particelli................. 44 Director
Anthony P. Scotto.................. 52 Director
Douglas D. Wheat................... 48 Director
Mr. Benjamin has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since February 1997; President and Chief Executive Officer of
Specialty Foods and Specialty Foods Acquisition Corp. since January 1997; and
President and Chief Executive Officer of Stella Foods, Inc. (a former subsidiary
of Specialty Foods) from August 1994 until December 1997. Mr. Benjamin held
various positions from 1986 through August 1994 with operating units of Kraft
Foods, Inc., including President of All American Gourmet Company, Vice President
of Kraft Frozen Products Group and Vice President and General Manager of the
Specialty Ingredients Unit of Kraft General Foods, Inc.
Mr. Aiken has been President of Metz since April 1998 and Chief Executive
Officer of Metz since January 1999. Mr. Aiken was Vice President, Secretary and
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General Counsel of Specialty Foods and Specialty Foods Acquisition Corp. from
February 1997 until April 1998. From October 1995 until February 1997, Mr. Aiken
was Executive Vice President, General Counsel and Secretary of Metz.
Mr. Fishbune has been Vice President and Chief Financial Officer of
Specialty Foods and Specialty Foods Acquisition Corp. since May 1996. Mr.
Fishbune was a Partner at Coopers & Lybrand L.L.P. from 1988 until May 1996.
Mr. Metz has been Chairman of Metz since January 1999. Mr. Metz was Chief
Executive Officer of Metz from August 1993 through December 1998, and President
of Metz from February 1983 to April 1998. Mr. Metz was Chief Operating Officer
of Metz from 1988 until August 1993.
Mr. O'Dea has been President and Chief Executive Officer of Mother's since
April 1997. Mr. O'Dea was Vice President, Retail of Stella Foods, Inc. from 1995
to March 1997. Prior to joining Stella Foods, Inc., Mr. O'Dea spent 12 years
with Procter & Gamble, most recently as Director of Marketing for its Snack Food
Business.
Mr. Schreibman has been Vice President, Secretary and General Counsel of
Specialty Foods and Specialty Foods Acquisition Corp. since May 1999 and Vice
President and General Counsel - Business Units of Specialty Foods and Specialty
Foods Acquisition Corp. since October 1998. Mr. Schreibman was Chief Counsel -
Mergers and Acquisitions for the Sara Lee Corporation from October 1995 to
October 1998. Prior to October 1995, Mr. Schreibman was in private law practice
as an associate with Sidley & Austin.
Mr. Strain has been President of Boudin since January 1999; Vice President
of Bakery Operations from August 1990 through December 1998. Prior to 1990, Mr.
Strain was Vice President and operating partner of Boudin International, Inc.
Mr. Haas has been Chairman of the Board of Specialty Foods and Specialty
Foods Acquisition Corp. since their organization in 1993 and Chairman of the
Board of Haas Wheat & Partners Incorporated, a private investment firm, since
1992 and Chairman of the Board of Haas & Partners Incorporated, a private
investment firm, since 1989. Mr. Haas is Chairman of the Board of Playtex
Products, Inc., NBC Acquisition Corp. and Nebraska Book Company, Inc. and a
Director of Sybron International Corporation.
Mr. Baldwin has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since May 1996; Chief Executive Officer of Christmas Corner,
Inc. since January 1995 and President of PB Ventures since July 1994. Mr.
Baldwin was also Managing Director of Invus Group, Ltd. from 1990 through
February 1995.
Mr. Crandall has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since August 1993; Vice President and Chief Financial Officer
of Keystone, Inc., an affiliate of the Company, since October 1986 and
President, Director and sole stockholder of Acadia MGP, Inc. (managing general
partner of Acadia FW Partners, L.P.), the sole general partner of Acadia
Partners, L.P., an affiliate of Specialty
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Foods since March 1992. Mr. Crandall also is a Director of Bell & Howell
Holdings Company, Physicians Reliance Network, Sunterra Corp., Integrated
Orthopedics and Washington Mutual.
Mr. Meyer has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since June 1996. Mr. Meyer also is a Director of Century
Capital Financial, Inc. and City National Bank in Kilgore and Longview, Texas.
Mr. Nathanson has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since August 1993 and Managing Director of Donaldson, Lufkin &
Jenrette Securities Corporation since January 1991. Mr. Nathanson also is a
Director of Duane Reade, Inc.
Mr. Offensend has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since August 1993 and Founder of Evercore Partners, LLC since
October 1995. Mr. Offensend was also Managing Director of Oak Hill Partners,
Inc. and its predecessor from April 1990 to September 1995; Vice President and
Director of Acadia MGP, Inc. from March 1992 to September 1995; and Vice
President of Keystone from March 1992 to September 1995.
Mr. Particelli has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since November 1997 and Managing Director of Oak Hill
Partners, Inc. since August 1997. Mr. Particelli was Principal of Odyssey
Partners L.P. from October 1995 to August 1997 and Senior Vice President of Booz
Allen & Hamilton Inc. prior to October 1995.
Mr. Scotto has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since August 1993; Managing Director of Oak Hill Partners,
Inc. and its predecessor since March 1988; and Consultant to Oak Hill Capital
Management, Inc. since November 1998. Mr. Scotto also is a Director of Ivex
Packaging Corporation, Holophane Corporation and Grove Worldwide LLC.
Mr. Wheat has been Director of Specialty Foods and Specialty Foods
Acquisition Corp. since June 1993 and President of Haas Wheat & Partners
Incorporated, a private investment firm, since November 1992. Mr. Wheat was
Co-Chairman of Grauer & Wheat, Inc., a private investment firm, from April 1989
to October 1992. Mr. Wheat also is a Director of Playtex Products, Inc.
Compensation of Executive Officers
The following table shows the compensation for the years ended December
31, 1998, December 31, 1997 and December 31, 1996 of Mr. Benjamin, our President
and Chief Executive Officer who holds the same positions in SFAC New Holdings,
who we refer to as the "CEO," and each of our four most highly compensated
executive officers (excluding the CEO but including our operating subsidiaries).
We have an annual bonus plan and a long-term incentive plan in which our
executive officers may participate.
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The CEO and four most highly compensated executive officers hold their
respective positions at SFC New Holdings and at SFAC New Holdings, but they are
not compensated separately by each entity.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation (1)
------------------------------------------------ ----------------------------
Awards
----------------------------
Securities
Other Annual Underlying
Fiscal Compensation Options/SARs All Other
Name and Principal Position Year Salary($) Bonus($) ($) (1) (#)(2) Compensation($)
- --------------------------- ---- --------- -------- ------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence S. Benjamin ........... 1998 625,000 1,774,000 89,000 -- 101,000 (3)
President and Chief Executive 1997 560,000 1,015,000 84,000 1,300,000 89,000
Officer of us and SFAC New 1996 320,000 72,000 -- 50,000 --
Holdings
William D. Day (4) ............. 1998 300,000 528,000 -- -- 8,500 (5)
President and Chief Executive 1997 209,000 215,000 31,000 -- 600
Officer of H&M 1996 145,000 -- -- 15,000 400
Robert L. Fishbune ............. 1998 376,000 601,500 62,000 -- 64,000 (6)
Vice President and Chief 1997 350,000 298,000 62,000 100,000 80,000
Financial Officer of us and SFAC 1996 191,000 150,000 51,000 100,000 29,000
New Holdings
Henry J. Metz .................. 1998 338,000 262,500 -- -- 500 (7)
Chairman of Metz 1997 334,000 251,000 -- -- 1,000
1996 320,000 240,000 93,000 50,000 2,000
Patrick J. O'Dea ............... 1998 295,000 225,000 -- -- 30,300 (8)
President and Chief Executive 1997 260,000 260,000 -- -- 207,000
Officer of Mother's 1996 184,000 -- -- 20,000 400
</TABLE>
- ----------
(1) The amounts listed for Mr. Benjamin include $71,000 and $76,000 for tax
reimbursement payments made in 1997 and 1998, respectively. The amounts
for Mr. Fishbune in 1996, 1997 and 1998 include $43,000, $50,000 and
$49,000, respectively, for tax reimbursement payments. In 1997, Mr. Day
received $31,000 in tax reimbursement. In 1996, Mr. Metz received $54,000
of tax reimbursement payments and $39,000 for personal use of the Metz
airplane.
(2) Options were generally granted to our employees, including the named
executive officers, under our 1994 Stock Option Plan, which was amended in
February 1995 and which we refer to as our "Stock Option Plan." Options
granted are either non-qualified stock options or incentive stock options.
Options granted generally have a ten year term.
(3) In 1998, we made a $90,000 contribution to a retirement account maintained
by Mr. Benjamin. Mr. Benjamin (and Mr. Fishbune) have established accounts
into which they contribute up to 15% of their base pay (on an after-tax
basis) to annuity or money-market funds. We provide contributions to their
retirement accounts and we reimburse them for taxes incurred as a result
of our contributions. The amounts listed for 1998 for Mr. Benjamin also
include life insurance premiums ($3,000) and personal financial planning
services ($8,000).
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(4) H&M was sold in April 1999.
(5) The amounts listed for Mr. Day in 1998 include life insurance premiums
($1,500) and reimbursement of moving and relocation expenses ($7,000).
(6) In 1998, we made a $56,000 contribution to a retirement account maintained
by Mr. Fishbune (see note 3 for a description of the account). The amounts
listed for Mr. Fishbune also include life insurance premiums ($1,500) and
personal financial planning services ($6,500).
(7) In 1998, Mr. Metz received a $500 reimbursement for relocation expenses.
(8) The amounts listed for Mr. O'Dea in 1998 include a $30,000 relocation
allowance and payment of $300 in life insurance premiums.
Aggregated Options/SARs Exercised In Last Fiscal Year And Year-End Option/SAR
Values
The following table describes, for the named executive officers, aggregated
information concerning the number of shares of Specialty Foods Acquisition Corp.
common stock, par value $.01 per share, underlying unexercised stock options at
December 31, 1998 and the value of unexercised, in-the-money options at that
date.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options/SARs at Fiscal Money Options/SARs at Fiscal
Year-End Year-End
Name (#) Exercisable/Unexercisable ($) Exercisable/Unexercisable
---- ----------------------------- -----------------------------
<S> <C> <C>
Lawrence S. Benjamin 825,000/675,000 (1)
President and Chief
Executive Officer of
us and SFAC New Holdings
William D. Day 18,750/6,250 (1)
President and Chief
Executive Officer of H&M
Robert L. Fishbune 100,000/100,000 (1)
Vice President and Chief
Financial Officer of us and
SFAC New Holdings
Henry J. Metz 153,750/31,250 (1)
Chairman of Metz
Patrick J. O'Dea 26,250/8,750 (1)
President and Chief
Executive Officer of
Mother's
</TABLE>
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<PAGE>
- ----------
(1) All of the options listed in this table have an exercise price of
$0.021322 per share. Due to the fact that the Specialty Foods Acquisition
Corp. common stock is not publicly traded, it is not currently possible to
calculate a precise value for the Specialty Foods Acquisition Corp. common
stock. In October 1997, the Board of Directors of Specialty Foods
Acquisition Corp. realized that certain previously granted stock options
had exercise prices which exceeded the fair market value of the Specialty
Foods Acquisition Corp. common stock. In view of this diminished value,
the Board of Directors of Specialty Foods Acquisition Corp. determined
that adjusting the exercise price of stock options previously awarded to
existing employees (including the named executive officers) was in our
best interest. On October 30, 1997, the Board of Directors of Specialty
Foods Acquisition Corp. repriced the exercise price of existing options
from $0.726703211 to $0.021322 per share of Specialty Foods Acquisition
Corp. common stock, which the Board of Directors of Specialty Foods
Acquisition Corp. determined was not below the fair market value of that
common stock.
Metz-Mother's Cake & Cookie Company Consolidated Pension Plan for Non-Union
Employees
The following table provides you with information about the estimated
annual benefits payable upon retirement for the specified compensation and years
of service classifications under the Metz-Mother's Cake & Cookie Company
Consolidated Pension Plan for Non-Union Employees, which we refer to as the
"Pension Plan." Messrs. Metz and O'Dea are the only named executive officers
participating in the Pension Plan.
Pension Plan Table For The Pension Plan
Annual Final
Average
Compensation Years of Service
------------ ----------------
15 20 25 30 35
-------- -------- -------- -------- --------
125,000 $ 23,988 $ 32,547 $ 41,105 $ 49,564 $ 49,664
150,000 $ 29,369 $ 39,834 $ 50,299 $ 60,764 $ 60,764
175,000 $ 33,833 $ 46,466 $ 59,100 $ 71,734 $ 71,734
200,000 $ 37,495 $ 52,035 $ 66,575 $ 81,115 $ 81,115
225,000 $ 41,158 $ 57,604 $ 74,050 $ 90,497 $ 90,497
250,000 $ 42,746 $ 60,038 $ 77,291 $ 94,564 $ 94,564
300,000 $ 42,746 $ 60,018 $ 77,291 $ 94,564 $ 94,564
350,000 $ 42,746 $ 60,018 $ 77,291 $ 94,564 $ 94,564
400,000 $ 42,746 $ 60,018 $ 77,291 $ 94,564 $ 94,564
450,000 $ 42,746 $ 60,018 $ 77,291 $ 94,564 $ 94,564
500,000 $ 42,746 $ 60,018 $ 77,291 $ 94,564 $ 94,564
Compensation under the Pension Plan generally refers to total annual cash
compensation (up to $160,000 for 1998, as limited by the IRS Code section
401(a)(17)),
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including pre-tax salary deferrals, but excluding certain specified items such
as compensation received under the Metz Long-Term Incentive Compensation Plan,
the Mother's Long-Term Incentive Compensation Plan, the Metz Annual Bonus
Incentive Plan and the Mother's Annual Bonus Incentive Plan.
In 1998, the amount of compensation covered under the Pension Plan Messrs.
Metz and O'Dea was $160,000 (as limited by IRS Code section 401(a)(171)). As of
December 31, 1998, Mr. Metz had approximately 27 years of credited service under
the Pension Plan and Mr. O'Dea had approximately one and one-half years of
credited service under the Pension Plan. Benefits are computed on a straight
life annuity basis and are not subject to deduction for Social Security or other
offset amounts.
Employment Arrangements
The following summaries of some of our employment agreements and
arrangements are not necessarily complete, so you should also read the text of
the agreements and arrangements, copies of which are listed as exhibits to the
registration statement and have either been filed as exhibits or incorporated by
reference into this prospectus.
Employment Agreement with Mr. Benjamin
Specialty Foods Acquisition Corp., Specialty Foods and certain of their
subsidiaries, including the Businesses, which we collectively refer to as the
"Employers," entered into an Amended and Restated Executive Employment Agreement
with Mr. Benjamin, dated as of March 15, 1999 and effective January 1, 1999.
Under this employment agreement, the initial term of employment ends June 30,
2001. However, the employment agreement will automatically be renewed for
additional one-year periods unless one of the parties cancels the renewal and
notifies the other party six months before the renewal term would begin. In
addition, if the employment agreement is terminated under certain circumstances,
the Employers will make post-termination salary and bonus payments to Mr.
Benjamin (or his estate). The employment agreement provides for an initial base
salary of $655,000 and an annual target bonus of 75% of base salary if we meet
specified EBITDA targets.
Mr. Benjamin's employment agreement also provides that he may be entitled
to receive, under certain circumstances, payments to offset (at least in part)
certain tax consequences to him if he exercises stock options, receives certain
payments, and/or has his contract terminated in connection with a change of
control of Specialty Foods Acquisition Corp. or Specialty Foods. These payments
are limited, in some circumstances, to the tax savings actually realized by the
Employers, and in other circumstances, by various dollar amounts.
Mr. Benjamin has agreed to be bound by certain confidentiality,
non-competition and non-solicitation restrictions described in his employment
agreement.
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Employment Agreement with Mr. Fishbune
The Employers also entered into an Amended and Restated Executive
Employment Agreement, dated as of March 15, 1999 and effective January 1, 1999,
with Mr. Fishbune. The initial term of Mr. Fishbune's employment agreement ends
December 31, 2000, but will be automatically renewed for additional one-year
periods unless the renewal is canceled by the Employers or Mr. Fishbune upon six
months' prior notice. In addition, if Mr. Fishbune's employment agreement is
terminated under certain circumstances, the Employers will make post-termination
salary and bonus payments to him (or his estate). Mr. Fishbune's employment
agreement provides for an initial base salary of $400,000 and an annual target
bonus of 75% of base salary if we meet specified EBITDA targets.
Mr. Fishbune's Employment Agreement also provides that he may be entitled
to receive, under certain circumstances, payments to offset (at least in part)
certain tax consequences to him if he exercises stock options, receives certain
payments, and/or has his contract terminated in connection with a change of
control of Specialty Foods Acquisition Corp. or Specialty Foods. These payments
are limited, in some circumstances, to the tax savings actually realized by the
Employers, and in other circumstances, by various dollar amounts.
Mr. Fishbune has agreed to be bound by certain confidentiality,
non-competition and non-solicitation restrictions described in his employment
agreement.
Employment Agreement with Mr. O'Dea
Specialty Foods, Mother's and MCC-DSD Holdings, Inc. (parent company of
Mother's and a wholly owned subsidiary of Specialty Foods) entered into an
Amended and Restated Executive Employment Agreement with Mr. O'Dea, effective
July 15, 1997. Mr. O'Dea's employment agreement provides for an initial
employment term ending December 31, 2000. However, this employment agreement may
be terminated at an earlier date under certain listed circumstances. Mr. O'Dea's
employment agreement provides for an initial base salary of $280,000 and an
annual target bonus of 75% of base salary if we meet specified performance
targets. In addition, if Mr. O'Dea's employment agreement is terminated in
certain circumstances, the Employers will make post-termination salary and bonus
payments to him (or his estate).
Mr. O'Dea has agreed to be bound by certain confidentiality,
non-competition and non-solicitation restrictions set forth in his employment
agreement.
Divestiture Award Agreements
Certain of our executive officers and other key employees, including
Messrs. Benjamin, Fishbune and Metz, have entered into Divestiture Award
Agreements with us. According to these agreements, a recipient will receive or
has received a percentage of the net cash proceeds received by us (after
deducting fees and expenses) if we sell certain of our subsidiaries.
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Change in Control Arrangements
Under the Mother's Amended and Restated Supplemental Long-Term Incentive
Compensation Plan, adopted in 1999, which we refer to as the "Mother's Long-Term
Plan," certain management employees, including certain named executive officers,
are eligible to receive awards based upon the total value of Mother's. We will
determine the amounts of any award payments to be made under the Mother's
Long-Term Plan on June 1, 2001, or earlier if there is a change in control of
Mother's. The award amounts under the Mother's Long-Term Plan will be offset, in
certain cases, by amounts payable under certain of the Deferred Bonus Agreements
described below.
Certain of our executive officers and other key employees, including
Messrs. Benjamin, Fishbune, Metz and O'Dea, entered into Deferred Bonus
Agreements with us. Under these agreements, they are entitled to receive
deferred bonus payments in amounts equal to their bonus payments under our
annual bonus plans. A payment of vested amounts relating to bonuses earned
through 1998 was made on March 31, 1999. Further payments relating to 1998 bonus
amounts earned through 1998 will be made on January 15, 2000. Messrs. Benjamin
and Fishbune waived the payments due to them on March 31, 1999 after they
received payments under the Divestiture Award Agreements relating to H&M
described above. In addition, on March 31, 2001 Messrs. Benjamin, Fishbune and
O'Dea will receive payments of amounts vested relating to any bonuses they may
earn for 1999 and 2000. However, if there is a change in control, the awards
that relate to bonuses earned prior to the change in control vest immediately
and will be paid within 90 days.
Compensation of Directors
Our employees do not receive any additional compensation for serving as
one of our directors or on one of our committees of the board of directors. We
reimburse our directors for reasonable out-of-pocket expenses that they incur in
connection with attending board of directors meetings or committee meetings. Our
directors are also covered by director's liability insurance. Each of Messrs.
Baldwin and Meyer also receive directors fees of $20,000 annually.
Compensation Committee Interlocks and Insider Participation In Compensation
Decisions
J. Taylor Crandall, Robert B. Haas, Anthony P. Scotto and Douglas D. Wheat
are all of the members of the compensation committee of the board of directors
of each of Specialty Foods Acquisition Corp. and Specialty Foods. Each of
Messrs. Crandall, Haas, Scotto and Wheat owns a beneficial interest in or is an
executive officer of one or more of the entities that have entered into
financial advisory arrangements with Specialty Foods, as described below.
Messrs. Haas and Wheat are controlling shareholders and are Chairman of
the Board and President, respectively, of Haas Wheat & Partners Incorporated.
Haas Wheat & Partners Incorporated was a party to a financial advisory agreement
with Specialty
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Foods pursuant to which Haas Wheat agreed to provide financial advisory and
other consulting services to Specialty Foods for a five-year period in exchange
for an annual fee of $700,000. Specialty Foods' board of directors approved a
one-year extension of the agreement in August 1998.
J. Taylor Crandall is Vice President and Chief Financial Officer of
Keystone and is President, Director and sole stockholder of Acadia MGP, Inc.,
the managing general partner of Acadia FW Partners, L.P., the sole general
partner of Acadia. Mr. Scotto is a Managing Director of Oak Hill Partners, Inc.
and its predecessor. Each of Penobscot-MB Partners, which we refer to as
"Penobscot," an affiliate of Acadia, and Keystone entered into a five-year
financial advisory agreement with Specialty Foods, under which they were paid an
annual fee, $200,000 per year in the case of Penobscot and $100,000 per year in
the case of Keystone. Specialty Foods' Board of Directors approved a one-year
extension of the agreement in August 1998.
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SECURITY OWNERSHIP
All of our outstanding common stock is held by SFAC New Holdings SFC Sub
owns 90% of the capital stock of SFAC New Holdings and the remaining 10% is held
by the holders of the 13% Debentures. All of the capital stock of SFC Sub is
owned by Specialty Foods, and all of the capital stock of Specialty Foods is
owned by Specialty Foods Acquisition Corp. The following table provides, as of
June 28, 1999, information regarding the beneficial ownership of voting
securities of Specialty Foods Acquisition Corp. by (i) each person known by
Specialty Foods Acquisition Corp. to be the beneficial owner of more than 5% of
any class of its voting securities, (ii) each of our directors and named
executive officers, and (iii) all of our executive officers and directors as a
group.
<TABLE>
<CAPTION>
Percentage of
Name and Address Number of Shares Outstanding Shares
of Beneficial Owner of Common Stock of Common Stock (1)
- ------------------- --------------- -------------------
<S> <C> <C>
Acadia Partners, L.P. (2) ............. 27,063,347 40.86%
201 Main Street
Fort Worth, Texas 76102
Keystone, Inc. (3) .................... 9,358,502 14.13%
201 Main Street
Fort Worth, Texas 76102
Artal Luxembourg S.A. (4) ............. 5,959,327 9.49%
Aandorenstraat 2
3300 Tienen, Belgium
Robert B. Haas (5) .................... 5,881,496 9.26%
300 Crescent Court, Suite 1700
Dallas, Texas 75201
UBS Capital LLC (6) ................... 5,366,913 8.55%
299 Park Avenue
New York, New York 10171
DLJ Merchant Banking Partners, L.P. (7) 3,812,562 6.07%
277 Park Avenue
New York, New York 10172
Thomas J. Baldwin ..................... -- --
J. Taylor Crandall (2) ................ -- --
Jerry M. Meyer ........................ -- --
Andrew J. Nathanson (7) ............... -- --
David G. Offensend .................... -- --
Marc C. Particelli .................... -- --
Anthony P. Scotto (2) ................. -- --
Douglas D. Wheat (8) .................. 276,264 *
Henry J. Metz (9) ..................... 1,217,750 1.93%
Lawrence S. Benjamin (10) ............. 1,001,771 1.57%
Robert L. Fishbune (11) ............... 125,000 *
Patrick J. O'Dea (12) ................. 35,000 *
All directors and executive officers
as a group ............................ 8,587,793 13.24%
</TABLE>
- ----------
* Less than 1%
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<PAGE>
(1) The holdings of all of the stockholders listed in this table may be
diluted by the exercise of the warrants listed in footnotes (b), (c) and
(e) below or options which, under employment arrangements and stock option
plans approved by Specialty Foods Acquisition Corp., Specialty Foods, SFAC
New Holdings and us, may be granted to certain employees. The Stock Option
Plan makes available to certain operating company employees and
headquarters employees options to purchase 5,852,917 shares of Specialty
Foods' common stock.
(2) Acadia's shares of common stock include shares owned by FWHY-Coinvestments
VII Partners, L.P., SFC Partners, L.P. and SFC Partners II, L.P., parties
related to Acadia. Acadia's shares of common stock also include 3,467,002
shares of common stock issuable upon the exercise of 8,775 warrants issued
by Specialty Foods Acquisition Corp. in favor of Acadia under a Warrant
Agreement dated June 27, 1997. Please refer to the section of this
prospectus entitled "Relationships and Related Transactions." The general
partner of Acadia is Acadia FW Partners, L.P., the managing general
partner of which is Acadia MGP, Inc., a corporation controlled by J.
Taylor Crandall. In addition, Mr. Crandall controls Group 31, Inc., the
general partner of each of FWHY, SFC Partners and SFC Partners II.
Therefore, Acadia FW and Acadia MGP may be deemed to beneficially own the
shares of common stock held by Acadia, SFC Partners, SFC Partners II and
FWHY. Mr. Scotto is a limited partner of SFC Partners II and disclaims
beneficial ownership of the shares of common stock held by SFC Partners
II. The address of Acadia FW, Acadia MGP, FWHY, SFC Partners, SFC Partners
II and Mr. Crandall is 201 Main Street, Fort Worth, Texas 76102.
(3) Keystone's shares of common stock include 3,467,002 shares of common stock
issuable upon the exercise of 8,775 warrants issued by Specialty Foods
Acquisition Corp. in favor of Keystone under a Warrant Agreement dated
June 27, 1997. Please refer to the section of this prospectus entitled
"Relationships and Related Transactions." Keystone is controlled by Robert
M. Bass. As such, Mr. Bass may be deemed to beneficially own the shares of
common stock held by Keystone. The address of Mr. Bass and Keystone is 201
Main Street, Fort Worth, Texas 76102.
(4) The parent entity of Artal Luxembourg S.A. is Artal Group S.A., a
Luxembourg company.
(5) Mr. Haas' shares of common stock include 101,011 shares owned by HWP
Specialty Subsidiary Partners, 25,253 shares owned by HWP Specialty
Subsidiary Partners II, and 1,000,000 shares owned by the Haas Family
Long-Term Trust. Mr. Haas' shares of common stock also include 770,445
shares of common stock issuable upon the exercise of 1,950 warrants issued
by Specialty Foods Acquisition Corp. in favor of Mr. Haas under a Warrant
Agreement dated September 19, 1997. Please refer to the section of this
prospectus entitled "Relationships and Related Transactions." The shares
owned by HWP Specialty Subsidiary Partners and HWP Specialty Subsidiary
Partners II also are beneficially owned by Mr. Douglas Wheat.
(6) Union Bank of Switzerland owns indirectly 100% of the capital stock of UBS
Capital LLC.
(7) The following entities hold shares of common stock: DLJ Merchant Banking
Partners, L.P.; DLJ International Partners, C.V.; DLJ Offshore Partners,
C.V.; DLJ Merchant Banking Funds, Inc.; DLJ First ESC L.L.C., an "employee
securities corporation" (as defined in the Investment Company Act of 1940)
formed to hold securities of employees of DLJ Merchant Banking, DLJ
International Partners, DLJ Banking Partners and DLJ First ESC); and
Donaldson, Lufkin & Jenrette Securities Corporation. Except for his
allocable portion of the shares held by DLJ First ESC, Mr. Nathanson
disclaims beneficial ownership of the shares of common stock held by the
DLJ Entities.
(8) Mr. Wheat's shares of common stock include 101,011 shares owned by HWP
Specialty Subsidiary Partners and 25,253 shares owned by HWP Specialty
Subsidiary Partners II, which also are beneficially owned by Mr. Robert B.
Haas, and 150,000 shares owned by the Carrol Wheat Jr. Children's Trust,
for which Mr. Wheat serves as a trustee.
(9) Mr. Metz's shares of common stock include 185,000 shares that Mr. Metz has
the right to acquire upon the exercise of options.
(10) Mr. Benjamin's shares of common stock include 825,000 shares that Mr.
Benjamin has the right to acquire upon the exercise of options.
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<PAGE>
(11) Mr. Fishbune's shares of common stock include 125,000 shares that Mr.
Fishbune has the right to acquire upon the exercise of options.
(12) Mr. O'Dea's shares of common stock include 35,000 shares that Mr. O'Dea
has the right to acquire upon the exercise of options.
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<PAGE>
RELATIONSHIPS AND RELATED TRANSACTIONS
Stockholders' Agreement
In 1993, simultaneously with the closing of the acquisitions of the
businesses underlying Specialty Foods, Haas Wheat, Acadia, Keystone, UBS Capital
LLC, Artal Belgium S.A. and DLJ Merchant Banking (in some cases acting through
affiliates) acquired common stock of Specialty Foods Acquisition Corp. at a
price of $0.726703211 per share. On August 16, 1993, these principal
stockholders entered into a stockholders' agreement governing the relationships
among them. Under this stockholders' agreement, if the principal stockholders
transfer the common stock to any of their affiliates or to members of
management, the transferees must also agree to be bound by the stockholders'
agreement.
The stockholders' agreement imposes restrictions and conditions on the
transfer of Specialty Foods Acquisition Corp. common stock, subject to certain
exceptions. Under the stockholders' agreement, the parties have the right to
participate in certain sales of the Specialty Foods Acquisition Corp. common
stock by other parties. In addition, the parties to the stockholders' agreement
were granted certain preemptive rights with respect to the issuance of common
stock by Specialty Foods Acquisition Corp. and the right, in certain
circumstances, to have their common stock registered for public sale under the
Securities Act of 1933.
The stockholders' agreement also contains provisions relating to the
corporate governance of Specialty Foods Acquisition Corp. Under the
stockholders' agreement, Acadia has the right to nominate three directors,
Keystone has the right to nominate two directors, Haas Wheat has the right to
nominate two directors, and UBS Capital, Artal Belgium and DLJ Merchant Banking
Partners each have the right to nominate one director. Under certain conditions,
Acadia and Keystone can increase the number of directors they can nominate.
Certain Transactions with Stockholders of Specialty Foods Acquisition Corp.
In 1998, Specialty Foods paid annual financial advisory fees to Haas Wheat
($700,000), Penobscot ($200,000) and Keystone ($100,000) under financial
advisory agreements with these parties. In 1998, the Board of Directors of
Specialty Foods extended the terms of each of the financial advisory agreements
between Specialty Foods and Haas Wheat, Penobscot and Keystone for one year.
Please refer to the section of this prospectus entitled "Executive
Compensation--Compensation Committee Interlocks and Insider Participation in
Compensation Decisions."
In November 1996, SF Leasing L.L.C. (of which Acadia and Keystone each
owns a 45% interest and Haas Wheat owns a 10% interest) purchased from Metz all
of the equipment at a Metz manufacturing facility for $3,222,000, a price that
was based on the appraised value of the equipment. The equipment was then leased
back to Metz in a transaction that was deemed by the parties to be equivalent to
an arms length transaction. In September 1998, SF Leasing, L.L.C. resold to Metz
all of the equipment at that
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<PAGE>
manufacturing facility for $3,013,381. During 1998, SF Leasing L.L.C. received
$614,439 in rental payments from Metz. Specialty Foods' Board of Directors
determined that the foregoing transactions were on terms no less favorable to it
and Metz than could have been obtained by Specialty Foods and Metz in a
transaction with an unaffiliated third party.
In December 1998, Specialty Foods retained Donaldson, Lufkin and Jenrette
Securities Corporation, which we refer to as "DLJ," an affiliate of DLJ Merchant
Banking Partners, to serve as its financial advisor in connection with its
proposed sale of H&M. Upon completion of the sale of H&M, the Company paid DLJ
approximately $1,600,000 as compensation for its financial advisory services.
In March 1998, Specialty Foods paid DLJ $5,092,000 in connection with its
refinancing of its Revolving Credit Facility and Term Loan Facility. DLJ acts as
the Syndication Agent and Collateral Agent under both of those loan agreements.
In 1998, Specialty Foods paid DLJ a $100,000 retainer in connection with its
recently completed exchange offers.
Tax Sharing Agreement
SFC New Holdings has entered into a tax sharing agreement with Specialty
Foods Acquisition Corp. under which SFC New Holdings has agreed to pay to
Specialty Foods Acquisition Corp. the pro rata share of Specialty Foods
Acquisition Corp.'s consolidated income tax liability attributable solely to SFC
New Holdings and each of its subsidiaries. SFC New Holdings and each of its
subsidiaries are also parties to a tax sharing agreement under which each
subsidiary has agreed to pay to SFC New Holdings the pro rata share of Specialty
Foods Acquisition Corp.'s consolidated income tax liability attributable to each
such subsidiary. Specialty Foods, SFC Sub, Inc., SFAC New Holdings and Specialty
Foods Acquisition Corp. are also parties to a tax sharing agreement under which:
o Specialty Foods has agreed to pay to Specialty Foods Acquisition
Corp. the pro rata share of Specialty Foods Acquisition Corp.'s
consolidated income tax liability attributable solely to Specialty
Foods, SFC Sub, Inc. and SFAC New Holdings, and
o SFC Sub, Inc. and SFAC New Holdings have each agreed to pay to
Specialty Foods the pro rata share of such tax liability
attributable to each of SFC Sub, Inc. and SFAC New Holdings
58
<PAGE>
THE EXCHANGE OFFERS
Purpose of the Exchange Offers
Our registration rights agreement requires us to file not later than
October 9, 1999, which is 120 days following the date of original issuance of
our private exchange notes, the registration statement of which this prospectus
is a part for registered exchange offers with respect to an issue of new notes
in exchange for the initial notes. The exchange notes will be substantially
identical in all material respects to our private exchange notes except that the
exchange notes will be registered under the Securities Act, will not bear
legends restricting their transfer and will not be entitled to registration
rights under our registration rights agreement. This summary of the registration
rights agreement does not contain all the information that you should consider
and we refer you to the provisions of the registration rights agreement, which
has been filed as an exhibit to the registration statement of which this
prospectus is a part and a copy of which is available as indicated under the
heading "Where You Can Obtain More Information."
This prospectus also covers an offer being made to provide holders of SFC
Notes, who did participate in the private transactions that were completed on
June 11, 1999, with the opportunity to exchange their securities for exchange
notes. Many of these holders were not eligible to participate in the private
transactions because they did not qualify as "accredited investors" under Rule
501(a)(1), (2) or (3) of the Securities Act of 1933. We refer to the exchange
offer for our private exchange notes and the exchange offer for the SFC Notes
collectively as the "exchange offers."
We are required to:
o use our reasonable best efforts to cause the registration statement
to be declared effective no later than December 8, 1999, which is
180 days after the date of issuance of our private exchange notes;
o keep the exchange offers effective for not less than 30 days or
longer if required by applicable law after the date that notice of
the exchange offers is mailed to holders of the initial notes, and
o use our reasonable best efforts to consummate the exchange offers no
later than December 23, 1999, which is 195 days after the date of
issuance of our private exchange notes.
The exchange offers being made here, if commenced and consummated within
the time periods described in this paragraph, will satisfy those requirements
under the registration rights agreement.
This prospectus, together with the letter of transmittal, is being sent to
all record holders of our private exchange notes as of __________, 1999. It is
also being sent to current holders of SFC Notes as of the same date.
59
<PAGE>
Based on interpretations by the staff of the Securities and Exchange
Commission, in no-action letters issued to third parties, we believe that the
exchange notes issued pursuant to the exchange offers may be offered for resale,
resold or otherwise transferred by each holder of exchange notes other than (1)
a broker-dealer who acquires the initial notes directly from us for resale
pursuant to Rule 144A under the Securities Act or any other available exemption
under the Securities Act, and (2) any holder that directly or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, us, without compliance with the registration and prospectus
delivery provisions of the Securities Act, so long as this holder:
o is acquiring the exchange notes in the ordinary course of its
business,
o is not participating in, and does not intend to participate in, a
distribution of the exchange notes within the meaning of the
Securities Act and has no arrangement or understanding with any
person to participate in a distribution of the exchange notes within
the meaning of the Securities Act, and
o is not a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with, us.
By tendering the initial notes in exchange for exchange notes, each
holder, other than a broker-dealer, will be required to make representations to
that effect. If a holder of initial notes is participating in or intends to
participate in, a distribution of the exchange notes, or has any arrangement or
understanding with any person to participate in a distribution of the exchange
notes to be acquired in these exchange offers, this holder may be deemed to have
received restricted securities and may not rely on the applicable
interpretations of the staff of the Securities and Exchange Commission. Any such
holder will have to comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction.
Each broker-dealer that receives exchange notes for its own account in
exchange for initial notes may be deemed to be an underwriter within the meaning
of the Securities Act and must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
these exchange notes. The letter of transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an underwriter within the meaning of the Securities Act. This prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with offers to resell, resales and other transfers
of exchange notes received in exchange for initial notes which were acquired by
such broker-dealer as a result of market making or other trading activities. We
have agreed that we will make this prospectus available to any broker-dealer for
a period of time not less than 90 days after the consummation of the exchange
offers for use in connection with any such offer to resell, resale or other
transfer. Please refer to the section in this prospectus entitled "Plan of
Distribution."
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Shelf Registration Statement
In the event that:
(1) because of any change in law or applicable interpretations thereof
by the staff of the Securities and Exchange Commission, we are not
permitted to effect the exchange offers, or
(2) for any other reason, the exchange offers are not consummated within
195 days from the date of issuance of our private exchange notes, or
(3) any holder so requests with respect to securities not eligible to be
exchanged for exchange securities in the exchange offers, or
(4) any applicable law or interpretations do not permit any holder to
participate in the exchange offers, or
(5) any holder that participates in the exchange offers does not receive
freely transferrable exchange securities in exchange for tendered
securities,
then in the case of clauses (1) through (5) of this sentence, we will be
obligated, at our sole expense, to:
o use our reasonable best efforts to file, as promptly as practicable
and in no event more than 45 days following this request, with the
Securities and Exchange Commission a shelf registration statement
covering resales of the private exchange notes, and
o use our reasonable best efforts to keep the shelf registration
statement continuously effective, supplemented and amended as
required by the Securities Act, in order to permit the prospectus
which is a part of this shelf registration statement to be usable by
holders for a period of two years after the date of issuance of our
private exchange notes or the shorter period of time that will
terminate when all of the applicable initial notes have been sold
under this shelf registration statement.
If a shelf registration statement is filed, we will provide to each holder
of the initial notes being registered copies of the prospectus that is a part of
the shelf registration statement. We will also notify each of these holders when
the shelf registration statement has become effective and take certain other
actions as are required to permit unrestricted resales of the initial notes
being registered. A holder that sells initial notes pursuant to the shelf
registration statement will be required to be named as a selling security holder
in the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
registration rights agreement that are applicable to such a holder, including
indemnification rights and obligations.
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Liquidated Damages
In the event that:
(1) we do not file the registration statement or the shelf registration
statement, as the case may be, with the Securities and Exchange
Commission on or before the dates specified above for these filings,
(2) the registration statement or the shelf registration statement, as
the case may be, is not declared effective on or before the dates
specified above for its effectiveness,
(3) the exchange offers are not consummated on or before December 23,
1999, or
(4) the shelf registration statement is filed and declared effective but
thereafter ceases to be effective or usable in connection with its
intended purpose (each such event referred to in clauses (1)
through( 4), being called a registration default),
then we will be obligated to pay liquidated damages to each holder of transfer
restricted securities, as described below. Transfer restricted securities means
each of our private exchange notes until:
o the date on which that initial note has been exchanged by a person
other than a broker-dealer for an exchange note in the registered
exchange offers,
o following the exchange by a broker-dealer in the registered exchange
offers of an initial note for an exchange note, the date on which
this exchange note is sold to a purchaser who receives from this
broker-dealer on or before the date of the sale a copy of the
prospectus contained in the exchange offers registration statement,
o the date on which the initial note has been effectively registered
under the Securities Act and disposed of in accordance with the
shelf registration statement,
o the date on which the initial note is distributed to the public
under Rule 144 promulgated under the Securities Act, or
o the date on which the initial note is eligible for resale pursuant
to Rule 144 without volume restrictions.
Liquidated damages will be an additional amount during the first 90-day
period immediately following the occurrence of one or more such registration
defaults, in an amount equal to $0.05 per week per $1,000 principal amount of
transfer restricted securities held by such holder. The amount of liquidated
damages thereafter will increase
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each week by an additional $0.05 per $1,000 principal amount of transfer
restricted securities, up to a maximum amount of liquidated damages of $0.30 per
week per $1,000 principal amount of transfer restricted securities. Liquidated
damages will accrue from the date a registration default occurs until the date
on which:
o the registration statement is filed,
o the registration statement or shelf registration statement is
declared effective and the exchange offer is consummated for all
validly tendered securities,
o the shelf registration statement is declared effective, or
o the shelf registration statement again becomes effective or made
usable, as the case may be.
Following the cure of all registration defaults, the accrual of liquidated
damages will cease.
Upon completion of the exchange offers, holders of initial notes who do
not exchange their initial notes for exchange notes in the exchange offers
generally will no longer be entitled to registration rights and will not be able
to offer or sell their initial notes, unless such initial notes are subsequently
registered under the Securities Act, which, subject to certain limited
exceptions, we will have no obligation to do, or pursuant to an exemption from,
or in a transaction not subject to, the Securities Act and applicable state
securities laws. Please refer to the section in this prospectus entitled "Risk
Factors--Your failure to participate in the exchange offers will have adverse
consequences."
Terms of the Exchange Offers
Expiration Date; Extensions; Amendments; Termination
The exchange offers will expire at 5:00 p.m., New York City time, on ,
1999, unless we extend it in our reasonable discretion. The expiration date of
the exchange offers will be at least 30 business days after the commencement of
the exchange offers in accordance with Rule 14e-l(a) under the Securities
Exchange Act of 1934 and our registration rights agreement.
To extend the expiration date, we will need to notify the exchange agent
of any extension by oral, promptly confirmed in writing, or written notice. We
will also need to notify the holders of the initial notes by mailing an
announcement or by means of a press release or other public announcement
communicated, unless otherwise required by applicable law or regulation, before
9:00 a.m., New York City time, on the next business day after the previously
scheduled expiration date.
We expressly reserve the right:
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<PAGE>
o to delay acceptance of any initial notes, to extend the exchange
offers or to terminate the exchange offers and not permit acceptance
of initial notes not previously accepted if any of the conditions
described below under "--Conditions" have occurred and have not been
waived by us, if permitted to be waived, by giving oral or written
notice of this delay, extension or termination to the exchange
agent, or
o to amend the terms of the exchange offers in any manner.
If we amend the exchange offers in a manner determined by us to constitute
a material change, we will promptly disclose this amendment in a manner
reasonably calculated to inform the holders of the initial notes of this
amendment including providing public announcement, or giving oral or written
notice to the holders of the initial notes. A material change in the terms of
the exchange offers could include, among other things, a change in the timing of
the exchange offers, a change in the exchange agent, and other similar changes
in the terms of the exchange offers. If any material change is made to terms of
the exchange offers, we will disclose this change by means of a post-effective
amendment to the registration statement of which this prospectus is a part and
will distribute an amended or supplemented prospectus to each registered holder
of initial notes. In addition, we will also extend the exchange offers for an
additional five to ten business days as required by the Securities Exchange Act
of 1934, depending on the significance of the amendment, if the exchange offers
would otherwise expire during this period. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral, promptly confirmed in writing, or written notice thereof to the
exchange agent.
Procedures for Tendering
To tender your initial notes in the exchange offers, you must complete,
sign and date the letter of transmittal, or a facsimile thereof, have the
signatures thereon guaranteed if required by the letter of transmittal, and mail
or otherwise deliver the letter of transmittal or the facsimile, or an agent's
message, together with the certificates representing the initial notes being
tendered and any other required documents, to the exchange agent on or before
5:00 p.m., New York City time, on the expiration date. Alternatively, you may:
o if you hold SFC Notes, send a timely confirmation of a book-entry
transfer of your SFC Notes into the exchange agent's account at The
Depository Trust Company pursuant to the procedure for book-entry
transfer described below, on or before 5:00 p.m. on the expiration
date, or
o comply with the guaranteed delivery procedures described below.
The term agent's message means a message, transmitted by The Depository
Trust Company to, and received by, the exchange agent and forming a part of a
book-entry confirmation, which states that The Depository Trust Company has
received an express acknowledgment from its participant tendering initial notes
which are the subject of this
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book-entry confirmation that this participant has received and agrees to be
bound by the terms of the letter of transmittal, and that we may enforce this
agreement against this participant.
The method of delivery of the initial notes, the letter of transmittal and
all other required documents is at your election and risk. Instead of delivery
by mail, we recommend that you use an overnight or hand-delivery service. If you
choose the mail, we recommend that you use registered mail, properly insured,
with return receipt requested. In all cases, you should allow sufficient time to
assure timely delivery. You should not send any letters of transmittal or
initial notes to us. You must deliver all documents to the exchange agent at its
address provided below. You may also request your respective brokers, dealers,
commercial banks, trust companies or nominees to tender your initial notes on
your behalf.
Your tender of initial notes will constitute an agreement between you and
us in accordance with the terms and subject to the conditions provided in this
prospectus and in the letter of transmittal.
Only a holder of initial notes may tender these initial notes in the
exchange offers. A holder, with respect to the exchange offers, is any person in
whose name initial notes are registered or any other person who has obtained a
properly completed bond power from the registered holder.
If you are the beneficial owner of initial notes that are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
and you wish to tender your initial notes, you should contact this registered
holder promptly and instruct this registered holder to tender on your behalf. If
you wish to tender on your own behalf, you must, before completing and executing
the letter of transmittal and delivering your initial notes, either make
appropriate arrangements to register ownership of the initial notes in your name
or obtain a properly completed bond power from the registered holder. The
transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an eligible guarantor institution within the meaning of Rule
17ad-15 under the Securities Exchange Act of 1934, each referred to as an
eligible institution, unless the initial notes are tendered:
o by a registered holder, or by a participant in The Depository Trust
Company whose name appears on a security position listing as the
owner, who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the letter of
transmittal if the exchange notes are being issued directly to this
registered holder or deposited into the participant's account at The
Depository Trust company, or
o for the account of an eligible institution.
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If the letter of transmittal is signed by the record holder(s) of the
initial notes tendered, the signature must correspond with the name(s) written
on the face of the initial notes without alteration, enlargement or any change
whatsoever. If the letter of transmittal is signed by a participant in The
Depository Trust Company, the signature must correspond with the name as it
appears on the security position listing as the holder of the initial notes.
If the letter of transmittal is signed by a person other than the
registered holder of any initial notes listed, such initial notes must be
endorsed or accompanied by bond powers and a proxy that authorize such person to
tender the initial notes on behalf of the registered holder in satisfactory form
to us as determined in our sole discretion, in each case as the name of the
registered holder or holders appears on the initial notes.
If the letter of transmittal or any initial notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing. Unless we waive the
requirement, evidence satisfactory to us of their authority to so act must also
be submitted with the letter of transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed letter of transmittal accompanied by the initial
notes tendered, or a timely confirmation received of a book-entry transfer of
initial notes into the exchange agent's account at The Depository Trust Company
with an agent's message, or a notice of guaranteed delivery from an eligible
institution is received by the exchange agent. Issuances of exchange notes in
exchange for initial notes tendered pursuant to a notice of guaranteed delivery
by an eligible institution will be made only against delivery of the letter of
transmittal, and any other required documents, and the tendered initial notes,
or a timely confirmation received of a book-entry transfer of initial notes into
the exchange agent's account at The Depository Trust Company with an agent's
message, with the exchange agent.
We will determine, in our sole discretion, all questions as to the
validity, form, eligibility, including time of receipt, acceptance and
withdrawal of the tendered initial notes. Our determination will be final and
binding. We reserve the absolute right to reject any and all initial notes not
properly tendered or any initial notes which, if accepted, would, in our opinion
or our counsel's opinion, be unlawful. We also reserve the absolute right to
waive any conditions of the exchange offers or irregularities or defects in
tender as to particular initial notes. Our interpretation of the terms and
conditions of the exchange offers, including the instructions in the letter of
transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of initial notes must be
cured within such time as we shall determine. We, the exchange agent or any
other person will be under no duty to give notification of defects or
irregularities with respect to tenders of initial notes. Neither we nor the
exchange agent will incur any liability for failure to give such notification.
Tenders of initial notes will not be deemed to have been made until such
irregularities have been cured or waived. Any initial notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or
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waived will be returned without cost by the exchange agent to the tendering
holders of such initial notes, unless otherwise provided in the letter of
transmittal, as promptly as practicable following the expiration date.
In addition, we reserve the right in our sole discretion, subject to the
provisions of the indenture for the initial and exchange notes, to:
o purchase or make offers for any initial notes that remain
outstanding subsequent to the expiration date, or, as described
under "--Expiration Date; Extensions; Amendments; Termination," to
terminate the exchange offers in accordance with the terms of our
registration rights agreement, and
o to the extent permitted by applicable law, purchase initial notes in
the open market, in privately negotiated transactions or otherwise.
The terms of these purchases or offers could differ from the terms
of the exchange offers.
Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the exchange
offers, we will accept all initial notes properly tendered, promptly after the
expiration date, and will issue the exchange notes promptly after the expiration
date and acceptance of the initial notes. Please refer to the section of this
prospectus entitled "--Conditions" below. For purposes of the exchange offers,
initial notes will be deemed to have been accepted as validly tendered for
exchange when, as and if we had given oral or written notice to the exchange
agent.
In all cases, issuance of exchange notes for initial notes that are
accepted for exchange pursuant to the exchange offers will be made only after
timely receipt by the exchange agent of certificates for such initial notes or a
timely book-entry confirmation of such initial notes into the exchange agent's
account at the book-entry transfer facility, a properly completed and duly
executed letter of transmittal or an agent's message and all other required
documents, in each case, in form satisfactory to us and the exchange agent. If
any tendered initial notes are not accepted for any reason set forth in the
terms and conditions of the exchange offers or if initial notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged initial notes will be returned without expense to
the tendering holder thereof, or, in the case of initial notes tendered by
book-entry transfer procedures described below, the non-exchanged initial notes
will be credited to an account maintained with the book-entry transfer facility,
as promptly as practicable after withdrawal, rejection of tender, the expiration
date or earlier termination of the exchange offers.
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Book-Entry Transfer
The exchange agent will make a request to establish an account with
respect to the initial notes at The Depository Trust Company for purposes of the
exchange offers within two business days after the date of this prospectus. Any
financial institution that is a participant in The Depository Trust Company's
systems may make book-entry delivery of initial notes by causing The Depository
Trust Company to transfer such initial notes into the exchange agent's account
at The Depository Trust Company in accordance with The Depository Trust
Company's procedures for transfer.
However, although delivery of initial notes may be effected through
book-entry transfer into the exchange agent's account at The Depository Trust
Company, an agent's message or the letter of transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the exchange agent at the address
indicated below under "--Exchange Agent" on or before the expiration date or the
guaranteed delivery procedures described below must be complied with. Delivery
of documents to The Depository Trust Company does not constitute delivery to the
exchange agent. All references in the prospectus to deposit of initial notes
will be deemed to include The Depository Trust Company's book-entry delivery
method.
Guaranteed Delivery Procedure
If you are a registered holder of initial notes and desire to tender such
initial notes, and (1) the initial notes are not immediately available, or (2)
time will not permit your initial notes or other required documents to reach the
exchange agent before the expiration date, or (3) the procedures for book-entry
transfer cannot be completed on a timely basis and an agent's message delivered,
you may still tender in the exchange offers if:
o you tender through an eligible institution,
o prior to the expiration date, the exchange agent receives from this
eligible institution a properly completed and duly executed letter
of transmittal, or facsimile thereof, and notice of guaranteed
delivery, substantially in the form provided by us, by facsimile
transmission, mail or hand delivery, setting forth your name and
address as holder of the initial notes and the amount of initial
notes tendered, stating that the tender is being made thereby and
guaranteeing that within five business days after the expiration
date the certificates for all tendered initial notes, in proper form
for transfer, or a book-entry confirmation with an agent's message,
as the case may be, and any other documents required by the letter
of transmittal will be deposited by the eligible institution with
the exchange agent, and
o the certificates for all tendered initial notes, in proper form for
transfer, or a book-entry confirmation as the case may be, and all
other documents required by the letter of transmittal are received
by the exchange agent within five business days after the expiration
date.
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Withdrawal of Tenders
Except as otherwise provided in this prospectus, you may withdraw tenders
of initial notes at any time before 5:00 p.m., New York City time, on the
expiration date.
For a withdrawal to be effective, you must send a written or facsimile
transmission notice of withdrawal to the exchange agent before 5:00 p.m., New
York City time, on the expiration date at the address provided below under
"--Exchange Agent" and before acceptance of the notes for exchange by us. Any
notice of withdrawal must:
o specify the name of the person having tendered the initial notes to
be withdrawn,
o identify the initial notes to be withdrawn, including, if
applicable, the registration number or numbers and total principal
amount of these initial notes,
o be signed by the person having tendered the initial notes to be
withdrawn in the same manner as the original signature on the letter
of transmittal by which these initial notes were tendered including
any required signature guarantees, or be accompanied by documents of
transfer sufficient to permit the trustee with respect to the
initial notes to register the transfer of these initial notes into
the name of the person having made the original tender and
withdrawing the tender,
o specify the name in which these initial notes are to be registered,
if different from that of the person having tendered the initial
notes to be withdrawn, and
o if applicable because the initial notes have been tendered pursuant
to the book-entry procedures, specify the name and number of the
participant's account at The Depository Trust Company to be
credited, if different than that of the person having tendered the
initial notes to be withdrawn.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of notices of withdrawal and our determination will
be final and binding on all parties. Any initial notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
exchange offers. Any initial notes which have been tendered for exchange which
are not exchanged for any reason will be returned to the holder thereof without
cost to such holder. In the case of initial notes tendered by book-entry
transfer into the exchange agent's account at The Depository Trust Company
pursuant to the book-entry transfer procedures described above, these initial
notes will be credited to an account maintained with The Depository Trust
Company for the initial notes, as promptly as practicable after withdrawal,
rejection of tender, expiration date or earlier termination of the exchange
offers. Properly withdrawn initial notes may be retendered by following one of
the procedures described under "--Procedures for
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Tendering" and "--Book-Entry Transfer" above at any time on or before the
expiration date.
Conditions
Notwithstanding any other term of the exchange offers, we will not be
required to accept initial notes for exchange, or issue exchange notes in
exchange for any initial notes, and we may terminate or amend the exchange
offers as provided in this prospectus before the acceptance of these initial
notes, if:
o an action or proceeding has been instituted or threatened in any
court or before any governmental agency or body that in our judgment
would reasonably be expected to prohibit, prevent or otherwise
impair our ability to proceed with the exchange offers;
o a change in the current interpretation of the staff of the
Securities and Exchange Commission has occurred which current
interpretation permits the exchange notes issued pursuant to the
exchange offers in exchange for the initial notes to be offered for
resale, resold or otherwise transferred by their holders, other than
in certain circumstances;
o a law, statute, rule or regulation has been adopted or enacted
which, in our judgment, would reasonably be expected to impair our
ability to proceed with the exchange offers;
o a stop order has been issued by the Securities and Exchange
Commission or any state securities authority suspending the
effectiveness of the registration statement of which this prospectus
is a part or the qualification of the indenture for the notes under
the Trust Indenture Act of 1939 or proceedings shall have been
initiated or, to our knowledge, threatened for that purpose;
o a governmental approval has not been obtained, which approval we
deem in our sole discretion, necessary for the consummation of the
exchange offers; or
o a change, or a development involving a prospective change, in our
business or financial affairs has occurred which, in our sole
judgment, might materially impair our ability to proceed with the
exchange offers.
These conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us, in whole or in part, at any time and from time to time, if we
determine in our reasonable discretion that any of the foregoing events or
conditions has occurred or exists or has not been satisfied, subject to
applicable law. Our failure at any time to exercise any of these rights will not
be deemed a waiver of any of these rights and each of these rights will be
deemed an ongoing right which we may assert at any time and from time to time.
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If we determine that we may terminate the exchange offers, as provided
above, we may:
o refuse to accept any initial notes and return any initial notes that
have been tendered to their holders
o extend the exchange offers and retain all initial notes tendered
before the expiration date, subject to the rights of such holders of
tendered initial notes to withdraw their tendered initial notes, or
o waive the termination event with respect to the exchange offers and
accept all properly tendered initial notes that have not been
withdrawn or otherwise amend the terms of the exchange offers in any
respect as provided under the section in this prospectus entitled
"--Expiration Date; Extensions; Amendments; Termination."
The exchange offers are not conditioned upon any minimum principal amount
of initial notes being tendered for exchange.
We have no obligation to, and will not knowingly, accept tenders of
initial notes from our affiliates within the meaning of Rule 405 under the
Securities Act or from any other holder or holders who are not eligible to
participate in the exchange offers under applicable law or its interpretation,
by the Securities and Exchange Commission, or if the exchange notes to be
received by the holder or holders of initial notes in the exchange offers, upon
receipt, will not be tradable by this holder without restriction under the
Securities Act and the Securities Exchange Act of 1934 and without material
restrictions under the blue sky or securities laws of substantially all of the
states of the United States.
Accounting Treatment
We will record the exchange notes at the same carrying value as the
initial notes, as reflected in our accounting records on the date of the
exchange. Accordingly, we will not recognize any gain or loss for accounting
purposes. We will amortize the costs of the exchange offers over the term of the
exchange notes.
Exchange Agent
We have appointed United States Trust Company of New York as exchange
agent for the exchange offers. You should direct all questions and requests for
assistance or additional copies of this prospectus or the letter of transmittal
to the exchange agent as follows:
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By Mail:
United States Trust Company of New York
P.O. Box 843 Cooper Station
New York, NY 10276
Attn: Corporate Trust Services
By Overnight Courier and By Hand
after 4:30 p.m. on the expiration date:
United States Trust Company of New York
770 Broadway, 13th Floor
New York, NY 10003
By Hand before 4:30 p.m.:
United States Trust Company of New York
111 Broadway
New York, NY 10006
ATTN: Lower Level Corporate Trust Window
Facsimile Transmission: (212) 780-0592
Attention: Customer Service
Confirm by Telephone: (800) 548-6565
Fees and Expenses
We will bear the expenses of soliciting tenders pursuant to the exchange
offers. The principal solicitation for tenders pursuant to the exchange offers
is being made by mail; however, our offices and regular employees may make
additional solicitations by telegraph, telephone, telecopy or in person.
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offers. However, we will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket expenses in connection with the
exchange offers. We may also pay brokerage houses and other custodians, nominees
and fiduciaries the reasonable out-of-pocket expenses incurred by them in
forwarding copies of the prospectus, letters of transmittal and related
documents to the beneficial owners of the initial notes, and in handling or
forwarding tenders for exchange.
We will pay the expenses incurred in connection with the exchange offers,
including fees and expenses of the exchange agent and trustee and accounting,
legal, printing and related fees and expenses.
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We will pay all transfer taxes, if any, applicable to the exchange of
initial notes pursuant to the exchange offers. However, tendering holders will
pay the amount of any such transfer taxes, whether imposed on the registered
holder or any other persons, if:
o certificates representing exchange notes or initial notes for
principal amounts not tendered or accepted for exchange are to be
delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the initial notes
tendered, or
o tendered initial notes are registered in the name of any person
other than the person signing the letter of transmittal, or
o a transfer tax is imposed for any reason other than the exchange of
initial notes pursuant to the exchange offers.
If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the letter of transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
Your Failure to Participate in the Exchange Offers Will Have Adverse
Consequences
Our private exchange notes. If you do not exchange our private exchange
notes for exchange notes pursuant to the exchange offers or if you do not
properly tender our private exchange notes in the exchange offers, you will not
be able to resell, offer to resell or otherwise transfer our private exchange
notes unless they are registered under the Securities Act or unless you resell
them, offer to resell or otherwise transfer them under an exemption from the
registration requirements of, or in a transaction not subject to, the Securities
Act. In addition, you will no longer be able to obligate us to register our
private exchange notes under the Securities Act except in the limited
circumstances provided under our registration rights agreement and you will not
be entitled to obligate us to register your initial notes at all. The
restrictions on transfer of our private exchange notes arise because we issued
our private exchange notes pursuant to exemptions from, or in transactions not
subject to, the registration requirements of the Securities Act and applicable
state securities laws. In addition, if you want to exchange our private exchange
notes in the exchange offers for the purpose of participating in a distribution
of the exchange notes, you may be deemed to have received restricted securities,
and, if so, will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. To the extent our private exchange notes are tendered and accepted
in the exchange offers, the trading market, if any, for our private exchange
notes would be adversely affected. Please refer to the section in this
prospectus entitled "Risk Factors."
SFC Notes. If you do not exchange your SFC Notes for exchange notes
pursuant to the exchange offers or if you do not properly tender your SFC Notes
you will no longer be able to obligate us to register additional exchange notes
under the Securities Act.
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DESCRIPTION OF OUR OTHER INDEBTEDNESS AND
OUR ACCOUNTS RECEIVABLE TRANSFER PROGRAM
Term Loan Facility and Revolving Credit Facility
DLJ Capital Funding, Inc. and certain financial institutions and other
entities, which we collectively refer to as the "Lenders," currently provide
Specialty Foods and us with (i) the Term Loan Facility, which is a secured
senior term loan facility, in an aggregate principal amount of $168,211,259
million (as of June 30, 1999), which we refer to as the "Term Loans," and (ii)
the Revolving Credit Facility, which provides certain of Specialty Foods'
operating subsidiaries with up to $122,801,241 million in aggregate principal
amount of secured revolving loans, which we refer to as the "Revolving Loans,"
and letters of credit, which we refer to collectively with the Revolving Loans
and the Term Loans, the "Loans"; we refer to the Revolving Credit Facility and
the Term Loan Facility collectively as the "Credit Facilities." The maturity
date of both the Term Loans and the Revolving Loans is January 31, 2001.
General
The Term Loan Facility is governed by the Term Loan Agreement, by and
among SFC New Holdings and the Lenders. The Revolving Credit Facility is
governed by the Revolving Credit Agreement, by and among certain of SFC New
Holdings operating subsidiaries and the Lenders. Loans outstanding under the
Term Loan Agreement will bear interest based on either, at the election of the
borrower (the terms are defined in the Term Loan Agreement):
o the alternate base rate, equal to the greater of (a) the reserve
adjusted federal funds effective rate plus 0.50%, and (b) the
administrative agent's base rate, plus the applicable term loan
margin for base rate loans; or
o the reserve adjusted LIBO rate, plus the applicable term loan margin
for LIBO rate loans.
Repayment
The Term Loans are required to be repaid in quarterly installments of
$434,375 through and including October 31, 2000 and $165,605,000 at the stated
maturity date, January 31, 2001.
The $122.8 million Revolving Credit Facility is comprised of two
sub-facilities. The Revolving I Facility is a $25 million commitment under which
revolving loans may be borrowed, prepaid and reborrowed by the revolving loan
borrowers (as defined in the Revolving Credit Facility). Letters of credit may
be issued under the Revolving I Facility, which terminates on January 31, 2001.
As of June 30, 1999 there were no borrowings under the Revolving I
Facility and $10.3 million of Letters of Credit issued which reduce availability
under that facility. As
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of June 30, 1999, the $97.8 million Revolving II Facility, which matures on
January 31, 2001, was fully drawn down by the revolving loan borrowers. We may
not reborrow amounts repaid under the Revolving II Facility.
Revolving loans bear interest based on, at the election of the borrower,
either (terms are as defined in the Revolving Credit Facility) :
o the applicable base rate equal to the greater of:
(a) the reserve adjusted federal funds rate plus 0.50%;
(b) the administrative agent's base rate plus the applicable base
rate revolving loan margin; or
o the reserve adjusted LIBO rate plus the applicable revolving LIBO
loan margin.
Fees on letters of credit outstanding are paid at the applicable base rate
revolving loan margin per annum. We pay a fee on unused commitments under the
Revolving Credit Facility.
Security and Guaranties
The Revolving Loans and other obligations under the Revolving Credit
Facility are or will be guaranteed by us, SFAC New Holdings, several new holding
companies, which we refer to as the "Holding Companies," and each of the Holding
Companies' domestic operating subsidiaries, other than inactive subsidiaries and
other than subsidiaries constituting revolving credit borrowers (as that term is
defined in the Revolving Credit Facility).
The Term Loan Facility is secured on an equal basis by a grant of a
security interest in all of the capital stock of Finance Corp., which is defined
below, and each Holding Company and a pledge of all inter-company notes payable
to us from our three main operating companies. The Revolving Credit Facility
(and any related guarantees of it) is also secured by mortgages on some of the
real property of some of our subsidiaries, grants of security interests in
substantially all of the other assets of each Holding Company and each of our
subsidiaries. The secured assets do not include:
o the collateral securing the Accounts Receivable Facility;
o the assets of inactive, foreign or certain non-wholly owned
subsidiaries; or
o the stock of foreign subsidiaries in excess of 65% of that stock.
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Covenants
The Credit Facilities restrict us and our subsidiaries from creating,
incurring, assuming, or suffering to exist indebtedness, and from issuing
capital stock, with certain exceptions (including indebtedness permitted under
the relevant indentures).
The Credit Facilities also contain restrictions that, among other things,
limit our ability to:
o incur, create and maintain liens;
o incur and maintain guarantee obligations;
o undertake certain fundamental corporate changes;
o dispose of assets;
o declare and pay dividends and other payments of our capital stock;
o make more than a certain amount of capital expenditures in any year;
o invest, lend and advance funds, and make acquisitions;
o make optional payments or purchases of 11 1/4% Senior Notes, 12 1/8%
Senior Notes and Subordinated Notes, and amend our debt and
capitalization documents;
o enter transactions with affiliates (with certain exceptions);
o enter sale/leaseback transactions (with certain exceptions);
o change our fiscal year-end;
o enter agreements containing negative pledge clauses;
o change the lines of business in which we and our subsidiaries may
engage; and
o change the nature of our business and the business conducted by SFAC
New Holdings and Finance Corp.
In addition to the covenants described above, the Credit Facilities
require, among other things, that, as of certain dates and for certain periods
described in Term Loan Agreement:
o we maintain a ratio of consolidated total indebtedness, senior
secured indebtedness and operating company indebtedness to
consolidated EBITDA
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(as those terms are defined in the Term Loan Agreement) that does
not exceed certain limits;
o we maintain an interest coverage ratio (as defined in the Term Loan
Agreement) in excess of certain limits; and
o we maintain a certain minimum consolidated EBITDA (as defined in the
Term Loan Agreement).
Events of Default
The Term Loan Agreement and the Revolving Credit Agreement contain events
of default that are customary in facilities of these types, including, among
others:
o our failure or the failure of any of our subsidiaries which is a
borrower to make principal payments when due, or to make payments of
interest or fees within five days of them becoming due;
o the material breach of representations or warranties at the time
they were made;
o our failure or the failure of any of our subsidiaries to perform or
observe any covenant under the relevant agreement or the other loan
documents (in some cases after certain grace periods);
o the failure to pay when due (subject to grace periods), whether due
by acceleration or otherwise, any of our or our subsidiaries'
indebtedness in excess of $5.0 million in the aggregate, or the
occurrence of any event which enables the holder of any that
indebtedness to accelerate the maturity of it;
o our bankruptcy, insolvency or similar event, or the bankruptcy,
insolvency or similar event of any of our material subsidiaries;
o certain ERISA defaults by us or any commonly controlled entity;
o undischarged and unstayed final judgments in excess of $5.0 million
in the aggregate, against us or any of our material subsidiaries,
which remain unsatisfied or unstayed for at least 30 days;
o the impairment of loan documentation, any security interest or any
guaranty; or
o a change in control.
In addition, each of the Term Loan Agreement and the Revolving Credit
Agreement state that there will be an event of default under an agreement if
there is an
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event of default under the other agreement or a termination event under the
Receivables Transfer Agreement, which is defined below.
Accounts Receivable Transfer Program
General
As part of the private transactions that were completed on June 11, 1999,
Specialty Foods contributed to us stock of Specialty Foods Finance Corporation,
which we refer to as "Finance Corp.," a wholly owned special purpose subsidiary
through which some of our operating companies sell their accounts receivable. In
connection with the private transactions, we also assumed the responsibilities
of the master servicer under the related accounts receivable finance documents
from Specialty Foods.
Under the terms of the non-recourse, off-balance sheet accounts receivable
transfer program, which we refer to as the "Accounts Receivable Transfer
Program," certain of our operating subsidiaries, which we refer to as the
"Accounts Receivable Sellers," transfer on a daily basis all of their accounts
receivable to Finance Corp., at a discount to the face amount of the
receivables. Finance Corp. then transfers, at a discount to the face amount of
the receivables, an undivided interest in the receivables to a Master Trust
created under the terms of a Pooling Agreement and related Supplement, which we
refer to together as the "Receivables Transfer Agreement." To fund the purchase
price of the receivables transferred to it by Finance Corp., the Master Trust
draws upon a $50 million variable funding certificate representing an undivided
interest in the assets of the Master Trust.
The transfers of receivables by the Accounts Receivable Sellers to Finance
Corp., and by Finance Corp. to the Master Trust, are intended to be non-recourse
to the master servicer and the Accounts Receivable Sellers. However, the master
servicer and the Accounts Receivable Sellers share certain joint and several
obligations for breaches of certain specified covenants made by each of the
Accounts Receivable Sellers in the documentation for the Accounts Receivable
Transfer Program.
In addition, Finance Corp. was organized in a way to enable bankruptcy
counsel to give its reasoned legal opinion that the assets and liabilities of
Finance Corp., on the one hand, should not be substantively consolidated, in a
bankruptcy proceeding of the master servicer or any of the Accounts Receivable
Sellers, with our assets and liabilities or the assets and liabilities of the
Accounts Receivable Sellers, on the other hand.
Finance Corp. purchases all of the Accounts Receivable Sellers' accounts
receivable at discounts to their face amount. The amounts of the discounts are
determined from time to time. Finance Corp. funds the ongoing purchase of these
receivables from proceeds received from:
o the transfer of receivables to the Master Trust under the
Receivables Transfer Agreement;
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o collections of receivables previously transferred to Finance Corp.;
o the variable funding certificate;
o additional capital contributions by us; and
o in certain instances, by the issuance by Finance Corp. of
subordinated notes to the Accounts Receivable Sellers in return for
certain accounts receivable.
Collections and Servicing of Receivables
Prior to the private transactions that were completed on June 11,
Specialty Foods, and since those exchange offers, we, act as Master Servicer,
and certain Accounts Receivable Sellers act as servicers, for Finance Corp. The
Master Servicer and the servicers provide collection and other services to
Finance Corp. in return for a servicing fee. All payments made by third party
obligors to any of the Accounts Receivable Sellers or the Master Servicer will
be transferred to the collection account held by the trustee of the Master Trust
for the benefit of the holders of the variable funding certificates. Before the
obligations of the Master Trust to acquire undivided interests in the
receivables are terminated, collection of accounts receivable sold to Finance
Corp. will be applied, according to the provisions and restrictions contained in
the Receivables Transfer Agreement, to:
o pay servicing and other fees and expenses;
o pay operating expenses of Finance Corp.;
o purchase additional receivables from the Accounts Receivable
Sellers;
o satisfy other obligations of Finance Corp., including payments on
subordinated notes; and
o pay dividends to us (after meeting certain minimum equity
requirements and other restrictions).
During an amortization period, collections will be applied to repay the
variable funding certificate holders and to satisfy obligations owed to the
trustee before any collections are distributed to Finance Corp. as the holder of
a certificate representing a subordinated interest in the assets of the Master
Trust.
Security
Finance Corp. granted to the Master Trust, for the benefit of the holders
of the variable funding certificates, a first priority security interest in:
o all accounts receivables purchased by Finance Corp.;
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o all of Finance Corp.'s interest in certain agreements;
o all of Finance Corp.'s interest in certain assets; and
o cash collections of all purchased accounts receivable.
As part of the transfer of receivables to Finance Corp., each Accounts
Receivable Seller has transferred and assigned to Finance Corp. the receivables
and related merchandise, contracts and equipment.
Repayment Events
The variable funding certificates issued by the Master Trust under the
Accounts Receivable Transfer Program have an expected final distribution date of
January 31, 2001. The amortization of the variable funding certificates will
begin on December 15, 2000. However, purchases of receivables under the
Receivable Transfer Agreements will terminate before the expected final
distribution date if certain events occur, including, among others:
o our bankruptcy, insolvency or similar event, or the bankruptcy,
insolvency or similar event of Finance Corp. or any of our
significant subsidiaries;
o the failure of Finance Corp. to make principal payments within one
day of their due date, or interest payments within two days of their
due date;
o the breach of material representations and warranties at the time
they were made;
o our failure or the failure of Finance Corp. or any of our
subsidiaries to perform or observe any covenant under the
Receivables Transfer Agreements (in some cases after certain notice
and/or grace periods) or to meet certain ratios with respect to the
receivables;
o the termination before the stated term, by the lenders under the
Revolving Credit Agreement, of the commitments to lend under that
agreement, or the refusal by those lenders to extend credit for a
period of 150 consecutive days;
o our failure or the failure of any Accounts Receivable Seller to make
payments of any indebtedness in excess of $5.0 million in the
aggregate, when they are due or within any applicable grace period;
o the default of any of our indebtedness or any indebtedness of our
subsidiaries in excess of $5.0 million in the aggregate, or the
occurrence of any event which enables the holder of that
indebtedness to accelerate its maturity;
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o the existence of judgments, unsatisfied or unstayed for at least 60
days, in excess of $5.0 million in the aggregate, against us or any
of our material subsidiaries; or
o a change in control (as defined in the Receivables Transfer
Agreement).
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DESCRIPTION OF THE EXCHANGE NOTES
General
The terms of the exchange notes include those stated in the applicable
indenture. The exchange notes are subject to all such terms, and holders of
exchange notes are referred to the indentures. The following summary of certain
provisions of the indentures does not purport to be complete and is qualified in
its entirety by reference to the indentures, including the definitions therein
of certain terms used below. However, the summary does summarize all material
provisions of the indentures. The definitions of certain terms used in the
following summary are set forth below under "Certain Definitions."
Principal, Maturity and Interest
The 11 1/4% Senior Notes are limited in aggregate principal amount to $225
million and will mature on August 15, 2001. The 12 1/8% Senior Notes are limited
in aggregate principal amount to $150 million and will mature on October 1,
2002. The Subordinated Notes are limited in aggregate principal amount to $200
million plus the amount of Subordinated Notes required to be issued as "PIK
Subordinated Notes," in connection with the Subordinated Notes, and will mature
on August 15, 2003.
Interest on the 11 1/4% Senior Notes will accrue at 11 1/4% per annum and
will be payable semi-annually in arrears on February 15 and August 15 of each
year, commencing on February 15, 2000, to holders of record on the immediately
preceding February 1 and August 1. Interest on the 12 1/8% Senior Notes will
accrue at 12 1/8% per annum and will be payable semi-annually in arrears on
April 1 and October 1 of each year, commencing on April 1, 2000, to holders of
record on the immediately preceding March 15 and September 15.
Interest on the Subordinated Notes will accrue at 13 1/4% per annum and
all but 1% of such accrued interest will be payable semi-annually in arrears on
February 15 and August 15 of each year, commencing on February 15, 2000, to
holders of record on the immediately preceding February 1 and August 1. The
remaining interest on the Subordinated Notes will be payable in kind through the
issuance of PIK Subordinated Notes at the rate of 1% per annum payable
semi-annually in arrears on February 15 and August 15 of each year, commencing
February 15, 2000.
Interest on the exchange notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The exchange notes will be payable as to
principal and interest at the office or agency of SFC New Holdings maintained
for such purpose within the City and State of New York or, at the option of SFC
New Holdings, payment of interest may be made by check mailed to the holders of
the exchange notes. Until otherwise designated by SFC New Holdings, SFC New
Holdings office or agency in New York will be the office of the applicable
exchange note trustee maintained for such purpose. The exchange notes will be
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issued in registered form, without coupons, and in denominations of $1,000 and
integral multiples thereof.
Effective Subordination of the 11 1/4% Senior Notes
The 11 1/4% Senior Notes will be effectively subordinated to (i) all
existing and future liabilities of SFC New Holdings Subsidiaries and (ii) all of
SFC New Holdings borrowings under the Term Loan Agreement, which borrowings are
secured by substantially all of the assets of SFC New Holdings and a pledge of
all of the capital stock of each First Tier Subsidiary and the Accounts
Receivable Subsidiary.
In the event of dissolution, bankruptcy, liquidation or reorganization of
SFC New Holdings Subsidiaries, the holders of the 11 1/4% Senior Notes will not
receive any amounts in respect of the 11 1/4% Senior Notes until after the
payment in full of the claims of the creditors of SFC New Holdings Subsidiaries.
In addition, upon the occurrence of certain events of default under the
agreement relating to the Senior Debt, SFC New Holdings will be prohibited from
making any payments in respect of the 11 1/4% Senior Notes under certain
circumstances.
Effective Subordination of the 12 1/8% Senior Notes
The 12 1/8% Senior Notes will be effectively subordinated to (i) all
existing and future liabilities and indebtedness of SFC New Holdings
Subsidiaries and (ii) all of SFC New Holdings borrowings under the Term Loan
Agreement, which borrowings are secured by substantially all of the assets of
SFC New Holdings and a pledge of all of the capital stock of each First Tier
Subsidiary and the Accounts Receivable Subsidiary.
In the event of dissolution, bankruptcy, liquidation or reorganization of
SFC New Holdings Subsidiaries, the holders of the 12 1/8% Senior Notes will not
receive any amounts in respect of the 12 1/8% Senior Notes until after the
payment in full of the claims of the creditors of SFC New Holdings Subsidiaries.
In addition, upon the occurrence of certain events of default under the
agreement relating to the Senior Debt, SFC New Holdings will be prohibited from
making any payments in respect of the 12 1/8% Senior Notes under certain
circumstances.
Subordination of the Subordinated Notes
The payment of principal of, premium, if any, and interest on the
Subordinated Notes will be (as it is with respect to the initial Subordinated
Notes of SFC New Holdings) subordinated in right of payment, as set forth in the
Subordinated Note indenture, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt of SFC New Holdings, including the 11 1/4% Senior
Notes and the 12 1/8% Senior Notes, whether outstanding on the date of the
Subordinated Note indenture or thereafter created, incurred, assumed or
guaranteed.
Upon any payment or distribution to creditors of SFC New Holdings in a
liquidation or dissolution of SFC New Holdings or in a bankruptcy,
reorganization,
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insolvency, receivership or similar proceeding relating to SFC New Holdings or
its property, in an assignment for the benefit of creditors or any marshaling of
SFC New Holdings assets and liabilities, holders of Senior Debt of SFC New
Holdings, including holders of the 11 1/4% Senior Notes and the 12 1/8% Senior
Notes, will be entitled to receive payment in full in cash or Cash Equivalents
of all outstanding Obligations in respect of such Senior Debt before the holders
of the Subordinated Notes will be entitled to receive any payment or
distribution with respect to the Subordinated Notes and, until all Obligations
with respect to Senior Debt of SFC New Holdings are paid in full in cash or Cash
Equivalents, any payment or distribution to which the holders of the
Subordinated Notes would be entitled shall be made to the holders of Senior Debt
(except that holders of the Subordinated Notes may receive securities that are
subordinated to at least the same extent as the Subordinated Notes to Senior
Debt and any securities issued in exchange for Senior Debt, subject to certain
authorization of a bankruptcy court).
SFC New Holdings also may not make any payment or distribution in respect
of the Subordinated Notes (except in such subordinated securities to the extent
permitted) if:
(a) a default in the payment of the principal of, premium, if any, or
interest on any Designated Senior Debt occurs and is continuing
beyond any applicable period of grace (whether upon maturity, as a
result of acceleration or otherwise), or
(b) any other default occurs and is continuing with respect to any
Designated Senior Debt that permits holders of the Designated Senior
Debt as to which such default relates to accelerate its maturity and
the Subordinated Note trustee receives a notice of such default (a
"Payment Blockage Notice") from the holders, or from the trustee,
agent or other representative of the holders, of any such Designated
Senior Debt.
Notwithstanding the foregoing, a notice of default under the foregoing
clause (b) may only be given by the Representative for the holders of Senior
Debt under the Term Loan Agreement or the Revolving Credit Agreement if Senior
Debt is outstanding under the Term Loan Agreement or the Revolving Credit
Agreement (including obligations in respect of letters of credit) at the time
such notice is to be given. Payments on the Subordinated Notes may and shall be
resumed:
o in the case of a payment default, upon the date on which such
default is cured or waived, and
o in case of a nonpayment default, upon the earlier of the date on
which such nonpayment default is cured or waived or 179 days after
the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Designated Senior Debt has been
accelerated.
No new period of payment blockage may be commenced within 360 days after
the receipt by the Subordinated Note trustee of any prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment
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Blockage Notice to the Subordinated Note trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default shall have been
cured or waived for a period of not less than 180 days.
The Subordinated Note indenture further requires that SFC New Holdings
promptly notify holders of Senior Debt if payment of the Subordinated Notes is
accelerated because of an Event of Default.
"Senior Debt" means:
(i) all Senior Term Debt outstanding from time to time;
(ii) all Senior Revolving Debt outstanding from time to time;
(iii) the 11 1/4% Senior Notes and the 12 1/8% Senior Notes;
(iv) Hedging Obligations; and
(v) any other Indebtedness that is permitted to be incurred by SFC New
Holdings pursuant to the Subordinated Note indenture unless the
instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of
payment to the Subordinated Notes.
"Senior Debt" shall include, without limitation, interest on any of the
Obligations described in the preceding clauses (i) through (v) accruing after
the filing of a petition by or against SFC New Holdings under any Bankruptcy
Law, in accordance with and at the rate (including any rate applicable upon any
default or event of default) specified in the applicable agreement under which
such Obligations are created, whether or not the claim for such interest is
allowed as a claim after such filing in any proceeding under such Bankruptcy
Law. Notwithstanding anything to the contrary in the foregoing, Senior Debt
shall not include:
o any Indebtedness of SFC New Holdings to any of its Subsidiaries or
other Affiliates;
o any Indebtedness incurred for the purchase of goods or materials or
for services obtained in the ordinary course of business (other than
the Senior Revolving Debt); and
o any Indebtedness that is incurred in violation of the Subordinated
Note indenture.
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"Designated Senior Debt" means:
o the Senior Term Debt;
o the Senior Revolving Debt;
o the 11 1/4% Senior Notes and the 12 1/8% Senior Notes; and
o any other Senior Debt permitted under the Subordinated Note
indenture, the principal amount of which is $25 million or more.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of the Subordinated Notes may recover
less ratably than creditors of SFC New Holdings who are holders of Senior Debt,
including holders of the 11 1/4% Senior Notes and the 12 1/8% Senior Notes. The
Subordinated Note indenture will limit, subject to certain financial tests, the
amount of additional Indebtedness, including Senior Debt, that SFC New Holdings
and its Subsidiaries can incur. See "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Preferred Stock."
The operations of SFC New Holdings are conducted through its Subsidiaries
and, therefore, SFC New Holdings is dependent upon the cash flow of its
Subsidiaries to meet its obligations, including its obligations under the
exchange notes and the indentures. The exchange notes will be effectively
subordinated to all indebtedness and other liabilities of SFC New Holdings
Subsidiaries.
Optional Redemption
The 11 1/4% Senior Notes and the Subordinated Notes will be subject to
redemption at the option of SFC New Holdings, in whole or in part, upon not less
than 30 nor more than 60 days' notice to the holders of 11 1/4% Senior Notes or
Subordinated Notes (as the case may be), at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of the years indicated below:
11 1/4% Senior Notes
Year Percentage
1998........................................... 105.625%
1999........................................... 102.813%
2000 and thereafter............................ 100.000%
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Subordinated Notes
Year Percentage
1998........................................... 103.786%
1999........................................... 101.893%
2000 and thereafter............................ 100.000%
In addition to the foregoing, if SFC New Holdings does not redeem the
Subordinated Notes, in whole, prior to November 15, 2002, the holders of the
Subordinated Notes will be entitled to receive a payment of $50.00 per $1,000
principal amount of Subordinated Notes (the "Non-Redemption Payment") on
November 16, 2002.
Except as set forth below, the 12 1/8% Senior Notes are not redeemable at
SFC New Holdings option prior to October 1, 1999. Thereafter, the 12 1/8% Senior
Notes will be subject to redemption at the option of SFC New Holdings, in whole
or in part, upon not less than 30 nor more than 60 days' notice to the holders
of exchange notes, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on October 1 of the years indicated below:
12 1/8% Senior Notes
Year Percentage
1999........................................... 106.063%
2000........................................... 103.031%
2001 and thereafter............................ 100.000%
In addition, if a Change of Control (as defined below) shall occur prior
to October 1, 1999, within 90 days after the occurrence of such Change of
Control, SFC New Holdings shall have the option to redeem the 12 1/8% Senior
Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice
to the holders of the 12 1/8% Senior Notes, at a redemption price equal to the
principal amount thereof plus the Yield Protection Amount, plus accrued and
unpaid interest thereon to the applicable redemption date.
"Yield Protection Amount" means, with respect to the 12 1/8% Senior Notes,
the greater of :
o 1.0% of the principal amount of 12 1/8% Senior Notes to be redeemed,
and
o the excess, expressed as a percentage of the total principal amount
of the 12 1/8% Senior Notes outstanding on the date of determination
and applied to the principal amount of such 12 1/8% Senior Notes to
be redeemed, of (A) the present value of all remaining required
principal and interest
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payments due on all such 12 1/8% Senior Notes outstanding on the
date of determination through the final stated maturity of all such
12 1/8% Senior Notes, computed using a discount rate equal to the
Treasury Rate plus the Applicable Spread, over (B) the principal
amount of all such 12 1/8% Senior Notes outstanding on the date of
determination.
"Applicable Spread" is defined as 100 basis points.
"Treasury Rate" is defined as the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15 (519) that has become publicly available at least two Business Days prior
to the date fixed for prepayment (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the then remaining Weighted Average Life to Maturity of the applicable
12 1/8% Senior Notes; provided, that if the Weighted Average Life to Maturity of
such 12 1/8% Senior Notes is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is given, the Treasury
Rate shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the Weighted Average
Life to Maturity of such 12 1/8% Senior Notes is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
Mandatory Redemption
Except as set forth below under "Redemption or Repurchase at the Option of
Holders," SFC New Holdings is not required to make mandatory redemption or
sinking fund payments with respect to the exchange notes.
Redemption or Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each holder of exchange notes
will have the right to require SFC New Holdings to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such holder's exchange
notes pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, SFC New
Holdings will mail a notice to each holder stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all exchange notes
tendered will be accepted for payment;
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(2) the purchase price and the purchase date, which shall be no later
than 30 Business Days from the date such notice is mailed (the
"Change of Control Payment Date");
(3) that any exchange note not tendered will continue to accrue
interest;
(4) that, unless SFC New Holdings defaults in the payment of the Change
of Control Payment, all exchange notes accepted for payment pursuant
to the Change of Control Offer will cease to accrue interest after
the Change of Control Payment Date;
(5) that holders electing to have any exchange notes purchased pursuant
to a Change of Control Offer will be required to surrender the
exchange notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the exchange notes completed, to the
Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of
Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal amount of exchange notes delivered
for purchase, and a statement that such holder is withdrawing his
election to have such exchange notes purchased; and
(7) that holders whose exchange notes are being purchased only in part
will be issued exchange notes equal in principal amount to the
unpurchased portion of the exchange notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount or
an integral multiple thereof. SFC New Holdings will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of
exchange notes in connection with a Change of Control.
On the Change of Control Payment Date, SFC New Holdings will, to the
extent lawful,
(1) accept for payment exchange notes or portions thereof tendered
pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all exchange notes or portions thereof
so tendered, and
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(3) deliver or cause to be delivered to the trustees the exchange notes
so accepted together with an Officers' Certificate stating the
exchange notes or portions thereof tendered to SFC New Holdings.
The Paying Agent will promptly mail to each holder of exchange notes so
accepted payment in an amount equal to the purchase price for such exchange
notes, and the applicable trustee will promptly authenticate and mail to each
holder an exchange note equal in principal amount to any unpurchased portion of
the exchange notes surrendered by such holder, if any; provided, that each such
exchange note will be in a principal amount of $1,000 or an integral multiple
thereof. The Subordinated Note indenture will provide that prior to making the
Change of Control Payment in respect of the Subordinated Notes, but in any event
within 60 days following a Change of Control, SFC New Holdings will either repay
all outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of
Subordinated Notes required by this covenant. SFC New Holdings will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
"Change of Control" means the occurrence of any of the following:
o the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the assets of SFC New
Holdings, SFC Sub, Inc., SFAC New Holdings, Specialty Foods or
Specialty Foods Acquisition Corp. to any person or group (as such
term is used in Section 13(d)(3) of the Exchange Act) (other than
the Principals or their Specified Parties (as defined below));
o the adoption of a plan relating to the liquidation or dissolution of
SFC New Holdings, SFC Sub, Inc., Specialty Foods Acquisition Corp.,
SFAC New Holdings or Specialty Foods;
o the consummation of any transaction the result of which is that any
person or group (as defined above) (other than the Principals and
their Specified Parties) owns, directly or indirectly, more of the
voting power of the voting stock of SFC New Holdings, SFC Sub, Inc.,
SFAC New Holdings, Specialty Foods Acquisition Corp. or Specialty
Foods other than the Principals and their Specified Parties; or
o the first day on which a majority of the members of the Board of
Directors of SFC New Holdings, SFC Sub, Inc., SFAC New Holdings,
Specialty Foods Acquisition Corp. or Specialty Foods are not
Continuing Directors. For the purposes of the foregoing sentence,
any shares of voting stock that are required to be voted for a
nominee of any Principal or Specified Party pursuant to a binding
agreement between the holder thereof and such Principal or Specified
Party will be deemed to be held by such Principal or Specified
Party, as the case may be, for purposes of determining the
percentage of voting power held by any person.
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"Principals" means Haas Wheat & Partners Incorporated, Acadia Partners,
L.P. and Keystone, Inc.
"Specified Party" with respect to any Principal means:
(A) any controlling stockholder or partner, a direct or indirect 80% (or
more) owned Subsidiary, or spouse or immediate family member (in the
case of an individual) of such Principal;
(B) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons
beneficially holding an 80% or more controlling interest of which
consist of such Principal and/or such other Persons referred to in
the immediately preceding clause (A) or the succeeding Clause (D) or
(E);
(C) any partner or stockholder of any Principal as of the date of the
indentures who acquires any assets or voting stock of SFC New
Holdings, SFC Sub, Inc., SFAC New Holdings, Specialty Foods
Acquisition Corp. or Specialty Foods pursuant to a general
distribution by such Principal to each of its partners or
stockholders;
(D) any officer or director of any principal as of the date of the
indentures; or
(E) co-investment entities established by any Principal within 90 days
of the date of the indentures and controlled by such principal, any
affiliated party (including any officer or director) of such
Principal or of the general partner of such Principal (or of the
general partner of any general partner of such Principal) or any
combination of the foregoing; provided, however, that (x) each of
Douglas D. Wheat and HWP Specialty Partners, L.P. shall be deemed a
Specified Party of Haas Wheat & Partners Incorporated and (y) any
officer or director of Oak Hill Partners, Inc. as of the date of the
indentures shall be deemed a Specified Party of Acadia Partners,
L.P. and Keystone, Inc.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Specialty Foods, SFC New Holdings, Specialty Foods
Acquisition Corp. or SFAC New Holdings, as applicable, who (i) was a member of
such Board of Directors on the date of the indentures or (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote of a
majority of the Continuing Directors who were members of such Board at the time
of such nomination or election.
Asset Sales
The indentures provide that SFC New Holdings will not, and will not permit
any of its Subsidiaries to:
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o sell, lease, convey or otherwise dispose of any assets (including by
way of a sale-and-leaseback) other than in the ordinary course of
business and other than sales of accounts receivable to the Accounts
Receivable Subsidiary in accordance with the provisions of the
"Accounts Receivable Subsidiary" covenant described below (provided
that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of SFC New Holdings shall be
governed by the provisions of the indentures described below under
the caption "Merger, Consolidation or Sale of Assets"), or
o issue or sell equity securities of any of its Subsidiaries, in each
case whether in a single transaction or a series of related
transactions,
(a) that have a fair market value in excess of $3 million or
(b) for net proceeds in excess of $3 million (each of the
foregoing, an "Asset Sale"), unless
(x) SFC New Holdings (or the Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at
least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the applicable
trustee) of the assets sold or otherwise disposed of,
and
(y) at least 80% of the consideration therefor received by
SFC New Holdings or such Subsidiary is in the form of
cash or Cash Equivalents;
provided, however, that the amount of:
(A) any liabilities (as shown on SFC New Holdings or such Subsidiary's
most recent balance sheet or in the notes thereto) of SFC New
Holdings or any Subsidiary (other than liabilities that are by their
terms subordinated in right of payment to the applicable exchange
notes) that are assumed by the transferee of any such assets, and
(B) any notes or other obligations of such transferee or Marketable
Securities received by SFC New Holdings or any such Subsidiary from
such transferee that, within 30 days (or 90 days, in the case of
Marketable Securities received in connection with a pooling of
interest transaction) of the consummation of the Asset Sale, are
converted by SFC New Holdings or such Subsidiary into cash (to the
extent of the cash received),
shall be deemed to be cash for purposes of this provision.
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Application of Cash Proceeds from Principal Business Asset Sale
Pursuant to the indentures, within 30 days after the receipt of cash
proceeds from any Principal Business Asset Sale, SFC New Holdings (or such
Subsidiary) must apply 75% of the Net Proceeds thereof to permanently reduce
Senior Term Debt and, to the extent that cash proceeds are not used in
connection therewith, to permanently reduce Senior Revolving Debt. To the extent
that the Net Proceeds exceeds the amounts required to permanently reduce Senior
Term Debt and Senior Revolving Debt, such excess Net Proceeds shall be deemed to
constitute excess proceeds and shall be applied to the repayment of the exchange
notes in accordance with the procedures set forth in the indentures and as
described in the following three paragraphs.
Application of Cash Proceeds from any Asset Sale
12 1/8% Senior Notes. Pursuant to the 12 1/8% Senior Note indenture,
within 365 days after the receipt of cash proceeds from any Asset Sale (other
than 75% of the cash proceeds from a Principal Business Asset Sale), SFC New
Holdings (or such Subsidiary) may, at its option, apply the Net Proceeds from
such Asset Sale either:
(a) to permanently reduce Senior Term Debt;
(b) to permanently reduce Senior Revolving Debt with a corresponding
permanent reduction in commitments with respect thereto; or
(c) to an investment in another business, capital expenditures or other
long-term assets, in each case, in the same, similar or related line
of business as SFC New Holdings or any of its Subsidiaries were
engaged in on the date of the 12 1/8% Senior Note indenture.
Pending the final application of any such Net Proceeds, SFC New Holdings (or
such Subsidiary) may temporarily reduce Senior Revolving Debt or otherwise
invest such Net Proceeds in any manner that is not prohibited by the 12 1/8%
Senior Note indenture. Any Net Proceeds from an Asset Sale that are not finally
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15 million, within five days of such date, SFC New Holdings
will be required to make an offer to all holders of 12 1/8% Senior Notes (a "12
1/8% Asset Sale Offer") to purchase the maximum principal amount of 12 1/8%
Senior Notes that may be purchased out of the Excess Proceeds at an offer price
in cash in an amount equal to 100% of the outstanding principal amount thereof
plus accrued and unpaid interest, if any, to the date fixed for the closing of
such offer, in accordance with the procedures set forth in the 12 1/8% Senior
Note indenture. To the extent that the aggregate amount of 12 1/8% Senior Notes
tendered pursuant to a 12 1/8% Asset Sale Offer is less than the amount of
Excess Proceeds, SFC New Holdings may use such deficiency for general corporate
purposes or to offer to redeem 11 1/4% Senior Notes pursuant to the provisions
of the 11 1/4% Senior Note indenture and Subordinated Notes pursuant to the
provisions of the Subordinated Note indenture. If the aggregate principal amount
of initial 12 1/8% notes surrendered by holders thereof exceeds the amount of
Excess Proceeds, the
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12 1/8% Senior Note trustee will select the 12 1/8% Senior Notes to be purchased
on pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds will be deemed to be reset at zero.
11 1/4% Senior Notes. Pursuant to the 11 1/4% Senior Note indenture,
within 365 days after the receipt of cash proceeds from any Asset Sale (other
than 75% of the cash proceeds from a Principal Business Asset Sale), SFC New
Holdings (or such Subsidiary) may, at its option, apply the Net Proceeds from
such Asset Sale either:
(a) to permanently reduce Senior Term Debt;
(b) to permanently reduce Senior Revolving Debt with a corresponding
permanent reduction in commitments with respect thereto; or
(c) to an investment in another business, capital expenditures or other
long-term assets, in each case, in the same, similar or related line
of business as SFC New Holdings or any of its Subsidiaries were
engaged in on the date of the 11 1/4% Senior Note indenture.
Pending the final application of any such Net Proceeds, SFC New Holdings (or
such Subsidiary) may temporarily reduce Senior Revolving Debt or invest such Net
Proceeds in cash or Cash Equivalents. Any Net Proceeds from an Asset Sales that
are not finally applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Senior Excess Proceeds." When the
aggregate amount of Senior Excess Proceeds exceeds $15 million, within five days
of such date, SFC New Holdings will be required to make an offer to all holders
of 11 1/4% Senior Notes (an "11 1/4% Asset Sale Offer") to purchase the maximum
principal amount of 11 1/4% Senior Notes that may be purchased out of the Senior
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the 11 1/4% Senior Note indenture. To the extent that
the aggregate amount of 11 1/4% Senior Notes tendered pursuant to a 11 1/4%
Asset Sale Offer is less than the amount of Senior Excess Proceeds, SFC New
Holdings may use such deficiency for general corporate purposes or to offer to
redeem Subordinated Notes pursuant to the provisions of the Subordinated Note
indenture. If the aggregate principal amount of initial 11 1/4% notes
surrendered by holders thereof exceeds the amount of Senior Excess Proceeds, the
11 1/4% Senior Note trustee will select the 11 1/4% Senior Notes to be purchased
on a pro rata basis. Upon completion of such offer to purchase, the amount of
Senior Excess Proceeds will be deemed to be reset at zero.
Subordinated Notes. Pursuant to the Subordinated Note indenture, within
365 days after the receipt of cash proceeds from any Asset Sale (other than 75%
of the cash proceeds from a Principal Business Asset Sale), SFC New Holdings (or
such Subsidiary) may, at its option, apply the Net Proceeds from such Asset Sale
either:
(a) to permanently reduce Senior Term Debt;
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(b) to permanently reduce Senior Revolving Debt with a corresponding
permanent reduction in commitments with respect thereto;
(c) to offer to redeem 11 1/4% Senior Notes pursuant to the provisions
of the 11 1/4% Senior Note indenture; or
(d) to an investment in another business, capital expenditures or other
long-term assets, in each case, in the same, similar or related line
of business as SFC New Holdings or any of its Subsidiaries were
engaged in on the date of the Subordinated Note indenture.
Pending the final application of any such Net Proceeds, SFC New Holdings (or
such Subsidiary) may temporarily reduce Senior Revolving Debt or invest such Net
Proceeds in cash or Cash Equivalents. Any Net Proceeds from an Asset Sale that
are not finally applied or invested as provided in the first sentence of this
paragraph will be deemed to constitute "Subordinated Excess Proceeds." When the
aggregate amount of Subordinated Excess Proceeds exceeds $15 million, SFC New
Holdings will be required to make an offer to all holders of Subordinated Notes
(a "Subordinated Note Asset Sale Offer") to purchase the maximum principal
amount of Subordinated Notes that may be purchased out of the Subordinated
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Subordinated Note indenture. To the extent that the
aggregate amount of Subordinated Notes tendered pursuant to a Subordinated Note
Asset Sale Offer is less than the amount of Subordinated Excess Proceeds, SFC
New Holdings may use such deficiency for general corporate purposes. If the
aggregate principal amount of Subordinated Notes surrendered by holders thereof
exceeds the amount of Subordinated Excess Proceeds, the Subordinated Note
trustee will select the Subordinated Notes to be purchased on a pro rata basis.
Upon completion of such offer to purchase, the amount of Subordinated Excess
Proceeds will be deemed to be reset at zero.
The foregoing limitations will not apply to Asset Sales to SFC New
Holdings or any of its Wholly Owned Subsidiaries.
The Term Loan Agreement will prohibit SFC New Holdings from purchasing any
exchange notes in the event of a Change of Control or an Asset Sale and will
provide that certain change of control events with respect to SFC New Holdings
would constitute a default thereunder. In addition, the Senior Note indentures
will restrict SFC New Holdings ability to repurchase the Subordinated Notes. Any
future credit agreements or other financing agreements to which SFC New Holdings
becomes a party may contain similar provisions. In the event a Change of Control
occurs or a Senior Note Asset Sale Offer or a Subordinated Note Asset Sale Offer
is required at a time when SFC New Holdings is prohibited from purchasing
exchange notes, SFC New Holdings could seek the consent of its lenders to the
purchase of exchange notes or could attempt to refinance the borrowings that
contain such prohibition. If SFC New Holdings does not obtain such a consent or
repay such borrowings, SFC New Holdings will remain prohibited from
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purchasing exchange notes. In such case, SFC New Holdings failure to purchase
tendered exchange notes would constitute an Event of Default under the
applicable indenture.
Selection and Notice
If less than all of the exchange notes are to be redeemed at any time,
selection of exchange notes for redemption will be made by the applicable
trustee in compliance with the requirements of the principal national securities
exchange, if any, on which such exchange notes are listed, or, if such exchange
notes are not so listed, on a pro rata basis, by lot or by such method as such
trustee shall deem fair and appropriate, provided that no note of $1,000 or less
shall be redeemed in part. Notices of redemption shall be mailed by first class
mail at least 30 but not more than 60 days before the redemption date to each
holder of exchange notes to be redeemed at its registered address. If any
exchange note is to be redeemed in part only, the notice of redemption that
relates to such exchange note shall state the portion of the principal amount
thereof to be redeemed. A registered exchange note in principal amount equal to
the unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original exchange note. On and after the redemption
date, interest ceases to accrue on the exchange notes or portions of them called
for redemption.
Certain Covenants
Restricted Payments
The indentures provide that SFC New Holdings will not, and will not permit
any of its Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
SFC New Holdings or any of its Subsidiaries' Equity Interests (other
than dividends or distributions payable in Equity Interests (other
than Disqualified Stock) of SFC New Holdings or dividends or
distributions payable by a Subsidiary of SFC New Holdings to SFC New
Holdings or any Wholly Owned Subsidiary of SFC New Holdings);
(ii) purchase, redeem or otherwise acquire or retire for value any Equity
Interests of SFC New Holdings or any Subsidiary or other Affiliate
of SFC New Holdings (other than any such Equity Interests owned by
SFC New Holdings or any Wholly Owned Subsidiary of SFC New
Holdings);
(iii) purchase, redeem, defease or otherwise acquire or retire for value
any Indebtedness of SFAC New Holdings or any Indebtedness that is
subordinated to the 11 1/4% Senior Notes, the 12 1/8% Senior Notes
or the Subordinated Notes, as the case may be; or
(iv) make any Restricted Investment (all such payments and other actions
set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such
Restricted Payment:
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(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) SFC New Holdings would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter
period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by SFC New Holdings and its Subsidiaries
after the date of the indentures (including all Restricted Payments
permitted by the next succeeding paragraph except clauses (iv) and
(vii) thereof and, to the extent deducted in determining the
Consolidated Net Income of SFC New Holdings in clause (x) below,
clause (vi) thereof), is less than the sum of
(x) 50% of the Consolidated Net Income of SFC New Holdings for the
period (taken as one accounting period) from the date of the
indentures to the end of SFC New Holdings most recently ended
fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, 100% of
such deficit), plus
(y) 100% of the aggregate Net Proceeds received by SFC New
Holdings since the date of the indentures (excluding any
proceeds received on such date in connection with the
Transaction) from the issue or sale of Equity Interests of SFC
New Holdings (other than Equity Interests sold to a Subsidiary
of SFC New Holdings and other than Disqualified Stock) or any
debt security of SFC New Holdings that is convertible into or
exchangeable for any Equity Interest of SFC New Holdings
(other than Disqualified Stock) that has been so converted or
exchanged, plus
(z) 100% of any common equity capital contribution received by SFC
New Holdings since the date of the indentures.
The foregoing provisions do not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment
would have complied with the provisions of the indentures;
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(ii) the redemption, repurchase, retirement or other acquisition of any
of SFC New Holdings Equity Interests or Indebtedness subordinated in
right of payment to the applicable exchange notes of SFC New
Holdings in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of SFC New
Holdings) of other Equity Interests of SFC New Holdings (other than
any Disqualified Stock);
(iii) the repurchase, redemption or other acquisition or retirement for
value (or the payment of a dividend to SFAC New Holdings for such
repurchase, redemption or other acquisition or retirement for value)
of any Equity Interests of SFC New Holdings, SFAC New Holdings or
any Subsidiary of SFC New Holdings held by any member of SFC New
Holdings (or any of its Subsidiaries') management; provided,
however, that the aggregate price paid since the date of the
indentures for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed an amount equal to $5 million plus
the aggregate cash proceeds received by SFC New Holdings or any
Subsidiary of SFC New Holdings from any reissuance of Equity
Interests by SFC New Holdings or such Subsidiary to members of
management of SFC New Holdings and its Subsidiaries;
(iv) Permitted Refinancings (as defined below) of Indebtedness
subordinated in right of payment to the applicable New Notes;
(v) payments to SFAC New Holdings to reimburse it for its out-of-pocket
administrative expenses in an aggregate amount not to exceed $1
million in any fiscal year;
(vi) payments to Specialty Foods Acquisition Corp. and/or SFAC New
Holdings pursuant to the Tax Sharing Agreements as in effect on the
date of the indentures to the extent that Specialty Foods
Acquisition Corp. and/or SFAC New Holdings is actually required to
make cash outlays in connection therewith; and
(vii) payments or distributions to Specialty Foods in an aggregate amount
equal to the interest required to be paid by Specialty Foods from
time to time on any of its outstanding SFC Notes.
Not later than the date of making any Restricted Payment (other than
Restricted Payments pursuant to clauses (iv), (v) and (vi) above), SFC New
Holdings shall deliver to the applicable trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by the covenant "Restricted Payments" were
computed, which calculations may be based upon SFC New Holdings latest available
financial statements.
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Incurrence of Indebtedness and Issuance of Preferred Stock
The indentures provide that SFC New Holdings will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt), and SFC
New Holdings will not issue any Disqualified Stock and will not permit any of
its Subsidiaries to issue any shares of preferred stock; provided, however, that
SFC New Holdings may incur Indebtedness or issue shares of Disqualified Stock,
and Subsidiaries of SFC New Holdings may incur up to $10 million in aggregate
principal amount of Indebtedness at any time outstanding, if:
(i) the Fixed Charge Coverage Ratio for SFC New Holdings most
recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 2.75 to
1 determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified
Stock had been issued, as the case may be, at the beginning of
such four-quarter period; and
(ii) in the case of any incurrence of additional Indebtedness of
SFC New Holdings, such Indebtedness is unsecured and
subordinated or pari passu in right of payment to the Senior
Notes and has a Weighted Average Life to Maturity that is
greater than the remaining Weighted Average Life to Maturity
of each of the 11 1/4% Senior Notes and the 12 1/8% Senior
Notes.
The foregoing limitations do not apply to:
(a) the incurrence by SFC New Holdings of Senior Term Debt in an
aggregate principal amount at any time outstanding not to exceed an
amount equal to $315 million less the aggregate amount of all
repayments, optional or mandatory, of the principal of any Senior
Term Debt (other than repayments that are immediately reborrowed)
that have been made since the date of Specialty Foods' indentures
(provided, however, that Subsidiaries of SFC New Holdings shall not
be permitted to guarantee the Senior Term Debt);
(b) the incurrence by SFC New Holdings or its Subsidiaries of Senior
Revolving Debt (and guarantees thereof by SFC New Holdings and its
Subsidiaries) in an aggregate principal amount at any time
outstanding not to exceed an amount equal to $125 million less the
aggregate amount of all proceeds of sales or other dispositions of
assets applied to permanently reduce the commitments with respect to
such Indebtedness pursuant to the "Limitation on Asset Sales"
covenant;
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(c) the incurrence by SFC New Holdings and its Subsidiaries of the
Existing Indebtedness;
(d) the incurrence by SFC New Holdings of Indebtedness represented by
the 11 1/4% Senior Notes, the 12 1/8% Senior Notes and the
Subordinated Notes;
(e) the incurrence by SFC New Holdings or any of its Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for
the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property used in the business
of SFC New Holdings or such Subsidiary, in an aggregate principal
amount not to exceed $5 million at any time outstanding;
(f) the incurrence by SFC New Holdings or any of its Subsidiaries of
Indebtedness issued in exchange for, or the proceeds of which are
used to extend, refinance, renew, replace, defease or refund,
Indebtedness referred to in clauses (c), (d) or (e) above or
previously incurred under this clause (f) (the "Refinancing
Indebtedness"); provided, however, that
(1) the principal amount of such Refinancing Indebtedness shall
not exceed the aggregate principal amount, tender or
prepayment premium and unpaid interest on the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection
therewith);
(2) any Refinancing Indebtedness incurred by any Subsidiary shall
only extend, refinance, renew, replace, defease or refund
Indebtedness of such Subsidiary or any Wholly Owned Subsidiary
of SFC New Holdings;
(3) the Refinancing Indebtedness shall have a Weighted Average
Life to Maturity equal to or greater than either
(x) the remaining Weighted Average Life to Maturity of the
Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded or
(y) the remaining Weighted Average Life to Maturity of the
applicable exchange notes; and
(4) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of
payment to the 11 1/4% Senior Notes, the 12 1/8% Senior Notes
or the Subordinated Notes, the Refinancing Indebtedness shall
be subordinated in right of payment to the notes on terms at
least as favorable to the holders of the exchange notes as
those contained in the documentation
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governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded (any such extension,
refinancing, renewal, replacement, defeasance or refunding, a
"Permitted Refinancing");
(g) intercompany Indebtedness between or among SFC New Holdings
and any of its Wholly Owned Subsidiaries;
(h) the incurrence by SFC New Holdings or its Subsidiaries of
Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of
the indentures to be outstanding; and
(i) the incurrence by SFC New Holdings of Indebtedness (in
addition to Indebtedness permitted by any other clause of this
paragraph) in an aggregate principal amount at any time
outstanding not to exceed the sum of (A) $35 million plus (B)
up to $40 million of permanent reductions in commitments for
Senior Revolving Debt (other than pursuant to the mandatory
repayment provisions thereof) made since the date of the
indentures.
Liens
The indentures provide that neither SFC New Holdings nor any of its
Subsidiaries may directly or indirectly create, incur, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, except
Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The indentures provide that SFC New Holdings will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction (other than
encumbrances or restrictions imposed by law or judicial or regulatory action) if
such encumbrance or restriction would by its terms prohibit or limit any
Subsidiary from:
(a) (i) paying dividends or making any other distributions to SFC New
Holdings or any of its Subsidiaries (A) on its Capital Stock
or (B) with respect to any other interest or participation in,
or measured by, its profits or
(ii) paying any indebtedness owed to SFC New Holdings or any of its
Subsidiaries;
(b) making loans or advances to SFC New Holdings or any of its
Subsidiaries; or
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(c) transferring any of its properties or assets to SFC New Holdings or
any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reasons of:
(i) Existing Indebtedness as in effect on the date of the
indentures;
(ii) the Term Loan Agreement and the Revolving Credit Agreement as
in effect as of the date of the indentures;
(iii) the indentures, the 11 1/4% Senior Notes, the 12 1/8% Senior
Notes and the Subordinated Notes;
(iv) applicable law;
(v) any instrument governing Indebtedness or Capital Stock of a
person acquired by SFC New Holdings or any of its Subsidiaries
as in effect at the time of such acquisition (except to the
extent such Indebtedness was incurred in connection with or in
anticipation of such acquisition), which encumbrance or
restriction is not applicable to any person, or the properties
or assets of any person, other than the person, or the
property or assets of the person, so acquired;
(vi) customary non-assignment provisions in leases entered into in
the ordinary course of business;
(vii) with respect to clause (c) above, purchase money obligations
for property acquired in the ordinary course of business;
provided that such restrictions are only applicable to the
property acquired through such purchase money obligations;
(viii) permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such
Refinancing Indebtedness are no more restrictive than those
contained in the agreements governing the Indebtedness being
refinanced; or
(ix) any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or
refinancings of the Indebtedness or the Capital Stock referred
to in the foregoing clauses (i), (ii) or (v); provided that
such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or
refinancings are not more restrictive with respect to such
dividend and other payment restrictions than those contained
in the applicable instrument governing such Indebtedness or
Capital Stock (as the case may be) as in effect on the date of
the indentures.
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Merger, Consolidation or Sale of Assets
The indentures provide that SFC New Holdings may not consolidate or merge
with or into (whether or not SFC New Holdings is the surviving corporation) or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more related
transactions to, another corporation, person or entity unless:
(i) SFC New Holdings is the surviving corporation or the entity or the
person formed by or surviving any such consolidation or merger (if
other than SFC New Holdings) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia;
(ii) the entity or person formed by or surviving any such consolidation
or merger (if other than SFC New Holdings) or the entity or person
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of SFC
New Holdings pursuant to a supplemental indenture in a form
reasonably satisfactory to the applicable trustee, under the
applicable exchange notes and the applicable indentures;
(iii) immediately after such transaction no Default or Event of Default
exists; and
(iv) SFC New Holdings or any entity or person formed by or surviving any
such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been
made (A) shall have Consolidated Net Worth (immediately after the
transaction) equal to or greater than the Consolidated Net Worth of
SFC New Holdings immediately preceding the transaction and (B)
shall, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the covenant entitled "Incurrence
of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates
The indentures provide that SFC New Holdings will not, and will not permit
any of its Subsidiaries to, in one or a series of related transactions, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (including the Accounts Receivable Subsidiary and its Subsidiaries)
(each of the foregoing, an "Affiliate Transaction"), unless:
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(a) such Affiliate Transaction is on terms that are no less favorable to
SFC New Holdings or the relevant Subsidiary than those that would
have been obtained in a comparable transaction by SFC New Holdings
or such Subsidiary with an unrelated person; and
(b) SFC New Holdings delivers to the trustees:
(i) with respect to (x) any Affiliate Transaction constituting the
purchase or sale of goods and services in the ordinary course
of business in excess of $10 million or (y) any other
Affiliate Transaction involving aggregate payments in excess
of $500,000, a resolution of the Board of Directors set forth
in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (a) above and such Affiliate
Transaction has been approved by a majority of the
disinterested members of the Board of Directors; and
(ii) with respect to any Affiliate Transaction (other than the
purchase or sale of goods and services in the ordinary course
of business) involving aggregate payments in excess of $20
million, an opinion as to the fairness to SFC New Holdings or
such Subsidiary from a financial point of view issued by an
investment banking firm of national standing;
provided, however, that:
(A) any employment agreement entered into by SFC New Holdings or any of
its Subsidiaries in the ordinary course of business and consistent
with business practices of companies similarly situated;
(B) transactions between or among SFC New Holdings and/or its Wholly
Owned Subsidiaries;
(C) transactions permitted by the provisions of the indentures described
above under the "Restricted Payments" described above;
(D) financial advisory fees payable pursuant to financial advisory
agreements as in effect on the date of the indentures;
(E) transactions permitted by the "Accounts Receivable Subsidiary"
covenant described below; and
(F) transactions between SFC New Holdings or any of its Subsidiaries on
the one hand, and DLJ on the other hand, involving the provision of
financial, consulting or underwriting services by DLJ, provided that
the fees payable to DLJ do not exceed the usual and customary fees
of DLJ for similar services,
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in each case, shall not be deemed Affiliate Transactions.
Accounts Receivable Subsidiary
The indentures provide that SFC New Holdings:
(a) may, and may permit any of its Subsidiaries to, notwithstanding the
provisions of the "Restricted Payments" covenant described above, make
Investments in the Accounts Receivable Subsidiary:
(i) the proceeds of which are applied within five Business Days of
the making thereof solely to finance:
(A) the purchase of accounts receivable of SFC New Holdings
and its Subsidiaries (provided that the aggregate amount
of Investments pursuant to this clause (i)(A) made since
the date of the indentures (including any such
Investments made concurrently with the consummation of
the Transaction) will not exceed $56 million, plus the
amount of any return of capital (excluding payment of
dividends) or any repayment of the principal amount of
any Indebtedness constituting such Investments by the
Accounts Receivable Subsidiary since the date of the
indentures); or
(B) payments required in connection with the termination of
all then existing arrangements relating to the sale of
accounts receivable or participation interests therein
by the Accounts Receivable Subsidiary (provided that the
Accounts Receivable Subsidiary shall receive cash, Cash
Equivalents and accounts receivable having an aggregate
fair market value not less than the amount of such
payments in exchange therefor); and
(ii) in the form of Accounts Receivable Subsidiary Notes to the
extent permitted by clause (b) below;
(b) may not, and may not permit any of its Subsidiaries to, sell accounts
receivable to the Accounts Receivable Subsidiary except for consideration in an
amount not less than that which would be obtained in an arm's length transaction
and solely in the form of cash or Cash Equivalents; provided that the Accounts
Receivable Subsidiary may pay the purchase price for any such accounts
receivable in the form of Accounts Receivable Subsidiary Notes so long as, after
giving effect to the issuance of any such Accounts Receivable Subsidiary Notes,
the aggregate principal amount of all Accounts Receivable Subsidiary Notes
outstanding shall not exceed 10% of the aggregate purchase price paid for all
outstanding accounts receivable purchased by the Accounts Receivable Subsidiary
since the date of the indentures (and not written off or required to be written
off in accordance with the normal business practice of the Accounts Receivable
Subsidiary);
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(c) may not permit the Accounts Receivable Subsidiary to sell any accounts
receivable purchased from SFC New Holdings and its Subsidiaries or participation
interests therein to any other person except on an arm's length basis and solely
for consideration in the form of cash or Cash Equivalents or certificates
representing undivided interests of a Receivables Trust; provided that the
Accounts Receivable Subsidiary may not sell such certificates to any other
person except on an arm's length basis and solely for consideration in the form
of cash or Cash Equivalents;
(d) may not, and may not permit any of its Subsidiaries to, enter into any
guarantee, subject any of their respective properties or assets (other than the
accounts receivable sold by them to the Accounts Receivable Subsidiary) to the
satisfaction of any liability or obligation or otherwise incur any liability or
obligation (contingent or otherwise), in each case, on behalf of the Accounts
Receivable Subsidiary or in connection with any sale of accounts receivable or
participation interests therein by or to the Accounts Receivable Subsidiary,
other than customary obligations relating to breaches of representations,
warranties, covenants and other agreements of SFC New Holdings or any of its
Subsidiaries with respect to the accounts receivable sold by SFC New Holdings or
any of its Subsidiaries to the Accounts Receivable Subsidiary or with respect to
the servicing thereof as set forth in the Accounts Receivable Agreements as in
effect on the date of the indentures or in any replacement or substitute
agreement, so long as the obligations set forth in such replacement or
substitute agreement are no more burdensome in any material respect than those
contained in the Accounts Receivable Agreements as in effect on the date of the
indentures; provided that neither SFC New Holdings nor any of its Subsidiaries
shall at any time guarantee or be otherwise liable for the collectibility of
accounts receivable sold by them;
(e) may not permit the Accounts Receivable Subsidiary to engage in any
business or transaction other than the purchase and sale of accounts receivable
or participation interests therein of SFC New Holdings and its Subsidiaries and
activities incidental thereto;
(f) may not permit the Accounts Receivable Subsidiary to incur any
Indebtedness other than the Accounts Receivable Subsidiary Notes, Indebtedness
owed to SFC New Holdings and Non-Recourse Indebtedness; provided that the
aggregate principal amount of all such Indebtedness of the Accounts Receivable
Subsidiary shall not exceed the book value of its total assets as determined in
accordance with GAAP;
(g) shall cause the Accounts Receivable Subsidiary to remit to SFC New
Holdings on a monthly basis as a distribution, all available cash and Cash
Equivalents not held in a collection account pledged to acquirors of accounts
receivable or participation interests therein, to the extent not applied to (x)
pay interest or principal on the Accounts Receivable Subsidiary Notes or any
Indebtedness of the Accounts Receivable Subsidiary owed to SFC New Holdings, (y)
pay or maintain reserves for reasonable operating expenses of the Accounts
Receivable Subsidiary or to satisfy reasonable minimum operating capital
requirements or (z) to finance the purchase of additional accounts receivable of
SFC New Holdings and its Subsidiaries; and
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(h) may not, and may not permit any of its Subsidiaries to, sell accounts
receivable to, or enter into any other transaction with or for the benefit of,
the Accounts Receivable Subsidiary upon the occurrence of certain events of
bankruptcy or insolvency with respect to the Accounts Receivable Subsidiary.
Subordinated Debt
The Subordinated Note indenture provides that SFC New Holdings will not
incur, create, issue, assume, guarantee or otherwise become directly or
indirectly liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in right of payment to the
Subordinated Notes.
Reports
Whether or not required by the rules and regulations of the SEC, so long
as any exchange notes are outstanding, SFC New Holdings will furnish to the
holders of exchange notes all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if SFC New Holdings were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by SFC New Holdings certified independent accountants. In addition, SFC New
Holdings will provide in each such quarterly and annual report such income
statement information as its Board of Directors determines in good faith to be
appropriate with respect to each of its major product groupings. In addition,
whether or not required by the rules and regulations of the SEC, SFC New
Holdings will file a copy of all such information with the SEC for public
availability and make such information available to prospective purchasers of
the exchange notes who request it in writing. SFC New Holdings will also furnish
to holders of the exchange notes and prospective purchasers of the exchange
notes designated by holders of exchange notes that are Transfer Restricted
Securities (as defined below), upon their request, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act until such
time as SFC New Holdings either exchanges the exchange notes for new notes or
has registered the exchange notes for resale under the Securities Act.
Events of Default and Remedies
The Senior Note indentures provide that each of the following constitutes
an Event of Default:
(i) default for 30 days in the payment when due of interest, Additional
Payments or Liquidated Damages on the 11 1/4% Senior Notes or the
12 1/8% Senior Notes, as the case may be;
(ii) default in payment when due of principal of, or premium, if any, on
the 11 1/4% Senior Notes or the 12 1/8% Senior Notes, as the case
may be, when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or
otherwise;
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(iii) failure by SFC New Holdings to comply with the provisions described
above under the captions "Asset Sale" or "Merger, Consolidation or
Sale of Assets," or failure by SFC New Holdings for 15 days to
comply with the provisions described above under the captions
"Restricted Payments" or "Incurrence of Indebtedness or Preferred
Stock;"
(iv) failure by SFC New Holdings for 60 days after notice to SFC New
Holdings by the applicable trustee or the holders of at least 25% in
principal amount of the 11 1/4% Senior Notes or the 12 1/8% Senior
Notes then outstanding to comply with any other agreements in the
Senior Note indentures or the 11 1/4% Senior Notes or the 12 1/8%
Senior Notes;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by SFC New Holdings or any of
its Subsidiaries (or the payment of which is guaranteed by SFC New
Holdings or any of its Subsidiaries), whether such Indebtedness or
guarantee now exists, or is created after the date of the Senior
Note indentures, which default (a) is caused by a failure to pay
when due principal or interest on such Indebtedness within the grace
period provided in such Indebtedness (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $10 million or
more;
(vi) failure by SFC New Holdings, any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, to pay any final judgment of or judgments
(other than any judgment to the extent a reputable insurance company
has accepted liability) aggregating in excess of $10 million, which
judgments remain undischarged or unstayed for a period of 60 days;
and
(vii) certain events of bankruptcy or insolvency with respect to SFC New
Holdings, any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary.
The Subordinated Note indenture provides that each of the following
constitutes an Event of Default:
(i) default for 30 days in the payment when due of interest on the
Subordinated Notes, whether or not prohibited by the subordination
provisions of the Subordinated Note indenture;
(ii) default in payment when due of principal of, or premium, if
any, on the Subordinated Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to
purchase) or otherwise,
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whether or not prohibited by the subordination provisions of the
Subordinated Note indenture;
(iii) failure by SFC New Holdings to comply with the provisions described
above under the captions "Asset Sale" or "Merger, Consolidation or
Sale of Assets" or failure by SFC New Holdings for 15 days to comply
with the provisions described above under the captions "Restricted
Payments" or "Incurrence of Indebtedness or Preferred Stock";
(iv) failure by SFC New Holdings for 60 days after notice to SFC New
Holdings by the Subordinated Note trustee or the holders of at least
25% in principal amount of the Subordinated Notes then outstanding
to comply with any other agreements in the Subordinated Note
indenture or the Subordinated Notes;
(v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by SFC New Holdings or any of
its Subsidiaries (or the payment of which is guaranteed by SFC New
Holdings or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the
Subordinated Note indenture, which default:
(a) is caused by a failure to pay at final maturity principal of
such Indebtedness within the grace period provided in such
Indebtedness (a "Final Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express final maturity and, in each case, either:
(1) the principal amount of such Indebtedness, together with
the principal amount of any other Indebtedness under
which there has been a Final Payment Default or the
maturity of which has been so accelerated, aggregates
$10 million or more, and such Final Payment Default or
acceleration shall not have been cured or rescinded
within 10 days after the occurrence thereof;
(2) the principal amount of such Indebtedness, together with
the principal amount of any other Indebtedness under
which there has been a Final Payment Default or the
maturity of which has been so accelerated, aggregates
$50 million or more; or
(3) a Final Payment Default or acceleration shall have
occurred with respect to the Senior Term Debt, the
Senior Revolving Debt, the 11 1/4% Senior Notes or the
12 1/8% Senior Notes;
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(vi) failure by SFC New Holdings, any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, to pay any final judgment or judgments
(other than any judgment to the extent a reputable insurance company
has accepted liability) aggregating in excess of $10 million, which
judgments remain undischarged for a period of 60 days; and
(vii) certain events of bankruptcy or insolvency with respect to SFC New
Holdings, any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the applicable trustee
or the holders of at least 25% in principal amount of the then outstanding 11
1/4% Senior Notes, the 12 1/8% Senior Notes or Subordinated Notes may declare
all the 11 1/4% Senior Notes, the 12 1/8% Senior Notes or Subordinated Notes, as
the case may be, to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to SFC New Holdings, any Significant
Subsidiary or any group of Subsidiaries that, taken as a whole, would constitute
a Significant Subsidiary, all outstanding exchange notes will become due and
payable without further action or notice. The Subordinated Note indenture will
provide that so long as any Designated Senior Debt (as defined therein) is
outstanding, such declaration shall not become effective until the earlier of
(x) the day which is five Business Days after the receipt by Representatives of
Designated Senior Debt of such written notice of acceleration (which notice may
only be given during the continuation of an Event of Default) or (y) the date of
acceleration of any Designated Senior Debt. Holders of the exchange notes may
not enforce the indentures or the exchange notes except as provided in the
indentures. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding 11 1/4% Senior Notes, the 12 1/8% Senior Notes or
Subordinated Notes may direct the applicable trustee in its exercise of any
trust or power. Each trustee may withhold from holders of the applicable
exchange notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of SFC New Holdings with the
intention of avoiding payment of the premium, if any, that SFC New Holdings
would have had to pay if SFC New Holdings then had elected to redeem any
exchange notes pursuant to the optional redemption provisions of the applicable
indenture, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law.
If an Event of Default occurs on or after October 1, 1999 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of SFC New
Holdings with the intention of avoiding payment of the premium, if any, that SFC
New Holdings would have had to pay if SFC New Holdings then had elected to
redeem the 12 1/8% Senior Notes pursuant to the optional redemption provisions
of the 12 1/8% Senior Note indenture, an equivalent premium shall also become
and be immediately due and payable to the extent
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permitted by law. If an Event of Default occurs prior to October 1, 1999 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of SFC New Holdings with the intention of avoiding the prohibition on redemption
of the 12 1/8% Senior Notes prior to such date, then the premium of 106.954%
(expressed as a percentage of the principal amount of such 12 1/8% Senior Notes)
shall also become immediately due and payable to the extent permitted by law.
The holders of a majority in aggregate principal amount of the applicable
exchange notes then outstanding by notice to the applicable trustee may on
behalf of the holders of all of the 11 1/4% Senior Notes, 12 1/8% Senior Notes
or Subordinated Notes, as the case may be, waive any existing Default or Event
of Default and its consequences under the applicable indenture (including
annulling a declaration of acceleration of maturity) except a continuing Default
or Event of Default in the payment of interest on, or the principal of, such
exchange notes.
SFC New Holdings is required to deliver to each trustee annually a
statement regarding compliance with the applicable indenture, and SFC New
Holdings is required upon becoming aware of any Default or Event of Default, to
deliver to each trustee a statement specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No past, present or future director, officer, employee, incorporator or
stockholder of SFC New Holdings, as such, shall have any liability for any
obligations of SFC New Holdings under the exchange notes or the indentures or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each holder of exchange notes by accepting an exchange note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the exchange note. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is the
view of the SEC that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
SFC New Holdings may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding 11 1/4% Senior Notes, the
12 1/8% Senior Notes or Subordinated Notes ("Legal Defeasance"). Legal
Defeasance means that SFC New Holdings will be deemed to have paid and
discharged the entire indebtedness represented by the outstanding 11 1/4% Senior
Notes, the 12 1/8% Senior Notes or Subordinated Notes, as the case may be,
except for:
(i) the rights of holders of such outstanding exchange notes to receive,
solely from the trust fund described below, payments in respect of
the principal of, premium, if any, and interest on such exchange
notes when such payments are due;
(ii) SFC New Holdings obligations with respect to such exchange notes
concerning issuing temporary exchange notes, registration of
exchange
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notes, mutilated, destroyed, lost or stolen notes and the
maintenance of an office or agency for payment and money for
security payments held in trust;
(iii) the rights, powers, trust, duties and immunities of the applicable
trustee, and SFC New Holdings obligations in connection therewith;
and
(iv) the Legal Defeasance provisions of the applicable indenture.
In addition, SFC New Holdings may, at its option and at any time, elect to have
the obligations of SFC New Holdings released with respect to certain covenants
that are described in the indentures ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the 11 1/4% Senior Notes, the 12 1/8% Senior Notes or
the Subordinated Notes, as the case may be. In the event Covenant Defeasance
occurs, certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the 11 1/4% Senior
Notes, the 12 1/8% Senior Notes or the Subordinated Notes, as the case may be.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(i) SFC New Holdings must irrevocably deposit with the applicable
trustee or Paying Agent, in trust, for the benefit of the holders of
the 11 1/4% Senior Notes, the 12 1/8% Senior Notes or the
Subordinated Notes, as the case may be, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such exchange notes
on the stated maturity or on the applicable redemption date, as the
case may be, of such principal or installment of principal of,
premium, if any, or interest on such outstanding exchange notes;
(ii) in the case of Legal Defeasance, SFC New Holdings shall have
delivered to the applicable trustee an opinion of counsel in the
United States reasonably acceptable to such trustee confirming that
(A) SFC New Holdings has received from, or there has been published
by the IRS a ruling or (B) since the date of the indentures, there
has been a change in the applicable federal income tax law, in
either case, to the effect that, and based thereon such opinion of
counsel shall confirm that, the holders of such outstanding exchange
notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal 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 Legal Defeasance
had not occurred;
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(iii) in the case of Covenant Defeasance, SFC New Holdings shall have
delivered to the applicable trustee an opinion of counsel in the
United States reasonably acceptable to such trustee confirming that
the holders of such outstanding exchange notes will not recognize
income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not
occurred;
(iv) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, the
applicable indenture, the Term Loan Agreement, the Revolving Credit
Agreement or any other material agreement or instrument to which SFC
New Holdings is a party or by which SFC New Holdings is bound;
(vi) SFC New Holdings shall have delivered to the applicable trustee an
opinion of counsel to the effect that after the 91st day following
the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(vii) SFC New Holdings shall have delivered to the applicable trustee an
Officers' Certificate stating that the deposit was not made by SFC
New Holdings with the intent of preferring the holders of such
exchange notes over the other creditors of SFC New Holdings or with
the intent of defeating, hindering, delaying or defrauding creditors
of SFC New Holdings or others; and
(viii) SFC New Holdings shall have delivered to the applicable trustee an
Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
Transfer and Exchange
A holder may transfer or exchange notes in accordance with the indentures.
The Registrar and the applicable trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and SFC New
Holdings may require a holder to pay any taxes and fees required by law or
permitted by the indentures. SFC New Holdings is not required to transfer or
exchange any exchange note selected for redemption. Also, SFC New Holdings is
not required to transfer or exchange any 11 1/4%
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Senior Note, 12 1/8% Senior Note or Subordinated Note for a period of 15 days
before a selection of such exchange notes to be redeemed.
The registered holder of an exchange note will be treated as the owner of
it for all purposes.
Amendment, Supplement and Waiver
Except as provided in the next succeeding paragraphs, the Senior Note
indentures and the Senior Notes or the Subordinated Note indenture and the
Subordinated Notes, may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the applicable exchange
notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for exchange notes), and any existing default or
compliance with any provision of the Senior Note indentures and the Senior Notes
or the Subordinated Note indenture and the Subordinated Notes, may be waived
with the consent of the holders of a majority in principal amount of the
applicable, then outstanding exchange notes (including consents obtained in
connection with a tender offer or exchange offer for such exchange notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any exchange note held by a non-consenting holder of
exchange notes):
(i) reduce the principal amount of exchange notes whose holders must
consent to an amendment, supplement or waiver,
(ii) reduce the principal of or change the fixed maturity of any exchange
note or alter the provisions with respect to the redemption of the
New Notes;
(iii) reduce the rate of or change the time for payment of interest on any
exchange note;
(iv) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the exchange notes (except a
rescission of acceleration of the 11 1/4% Senior Notes, the 12 1/8%
Senior Notes or Subordinated Notes by the holders of at least a
majority in aggregate principal amount of the Senior Notes or
Subordinated Notes, as the case may be, and a waiver of the payment
default that resulted from such acceleration);
(v) make any exchange note payable in money other than that stated in
the exchange notes;
(vi) make any change in the provisions of the indentures relating to
waivers of past Defaults or the rights of holders of exchange notes
to receive payments of principal of or interest on the exchange
notes;
(vii) waive a redemption payment with respect to any exchange note;
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(viii) make any change in the subordination provisions of the Subordinated
Note indenture that adversely affects any holder of Subordinated
Notes; or
(viii) make any change in the foregoing amendment and waiver provisions.
Without the consent of at least 75% in principal amount of the 11 1/4%
Senior Notes, the 12 1/8% Senior Notes or Subordinated Notes then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for such exchange notes), no waiver or amendment to the applicable indenture may
make any change in the provisions described above under the caption "Change of
Control" that adversely affect the rights of any holder of such notes.
Notwithstanding the foregoing, without the consent of any holder of
exchange notes, SFC New Holdings and the trustees may amend or supplement the
indentures or the exchange notes to cure any ambiguity, defect or inconsistency,
to provide for uncertificated exchange notes in addition to or in place of
certificated exchange notes, to provide for the assumption of SFC New Holdings
obligations to holders of the exchange notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the holders of the exchange notes or that does not adversely affect
the legal rights under the indentures of any such holder.
Concerning the Trustees
The indentures contain certain limitations on the rights of the trustees,
should a trustee become a creditor of SFC New Holdings, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The trustees will be permitted to
engage in other transactions; however, if any trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding
Senior Notes or Subordinated Notes will have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the applicable trustee, subject to certain exceptions. The
indentures provide that in case an Event of Default shall occur (which shall not
be cured), the trustees will be required, in the exercise of its power, to use
the degree of care of a prudent man in the conduct of his own affairs. Subject
to such provisions, the trustees will be under no obligation to exercise any of
their rights or powers under the indentures at the request of any holder of
exchange notes, unless such holder shall have offered to the applicable trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
Certain Definitions
Set forth below are certain defined terms used in the indentures.
Reference is made to the indentures for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
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"Accounts Receivable Agreements" means
o the Pooling Agreement dated as of November 16, 1994, as amended,
among the Accounts Receivable Subsidiary, SFC New Holdings or
Specialty Foods, as Master Servicer, and The Chase Manhattan Bank,
as trustee on behalf of the Certificate holders;
o the Series 1998-1 Supplement to the Pooling Agreement, dated as of
March 31, 1998, as amended, among the Accounts Receivable
Subsidiary, SFC New Holdings or Specialty Foods, as Master Servicer,
and The Chase Manhattan Bank, as trustee on behalf of the
Certificate holders;
o the Servicing Agreement dated as of November 16, 1994, as amended,
among the Accounts Receivable Subsidiary, SFC New Holdings or
Specialty Foods, as Master Servicer, certain of the subsidiaries of
SFC New Holdings, as servicers, and The Chase Manhattan Bank, as
trustee;
o the Amended and Restated Receivables Sale Agreement, dated as of
November 16, 1994, as amended, among the Accounts Receivable
Subsidiary, SFC New Holdings or Specialty Foods, as Master Servicer,
and certain of the subsidiaries of SFC New Holdings, as sellers; and
o any related instruments and agreements executed in connection
therewith.
"Accounts Receivable Discount" means, with respect to any account
receivable sold by SFC New Holdings or any of its Subsidiaries to the Accounts
Receivable Subsidiary,
(a) the difference between (i) the face amount of such account
receivable and (ii) the aggregate amount of consideration (after
giving effect to any subsequent adjustments thereto) received upon
the sale of such account receivable (with any Accounts Receivable
Subsidiary Notes received as consideration in such sale being valued
at the principal amount thereof for this purpose), less
(b) the amount of such difference that is calculated on the basis of, or
with reference to, (i) the historical bad debt allowance or accounts
receivable write-offs of the seller of such account receivable, (ii)
fees and other operating expenses of the Accounts Receivable
Subsidiary payable to parties other than SFC New Holdings and its
Subsidiaries and acquirors of accounts receivable or participation
interests therein (in their capacity as acquirors) to the extent
that such fees and expenses do not exceed such amounts as would be
obtained in an arm's length transaction and (iii) credits to the
obligor of such account receivable applied to the face amount of
such account receivable in respect of discount expense (including
prompt payment and volume discounts), rebates, refunds, promotional
allowances, billing error expense and similar adjustments and
allowances made by the seller of such account receivable.
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"Accounts Receivable Subsidiary" means a wholly owned subsidiary of SFC
New Holdings designated as such by SFC New Holdings,
(a) that has total assets at the time of such designation with a book
value of $100,000 or less, and
(b) with which neither SFC New Holdings nor any other Subsidiary of SFC
New Holdings has any obligation (i) to subscribe for additional
shares of Capital Stock or other equity interests therein (other
than to finance the purchase of additional accounts receivable of
SFC New Holdings and its Subsidiaries) or (ii) to maintain or
preserve such Accounts Receivable Subsidiary's financial condition
or to cause it to achieve certain levels of operating results.
"Accounts Receivable Subsidiary Notes" means the notes to be issued by the
Accounts Receivable Subsidiary for the purchase of accounts receivable.
"Acquired Debt" means, with respect to any specified person, Indebtedness
of any other person existing at the time such other person merged with or into
or became a Subsidiary of such specified person, including Indebtedness incurred
in connection with, or in contemplation of, such other person merging with or
into or becoming a Subsidiary of such specified person.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however
that
(i) beneficial ownership of 20% or more of the voting securities of a
person shall be deemed to be control;
(ii) no lender party to the Term Loan Agreement or the Revolving Credit
Agreement (or any of its affiliates) shall be deemed to be an
Affiliate of SFC New Holdings or any of its Subsidiaries solely by
virtue of being party to the Term Loan Agreement or the Revolving
Credit Agreement; and
(iii) an officer of a person shall not be deemed an Affiliate of such
person unless such officer directly or indirectly controls such
person.
"Business Day" means each day other than a Legal Holiday.
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"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the liability in respect of a capital lease that would at such time
be required to be capitalized on the balance sheet in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests.
"Cash Equivalents" means
(i) cash;
(ii) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
having maturities of not more that six months from the date of
acquisition;
(iii) certificates of deposit and Eurodollar time deposits with maturities
of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight
bank deposits, in each case, with any lender party to the Term Loan
Agreement or the Revolving Credit Agreement or with any domestic
commercial bank having capital and surplus in excess of
$500,000,000;
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and
(iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above; and
(v) commercial paper issued by any lender party to the Term Loan
Agreement or the Revolving Credit Agreement (or the parent company
of any such lender) and commercial paper rated A-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case maturing
within six months after the date of acquisition.
"Consolidated Cash Flow" means, with respect to any person for any period,
the Consolidated Net Income of such person for such period plus:
(a) an amount equal to any extraordinary loss plus any net loss realized
in connection with an Asset Sale (to the extent such losses were
deducted in computing Consolidated Net Income), plus
(b) provision for taxes based on income or profits to the extent such
provision for taxes was included in computing Consolidated Net
Income, plus
(c) consolidated interest expense of such person for such period,
whether paid or accrued (including amortization of original issue
discount, non-cash interest payments and the interest component of
any payments associated
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with Capital Lease Obligations), to the extent such expense was
deducted in computing Consolidated Net Income, plus
(d) all depreciation, amortization (including amortization of goodwill
and other intangibles) and other non-cash charges (excluding any
non-cash charge constituting an extraordinary item of loss or
expense and any non-cash charge that requires an accrual of or a
reserve for cash charges for any future period) of such person for
such period to the extent such depreciation, amortization and other
non-cash charges were deducted in computing Consolidated Net Income,
plus
(e) one-third of all operating lease payments of such person paid or
accrued during such period, in each case, on a consolidated basis
and determined in accordance with GAAP, plus
(f) without duplication, the amount of Accounts Receivable Discount
attributable to sales of accounts receivable by such person and its
Subsidiaries to the Accounts Receivable Subsidiary during such
period to the extent such Account Receivable Discount was deduced in
computing Consolidated Net Income for such period.
"Consolidated Net Income" means, with respect to any person for any
period, the aggregate of the Net Income of such person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that
(i) the Net Income of any person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid
to the referent person or a Wholly Owned Subsidiary of the referent
person;
(ii) the Net Income of any Subsidiary of the referent person shall be
excluded to the extent that the declaration or payment of dividends
or similar distributions by that Subsidiary of that Net Income is
not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its
stockholders;
(iii) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition
shall be excluded; and
(iv) the cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Worth" means, with respect to any person, the sum of:
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(i) the consolidated equity of the common stockholders of such person
and its consolidated Subsidiaries, plus
(ii) the respective amounts reported on such person's most recent balance
sheet with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out
of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such person
upon issuance of such preferred stock, less
(x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a
going concern business made within 12 months after the
acquisition of such business) subsequent to the date of the
indentures in the book value of any asset owned by such person
or a consolidated Subsidiary of such person;
(y) all investments in unconsolidated Subsidiaries and in persons
that are not Subsidiaries (except, in each case, Permitted
Investments); and
(z) all unamortized debt discount and expense and unamortized
deferred charges, all of the foregoing determined in
accordance with GAAP.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means, with respect to the 11 1/4% Senior Notes, the
12 1/8% Senior Notes or the Subordinated Notes, any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date on which the 11 1/4% Senior Notes, the 12 1/8% Senior Notes or the
Subordinated Notes, as the case may be, mature.
"85% Owned Subsidiary" of a person means any Subsidiary of such person at
least 85% of the outstanding Capital Stock or other ownership interests
(including at least 51% of the outstanding voting Capital Stock or other voting
ownership interests) of which are owned directly or indirectly by such person.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of SFC New Holdings and its
Subsidiaries (other than under the Term Loan Agreement, the Revolving Credit
Agreement and the indentures) in existence on the date of the indentures, until
such amounts are repaid.
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"First Tier Subsidiaries" means direct Wholly Owned Subsidiaries of SFC
New Holdings on the date of the applicable Note indentures and any such
subsidiaries acquired thereafter other than the Accounts Receivable Subsidiary.
"Fixed Charge Coverage Ratio" means with respect to any person for any
period, the ratio of the Consolidated Cash Flow of such person for such period
to the Fixed Charges of such person for such period. In the event that SFC New
Holdings or any of its Subsidiaries incurs or redeems any Indebtedness (other
than revolving credit borrowings) or issues or redeems preferred stock or
consummates an Asset Sale or any Material Acquisition subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, guarantee or redemption of
Indebtedness, or such issuance or redemption of preferred stock, or the
consummation of such Asset Sale or such Material Acquisition, as if the same had
occurred at the beginning of the applicable period. For purposes of calculating
the Fixed Charge Coverage Ratio of SFC New Holdings for any period commencing
prior to the date of the recent restructuring of Specialty Foods and Specialty
Foods Acquisition Corp., which we refer to as the "Transaction," pro forma
effect shall be given to the Transaction and the financing thereof as if the
same had occurred at the beginning of such period.
"Fixed Charges" means, with respect to any person for any period, the sum
of
(a) consolidated interest expense of such person for such period,
whether paid or accrued, to the extent such expense was deducted in
computing Consolidated Net Income (including amortization of
original issue discount, non-cash interest payments and the interest
component of any payments associated with Capital Lease Obligations
but excluding amortization of deferred financing fees), plus
(b) the interest expense of any other person for such period with
respect to Indebtedness that is guaranteed by the referent person,
plus
(c) the product of
(i) all cash dividend payments (and non-cash dividend payments in
the case of a person that is a Subsidiary) on any series of
preferred stock of such person, times
(ii) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state
and local statutory tax rate of such person, expressed as a
decimal, plus
(d) one-third of all operating lease payments of such person paid or
accrued during such period, in each case, on a consolidated basis
and in accordance with GAAP, plus
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(e) the amount of Accounts Receivable Discount attributable to sales of
accounts receivable by such person and its Subsidiaries to the
Accounts Receivable Subsidiary during such period.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the date of the indentures.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Hedging Obligations" means, with respect to any person, the obligations
of such person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any person, the principal amount of
any indebtedness of such person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property (including pursuant to capital leases) or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such person prepared in accordance with
GAAP, and also includes, to the extent not otherwise included, the guarantee of
items that would be included within this definition.
"Investments" means, with respect to any person, all investments by such
person in other persons (including Affiliates) in the forms of loans (including
guarantees), advances or capital contributions (excluding commission, travel,
relocation and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in New York City or at a place of payment are authorized by law or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Marketable Securities" means, in connection with any Asset Sale, any
readily marketable equity or debt securities that are received by SFC New
Holdings or any Subsidiary of SFC New Holdings as consideration for such Asset
Sale and are
o traded on the New York Stock Exchange, the American Stock Exchange
or the National Association of Securities Dealers Automated
Quotation National Market System, and
o issued by a corporation that has outstanding one or more issues of
debt or preferred stock securities that are rated investment grade
by Moody's Investor Services, Inc. or Standard & Poor's Corporation;
provided, that in no event shall the excess of aggregate amount of securities of
any one such corporation held immediately following the consummation of any
Asset Sale by SFC New Holdings and its Subsidiaries over 10 times the average
daily trading volume of such securities during the 20 trading days immediately
preceding the consummation of such Asset Sale be deemed Marketable Securities.
"Material Acquisition" means any material acquisition of a business,
Capital Stock, property or assets or any other material transaction as a result
of which a person becomes a Subsidiary of SFC New Holdings. For the purposes of
this definition, an acquisition or other transaction shall be deemed "material"
if it has an aggregate value of $5 million or more.
"Net Income" means, with respect to any person, the net income (loss) of
such person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by SFC New
Holdings or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets the
subject of such
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Asset Sale and any reserve for adjustment in respect of the sale price of such
asset or assets.
"Non-Recourse Indebtedness" of any person means Indebtedness of such
person that:
o is not guaranteed by any other person (except a Wholly Owned
Subsidiary of the referent person);
o is not recourse to and does not obligate any other person (except a
Wholly Owned Subsidiary of the referent person) in any way;
o does not subject any property or assets of any other person (except
a Wholly Owned Subsidiary of the referent person), directly or
indirectly, contingently or otherwise, to the satisfaction thereof;
and
o is not required by GAAP to be reflected on the financial statements
of any other person (other than a Subsidiary of the referent person)
prepared in accordance with GAAP.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness. With respect to the
Subordinated Notes, "Obligations" shall include, without limitation, liabilities
in respect of any indemnity, any reimbursement, compensation or contribution
obligations, any liquidated damage provision (including Liquidated Damages), any
breach of representation or warranty or any rights of redemption or rescission
under the Subordinated Note indenture, [the Purchase Agreements, the
Registration Rights Agreement] or by law or otherwise (other than amounts
payable to the Subordinated Note trustee pursuant to the provisions of the
Subordinated Note indenture with respect to compensation and indemnification of
the Subordinated Note trustee).
"Paying Agent" means United States Trust Company of New York.
"Permitted Investments" means:
(a) any Investments in SFC New Holdings or in an 85% Owned Subsidiary of
SFC New Holdings that is engaged in the same or a similar or related
line of business as SFC New Holdings or any of its Subsidiaries were
engaged in on the date of the indentures;
(b) any Investments in Cash Equivalents;
(c) Investments by SFC New Holdings or any Subsidiary of SFC New
Holdings in a person that is engaged in the same or a similar or
related line of business as SFC New Holdings or any of its
Subsidiaries were engaged in on the date of the indentures, if as a
result of such Investment
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(i) such person becomes an 85% Owned Subsidiary of SFC New
Holdings, or
(ii) such person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets
to, or is liquidated into, SFC New Holdings or an 85% Owned
Subsidiary of SFC New Holdings;
(d) Investments in the Accounts Receivable Subsidiary permitted by the
"Accounts Receivable Subsidiary" covenant;
(e) Investments in agricultural commodities futures, options and other
hedging obligations in the ordinary course of business; and
(f) Investments in any Person other than SFAC New Holdings or a
Subsidiary of SFAC New Holdings that is not also a Subsidiary of SFC
New Holdings (in addition to Investments permitted by the foregoing
clauses (a) through (e)) that, in the aggregate, do not exceed $25
million at any one time outstanding.
"Permitted Liens" means:
(a) Liens on the Capital Stock of the First Tier Subsidiaries and the
Accounts Receivable Subsidiary and other assets of SFC New Holdings,
if any, securing Senior Term Debt and any Indebtedness permitted
under clause (h) or (i) of the "Incurrence of Indebtedness and
Issuance of Preferred Stock" covenant;
(b) Liens securing the Senior Revolving Debt;
(c) Liens in favor of SFC New Holdings and its Wholly Owned
Subsidiaries;
(d) Liens on property of a person existing at the time such person is
merged into or consolidated with SFC New Holdings or any Subsidiary
of SFC New Holdings; provided, that such Liens were in existence
prior to the contemplation of such merger or consolidation;
(e) Liens on property existing at the time of acquisition thereof by SFC
New Holdings or any Subsidiary of SFC New Holdings; provided, that
such Liens were in existence prior to the contemplation of such
acquisition;
(f) Liens to secure Indebtedness permitted by clause (e) of the second
paragraph of the covenant entitled "Incurrence of Indebtedness and
Issuance of Preferred Stock" covering solely the assets acquired
with such Indebtedness and the proceeds of such assets;
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(g) Liens existing on the date of the indentures and renewals,
extensions and replacements thereof; provided, that such renewals,
extensions or renewals shall not apply to any property or assets not
previously subject to such Liens or increase the principal amount of
Obligations secured thereby;
(h) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently pursued;
provided, that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor;
(i) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlords' or other like Liens arising in the ordinary course of
business;
(j) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
(k) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like
nature incurred in the ordinary course of business;
(l) easements, rights-of-way, encroachments and other survey defects,
restrictions and other similar encumbrances and title defects which,
in the aggregate, do not in any case materially detract from the
value of the property subject thereto or materially interfere with
the ordinary conduct of the business of SFC New Holdings and its
Subsidiaries;
(m) any Lien arising pursuant to any order of attachment, distraint or
other legal process arising in connection with court or arbitration
proceedings so long as the execution or other enforcement thereof is
effectively stayed, the claims secured thereby are being contested
in good faith by appropriate proceedings, adequate reserves have
been established with respect to such claims in accordance with GAAP
and no Default or Event of Default would result thereby;
(n) licenses for the use of intellectual property rights or like
intangible assets; and
(o) Liens incurred in the ordinary course of business of SFC New
Holdings or any Subsidiary of SFC New Holdings with respect to
obligations that do not exceed $5 million at any one time
outstanding and that are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other
than trade credit).
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"Principal Business Asset Sale" means any sale, issuance, conveyance,
transfer, lease or other disposition (including, without limitation, by way of
merger, consolidation or sale and leaseback transaction but not the grant of a
pledge or security interest), directly or indirectly, in one or a series of
related transactions, of all of the Capital Stock or all or substantially all of
the properties and assets of Mother's, Metz or Archway, other than certain real
estate currently held for sale by Mothers, Metz or Archway as of the Original
Issue Date.
"Receivables Trust" means a trust organized solely for the purpose of
securitizing the accounts receivable held by the Accounts Receivable Subsidiary
that:
(a) shall not engage in any business other than (i) the purchase of
accounts receivable or participation interests therein from the
Accounts Receivable Subsidiary and the servicing thereof, (ii) the
issuance of and distribution of payments with respect to the
securities permitted to be issued under clause (b) below and (iii)
other activities incidental to the foregoing;
(b) shall not at any time incur Indebtedness or issue any securities,
except (i) certificates representing undivided interests in the
Trust issued to the Accounts Receivable Subsidiary and (ii) debt
securities issued in an arm's length transaction for consideration
solely in the form of cash and Cash Equivalents, all of which (net
of any issuance fees and expenses) shall promptly be paid to the
Accounts Receivable Subsidiary; and
(c) shall distribute to the Accounts Receivable Subsidiary as a
distribution on the Accounts Receivable Subsidiary's beneficial
interest in the Receivables Trust no less frequently that once every
six months all available cash and Cash Equivalents held by it, to
the extent not required for reasonable operating expenses or
reserves therefor or to service any securities issued pursuant to
clause (b) above that are not held by the Accounts Receivable
Subsidiary.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date of the indenture, by and among SFC New Holdings
and the holders of the New 13% Debentures, as such agreement may be amended,
modified or supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Agreement" means that certain Revolving Credit
Agreement, dated as of March 16, 1998 by and among certain Subsidiaries of
Specialty Foods and the lenders party thereto, providing for up to $125 million
in aggregate principal amount of revolving loans and letters of credit, together
with any replacement or additional loan agreement or agreements, and including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, supplemented,
extended, modified, renewed, refunded, replaced or refinanced from time to time,
whether or not with the same lenders.
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"Senior Revolving Debt" means all Obligations from time to time
outstanding under the Revolving Credit Agreement.
"Senior Term Debt" means all Obligations from time to time outstanding
under the Term Loan Agreement.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulations S-X,
promulgated pursuant to the Securities Act of 1933, as amended, as such
Regulation is in effect on the date of the indentures.
"Subsidiary" of any person means any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such person or one or more of
the other Subsidiaries of that person or a combination thereof; provided,
however, that the Accounts Receivable Subsidiary and its Subsidiaries shall not
be deemed Subsidiaries of SFC New Holdings or of any of its other Subsidiaries.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement, as
amended, dated as of August 16, 1993 between Specialty Foods Acquisition Corp.
and Specialty Foods, as amended to include SFC New Holdings and SFAC New
Holdings as parties as of the date of the indenture.
"Term Loan Agreement" means:
(A) for purpose of the 12 1/8% Senior Note indenture, that certain Term
Loan Agreement, dated as of July 17, 1995, by and among Specialty
Foods, Chemical Bank and the other lenders party thereto providing
for $175 million in aggregate principal amount of term loans,
together with any replacement or additional credit agreement or
agreements, and including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection
therewith, and in each case as amended, supplemented, extended,
modified, renewed, refunded, replaced or refinanced from time to
time, whether or not with the same lenders, and
(B) for the purposes of the 11 1/4% Senior Note indenture and the
Subordinated Note indenture, that certain Term Loan Agreement, dated
as of August 16, 1993, by and among Specialty Foods and the lenders
party thereto providing for up to $315 million in aggregate
principal amount of term loans, together with any replacement or
additional credit agreement or agreements, and including any related
notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended,
supplemented, extended, modified, renewed, refunded, replaced or
refinanced from time to time, whether or not with the same lenders.
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"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(a) the then outstanding principal amount of such Indebtedness, into
(b) the sum of the products obtained by multiplying
(x) the amount of each then remaining installment, sinking fund,
serial maturity or other scheduled required payments of
principal, including payment at final maturity, in respect
thereof, by
(y) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such
payment.
"Wholly Owned Subsidiary" of any person means a Subsidiary of such person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
person or by one or more Wholly Owned Subsidiaries of such person or by such
person and one or more Wholly Owned Subsidiaries of such person.
Global Securities
Each exchange note to be issued to a holder exchanging an initial note
held through a global security will be issued in the form of one or more global
securities that will be deposited with, or on behalf of, DTC, which we refer to
as the "Depository." Unless and until it is exchanged in whole or in part for
exchange notes of that class in definitive form, a global security may not be
transferred except as a whole to a nominee of the Depository for such global
security, or by a nominee of the Depository to the Depository or another nominee
of the Depository, or by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
Physical Securities
If a holder of initial notes holds such security in physical form,
exchange notes issued to such holder will be in physical form. Following initial
issuance, physical exchange notes will be issued to a holder of exchange notes
upon request to SFC New Holdings and the applicable trustee subject to
compliance with the procedures therefor of the Depository. If the Depository is
at any time unwilling or unable to continue as a depository for the global
securities and a successor depository is not appointed by SFC New Holdings
within 90 days, SFC New Holdings will issue certificated exchange notes in
exchange for the global securities.
Book-Entry System
Each global security will be registered in the name of Cede & Co., the
nominee of the Depository. Accordingly, beneficial interests in the global
securities will be shown
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on, and transfer thereof will be effected only through, records maintained by
the Depository and its participants.
The Depository has advised SFC New Holdings as follows: the Depository is
a limited purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depository holds securities that its participants ("Direct Participants")
deposit with the Depository. The Depository also facilitates the settlement
among Direct Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in such Direct Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. The Depository is owned by a number of its
Direct Participants and by the NYSE, the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc. Access to the Depository's
book-entry system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depository and its Direct and
Indirect Participants are on file with the SEC.
The Depository advises that its established procedures provide that (i)
upon issuance of the global securities by SFC New Holdings, the Depository will
credit the accounts of Direct Participants designated by SFC New Holdings with
the principal amounts of the exchange notes issued pursuant to the exchange
offers and (ii) ownership of interests in the global securities will be shown
on, and the transfer of the ownership will be effected only through, records
maintained by the Depository, the Direct Participants and the Indirect
Participants.
So long as a nominee of the Depository is the registered owner of the
global securities, such nominee for all purposes will be considered the sole
owner or holder of such global securities under the indentures.
Neither SFC New Holdings, the trustee, any paying agent nor the registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the global
securities, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Principal and interest payments on the exchange notes registered in the
name of the Depository's nominee will be made in immediately available funds to
the Depository's nominee as the registered owner of the global securities. Under
the terms of the exchange notes, SFC New Holdings and the trustee will treat the
persons in whose names the exchange notes are registered as the owners of such
exchange notes for the purpose of receiving payment of principal and interest on
such exchange notes and for all other
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purposes whatsoever. Therefore, neither SFC New Holdings, the trustee nor any
paying agent has any direct responsibility or liability for the payment of
principal or interest on the exchange notes to owners of beneficial interests in
the global securities. The Depository has advised SFC New Holdings and the
trustee that its current practice is, upon receipt of any payment of principal
or interest, to credit Direct Participants' accounts on the payment date in
accordance with their respective holdings of beneficial interests in the global
securities as shown on the Depository's records. Payments by Direct and Indirect
Participants to owners of beneficial interests in the global securities will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Direct and Indirect
Participants and not of the Depository, the trustee, or SFC New Holdings,
subject to any statutory requirements that may be in effect from time to time.
Payment of principal and interest to the Depository is the responsibility of SFC
New Holdings or the trustee; disbursement of such payments to the owners of
beneficial interests in the global securities shall be the responsibility of the
Depository and Direct and Indirect Participants.
So long as the Depository continues to make its Same-Day Funds Settlement
System available to SFC New Holdings, all payments of principal and interest on
the global securities will be made by SFC New Holdings in immediately available
funds.
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DESCRIPTION OF THE INITIAL NOTES
The initial notes are comprised of: (1) the notes that we issued and sold
in connection with the exchange offers that were completed on June 11, 1999, and
(2) the SFC Notes that were the subject of the June 11, 1999 private
transactions, but which did not participate in those exchange offers. The form
and terms of our private exchange notes are the same as the form and terms of
the exchange notes except that (a) our private exchange notes are not registered
under the Securities Act and bear legends restricting the transfer of them and
(b) holders of our private exchange notes have certain rights under a
registration rights agreement which will terminate upon the consummation of
these exchange offers. We refer you to the sections of this prospectus entitled
"Description of the Exchange Notes" and "The Exchange Offers--Termination of
Certain Rights."
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DESCRIPTION OF THE SFC NOTES
We will pay all accrued but unpaid interest on the SFC Notes that we
acquired on June 11, 1999 on the first interest payment date of each of our
private exchange notes. In addition, we will pay (i) additional interest on each
of those SFC Notes at the rate of 1% per annum, on the first interest payment
date of each of our private exchange notes, and (ii) additional interest on the
SFC Subordinated Notes that we acquired on June 11, 1999 through the issuance of
PIK Subordinated Noes at the rate of 1% per annum, on August 15, 1999.
General
The following summary of certain provisions of the SFC Note indentures
does not purport to be complete and is qualified in its entirety by reference to
the SFC Note indentures, as amended by the first supplemental indentures dated
as of June 8, 1999, including the definitions therein of certain terms used
below. However, the summary does summarize all material provisions of the SFC
Note indentures, as amended. The definitions of certain terms used in the
following summary are set forth below under "Certain Definitions."
Principal, Maturity and Interest
The SFC 10 1/4% Senior Notes are limited in aggregate principal amount to
$225 million and mature on August 15, 2001. The SFC 11 1/8% Senior Notes are
limited in aggregate principal amount to $150 million and mature on October 1,
2002. The SFC Subordinated Notes are limited in aggregate principal amount to
$200 million and mature on August 15, 2003. Interest on the SFC 10 1/4% Senior
Notes and the SFC Subordinated Notes accrues at the rate of SFC 10 1/4% and SFC
11 1/4% per annum, respectively, and is payable semi-annually in arrears on
February 15 and August 15 of each year, commencing on February 15, 1994, to
holders of record on the immediately preceding February 1 and August 1. Interest
on the SFC 11 1/8% Senior Notes accrues at the rate of SFC 11 1/8% per annum and
is payable semi-annually in arrears on April 1 and October 1 of each year,
commencing on October 1, 1995, to holders of record on the immediately preceding
March 15 and September 15. Interest on the SFC Notes accrues from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest is computed on the basis of a
360-day year comprised of twelve 30-day months. The SFC Notes are payable as to
principal and interest at the office or agency of Specialty Foods maintained for
such purpose within the City and State of New York or, at the option of
Specialty Foods, payment of interest may be made by check mailed to the holders
of the SFC Notes. Until otherwise designated by Specialty Foods, Specialty
Foods' office or agency in New York is the office of the applicable SFC trustee
maintained for such purpose. The SFC Notes are issued in registered form,
without coupons, and in denominations of $1,000 and integral multiples thereof.
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Effective Subordination of the SFC 10 1/4% Senior Notes
The SFC 10 1/4% Senior Notes are effectively subordinated to (i) all
existing and future liabilities of Specialty Foods' Subsidiaries and (ii) all of
Specialty Foods' borrowings under the Term Loans, which borrowings are secured
by substantially all of the assets of Specialty Foods and a pledge of all of the
capital stock of each First Tier Subsidiary.
Effective Subordination of the SFC 11 1/8% Senior Notes
The operations of Specialty Foods are conducted through its Subsidiaries
and, therefore, Specialty Foods is dependent upon the cash flow of its
Subsidiaries to meet its obligations, including its obligations under the SFC 11
1/8% Senior Notes and the SFC 11 1/8% Senior indenture. The SFC 11 1/8% Senior
Notes are effectively subordinated to (i) all existing and future liabilities
and indebtedness of Specialty Foods' Subsidiaries, which includes borrowings
under the Revolving Credit Facility, and (ii) all of Specialty Foods' borrowings
under the Term Loan Facility, which borrowings are secured by substantially all
of the assets of Specialty Foods and a pledge of all of the capital stock of
each First Tier Subsidiary and the Accounts Receivable Subsidiary.
In the event of dissolution, bankruptcy, liquidation or reorganization of
Specialty Foods' Subsidiaries, the holders of the SFC 11 1/8% Senior Notes will
not receive any amounts in respect of the SFC 11 1/8% Senior Notes until after
the payment in full of the claims of the creditors of Specialty Foods'
Subsidiaries. In addition, upon the occurrence of certain events of default
under the agreement relating to the Senior Debt, Specialty Foods will be
prohibited from making any payments in respect of the SFC 11 1/8% Senior Notes
under certain circumstances.
Subordination of the SFC Subordinated Notes
The payment of principal of, premium, if any, and interest on the SFC
Subordinated Notes is subordinated in right of payment, as set forth in the SFC
Subordinated Note indenture, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt of Specialty Foods, including the SFC Senior
Notes, whether outstanding on the date of the SFC Subordinated Note indenture or
thereafter created, incurred, assumed or guaranteed.
Upon any payment or distribution to creditors of Specialty Foods in a
liquidation or dissolution of Specialty Foods or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to
Specialty Foods or its property, in an assignment for the benefit of creditors
or any marshaling of Specialty Foods' assets and liabilities, holders of Senior
Debt of Specialty Foods, including holders of the SFC Senior Notes, will be
entitled to receive payment in full in cash or Cash Equivalents of all
outstanding Obligations in respect of such Senior Debt before the holders of the
SFC Subordinated Notes will be entitled to receive any payment or distribution
with respect to the SFC Subordinated Notes and, until all Obligations with
respect to Senior Debt of
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Specialty Foods are paid in full in cash or Cash Equivalents, any payment or
distribution to which the holders of the SFC Subordinated Notes would be
entitled shall be made to the holders of Senior Debt (except that holders of the
SFC Subordinated Notes may receive securities that are subordinated to at least
the same extent as the SFC Subordinated Notes to Senior Debt and any securities
issued in exchange for Senior Debt, subject to certain authorization of a
bankruptcy court).
Specialty Foods also may not make any payment or distribution in respect
of the SFC Subordinated Notes (except in such subordinated securities to the
extent permitted) if:
(a) a default in the payment of the principal of, premium, if any, or
interest on any Designated Senior Debt occurs and is continuing
beyond any applicable period of grace (whether upon maturity, as a
result of acceleration or otherwise), or
(b) any other default occurs and is continuing with respect to any
Designated Senior Debt that permits holders of the Designated Senior
Debt as to which such default relates to accelerate its maturity and
the SFC Subordinated Note trustee receives a notice of such default
(a "Payment Blockage Notice") from the holders, or from the trustee,
agent or other representative of the holders, of any such Designated
Senior Debt.
Notwithstanding the foregoing, a notice of default under the foregoing
clause (b) may only be given by the Representative for the holders of Senior
Debt under the Term Loan Agreement or the Revolving Credit Agreement if Senior
Debt is outstanding under the Term Loan Agreement or the Revolving Credit
Agreement (including obligations in respect of letters of credit) at the time
such notice is to be given. Payments on the SFC Subordinated Notes may and shall
be resumed (i) in the case of a payment default, upon the date on which such
default is cured or waived and (ii) in case of a nonpayment default, upon the
earlier of the date on which such nonpayment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated. No new
period of payment blockage may be commenced within 360 days after the receipt by
the SFC Subordinated Note trustee of any prior Payment Blockage Notice. No
nonpayment default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the SFC Subordinated Note trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been cured or waived for a period of not less than 180 days.
The SFC Subordinated Note indenture further requires that Specialty Foods
promptly notify holders of Senior Debt if payment of the SFC Subordinated Notes
is accelerated because of an Event of Default.
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"Senior Debt" means:
o all Senior Term Debt outstanding from time to time,
o all Senior Revolving Debt outstanding from time to time,
o the SFC Senior Notes,
o Hedging Obligations, and
o any other Indebtedness that is permitted to be incurred by Specialty
Foods pursuant to the SFC Subordinated Note indenture unless the
instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of
payment to the SFC Subordinated Notes.
"Senior Debt" shall include, without limitation, interest on any of the
Obligations described in the preceding clauses (i) through (v) accruing after
the filing of a petition by or against Specialty Foods under any Bankruptcy Law,
in accordance with and at the rate (including any rate applicable upon any
default or event of default) specified in the applicable agreement under which
such Obligations are created, whether or not the claim for such interest is
allowed as a claim after such filing in any proceeding under such Bankruptcy
Law. Notwithstanding anything to the contrary in the foregoing, Senior Debt
shall not include (x) any Indebtedness of Specialty Foods to any of its
Subsidiaries or other Affiliates, (y) any Indebtedness incurred for the purchase
of goods or materials or for services obtained in the ordinary course of
business (other than the Senior Revolving Debt) and (z) any Indebtedness that is
incurred in violation of the SFC Subordinated Note indenture.
"Designated Senior Debt" means:
o the Senior Term Debt,
o the Senior Revolving Debt,
o the SFC Senior Notes, and
o any other Senior Debt permitted under the SFC Subordinated Note
indenture, the principal amount of which is $25 million or more.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of the SFC Subordinated Notes may
recover less ratably than creditors of Specialty Foods who are holders of Senior
Debt, including holders of the SFC Senior Notes.
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Optional Redemption - SFC 11 1/8% Senior Notes
Except as set forth below, the SFC 11 1/8% Senior Notes are not redeemable
at Specialty Foods' option prior to October 1, 1999. Thereafter, the SFC 11 1/8%
Senior Notes will be subject to redemption at the option of Specialty Foods, in
whole or in part, upon not less than 30 nor more than 60 days' notice to the
holders of SFC 11 1/8% Senior Notes, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on October 1, of the years indicated below:
Year Percentage
1999..................................................... 105.562%
2000..................................................... 102.781%
2001 and thereafter...................................... 100.000%
If a Change of Control (as defined below) shall occur prior to October 1,
1999, within 90 days after the occurrence of such Change of Control, Specialty
Foods shall have the option to redeem the SFC 11 1/8% Senior Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice to the holders of
the SFC 11 1/8% Senior Notes, at a redemption price equal to the principal
amount thereof plus the Yield Protection Amount, plus accrued and unpaid
interest thereon to the applicable redemption date.
Optional Redemption - SFC 10 1/4% Senior Notes and SFC Subordinated Notes
The SFC 10 1/4% Senior Notes and the SFC Subordinated Notes will be
subject to redemption at the option of Specialty Foods, in whole or in part,
upon not less than 30 nor more than 60 days' notice to the holders of SFC 10
1/4% Senior Notes and the SFC Subordinated Notes, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on August 15 of the years indicated below:
SFC 10 1/4% Senior Notes
Year Percentage
1998................................................. 105.125%
1999................................................. 102.563%
2000 and thereafter.................................. 100.000%
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SFC Subordinated Notes
Year Percentage
1998................................................. 103.214%
1999................................................. 101.607%
2000 and thereafter.................................. 100.000%
Redemption or Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each holder of SFC Notes will
have the right to require Specialty Foods to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such holder's SFC Notes pursuant
to the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, Specialty Foods will mail a
notice to each holder stating:
(1) that the Change of Control Offer is being made pursuant to the
covenant entitled "Change of Control" and that all SFC Notes
tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no later
than 30 Business Days from the date such notice is mailed (the
"Change of Control Payment Date");
(3) that any SFC Note not tendered will continue to accrue interest;
(4) that, unless Specialty Foods defaults in the payment of the Change
of Control Payment, all SFC Notes accepted for payment pursuant to
the Change of Control Offer will cease to accrue interest after the
Change of Control Payment Date;
(5) that holders electing to have any SFC Notes purchased pursuant to a
Change of Control Offer will be required to surrender the SFC Notes,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the SFC Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date;
(6) that holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the principal
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amount of SFC Notes delivered for purchase, and a statement that
such holder is withdrawing his election to have such SFC Notes
purchased; and
(7) that holders whose SFC Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased
portion of the SFC Notes surrendered, which unpurchased portion must
be equal to $1,000 in principal amount or an integral multiple
thereof. Specialty Foods will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of SFC Notes in
connection with a Change of Control.
On the Change of Control Payment Date, Specialty Foods will, to the extent
lawful, (1) accept for payment SFC Notes or portions thereof tendered pursuant
to the Change of Control Offer, (2) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all SFC Notes or portions
thereof so tendered, and (3) deliver or cause to be delivered to the SFC
trustees the Notes so accepted together with an Officers' Certificate stating
the SFC Notes or portions thereof tendered to Specialty Foods. The Paying Agent
will promptly mail to each holder of Notes so accepted payment in an amount
equal to the purchase price for such SFC Notes, and the applicable SFC trustee
will promptly authenticate and mail to each holder a new SFC Note equal in
principal amount to any unpurchased portion of the SFC Notes surrendered by such
holder, if any; provided, that each such new SFC Note will be in a principal
amount of $1,000 or an integral multiple thereof. The SFC Subordinated Note
indenture will provide that prior to making the Change of Control Payment in
respect of the SFC Subordinated Notes, but in any event within 60 days following
a Change of Control, Specialty Foods will either repay all outstanding Senior
Debt or obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt to permit the repurchase of SFC Subordinated Notes
required by this covenant. Specialty Foods will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
Selection and Notice
If less than all of the SFC Senior Notes or all of the SFC Subordinated
Notes are to be redeemed at any time, selection of SFC Notes for redemption will
be made by the applicable SFC trustee in compliance with the requirements of the
principal national securities exchange, if any, on which such SFC Notes are
listed, or, if such SFC Notes are not so listed, on a pro rata basis, by lot or
by such method as such SFC trustee shall deem fair and appropriate, provided
that no SFC Note of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each holder of SFC Notes to be redeemed at
its registered address. If any SFC Note is to be redeemed in part only, the
notice of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new SFC Note in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original
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SFC Note. On and after the redemption date, interest ceases to accrue on the SFC
Notes or portions of them called for redemption.
SFC Subordinated Debt
The SFC Subordinated Note indenture provides that Specialty Foods will not
incur, create, issue, assume, guarantee or otherwise become directly or
indirectly liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in right of payment to the
SFC Subordinated Notes.
Events of Default and Remedies
The SFC Senior indentures provide that each of the following constitutes
an Event of Default:
(i) default for 30 days in the payment when due of interest on the
applicable SFC Senior Notes;
(ii) default in payment when due of principal of, or premium, if any, on
the applicable SFC Senior Notes when the same becomes due and
payable at maturity, upon redemption (including in connection with
an offer to purchase) or otherwise;
(iii) failure by Specialty Foods for 60 days after notice to Specialty
Foods by the applicable SFC Senior Note trustee or the holders of at
least 25% in principal amount of the SFC Senior Notes then
outstanding to comply with any other agreements in the applicable
SFC Senior indenture or the SFC Senior Notes; and
(iv) certain events of bankruptcy or insolvency with respect to Specialty
Foods, any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary.
The SFC Subordinated Note indenture provides that each of the following
constitutes an Event of Default:
(i) default for 30 days in the payment when due of interest on the SFC
Subordinated Notes, whether or not prohibited by the subordination
provisions of the SFC Subordinated Note indenture;
(ii) default in payment when due of principal of, or premium, if any, on
the SFC Subordinated Notes when the same becomes due and payable at
maturity, upon redemption (including in connection with an offer to
purchase) or otherwise, whether or not prohibited by the
subordination provisions of the SFC Subordinated Note indenture;
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(iii) failure by Specialty Foods for 60 days after notice to Specialty
Foods by the SFC Subordinated Note trustee or the holders of at
least 25% in principal amount of the SFC Subordinated Notes then
outstanding to comply with any other agreements in the SFC
Subordinated Note indenture or the SFC Subordinated Notes; and
(iv) certain events of bankruptcy or insolvency with respect to Specialty
Foods, any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the applicable SFC
trustee or the holders of at least 25% in principal amount of the then
outstanding SFC Senior Notes or SFC Subordinated Notes may declare all the SFC
Senior Notes or SFC Subordinated Notes, as the case may be, to be due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency with respect to
Specialty Foods, any Significant Subsidiary or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary, all outstanding
Notes will become due and payable without further action or notice. The SFC
Subordinated Note indenture will provide that so long as any Designated Senior
Debt (as defined therein) is outstanding, such declaration shall not become
effective until the earlier of (x) the day which is five Business Days after the
receipt by Representatives of Designated Senior Debt of such written notice of
acceleration (which notice may only be given during the continuation of an Event
of Default) or (y) the date of acceleration of any Designated Senior Debt.
Holders of the SFC Notes may not enforce the SFC Note indentures or the SFC
Notes except as provided in the SFC Note indentures. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
SFC Senior Notes or SFC Subordinated Notes may direct the applicable SFC trustee
in its exercise of any trust or power. Each SFC trustee may withhold from
holders of the applicable Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
If an Event of Default occurs on or after August 15, 1998 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of Specialty
Foods with the intention of avoiding payment of the premium, if any, that
Specialty Foods would have had to pay if Specialty Foods then had elected to
redeem any SFC 10 1/4% Senior Notes or SFC Subordinated Notes pursuant to the
optional redemption provisions of the applicable SFC Note indenture, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law.
If an Event of Default occurs on or after October 1, 1999 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of Specialty
Foods with the intention of avoiding payment of the premium, if any, that
Specialty Foods would have had to pay if Specialty Foods then had elected to
redeem the SFC 11 1/8% Senior Notes pursuant to the optional redemption
provisions of the SFC 11 1/8% Senior indenture, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law. If an
Event of Default occurs prior to October 1, 1999 by reason of
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any willful action (or inaction) taken (or not taken) by or on behalf of
Specialty Foods with the intention of avoiding the prohibition on redemption of
the SFC 11 1/8% Senior Notes prior to such date, then the premium specified in
the SFC 11 1/8% Senior indenture shall also become immediately due and payable
to the extent permitted by law.
The holders of a majority in aggregate principal amount of the SFC Senior
Notes or SFC Subordinated Notes then outstanding by notice to the applicable SFC
trustee may on behalf of the holders of all of the SFC 10 1/4% Senior Notes, SFC
11 1/8% Senior Notes or SFC Subordinated Notes, as the case may be, waive any
existing Default or Event of Default and its consequences under the applicable
SFC Note indenture (including annulling a declaration of acceleration of
maturity) except a continuing Default or Event of Default in the payment of
interest on, or the principal of, such Notes.
No Personal Liability of Directors, Officers, Employees and Stockholders
No past, present or future director, officer, employee, incorporator or
stockholder of Specialty Foods, as such, shall have any liability for any
obligations of Specialty Foods under the Notes or the SFC Note indentures or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of SFC Notes by accepting a SFC Note waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the SFC Note. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that such
a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
Specialty Foods may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding SFC Senior Notes or SFC
Subordinated Notes ("Legal Defeasance"). Legal Defeasance means that Specialty
Foods will be deemed to have paid and discharged the entire indebtedness
represented by the outstanding SFC Senior Notes or SFC Subordinated Notes, as
the case may be, except for
(i) the rights of holders of such outstanding SFC Notes to receive,
solely from the trust fund described below, payments in respect of
the principal of, premium, if any, and interest on such SFC Notes
when such payments are due,
(ii) Specialty Foods' obligations with respect to such SFC Notes
concerning issuing temporary SFC Notes, registration of SFC Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for payment and money for security payments held in
trust,
(iii) the rights, powers, trust, duties and immunities of the applicable
SFC trustee, and Specialty Foods' obligations in connection
therewith, and
(iv) the Legal Defeasance provisions of the applicable SFC Note
indenture.
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In addition, Specialty Foods may, at its option and at any time, elect to have
the obligations of Specialty Foods released with respect to certain covenants
that are described in the SFC Note indentures ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the SFC 10 1/4% Senior Notes, the
SFC 11 1/8% Senior Notes or the SFC Subordinated Notes, as the case may be. In
the event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the SFC 10 1/4% Senior Notes, the SFC 11 1/8% Senior Notes or the SFC
Subordinated Notes, as the case may be.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) Specialty Foods must irrevocably deposit with the applicable SFC
trustee or Paying Agent, in trust, for the benefit of the holders of
the SFC 10 1/4% Senior Notes, the SFC 11 1/8% Senior Notes or the
SFC Subordinated Notes, as the case may be, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the
stated maturity or on the applicable redemption date, as the case
may be, of such principal or installment of principal of, premium,
if any, or interest on such outstanding SFC Notes;
(ii) in the case of Legal Defeasance, Specialty Foods shall have
delivered to the applicable SFC trustee an opinion of counsel in the
United States reasonably acceptable to such SFC trustee confirming
that (A) Specialty Foods has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date of the SFC Note indentures, there has been a change in the
applicable federal income tax law, in either case, to the effect
that, and based thereon such opinion of counsel shall confirm that,
the holders of such outstanding SFC Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such
Legal 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 Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, Specialty Foods shall have
delivered to the applicable SFC trustee an opinion of counsel in the
United States reasonably acceptable to such SFC trustee confirming
that the holders of such outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not
occurred;
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(iv) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, the
applicable SFC Note indenture, the Term Loan Agreement, the
Revolving Credit Agreement or any other material agreement or
instrument to which Specialty Foods is a party or by which Specialty
Foods is bound;
(vi) Specialty Foods shall have delivered to the applicable SFC trustee
an opinion of counsel to the effect that after the 91st day
following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(vii) Specialty Foods shall have delivered to the applicable SFC trustee
an Officers' Certificate stating that the deposit was not made by
Specialty Foods with the intent of preferring the holders of such
Notes over the other creditors of Specialty Foods or with the intent
of defeating, hindering, delaying or defrauding creditors of
Specialty Foods or others; and
(viii) Specialty Foods shall have delivered to the applicable SFC trustee
an Officers' Certificate and an opinion of counsel, each stating
that all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
Transfer and Exchange
A holder may transfer or exchange SFC Notes in accordance with the SFC
Note indentures. The Registrar and the applicable SFC trustee may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents and Specialty Foods may require a holder to pay any taxes and fees
required by law or permitted by the SFC Note indentures. Specialty Foods is not
required to transfer or exchange any Note selected for redemption. Also,
Specialty Foods is not required to transfer or exchange any SFC Senior Note or
SFC Subordinated Note for a period of 15 days before a selection of such SFC
Notes to be redeemed.
The registered holder of a SFC Note will be treated as the owner of it for
all purposes.
Amendment, Supplement and Waiver
Except as provided in the next succeeding paragraphs, the SFC 10 1/4%
Senior indenture and the SFC 10 1/4% Senior Notes, the SFC 11 1/8% Senior
indenture and the SFC 11 1/8% Senior Notes, or the SFC Subordinated Note
indenture and the SFC
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Subordinated Notes, may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the applicable SFC Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for such SFC Notes), and any existing default or compliance
with any provision of the SFC 10 1/4% Senior indenture and the SFC 10 1/4%
Senior Notes, the SFC 11 1/8% Senior indenture and the SFC 11 1/8% Senior Notes
or the SFC Subordinated Note indenture and the SFC Subordinated Notes, may be
waived with the consent of the holders of a majority in principal amount of the
applicable, then outstanding SFC Notes (including consents obtained in
connection with a tender offer or exchange offer for such SFC Notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any SFC Note held by a non-consenting holder of SFC Notes)
(i) reduce the principal amount of SFC Notes whose holders must consent
to an amendment, supplement or waiver,
(ii) reduce the principal of or change the fixed maturity of any SFC Note
or alter the provisions with respect to the redemption of the SFC
Notes,
(iii) reduce the rate of or change the time for payment of interest on any
SFC Note,
(iv) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the SFC Notes (except a
rescission of acceleration of the SFC 10 1/4% Senior Notes, the SFC
11 1/8% Senior Notes or SFC Subordinated Notes by the holders of at
least a majority in aggregate principal amount of the SFC 10 1/4%
Senior Notes, the SFC 11 1/8% Senior Notes or SFC Subordinated
Notes, as the case may be, and a waiver of the payment default that
resulted from such acceleration),
(v) make any SFC Note payable in money other than that stated in the
applicable SFC Notes,
(vi) make any change in the provisions of the SFC Note indentures
relating to waivers of past Defaults or the rights of holders of SFC
Notes to receive payments of principal of or interest on the SFC
Notes,
(vii) waive a redemption payment with respect to any SFC Note,
(viii) make any change in the subordination provisions of the SFC
Subordinated Note indenture that adversely affects any holder of SFC
Subordinated Notes, or
(ix) make any change in the foregoing amendment and waiver provisions.
Without the consent of at least 75% in principal amount of the SFC 10 1/4%
Senior Notes, the SFC 11 1/8% Senior Notes or SFC Subordinated Notes then
outstanding
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(including consents obtained in connection with a tender offer or exchange offer
for such Notes), no waiver or amendment to the applicable SFC Note indenture may
make any change in the provisions described above under the caption "Change of
Control" that adversely affect the rights of any holder of such Notes.
Notwithstanding the foregoing, without the consent of any holder of SFC
Notes, Specialty Foods and the SFC trustees may amend or supplement the
applicable SFC Note indentures or the SFC Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated SFC Notes, to provide for the assumption of Specialty Foods'
obligations to holders of the SFC Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the holders of the SFC Notes or that does not adversely affect the
legal rights under the SFC Note indentures of any such holder.
Concerning the SFC Trustees
The SFC Note indentures contain certain limitations on the rights of the
SFC trustees, should a SFC trustee become a creditor of Specialty Foods, to
obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The SFC trustees
will be permitted to engage in other transactions; however, if any SFC trustee
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the Commission for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding SFC
10 1/4% Senior Notes, the SFC 11 1/8% Senior Notes or SFC Subordinated Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the applicable SFC trustee,
subject to certain exceptions. The SFC Note indentures provide that in case an
Event of Default shall occur (which shall not be cured), the SFC trustees will
be required, in the exercise of its power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions, the
SFC trustees will be under no obligation to exercise any of their rights or
powers under the SFC Note indentures at the request of any holder of Notes,
unless such holder shall have offered to the applicable SFC trustee security and
indemnity satisfactory to it against any loss, liability or expense.
Certain Definitions
Set forth below are certain defined terms used in the SFC Note indentures.
Reference is made to the SFC Note indentures for a full disclosure of all such
terms, as well as any other capitalized terms used herein for which no
definition is provided.
"Accounts Receivable Agreements" means (i) the Pooling Agreement, dated as
of November 16, 1994, among the Accounts Receivable Subsidiary, Specialty Foods,
as Master Servicer, and Chemical Bank, as trustee on behalf of the
certificateholders, (ii) the Series 1994-1 Supplement to the Pooling Agreement,
dated as of November 16, 1994, among the Accounts Receivable Subsidiary,
Specialty Foods, as Master Servicer, and
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Chemical Bank, as trustee on behalf of the certificateholders, (iii) the
Servicing Agreement, dated as of November 16, 1994, among the Accounts
Receivable Subsidiary, Specialty Foods, as Master Servicer, certain of the
subsidiaries of Specialty Foods, as servicers, the Chemical Bank, as trustee on
behalf of the certificateholders, (iv) the Amended and Restated Receivables Sale
Agreement, dated as of November 16, 1994, among Capital Markets Assurance
Corporation, the Accounts Receivable Subsidiary, as Master Servicer, and
Chemical Bank, as trustee on behalf of the certificateholders, and (vi) any
related instruments and agreements executed in connection therewith.
"Accounts Receivable Discount" means, with respect to any account
receivable sold by Specialty Foods or any of its Subsidiaries to the Accounts
Receivable Subsidiary, (a) the difference between (i) the face amount of such
account receivable and (ii) the aggregate amount of consideration (after giving
effect to any subsequent adjustments thereto) received upon the sale of such
account receivable (with any Accounts Receivable Subsidiary Notes received as
consideration in such sale being valued at the principal amount thereof for this
purpose), less (b) the amount of such difference that is calculated on the basis
of, or with reference to, (i) the historical bad debt allowance or accounts
receivable write-offs of the seller of such account receivable, (ii) fees and
other operating expenses of the Accounts Receivable Subsidiary payable to
parties other than Specialty Foods and its Subsidiaries and acquirors of
accounts receivable or participation interests therein (in their capacity as
acquirors) to the extent that such fees and expenses do not exceed such amounts
as would be obtained in an arm's length transaction and (iii) credits to the
obligor of such account receivable applied to the face amount of such account
receivable in respect of discount expense (including prompt payment and volume
discounts), rebates, refunds, promotional allowances, billing error expense and
similar adjustments and allowances made by the seller of such account
receivable.
"Accounts Receivable Subsidiary" means a newly created, wholly owned
subsidiary of Specialty Foods designated as such by Specialty Foods, (a) that
has total assets at the time of such designation with a book value of $100,000
or less and (b) with which neither Specialty Foods nor any other Subsidiary of
Specialty Foods has any obligation (i) to subscribe for additional shares of
Capital Stock or other equity interests therein (other than to finance the
purchase of additional accounts receivable of Specialty Foods and its
Subsidiaries) or (ii) to maintain or preserve such Accounts Receivable
Subsidiary's financial condition or to cause it to achieve certain levels of
operating results.
"Accounts Receivable Subsidiary Notes" means the notes to be issued by the
Accounts Receivable Subsidiary for the purchase of accounts receivable.
"Acquired Debt" means, with respect to any specified person, Indebtedness
of any other person existing at the time such other person merged with or into
or became a Subsidiary of such specified person, including Indebtedness incurred
in connection with, or in contemplation of, such other person merging with or
into or becoming a Subsidiary of such specified person.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such
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specified person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such person, whether through the ownership of voting
securities, by agreement or otherwise; provided, however that (i) beneficial
ownership of 20% or more of the voting securities of a person shall be deemed to
be control, (ii) no lender party to the Term Loan Agreement or the Revolving
Credit Agreement (or any of its affiliates) shall be deemed to be an Affiliate
of Specialty Foods or any of its Subsidiaries solely by virtue of being party to
the Term Loan Agreement or the Revolving Credit Agreement and (iii) an officer
of a person shall not be deemed an Affiliate of such person unless such officer
directly or indirectly controls such person.
"Applicable Spread" is defined as 100 basis points.
"Business Day" means each day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the liability in respect of a capital lease that would at such time
be required to be capitalized on the balance sheet in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests.
"Cash Equivalents" means
(i) cash,
(ii) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
having maturities of not more that six months from the date of
acquisition,
(iii) certificates of deposit and Eurodollar time deposits with maturities
of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight
bank deposits, in each case, with any lender party to the Term Loan
Agreement or the Revolving Credit Agreement or with any domestic
commercial bank having capital and surplus in excess of
$500,000,000,
(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and
(iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, and
(v) commercial paper issued by any lender party to the Term Loan
Agreement or the Revolving Credit Agreement (or the parent company
of any such
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lender) and commercial paper rated A-1 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within six
months after the date of acquisition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of Specialty Foods' or
Specialty Foods Acquisition Corp.'s' assets to any person or group
(as such term is used in Section 13(d)(3) of the Exchange Act)
(other than the Principals or their Specified Parties (as defined
below)),
(ii) the adoption of a plan relating to the liquidation or dissolution of
Specialty Foods or Specialty Foods Acquisition Corp.,
(iii) the consummation of any transaction the result of which is that any
person or group (as defined above) (other than the Principals and
their Specified Parties) owns, directly or indirectly, more of the
voting power of the voting stock of Specialty Foods or Specialty
Foods Acquisition Corp. than the Principals and their Specified
Parties, or
(iv) the first day on which a majority of the members of the Board of
Directors of Specialty Foods or Specialty Foods Acquisition Corp.
are not Continuing Directors. For the purposes of the foregoing
sentence, any shares of voting stock that are required to be voted
for a nominee of any Principal or Specified Party pursuant to a
binding agreement between the holder thereof and such Principal or
Specified Party will be deemed to be held by such Principal or
Specified Party, as the case may be, for purposes of determining the
percentage of voting power held by any person.
"Consolidated Cash Flow" means, with respect to any person for any period,
the Consolidated Net Income of such person for such period plus (a) an amount
equal to any extraordinary loss, plus (b) provision for taxes based on income or
profits to the extent such provision for taxes was included in computing
Consolidated Net Income, plus (c) consolidated interest expense of such person
for such period, whether paid or accrued (including amortization of original
issue discount, non-cash interest payments and the interest component of any
payments associated with Capital Lease Obligations), to the extent such expense
was deducted in computing Consolidated Net Income, plus (d) all depreciation,
amortization (including amortization of goodwill and other intangibles) and
other non-cash charges (excluding any non-cash charge constituting an
extraordinary item of loss or expense and any non-cash charge that requires an
accrual of or a reserve for cash charges for any future period) of such person
for such period to the extent such depreciation, amortization and other non-cash
charges were deducted in computing Consolidated Net Income, plus (e) one-third
of all operating lease payments of such person paid or accrued during such
period, in each case, on a consolidated basis and determined in accordance with
GAAP, plus (f) without duplication, the amount of Accounts Receivable Discount
attributable to sales of accounts receivable by such person
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and its Subsidiaries to the Accounts Receivable Subsidiary during such period to
the extent such Account Receivable Discount was deduced in computing
Consolidated Net Income for such period.
"Consolidated Net Income" means, with respect to any person for any
period, the aggregate of the Net Income of such person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that
(i) the Net Income of any person that is not a Subsidiary or that is
accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid
to the referent person or a Wholly Owned Subsidiary of the referent
person,
(ii) the Net Income of any Subsidiary of the referent person shall be
excluded to the extent that the declaration or payment of dividends
or similar distributions by that Subsidiary of that Net Income is
not at the date of determination permitted without any prior
governmental approval (which has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its
stockholders,
(iii) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition
shall be excluded, and
(iv) the cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Worth" means, with respect to any person, the sum of (i)
the consolidated equity of the common stockholders of such person and its
consolidated Subsidiaries plus (ii) the respective amounts reported on such
person's most recent balance sheet with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such person upon issuance of such preferred
stock, less (x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business)
subsequent to the date of the SFC Note indentures in the book value of any asset
owned by such person or a consolidated Subsidiary of such person, (y) all
investments in unconsolidated Subsidiaries and in persons that are not
Subsidiaries (except, in each case, Permitted Investments), and (z) all
unamortized debt discount and expense and unamortized deferred charges, all of
the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Specialty Foods or Specialty Foods Acquisition
Corp. who (i) was a member of such Board of Directors on the date of the SFC
Note indentures or (ii) was nominated for election or elected to such Board of
Directors with the affirmative vote of a
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majority of the Continuing Directors who were members of such Board at the time
of such nomination or election.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means, with respect to the SFC 10 1/4% Senior Notes,
the SFC 11 1/8% or the SFC Subordinated Notes, any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date on which the SFC 10 1/4% Senior Notes, the SFC 11 1/8% Senior Notes
or SFC Subordinated Notes, as the case may be, mature.
"85% Owned Subsidiary" of a person means any Subsidiary of such person at
least 85% of the outstanding Capital Stock or other ownership interests
(including at least 51% of the outstanding voting Capital Stock or other voting
ownership interests) of which are owned directly or indirectly by such person.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of Specialty Foods and its
Subsidiaries (other than under the Term Loan Agreement, the Revolving Credit
Agreement and the SFC Note indentures) in existence on the date of the SFC Note
indentures, until such amounts are repaid.
"First Tier Subsidiaries" direct Wholly Owned Subsidiaries of Specialty
Foods on the date of the indenture and any such subsidiaries acquired thereafter
other than the Accounts Receivable Subsidiary.
"Fixed Charge Coverage Ratio" means with respect to any person for any
period, the ratio of the Consolidated Cash Flow of such person for such period
to the Fixed Charges of such person for such period. In the event that Specialty
Foods or any of its Subsidiaries incurs or redeems any Indebtedness (other than
revolving credit borrowings) or issues or redeems preferred stock or consummates
any Material Acquisition subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the event for
which the calculation of the Fixed Charge Coverage Ratio is made, then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, or the consummation of such Material Acquisition,
as if the same had occurred at the beginning of the applicable period. For
purposes of calculating the Fixed Charge Coverage Ratio of Specialty Foods for
any period commencing prior to the date of the Refinancing Transactions, pro
forma effect shall be given to the Refinancing Transactions and the financing
thereof as if the same had occurred at the beginning of such period.
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"Fixed Charges" means, with respect to any person for any period, the sum
of (a) consolidated interest expense of such person for such period, whether
paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments and the interest component of any payments associated
with Capital Lease Obligations but excluding amortization of deferred financing
fees), plus (b) the interest expense of any other person for such period with
respect to Indebtedness that is guaranteed by the referent person, plus (c) the
product of (i) all cash dividend payments (and non-cash dividend payments in the
case of a person that is a Subsidiary) on any series of preferred stock of such
person, times (ii) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such person, expressed as a decimal, plus (d) one-third of
all operating lease payments of such person paid or accrued during such period,
in each case, on a consolidated basis and in accordance with GAAP, plus (e) the
amount of Accounts Receivable Discount attributable to sales of accounts
receivable by such person and its Subsidiaries to the Accounts Receivable
Subsidiary during such period.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
which are in effect on the date of the SFC Note indentures.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Hedging Obligations" means, with respect to any person, the obligations
of such person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any person, the principal amount of
any indebtedness of such person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property (including pursuant to capital leases) or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such person prepared in accordance with
GAAP, and also includes, to the extent not otherwise included, the guarantee of
items that would be included within this definition.
"Investments" means, with respect to any person, all investments by such
person in other persons (including Affiliates) in the forms of loans (including
guarantees), advances
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or capital contributions (excluding commission, travel, relocation and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in New York City or at a place of payment are authorized by law or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Material Acquisition" means any material acquisition of a business,
Capital Stock, property or assets or any other material transaction as a result
of which a person becomes a Subsidiary of Specialty Foods. For the purposes of
this definition, an acquisition or other transaction shall be deemed "material"
if it has an aggregate value of $5 million or more.
"Net Income" means, with respect to any person, the net income (loss) of
such person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with any sale of assets Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Non-Recourse Indebtedness" of any person means Indebtedness of such
person that
(i) is not guaranteed by any other person (except a Wholly Owned
Subsidiary of the referent person),
(ii) is not recourse to and does not obligate any other person (except a
Wholly Owned Subsidiary of the referent person) in any way,
(iii) does not subject any property or assets of any other person (except
a Wholly Owned Subsidiary of the referent person), directly or
indirectly, contingently or otherwise, to the satisfaction thereof,
and
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(iv) is not required by GAAP to be reflected on the financial statements
of any other person (other than a Subsidiary of the referent person)
prepared in accordance with GAAP.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness. With respect to the
SFC Subordinated Notes, "Obligations" shall include, without limitation,
liabilities in respect of any indemnity, any reimbursement, compensation or
contribution obligations, any liquidated damage provision (including Liquidated
Damages), any breach of representation or warranty or any rights of redemption
or rescission under the SFC Subordinated Note indenture, the Purchase
Agreements, the Registration Rights Agreement or by law or otherwise (other than
amounts payable to the SFC Subordinated Note trustee pursuant to the provisions
of the SFC Subordinated Note indenture with respect to compensation and
indemnification of the SFC Subordinated Note trustee).
"Paying Agent" means United States Trust Company of New York.
"Permitted Investments" means
(a) any Investments in Specialty Foods or in an 85% Owned Subsidiary of
Specialty Foods that is engaged in the same or a similar or related
line of business as Specialty Foods or any of its Subsidiaries were
engaged in on the date of the SFC Note indentures;
(b) any Investments in Cash Equivalents;
(c) Investments by Specialty Foods or any Subsidiary of Specialty Foods
in a person that is engaged in the same or a similar or related line
of business as Specialty Foods or any of its Subsidiaries were
engaged in on the date of the SFC Note indentures, if as a result of
such Investment (i) such person becomes an 85% Owned Subsidiary of
Specialty Foods or (ii) such person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all
of its assets to, or is liquidated into, Specialty Foods or an 85%
Owned Subsidiary of Specialty Foods;
(d) Investments in agricultural commodities futures, options and other
hedging obligations in the ordinary course of business; and
(e) Investments in any Person other than Specialty Foods Acquisition
Corp. or a Subsidiary of Specialty Foods Acquisition Corp. that is
not also a Subsidiary of Specialty Foods (in addition to Investments
permitted by the foregoing clauses (a) through (d)) that, in the
aggregate, do not exceed $25 million at any one time outstanding.
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"Permitted Liens" means
(a) Liens on the Capital Stock of the First Tier Subsidiaries and the
Accounts Receivable Subsidiary and other assets of Specialty Foods,
if any, securing Senior Term Debt;
(b) Liens securing the Senior Revolving Debt;
(c) Liens in favor of Specialty Foods and its Wholly Owned Subsidiaries;
(d) Liens on property of a person existing at the time such person is
merged into or consolidated with Specialty Foods or any Subsidiary
of Specialty Foods; provided, that such Liens were in existence
prior to the contemplation of such merger or consolidation;
(e) Liens on property existing at the time of acquisition thereof by
Specialty Foods or any Subsidiary of Specialty Foods; provided, that
such Liens were in existence prior to the contemplation of such
acquisition;
(f) Liens existing on the date of the SFC Note indentures and renewals,
extensions and replacements thereof; provided, that such renewals,
extensions or renewals shall not apply to any property or assets not
previously subject to such Liens or increase the principal amount of
Obligations secured thereby;
(g) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently pursued;
provided, that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor;
(h) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlords' or other like Liens arising in the ordinary course of
business;
(i) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
(j) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like
nature incurred in the ordinary course of business;
(k) easements, rights-of-way, encroachments and other survey defects,
restrictions and other similar encumbrances and title defects which,
in the aggregate, do not in any case materially detract from the
value of the
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property subject thereto or materially interfere with the ordinary
conduct of the business of Specialty Foods and its Subsidiaries;
(l) any Lien arising pursuant to any order of attachment, distraint or
other legal process arising in connection with court or arbitration
proceedings so long as the execution or other enforcement thereof is
effectively stayed, the claims secured thereby are being contested
in good faith by appropriate proceedings, adequate reserves have
been established with respect to such claims in accordance with GAAP
and no Default or Event of Default would result thereby;
(m) licenses for the use of intellectual property rights or like
intangible assets; and
(n) Liens incurred in the ordinary course of business of Specialty Foods
or any Subsidiary of Specialty Foods with respect to obligations
that do not exceed $5 million at any one time outstanding and that
are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit).
"Principals" means Haas Wheat & Partners Incorporated, Acadia Partners,
L.P. and Keystone, Inc.
"Receivables Trust" means a trust organized solely for the purpose of
securitizing the accounts receivable held by the Accounts Receivable Subsidiary
that
(a) shall not engage in any business other than (i) the purchase of
accounts receivable or participation interests therein from the
Accounts Receivable Subsidiary and the servicing thereof, (ii) the
issuance of and distribution of payments with respect to the
securities permitted to be issued under clause (b) below and (iii)
other activities incidental to the foregoing,
(b) shall not at any time incur Indebtedness or issue any securities,
except (i) certificates representing undivided interests in the
Trust issued to the Accounts Receivable Subsidiary and (ii) debt
securities issued in an arm's length transaction for consideration
solely in the form of cash and Cash Equivalents, all of which (net
of any issuance fees and expenses) shall promptly be paid to the
Accounts Receivable Subsidiary, and
(c) shall distribute to the Accounts Receivable Subsidiary as a
distribution on the Accounts Receivable Subsidiary's beneficial
interest in the Receivables Trust no less frequently that once every
six months all available cash and Cash Equivalents held by it, to
the extent not required for reasonable operating expenses or
reserves therefor or to service any securities issued pursuant to
clause (b) above that are not held by the Accounts Receivable
Subsidiary.
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"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Agreement" means that certain Amended and Restated
Revolving Credit Agreement, dated as of July 17, 1995 by and among certain
Subsidiaries of Specialty Foods, Chemical Bank and the other lenders party
thereto, providing for up to $125 million in aggregate principal amount of
revolving loans and letters of credit, together with any replacement or
additional loan agreement or agreements, and including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, supplemented, extended,
modified, renewed, refunded, replaced or refinanced from time to time, whether
or not with the same lenders.
"Senior Revolving Debt" means all Obligations from time to time
outstanding under the Revolving Credit Agreement.
"Senior Term Debt" means all Obligations from time to time outstanding
under the Term Loan Agreement.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulations S-X,
promulgated pursuant to the Securities Act of 1933, as amended, as such
Regulation is in effect on the date of the SFC Note indentures.
"Specified Party" with respect to any Principal means (A) any controlling
stockholder or partner, a direct or indirect 80% (or more) owned Subsidiary, or
spouse or immediate family member (in the case of an individual) of such
Principal, (B) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A) or the
succeeding Clause (D) or (E), (C) any partner or stockholder of any Principal as
of the date of the SFC Note indentures who acquires any assets or voting stock
of Specialty Foods or Specialty Foods Acquisition Corp. pursuant to a general
distribution by such Principal to each of its partners or stockholders, (D) any
officer or director of any principal as of the date of the SFC Note indentures
or (E) co-investment entities established by any Principal within 90 days of the
date of the SFC Note indentures and controlled by such principal, any affiliated
party (including any officer or director) of such Principal or of the general
partner of such Principal (or of the general partner of any general partner of
such Principal) or any combination of the foregoing; provided, however, that (x)
each of Douglas D. Wheat, Mark W. Stephens, Thomas L. Harrison and HWP Specialty
Partners, L.P. shall be deemed a Specified Party of Haas Wheat & Partners
Incorporated and (y) any officer or director of Oak Hill Partners, Inc. as of
the date of the SFC Note indentures shall be deemed a Specified Party of Acadia
Partners, L.P. and Keystone, Inc.
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"Subsidiary" of any person means any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by such person or one or more of
the other Subsidiaries of that person or a combination thereof; provided,
however, that the Accounts Receivable Subsidiary and its Subsidiaries shall not
be deemed Subsidiaries of Specialty Foods or of any of its other Subsidiaries.
"Tax Sharing Agreement" means that certain tax sharing agreement, dated as
of the date of the SFC Note indentures, by and between Specialty Foods and
Specialty Foods Acquisition Corp., as in effect on the date of the SFC Note
indentures.
"Term Loan Agreement" means that certain Term Loan Agreement, dated as of
July 17, 1995, by and among Specialty Foods, Chemical Bank and the other lenders
party thereto, providing for $175 million in aggregate principal amount of term
loans, together with any replacement or additional credit agreement or
agreements, and including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, supplemented, extended, modified, renewed, refunded, replaced or
refinanced from time to time, whether or not with the same lenders.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled by and
published in the most recent Federal Reserve Statistical Release H.15 (519) that
has become publicly available at least two Business Days prior to the date fixed
for prepayment (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the then
remaining Weighted Average Life to Maturity of the applicable SFC Notes;
provided, that if the Weighted Average Life to Maturity of such SFC Notes is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Weighted Average Life to Maturity of such SFC Notes is
less than one year, the weekly average yield on actually traded United States
securities adjusted to a constant maturity of one year shall be used.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other scheduled required payments
of principal, including payment at final maturity, in respect thereof, by (y)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any person means a Subsidiary of such person
all of the outstanding Capital Stock or other ownership interests of which
(other than
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directors' qualifying shares) shall at the time be owned by such person or by
one or more Wholly Owned Subsidiaries of such person or by such person and one
or more Wholly Owned Subsidiaries of such person.
"Yield Protection Amount" means, with respect to the SFC Notes, the
greater of (i) 1.0% of the principal amount of the applicable SFC Notes to be
redeemed and (ii) the excess, expressed as a percentage of the total principal
amount of the applicable SFC Notes outstanding on the date of determination and
applied to the principal amount of such Notes to be redeemed, of (A) the present
value of all remaining required interest and principal payments due on all such
Notes outstanding on the date of determination through the final stated maturity
of all such Notes, computed using a discount rate equal to the Treasury Rate
plus the Applicable Spread, over (B) the principal amount of all such Notes
outstanding on the date of determination.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offers in exchange for initial notes acquired by it as
a result of market-making or other trading activities may be deemed to be an
underwriter within the meaning of the Securities Act and, therefore, must
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales, offers to resell or other transfers of the exchange
notes received by it in the exchange offers. Accordingly, each such
broker-dealer must acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of these
exchange notes. The letter of transmittal states that by acknowledging that it
will delver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an underwriter within the meaning of the Securities Act.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of exchange notes received in
exchange for initial notes where these initial notes were acquired as a result
of market-making activities or other trading activities. We have agreed that,
starting on the consummation of the exchange offers, and ending on the close of
business 180 days after the completion of the exchange offers, we will make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offers may be sold from time to time in one or more
transactions in the over-the-counter markets, in negotiated transactions,
through the writing of options on the exchange notes or a combination of these
methods of resale, at market prices prevailing at the time of resale, at prices
related to these prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through such broker-dealer and/or
the purchasers of any such exchange notes. Any broker-dealer that resells
exchange notes that were received by it for its own account pursuant to the
exchange offers and any broker or dealer that participates in a distribution of
these exchange notes may be deemed to be an underwriter within the meaning of
the Securities Act and any profit of any such resale of exchange notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of our counsel, Paul, Weiss, Rifkind, Wharton & Garrison,
the following discussion is an accurate general description of certain of the
material anticipated United States Federal income tax consequences of the
acquisition, ownership, and disposition of exchange notes by U.S. holders (as
defined below). This summary is based upon current laws, regulations, rulings,
and judicial decisions all of which are subject to change, possibly
retroactively. This summary deals only with holders that hold SFC Notes or
initial notes and will hold exchange notes as capital assets within the meaning
of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"),
and does not address tax considerations applicable to investors that may be
subject to special tax rules such as banks, insurance companies, tax-exempt
organizations, persons that will hold notes as part of an integrated investment
(including a "straddle") comprised of exchange notes and one or more other
positions, dealers in securities or holders of, initial notes and/or exchange
notes that are not U.S. holders (as defined below). In addition, this discussion
does not consider the effect of any state, local, foreign, estate, gift or other
tax laws. Investors considering acquiring exchange notes pursuant to the
exchange offer should consult their own tax advisors with respect to the
application of the Federal income tax laws to their particular situations, as
well as any tax consequences arising under the laws of any state, local or
foreign taxing jurisdiction.
As used in this prospectus, the term U.S. holder means a beneficial owner
of notes that is, for United States Federal income tax purposes, (1) a citizen
or resident of the United States, (2) a domestic corporation or other entity
taxable as a corporation, (3) an estate the income of which is subject to United
States Federal income taxation regardless of its source, (4) a trust if (A) a
United States court is able to exercise supervision over the administration of
the trust and (B) one or more United States persons have authority to control
all substantial decisions of the trust, or (5) otherwise subject to United
States Federal income taxation with respect to its worldwide income on a net
income basis.
The Treatment of Holders of Private Exchange Notes
Taxation of Holders of Private Exchange Notes on the Exchange
In the opinion of our counsel, Paul, Weiss, Rifkind, Wharton & Garrison,
the exchange of an outstanding private exchange note for an exchange note will
not be a taxable event to a holder of our private exchange note, and a holder
will not recognize any taxable gain or loss as a result of such an exchange.
Accordingly, a holder will have the same adjusted basis and holding period in an
exchange note that was received in exchange for our private exchange note as it
had in our outstanding private exchange note immediately before such exchange.
Further, the tax consequences of ownership and disposition of such an exchange
note will be the same as the tax consequences of ownership and disposition of
our outstanding private exchange note.
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The Treatment of Exchange Notes Received in Exchange for Private Exchange
Notes
Payments of Stated Interest and Original Issue Discount
A holder of an 11 1/4% Senior Note, a 12 1/8% Senior Note, or a
Subordinated Note that is received in exchange for our private exchange note
will be required (absent an election described below to treat all interest on
the note as original issue discount) to report as income for U.S. Federal income
tax purposes the portion of the stated interest on such exchange note that is
"qualified stated interest" in accordance with the holder's method of accounting
for tax purposes. Qualified stated interest on a note is the stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate.
Such exchange notes that are received in exchange for our private exchange
notes will have original issue discount for Federal income tax purposes.
Consequently, holders of such exchange notes will be required to include
original issue discount in ordinary income over the period that they hold such
notes on the basis of a constant yield method.
Because such exchange notes are treated for Federal income tax purposes as
the same as our private exchange notes, the amount of original issue discount on
such an exchange note will be calculated as if the exchange note and the private
exchange note were a single note that was issued at the time such private
exchange note was issued, for an issue price equal to the issue price of the
private exchange note, and any accrued original issue discount on the private
exchange note at the time of the exchange will carry over and be treated as
accrued original issue discount on the exchange note. The issue price of each of
our private exchange notes is its stated principal amount less the amount
allocated to any 11% Debentures received in exchange for such private exchange
note and such 11% Debentures pursuant to the "investment unit" rules. Pursuant
to these rules, when a note is issued together with certain property, the issue
price of the note should be allocated to each of the note and property in
proportion to their relative fair market values.
Except as set forth below under "--Acquisition Premium" and "--Bond
Premium," the amount of original issue discount on such an exchange note will be
equal to the excess of (i) the sum of the principal amount due at maturity plus
the amount of certain additional payments set forth below over (ii) the issue
price of such exchange note. Any amount of original issue discount included in
income will increase a holder's adjusted tax basis in such exchange notes, and
any payments (other than payments of qualified stated interest), including
additional payments described below, will decrease a holder's adjusted tax basis
in such exchange notes. Such payments will not be subject to Federal income tax.
The additional payments described in the preceding paragraph are as
follows: (i) in the case of holders of 11 1/4% Senior Notes or 12 1/8% Senior
Notes, the amount of additional interest on SFC 10 1/4% Senior Notes or 11 1/8%
Senior Notes accepted for exchange for our private exchange notes, commencing
April 1, 1999, and any other payments to be made on the 11 1/4% Senior Notes or
12 1/8% Senior Notes other
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than qualified stated interest; and (ii) in the case of holders of Subordinated
Notes, the amount the Non-Redemption Premium, the amount of interest on a
Subordinated Note payable in cash or in PIK Subordinated Notes, the amount of
additional interest on the SFC Subordinated Notes accepted for exchange for our
private exchange notes at the rate of 2% per annum, commencing April 1, 1999,
payable in cash or in PIK Subordinated Notes, and any other payments to be made
on the Subordinated Notes other than qualified stated interest. The amount of
such interest actually paid in additional PIK Subordinated Notes will be taken
into account as set forth below under "Issuance of PIK Subordinated Notes as
Additional Interest on SFC Subordinated Notes and Exercise of Election to Issue
PIK Subordinated Notes on the Subordinated Notes."
Election to Treat All Interest as Original Issue Discount
A holder of an exchange note, subject to certain limitations, may elect to
include in gross income for Federal income tax purposes all interest that
accrues on such note by using the constant yield method described above. For
purposes of the election, interest includes all stated and unstated interest,
acquisition discount, original issue discount, de minimis original issue
discount, market discount, and de minimis market discount, as adjusted by any
amortizable bond premium or acquisition premium (as discussed below). In
applying the constant yield method to a note with respect to which an election
is made, the issue price of the note will equal the electing holder's adjusted
basis in the note immediately after its acquisition, the issue date of the note
will be the date of its acquisition, and no payments on the note will be treated
as payments of qualified stated interest. This election is generally applicable
only to the note with respect to which it is made and may not be revoked without
the consent of the Internal Revenue Service. Such an election, if made in
respect of a market discount bond, will constitute an election to include market
discount in income currently on all market discount bonds held by such holder
during or after the taxable year in which the note is acquired. See the
discussion below under "--Market Discount." If the election is made with respect
to a note with amortizable bond premium, the holder will be deemed to have
elected to apply amortizable bond premium against interest with respect to all
debt instruments with amortizable bond premium held by the electing holder
during or after the taxable year in which the note is acquired. See the
discussion below under "--Bond Premium."
Issuance of PIK Subordinated Notes as Additional Interest on SFC
Subordinated Notes and Exercise of Election to Issue PIK
Subordinated Notes on the Subordinated Notes
In the case of holders who receive PIK Subordinated Notes in lieu of
certain interest on any SFC Subordinated Notes previously held by such holder
and in the event that the Issuer elects to issue PIK Subordinated Notes in
respect of paying cash interest to holders of Subordinated Notes, such issuance
of PIK Subordinated Notes will not be treated, for United States Federal income
tax purposes, as a payment of interest, and the Subordinated Notes will be
deemed to be "reissued" solely for purposes for computing the amount of original
issue discount includible in income during the then remaining term of the
Subordinated Notes. Under these rules, the Subordinated Notes will be deemed to
be reissued at their then adjusted issue price, and the amount of original issue
discount includible in ordinary income over the remaining term of the exchange
notes, determined on the basis of a constant yield method, will equal the excess
of the (i) the sum of the principal amount due at maturity of the Subordinated
Notes and PIK Subordinated Notes
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issued in lieu of cash payments, plus all remaining cash payments of stated
interest and the amount of the Non-Redemption Payment on the Subordinated Notes
and PIK Subordinated Notes over (ii) the adjusted issue price of the
Subordinated Notes.
Applicable High Yield Debt Obligations
The exchange notes that are received in exchange for our private exchange
notes will constitute "applicable high yield debt obligations" ("AHYDOs") for
Federal income tax purposes if their yield to maturity is equal to or greater
than the sum of the applicable Federal rate (the "AFR") plus five percentage
points. If the exchange notes are AHYDOs, the Issuer will not be entitled to
deduct original issue discount that accrues with respect to such notes until
amounts attributed to such original issue discount are paid in cash. In
addition, to the extent the yield to maturity of such notes exceeds the sum of
the AFR plus six percentage points, the Issuer will not be entitled to claim a
deduction for interest expense, for Federal income tax purposes, that is
attributable to such excess yield.
Market Discount
The market discount rules generally provide that if a holder of an
exchange note that is received in exchange for our private exchange note
purchased the note, subsequent to the original offering, for an amount that is
less than the "revised issue price" (the sum of the issue price of the exchange
note and the aggregate amount of original interest discount includible in the
gross income of all holders for periods before the acquisition of the exchange
note by such holder, which probably should be reduced by, although it is not
expressly stated in the Code, the amount of all payments previously received on
the exchange note) of the exchange note, the amount of the difference will be
treated as "market discount" for Federal income tax purposes, unless such
difference is less than a specified de minimis amount. Such a holder will be
required to treat any principal payment on, or any gain on the sale, exchange,
retirement or other disposition of, a exchange note as ordinary income to the
extent of the market discount which has not previously been included in income
and is treated as having accrued on such exchange note at the time of such
payment or disposition. In addition, the holder may be required to defer, until
the maturity of the note or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such exchange note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the exchange note, unless
the holder elects to accrue on a constant interest method. A holder of an
exchange note may elect to include market discount in income currently as it
accrues (on either a ratable or constant interest method), in which case the
rule described above regarding deferral of interest deductions will not apply.
This election to include market discount in income currently, once made, applies
to all market discount obligations acquired on or after the first taxable year
to which the election applies and may not be revoked without the consent of the
Internal Revenue Service.
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Acquisition Premium
The acquisition premium rules generally provide that if a holder of an
exchange note that is received in exchane for our private exchange note
purchased the note, subsequent to the original offering, for an amount that is
greater than the "adjusted issue price" (the sum of the issue price of the
exchange note and the aggregate amount of original interest discount includible
in the gross income of all holders for periods before the acquisition of the
exchange note by such holder, reduced by the amount (other than qualified stated
interest) of all payments previously received on the exchange note) of the
exchange note, the amount of such excess will be treated as "acquisition
premium" for Federal income tax purposes, and the amount of original issue
discount that the holder includes in gross income is reduced to reflect such
acquisition premium. Acquisition premium is allocated on a pro rata basis to
each accrual of original issue discount reducing original issue discount by a
constant fraction, the numerator of which is the excess of the adjusted basis of
the exchange note over its adjusted issue price, and the denominator of which is
the excess of the sum of all amounts (other than qualified stated interest)
payable on the exchange note after the purchase date over its adjusted issue
price. Alternatively, a holder may elect to amortize acquisition premium on a
constant yield basis, treating the holder's basis in the exchange note as the
exchange note's issue price.
Bond Premium
If a subsequent holder's tax basis in a exchange note that is received in
exchange for our private exchange note exceeds the sum of all amounts (other
than qualified stated interest) payable on such note after the acquisition date,
such excess would be treated as "amortizable bond premium." The Holder may elect
to amortize such excess over the period from the acquisition date of the note to
the maturity date. Amortizable bond premium allocable to a period may be offset
against qualified stated interest on the related security to the extent such
qualified stated interest for the period exceeds the holder's yield for the
period (the yield being the discount rate that, when used in computing the
present value of all remaining payments to be made (including qualified stated
interest) produces an amount equal to the holder's basis in the note. Additional
amortizable premium for a period may be treated as a bond premium deduction to
the extent that the holder's total interest inclusions on the note in prior
periods exceed the total amount treated by the holder as a bond premium
deduction on the note in prior periods. Any excess over such total interest
inclusions is carried forward to the next accrual period. A holder that elects
to amortize bond premium must reduce its adjusted basis in the note by the
amount of allowable amortization. An election to amortize bond premium applies
to the amortizable bond premium on all taxable bonds held during or after the
holder's taxable year for which the election is made and may be revoked only
with the consent of the Internal Revenue Service.
Sale, Exchange or Retirement of Exchange Notes Received in Exchange
for Outstanding SFC Notes
If an exchange note that is received in exchange for our private exchange
note is redeemed, sold or otherwise disposed of, a holder generally will
recognize gain or loss equal to the difference between the amount realized on
the sale or other disposition of such exchange note (to the extent such amount
does not represent accrued but unpaid interest) and such adjusted holder's
adjusted tax basis in such note. Except as set forth in
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the discussion of market discount set forth above, such gain or loss will be
capital gain or loss and will be long-term if the holder has held the exchange
note for more than one year at the time of the disposition. The deductibility of
capital losses is subject to limitations.
Reporting Requirements
The Issuer will provide annual information statements to holders of
exchange notes that are received in exchange for our private exchange notes and
to the Internal Revenue Service setting forth the amount of original issue
discount determined to be attributable to each of the exchange notes for that
year.
The Treatment of Holders of SFC Notes
Taxation of Holders of SFC Notes on the Exchange
In the opinion of our counsel, Paul, Weiss, Rifkind, Wharton & Garrison,
the exchange of an outstanding SFC Note for an exchange note should be a taxable
event to a holder of an outstanding SFC Note. Tendering holders should recognize
gain or loss equal to the difference between (i) the issue price of any exchange
notes received in the exchange offer and (ii) such holder's adjusted tax basis
in its SFC Notes exchanged therefor. Because the SFC Notes are not, and the
exchange notes will not be, traded on an established securities market, the
issue price of an exchange note that is received in exchange for an SFC Note
will be its stated principal amount. A holder's adjusted tax basis in its SFC
Notes will generally be equal to the amount paid for the SFC Notes and, in the
case of a holder that purchased such SFC Notes after their original issuance at
a discount to their initial issue price, market discount which such holder may
have elected to include in income and reduced by, in the case of a holder that
purchased the SFC Notes after their original issuance at a premium, any such
acquisition premium which the holder may have elected to deduct from income. The
gain or loss recognized on such an exchange, if any, will be capital gain or
loss, except to the extent that such gain is attributable to accrued market
discount that the holder has not elected to include in income. The portion
representing capital gain or loss will be long-term capital gain or loss if such
SFC Note was held for more than one year. The deductibility of capital losses is
subject to limitation. A holder's initial tax basis in an exchange note that was
received in exchange for an SFC Note will be equal to the stated principal
amount of such exchange note.
The Treatment of the 11 1/4% Senior Notes and the 12 1/8% Senior Notes
Received in Exchange for Outstanding SFC Notes
Payments of Interest
Interest payable on an 11 1/4% Senior Note that is received in exchange
for an outstanding SFC Note or a 12 1/8% Senior Note that is received in
exchange for an outstanding SFC Note will be includible in the income of a
holder in accordance with such holder's regular method of accounting.
166
<PAGE>
Market Discount
The market discount rules generally provide that if a subsequent holder of
such 11 1/4% Senior Note or such 12 1/8% Senior Note purchases the note for an
amount that is less than its stated principal amount, the amount of the
difference will be treated as "market discount" for Federal income tax purposes,
unless such difference is less than a specified de minimis amount. Such a holder
will be required to treat any principal payment on, or any gain on the sale,
exchange, retirement or other disposition of, an 11 1/4% Senior Note or a 12
1/8% Senior Note as ordinary income to the extent of the market discount which
has not previously been included in income and is treated as having accrued on
such 11 1/4% Senior Note or 12 1/8% Senior Note at the time of such payment or
disposition. In addition, the holder may be required to defer, until the
maturity of the note or its earlier disposition in a taxable transaction, the
deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such 11 1/4% Senior Note or 12 1/8%
Senior Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of an 11 1/4% Senior Note or a
12 1/8% Senior Note, unless the holder elects to accrue on a constant interest
method. A holder of an 11 1/4% Senior Note or a 12 1/8% Senior Note may elect to
include market discount in income currently as it accrues (on either a ratable
or constant interest method), in which case the rule described above regarding
deferral of interest deductions will not apply. This election to include market
discount in income currently, once made, applies to all market discount
obligations acquired on or after the first taxable year to which the election
applies and may not be revoked without the consent of the Internal Revenue
Service.
Bond Premium
If a subsequent holder's tax basis in such 11 1/4% Senior Note or 12 1/8%
Senior Note exceeds its stated principal amount, such excess would be treated as
"amortizable bond premium." The Holder may elect to amortize such excess over
the period from the acquisition date of the note to the maturity date.
Amortizable bond premium allocable to a period may be offset against qualified
stated interest on the related security to the extent such qualified stated
interest for the period exceeds the holder's yield for the period (the yield
being the discount rate that, when used in computing the present value of all
remaining payments to be made (including qualified stated interest) produces an
amount equal to the holder's basis in the note. Additional amortizable premium
for a period may be treated as a bond premium deduction to the extent that the
holder's total interest inclusions on the note in prior periods exceed the total
amount treated by the holder as a bond premium deduction on the note in prior
periods. Any excess over such total interest inclusions is carried forward to
the next accrual period. A holder that elects to amortize bond premium must
reduce its adjusted basis in the note by the amount of allowable amortization.
An election to amortize bond premium applies to the amortizable bond premium on
all taxable bonds held during or after the holder's taxable year for which the
election is made and may be revoked only with the consent of the Internal
Revenue Service.
167
<PAGE>
Sale, Exchange or Retirement of New 11 1/4% Senior Notes or New
12 1/8% Senior Notes
If an 11 1/4% Senior Note that is received in exchange for an outstanding
SFC Note or a 12 1/8% Senior Note that is received in exchange for an
outstanding SFC Note is redeemed, sold or otherwise disposed of, a holder
generally will recognize gain or loss equal to the difference between the amount
realized on the sale or other disposition of such 11 1/4% Senior Note or 12 1/8%
Senior Note (to the extent such amount does not represent accrued but unpaid
interest) and such holder's adjusted tax basis in such note. Except as set forth
in the discussion of market discount set forth above, such gain or loss will be
capital gain or loss and will be long-term if the holder has held the exchange
note for more than one year at the time of the disposition. The deductibility of
capital losses is subject to limitations.
The Treatment of the Subordinated Notes Received in Exchange for
Outstanding SFC Notes
Payments of Stated Interest and Original Issue Discount
A holder of a Subordinated Note that is received in exchange for an
outstanding SFC Note will be required (absent an election described below to
treat all interest on the note as original issue discount) to report as income
for U.S. Federal income tax purposes the portion of the stated interest on the
note that is "qualified stated interest" in accordance with the holder's method
of accounting for tax purposes. Qualified stated interest on a note is the
stated interest that is unconditionally payable in cash or property (other than
debt instruments of the issuer) at least annually at a single fixed rate.
Such Subordinated Notes will have original issue discount for Federal
income tax purposes. Consequently, holders of such Subordinated Notes will be
required to include original issue discount in ordinary income over the period
that they hold such notes on the basis of a constant yield method.
Except as set forth below under "--Acquisition Premium" and "--Bond
Premium," the amount of original issue discount on such a Subordinated Note will
be equal to the excess of (i) the sum of the principal amount due at maturity
plus the amount of the Non-Redemption Premium, the amount of the interest on a
Subordinated Note payable in cash or in PIK Subordinated Notes, and any other
payments to be made on the note other than qualified stated interest over (ii)
the issue price of such Subordinated Note. The amount of such interest actually
paid in additional PIK Subordinated Notes will be taken into account as set
forth below under "Exercise of Election to Issue PIK Subordinated Notes on the
Subordinated Notes."
Any amount of original issue discount included in income will increase a
holder's adjusted tax basis in such notes, and any payments (other than payments
of qualified stated interest) will decrease a holder's adjusted tax basis in
such notes. Such payments will not be subject to Federal income tax.
168
<PAGE>
Election to Treat All Interest as Original Issue Discount.
A holder of such a Subordinated Note, subject to certain limitations, may
elect to include in gross income for Federal income tax purposes all interest
that accrues on such note by using the constant yield method described above.
For purposes of the election, interest includes all stated and unstated
interest, acquisition discount, original issue discount, de minimis original
issue discount, market discount, and de minimis market discount, as adjusted by
any amortizable bond premium or acquisition premium (as discussed below). In
applying the constant yield method to a note with respect to which an election
is made, the issue price of the note will equal the electing holder's adjusted
basis in the note immediately after its acquisition, the issue date of the note
will be the date of its acquisition, and no payments on the note will be treated
as payments of qualified stated interest. This election is generally applicable
only to the note with respect to which it is made and may not be revoked without
the consent of the Internal Revenue Service. Such an election, if made in
respect of a market discount bond, will constitute an election to include market
discount in income currently on all market discount bonds held by such holder
during or after the taxable year in which the note is acquired. See the
discussion below under "--Market Discount." If the election is made with respect
to a note with amortizable bond premium, the holder will be deemed to have
elected to apply amortizable bond premium against interest with respect to all
debt instruments with amortizable bond premium held by the electing holder
during or after the taxable year in which the note is acquired. See the
discussion below under "--Bond Premium."
Exercise of Election to Issue PIK Subordinated Notes on the
Subordinated Notes
In the event that the Issuer elects to issue PIK Subordinated Notes in
respect of paying cash interest to holders of such Subordinated Notes, such
issuance of PIK Subordinated Notes will not be treated, for United States
Federal income tax purposes, as a payment of interest, and the Subordinated
Notes will be deemed to be "reissued" solely for purposes for computing the
amount of original issue discount includible in income during the then remaining
term of the Subordinated Notes. Under these rules, the Subordinated Notes will
be deemed to be reissued at their then adjusted issue price, and the amount of
original issue discount includible in ordinary income over the remaining term of
the exchange notes, determined on the basis of a constant yield method, will
equal the excess of the (i) the sum of the principal amount due at maturity of
the Subordinated Notes and PIK Subordinated Notes issued in lieu of cash
payments, plus all remaining cash payments of stated interest and the amount of
the Non-Redemption Payment on the Subordinated Notes and PIK Subordinated Notes
over (ii) the adjusted issue price of the Subordinated Notes.
Applicable High Yield Debt Obligations
The Subordinated Notes will constitute "applicable high yield debt
obligations" ("AHYDOs") for Federal income tax purposes if their yield to
maturity is equal to or greater than the sum of the applicable Federal rate (the
"AFR") plus five percentage points. If the Subordinated notes are AHYDOs, the
Issuer will not be entitled to deduct original issue discount that accrues with
respect to such notes until amounts attributed to such original issue discount
are paid in cash. In addition, to the extent the yield to maturity of such notes
exceeds the sum of the AFR plus six percentage points, the Issuer
169
<PAGE>
will not be entitled to claim a deduction for interest expense, for Federal
income tax purposes, that is attributable to such excess yield.
Market Discount
The market discount rules generally provide that if a holder of a
Subordinated Note purchased the note, subsequent to the original offering, for
an amount that is less than the "revised issue price" (the sum of the issue
price of the Subordinated Note and the aggregate amount of original interest
discount includible in the gross income of all holders for periods before the
acquisition of the Subordinated Note by such holder, which probably should be
reduced by, although it is not expressly stated in the Code, the amount of all
payments previously received on the Subordinated Note) of the Subordinated Note,
the amount of the difference will be treated as "market discount" for Federal
income tax purposes, unless such difference is less than a specified de minimis
amount. Such a holder will be required to treat any principal payment on, or any
gain on the sale, exchange, retirement or other disposition of, a Subordinated
Note as ordinary income to the extent of the market discount which has not
previously been included in income and is treated as having accrued on such
Subordinated Note at the time of such payment or disposition. In addition, the
holder may be required to defer, until the maturity of the exchange note or its
earlier disposition in a taxable transaction, the deduction of all or a portion
of the interest expense on any indebtedness incurred or continued to purchase or
carry such Subordinated Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Subordinated Note,
unless the holder elects to accrue on a constant interest method. A holder of a
Subordinated Note may elect to include market discount in income currently as it
accrues (on either a ratable or constant interest method), in which case the
rule described above regarding deferral of interest deductions will not apply.
This election to include market discount in income currently, once made, applies
to all market discount obligations acquired on or after the first taxable year
to which the election applies and may not be revoked without the consent of the
Internal Revenue Service.
Acquisition Premium
The acquisition premium rules generally provide that if a holder of a
Subordinated Note purchased the note, subsequent to the original offering, for
an amount that is greater than the "adjusted issue price" (the sum of the issue
price of the exchange note and the aggregate amount of original interest
discount includible in the gross income of all holders for periods before the
acquisition of the exchange note by such holder, reduced by the amount (other
than qualified stated interest) of all payments previously received on the
Subordinated Note) of the Subordinated Note, the amount of such excess will be
treated as "acquisition premium" for Federal income tax purposes, and the amount
of original issue discount that the holder includes in gross income is reduced
to reflect such acquisition premium. Acquisition premium is allocated on a pro
rata basis to each accrual of original issue discount reducing original issue
discount by a constant fraction, the numerator of which is the excess of the
adjusted basis of the Subordinated Note over its adjusted issue price, and the
denominator of which is the excess of the sum of all amounts (other than
qualified stated interest) payable on the Subordinated Note after the purchase
date over its adjusted issue price. Alternatively, a holder may elect to
amortize acquisition premium on
170
<PAGE>
a constant yield basis, treating the holder's basis in the Subordinated Note as
the Subordinated Note's issue price.
Bond Premium
If a subsequent holder's tax basis in a Subordinated Note exceeds the sum
of all amounts (other than qualified stated interest) payable on such note after
the acquisition date, such excess would be treated as "amortizable bond
premium." The Holder may elect to amortize such excess over the period from the
acquisition date of the note to the maturity date. Amortizable bond premium
allocable to a period may be offset against qualified stated interest on the
related security to the extent such qualified stated interest for the period
exceeds the holder's yield for the period (the yield being the discount rate
that, when used in computing the present value of all remaining payments to be
made (including qualified stated interest) produces an amount equal to the
holder's basis in the note. Additional amortizable premium for a period may be
treated as a bond premium deduction to the extent that the holder's total
interest inclusions on the note in prior periods exceed the total amount treated
by the holder as a bond premium deduction on the note in prior periods. Any
excess over such total interest inclusions is carried forward to the next
accrual period. A holder that elects to amortize bond premium must reduce its
adjusted basis in the note by the amount of allowable amortization. An election
to amortize bond premium applies to the amortizable bond premium on all taxable
bonds held during or after the holder's taxable year for which the election is
made and may be revoked only with the consent of the Internal Revenue Service.
Sale, Exchange or Retirement of Subordinated Notes
If a Subordinated Note that is received in exchange for an outstanding SFC
Notes is redeemed, sold or otherwise disposed of, a holder generally will
recognize gain or loss equal to the difference between the amount realized on
the sale or other disposition of such Subordinated Note (to the extent such
amount does not represent accrued but unpaid interest) and such holder's tax
basis in such note. Except as set forth in the discussion of market discount set
forth above, such gain or loss will be capital gain or loss and will be
long-term if the holder has held the exchange note for more than one year at the
time of the disposition. The deductibility of capital losses is subject to
limitations.
Reporting Requirements
The Issuer will provide annual information statements to holders of
Subordinated Notes that are received in exchange for outstanding SFC Notes and
to the Internal Revenue Service setting forth the amount of original issue
discount determined to be attributable to each of the Subordinated Notes for
that year.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest (including original issue discount) on
an exchange note and payment of the proceeds of the sale of an exchange note to
certain non-corporate, not otherwise exempt holders, and a 31% backup
withholding tax may apply to such payments if the holder (i) fails to furnish or
certify its correct taxpayer identification number to the payor in the manner
required, (ii) is notified by the Internal Revenue Service that it has
171
<PAGE>
failed to report payments of interest and dividends properly, or (iii) under
certain circumstances, fails to certify that it has not been notified by the
Internal Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments. Any amounts withheld under the backup
withholding rules from a payment to a holder will be allowed as a credit against
such holder's United States Federal income tax liability and may entitle the
holder to a refund.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF EXCHANGE NOTES IN LIGHT
OF HIS PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER OF
EXCHANGE NOTES SHOULD CONSULT HIS OWN ADVISOR AS TO THE SPECIFIC TAX
CONSEQUENCES TO SUCH HOLDER OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
EXCHANGE NOTES, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS, OR SUBSEQUENT VERSIONS THEREOF.
LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by Paul,
Weiss, Rifkind, Wharton & Garrison, New York, New York.
EXPERTS
The financial statements of Specialty Foods Corporation and subsidiaries
as of December 31, 1998 and 1997, and for each of the years in the three-year
period ended December 31, 1998, have been included in this prospectus and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere in this prospectus, and upon
the authority of said firm as experts in accounting and auditing.
172
<PAGE>
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
We are not currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934. However, we
will be subject to those requirements upon the completion of the exchange
offers. In addition, the indentures require that we file reports under the
Securities Exchange Act of 1934 with the Securities and Exchange Commission and
provide those reports to the trustee and holders of the notes. You can inspect
and copy at prescribed rates the reports and other information that we file with
the Securities and Exchange Commission at the public reference facilities
maintained by the Securities and Exchange Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also at the regional
offices of the Securities and Exchange Commission located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and the Citicorp Center at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You may obtain
information on the operation of the public reference facilities by calling the
Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
Exchange Commission also maintains an internet web site at http://www.sec.gov
that contains reports, proxy and information statements and other information.
You can also obtain copies of such materials from us upon request.
We have filed a registration statement on Form S-4 with the Securities and
Exchange Commission covering the exchange notes, and this prospectus is part of
our registration statement. For further information on us and the exchange
notes, you should refer to our registration statement and its exhibits. This
prospectus summarizes material provisions of contracts and other documents that
we refer you to. Since the prospectus may not contain all the information that
you may find important, you should review the full text of these documents. We
have included copies of these documents as exhibits to our registration
statement.
We have agreed that, whether or not we are required to do so by the rules
and regulations of the Securities and Exchange Commission, for so long as any of
the exchange notes remain outstanding, we will furnish you as a holder of the
exchange notes and will, if permitted, file with the Securities and Exchange
Commission (1) all quarterly and annual financial information that would be
required to be contained in a filing with the Securities and Exchange Commission
on Forms 10-Q and 10-K if we were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by our certified independent accountants, and (2) all reports that would be
required to be filed with the Securities and Exchange Commission on Form 8-K if
we were required to file such reports. In addition, for so long as any of the
exchange notes remain outstanding, we have agreed to make available to any
prospective purchaser of the exchange notes or beneficial owner of the notes in
connection with any sale of these notes the information required by Rule 144
under the Securities Act.
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INDEX TO FINANCIAL INFORMATION
Page
----
Annual Information
Independent Auditors' Report..............................................F-2
Consolidated Balance Sheets -
December 31, 1998 and 1997..............................................F-3
Consolidated Statements of Operations
Years ended December 31, 1998, 1997, and 1996...........................F-4
Consolidated Statements of Changes in Stockholders' Equity
Years ended December 31, 1998, 1997, and 1996...........................F-5
Consolidated Statements of Cash Flows -
Years ended December 31, 1998, 1997, and 1996...........................F-6
Notes to Financial Statements.............................................F-7
Interim Information
Condensed Consolidated Balance Sheets as of March 31, 1999 and
December 31, 1998......................................................F-25
Condensed Consolidated Statements of Operations for the three
months ended March 31, 1999 and 1998...................................F-26
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and 1998..........................................F-27
Notes to Financial Statements............................................F-28
All other financial statement schedules are omitted as not applicable or because
the required information is presented in the consolidated financial statements
or related notes.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Specialty Foods Corporation:
We have audited the accompanying consolidated balance sheets of Specialty Foods
Corporation and Subsidiaries as of December 31, 1998 and 1997 and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Specialty Foods
Corporation and Subsidiaries as of December 31, 1998 and 1997 and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998 in conformity with generally accepted accounting
principles.
KPMG LLP
Chicago, Illinois
March 19, 1999
F-2
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
December 31,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 5,880 $ 234,266
Accounts receivable, net 19,327 15,504
Inventories 23,366 20,188
Net assets of discontinued operations 86,632 65,192
Other current assets 7,234 7,157
--------- ---------
Total current assets 142,439 342,307
Property, plant, and equipment, net 234,944 146,023
Intangible assets, net 113,438 842
Other noncurrent assets 39,338 23,491
--------- ---------
Total assets $ 530,159 $ 512,663
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt $ 3,450 $ 2,561
Accounts payable 37,779 41,925
Accrued expenses 80,741 80,906
--------- ---------
Total current liabilities 121,970 125,392
Long-term debt 820,309 753,054
Due to Specialty Foods Acquisition Corporation 7,499 7,376
Other noncurrent liabilities 31,355 30,645
--------- ---------
Total liabilities 981,133 916,467
--------- ---------
Stockholders' equity:
Additional paid-in capital 275,000 275,000
Accumulated deficit (725,974) (678,804)
--------- ---------
Total stockholders' equity (450,974) (403,804)
--------- ---------
Total liabilities and stockholders' equity $ 530,159 $ 512,663
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Net sales $ 742,315 $ 718,105 $ 705,996
Cost of sales 329,567 321,851 328,422
--------- --------- ---------
Gross profit 412,748 396,254 377,574
--------- --------- ---------
Operating expenses:
Selling, distribution, general and
administrative expenses 379,794 367,051 349,463
Amortization of intangibles 1,471 900 7,032
Goodwill write-down -- -- 203,304
--------- --------- ---------
381,265 367,951 559,799
--------- --------- ---------
Operating profit (loss) 31,483 28,303 (182,225)
Other:
Interest expense, net 84,750 90,789 93,479
Other expense, net 3,129 4,729 9,132
--------- --------- ---------
Loss before income taxes (56,396) (67,215) (284,836)
Provision (benefit) for income taxes (507) 244 927
--------- --------- ---------
Loss from continuing operations (55,889) (67,459) (285,763)
Discontinued operations:
Earnings (loss) 10,324 31,404 (146,273)
Gain (loss) on disposal (601) 133,130 (14,514)
--------- --------- ---------
9,723 164,534 (160,787)
--------- --------- ---------
Income (loss) before extraordinary items (46,166) 97,075 (446,550)
Extraordinary items -- (5,714) --
--------- --------- ---------
Net income (loss) $ (46,166) $ 91,361 $(446,550)
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
(In thousands, except share data)
<TABLE>
<CAPTION>
Additional Cumulative
Common stock paid-in Accumulated Translation
-------------------------
Shares Amount Capital Deficit Adjustment
------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 100 -- $ 275,000 $(319,656) $ (837)
Dividend to parent -- -- -- (2,837) --
Cumulative translation adjustment -- -- -- -- 837
Net loss -- -- -- (446,550) --
------- --------- --------- --------- ---------
Balance at December 31, 1996 100 $ -- $ 275,000 $(769,043) $ --
Dividend to parent -- -- -- (1,122) --
Net loss -- -- -- 91,361 --
------- --------- --------- --------- ---------
Balance at December 31, 1997 100 $ -- $ 275,000 $(678,804) $ --
Dividend to parent -- -- -- (1,004) --
Net loss -- -- -- (46,166) --
------- --------- --------- --------- ---------
Balance at December 31, 1998 100 $ -- $ 275,000 $(725,974) --
======= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $ (55,889) $ (67,459) $(285,763)
Adjustments to reconcile to net cash from continuing
operating activities:
Depreciation and amortization 27,204 21,087 27,868
Debt issuance cost amortization 9,500 5,511 5,472
Write-down of goodwill -- -- 203,304
Loss on disposal of property, plant, and equipment, net 436 1,521 5,747
Changes in assets and liabilities, net of effects from acquisitions of
businesses:
Accounts receivable 8,916 6,241 14,612
Inventories 1,338 398 214
Prepaid expenses and other assets 274 1,576 (5,987)
Accounts payable (8,478) (9,093) 2,064
Accrued expenses and other (15,537) (13,809) (1,627)
--------- --------- ---------
Net cash used by continuing operating activities (32,236) (54,027) (34,096)
Net cash provided (used) by discontinued operations (11,717) (41,564) 27,055
--------- --------- ---------
Net cash used by operating activities (43,953) (95,591) (7,041)
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired (135,035) -- --
Net proceeds from divestitures of businesses -- 384,096 69,333
Capital expenditures (91,445) (36,071) (25,218)
Cash restricted for the purchase of property, plant
and equipment (8,017) -- --
Proceeds from sale leaseback, net -- -- 13,370
Other (5,061) (3,281) (727)
--------- --------- ---------
Net cash provided (used) by investing activities (239,558) 344,744 56,758
Cash flows from financing activities:
Increase (decrease) in revolving credit 75,000 (78,300) 5,700
Payments on long-term debt (6,115) (3,529) (2,303)
Payments of debt issuance costs (12,879) -- (3,738)
Issuance of redeemable preferred stock -- 19,500 --
Other (881) (738) (2,837)
--------- --------- ---------
Net cash provided (used) by financing activities 55,125 (63,067) (3,178)
Increase (decrease) in cash and cash equivalents (228,386) 186,086 46,539
Balance - beginning of year 234,266 48,180 1,641
Balance - end of year $ 5,880 $ 234,266 $ 48,180
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
(1) Company Background
Specialty Foods Acquisition Corporation ("SFAC") through its direct,
wholly-owned subsidiary, Specialty Foods Corporation ("SFC"), is a leading
producer, marketer and distributor of bakery products, including retail
bread, cookies and other baked goods. The continuing operations of SFC
consist of the following operating companies:
o Metz Baking Company ("Metz") - Metz is a leading retail bread
company serving a sixteen state area of the Midwestern United
States. Metz's product line includes breads, buns, rolls and
sweet goods.
o Mother's Cake & Cookie Co. ("Mother's") - Mother's is the
second largest retail cookie producer and distributor in the
Western United States. Mother's sells its branded cookie
products primarily to retail grocers.
o Archway Cookies, Inc. ("Archway") - Acquired in 1998, Archway
is one of the nation's leading cookie makers, producing more
than one billion cookies annually. Archway sells its branded
cookie products through a network of independent distributors
who resell to retail food outlets and chain stores throughout
the U.S. and Canada.
o Andre-Boudin Bakeries, Inc. ("Boudin") - Boudin is a leading
marketer of premium branded specialty breads and bread-related
products. Boudin sells most of its products through a chain of
46 bakery cafes and kiosks located in California and the
greater Chicago area.
The Company's discontinued operations are described in Note 3.
(2) Summary of Significant Accounting Policies
Basis of Presentation
The Company's financial statements are presented on a consolidated basis.
All significant intercompany accounts and transactions have been
eliminated. Acquisitions recorded as purchases are included in the
Consolidated Statement of Operations from the date of acquisition.
Divestitures reported as discontinued operations have been removed from
continuing operations and reclassified to discontinued operations in
accordance with Accounting Principles Board Opinion No. 30.
F-7
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
related disclosures at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain amounts included in the 1997 and 1996 financial statements have
been reclassified to conform to the manner in which the 1998 financial
statements have been presented.
Cash Equivalents
Cash equivalents represent investments in overnight bank deposits and
commercial paper with a maturity of less than three months.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined
principally by the first-in, first-out (FIFO) method.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost. Depreciation is
provided by the straight-line method over the assets' estimated useful
lives or, in the case of leasehold improvements, over the terms of the
leases, if shorter, as follows:
Years
-----
Buildings and improvements 7-40
Machinery and equipment 3-20
Office furniture and vehicles 3-10
Expenditures for maintenance, repairs, and minor replacements are charged
to current operations. Expenditures for major replacements and betterment
are capitalized.
The cost and related accumulated depreciation of property and equipment
retired or sold is eliminated from the property and equipment accounts at
the time of retirement or sale, and the resulting gain or loss is reported
in the Consolidated Statement of Operations.
F-8
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
Intangible Assets
Intangible assets, which consist primarily of the excess of cost over fair
value of net assets acquired, are amortized on a straight-line basis over
the periods of expected benefit, which range from five to forty years. The
Company annually evaluates whether events and circumstances have occurred
that indicate that the remaining estimated useful life of intangible
assets may warrant revision or that the remaining balance of intangible
assets may not be recoverable. When factors indicate that intangible
assets should be evaluated for possible impairment, the Company assesses
recoverability of intangible assets based on its expectations concerning
operating cash flows after interest and capital expenditures. An
impairment is recorded if the discounted value of such cash flows is less
than the recorded value of the intangible assets. The Company utilizes a
discount rate which reflects its weighted average cost of capital. Based
on application of this methodology, an impairment was recorded in 1996
(see Note 5).
Deferred Debt Issuance Costs
Deferred debt issuance costs are being amortized by the straight-line
method over the terms of the related debt agreements and are classified as
other noncurrent assets.
Advertising Costs
Advertising costs are expensed as incurred.
(3) Discontinued Operations
In March 1999, SFC signed a definitive agreement to sell its subsidiary,
H&M Food Systems Company, Inc. ("H&M"), for $132 million. H&M is a
producer of custom formulated, pre-cooked meat products that are sold
primarily to national restaurant chains and prepared-food producers. SFC
will realize net cash proceeds of approximately $110 million after it has
repurchased H&M's financed accounts receivables, established a $5 million
one-year escrow and paid transaction costs. Upon the closing of this
transaction, expected in the second quarter of 1999, SFC will report a
gain on the sale of H&M.
In addition, during 1997 and 1996 the Company divested of:
o Stella Foods, Inc. ("Stella") - One of the largest specialty
cheese producers in the United States with distribution to
retail grocers, foodservice accounts, and commercial food
processors. The sale of Stella was completed on December 5,
1997 for $405 million.
o Gai's Seattle French Baking Company ("Gai's") - A restaurant
and institutional bakery operation serving the northwestern
United States. The sale of Gai's was completed on February 24,
1997.
F-9
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
o San Francisco French Bread ("SFFB") - A sourdough hearth bread
operation located in California. The sale of SFFB was
completed on March 31, 1997.
o A restaurant and institutional bakery operated by Metz located
in Illinois. The sale of this bakery was completed on August
23, 1997.
o Bloch and Guggenheimer, Inc. ("B&G")/Burns & Ricker, Inc.
("B&R") - Pickle, pepper, and specialty snack food businesses
operated under common management. The sale of the combined
business of B&G/B&R was completed on December 27, 1996.
These divestitures have been reported as discontinued operations in the
accompanying financial statements in accordance with Accounting Principles
Board Opinion No. 30. Operating results for these businesses, including
revenues of $181,038, $935,424, and $1,333,194 for 1998, 1997, and 1996,
respectively, as well as the applicable goodwill write-down of $152,360 in
1996, have been reclassified to discontinued operations. No interest
expense has been allocated to discontinued operations.
In 1998, the earnings from discontinued operations relates solely to H&M.
The net loss on disposal of discontinued operations for 1998 consists of
adjustments to the estimated losses on the sale of Gai's, SFFB, and the
Illinois restaurant and institutional bakery. The net gain on disposal of
discontinued operations for 1997 consisted of the gain realized on the
sale of Stella and Gai's, an adjustment to the estimated loss on the
disposal of SFFB, and the loss realized on disposal of the Illinois
restaurant and institutional bakery. The net loss on disposal of
discontinued operations for 1996 consisted of the realized loss on the
sale of B&G/B&R, estimated loss on the sale of SFFB, and the 1996
operating losses from the measurement date through the disposal date of
B&G/B&R, SFFB and of Gai's.
Net assets of the discontinued operations as of December 31, 1998 and 1997
related to H&M and consisted of the following:
1998 1997
---- ----
Accounts receivable, net of allowance $ 3,587 $ 3,658
Inventories 16,824 15,388
Plant and equipment, net 53,205 41,852
Other assets 4,852 1,011
Goodwil, net 18,069 18,592
Accounts Payable (6,727) (10,058)
-------- --------
Accrued expenses and other liabilitiues $ 86,632 $ 65,192
======== ========
F-10
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
(4) Acquisitions
On October 26, 1998, SFC acquired all of the outstanding capital stock of
Archway, a privately held Michigan corporation, from the previous
stockholders. The purchase price totaled approximately $90,000 plus
$26,000 to repay certain indebtedness of Archway.
Additionally, in 1998, SFC also acquired four retail bakeries in separate
transactions for a total aggregate consideration of $19,600.
All of the acquisitions have been accounted for as purchases and,
accordingly, the respective purchase prices have been allocated to the
applicable assets and liabilities based upon their estimated fair values
as of the acquisition date. On a combined basis, the excess of the
purchase price over the fair values of the net assets acquired was
approximately $110,000 and has been recorded as goodwill, which is being
amortized on a straight-line basis over 40 years. The acquisitions were
funded by a combination of cash and borrowings under SFC's existing
revolving credit facility. Operating results of acquired businesses have
been included in the Consolidated Statements of Operations since their
respective acquisition dates.
The following unaudited pro forma consolidated results of operations are
presented as if the above acquisitions had been made at the beginning of
the periods presented.
1998 1997
--------- ---------
Net sales $ 831,533 $ 828,243
Net earnings (loss) from continuing operations $ (60,513) $ (70,188)
The consolidated pro forma information is not necessarily indicative of
the combined results that would have occurred had the acquisitions been
made at the beginning of the periods presented or the future results of
the combined operations and do not include the projected cost reductions
and revenue increases of the combined operations. Additionally, pro forma
net sales exclude sales of Archway's franchisees and third party
distributor mark-up.
(5) Goodwill Write-Down
As described under "Intangible Assets" in Note 2, "Summary of Significant
Accounting Policies", the Company annually evaluates its intangible
assets. Based on the Company's goodwill assessment, a write-down of
goodwill was recorded in the fourth quarter of 1996, which is presented in
the accompanying Consolidated Statements of Operations as follows:
Continuing operations $203,304
Discontinued operations 152,360
--------
$355,664
========
F-11
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
In determining the amounts of the goodwill write-down, the Company
developed its best estimate of future operating cash flows, after interest
and capital expenditures, over the remaining useful life of the goodwill.
The Company's estimates were based on recent historic financial trends and
then current market conditions. The goodwill of each business was
evaluated separately for impairment. Individual business unit sales growth
projections ranged from two to five percent. Interest costs were allocated
based on the relative level of investment in each business. Each of the
Company's fixed-rate debt obligations were assumed to be refinanced at
existing interest rates. The Company calculated the present value of
estimated future cash flows using a discount rate which represented its
weighted average cost of capital of 11.8% in 1996.
As of December 31, 1998, there was $109,745 of goodwill on the Company's
balance sheet resulting from acquisitions made during 1998. Management
believes the Company's remaining goodwill will be recovered over its
useful life.
(6) Acquisition Liabilities
In connection with the formation of the Company and subsequent
acquisitions, estimated liabilities were recorded for the expected cash
expenditures to consolidate facilities, streamline operations, and settle
environmental, legal and tax matters. In 1998, $4,450 of additional
estimated acquisition liabilities were recorded as a result of current
year acquisitions. Cash expenditures associated with acquisition
liabilities were $4,440, $14,043, and $10,593 for 1998, 1997, and 1996,
respectively. As of December 31, 1998, there are $15,797 of remaining
acquisition liabilities, of which $4,899 is classified as current.
(7) Extraordinary Items
In the first quarter of 1998, the Company refinanced its accounts
receivable, revolver, and term loan financing facilities. Due to this
early extinguishment of debt, the Company wrote-off deferred debt issuance
costs related to these facilities of $5,714 and has recorded them as
extraordinary items in 1997.
(8) Accounts Receivable
Specialty Foods Finance Corporation ("SFFC"), a wholly-owned subsidiary of
SFC, was established for the purpose of acquiring substantially all of the
trade accounts receivable generated by the operating subsidiaries of SFC.
Under the terms of the Accounts Receivable Facility ("Facility"), SFFC
sells for cash an undivided interest in eligible accounts receivable.
F-12
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
Under the terms of the Facility, the maximum amount of eligible
receivables that can be sold to the Facility is $75,000. The amount
outstanding under the Facility varies based upon the level of eligible
receivables and advance rate factors. As of December 31, 1998, the amount
outstanding under the Facility was $50,000. The discount on receivables
sold is included in other expense and totaled $2,445, $1,933, and $1,846
in 1998, 1997, and 1996, respectively.
Trade accounts receivable are reported net of the allowance for doubtful
accounts of $1,149 and $1,099 in 1998 and 1997, respectively.
(9) Inventories
The components of inventories are as follows:
1998 1997
-------- --------
Raw materials and packaging $ 12,244 $ 9,477
Work in progress 264 452
Finished goods 8,593 7,662
Other 3,209 2,681
-------- --------
24,310 20,272
Less obsolescence and other allowances (944) (84)
-------- --------
$ 23,366 $ 20,188
======== ========
(10) Property, Plant, and Equipment
The components of property, plant and equipment are as follows:
1998 1997
--------- ---------
Land $ 11,586 $ 10,898
Buildings and improvements 90,963 72,130
Machinery and equipment 136,732 104,676
Office furniture and vehicles 63,320 29,248
Construction in progress 36,734 8,639
--------- ---------
339,335 225,591
Less accumulated depreciation (104,391) (79,568)
--------- ---------
$ 234,944 $ 146,023
========= =========
Depreciation expense was $25,733, $20,187, and $20,836 in 1998, 1997, and
1996, respectively.
F-13
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
(11) Restricted Cash
In 1998, the Company entered into various agreements to purchase certain
machinery, equipment and building improvements. Funds were designated for
these purchases and deposited in an escrow account which amounted to
$7,915 as of December 31, 1998. The escrow account is classified as a
noncurrent asset.
(12) Accrued Expenses
The components of accrued expenses are as follows:
1998 1997
------- -------
Accrued payroll $ 8,782 $ 6,229
Other taxes payable 4,087 3,085
Workers' compensation 11,896 9,768
Compensated absences 7,491 6,236
Accrued interests 21,869 21,518
Acquisition liabilities 4,899 7,582
Other 21,717 26,488
------- -------
$80,741 $80,096
======= =======
(13) Long-Term Debt
Long-term debt consists of the following:
1998 1997
--------- ---------
Revolving Credit Facility $ 75,000 $ --
Term Loan Facility 169,080 173,750
10 1/4% Senior Notes due 2001 225,000 225,000
11 1/8% Senior Notes due 2002 150,000 150,000
11 1/4% Subordinated Notes due 2003 200,000 200,000
Other 4,679 6,865
--------- ---------
823,759 755,615
Less current portion (3,450) (2,561)
--------- ---------
$ 820,309 $ 753,054
========= =========
F-14
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
During March 1998, the Company refinanced its Revolving Credit Facility
("Revolver") and Term Loan Facility ("Term Loan") with a new syndicate of
financial institutions. Both facilities mature on January 31, 2000.
Proceeds from these facilities can be used to finance working capital
requirements and are available for other corporate purposes, including
acquisitions.
As required under the terms of the Revolver and Term Loan Agreements, the
Company reduced the commitment amount available under the Revolver from
$125,000 to $122,801 and the Term Loan was reduced to $169,080 with excess
asset sale proceeds during 1998. The Company is required to make quarterly
payments on the Term Loan in the amount of $434.
The Revolver bears an interest rate of LIBOR plus 250 basis points. The
Revolver is secured by the assets of the operating companies. Amounts
outstanding under the Revolver totaled $75,000 as of December 31, 1998. In
addition to amounts outstanding under the Revolver, letters of credit
commitments totaling $10,200 as of December 31, 1998 reduce available
funds under the Revolver.
The Term Loan bears an interest rate of LIBOR plus 375 basis points. The
Term Loan is secured by the assets of SFC and a pledge of the stock of
each of the direct subsidiaries of SFC.
Semi-annual interest payments are required through maturity on the 10 1/4%
Senior Notes and the 11 1/4% Subordinated Notes on February 15 and August
15 each year. Semi-annual interest payments are required through maturity
on the 11 1/8% Senior Notes on April 1 and October 1 each year.
The 10 1/4% and 11 1/8% Senior Notes and the 11 1/4% Senior Subordinated
are unsecured. During the fourth quarter of 1998, the Company commenced
private exchange offers for its publicly held debt. Under the offers, the
existing debt of SFC held by certain holders would be exchanged for the
debt of a new intermediate holding company. SFC is offering certain
holders of its existing notes the opportunity to exchange their existing
debt for new notes (the "New Notes") of another intermediate holding
company. The New Notes have substantially the same terms and covenants as
the existing notes. In addition, SFC is seeking the consent of its Term
Loan and Revolver lenders to amend existing agreements to conform to the
new holding company structure. The proposed exchange offer has not been
consummated. Remaining on the Company's balance sheet are unamortized
deferred financing fees of approximately $14,000 related to the existing
debt that is subject to the exchange offer. Upon the completion of the
exchange offer, this amount would be written off as an extraordinary item.
Other long-term debt consists primarily of miscellaneous notes payable
with interest rates ranging from 7.9% to 10.5% at December 31, 1998.
The provisions of the Term Loan and the Revolver contain covenants which
require the Company to maintain specified leverage and interest coverage
ratios. The Company also has other limitations regarding capital
expenditures, sales of assets, loans and investments, encumbrances of
assets and assumption of additional indebtedness. In addition, the
agreements governing the Term Loan and the Revolver and the indentures
governing the Senior Notes and the Subordinated Notes contain certain
restrictive covenants, including, to the detriment of the holders of the
SFAC Senior Debentures and the SFAC Senior Subordinated Debentures,
certain covenants that restrict
F-15
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
or prohibit (with de minimis exceptions) SFC's ability to pay dividends or
make other distributions to SFAC. Specifically, as a result of the
Company's net losses and accumulated deficit, SFC's ability to make
distributions to SFAC under the indentures of the Senior Notes and the
Subordinated Notes has been impaired and these indentures will require
modification before any such distribution to SFAC can be made.
Aggregate maturities of debt are as follows:
1999 $ 3,450
2000 243,308
2001 225,234
2002 150,259
2003 200,277
Thereafter 1,231
--------
Total aggregate maturities $823,759
========
Cash paid for interest was $82,508, $85,603, and $90,533 for the years
ended December 31, 1998, 1997, and 1996, respectively.
(14) Financial Instruments
Concentration of Credit Risk
The Company's exposure to credit loss in the event of nonpayment of
accounts receivable by customers is represented in the amount of those
receivables. The Company performs ongoing credit evaluations of its
customers' financial condition and generally requires no collateral from
those customers. As of December 31, 1998, the Company does not believe it
has any significant concentration of credit risk with respect to its trade
accounts receivable.
Financial Instruments With Off-Balance-Sheet Risk
During 1998, the Company entered into interest rate swap agreements to
reduce its exposure to changes in the cost of its variable rate borrowings
as required by its Term Loan Agreement. Under the interest rate swap
agreements, which expire in January 2000, the Company receives floating
rate payments from the counterparties based upon the three-month LIBOR and
makes fixed rate payments at 5.753% and 5.765% to the respective
counterparties. The payments are calculated based upon a notional
principal amount of $100,000. The net differential of interest to be paid
or received under the remaining agreements is recognized as incurred. In
1998, net payments totaling $30 were made to the counterparties.
Off-balance-sheet risk from the interest rate swap agreements at December
31, 1998 includes the risk associated with changes in market values and
interest rates. The counterparties to the agreements are major financial
institutions.
F-16
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
Fair Value of Financial Instruments
The Company's financial instruments include long-term debt and the
interest rate swap agreements. The estimated fair value and carrying
amount of long term debt including current maturities at December 31, 1998
are as follows:
Estimated
Carrying Fair
Amounts Values
--------- ---------
Financial liabilities:
Long-term debt, including
current maturities $ 823,759 $ 696,259
Interest rate swap agreements $ -- $ (906)
The fair value of long-term debt and the interest rate swap agreements
have been determined based on quoted market prices and market interest
rates at December 31, 1998.
(15) Lease Commitments
The Company leases equipment and facilities under various noncancelable
operating leases. Future minimum lease payments under all noncancelable
operating leases are as follows:
1999 $11,668
2000 10,879
2001 9,530
2002 8,337
2003 6,406
Thereafter 24,443
-------
Total minimum lease payments $71,263
=======
Total rental expense for 1998, 1997, and 1996 was $17,318, $19,557, and
$17,018 respectively.
In 1998, the Company purchased certain transportation and production
equipment which had been subject to operating lease arrangements. The cost
of purchasing these leased assets was approximately $35,400.
(16) Income Taxes
The provision (benefit) for income taxes for 1998, 1997, and 1996 relates
to state and Canadian income taxes payable (refundable). An effective tax
rate reconciliation is not presented because the Company has no federal
tax currently payable or deferred income tax expense due to its net
operating loss position.
F-17
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
The components of net deferred taxes are as follows:
1998 1997
------- -------
Deferred tax assets related to:
Accrued expenses and other liabilities $24,607 $20,670
Net operating losses and credits 63,820 44,514
Other 2,471 4,590
------- -------
Total deferred tax assets 90,898 69,774
Valuation allowance 72,906 53,878
------- -------
Total net deferred tax assets 17,992 15,896
Deferred tax liabilities related to:
Depreciation and amortization 17,992 15,541
Inventories -- 355
------- -------
Total deferred tax liabilities 17,992 15,896
Net deferred tax asset (liability) $ -- $ --
======= =======
At December 31, 1998, the Company has federal net operating loss carryforwards
of $163,000 including $9,000 of loss carryforwards from predecessor companies,
which are subject to limitations that may substantially limit future
utilization. Also at December 31, 1998, the Company has $91,000 of state net
operating loss carryforwards and $3,000 of state tax credit carryforwards. The
net operating loss carryforwards and state tax credits exclude H&M's allocable
portions. Net operating loss and credit carryforwards expire in varying amounts
through the year 2018.
Cash paid (received) for income taxes was $(613), $123 and $432 for 1998, 1997,
and 1996, respectively.
(17) Litigation and Other Contingencies
Litigation
The Company has retained liability with respect to a proceeding against
Stella. In 1993, Stella was alleged to have misappropriated confidential
and proprietary trade secrets of a competitor and infringed upon the
competitor's purported trademark. Stella has filed a cross complaint
against the competitor for predatory pricing practices. The proceeding is
scheduled for trial during the second quarter of 1999. The Company
continues to vigorously defend against the allegations and pursue its
claim. Although any litigation has an element of uncertainty, management
believes the
F-18
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
ultimate resolution of this matter will not have a material adverse effect
on the Company's financial condition or results of operations.
In the normal course of business activities, the Company is a party to
certain legal proceedings and claims. Although the outcome of such matters
cannot be determined with certainty, it is management's opinion that the
final outcome will not have a material adverse effect on the Company's
financial position or results of operations.
Other
Various operating subsidiaries are self-insured or retain a portion of
losses with the respect to workers' compensation claims. Accordingly, the
Company provides irrevocable letters of credit or surety bonds which total
$10,200 at December 31, 1998 to state regulatory agencies or insurance
companies.
(18) Employee Benefits
Pension and Other Post-retirement Benefits
Certain of the operating subsidiaries sponsor single-employer,
non-contributory, defined benefit pension plans. The operating
subsidiaries also participate in numerous multi-employer,
non-contributory, defined benefit pension plans. Substantially all of the
Company's employees are covered by the defined benefit or multi-employer
plans. Certain of the subsidiaries also sponsor post-retirement health
care benefit plans.
F-19
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
Benefits for employees are based on various factors including length of
service and average compensation. Contributions are funded to the extent
deductible for federal income tax purposes. The following table provides a
reconciliation of the changes in the plans' benefit obligations and fair
value of assets during the years ended December 31, 1998 and 1997 and a
summary of the funded status as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Pension Plans Post-retirement Medical
---------------------- -----------------------
1998 1997 1998 1997
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Change in Benefit Obligation
Benefit obligation at beginning of year $ 61,072 $ 54,218 $ 8,226 $ 9,886
Service cost 2,248 1,914 393 345
Interest cost 4,111 3,956 542 602
Participant Contributions -- -- 29 --
Plan amendments 35 1,220 -- --
Settlement (gain) or loss -- -- -- (1,295)
Benefits paid (3,609) (2,527) (591) (339)
Actuarial (gain) or loss 1,371 2,291 111 (973)
-------- -------- -------- --------
Benefit obligation at end of year $ 65,228 $ 61,072 $ 8,710 $ 8,226
======== ======== ======== ========
Change in Plan Assets
Fair value of plan assets at
beginning of year $ 62,167 $ 57,854 $ -- $ --
Actual return on plan assets 7,368 6,840 -- --
Benefits paid (3,609) (2,527) -- --
Other 1,028 -- -- --
-------- -------- -------- --------
Fair value of plan assets at end of year $ 66,954 $ 62,167 $ -- $ --
======== ======== ======== ========
Summary of Funded Status
Funded status $ 1,726 $ 1,095 $ (8,710) $ (8,226)
Unrecognized transition amount (274) (381) -- --
Unrecognized prior service cost 1,447 1,561 -- --
Unrecognized net (gain) or loss (11,593) (11,241) (3,243) (4,816)
-------- -------- -------- --------
Accrued benefit cost $ (8,694) $ (8,966) $(11,953) $(13,042)
======== ======== ======== ========
Amounts Recognized in Consolidated
Balance Sheets
Accrued expenses $ 2,842 $ 2,464 -- $ 251
Other non-current liabilities 5,852 6,502 11,953 12,791
-------- -------- -------- --------
$ 8,694 $ 8,966 $ 11,953 $ 13,042
======== ======== ======== ========
</TABLE>
F-20
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
One of the Company's qualified pension plans had a projected benefit
obligation in excess of plan assets as of December 31, 1998 and 1997. The
projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for this plan was $13,815, $13,815, and $12,675,
respectively, as of December 31, 1998 and $12,669, $12,669, and $11,616,
respectively, as of December 31, 1997.
The following table provides the components of net periodic benefit cost
for the plans for the fiscal years ended December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
Pension Plans Postretirement Medical
--------------------------------------------------------------
1998 1997 1996 1998 1997 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned during
the period $ 2,248 $ 1,914 $ 2,116 $ 393 $ 345 $ 446
Interest cost on the benefit obligation 4,111 3,956 3,658 542 602 661
Expected return on plan assets (6,175) (5,087) (6,290) -- -- --
Net amortization and deferral 1,583 (832)
Transition amount (107) (107) -- -- -- --
Prior service costs 149 146 -- -- -- --
(Gain)/loss (498) (607) -- (805) (292) --
------- ------- ------- ------- ------- -------
Net periodic benefit cost $ (272) $ 215 $ 1,067 $ 130 $ 655 $ 275
======= ======= ======= ======= ======= =======
</TABLE>
Gains and losses in excess of 10% of the greater of the benefit obligation
or the market-related value of assets are amortized over the average
remaining service period of active participants for pension plans. Gains
and losses in excess of 10% of the benefit obligation are amortized over
five years for the post-retirement plan.
The Company sponsors defined benefit health care plans that provide
post-retirement medical and life benefits to certain full-time employees
who meet minimum age and service requirements. The plans are contributory,
with retiree contributions adjusted annually, and contain other
cost-sharing features such as deductibles and co-insurance. The accounting
for these plans anticipates future cost-sharing changes to the written
plans that are consistent with the Company's expressed intent to increase
the retiree contribution rate annually for the expected general inflation
rate for the year.
F-21
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
The assumptions used in the measurement of the Company's benefit
obligations are shown in the following table:
<TABLE>
<CAPTION>
Post-retirement
Pension Plans Medical
-----------------------------------------
1998 1997 1998 1997
------ ----- -------------- -----
<S> <C> <C> <C> <C>
Discount Rate (Y/E Disclosures) 6.75% 7.00% 6.50% to 6.75% 7.00%
Salary Scale 4.00% 4.00% N/A N/A
Long Term Rate of Return on Assets 10.00% 9.00% N/A N/A
</TABLE>
For measurement purposes, a 9.5% annual rate of increase in the per capita
cost of covered health care benefit was assumed for 1998. The rate is
assumed to decrease gradually to 5.5% for 2002 and remain at that level
thereafter.
The health care trend rate used to determine the pre-age 65 accumulated
post-retirement benefit obligation was 14% for 1998, decreasing to 6% by
the year 2002 and beyond. A flat 16 % rate per year is used for the
post-age 65 obligation. Increasing the assumed health care trend rate by
1% each year would increase the accumulated post-retirement benefit
obligation as of December 31, 1998 and 1997 approximately $664 and $658,
respectively, and the aggregate of the service and interest cost
components of 1998, 1997, and 1996 net retiree healthcare expense
approximately $97, $98, and $134 respectively. Decreasing the assumed
health care trend rate by 1% each year would decrease the accumulated
post-retirement benefit obligation as of December 31, 1998 approximately
$547, and the aggregate of the service and interest cost components for
1998 net retiree healthcare expense approximately $79.
Certain of the operating subsidiaries also participate in various
multi-employer defined benefit pension plans on behalf of employees
pursuant to various collective bargaining agreements. Contributions to
these plans included in continuing operations amounted to approximately
$15,441, $14,822, and $14,535 for the years ended December 31, 1998, 1997,
and 1996, respectively.
The Company has various defined contribution plans which cover
non-bargaining unit employees meeting eligibility requirements.
Contributions to these plans were approximately $1,915, $1,444, and $1,296
for the years ended December 31, 1998, 1997, and 1996, respectively.
Long Term Incentive Compensation Plans
The Company has adopted long-term incentive compensation plans for several
of its businesses which provide for cash awards upon the achievement of
specified earnings or enterprise values. Amounts related to long-term
incentive plans will be accrued when amounts due participants vest. As of
December 31, 1998, no amounts have been accrued.
F-22
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
(19) Related Party Transactions
Certain Transactions with Stockholders of and Affiliates of Stockholders
of SFAC
Certain of SFAC's stockholders and their affiliates previously entered
into financial advisory arrangements (the "Financial Advisory Agreements")
with SFAC's subsidiary, SFC. Haas Wheat & Partners ("Haas Wheat"),
Penobscot ("Penobscot"), an affiliate of Acadia Partners, L.P. ("Acadia"),
and Keystone, Inc. ("Keystone") each entered into such Financial Advisory
Agreements. In August 1998, the Board of Directors approved a one-year
extension of the financial advisory arrangements. Under the terms of the
Financial Advisory Agreements, SFC pays Haas Wheat an annual fee of $700 (
a portion of which Haas Wheat is obligated by agreement to remit to
Acadia), Penobscot an annual fee of $200, and Keystone an annual fee of
$100.
In 1996, SF Leasing L.L.C. (of which Acadia and Keystone each owns a 45%
interest and Haas Wheat owns a 10% interest) purchased from Metz all of
the equipment at a manufacturing facility for $3,222 (which was based on
the appraised value of such equipment) and leased such equipment back to
Metz. During 1998, the Company made rental payments totaling $614 to SF
Leasing L.L.C. for equipment that was leased by the Company. In September
1998, the Company purchased from SF Leasing L.L.C. this equipment for an
aggregate amount of $3,013.
In June 1997, the Company retained Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ", an affiliate of DLJMBP, which is a stockholder of the
Company), to serve as the Company's financial advisor in connection with
its sale of Stella. The Company paid DLJ approximately $5,400 as
compensation for such financial advisory services. In December 1998, DLJ
was retained as the financial advisor for the sale of H&M. Upon the
completion of the H&M sale, the Company will pay DLJ approximately $1,600.
In March 1998, the Company paid DLJ $5,092 in connection with the
Company's refinancing of its Revolving Credit Facility and Term Loan
Facility. DLJ serves as the Syndication Agent and Collateral Agent under
both Loan Agreements.
F-23
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Notes to Financial Statements
(In thousands)
(20) Other Expense (Income)
Other expense (income) is comprised of the following:
1998 1997 1996
------ ------ ------
Loss on disposal of property, plant
and equipment $ 436 $1,521 $5,747
Discount on receivables sold 2,445 1,933 1,846
Other 248 1,275 1,539
------ ------ ------
$3,129 $4,729 $9,132
====== ====== ======
F-24
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 16,992 $ 5,880
Accounts receivable, net 20,915 19,327
Inventories 25,307 23,366
Net assets of discontinued operations 87,839 86,632
Other current assets 8,764 7,234
----------- -----------
Total current assets 159,817 142,439
Property, plant, and equipment, net 233,001 234,944
Intangible assets, net 110,281 113,438
Other noncurrent assets 30,171 39,338
----------- -----------
Total assets $ 533,270 $ 530,159
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Current maturities of long-term debt (Note 5) $ 268,144 $ 3,450
Accounts payable 44,662 37,779
Accrued expenses 75,777 80,741
----------- -----------
Total current liabilities 388,583 121,970
Long-term debt 577,548 820,309
Due to Specialty Foods Acquisition Corporation 8,243 7,499
Other noncurrent liabilities 30,506 31,355
----------- -----------
Total liabilities 1,004,880 981,133
Stockholders' equity (471,610) (450,974)
----------- -----------
Total liabilities and stockholders' equity $ 533,270 $ 530,159
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-25
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 200,265 $ 170,924
Cost of sales 89,444 76,319
--------- ---------
Gross profit 110,821 94,605
Operating expenses:
Selling, distribution, general and administrative 108,537 94,364
Amortization of intangibles 1,017 212
--------- ---------
Total operating expenses 109,554 94,576
--------- ---------
Operating profit 1,267 29
Other expenses:
Interest expense, net 23,493 19,630
Other expense, net 679 801
--------- ---------
Loss before income taxes (22,905) (20,402)
Provision for income taxes 130 29
--------- ---------
Loss from continuing operations (23,035) (20,431)
Discontinued operations:
Net income 3,810 2,362
Loss on disposal, net (412) --
--------- ---------
3,398 2,362
--------- ---------
Net loss $ (19,637) $ (18,069)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-26
<PAGE>
SPECIALTY FOODS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $ (23,035) $ (20,431)
Adjustments to reconcile to net cash
from continuing operating activities
Depreciation and amortization 9,331 5,653
Debt issuance cost amortization 2,762 1,316
Changes in operating assets and liabilities,
net of effects from businesses acquired or sold (3,780) (17,699)
--------- ---------
Net cash used by continuing operating activities (14,722) (31,161)
Net cash provided (used) by discontinued operations 2,191 (2,391)
--------- ---------
Net cash used by operating activities (12,531) (33,552)
Cash flows from investing activities:
Capital expenditures (3,658) (5,977)
Proceeds from the sale of business 3,800 --
Other 2,406 (764)
--------- ---------
Net cash provided (used) by investing activities 2,548 (6,741)
Cash flows from financing activities:
Increase in revolving credit 22,801 --
Refinancing costs (586) (9,243)
Other (1,120) (712)
--------- ---------
Net cash provided (used) by financing activities 21,095 (9,955)
Increase (decrease) in cash and cash equivalents 11,112 (50,248)
Cash - beginning of period 5,880 234,266
--------- ---------
Cash - end of period $ 16,992 $ 184,018
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-27
<PAGE>
NOTE 1 - Interim Financial Information
In the opinion of management, the accompanying unaudited interim condensed
financial information of Specialty Foods Corporation (SFC) and its
subsidiaries (collectively, the Company) contains all adjustments,
consisting only of those of a recurring nature, necessary to present
fairly the Company's financial position and results of operations. All
significant intercompany accounts, transactions and profits have been
eliminated.
These financial statements are for interim periods and do not include all
information normally provided in annual financial statements and should be
read in conjunction with the financial statements of the Company for the
year ended December 31, 1998 included in the annual report filed on Form
10-K and any reports on Form 8-K filed during the quarter. The results of
operations for interim periods are not necessarily indicative of the
results that may be expected for the full year.
Certain amounts in the 1998 financial statements have been reclassified to
conform to the manner in which the 1999 financial statements have been
presented.
NOTE 2 - Inventories
The components of inventories are as follows:
March 31, December 31,
1999 1998
---- ----
(In thousands)
Raw materials and packaging $ 12,519 $ 12,244
Work in progress 588 264
Finished goods 9,282 8,593
Other 3,934 3,209
-------- --------
26,323 24,310
Less obsolescence and other allowances (1,016) (944)
-------- --------
$ 25,307 $ 23,366
======== ========
Inventories are stated at the lower of cost or market. Cost is determined
principally by the first-in first-out ("FIFO") method.
F-28
<PAGE>
NOTE 3 - Sale of H&M Food Systems, Inc. (H&M)
In March 1999, SFC signed a definitive agreement to sell its subsidiary,
H&M, for $132 million. H&M is a producer of custom formulated, pre-cooked
meat products that are sold primarily to national restaurant chains and
prepared-food producers. The transaction closed on April 12, 1999.
Accordingly, SFC will report the net gain on the sale, expected to
approximate $29 million, during the second quarter of 1999. The Company
realized net cash proceeds of $110 million after it repurchased H&M's
financed receivables, established a $5 million one-year escrow and paid
transaction costs.
H&M is classified as a discontinued operation in the accompanying
financial statements. The net assets of H&M are reported as a single line
item in SFC's Balance Sheets for March 31, 1999 and December 31, 1998, and
the results of H&M's operation are reported in the discontinued operations
section of the accompanying Consolidated Statements of Operations.
NOTE 4 - Acquisition
On May 13, 1999, SFC announced that its wholly-owned operating company,
Metz Baking Company, signed a definitive agreement to acquire Grocers
Baking Company. Grocers Baking Company, which had approximately $60
million of sales during 1998, is a privately-held manufacturer and
distributor of retail bread, buns, and sweet goods based in Western
Michigan. The transaction, which is subject to certain regulatory
approvals, is expected to close during the second quarter of 1999.
NOTE 5 - Debt
On May 12, 1999, the Company commenced new private exchange offers ("New
Offers") for its publicly held debt following the termination of its
previous exchange offers on April 30, 1999. Under the New Offers, holders
of existing debt of SFC and its Parent Company, Specialty Foods
Acquisition Corporation ("SFAC") are being offered the opportunity to
exchange their existing debt for the debt of three new intermediate
holding companies as described below:
o Holders of SFAC 13% Senior Secured Discount Debentures are being
offered the opportunity to exchange their existing securities for
new 13% Senior Secured Discount Debentures ("New Senior Debentures")
of one of the new intermediate holding companies. The New Senior
Debentures include provisions that will extend the initial cash pay
interest date from February 2000 to December 2004, extend the
maturity date from August 2005 to June 2009, and provide the Company
with the option to redeem the New Senior Debentures at prescribed
discounts of accreted value. Consenting holders of the New Senior
Debentures will also receive up to an aggregate of ten percent of
the equity interest of one of the new intermediate holding
companies. Additionally, holders of SFAC's 11% Senior Subordinated
Discount Debentures are being offered the opportunity to exchange
their existing securities for new 11% Senior Subordinated Discount
Debentures ("New 11% Debentures") of one of
F-29
<PAGE>
the new intermediate holding companies. The New 11% Debentures
include provisions that will extend the initial cash pay interest
date from August 2001 to December 2005 and extend the maturity date
from August 2006 to December 2009.
o Holders of SFC Subordinated Notes and Senior Notes are being offered
the opportunity to exchange their existing securities for new notes
("New Notes") of one of the new intermediate holding companies. The
New Notes will have substantially the same terms and covenants as
the existing SFC notes and will be structurally senior to the New
Senior Debentures. Subordinated Note holders who exchange for the
New Notes will receive a consent fee of $35 per $1,000 note and an
increased coupon rate of 200 basis points of which 100 basis points
will be paid in cash and 100 basis points payable in kind. Senior
Note holders who exchange for the New Notes will receive a consent
fee of $10 per $1,000 note and an increased coupon rate of 100 basis
points. In addition, consenting holders of the New Notes will
receive up to an aggregate of $28.2 million of New 11% Debentures of
one of the new intermediate holding companies.
Concurrent with the above described offers, the Company is seeking the
consent for the Corporate organization changes from its Revolving Credit,
Term Loan, and Accounts Receivable Facility lenders ("Senior Secured Debt
Lenders"). Additionally, the Company is seeking the consent of its Senior
Secured Debt Lenders to extend the maturity of the facilities from January
2000 to January 2001. As of March 31, 1999, $ 264.7 million of the
Revolving Credit and Term Loan Facilities were reclassed to a current
liability based on the existing maturity date. Consummation of the
exchange offers and the extension of the Senior Secured Debt facilities
would result in a reclassification of the amount outstanding under the
Revolving Credit and Term Loan Facilities back to a non-current liability.
The Company's management believes that completion of an exchange offer and
the extension of its senior secured indebtedness are essential elements in
continuing to operate the Company's business as currently conducted.
F-30
<PAGE>
SFC New Holdings, Inc.
Exchange offers for:
11 1/4% Senior Notes due 2001
12 1/8% Senior Notes due 2002
13 1/4% Subordinated Notes due 2003
of SFC New Holdings, Inc.
10 1/4% Senior Notes due 2001
11 1/3% Senior Notes due 2002
11 1/4% Subordinated Notes due 2003
of Specialty Foods Corporation
---------------------------
PROSPECTUS
_________, 1999
---------------------------
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of SFC New Holdings since the date hereof or that the information
contained herein is correct as of any time subsequent to its date.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Article 8 of the Company's Certificate of Incorporation and By-Laws
provide for the indemnification by the Company of each person who is or was or
had agreed to become a director, officer, employee or agent of the Company, or,
at the request of the Company, a director, officer, employee or agent of another
enterprise, against all expenses and other amounts for which indemnification may
be made under law. Section 145 of the General Corporation Law of the State of
Delaware sets forth provisions which define the extent to which a corporation
organized under the laws of Delaware may indemnify directors, officers,
employees, and agents. Section 145 provides in pertinent part as follows:
(a) A corporation shall have power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) A corporation shall have power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
<PAGE>
fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b), or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless
ordered by a court) shall be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b). Such determination shall be made (1) by the board
of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion,
or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section, shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
* * *
<PAGE>
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee, or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
Item 21. Exhibits and Financial Statements.
Exhibit
Number Description of Document
------ -----------------------
3.1* Certificate of Incorporation of SFC New Holdings, Inc.
3.2* By-Laws of SFC New Holdings, Inc.
3.3* Certificate of Designation of SFC New Holdings, Inc.
4.1* Registration Rights Agreement, dated as of June 11,
1999, among SFC New Holdings, Inc. and holders of its
11 1/4% Senior Notes due 2001, its 12 1/8% Senior Notes
due 2002 and its 13 1/4% Senior Subordinated Notes due
2003.
4.2* Indenture, dated as of June 11, 1999, between SFC New
Holdings, Inc. and United States Trust Company of New
York, as trustee, governing the 11 1/4% Senior Notes due
2001 issued by SFC New Holdings, Inc.
4.3* Indenture, dated as of June 11, 1999, between SFC New
Holdings, Inc. and United States Trust Company of New
York, as trustee, governing the 12 1/8% Senior Notes due
2002 issued by SFC New Holdings, Inc.
4.4* Indenture, dated as of June 11, 1999, between SFC New
Holdings, Inc. and U.S. Trust Company of Texas, N.A., as
trustee, governing the 13 1/4% Senior Subordinated Notes
due 2003 issued by SFC New Holdings, Inc.
5.1** Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding the legality of the securities being
registered.
8.1** Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding certain tax matters.
10.1 Tax Sharing Agreement, dated as of August 16, 1993,
among Specialty Foods Acquisition Corp., Specialty Foods
Corp. and certain subsidiaries of Specialty Foods Corp.
(Incorporated by reference to Exhibit 10.17 to Specialty
Foods Acquisition Corp.'s Registration Statement on Form
S-4 (Registration No. 33-68958))
10.2* First Amended and Restated SFC Group Tax Sharing
Agreement, dated as of June 11, 1999, among Specialty
Foods Acquisition Corp., SFC New Holdings, Inc. and
certain subsidiaries of SFC New Holdings, Inc.
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.3 Tax Sharing Agreement, dated as of August 16, 1993,
between Specialty Foods Acquisition Corp. and Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.18
to Specialty Foods Acquisition Corp.'s Registration
Statement on Form S-4 (Registration No. 33-68958))
10.4* First Amended and Restated SFAC Tax Sharing Agreement,
dated as of June 11, 1999, among Specialty Foods
Acquisition Corp. and SFC New Holdings, Inc.
10.5* Assignment and Assumption Agreement, dated as of June
11, 1999, between Specialty Foods Corp. and SFC New
Holdings, Inc.
10.6 Corporate Services Agreement, dated as of June 30, 1994,
between Specialty Foods Acquisition Corp. and Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.14
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1994)
10.7 Term Loan Agreement, dated as of March 16, 1998, among
Specialty Foods Corp., various financial institutions,
DLJ Capital Funding, Inc., as syndication agent, and ABN
Amro Bank N.V., as administrative agent. (Incorporated
by reference to Exhibit 10.24 to Specialty Foods
Acquisition Corp.'s Report on Form 10-K for the year
ended December 31, 1997)
10.8 Amended and Restated Term Loan Agreement, dated as of
June 11, 1999, among SFC New Holdings, Inc., as the
Borrower, Various Financial Institutions, as the Term
Loan Lenders, DLJ Capital Funding, Inc., as the
Syndication Agent and Collateral Agent for the Term Loan
Lenders, ABN Amro Bank, N.V. as the Administrative Agent
for the Term Loan Lenders and Banque Paribas, as the
Documentation Agent for the Term Loan Lenders.
(Incorporated by reference to Exhibit 99.3 to Specialty
Foods Acquisition Corp. Report on Form 8-K dated June
30, 1999)
10.9 Revolving Credit Agreement, dated as of March 16, 1998,
among certain subsidiaries of Specialty Foods Corp.,
various financial institutions, DLJ Capital Funding,
Inc., as syndication agent, and ABN Amro Bank N.V., as
administrative agent. (Incorporated by reference to
Exhibit 10.25 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1997)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.10 Amended and Restated Revolving Credit Agreement, dated
as of June 11, 1999, among certain subsidiaries of SFC
New Holdings, Inc., as the Revolving Credit Borrowers,
Various Financial Institutions, as the Revolving Credit
Lenders, DLJ Capital Funding, Inc., as the Syndication
Agent and Collateral Agent for the Revolving Credit
Lenders, ABN Amro Bank, N.V. as the Administrative Agent
for the Revolving Credit Lenders and Banque Paribas, as
the Documentation Agent for the Revolving Credit
Lenders. (Incorporated by reference to Exhibit 99.2 to
Specialty Foods Acquisition Corp. Report on Form 8-K
dated June 30, 1999)
10.11 Pooling Agreement, dated as of November 16, 1994, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee (the "Pooling Agreement"). (Incorporated by
reference to Exhibit 10.29 to Specialty Foods
Acquisition Corp.'s Report on Form 10-K for the year
ended December 31, 1994)
10.12 Series 1994-1 Supplement to the Pooling Agreement, dated
as of November 16, 1994, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 10.30 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1994)
10.13 Series 1996-1 Supplement to the Pooling Agreement, dated
as of August 1, 1996, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 10.67 to Specialty
Foods Acquisition Corp.'s Report on Form 10-Q for the
Quarter ended September 28, 1996)
10.14 Amendment No. 1 to Series 1996-1 Supplement to the
Pooling Agreement, dated as of November 29, 1996, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, Chase Manhattan Bank, as
initial VFC Certificate holder, and Chase Manhattan
Bank, as trustee. (Incorporated by reference to Exhibit
10.34 to Specialty Foods Acquisition Corp.'s Report on
Form 10-K for the year ended December 31, 1996)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.15 Amendment No. 2 to Series 1996-1 Supplement to the
Pooling Agreement, dated as of December 13, 1996, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, Chase Manhattan Bank, as
initial VFC Certificate holder, and Chase Manhattan
Bank, as trustee. (Incorporated by reference to Exhibit
10.26 to Specialty Foods Corp.'s Report on Form 10-K for
the year ended December 31, 1996)
10.16 Series 1997-1 Supplement to the Pooling Agreement, dated
as of January 31, 1997, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 10.36 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1996)
10.17 Series 1998-1 Certificate Purchase Agreement, dated as
of March 31, 1998, by and among Specialty Foods Finance
Corp., Specialty Foods Corp., as Master Servicer, and
Bankers Trust Company, as Agent. (Incorporated by
reference to Exhibit 10.78 to Specialty Foods
Acquisition Corp.'s Report on Form 10-Q for the Quarter
ended March 31, 1998)
10.18 Series 1998-1 Supplement, dated as of March 31, 1998, to
the Pooling Agreement, dated as of November 16, 1994, by
and among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee. (Incorporated by reference to Exhibit 10.79 to
Specialty Foods Acquisition Corp.'s Report on Form 10-Q
for the Quarter ended March 31, 1998)
10.19 Amendment to Series 1998-1 Supplement, dated as of March
31, 1998, by and among Specialty Foods Finance Corp.,
Specialty Foods Corp., as Master Servicer, Chase
Manhattan Bank, as trustee, and Bankers Trust, as the
sole VFC Certificate holder under that certain
Certificate Purchase Agreement. (Incorporated by
reference to Exhibit 10.81 to Specialty Foods
Acquisition Corp.'s Report on Form 10-Q for the Quarter
ended March 31, 1998)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.20 Amendment No. 3 to Series 1998-1 Supplement and
Amendment No. 1 to Series 1998-1 Certificate Purchase
Agreement, dated as of June 10, 1999, between Specialty
Foods Finance Corp., Specialty Foods Corp., SFC New
Holdings, Inc., The Chase Manhattan Bank, Various
Financial Institutions and Bankers Trust Company, as a
VFC Certificateholder and as agent for the VFC
Certificateholder. (Incorporated by reference to Exhibit
99.5 to Specialty Foods Acquisition Corp.'s Report on
Form 8-K dated June 30, 1999).
10.21 Amendment No. 4 to Series 1998-I Supplement, dated as of
June 10, 1999, by and among Specialty Foods Finance
Corp., SFC New Holdings, Inc., The Chase Manhattan Bank,
as trustee, Various Financial Institutions and Bankers
Trust, as a VFC Certificateholder and as agent for the
VFC Certificateholder. (Incorporated by reference to
Exhibit 99.6 to Specialty Foods Acquisition Corp.'s
Report on Form 8-K dated June 30, 1999)
10.22 Performance Guaranty, dated as of March 31, 1998, by and
among Specialty Foods Corp., as Master Servicer, in
favor of Specialty Foods Finance Corp. (Incorporated by
reference to Exhibit 10.82 to Specialty Foods
Acquisition Corp.'s Report on Form 10-Q for the Quarter
ended March 31, 1998)
10.23 Amended and Restated Receivables Sales Agreement, dated
as of November 16, 1994, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and certain subsidiaries of Specialty Foods
Corp. (Incorporated by reference to Exhibit 10.31 to
Specialty Foods Acquisition Corp.'s Report on Form 10-K
for the year ended December 31, 1994)
10.24 Servicing Agreement, dated as of November 16, 1994, by
and among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and certain subsidiaries of
Specialty Foods Corp. (Incorporated by reference to
Exhibit 10.32 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1994)
10.25 Amendment No. 1 to Specialty Foods Corp. Master Trust
Pooling and Servicing Agreements, dated as of December
16, 1996, by and among Specialty Foods Finance Corp.,
Specialty Foods Corp., as Master Servicer, and Chase
Manhattan Bank, as trustee. (Incorporated by reference
to Exhibit 10.38 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1996)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.26 Amendment No. 2 to Specialty Foods Corp. Master Trust
Pooling Agreement, dated as of December 27, 1996, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee. (Incorporated by reference to Exhibit 10.40 to
Specialty Foods Acquisition Corp.'s Report on Form 10-K
for the year ended December 31, 1996)
10.27 Amendment No. 3 to Specialty Foods Corp. Master Trust
Pooling Agreement, dated as of February 24, 1997, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee. (Incorporated by reference to Exhibit 10.41 to
Specialty Foods Acquisition Corp.'s Report on Form 10-K
for the year ended December 31, 1996)
10.28 Amendment No. 7 to Specialty Foods Corp. Master Trust
Amendment No. 7 to the Master Trust Pooling Agreement
and the Receivables Sale Agreement and Amendment No. 2
to the Servicing Agreement and Consent Related thereto,
dated as of June 10, 1999, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., SFC New Holdings,
Inc. and The Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 99.4 to Specialty
Foods Acquisition Corp.'s Report on Form 8-K dated June
8, 1999)
10.29 Amendment No. 1 to Amended and Restated Receivables Sale
Agreement, dated as of December 16, 1996, by and among
Specialty Foods Finance Corp., Specialty Foods Corp., as
Master Servicer, and certain subsidiaries of Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.42
to Specialty Foods Acquisition Corp.'s Report on Form
10-K for the year ended December 31, 1996)
10.30 Amendment No. 2 to Amended and Restated Receivables Sale
Agreement, dated as of December 27, 1996, by and among
Specialty Foods Finance Corp., Specialty Foods Corp., as
Master Servicer, and certain subsidiaries of Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.43
to Specialty Foods Acquisition Corp.'s Report on Form
10-K for the year ended December 31, 1996)
10.31 Amendment No. 3 to Amended and Restated Receivables Sale
Agreement, dated as of February 24, 1997, by and among
Specialty Foods Finance Corp., Specialty Foods Corp., as
Master Servicer, and certain subsidiaries of Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.44
to Specialty Foods Acquisition Corp.'s Report on Form
10-K for the year ended December 31, 1996)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.32 Specialty Foods Corp. Master Trust Amendment No. 5 to
each of the Pooling Agreement and Receivables Sale
Agreement and Amendment No. 1 to the Servicing
Agreement. (Incorporated by reference to Exhibit 10.80
to Specialty Foods Acquisition Corp.'s Report on Form
10-Q for the Quarter ended March 31, 1998)
10.33 Amended and Restated Executive Employment Agreement,
dated as of March 15, 1999, among Specialty Foods
Acquisition Corp., Specialty Foods Corp. and Lawrence S.
Benjamin. (Incorporated by reference to Exhibit 10.38 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.34 Amended and Restated Executive Employment Agreement,
dated as of March 15, 1999, among Specialty Foods
Acquisition Corp., Specialty Foods Corp. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.43 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.35 Amended and Restated Executive Employment Agreement,
dated as of March 15, 1999, among Specialty Foods
Acquisition Corp., Specialty Foods Corp. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.43 to
Specialty Food Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.36 Executive Employment Agreement, dated as of July 15,
1997, among Specialty Foods Corp., Mother's Cake &
Cookie Company, MCC-DSD Holdings, Inc. and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.44 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.37 Mother's Cake & Cookie Co. Amended and Restated
Supplemental Long Term Incentive Compensation Plan.
(Incorporated by reference to Exhibit 10.48 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.38 Deferred Bonus Agreement, dated as of October 27, 1997,
between Specialty Foods Corp. and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.53 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.39 Special Bonus Agreement, dated as of December 21, 1997,
between Specialty Foods Corp. and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.54 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
10.40 Retention Bonus Agreement, dated as of March 15, 1999,
between Specialty Foods Corp. and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.52 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.41 Participation Award Agreement, dated as of March 15,
1999, between Mother's Cake & Cookie Company and
Lawrence S. Benjamin. (Incorporated by reference to
Exhibit 10.53 to Specialty Foods Corp.'s Report on Form
10-K for the year ended December 31, 1998)
10.42 Deferred Bonus Agreement, dated as of July 15, 1997,
between Specialty Foods Corp. and Robert L. Fishbune.
(Incorporated by reference to Exhibit 10.55 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
10.43 Retention Bonus Agreement, dated as of March 15, 1999,
between Specialty Foods Corp. and Robert L. Fishbune.
(Incorporated by reference to Exhibit 10.55 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.44 Deferred Bonus Agreement, dated as of June 16, 1998,
between Andre-Boudin Bakeries, Inc. and Larry Strain.
(Incorporated by reference to Exhibit 10.56 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.45 Deferred Bonus Agreement, dated as of July 15, 1997,
between Mother's Cake & Cookie Company and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.58 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.46 Retention Bonus Agreement, dated as of March 15, 1999,
between Mother's Cake & Cookie Company and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.59 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.47 Retention Bonus Agreement, dated as of March 15, 1999,
between Specialty Foods Corp. and David E. Schreibman.
(Incorporated by reference to Exhibit 10.60 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.48 Deferred Bonus Agreement, dated as of July 15, 1997,
between Metz Baking Company and Henry J. Metz.
(Incorporated by reference to Exhibit 10.57 Specialty
Foods Acquisition Corp.'s Report on Form 10-Q for the
Quarter ended March 31, 1998)
10.49 Divestiture Award Agreement, dated as of March 15, 1999,
between Metz Baking Company and Robert L. Fishbune.
(Incorporated by reference to Exhibit 10.66 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.50 Divestiture Award Agreement, dated as of July 15, 1997,
between Metz Baking Company and Henry J. Metz.
(Incorporated by reference to Exhibit 10.65 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
10.51 Divestiture Award Agreement, dated as of March 15, 1999,
between H&M Food System Company, Inc. and Lawrence S.
Benjamin. (Incorporated by reference to Exhibit 10.68 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.52 Divestiture Award Agreement, dated as of March 15, 1999,
between Metz Baking Company and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.69 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.53 Divestiture Award Agreement, dated as of March 15, 1999,
between H&M Food System Company, Inc. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.70 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.54 Divestiture Award Agreement, dated as of March 15, 1999,
between Mother's Cake & Cookie Company and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.71 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.55 Divestiture Award Agreement, dated as of March 15, 1999,
between Andre-Boudin Bakeries, Inc. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.72 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.56 Divestiture Award Agreement, dated as of October 19,
1998 between H&M Food System Company, Inc. and David E.
Schreibman. (Incorporated by reference to Exhibit 10.73
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1998)
10.57 Divestiture Award Agreement, dated as of March 15, 1999,
between Metz Baking Company and David E. Schreibman.
(Incorporated by reference to Exhibit 10.74 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.58 Divestiture Award Agreement, dated as of March 15, 1999,
between Mother's Cake & Cookie Company and David E.
Schreibman. (Incorporated by reference to Exhibit 10.75
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1998)
10.59 Divestiture Award Agreement, dated as of March 15, 1999,
between Andre-Boudin Bakeries, Inc. and David E.
Schreibman. (Incorporated by reference to Exhibit 10.76
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1998)
10.60 Amended and Restated Metz Baking Company Pension Plan
for Non-Union Employees. (Incorporated by reference to
Exhibit 10.52 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1994)
10.61 Amended and Restated Mother's Cake & Cookie Company
Retirement Plan. (Incorporated by reference to Exhibit
10.51 to Specialty Foods Acquisition Corp.'s report on
Form 10-K for the year ended December 31, 1994)
10.62 Coordination Document for the Metz Baking
Company-Mother's Cake & Cookie Co. Consolidated Pension
Plan. (Incorporated by reference to Exhibit 10.80 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
10.63 Form of 1998 Annual Bonus Plan. (Incorporated by
reference to Exhibit 10.84 to Specialty Foods Corp.'s
Report on Form 10-K for the year ended December 31,
1998)
10.64 Form of 1999 Annual Bonus Plan. (Incorporated by
reference to Exhibit 10.85 to Specialty Foods Corp.'s
Report on Form 10-K for the year ended December 31,
1998)
10.65 Executive Employment Agreement, dated as of May 1, 1999,
by and among Specialty Foods Acquisition Corp.,
Specialty Foods Corp., Metz Baking Company, Mother's
Cake & Cookie Company, Archway Cookies, Inc., and
Andre-Boudin Bakeries, Inc. and David E. Schreibman.
(Incorporated by reference to Exhibit 10.87 to Specialty
Foods Corp.'s Report on Form 10-Q for the Quarter ended
March 31, 1999)
10.66 Amended and Restated Retention Bonus Agreement, dated as
of May 1, 1999, by and between Specialty Foods Corp. and
David E. Schreibman. (Incorporated by reference to
Exhibit 10.88 to Specialty Foods Corp.'s Report on Form
10-Q for the Quarter ended March 31, 1999)
10.67 Amended and Restated Divestiture Award Agreement, dated
as of May 1, 1999, by and between Metz Baking Company
and David E. Schreibman. (Incorporated by reference to
Exhibit 10.89 to Specialty Foods Corp.'s Report on Form
10-Q for the Quarter ended March 31, 1999)
10.68 Amended and Restated Divestiture Award Agreement, dated
as of May 1, 1999, by and between Mother's Cake & Cookie
Company and David E. Schreibman. (Incorporated by
reference to Exhibit 10.90 to Specialty Foods Corp.'s
Report on Form 10-Q for the Quarter ended March 31,
1999)
10.69 Amended and Restated Divestiture Award Agreement, dated
as of May 1, 1999, by and between Andre-Boudin Bakeries,
Inc. and David E. Schreibman. (Incorporated by reference
to Exhibit 10.91 to Specialty Foods Corp.'s Report on
Form 10-Q for the Quarter ended March 31, 1999)
10.70 Participation Award Agreement, dated as of May 1, 1999,
between Mother's Cake & Cookie Company and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.92 to
Specialty Foods Corp.'s Report on Form 10-Q for the
Quarter ended March 31, 1999)
12.1* Statement re Computation of Ratio of Earnings to Fixed
Charges.
<PAGE>
Exhibit
Number Description of Document
------ -----------------------
21.1* Subsidiaries of SFC New Holdings, Inc.
23.1* Consent of KPMG.
23.2** Consent of Paul, Weiss, Rifkind, Wharton & Garrison (See
Exhibit 5.1).
24.1* Power of attorney (included on the signature page of
this registration statement).
25.1* Statement on Form T-1, of the Eligibility of United
States Trust Company of New York, as Trustee under the
Indenture relating to the 11 1/4% Senior Notes due 2001
and the 12 1/8% Senior Notes due 2002.
25.2* Statement on Form T-1, of the Eligibility of U.S. Trust
Company of Texas, N.A., as Trustee under the Indenture
relating to the 13 1/4% Senior Subordinated Notes due
2003.
27* Financial Data Schedule
99.1** Form of Letter of Transmittal.
99.2** Form of Notice of Guaranteed Delivery.
- ----------
* To be filed herewith.
** To be filed by amendment.
Item 22. Undertakings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
<PAGE>
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
The undersigned registrant hereby undertakes as follows:
(a) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable form.
(b) Every prospectus (i) that is filed pursuant to the paragraph
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Deerfield, Illinois on
July 15, 1999.
SFC NEW HOLDINGS, INC.
By: /s/ Sean M.Stack
------------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer and
Assistant Secretary
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Robert
L. Fishbune and Sean M. Stack, or any one of them, with full power to act
without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
Registration Statement and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature and Title Capacity Date
- ------------------- -------- ----
/s/ Lawrence S. Benjamin Principal Executive Officer July 15, 1999
- ---------------------------- and Director
Lawrence S. Benjamin
/s/ Robert L. Fishbune Principal Financial and July 15, 1999
- ---------------------------- Accounting Officer
Robert L. Fishbune
<PAGE>
Signature and Title Capacity Date
- ------------------- -------- ----
/s/ Robert B. Haas Chairman of the Board of July 15, 1999
- ---------------------------- Directors
Robert B. Haas
Director
- ----------------------------
Thomas J. Baldwin
/s/ J. Taylor Crandall Director July 15, 1999
- ----------------------------
J. Taylor Crandall
/s/ Jerry M. Meyer Director July 15, 1999
- ----------------------------
Jerry M. Meyer
/s/ Andrew J. Nathanson Director July 15, 1999
- ----------------------------
Andrew J. Nathanson
Director
- ----------------------------
David G. Offensend
/s/ Marc C. Particelli Director July 15, 1999
- ----------------------------
Marc C. Particelli
/s/ Anthony P. Scotto Director July 15, 1999
- ----------------------------
Anthony P. Scotto
/s/ Douglas D. Wheat
- ----------------------------
Douglas D. Wheat Director July 15, 1999
<PAGE>
EXHIBIT INDEX
3.1* Certificate of Incorporation of SFC New Holdings, Inc.
3.2* By-Laws of SFC New Holdings, Inc.
3.3* Certificate of Designation of SFC New Holdings, Inc.
4.1* Registration Rights Agreement, dated as of June 11,
1999, among SFC New Holdings, Inc. and holders of its
11 1/4% Senior Notes due 2001, its 12 1/8% Senior Notes
due 2002 and its 13 1/4% Senior Subordinated Notes due
2003.
4.2* Indenture, dated as of June 11, 1999, between SFC New
Holdings, Inc. and United States Trust Company of New
York, as trustee, governing the 11 1/4% Senior Notes due
2001 issued by SFC New Holdings, Inc.
4.3* Indenture, dated as of June 11, 1999, between SFC New
Holdings, Inc. and United States Trust Company of New
York, as trustee, governing the 12 1/8% Senior Notes due
2002 issued by SFC New Holdings, Inc.
4.4* Indenture, dated as of June 11, 1999, between SFC New
Holdings, Inc. and U.S. Trust Company of Texas, N.A., as
trustee, governing the 13 1/4% Senior Subordinated Notes
due 2003 issued by SFC New Holdings, Inc.
5.1** Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding the legality of the securities being
registered.
8.1** Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
regarding certain tax matters.
10.1 Tax Sharing Agreement, dated as of August 16, 1993,
among Specialty Foods Acquisition Corp., Specialty Foods
Corp. and certain subsidiaries of Specialty Foods Corp.
(Incorporated by reference to Exhibit 10.17 to Specialty
Foods Acquisition Corp.'s Registration Statement on Form
S-4 (Registration No. 33-68958))
10.2* First Amended and Restated SFC Group Tax Sharing
Agreement, dated as of June 11, 1999, among Specialty
Foods Acquisition Corp., SFC New Holdings, Inc. and
certain subsidiaries of SFC New Holdings, Inc.
10.3 Tax Sharing Agreement, dated as of August 16, 1993,
between Specialty Foods Acquisition Corp. and Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.18
to Specialty Foods Acquisition Corp.'s Registration
Statement on Form S-4 (Registration No. 33-68958))
10.4* First Amended and Restated SFAC Tax Sharing Agreement,
dated as of June 11, 1999, among Specialty Foods
Acquisition Corp. and SFC New Holdings, Inc.
<PAGE>
10.5* Assignment and Assumption Agreement, dated as of June
11, 1999, between Specialty Foods Corp. and SFC New
Holdings, Inc.
10.6 Corporate Services Agreement, dated as of June 30, 1994,
between Specialty Foods Acquisition Corp. and Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.14
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1994)
10.7 Term Loan Agreement, dated as of March 16, 1998, among
Specialty Foods Corp., various financial institutions,
DLJ Capital Funding, Inc., as syndication agent, and ABN
Amro Bank N.V., as administrative agent. (Incorporated
by reference to Exhibit 10.24 to Specialty Foods
Acquisition Corp.'s Report on Form 10-K for the year
ended December 31, 1997)
10.8 Amended and Restated Term Loan Agreement, dated as of
June 11, 1999, among SFC New Holdings, Inc., as the
Borrower, Various Financial Institutions, as the Term
Loan Lenders, DLJ Capital Funding, Inc., as the
Syndication Agent and Collateral Agent for the Term Loan
Lenders, ABN Amro Bank, N.V. as the Administrative Agent
for the Term Loan Lenders and Banque Paribas, as the
Documentation Agent for the Term Loan Lenders.
(Incorporated by reference to Exhibit 99.3 to Specialty
Foods Acquisition Corp. Report on Form 8-K dated June
30, 1999)
10.9 Revolving Credit Agreement, dated as of March 16, 1998,
among certain subsidiaries of Specialty Foods Corp.,
various financial institutions, DLJ Capital Funding,
Inc., as syndication agent, and ABN Amro Bank N.V., as
administrative agent. (Incorporated by reference to
Exhibit 10.25 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1997)
10.10 Amended and Restated Revolving Credit Agreement, dated
as of June 11, 1999, among certain subsidiaries of SFC
New Holdings, Inc., as the Revolving Credit Borrowers,
Various Financial Institutions, as the Revolving Credit
Lenders, DLJ Capital Funding, Inc., as the Syndication
Agent and Collateral Agent for the Revolving Credit
Lenders, ABN Amro Bank, N.V. as the Administrative Agent
for the Revolving Credit Lenders and Banque Paribas, as
the Documentation Agent for the Revolving Credit
Lenders. (Incorporated by reference to Exhibit 99.2 to
Specialty Foods Acquisition Corp. Report on Form 8-K
dated June 30, 1999)
10.11 Pooling Agreement, dated as of November 16, 1994, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee (the "Pooling Agreement"). (Incorporated by
reference to Exhibit 10.29 to Specialty Foods
Acquisition Corp.'s Report on Form 10-K for the year
ended December 31, 1994)
<PAGE>
10.12 Series 1994-1 Supplement to the Pooling Agreement, dated
as of November 16, 1994, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 10.30 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1994)
10.13 Series 1996-1 Supplement to the Pooling Agreement, dated
as of August 1, 1996, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 10.67 to Specialty
Foods Acquisition Corp.'s Report on Form 10-Q for the
Quarter ended September 28, 1996)
10.14 Amendment No. 1 to Series 1996-1 Supplement to the
Pooling Agreement, dated as of November 29, 1996, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, Chase Manhattan Bank, as
initial VFC Certificate holder, and Chase Manhattan
Bank, as trustee. (Incorporated by reference to Exhibit
10.34 to Specialty Foods Acquisition Corp.'s Report on
Form 10-K for the year ended December 31, 1996)
10.15 Amendment No. 2 to Series 1996-1 Supplement to the
Pooling Agreement, dated as of December 13, 1996, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, Chase Manhattan Bank, as
initial VFC Certificate holder, and Chase Manhattan
Bank, as trustee. (Incorporated by reference to Exhibit
10.26 to Specialty Foods Corp.'s Report on Form 10-K for
the year ended December 31, 1996)
10.16 Series 1997-1 Supplement to the Pooling Agreement, dated
as of January 31, 1997, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 10.36 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1996)
10.17 Series 1998-1 Certificate Purchase Agreement, dated as
of March 31, 1998, by and among Specialty Foods Finance
Corp., Specialty Foods Corp., as Master Servicer, and
Bankers Trust Company, as Agent. (Incorporated by
reference to Exhibit 10.78 to Specialty Foods
Acquisition Corp.'s Report on Form 10-Q for the Quarter
ended March 31, 1998)
<PAGE>
10.18 Series 1998-1 Supplement, dated as of March 31, 1998, to
the Pooling Agreement, dated as of November 16, 1994, by
and among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee. (Incorporated by reference to Exhibit 10.79 to
Specialty Foods Acquisition Corp.'s Report on Form 10-Q
for the Quarter ended March 31, 1998)
10.19 Amendment to Series 1998-1 Supplement, dated as of March
31, 1998, by and among Specialty Foods Finance Corp.,
Specialty Foods Corp., as Master Servicer, Chase
Manhattan Bank, as trustee, and Bankers Trust, as the
sole VFC Certificate holder under that certain
Certificate Purchase Agreement. (Incorporated by
reference to Exhibit 10.81 to Specialty Foods
Acquisition Corp.'s Report on Form 10-Q for the Quarter
ended March 31, 1998)
10.20 Amendment No. 3 to Series 1998-1 Supplement and
Amendment No. 1 to Series 1998-1 Certificate Purchase
Agreement, dated as of June 10, 1999, between Specialty
Foods Finance Corp., Specialty Foods Corp., SFC New
Holdings, Inc., The Chase Manhattan Bank, Various
Financial Institutions and Bankers Trust Company, as a
VFC Certificateholder and as agent for the VFC
Certificateholder. (Incorporated by reference to Exhibit
99.5 to Specialty Foods Acquisition Corp.'s Report on
Form 8-K dated June 30, 1999).
10.21 Amendment No. 4 to Series 1998-I Supplement, dated as of
June 10, 1999, by and among Specialty Foods Finance
Corp., SFC New Holdings, Inc., The Chase Manhattan Bank,
as trustee, Various Financial Institutions and Bankers
Trust, as a VFC Certificateholder and as agent for the
VFC Certificateholder. (Incorporated by reference to
Exhibit 99.6 to Specialty Foods Acquisition Corp.'s
Report on Form 8-K dated June 30, 1999)
10.22 Performance Guaranty, dated as of March 31, 1998, by and
among Specialty Foods Corp., as Master Servicer, in
favor of Specialty Foods Finance Corp. (Incorporated by
reference to Exhibit 10.82 to Specialty Foods
Acquisition Corp.'s Report on Form 10-Q for the Quarter
ended March 31, 1998)
10.23 Amended and Restated Receivables Sales Agreement, dated
as of November 16, 1994, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., as Master
Servicer, and certain subsidiaries of Specialty Foods
Corp. (Incorporated by reference to Exhibit 10.31 to
Specialty Foods Acquisition Corp.'s Report on Form 10-K
for the year ended December 31, 1994)
<PAGE>
10.24 Servicing Agreement, dated as of November 16, 1994, by
and among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and certain subsidiaries of
Specialty Foods Corp. (Incorporated by reference to
Exhibit 10.32 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1994)
10.25 Amendment No. 1 to Specialty Foods Corp. Master Trust
Pooling and Servicing Agreements, dated as of December
16, 1996, by and among Specialty Foods Finance Corp.,
Specialty Foods Corp., as Master Servicer, and Chase
Manhattan Bank, as trustee. (Incorporated by reference
to Exhibit 10.38 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1996)
10.26 Amendment No. 2 to Specialty Foods Corp. Master Trust
Pooling Agreement, dated as of December 27, 1996, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee. (Incorporated by reference to Exhibit 10.40 to
Specialty Foods Acquisition Corp.'s Report on Form 10-K
for the year ended December 31, 1996)
10.27 Amendment No. 3 to Specialty Foods Corp. Master Trust
Pooling Agreement, dated as of February 24, 1997, by and
among Specialty Foods Finance Corp., Specialty Foods
Corp., as Master Servicer, and Chase Manhattan Bank, as
trustee. (Incorporated by reference to Exhibit 10.41 to
Specialty Foods Acquisition Corp.'s Report on Form 10-K
for the year ended December 31, 1996)
10.28 Amendment No. 7 to Specialty Foods Corp. Master Trust
Amendment No. 7 to the Master Trust Pooling Agreement
and the Receivables Sale Agreement and Amendment No. 2
to the Servicing Agreement and Consent Related thereto,
dated as of June 10, 1999, by and among Specialty Foods
Finance Corp., Specialty Foods Corp., SFC New Holdings,
Inc. and The Chase Manhattan Bank, as trustee.
(Incorporated by reference to Exhibit 99.4 to Specialty
Foods Acquisition Corp.'s Report on Form 8-K dated June
8, 1999)
10.29 Amendment No. 1 to Amended and Restated Receivables Sale
Agreement, dated as of December 16, 1996, by and among
Specialty Foods Finance Corp., Specialty Foods Corp., as
Master Servicer, and certain subsidiaries of Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.42
to Specialty Foods Acquisition Corp.'s Report on Form
10-K for the year ended December 31, 1996)
10.30 Amendment No. 2 to Amended and Restated Receivables Sale
Agreement, dated as of December 27, 1996, by and among
Specialty Foods Finance Corp., Specialty Foods Corp., as
Master Servicer, and certain subsidiaries of Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.43
to Specialty Foods Acquisition Corp.'s Report on Form
10-K for the year ended December 31, 1996)
<PAGE>
10.31 Amendment No. 3 to Amended and Restated Receivables Sale
Agreement, dated as of February 24, 1997, by and among
Specialty Foods Finance Corp., Specialty Foods Corp., as
Master Servicer, and certain subsidiaries of Specialty
Foods Corp. (Incorporated by reference to Exhibit 10.44
to Specialty Foods Acquisition Corp.'s Report on Form
10-K for the year ended December 31, 1996)
10.32 Specialty Foods Corp. Master Trust Amendment No. 5 to
each of the Pooling Agreement and Receivables Sale
Agreement and Amendment No. 1 to the Servicing
Agreement. (Incorporated by reference to Exhibit 10.80
to Specialty Foods Acquisition Corp.'s Report on Form
10-Q for the Quarter ended March 31, 1998)
10.33 Amended and Restated Executive Employment Agreement,
dated as of March 15, 1999, among Specialty Foods
Acquisition Corp., Specialty Foods Corp. and Lawrence S.
Benjamin. (Incorporated by reference to Exhibit 10.38 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.34 Amended and Restated Executive Employment Agreement,
dated as of March 15, 1999, among Specialty Foods
Acquisition Corp., Specialty Foods Corp. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.43 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.35 Amended and Restated Executive Employment Agreement,
dated as of March 15, 1999, among Specialty Foods
Acquisition Corp., Specialty Foods Corp. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.43 to
Specialty Food Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.36 Executive Employment Agreement, dated as of July 15,
1997, among Specialty Foods Corp., Mother's Cake &
Cookie Company, MCC-DSD Holdings, Inc. and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.44 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.37 Mother's Cake & Cookie Co. Amended and Restated
Supplemental Long Term Incentive Compensation Plan.
(Incorporated by reference to Exhibit 10.48 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.38 Deferred Bonus Agreement, dated as of October 27, 1997,
between Specialty Foods Corp. and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.53 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
<PAGE>
10.39 Special Bonus Agreement, dated as of December 21, 1997,
between Specialty Foods Corp. and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.54 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
10.40 Retention Bonus Agreement, dated as of March 15, 1999,
between Specialty Foods Corp. and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.52 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.41 Participation Award Agreement, dated as of March 15,
1999, between Mother's Cake & Cookie Company and
Lawrence S. Benjamin. (Incorporated by reference to
Exhibit 10.53 to Specialty Foods Corp.'s Report on Form
10-K for the year ended December 31, 1998)
10.42 Deferred Bonus Agreement, dated as of July 15, 1997,
between Specialty Foods Corp. and Robert L. Fishbune.
(Incorporated by reference to Exhibit 10.55 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
10.43 Retention Bonus Agreement, dated as of March 15, 1999,
between Specialty Foods Corp. and Robert L. Fishbune.
(Incorporated by reference to Exhibit 10.55 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.44 Deferred Bonus Agreement, dated as of June 16, 1998,
between Andre- Boudin Bakeries, Inc. and Larry Strain.
(Incorporated by reference to Exhibit 10.56 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.45 Deferred Bonus Agreement, dated as of July 15, 1997,
between Mother's Cake & Cookie Company and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.58 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.46 Retention Bonus Agreement, dated as of March 15, 1999,
between Mother's Cake & Cookie Company and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.59 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.47 Retention Bonus Agreement, dated as of March 15, 1999,
between Specialty Foods Corp. and David E. Schreibman.
(Incorporated by reference to Exhibit 10.60 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.48 Deferred Bonus Agreement, dated as of July 15, 1997,
between Metz Baking Company and Henry J. Metz.
(Incorporated by reference to Exhibit 10.57 Specialty
Foods Acquisition Corp.'s Report on Form 10-Q for the
Quarter ended March 31, 1998)
<PAGE>
10.49 Divestiture Award Agreement, dated as of March 15, 1999,
between Metz Baking Company and Robert L. Fishbune.
(Incorporated by reference to Exhibit 10.66 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.50 Divestiture Award Agreement, dated as of July 15, 1997,
between Metz Baking Company and Henry J. Metz.
(Incorporated by reference to Exhibit 10.65 to Specialty
Foods Acquisition Corp.'s Report on Form 10-K for the
year ended December 31, 1997)
10.51 Divestiture Award Agreement, dated as of March 15, 1999,
between H&M Food System Company, Inc. and Lawrence S.
Benjamin. (Incorporated by reference to Exhibit 10.68 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.52 Divestiture Award Agreement, dated as of March 15, 1999,
between Metz Baking Company and Lawrence S. Benjamin.
(Incorporated by reference to Exhibit 10.69 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.53 Divestiture Award Agreement, dated as of March 15, 1999,
between H&M Food System Company, Inc. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.70 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.54 Divestiture Award Agreement, dated as of March 15, 1999,
between Mother's Cake & Cookie Company and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.71 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.55 Divestiture Award Agreement, dated as of March 15, 1999,
between Andre-Boudin Bakeries, Inc. and Robert L.
Fishbune. (Incorporated by reference to Exhibit 10.72 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.56 Divestiture Award Agreement, dated as of October 19,
1998 between H&M Food System Company, Inc. and David E.
Schreibman. (Incorporated by reference to Exhibit 10.73
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1998)
10.57 Divestiture Award Agreement, dated as of March 15, 1999,
between Metz Baking Company and David E. Schreibman.
(Incorporated by reference to Exhibit 10.74 to Specialty
Foods Corp.'s Report on Form 10-K for the year ended
December 31, 1998)
10.58 Divestiture Award Agreement, dated as of March 15, 1999,
between Mother's Cake & Cookie Company and David E.
Schreibman. (Incorporated by reference to Exhibit 10.75
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1998)
<PAGE>
10.59 Divestiture Award Agreement, dated as of March 15, 1999,
between Andre-Boudin Bakeries, Inc. and David E.
Schreibman. (Incorporated by reference to Exhibit 10.76
to Specialty Foods Corp.'s Report on Form 10-K for the
year ended December 31, 1998)
10.60 Amended and Restated Metz Baking Company Pension Plan
for Non-Union Employees. (Incorporated by reference to
Exhibit 10.52 to Specialty Foods Acquisition Corp.'s
Report on Form 10-K for the year ended December 31,
1994)
10.61 Amended and Restated Mother's Cake & Cookie Company
Retirement Plan. (Incorporated by reference to Exhibit
10.51 to Specialty Foods Acquisition Corp.'s report on
Form 10-K for the year ended December 31, 1994)
10.62 Coordination Document for the Metz Baking
Company-Mother's Cake & Cookie Co. Consolidated Pension
Plan. (Incorporated by reference to Exhibit 10.80 to
Specialty Foods Corp.'s Report on Form 10-K for the year
ended December 31, 1998)
10.63 Form of 1998 Annual Bonus Plan. (Incorporated by
reference to Exhibit 10.84 to Specialty Foods Corp.'s
Report on Form 10-K for the year ended December 31,
1998)
10.64 Form of 1999 Annual Bonus Plan. (Incorporated by
reference to Exhibit 10.85 to Specialty Foods Corp.'s
Report on Form 10-K for the year ended December 31,
1998)
10.65 Executive Employment Agreement, dated as of May 1, 1999,
by and among Specialty Foods Acquisition Corp.,
Specialty Foods Corp., Metz Baking Company, Mother's
Cake & Cookie Company, Archway Cookies, Inc., and
Andre-Boudin Bakeries, Inc. and David E. Schreibman.
(Incorporated by reference to Exhibit 10.87 to Specialty
Foods Corp.'s Report on Form 10-Q for the Quarter ended
March 31, 1999)
10.66 Amended and Restated Retention Bonus Agreement, dated as
of May 1, 1999, by and between Specialty Foods Corp. and
David E. Schreibman. (Incorporated by reference to
Exhibit 10.88 to Specialty Foods Corp.'s Report on Form
10-Q for the Quarter ended March 31, 1999)
10.67 Amended and Restated Divestiture Award Agreement, dated
as of May 1, 1999, by and between Metz Baking Company
and David E. Schreibman. (Incorporated by reference to
Exhibit 10.89 to Specialty Foods Corp.'s Report on Form
10-Q for the Quarter ended March 31, 1999)
<PAGE>
10.68 Amended and Restated Divestiture Award Agreement, dated
as of May 1, 1999, by and between Mother's Cake & Cookie
Company and David E. Schreibman. (Incorporated by
reference to Exhibit 10.90 to Specialty Foods Corp.'s
Report on Form 10-Q for the Quarter ended March 31,
1999)
10.69 Amended and Restated Divestiture Award Agreement, dated
as of May 1, 1999, by and between Andre-Boudin Bakeries,
Inc. and David E. Schreibman. (Incorporated by reference
to Exhibit 10.91 to Specialty Foods Corp.'s Report on
Form 10-Q for the Quarter ended March 31, 1999)
10.70 Participation Award Agreement, dated as of May 1, 1999,
between Mother's Cake & Cookie Company and Patrick J.
O'Dea. (Incorporated by reference to Exhibit 10.92 to
Specialty Foods Corp.'s Report on Form 10-Q for the
Quarter ended March 31, 1999)
12.1* Statement re Computation of Ratio of Earnings to Fixed
Charges.
21.1* Subsidiaries of SFC New Holdings, Inc.
23.1* Consent of KPMG.
23.2** Consent of Paul, Weiss, Rifkind, Wharton & Garrison (See
Exhibit 5.1).
24.1* Power of attorney (included on the signature page of
this registration statement).
25.1* Statement on Form T-1, of the Eligibility of United
States Trust Company of New York, as Trustee under the
Indenture relating to the 11 1/4% Senior Notes due 2001
and the 12 1/8% Senior Notes due 2002.
25.2* Statement on Form T-1, of the Eligibility of U.S. Trust
Company of Texas, N.A., as Trustee under the Indenture
relating to the 13 1/4% Senior Subordinated Notes due
2003.
27* Financial Data Schedule
99.1** Form of Letter of Transmittal.
99.2** Form of Notice of Guaranteed Delivery.
- ----------
* To be filed herewith.
** To be filed by amendment.
Exhibit 3.1
CERTIFICATE OF INCORPORATION
of
SFC New Holdings, Inc.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of the State of Delaware, certifies as follows:
1. Name. The name of the corporation is SFC New Holdings, Inc. (the
"Corporation").
2. Address; Registered Office and Agent. The address of the
Corporation's registered office is 9 East Loockerman Street, City of Dover,
County of Kent, State of Delaware; and its registered agent at such address is
National Corporate Research, Ltd.
3. Purposes. The purpose of the Corporation is to engage in, carry
on and conduct any lawful act or activity for which corporations may be
organized under the Delaware General Corporation Law.
4. Number of Shares. The total number of shares of all classes of
stock that the Corporation shall have authority to issue is 1,100 shares,
consisting of (a) One Hundred (100) shares of common stock, no par value per
share (the "Common Stock") and (b) One Thousand (1000) shares of preferred
stock, no par value per share (the "Preferred Stock").
<PAGE>
2
The designation, relative rights, preferences and limitations of the
shares of each class are as follows:
4.1 Common Stock.
4.1.1 Each share of Common Stock shall have one vote, and,
except as otherwise provided in respect of any other class or series of stock
now or hereafter provided for, the exclusive voting power for all purposes shall
be vested in the holders of the Common Stock.
4.1.2 Subject to the provisions of law and any other class or
series of stock now or hereafter provided for, each outstanding share of Common
Stock shall be entitled to receive such dividends and other distributions in
cash, property or shares of stock of the Corporation as may be declared thereon
by the Board of Directors from time to time out of assets of the Corporation
legally available therefor.
4.1.3 In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
Common Stock shall be entitled, after payment or provision for payment of the
debts and other liabilities of the Corporation and the amount to which the
holders of any other class or series of stock now or hereafter provided for
having a preference on distributions in the liquidation, dissolution or winding
up of the Corporation shall be entitled, together with any other class or series
of stock now or hereafter provided for not having a preference on distributions
in the liquidation, dissolution or winding up of the Corporation, to share
ratably in the remaining assets of the Corporation.
<PAGE>
3
4.2 Preferred Stock.
4.2.1 The shares of Preferred Stock may be issued from time to
time in one or more series of any number of shares, provided that the aggregate
number of shares issued and not canceled of any and all such series shall not
exceed the total number of shares of Preferred Stock hereinabove authorized, and
with distinctive serial designations, all as shall hereafter be stated and
expressed in the resolution or resolutions providing for the issue of such
shares of Preferred Stock from time to time adopted by the Board pursuant to
authority so to do which is hereby vested in the Board. Each series of shares of
Preferred Stock (a) may have such voting powers, full or limited, or may be
without voting powers; (b) may be subject to redemption at such time or times
and at such prices; (c) may be entitled to receive dividends (which may be
cumulative or non-cumulative) at such rate or rates, on such conditions and at
such times, and payable in preference to, or in such relation to, the dividends
payable on any other class or classes or series of stock; (d) may have such
rights upon the dissolution of, or upon any distribution of the assets of, the
Corporation; (e) may be made convertible into or exchangeable for, shares of any
other class or classes or of any other series of the same or any other class or
classes of shares of the Corporation at such price or prices or at such rates of
exchange and with such adjustments; (f) may be entitled to the benefit of a
sinking fund to be applied to the purchase or redemption of shares of such
series in such amount or amounts; (g) may be entitled to the benefit of
conditions and restrictions upon the creation of indebtedness of the Corporation
or any subsidiary, upon the issue of any additional shares (including additional
shares of such series or of any other series) and
<PAGE>
4
upon the payment of dividends or the making of other distributions on, and the
purchase, redemption or other acquisition by the Corporation or any subsidiary
of, any outstanding shares of the Corporation and (h) may have such other
relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof; all as shall be stated in said resolution
or resolutions providing for the issue of such shares of Preferred Stock. Any of
the voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of any such series of Preferred Stock may be made
dependent upon facts ascertainable outside of the resolution or resolutions
providing for the issue of such Preferred Stock adopted by the Board pursuant to
the authority vested in it by this Section 4.2.1, provided that the manner in
which such facts shall operate upon the voting powers, designations,
preferences, rights and qualifications, limitations or restrictions of such
series of Preferred Stock is clearly and expressly set forth in the resolution
or resolutions providing for the issue of such Preferred Stock. The term "facts"
as used in the next preceding sentence shall have the meaning given to it in
section 151(a) of the Delaware General Corporation Law. Shares of Preferred
Stock of any series that have been redeemed (whether through the operation of a
sinking fund or otherwise) or that if convertible or exchangeable, have been
converted into or exchanged for shares of any other class or classes shall have
the status of authorized and unissued shares of Preferred Stock of the same
series and may be reissued as a part of the series of which they were originally
a part or may be reclassified and reissued as part of a new series of shares of
Preferred Stock to be created by resolution or resolutions of the Board or as
part of any other series of shares of Preferred Stock, all subject to the
<PAGE>
5
conditions or restrictions on issuance set forth in the resolution or
resolutions adopted by the Board providing for the issue of any series of shares
of Preferred Stock.
4.2.2 Subject to the provisions of any applicable law or of
the By-laws of the Corporation, as from time to time amended, with respect to
the closing of the transfer books or the fixing of a record date for the
determination of stockholders entitled to vote and except as otherwise provided
by law or by the resolution or resolutions providing for the issue of any series
of shares of Preferred Stock, the holders of outstanding shares of Common Stock
shall exclusively possess voting power for the election of directors and for all
other purposes, each holder of record of shares of Common Stock being entitled
to one vote for each share of Common Stock standing in his or her name on the
books of the Corporation. Except as otherwise provided by the resolution or
resolutions providing for the issue of any series of shares of Preferred Stock,
the holders of shares of Common Stock shall be entitled, to the exclusion of the
holders of shares of Preferred Stock of any and all series, to receive such
dividends as from time to time may be declared by the Board. In the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of shares of
Preferred Stock of the full amount to which they shall be entitled pursuant to
the resolution or resolutions providing for the issue of any series of shares of
Preferred Stock, the holders of shares of Common Stock shall be entitled, to the
exclusion of the holders of shares of Preferred Stock of any and all series, to
share, ratably according to the number of shares of Common Stock held by them,
in all remaining assets of the Corporation available for distribution to its
stockholders.
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6
4.2.3 Subject to the provisions of this Certificate of
Incorporation and except as otherwise provided by law, the stock of the
Corporation, regardless of class, may be issued for such consideration and for
such corporate purposes as the Board may from time to time determine.
5. Name and Address of Incorporator. The name and mailing address of
the incorporator are: Mitchell S. Fishman, 1285 Avenue of the Americas, New
York, New York 10019-6064.
6. Election of Directors. Members of the Board of Directors may be
elected either by written ballot or by voice vote.
7. Limitation of Liability. No Director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director, except for liability (a) for any
breach of the Director's duty of loyalty to the Corporation or its stockholders,
(b) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (c) under Section 174 of the Delaware
General Corporation Law or (d) for any transaction from which the Director
derived any improper personal benefits.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a Director of the Corporation existing at the time of such repeal
or modification.
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7
8. Indemnification.
8.1 To the extent not prohibited by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party to
any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Section 8.
8.2 The Corporation shall, from time to time, reimburse or
advance to any Director or officer or other person entitled to indemnification
hereunder the funds necessary for payment of expenses, including attorneys' fees
and disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; provided, however, that, if required by
the Delaware General Corporation Law, such expenses incurred by or on behalf of
any Director or officer or other person may be paid in advance of the final
disposition of a Proceeding
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8
only upon receipt by the Corporation of an undertaking, by or on behalf of such
Director or officer (or other person indemnified hereunder), to repay any such
amount so advanced if it shall ultimately be determined by final judicial
decision from which there is no further right of appeal that such Director,
officer or other person is not entitled to be indemnified for such expenses.
8.3 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this Certificate of Incorporation, the
By-laws of the Corporation (the "Bylaws"), any agreement, any vote of
stockholders or disinterested Directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office.
8.4 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall continue as to a person who has ceased to be a Director or officer (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
8.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
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9
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 8, the By-laws or under Section 145 of the
Delaware General Corporation Law or any other provision of law.
8.6 The provisions of this Section 8 shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time while this Section 8 is in effect and any
other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer, or other person intend to be
legally bound. No repeal or modification of this Section 8 shall affect any
rights or obligations with respect to any state of facts then or theretofore
existing or thereafter arising or any proceeding theretofore or thereafter
brought or threatened based in whole or in part upon any such state of facts.
8.7 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) to have made a determination prior to the
commencement of such action that such indemnification or reimbursement or
advancement of expenses is proper in the circumstances nor an actual
determination by the Corporation (including its Board of
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10
Directors, its independent legal counsel and its stockholders) that such person
is not entitled to such indemnification or reimbursement or advancement of
expenses shall constitute a defense to the action or create a presumption that
such person is not so entitled. Such a person shall also be indemnified for any
expenses incurred in connection with successfully establishing his or her right
to such indemnification or reimbursement or advancement of expenses, in whole or
in part, in any such proceeding.
8.8 Any Director or officer of the Corporation serving in any
capacity (a) another corporation of which a majority of the shares entitled to
vote in the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
8.9 Any person entitled to be indemnified or to reimbursement
or advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the right to indemnification or reimbursement or advancement of
expenses interpreted on the basis of the applicable law in effect at the time of
the occurrence of the event or events giving rise to the applicable Proceeding,
to the extent permitted by law, or on the basis of the applicable law in effect
at the time such indemnification or reimbursement or advancement of expenses is
sought. Such election shall be made, by a notice in writing to the Corporation,
at the time indemnification or reimbursement or advancement of expenses is
sought; provided, however, that if no such notice is given, the right to
indemnification or
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11
reimbursement or advancement of expenses shall be determined by the law in
effect at the time indemnification or reimbursement or advancement of expenses
is sought.
9. Adoption, Amendment and/or Repeal of By-Laws. The Board of
Directors may from time to time (after adoption by the undersigned of the
original By-laws) make, alter or repeal the By-laws by a vote of two-thirds of
the entire Board of Directors that would be in office if no vacancy existed,
whether or not present at a meeting; provided, however, that any By-laws made,
amended or repealed by the Board of Directors may be amended or repealed, and
any By-laws may be made, by the stockholders of the Corporation by vote of a
majority of the holders of shares of stock of the Corporation entitled to vote
in the election of Directors of the Corporation.
WITNESS the signature of this Certificate as of October 14, 1998.
/s/ Mitchell S. Fishman
---------------------------------
Mitchell S. Fishman, Incorporator
Exhibit 3.2
BY-LAWS
of
SFC NEW HOLDINGS, INC.
(A Delaware Corporation)
Effective as of June 2, 1999
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires, the term:
1.1 "Assistant Secretary" means an Assistant Secretary of the Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means these by-laws of the Corporation, as amended from time
to time.
1.5 "Certificate of Incorporation" means the initial certificate of
incorporation of the Corporation, as amended, supplemented or restated from time
to time.
1.6 "Chairman" means the Chairman of the Board of Directors of the
Corporation.
1.7 "Corporation" means SFC New Holdings, Inc.
1.8 "Directors" means directors of the Corporation.
1.9 "Entire Board" means all directors of the Corporation in office,
whether or not present at a meeting of the Board, but disregarding vacancies.
1.10 "General Corporation Law" means the General Corporation Law of the
State of Delaware, amended from time to time.
1.11 "Managing Director" means a Managing Director of the Corporation.
1.12 "Office of the Corporation" means the executive office of the
Corporation, anything in Section 131 of the General Corporation Law to the
contrary notwithstanding.
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1.13 "President" means the President of the Corporation.
1.14 "Chief Operating Officer" means the Chief Operating Officer of the
Corporation.
1.15 "Secretary" means the Secretary of the Corporation.
1.16 "Stockholders" means stockholders of the Corporation.
1.17 "Treasurer" means the Treasurer of the Corporation.
1.18 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 Place of Meetings. Every meeting of Stockholders shall be held at the
Office of the Corporation or at such other place within or without the State of
Delaware as shall be specified or fixed in the notice of such meeting or in the
waiver of notice thereof.
2.2 Annual Meeting. A meeting of Stockholders shall be held annually for
the election of Directors and the transaction of other business at such hour and
on such business day in April or as otherwise may be determined by the Board and
designated in the notice of meeting.
2.3 Deferred Meetings for Election of Directors, Etc. If the annual
meeting of Stockholders for the election of Directors and the transaction of
other business is not held within the month specified in Section 2.2 hereof, the
Board shall call a meeting of Stockholders for the election of Directors and the
transaction of other business as soon thereafter as convenient.
2.4 Other Special Meetings. A special meeting of Stockholders (other than
a special meeting for the election of Directors), unless otherwise prescribed by
statute, may be called at any time by the Board or by the President or by the
Secretary. At any special meeting of Stockholders only such business may be
transacted as is related to the purpose or purposes of such meeting set forth in
the notice thereof given pursuant to Section 2.6 hereof or in any waiver of
notice thereof given pursuant to Section 2.7 hereof.
2.5 Fixed Record Date. For the purpose of (a) determining the Stockholders
entitled (i) to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, (ii) to express consent to corporation action in writing
without a meeting, or (iii) to receive payment of any dividend or other
distribution or allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock; or (b) any other lawful action, the
Board may fix a record date,
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which record date shall not precede the date upon which the resolution fixing
the record date was adopted by the Board and which record date shall not be (x)
in the case of clause (a)(i) above, more than sixty nor less than ten days
before the date of such meeting, (y) in the case of clause (a)(ii) above, more
than ten days after the date upon which the resolution fixing the record date
was adopted by the Board, and (z) in the case of clause (a)(iii) or (b) above,
more than sixty days prior to such action. If no such record date is fixed:
2.5.1 the record date for determining Stockholders entitled to
notice of or to vote at a meeting of Stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or,
if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held;
2.5.2 the record date for determining Stockholders entitled to
express consent to corporate action in writing without a meeting, when no
prior action by the Board is required under the General Corporation Law,
shall be the first day on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office in the State of Delaware, (its principal
place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of Stockholders are
recorded; and when prior action by the Board is required under the General
Corporation Law, the record date for determining Stockholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the date on which the Board adopts the resolution
taking such prior action; and
2.5.3 the record date for determining Stockholders for any purpose
other than those specified in Sections 2.5.1 and 2.5.2 shall be at the
close of business on the day on which the Board adopts the resolution
relating thereto.
When a determination of Stockholders entitled to notice of or to
vote at any meeting of Stockholders has been made as provided in this Section
2.5, such determination shall apply to any adjournment thereof unless the Board
fixes a new record date for the adjourned meeting. Delivery made to the
Corporation's registered office in accordance with Section 2.5.2 shall be by
hand or by certified or registered mail, return receipt requested.
2.6 Notice of Meeting of Stockholders. Except as otherwise provided in
Sections 2.5 and 2.7 hereof, whenever under the provisions of any statute, the
Certificate of Incorporation or these By-laws, Stockholders are required or
permitted to take any action at a meeting, written notice shall be given stating
the place, date and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called. Unless otherwise
provided by any statute, the Certificate of Incorporation or these By-laws, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten nor more than sixty days before the date of the meeting, to each
Stockholder entitled to notice of or to vote at
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such meeting. If mailed, such notice shall be deemed to be given when deposited
in the United States mail, with postage prepaid, directed to the Stockholder at
his or her address as it appears on the records of the Corporation. An affidavit
of the Secretary or an Assistant Secretary or of the transfer agent of the
Corporation that the notice required by this Section 2.6 has been given shall,
in the absence of fraud, be prima facie evidence of the facts stated therein.
When a meeting is adjourned to another time or place, notice need not be given
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted at the meeting as
originally called. If, however, the adjournment is for more than thirty days, or
if after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each Stockholder of record
entitled to vote at the meeting.
2.7 Waivers of Notice. Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the Stockholder or Stockholders entitled to said notice,
whether before or after the event as to which such notice is required, shall be
deemed equivalent to notice. Attendance by a Stockholder at a meeting shall
constitute a waiver of notice of such meeting except when the Stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting to the transaction of any business on the ground that the meeting has
not been lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Stockholders need be
specified in any written waiver of notice unless so required by statute, the
Certificate of Incorporation or these By-laws.
2.8 List of Stockholders. The Secretary shall prepare and make, or cause
to be prepared and made, at least ten days before every meeting of Stockholders,
a complete list of the Stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each Stockholder and the number
of shares registered in the name of each Stockholder. Such list shall be open to
the examination of any Stockholder, the stockholder's agent, or attorney, at the
stockholder's expense, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any Stockholder who is present. The Corporation shall maintain the
Stockholder list in written form or in another form capable of conversion into
written form within a reasonable time. Upon the willful neglect or refusal of
the Directors to produce such a list at any meeting for the election of
Directors, they shall be ineligible for election to any office at such meeting.
The stock ledger shall be the only evidence as to who are the Stockholders
entitled to examine the stock ledger, the list of Stockholders or the books of
the Corporation, or to vote in person or by proxy at any meeting of
Stockholders.
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2.9 Quorum of Stockholders; Adjournment. Except as otherwise provided by
any statute, the Certificate of Incorporation or these By-laws, the holders of
one-third of all outstanding shares of stock entitled to vote at any meeting of
Stockholders, present in person or represented by proxy, shall constitute a
quorum for the transaction of any business at such meeting. When a quorum is
once present to organize a meeting of Stockholders, it is not broken by the
subsequent withdrawal of any Stockholders. The holders of a majority of the
shares of stock present in person or represented by proxy at any meeting of
Stockholders, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. Shares of its own
stock belonging to the Corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held, directly or indirectly, by the Corporation, shall neither
be entitled to vote nor be counted for quorum purposes; provided, however, that
the foregoing shall not limit the right of the Corporation to vote stock,
including but not limited to its own stock, held by it in a fiduciary capacity.
2.10 Voting: Proxies. Unless otherwise provided in the Certificate of
Incorporation, every Stockholder of record shall be entitled at every meeting of
Stockholders to one vote for each share of capital stock standing in his or her
name on the record of Stockholders determined in accordance with Section 2.5
hereof. If the Certificate of Incorporation provides for more or less than one
vote for any share on any matter, each reference in the By-laws or the General
Corporation Law to a majority or other proportion of stock shall refer to such
majority or other proportion of the votes of such stock. The provisions of
Sections 212 and 217 of the General Corporation Law shall apply in determining
whether any shares of capital stock may be voted and the persons, if any,
entitled to vote such shares; but the Corporation shall be protected in assuming
that the persons in whose names shares of capital stock stand on the stock
ledger of the Corporation are entitled to vote such shares. Holders of
redeemable shares of stock are not entitled to vote after the notice of
redemption is mailed to such holders and a sum sufficient to redeem the stocks
has been deposited with a bank, trust company, or other financial institution
under an irrevocable obligation to pay the holders the redemption price on
surrender of the shares of stock. At any meeting of Stockholders (at which a
quorum was present to organize the meeting) all matters, except as otherwise
provided by statute or by the Certificate of Incorporation or by these By-laws,
shall be decided by a majority of the votes cast at such meeting by the holders
of shares present in person or represented by proxy and entitled to vote
thereon, whether or not a quorum is present when the vote is taken. All
elections of Directors shall be by written ballot unless otherwise provided in
the Certificate of Incorporation. In voting on any other question on which a
vote by ballot is required by law or is demanded by any Stockholder entitled to
vote, the voting shall be by ballot. Each ballot shall be signed by the
Stockholder voting or the stockholder's proxy and shall state the number of
shares voted. On all other questions, the voting may be viva voce. Each
Stockholder entitled to vote at a meeting of Stockholders or to express consent
or dissent to corporate action in writing without a meeting may authorize
another person or persons to act for such Stockholder by proxy. The validity and
enforceability of any proxy shall be determined in accordance with Section 212
of the General Corporation Law. A
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Stockholder may revoke any proxy that is not irrevocable by attending the
meeting and voting in person or by filling an instrument in writing revoking the
proxy or by delivering a proxy in accordance with applicable law bearing a later
date to the Secretary.
2.11 Voting Procedures and Inspectors of Election at Meetings of
Stockholders. The Board, in advance of any meeting of Stockholders, may appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Board may designate one or more persons as alternate inspectors to replace
any inspector who fails to act. If no inspector or alternate is able to act at a
meeting, the person presiding at the meeting may appoint, and on the request of
any Stockholder entitled to vote thereat shall appoint, one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge of his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or his
ability. The inspectors shall (a) ascertain the number of shares outstanding and
the voting power of each, (b) determine the shares represented at the meeting
and the validity of proxies and ballots, (c) count all votes and ballots, (d)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (e) certify their
determination of the number of shares represented at the meeting and their count
of all votes and ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of their duties. Unless
otherwise provided by the Board, the date and time of the opening and the
closing of the polls for each matter upon which the Stockholders will vote at a
meeting shall be determined by the person presiding at the meeting and shall be
announced at the meeting. No ballot, proxies or votes, or any revocation thereof
or change thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court of Chancery of the State of Delaware upon application by
a Stockholder shall determine otherwise.
2.12 Organization. At each meeting of Stockholders, the Chairman, or in
the absence of the Chairman the President, or in the absence of the President a
Vice President, and in case more than one Vice President shall be present, that
Vice President designated by the Board (or in the absence of any such
designation. the most senior Vice President, based on age, present), shall act
as chairman of the meeting. The Secretary, or in his or her absence one of the
Assistant Secretaries, shall act as secretary of the meeting. In case none of
the officers above designated to act as chairman or secretary of the meeting,
respectively, shall be present, a chairman or a secretary of the meeting, as the
case may be, shall be chosen by a majority of the votes cast at such meeting by
the holders of shares of capital stock present in person or represented by proxy
and entitled to vote at the meeting.
2.13 Order of Business. The order of business at all meetings of
Stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority of the votes cast at such meeting by the holders of
shares of capital stock present in person or represented by proxy and entitled
to vote at the meeting.
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2.14 Written Consent of Stockholders Without a Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required by the General
Corporation Law to be taken at any annual or special meeting of Stockholders may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered (by hand or by certified or registered mail, return receipt
requested) to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
Stockholders are recorded. Every written consent shall bear the date of
signature of each Stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within 60
days of the earliest dated consent delivered in the manner required by this
Section 2.14, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation as aforesaid. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those Stockholders who have not consented in writing.
ARTICLE 3
DIRECTORS
3.1 General Powers. Except as otherwise provided in the Certificate of
Incorporation, the business and affairs of the Corporation shall be managed by
or under the direction of the Board. The Board may adopt such rules and
regulations, not inconsistent with the Certificate of Incorporation or these
By-laws or applicable laws, as it may deem proper for the conduct of its
meetings and the management of the Corporation. In addition to the powers
expressly conferred by these By-laws, the Board may exercise all powers and
perform all acts that are not required, by these By-laws or the Certificate of
Incorporation or by statute, to be exercised and performed by the Stockholders.
3.2 Number: Qualification: Term of Office. The Board shall consist of one
or more members. The number of Directors shall be fixed initially by the
incorporator and may thereafter be changed from time to time by action of the
Stockholders or by action of the Board. Directors need not be Stockholders. Each
Director shall hold office until a successor is elected and qualified or until
the Director's death, resignation or removal.
3.3 Election. Directors shall, except as otherwise required by statute or
by the Certificate of Incorporation, be elected by a plurality of the votes cast
at a meeting of Stockholders by the holders of shares entitled to vote in the
election.
3.4 Newly Created Directorships and Vacancies. Unless otherwise provided
in the Certificate of Incorporation, newly created Directorships resulting
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from an increase in the number of Directors and vacancies occurring in the Board
for any other reason, including the removal of Directors without cause, may be
filled by the affirmative votes of a majority of the entire Board, although less
than a quorum, or by a sole remaining Director, or may be elected by a plurality
of the votes cast by the holders of shares of capital stock entitled to vote in
the election at a special meeting of Stockholders called for that purpose. A
Director elected to fill a vacancy shall be elected to hold office until a
successor is elected and qualified, or until the Director's earlier death,
resignation or removal.
3.5 Resignation. Any Director may resign at any time by written notice to
the Corporation. Such resignation shall take effect at the time therein
specified, and, unless otherwise specified in such resignation, the acceptance
of such resignation shall not be necessary to make it effective.
3.6 Removal. Subject to the provisions of Section 141(k) of the General
Corporation Law, any or all of the Directors may be removed with or without
cause by vote of the holders of a majority of the shares then entitled to vote
at an election of Directors.
3.7 Compensation. Each Director, in consideration of his or her service as
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at Directors' meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable
out-of-pocket expenses, if any, incurred by such Director in connection with the
performance of his or her duties. Each Director who shall serve as a member of
any committee of Directors of Directors in consideration of serving as such
shall be entitled to such additional amount per annum or such fees for
attendance at committee meetings, or both, as the Board may from time to time
determine, together with reimbursement for the reasonable out of-pocket
expenses, if any, incurred by such Director in the performance of his or her
duties. Nothing contained in this Section 3.7 shall preclude any Director from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
3.8 Times and Places of Meeting. The Board may hold meetings, both regular
and special, either within or without the State of Delaware. The times and
places for holding meetings of the Board may be fixed from time to time by
resolution of the Board or (unless contrary to a resolution of the Board) in the
notice of the meeting.
3.9 Annual Meetings. On the day when and at the place where the annual
meeting of Stockholders for the election of Directors is held, and as soon as
practicable thereafter, the Board may hold its annual meeting, without notice of
such meeting, for the purposes of organization, the election of officers and the
transaction of other business. The annual meeting of the Board may be held at
any other time and place specified in a notice given as provided in Section 3.11
hereof for special meetings of the Board or in a waiver of notice thereof.
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3.10 Regular Meetings. Regular meetings of the Board may be held without
notice at such times and at such places as shall from time to time be determined
by the Board.
3.11 Special Meeting. Special meetings of the Board may be called by the
Chairman, the President or the Secretary or by any two or more Directors then
serving on at least one day's notice to each Director given by one of the means
specified in Section 3.14 hereof other than by mail, or on at least three days'
notice if given by mail. Special meetings shall be called by the Chairman,
President or Secretary in like manner and on like notice on the written request
of any two or more of the Directors then serving.
3.12 Telephone Meetings. Directors or members of any committee designated
by the Board may participate in a meeting of the Board or of such committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 3.12 shall constitute
presence in person at such meeting.
3.13 Adjourned Meetings. A majority of the Directors present at any
meeting of the Board, including an adjourned meeting, whether or not a quorum is
present, may adjourn such meeting to another time and place. At least one day's
notice of any adjourned meeting of the Board shall be given to each Director
whether or not present at the time of the adjournment, if such notice shall be
given by one of the means specified in Section 3.14 hereof other than by mail,
or at least three days' notice if by mail. Any business may be transacted at an
adjourned meeting that might have been transacted at the meeting as originally
called.
3.14 Notice Procedure. Subject to Sections 3.11 and 3.17 hereof, whenever,
under the provisions of any statute, the Certificate of Incorporation or these
By-laws, notice is required to be given to any Director, such notice shall be
deemed given effectively if given in person or by telephone, by mail addressed
to such Director at such Director's address as it appears on the records of the
Corporation, with postage thereon prepaid, or by telegram, telex, telecopy or
similar means addressed as aforesaid.
3.15 Waiver of Notice. Whenever the giving of any notice is required by
statute, the Certificate of Incorporation or these By-laws, a waiver thereof, in
writing, signed by the person or persons entitled to said notice, whether before
or after the event as to which such notice is required, shall be deemed
equivalent to notice. Attendance by a person at a meeting shall constitute a
waiver of notice of such meeting except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Directors or a committee of Directors
need be specified in any written waiver of notice unless so required by statute,
the Certificate of Incorporation or these By-laws.
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3.16 Organization. At each meeting of the Board, the Chairman, or in the
absence of the Chairman the President, or in the absence of the President a
chairman chosen by a majority of the Directors present, shall preside. The
Secretary shall act as secretary at each meeting of the Board. In case the
Secretary shall be absent from any meeting of the Board, an Assistant Secretary
shall perform the duties of secretary at such meeting; and in the absence from
any such meeting of the Secretary and all Assistant Secretaries, the person
presiding at the meeting may appoint any person to act as secretary of the
meeting.
3.17 Quorum of Directors. The presence in person of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business at any meeting of the Board, but a majority of a smaller
number may adjourn any such meeting to a later date.
3.18 Action by Majority Vote. Except as otherwise expressly required by
statute, the Certificate of Incorporation or these By-laws, the act of a
majority of the Directors present at the meeting at which a quorum present shall
be the act of the Board.
3.19 Action Without Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting if all Directors or members of such committee, as the case may
be, consent thereto in writing, and the writings or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of the entire Board,
designate one or more committees, each committee to consist of one or more of
the Directors of the Corporation. The Board may designate one or more Directors
as alternate members of any committee to replace absent or disqualified members
at any meeting of such committee. If a member of a committee shall be absent
from any meeting, or disqualified from voting thereat, the remaining member or
members present and not disqualified from voting, whether or not such member or
members constitute a quorum, may, by a unanimous vote, appoint another member of
the Board to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in a resolution of the Board
passed as aforesaid, shall have and may exercise all the powers and authority of
the Board in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be impressed on all papers that may
require it, but no such committee shall have the power or authority of the Board
in reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation under Section 251 or 252 of the General Corporation
Law, selling, leasing or exchanging all or substantially all of the
Corporation's property and assets, dissolving
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or revoking the dissolution of the Corporation or amending the By-laws of the
Corporation; and, unless the resolution designating it expressly so provides, no
such committee shall have the power and authority to declare a dividend, to
authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board. Unless otherwise specified in the resolution
of the Board designating a committee, at all meetings of such committee a
majority of the total number of members of the committee shall constitute a
quorum for the transaction of business, and the vote of a majority of the
members of the committee present at any meeting at which there is a quorum shall
be the act of the committee. Each committee shall keep regular minutes of its
meetings. Unless the Board otherwise provides, each committee designated by the
Board may make, alter and repeal rules for the conduct of its business. In the
absence of such rules each committee shall conduct its business in the same
manner as the Board conducts its business pursuant to Article 3 of these Bylaws.
ARTICLE 5
OFFICERS
5.1 Positions. The officers of the Corporation shall be a Chairman, a
President, a Chief Operating Officer, a Secretary, a Treasurer and such other
officers as the Board may appoint, including one or more Vice Presidents, one or
more Managing Directors and one or more Assistant Secretaries and Assistant
Treasurers, who shall exercise such powers and perform such duties as shall be
determined from time to time by the Board. The Board may designate one or more
Vice Presidents as Executive Vice Presidents and may use descriptive words or
phrases to designate the standing, seniority or areas of special competence of
the Vice Presidents elected or appointed by it. Any number of offices may be
held by the same person unless the Certificate of Incorporation or these By-laws
otherwise provide.
5.2 Appointment. The officers of the Corporation shall be chosen by the
Board annually or at such other time or times as the Board shall determine.
5.3 Compensation. The compensation of all officers of the Corporation
shall be fixed by the Board. No officer shall be prevented from receiving a
salary or other compensation by reason of the fact that the officer is also a
Director.
5.4 Term of Office. Each officer of the Corporation shall hold office
until such officer's successor is chosen and qualifies or until such officer's
earlier death, resignation or removal. Any officer may resign at any time upon
written notice to the Corporation. Such resignation shall take effect at the
date of receipt of such notice or at such later time as is therein specified,
and, unless otherwise specified, the acceptance of such resignation shall not be
necessary to make it effective. The resignation of an officer shall be without
prejudice to the contract rights of the Corporation, if any. Any officer elected
or appointed by the Board may be removed
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at any time with or without cause, by vote of a majority of the entire Board.
Any vacancy occurring in any office of the Corporation shall be filled by the
Board. The removal of an officer without cause shall be without prejudice to the
officer's contract rights, if any. The election or appointment of an officer
shall not of itself create contract rights.
5.5 Fidelity Bonds. The Corporation may secure the fidelity of any or all
of its officers or agents by bond or otherwise.
5.6 Chairman. The Chairman shall preside at all meetings of the Board and
shall exercise such powers and perform such other duties as shall be determined
from time to time by the Board.
5.7 President. The President shall be the Chief Executive Officer of the
Corporation and shall have general supervision over the business of the
Corporation, subject, however, to the control of the Board and of any duly
authorized committee of Directors. The President shall preside at all meetings
of the Stockholders and at all meetings of the Board at which the Chairman is
not present. The President may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts and other instruments except in cases in
which the signing and execution thereof shall be expressly delegated by the
Board or by these By-laws to some other officer or agent of the Corporation or
shall be required by statute otherwise to be signed or executed and, in general,
the President shall perform all duties incident to the office of President of a
corporation and such other duties as may from time to time be assigned to the
President by the Board.
5.8 Chief Operating Officer. The Chief Operating Officer shall be the
Chief Operating Officer of the Corporation and shall be responsible for the day
to day supervision of the business of the Corporation and the businesses
conducted by the Corporation's subsidiaries, subject, however, to the
supervision of the President and the control of the Board and of any duly
authorized committee of Directors. At the request of the President, or, in the
President's absence, at the request of the Board, the Chief Operating Officer
shall perform all of the duties of the President and, in so performing, shall
have all the powers of, and be subject to all restrictions upon, the President.
The Chief Operating Officer may sign and execute in the name of the Corporation
deeds, mortgages, bonds, contracts or other instruments, except in cases in
which the signing and execution thereof shall be expressly delegated by the
Board or by these By-laws to some other officer or agent of the Corporation, or
shall be required by statute otherwise to be signed or executed, and the Chief
Operating Officer shall perform such other duties as from time to time may be
assigned to the Chief Operating Officer by the Board or by the President.
5.9 Vice Presidents. At the request of the President, or in the
President's and the Chief Operating Officer's absence, at the request of the
Board, the Vice Presidents shall (in such order as may be designated by the
Board or, in the absence of any such designation, in order of seniority based on
age) perform all of the duties of the President and, in so performing, shall
have all the powers of, and be subject to
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all restrictions upon, the President. Any Vice President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments, except in cases in which the signing and execution thereof shall be
expressly delegated by the Board or by these By-laws to some other officer or
agent of the Corporation, or shall be required by statute otherwise to be signed
or executed, and each Vice President shall perform such other duties as from
time to time may be assigned to such Vice President by the Board or by the
President.
5.10 Managing Directors. Managing Directors shall perform such duties as
from time to time may be assigned to them by the Board or by the President. Any
Managing Director may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts or other instruments, except in cases in which the
signing and execution thereof shall be expressly delegated by the Board or by
the By-laws to some other officer or agent of the Corporation, or shall be
required by statute otherwise to be signed or executed.
5.11 Secretary. The Secretary shall attend all meetings of the Board and
of the Stockholders and shall record all the proceedings of the meetings of the
Board and of the shareholders in a book to be kept for that purpose, and shall
perform like duties for committees of the Board, when required. The Secretary
shall give, or cause to be given, notice of all special meetings of the Board
and of the Stockholders and shall perform such other duties as may be prescribed
by the Board or by the President, under whose supervision the Secretary shall
be. The Secretary shall have custody of the corporate seal of the Corporation,
and the Secretary, or an Assistant Secretary, shall have authority to impress
the same on any instrument requiring it, and when so impressed the seal may be
attested by the signature of the Secretary or by the signature of such Assistant
Secretary. The Board may give general authority to any other officer to impress
the seal of the Corporation and to attest the same by such officer's signature.
The Secretary or an Assistant Secretary may also attest all instruments signed
by the President or any Vice President. The Secretary shall have charge of all
books, records and papers of the Corporation relating to its organization and
management, shall see the reports, statements and other documents required by
statute are property kept and filed and, in general, shall perform all duties
incident to the office of Secretary of a corporation and such other duties as
may from time to time be assigned to the Secretary by the Board or by the
President.
5.12 Treasurer. The Treasurer shall have charge and custody of, and be
responsible for, all funds, securities and notes of the Corporation; receive and
give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized depositories of the Corporation signed in such manner
as shall be determined by the Board and be responsible for the accuracy of the
amounts of all moneys so disbursed; regularly enter or cause to be entered in
books or other records maintained for the purpose full and adequate account of
all moneys received or paid for the account of the Corporation; have the right
to require from time to time reports or statements
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giving such information as the Treasurer may desire with respect to any and all
financial transactions of the Corporation from the officers or agents
transacting the same; render to the President or the Board, whenever the
President or the Board shall require the Treasurer so to do, an account of the
financial condition of the Corporation and of all financial transactions of the
Corporation; exhibit at all reasonable times the records and books of account to
any of the Directors upon application at the office of the Corporation where
such records and books are kept; disburse the funds of the Corporation as
ordered by the Board; and, in general, perform all duties incident to the office
of Treasurer of a corporation and such other duties as may from time to time be
assigned to the Treasurer by the Board or the President.
5.13 Assistant Secretaries and Assistant Treasurers. Assistant Secretaries
and Assistant Treasurers shall perform such duties as shall be assigned to them
by the Secretary or by the Treasurer, respectively, or by the Board or by the
President.
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 Execution of Contracts. The Board, except as otherwise provided in
these Bylaws, may prospectively or retroactively authorize any officer or
officers, employee or employees or agent or agents, in the name and on behalf of
the Corporation, to enter into any contract or execute and deliver any
instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 Loans. The Board may prospectively or retroactively authorize the
President or any other officer, employee or agent of the Corporation to effect
loans and advances at any time for the Corporation from any bank, trust company
or other institution, or from any fund, corporation or individual, and for such
loans and advances the person so authorized may make, execute and deliver
promissory notes, bonds or other certificates or evidences of indebtedness of
the Corporation, and, when authorized by the Board to do so, may pledge and
hypothecate or transfer any securities or other property of the Corporation as
security for any such loans or advances. Such authority conferred by the Board
may be general or confined to specific instances, or otherwise limited.
6.3 Checks, Draft, Etc. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation and all evidences of
indebtedness of the Corporation shall be signed on behalf of the Corporation in
such manner as shall from time to time be determined by resolution of the Board.
6.4 Deposits. The funds of the Corporation not otherwise employed shall be
deposited from time to time to the order of the Corporation with such banks,
trust companies, investment banking firms, financial institutions or other
depositories as the Board may select or as may be selected by an officer,
employee or agent of the
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Corporation to whom such power to select may from time to time be delegated by
the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 Certificates Representing Shares. The shares of capital stock of the
Corporation shall be represented by certificates in such form (consistent with
the provisions of Section 158 of the General Corporation Law) as shall be
approved by the Board. Such certificates shall be signed by the Chairman, the
President or a Vice President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer, and may be impressed with the seal of
the Corporation or a facsimile thereof. The signatures of the officers upon a
certificate may be facsimiles, if the certificate is countersigned by a transfer
agent or registrar other than the Corporation itself or its employee. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, such
certificate may, unless otherwise ordered by the Board, be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue.
7.2 Transfer of Shares. Transfers of shares of capital stock of the
Corporation shall be made only on the books of the Corporation by the holder
thereof or by the holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Canceled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of capital stock shall stand
on the books of the Corporation shall be deemed the owner thereof to receive
dividends, to vote as such owner and for all other purposes as respects the
Corporation. No transfer of shares of capital stock shall be valid against the
Corporation, its Stockholders and creditors for any purpose, except to render
the transferee liable for the debts of the Corporation to the extent provided by
law, until such transfer shall have been entered on the books of the Corporation
by an entry showing from and to whom transferred.
7.3 Transfer and Registry Agents. The Corporation may from time to time
maintain one or more transfer offices or agents and registry offices or agents
at such place or places as may be determined from time to time by the Board.
7.4 Lost, Destroyed, Stolen and Mutilated Certificates. The holder of any
shares of capital stock of the Corporation shall immediately notify the
Corporation of any loss, destruction, theft or mutilation of the certificate
representing such shares, and the Corporation may issue a new certificate to
replace the certificate alleged to
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have been lost, destroyed, stolen or mutilated. The Board may, in its
discretion, as a condition to the issue of any such new certificate, require the
owner of the lost, destroyed, stolen or mutilated certificate, or his or her
legal representatives, to make proof satisfactory to the Board of such loss,
destruction, theft or mutilation and to advertise such fact in such manner as
the Board may require, and to give the Corporation and its transfer agents and
registrars, or such of them as the Board may require, a bond in such form, in
such sums and with such surety or sureties as the Board may direct, to indemnify
the Corporation and its transfer agents and registrars against any claim that
may be made against any of them on account of the continued existence of any
such certificate so alleged to have been lost, destroyed, stolen or mutilated
and against any expense in connection with such claim.
7.5 Rules and Regulations. The Board may make such rules and regulations
as it may deem expedient, not inconsistent with these By-laws or with the
Certificate of Incorporation, concerning the issue, transfer and registration of
certificates representing shares of its capital stock.
7.6 Restriction on Transfer of Stock. A written restriction on the
transfer or registration of transfer of capital stock of the Corporation, if
permitted by Section 202 of the General Corporation Law and noted conspicuously
on the certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder, including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such capital
stock, a restriction, even though permitted by Section 202 of the General
Corporation Law, shall be ineffective except against a person with actual
knowledge of the restriction. A restriction on the transfer or registration of
transfer of capital stock of the Corporation may be imposed either by the
Certificate of Incorporation or by an agreement among any number of Stockholders
or among such Stockholders and the Corporation. No restriction so imposed shall
be binding with respect to capital stock issued prior to the adoption of the
restriction unless the holders of such capital stock are parties to an agreement
or voted in favor of the restriction.
7.7 Dividends, Surplus, Etc. Subject to the provisions of the Certificate
of Incorporation and of law, the Board:
7.7.1 may declare and pay dividends or make other distributions on
the outstanding shares of capital stock in such amounts and at such time
or times as it, in its discretion, shall deem advisable giving due
consideration to the condition of the affairs of the Corporation;
7.7.2 may use and apply, in its discretion, any of the surplus of
the Corporation in purchasing or acquiring any shares of capital stock of
the Corporation, or purchase warrants therefor, in accordance with law, or
any of its bonds, debentures, notes, scrip or other securities or
evidences of indebtedness; and
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7.7.3 may set aside from time to time out of such surplus or net
profits such sum or sums as, in its discretion, it may think proper, as a
reserve fund to meet contingencies, or for equalizing dividends or for the
purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnity Undertaking. To the extent not prohibited by law, the
Corporation shall indemnify any person who is or was made, or threatened to be
made, a party to any threatened, pending or completed action, suit or proceeding
(a "Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the Corporation
to procure a judgment in its favor, by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a Director or
officer of the Corporation, or is or was serving in any capacity at the request
of the Corporation for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments, fines, penalties, excise taxes, amounts paid in settlement and costs,
charges and expenses (including attorneys' fees and disbursements). Persons who
are not Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request of
the Corporation to the extent the Board at any time specifies that such persons
are entitled to the benefits of this Section 8.
8.2 Advancement of Expenses. The Corporation shall, from time to time,
reimburse or advance to any Director or officer or other person entitled to
indemnification hereunder the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding,
in advance of the formal disposition of such Proceeding; provided, however,
that, if required by the General Corporation Law, such expenses incurred by or
on behalf of any Director or officer or other person may be paid in advance of
the final disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such Director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 Rights Not Exclusive. The rights to indemnification and reimbursement
or advancement of expenses provided by, or granted pursuant to, this Section 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, the Certificate of Incorporation, these
By-laws, any agreement, any vote of Stockholders or disinterested Directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity and as to action in another capacity while holding such office.
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8.4 Continuation of Benefits. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Section 8 shall continue as to a person who has ceased to be a Director or
officer (or other person indemnified hereunder) and shall inure to the benefit
of the executors, administrators, legatees and distributees of such person.
8.5 Insurance. The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of an Other Entity, against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Section 8, the Certificate of Incorporation or
under Section 145 of the General Corporation Law or any other provision of law.
8.6 Binding Effect. The provisions of this Section 8 shall be a contract
between the Corporation, on the one hand, and each Director and officer who
serves in such capacity at any time while this Section 8 is in effect and any
other person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer or other person intend to be legally
bound. No repeal or modification of this Section 8 shall affect any rights or
obligations with respect to any state of facts then or theretofore existing or
thereafter arising or any proceeding theretofore or thereafter brought or
threatened based on whole or in part upon any such state of facts.
8.7 Procedural Rights. The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel and its Stockholders) to have made a determination prior to the
commencement of such action that such indemnification or reimbursement or
advancement of expenses is proper in the circumstances nor an actual
determination by the Corporation (including its Board of Directors, its
independent legal counsel and its Stockholders) that such person is not entitled
to such indemnification or reimbursement or advancement of expenses shall
constitute a defense to the action or create a presumption that such person is
not so entitled. Such a person shall also be indemnified for any expenses
incurred in connection with successfully establishing his or her right to such
indemnification or reimbursement or advancement of expenses, in whole or in
part, in any such proceeding.
8.8 Service Deemed at Corporation's Request. Any Director or officer of
the Corporation serving in any capacity (a) another corporation of which a
majority of the shares entitled to vote in the election of its directors is
held, directly or indirectly,
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by the Corporation, or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
8.9 Election of Applicable Law. Any person entitled to be indemnified or
to reimbursement or advancement of expenses as a matter of right pursuant to
this Section 8 may elect to have the right to indemnification or reimbursement
or advancement of expenses interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise to the
applicable Proceeding, to the extent permitted by law, or on the basis of the
applicable law in effect at the time such indemnification or reimbursement or
advancement of expenses is sought. Such election shall be made, by a notice in
writing to the Corporation, at the time indemnification or reimbursement or
advancement of expenses is sought; provided, however, that if no such notice is
given, the right to indemnification or reimbursement or advancement of expenses
shall be determined by the law in effect at the time indemnification or
reimbursement or advancement of expenses is sought.
ARTICLE 9
BOOKS AND RECORDS
9.1 Books and Records. There shall be kept at the principal office of the
Corporation correct and complete records and books of accounting recording the
financial transaction of the Corporation and minutes of the proceedings of the
Stockholders, the Board and any committee of the Board. The Corporation shall
keep at its principal office, or at the office of the transfer agent or
registrar of the Corporation, a record containing the names and addresses of all
Stockholders, the number and class of shares held by each and the dates when
they respectively became the owners of record thereof.
9.2 Form of Records. Any records maintained by the Corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible written
form within a reasonable time. The Corporation shall so convert any records so
kept upon the request of any person entitled to inspect the same.
9.3 Inspection of Books and Records. Except as otherwise provided by law,
the Board shall determine from time to time whether, and, if allowed, when and
under what conditions and regulations, the accounts, books, minutes and other
records of the Corporation, or any of them, shall be open to the Stockholders
for inspection.
- 19 -
<PAGE>
ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be changed, by
resolution of the Board.
ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the President, any
Vice President, the Secretary or the Treasurer, or any one of them, may execute
and deliver on behalf of the Corporation proxies respecting any and all shares
or other ownership interests of any Other Entity owned by the Corporation
appointing such person or persons as the officer executing the same shall deem
proper to represent and vote the shares or other ownership interests so owned at
any and all meetings of holders of shares or other ownership interests, whether
general or special, and/or to execute and deliver consents respecting such
shares or other ownership interests; or any of the aforesaid officers may attend
any meeting of the holders of shares or other ownership interests of such Other
Entity and thereat vote or exercise any or all other powers of the Corporation
as to the holder of such shares or other ownership interests.
ARTICLE 13
EMERGENCY BY-LAWS
Unless the Certificate of Incorporation provides otherwise, the following
provisions of this Article 13 shall be effective during an emergency, which is
defined as when a quorum of the Corporation's Directors cannot be readily
assembled because of some catastrophic event. During such emergency:
13.1 Notice to Board Members. Any one member of the Board or any one of
the following officers: Chairman, President, any Vice President, any Managing
Director, Secretary, or Treasurer, may call a meeting of the Board. Notice of
such meeting need be given only to those Directors whom it is practicable to
reach, and may be given in any practical manner, including by publication and
radio. Such notice shall be given at least six hours prior to commencement of
the meeting.
- 20 -
<PAGE>
13.2 Temporary Directors and Quorum. One or more officers of the
Corporation present at the emergency Board meeting, as it necessary to achieve a
quorum, shall be considered to be Directors for the meeting, and shall so serve
in order of rank, and within the same rank, in order of seniority. In the event
that less then a quorum of the Directors are present (including any officers who
are to serve as Directors for the meeting), those Directors present (including
the officers serving as Directors) shall constitute a quorum.
13.3 Actions Permitted To Be Taken. The Board as constituted in Section
13.2, and after notice as set forth in Section 13.1 may:
13.3.1 prescribe emergency powers to any officer of the Corporation;
13.3.2 delegate to any officer or Director, any of the powers of the
Board;
13.3.3 designate lines of succession of officers and agents, in the
event that any of them are unable to discharge their duties;
13.3.4 relocate the principal place of business, or designate
successive or simultaneous principal places of business; and
13.3.5 take any other convenient, helpful or necessary action to
carry on the business of the Corporation.
ARTICLE 14
AMENDMENTS
These By-laws may be altered, amended or repealed and new By-laws may be
adopted by a vote of the holders of shares entitled to vote in the election of
Directors or by a vote of two thirds of the entire Board. Notwithstanding the
preceding sentence, none of the provisions of this Article 14 shall be altered,
amended or repealed by the Board. Any By-laws adopted, altered or amended by the
Board may be altered, amended or repealed by the Stockholders entitled to vote
thereon only to the extent and in the manner provided in the Certificate of
Incorporation and these By-laws.
- 21 -
Exhibit 3.3
SFC NEW HOLDINGS, INC.
CERTIFICATE OF DESIGNATION OF THE SERIES A PREFERRED STOCK,
SERIES B PREFERRED STOCK AND SERIES C PREFERRED STOCK, SETTING
FORTH THE POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The following resolution was duly adopted by the Board of Directors
of SFC New Holdings, Inc., a Delaware corporation (the "Corporation"), pursuant
to the provisions of Section 151 of the General Corporation Law of the State of
Delaware on June 2, 1999, by the unanimous written consent of the Board of
Directors:
WHEREAS, the Board of Directors is authorized, within the
limitations and restrictions stated in the certificate of incorporation of the
Corporation (the "Certificate of Incorporation"), to provide by resolution or
resolutions for the issuance of shares of preferred stock, no par value, of the
Corporation (the "Preferred Stock"), in one or more series with such voting
powers, and such designations, preferences and relative, participating, optional
and other special rights, and qualifications, limitations or restrictions as
shall be stated and expressed in the resolution or resolutions providing for the
issuance of thereof adopted by the Board of Directors, and as are not stated and
expressed in the Certificate of Incorporation, or any amendment thereto,
including (but without limiting the generality of the foregoing) such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets and such other subjects or matters as may be fixed by
resolution or resolutions of the Board of Directors under the General Law of the
State of Delaware; and
<PAGE>
2
WHEREAS, it is the desire of the Board of Directors, pursuant to its
authority as aforesaid, to authorize and fix the terms of three series of
Preferred Stock and the numbers of shares constituting each such series:
NOW, THEREFORE, BE IT RESOLVED:
1. Designation and Number of Preferred Stock. There shall be hereby
established three series of preferred stock. The shares of each such series
shall be designated as Series A Preferred Stock (the "Series A Preferred
Stock"), the Series B Preferred Stock (the "Series B Preferred Stock") and the
Series C Preferred Stock (the "Series C Preferred Stock" and, together with the
Series A Preferred Stock and the Series B Preferred Stock, the "Preferred
Stock"). The number of shares initially constituting the Preferred Stock shall
be 575, no par value per share, of which 225 shares shall be Series A Preferred
Stock, 150 shares shall be Series B Preferred Stock, and 200 shares shall be
Series C Preferred Stock, each of which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders; provided,
however, that such number may not be decreased below the number of then
outstanding shares of such series of Preferred Stock.
2. Rank. (a) The Series A Preferred Stock and the Series B Preferred
Stock shall, with respect to distributions and distributions of assets and
rights upon the liquidation, winding up and dissolution of the Corporation, (i)
rank pari passu with respect to each other and (ii) rank senior to the Series C
Preferred Stock.
(b) Each series of Preferred Stock shall, with respect to
distributions and distributions of assets and rights upon the liquidation,
winding up and dissolution of the Corporation, rank senior to (i) all classes of
common stock of the
<PAGE>
3
Corporation (including, without limitation, the Common Stock, no par value per
share, of the Corporation (the"Common Stock")) and (ii) each other class or
series of Capital Stock of the Corporation hereafter created which by its terms
does not expressly rank pari passu with or senior to the Preferred Stock (the
Common Stock and each other class or series of Capital Stock of the Corporation
are hereinafter collectively referred to as the "Junior Stock").
3. Dividends. (a) The holders of shares of Preferred Stock, in
preference to holders of shares of Junior Stock of the Corporation, shall be
entitled to receive, when, as and if declared by the Board of Directors, out of
the assets of the Corporation legally available therefor, cumulative cash
dividends at the rates for each series of Preferred Stock as provided in the
following paragraphs.
(b) The holders of shares of Series A Preferred Stock shall be
entitled to receive dividends at an annual rate equal to $102,500.00 per annum,
payable semi-annually in arrears on February 15 and August 15 of each year,
commencing on August 15, 1999.
(c) The holders of shares of Series B Preferred Stock shall be
entitled to receive dividends at an annual rate equal to $111,250.00 per annum,
payable semi-annually in arrears on April 1 and October 1 of each year,
commencing on October 1, 1999.
(d) The holders of shares of Series C Preferred Stock shall be
entitled to receive dividends at an annual rate equal to $112,500.00 per annum,
payable semi-annually in arrears on February 15 and August 15 of each year,
commencing on August 15, 1999.
<PAGE>
4
(e) Dividends payable pursuant to Sections 3(b) - (d) shall
begin to accrue and be cumulative from the Issue Date, and shall accrue on a
daily basis, in each case whether or not declared. Dividends paid on the shares
of Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated to the Series A
Preferred Stock and the Series B Preferred Stock pro rata on a share-by-share
basis among all such shares of Series A Preferred Stock and Series B Preferred
Stock at the time outstanding. No dividends shall be payable on the Series C
Preferred Stock until the dividends payable on the Series A Preferred Stock and
the Series B Preferred Stock have been paid in full. Upon payment in full of the
Series A Preferred Stock and the Series B Preferred Stock, dividends paid on the
shares of Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall then be allocated
to the Series C Preferred Stock pro rata on a share-by-share basis among all
such shares of Series C Preferred Stock at the time outstanding.
(f) The Board of Directors may fix a record date for the
determination of holders of shares of Preferred Stock entitled to receive
payment of a dividend declared thereon, which record date shall be no more than
60 days or less than 10 days prior to the date fixed for the payment thereof.
Accumulated but unpaid dividends for any past dividend periods may be declared
and paid at any time, without reference to any regular dividend payment date, to
holders of record on such date, not more than 60 nor less than 10 days preceding
the payment date thereof, as may be fixed by the Board of Directors.
<PAGE>
5
(g) The holders of shares of Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
4. Liquidation. (a) In the event of any voluntary or involuntary
liquidation, winding up or dissolution of the Corporation, the holders of shares
of each series of Preferred Stock then outstanding shall be entitled to be paid
for each share of Preferred Stock held thereby, out of the assets of the
Corporation legally available for distribution to its stockholders, before any
payment shall be made or any assets distributed to the holders of any shares of
Junior Stock, a payment (the "Liquidation Payment") equal to $1,000,000 per
share plus, if applicable, the additional amounts specified below with respect
to each class of Preferred Stock if liquidation occurs during the twelve-month
period beginning:
(i) in the case of the Series A Preferred Stock:
Date Amount
August 15, 1998 $ 51,250.00
August 15, 1999 25,630.00
(ii) in the case of the Series B Preferred Stock:
Date Amount
October 1, 1999 $ 55,620.00
October 1, 2000 27,810.00
(iii) in the case of the Series C Preferred Stock:
Date Amount
August 15, 1998 $ 32,140.00
August 15, 1999 16,070.00
Except as provided in the preceding sentence, holders of Preferred Stock shall
not be entitled to any distribution in the event of any liquidation, dissolution
or winding up of the affairs of the Corporation. If upon any liquidation,
winding up or dissolution of the
<PAGE>
6
Company, the assets of the Corporation are not sufficient to pay in full the
foregoing liquidation payments payable to the holders of outstanding shares of
Preferred Stock, then the distribution shall be made in accordance with the
amount that would be payable on such distribution if the amounts to which the
holders of outstanding shares of Preferred Stock are entitled were paid in full
(a) first, to holders of all shares of Series A Preferred Stock and Series B
Preferred Stock, which shall share ratably in such distribution of assets, (b)
second, to holders of all shares of Series C Preferred Stock, (c) third, to
holders of Junior Stock.
(b) For the purposes of this Section 4, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all or part of the property or
assets of the Corporation nor the consolidation or merger of the Corporation
with one or more other corporations shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary, of the affairs of the
Corporation (unless such sale, conveyance, exchange or transfer is in connection
with a liquidation, dissolution or winding up of the affairs of the
Corporation).
5. Optional Redemption.
(a) To the extent not prohibited under any loan or other
financing agreement to which the Corporation is a party or by which it is bound,
the Corporation, at its option, may redeem at any time, in whole or in part, in
the manner provided in Section 5(c), from any source of funds legally available
therefor, any or all of the shares of the Preferred Stock, at the relevant
redemption price per share for that
<PAGE>
7
series of Preferred Stock, as provided in the following paragraphs (the
"Optional Redemption Price").
(b) The redemption prices for each class of the Preferred
Stock shall be as set forth below plus, in each case, accrued and unpaid
dividends thereon to the applicable redemption date calculated at the dividend
rate specified in Section 3 for each series, if redeemed during the twelve-month
period beginning on August 15 (in the case of the Series A Preferred Stock and
the Series C Preferred Stock) or on October 1 (in the case of the Series B
Preferred Stock) of the years indicated below:
Series A Preferred Stock
Year Amount
1998 $ 1,051,250
1999 1,025,063
2000 and thereafter 1,000,000
Series B Preferred Stock
Year Amount
1999 $ 1,055,620
2000 1,027,810
2001 and thereafter 1,000,000
Series C Preferred Stock
Year Amount
1998 $ 1,032,140
1999 1,016,070
2000 and thereafter 1,000,000
<PAGE>
8
At the election of the Board of Directors, such redemption payments
for the Preferred Stock may be paid to the holders of the Preferred Stock at the
date of redemption of the Preferred Stock either in cash or exclusively in kind
by delivery of SFC 10 1/4% Senior Notes (in the case of Series A Preferred
Stock), SFC 11 1/8% Senior Notes (in the case of Series B Preferred Stock) and
SFC Subordinated Notes (in the case of Series C Preferred Stock) the principal
amount of which, plus any amount then payable in accordance with the terms
thereof upon the optional redemption thereof, is equal to the applicable
Optional Redemption Price set forth in this Section.
(c) At least thirty (30) days and not more than sixty (60)
days before the date fixed by the Corporation for the redemption of a series of
Preferred Stock (the "Optional Redemption Date"), the Corporation shall mail a
notice of Redemption (the "Optional Redemption Notice") by first class mail,
postage prepaid, to each holder of record of that series of Preferred Stock on
the record date fixed for such redemption at such holder's address as it appears
on the stock register of the Corporation; provided, however, that neither the
failure to give such notice nor any deficiency therein shall affect the validity
of the procedure for the redemption of any shares of that series of Preferred
Stock to be redeemed except as to the holder or holders to whom the Corporation
has failed to give said notice or except as to the holder or holders whose
notice was defective. The Optional Redemption Notice shall state:
(i) that the Corporation is exercising its option to
redeem a series of Preferred Stock and the relevant series of Preferred
Stock (the "Redeemed Preferred Stock");
(ii) the Optional Redemption Price;
<PAGE>
9
(iii) whether all or less than all of the outstanding
shares of the Redeemed Preferred Stock redeemable thereunder are to be
redeemed and the total number of shares of the Redeemed Preferred Stock
being redeemed;
(iv) the number of shares of Redeemed Preferred Stock
held by such holder, as of the appropriate record date, that the
Corporation intends to redeem;
(v) the Optional Redemption Date;
(vi) whether the Corporation has elected to pay the
redemption payment in cash or by delivery of securities; and
(vii) that the holder is to surrender to the
Corporation, at the place or places where certificates for shares of
Redeemed Preferred Stock are to be surrendered for redemption, in the
manner and at the price designated, his or her certificate or certificates
representing the shares of Redeemed Preferred Stock to be redeemed.
(d) In the event of an optional redemption pursuant to
paragraph 5(a) of only a portion of the then outstanding shares of the Redeemed
Preferred Stock, the Corporation shall effect such redemption pro rata according
to the number of shares held by each holder of the Redeemed Preferred Stock,
except that the Corporation may redeem such shares held by holders of fewer than
100 shares (or shares held by holders who would hold less than 100 shares as a
result of such redemption), as may be determined by the Corporation.
(e) Each holder of Redeemed Preferred Stock shall surrender
the certificate or certificates representing such shares of Redeemed Preferred
Stock to the
<PAGE>
10
Corporation, duly endorsed, in the manner and at the place designated in the
Optional Redemption Notice, and on the Optional Redemption Date the full
Optional Redemption Price for such shares shall be payable in cash to the Person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are redeemed, a
new certificate shall be issued by the Corporation representing the unredeemed
shares.
(f) Unless the Corporation defaults in the payment in full of
the Optional Redemption Price, the holders of such redeemed shares shall cease
to have any further rights with respect thereto on the Optional Redemption Date,
other than the right to receive the Optional Redemption Price.
6. Voting Rights. (a) The holders of Preferred Stock shall not be
entitled or permitted to vote on any matter required or permitted to be voted
upon by the stockholders of the Corporation, except as otherwise required under
Delaware law or as set forth in paragraph (b) below. In exercising any voting
rights, each outstanding share of Preferred Stock shall entitle the holder
thereof to one vote.
(b) So long as any share of Preferred Stock is outstanding,
the Company shall not, without the affirmative vote at a meeting or the written
consent with or without a meeting of the holders of at least 66 2/3% of all
outstanding shares of Preferred Stock (i) authorize or issue any Senior Stock or
Parity Stock or reclassify any Junior Stock as Parity Stock or Senior Stock or
reclassify any Parity Stock as Senior Stock or (ii) amend, alter or repeal (by
merger or otherwise) any of the provisions of the Certificate of Incorporation
or the by-laws, so as in any such case to materially adversely
<PAGE>
11
affect the preferences, special rights, powers or privileges of the shares of
Preferred Stock. Each series of Preferred Stock shall vote together with all
other series of Preferred Stock of the Corporation as a single class.
7. Reissuance of Preferred Stock. Shares of Preferred Stock that
have been redeemed or otherwise acquired by the Corporation shall be retired and
canceled and shall resume the status of authorized and unissued shares of
Preferred Stock undesignated as to Series and may be redesignated and reissued
as part of any series of Preferred Stock; provided, that the issuance of such
shares as Preferred Stock must be in compliance with the terms of this
Certificate of Designation.
8. Business Day. If any payment or redemption shall be required by
the terms hereof to be made on a day that is not a Business Day, such payment or
redemption shall be made on the immediately succeeding Business Day.
9. Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Board of Directors" means the board of directors of the Corporation
or any duly authorized committee thereof.
"Business Day" means any day except a Saturday, a Sunday, or other
day on which commercial banks in the State of New York are authorized or
required by law or executive order to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether
<PAGE>
12
voting or non-voting) of, such Person's capital stock and any and all rights,
warrants or options exchangeable for or convertible into such capital stock (but
excluding any debt security that is exchangeable for or convertible into such
capital stock).
"Common Stock" shall have the meaning ascribed to it in Section 2
hereof.
"Corporation" shall have the meaning ascribed to it in the first
paragraph of this Resolution.
"Issue Date" means the first date on which shares of Preferred Stock
are issued.
"Junior Stock" shall have the meaning ascribed to it in Section 2
hereof.
"Liquidation Payment" shall have the meaning ascribed to it in
Section 4 hereof.
"Optional Redemption Date" means, with respect to any shares of a
series of Preferred Stock, the date on which such shares are to be redeemed by
the Corporation pursuant to Section 5 hereof.
"Optional Redemption Notice" shall have the meaning ascribed to it
in Section 5(c) hereof.
"Optional Redemption Price" shall have the meaning ascribed to it in
Section 5(a) hereof.
"Parity Stock" means any Capital Stock of the Corporation, including
the Preferred Stock, ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Preferred Stock.
<PAGE>
13
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, governmental body or other entity of any
kind.
"Preferred Stock" shall have the meaning ascribed to it in Section 1
hereof.
"Redeemed Preferred Stock" shall have the meaning ascribed to it in
Section 5(c) hereof.
"Senior Stock" means any Capital Stock of the Corporation ranking
senior (either as to dividends or upon liquidation, dissolution or winding up)
to the Preferred Stock.
"SFC" means Specialty Foods Corporation, a Delaware corporation.
"SFC 11 1/8% Senior Notes" means the 11 1/8% Senior Notes due 2002
issued by SFC pursuant to an indenture dated as of July 17, 1995, by and between
SFC and the Trustee.
"SFC Subordinated Notes" means the 11 1/4% Senior Subordinated Notes
due 2003 issued by SFC pursuant to an indenture dated as of August 16, 1993, by
and between SFC and the Trustee.
"SFC 10 1/4% Senior Notes" means the 10 1/4% Senior Notes due 2001
issued by SFC pursuant to an indenture dated as of August 16, 1993, by and
between SFC and the Trustee.
"Subsidiary" means with respect to any Person any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect the board
<PAGE>
14
of directors or other persons performing similar functions of such corporation,
partnership or other entity directly or indirectly are owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
"Trustee" means United States Trust Company of New York.
<PAGE>
15
IN WITNESS WHEREOF, SFC New Holdings, Inc. has caused this
Certificate to be duly executed by its duly authorized officers this 9th day of
June, 1999.
SFC NEW HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice-President, Treasurer and
Asst. Secretary
ATTEST:
By: /s/ Geoffrey Perusse
-------------------------------
Exhibit 4.1
$
11 1/4% SENIOR NOTES DUE 2001
12 1/8% SENIOR NOTES DUE 2002
13 1/4% SENIOR SUBORDINATED NOTES DUE 2003
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of June 11, 1999
Among
SFC NEW HOLDINGS, INC.
and
Holders of the 11 1/4% Senior Notes due 2001,
the 12 1/8% Senior Notes due 2002 and
the 13 1/4% Senior Subordinated Notes due 2003
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Registered Exchange Offer..............................................1
2. Shelf Registration.....................................................5
3. Liquidated Damages.....................................................6
4. Hold-Back Agreements...................................................7
5. Registration Procedures................................................8
6. Registration Expenses.................................................12
7. Indemnification.......................................................12
8. Contribution..........................................................15
9. Rules 144 and 144A....................................................16
10. Underwritten Registrations............................................16
11. Miscellaneous.........................................................17
(a) Amendments and Waivers..........................................17
(b) Notices.........................................................17
(c) Successors and Assigns..........................................18
(d) Counterparts....................................................18
(e) Definition of Terms.............................................18
(f) Headings........................................................18
(g) Governing Law...................................................18
(h) No Inconsistent Agreements......................................18
(i) No Piggyback on Registrations...................................18
(j) Severability....................................................19
(k) Entire Agreement................................................19
(l) Attorneys' Fees.................................................19
(m) Securities Held by the Company or its Affiliates................19
i
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of June 11, 1999 (this
"Agreement"), by and among SFC New Holdings, Inc., a Delaware corporation (the
"Company") and the Holders of Securities (as defined herein) who have received
Securities pursuant to the Initial Exchange Offer (as defined herein) or in any
subsequent exchange offer (the "Holders").
The Company proposes to exchange up to $575,000,000 aggregate
principal amount of its newly issued 11 1/4% Senior Notes due 2001, 12 1/8%
Senior Notes due 2002 and 13 1/4% Senior Subordinated Notes due 2003
(collectively, the "Securities" and each a "Security") and up to $141,480,785
aggregate principal amount of 11% Senior Subordinated Discount Debentures due
2009 issued by SFC Sub, Inc., a Delaware corporation ("SFC Sub") for any and all
of the $575,000,000 aggregate principal amount of outstanding SFC Notes (as
defined herein) issued by Specialty Foods Corporation, a Delaware corporation
("SFC") (such offer is referred to as the "Initial Exchange Offer"), upon the
terms and subject to the conditions set forth in the Offer to Exchange and
Consent Solicitation dated May 10, 1999 of the Company (the "Offering
Circular"). The SFC Notes are, collectively, (i) the 10 1/4% Senior Notes due
2001, (ii) the 11 1/8% Senior Notes due 2002 and (iii) the 11 1/4% Senior
Subordinated Notes due 2003 issued by SFC.
The Securities are being offered exclusively to holders of the SFC
Notes. As an inducement to the holders of the SFC Notes to tender their SFC
Notes pursuant to the Initial Exchange Offer, the Company has undertaken to
register each class of the Exchange Securities (as defined herein) under the
Securities Act and to take certain other actions with respect to the Exchange
Securities.
Simultaneously with the registration of the Exchange Securities to
be issued in exchange for Securities, the Company will offer to exchange
Exchange Securities for all of the outstanding SFC Notes not validly tendered
pursuant to the Initial Exchange Offer (the "Remaining Securities").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Circular.
In consideration of the premises and the mutual agreements set forth
herein, the parties hereto hereby agree as follows:
1. Registered Exchange Offer. The Company shall (i) prepare and,
promptly, but in any event, not later than 120 days following the date of
original issuance of the Securities (the "Original Issue Date"), file with the
Securities and Exchange Commission (the "Commission") a registration statement
(the "Exchange Offer Registration Statement") on an appropriate form under the
Securities Act with respect to a proposed offer to the Holders of the Securities
or Remaining Securities
<PAGE>
2
(the "Registered Exchange Offer") (x) to issue and deliver to such Holders of
the Securities, in exchange for each class of the Securities or Remaining
Securities, a like aggregate principal amount of debt securities of the Company
(collectively, the "Exchange Securities" and individually an "Exchange
Security") that are identical in all material respects to each class of the
Securities, except for the transfer restrictions relating to the Securities and
(y) to issue and deliver to Holders of Remaining Securities, a like aggregate
principal amount of Exchange Securities, (ii) use its reasonable best efforts to
cause the Exchange Offer Registration Statement to become effective under the
Securities Act as promptly as practicable after the filing thereof, but in no
event later than 180 days after the Original Issue Date and the Registered
Exchange Offer to be consummated no later than 195 days after the Original Issue
Date and (iii) keep the Exchange Offer Registration Statement effective for not
less than 30 days (or longer, if required by applicable law) after the date on
which notice of the Registered Exchange Offer is mailed to the Holders (such
period being called the "Exchange Offer Registration Period"). Each class of the
Exchange Securities will be issued under the New 11 1/4% Senior Indenture, the
New 12 1/8% Senior Indenture, the New Subordinated Indenture, as applicable, or
an indenture (collectively, the "Exchange Securities Indentures" and each an
"Exchange Securities Indenture") between the Company and the Trustee, as trustee
(the "Exchange Securities Trustee"), such indentures to be identical in all
material respects to the New 11 1/4% Senior Indenture, the New 12 1/8% Senior
Indenture, the New Subordinated Indenture, as applicable, except for the
transfer restrictions relating to the Securities (as described above). The
Registered Exchange Offer shall not be subject to any conditions, other than
that the Registered Exchange Offer does not violate applicable law or any
applicable interpretation of the staff of the Commission.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities or Remaining Securities for Exchange Securities
(assuming that such Holder (a) is not an affiliate of the Company or an
Exchanging Dealer (as defined herein) not complying with the requirements of the
next sentence, (b) acquires the Exchange Securities in the ordinary course of
such Holder's business and (c) has no arrangements or understandings with any
person to participate in the distribution of the Exchange Securities) to trade
such Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of the several states of the United States. The Company, the
Holders and each Exchanging Dealer acknowledge that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act,
each Holder that is a broker-dealer electing to exchange Securities, acquired
for its own account as a result of market-making activities or other trading
activities, for Exchange Securities (an "Exchanging Dealer"), is required to
deliver a prospectus containing substantially the information set forth in Annex
A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section and in Annex C
<PAGE>
3
hereto in the "Plan of Distribution" section of such prospectus in connection
with a sale of any such Exchange Securities received by such Exchanging Dealer
pursuant to the Registered Exchange Offer.
(c) In connection with the Registered Exchange Offer, the
Company shall:
(i) mail to each Holder a copy of the prospectus forming
part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not
less than 30 days (or longer, if required by applicable law) after the
date on which notice of the Registered Exchange Offer is mailed to the
Holders;
(iii) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of Manhattan, The
City of New York;
(iv) permit Holders to withdraw tendered Securities or
Remaining Securities at any time prior to the close of business, New York
City time, on the last business day on which the Registered Exchange Offer
shall remain open; and
(v) otherwise comply in all respects with all laws that
are applicable to the Registered Exchange Offer.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Securities or Remaining
Securities validly tendered and not properly withdrawn pursuant to the
Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all
Securities accepted for exchange; and
(iii) cause the Trustee or the Exchange Securities
Trustee, as the case may be, promptly to authenticate and deliver to each
Holder, Exchange Securities equal in principal amount to the Securities or
Remaining Securities of such Holder so accepted for exchange.
(e) The Company shall use its reasonable best efforts to keep
the Exchange Offer Registration Statement effective and to amend and supplement
the prospectus contained therein in order to permit such prospectus to be used
by all
<PAGE>
4
persons subject to the prospectus delivery requirements of the Securities Act
for such period of time as such persons must comply with such requirements in
order to resell the Exchange Securities; provided that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Company shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.
(f) The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Securities and the Exchange Securities shall
vote and consent together on all matters as one class and that none of the
Securities or the Exchange Securities will have the right to vote or consent as
a separate class on any matter.
(g) Interest on each Exchange Security issued pursuant to the
Registered Exchange Offer will accrue from the last interest payment date on
which interest was paid on the Securities surrendered in exchange therefor or,
if no interest has been paid on the Securities, from the Original Issue Date.
(h) Each Holder participating in the Registered Exchange Offer
may be required to represent to the Company that at the time of the consummation
of the Registered Exchange Offer (i) any Exchange Securities received by such
Holder in the Exchange Offer will be acquired in the ordinary course of
business, (ii) such Holder will have no arrangements or understanding with any
person to participate in the distribution of the Securities or the Exchange
Securities within the meaning of the Securities Act and (iii) such Holder is not
an affiliate of the Company or, if it is such affiliate, such Holder will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable.
(i) Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or fail to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not, as of the
consummation of the Registered Exchange Offer, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
<PAGE>
5
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) the Exchange Offer Registration Statement is not declared
effective within 180 days following the Original Issue Date, or (iii) for any
other reason the Registered Exchange Offer is not consummated within 195 days
after the Original Issue Date, or (iv) any Holder so requests with respect to
Securities not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer and held by it following the consummation of the
Registered Exchange Offer, or (v) any applicable law or interpretations do not
permit any Holder to participate in the Registered Exchange Offer, or (vi) any
Holder that participates in the Registered Exchange Offer does not receive
freely transferrable Exchange Securities in exchange for tendered Securities,
then the following provisions shall apply:
(a) The Company shall use its reasonable best efforts to file
as promptly as practicable (but in no event more than 45 days after so required
or requested pursuant to this Section 2) with the Commission, and thereafter
shall use its reasonable best efforts to cause to be declared effective, a shelf
registration statement on an appropriate form under the Securities Act relating
to the offer and sale of the Registrable Securities (as defined herein) by the
Holders thereof from time to time in accordance with the methods of distribution
set forth in such registration statement (hereafter, a "Shelf Registration
Statement") and, together with any Exchange Offer Registration Statement, a
"Registration Statement").
(b) The Company shall use its reasonable best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Registrable Securities
for a period of two years from the Original Issue Date or such shorter period
that will terminate when all the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant thereto (in any such case, such
period being called the "Shelf Registration Period"). The Company shall be
deemed not to have used its reasonable best efforts to keep the Shelf
Registration Statement effective during the requisite period if it voluntarily
takes any action that would result in Holders of Registrable Securities covered
thereby not being able to offer and sell such Registrable Securities during that
period. The Company shall not permit any securities other than the Exchange
Securities to be included in the Shelf Registration Statement.
(c) Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules and regulations of
the Commission thereunder, (ii) any Shelf Registration Statement and any
amendment thereto (in either case, other than with respect to information
included therein in reliance upon or in conformity with written information
furnished to the Company by
<PAGE>
6
or on behalf of any Holder specifically for use therein (the "Holders'
Information")) does not, when it becomes effective, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and (iii) any
prospectus forming part of any Shelf Registration Statement, and any supplement
to such prospectus (in either case, other than with respect to Holders'
Information), does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the Holders
of Registrable Securities will suffer damages if the Company fails to fulfill
its obligations under Section 1 or Section 2, as applicable, and that it would
not be feasible to ascertain the extent of such damages. Accordingly, if (i) the
applicable Registration Statement is not filed with the Commission on or prior
to 120 days after the Original Issue Date, (ii) the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is not
declared effective within 180 days after the Original Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of the Commission's staff, if later,
within 30 days after publication of the change in law or interpretation), (iii)
the Registered Exchange Offer is not consummated on or prior to 195 days after
the Original Issue Date, or (iv) the Shelf Registration Statement is filed and
declared effective within 120 days after the Original Issue Date or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of Commission's staff, if later, within
30 days after publication of the change in law or interpretation) but shall
thereafter cease to be effective (at any time that the Company is obligated to
maintain the effectiveness thereof) without being succeeded within 30 days by an
additional Registration Statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"), the Company
will be obligated to pay, or cause to be paid, in addition to amounts otherwise
due under the Indenture and the Exchange Securities, as liquidated damages, and
not as a penalty, to each Holder of Registrable Securities, an additional amount
during the first 90-day period immediately following the occurrence of one or
more such Registration Defaults, in an amount equal to $0.05 per week per $1,000
principal amount of Registrable Securities held by such Holder. The amount of
the liquidated damages thereafter will increase each week by an additional $0.05
per $1,000 principal amount of Registrable Securities, up to a maximum amount of
liquidated damages of $0.30 per week per $1,000 principal amount of Registrable
Securities, until (i) the applicable Registration Statement is filed, (ii) the
Exchange Offer Registration Statement is declared effective and the Registered
Exchange Offer is consummated with respect to all validly tendered Securities,
(iii) the Shelf Registration Statement is declared effective or (iv) the Shelf
Registration Statement again becomes effective, as the case may be. Following
the cure of all Registration Defaults, the accrual of liquidated damages will
cease. As used herein, the term "Registrable Securities" means (i) each Security
until
<PAGE>
7
the date on which such Security has been exchanged for a freely transferable
Exchange Security in the Registered Exchange Offer, (ii) each Security until the
date on which it has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iii) each
Security until the date on which it is distributed to the public pursuant to
Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under
the Securities Act. Notwithstanding anything to the contrary in this Section
3(a), the Company shall not be required to pay liquidated damages to a Holder of
Registrable Securities if such Holder failed to comply with its obligations to
make the representations set forth in the second to last paragraph of Section 1
or failed to provide the information required to be provided by it, if any,
pursuant to Section 5(n) upon the Company's request.
(b) The Company shall notify the Trustee and the Paying Agent
under the Indenture immediately upon the happening of each and every
Registration Default. The Company shall pay the liquidated damages due on the
Registrable Securities by depositing with the Paying Agent (which may not be the
Company for these purposes), in trust, for the benefit of the Holders thereof,
prior to 10:00 a.m., New York City time, on or before the next interest payment
date specified by the Indenture and the Securities, immediately available funds
in sums sufficient to pay the liquidated damages then due. The liquidated
damages due shall be payable on each interest payment date specified by the
Indenture and the Securities to the record holder entitled to receive the
interest payment to be made on such date. Each obligation to pay liquidated
damages shall be deemed to accrue from and including the date of the applicable
Registration Default.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Registrable Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.
4. Hold-Back Agreements. The Company agrees without the prior
written consent of the Holders of a majority of the aggregate principal amount
of the then outstanding Registrable Securities, not to effect any public or
private sale or distribution (including a sale pursuant to Regulation D under
the Securities Act) of any securities the same as or similar to those covered by
a Registration Statement filed pursuant to Section 1 or 2 hereof, or any
securities convertible into or exchangeable or exercisable for such securities,
during the 10 days prior to, and during the 30-day period beginning on, (A) the
effective date of any Registration Statement filed pursuant to Sections 1 and 2
hereof unless the Holders of a majority in principal amount of Registrable
Securities to be included in such Registration
<PAGE>
8
Statement consent or (B) the commencement of an underwritten public distribution
of Registrable Securities, where the managing underwriter so requests.
5. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:
(a) The Company shall (i) include the information set forth in
Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of the prospectus forming a part
of the Exchange Offer Registration Statement, and include the information set
forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer and (ii) if requested by the Holders, include the
information required by Items 507 or 508 of Regulation S-K, as applicable, in
the prospectus forming a part of the Exchange Offer Registration Statement.
(b) The Company shall advise each Exchanging Dealer and the
Holders (if applicable) and, if requested by any such person, confirm such
advice in writing (which advice pursuant to clauses (ii) - (v) hereof shall be
accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made):
(i) when any Registration Statement and any amendment
thereto has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments,
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Securities or
the Exchange Securities for sale in any jurisdiction or the initiation
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the
making of any changes in any Registration Statement or the prospectus
included therein in order that the statements therein are not misleading
and do not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
<PAGE>
9
(c) The Company will use its best efforts to prevent the
issuance of any order suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of a prospectus or suspending
the qualification (or exemption from qualification) of any of the Securities for
sale in any jurisdiction, and if any such order is issued, and will use its
reasonable best efforts to obtain the withdrawal at the earliest possible time
of any order suspending the effectiveness of any Registration Statement.
(d) The Company will furnish to each Holder of Registrable
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one conformed copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules and, if any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).
(e) The Company will, during the Shelf Registration Period,
promptly deliver to each Holder of Registrable Securities included within the
coverage of any Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Company consents to the use of such prospectus
or any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offer and sale of the Registrable
Securities covered by such prospectus or any amendment or supplement thereto.
(f) The Company will furnish to each Exchanging Dealer, and to
any Holder who so requests, without charge, at least one conformed copy of the
Exchange Offer Registration Statement and any post-effective amendment thereto,
including financial statements and schedules and, if any Exchanging Dealer or
any Holder requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).
(g) The Company will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver to each
Exchanging Dealer and such other persons that are required to deliver a
prospectus following the Registered Exchange Offer, without charge, as many
copies of the final prospectus included in the Exchange Offer Registration
Statement or the Shelf Registration Statement and any amendment or supplement
thereto as such Exchanging Dealer or other persons may reasonably request; and
the Company consents to the use of such prospectus or any amendment or
supplement thereto by any such Exchanging Dealer or other persons, as
applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement,
the Company will use its reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities or Exchange Securities included therein
and their
<PAGE>
10
respective counsel in connection with the registration or qualification of, such
Securities or Exchange Securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities or Exchange
Securities covered by such Registration Statement; provided that the Company
will not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action which would subject it
to general service of process or to taxation in any such jurisdiction where it
is not then so subject.
(i) The Company will cooperate with the Holders of Securities
or Exchange Securities to facilitate the timely preparation and delivery of
certificates representing Securities or Exchange Securities to be sold pursuant
to any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders thereof may request in
writing prior to sales of Securities or Exchange Securities pursuant to such
Registration Statement.
(j) If any event contemplated by Section 5(b)(ii) through (v)
occurs during the period for which the Company is required to maintain an
effective Registration Statement, the Company will promptly prepare and file
with the Commission a post-effective amendment to the Registration Statement or
a supplement to the related prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Securities or Exchange
Securities from a Holder, the prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities and the Exchange Securities, as the case may be, and provide the
applicable trustee with printed certificates for the Securities or the Exchange
Securities, as the case may be, in a form eligible for deposit with The
Depository Trust Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of Section
11(a) of the Securities Act; provided that in no event shall such earning
statement be delivered later than 45 days after the end of a 12 month period (or
90 days, if such period is a fiscal year) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
applicable Registration Statement, which statement shall cover such 12-month
period.
<PAGE>
11
(m) The Company will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.
(n) The Company may require each Holder of Registrable
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Company such information concerning the Holder and the
distribution of such Registrable Securities as the Company may from time to time
reasonably require for inclusion in such Shelf Registration Statement, and the
Company may exclude from such registration the Registrable Securities of any
Holder that fails to furnish such information within a reasonable time after
receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder
of Registrable Securities to be registered pursuant thereto agrees by
acquisition of such Registrable Securities that, upon receipt of any notice from
the Company pursuant to Section 5(b)(ii) through (v), such Holder will
discontinue disposition of such Registrable Securities until such Holder's
receipt of copies of the supplemental or amended prospectus contemplated by
Section 5(j) or until advised in writing (the "Advice") by the Company that the
use of the applicable prospectus may be resumed. If the Company shall give any
notice under Section 5(b)(ii) through (v) during the period that the Company is
required to maintain an effective Registration Statement (the "Effectiveness
Period"), such Effectiveness Period shall be extended by the number of days
during such period from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities covered by
such Registration Statement shall have received (x) the copies of the
supplemental or amended prospectus contemplated by Section 5(j) (if an amended
or supplemental prospectus is required) or (y) the Advice (if no amended or
supplemental prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company
shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action, if
any, as Holders of a majority in aggregate principal amount of the Securities
and Exchange Securities being sold or the managing underwriters (if any) shall
reasonably request in order to facilitate any disposition of Securities or
Exchange Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company
shall (i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Securities and Exchange Securities being sold
and any underwriter participating in any disposition of Securities and Exchange
Securities pursuant to such Shelf Registration Statement, all relevant financial
and other records, pertinent corporate documents and properties of the Company
and it subsidiaries and (ii) use its reasonable best efforts to have its
officers, directors, employees,
<PAGE>
12
accountants and counsel supply all relevant information reasonably requested by
such representative, Special Counsel or any such underwriter (an "Inspector") in
connection with such Shelf Registration Statement.
(r) In the case of a Shelf Registration Statement, the Company
shall, if requested by Holders of a majority in aggregate principal amount of
the Securities and Exchange Securities being sold, their Special Counsel, or the
managing underwriters (if any) in connection with such Shelf Registration
Statement, use its reasonable best efforts to cause (i) its counsel to deliver
an opinion relating to the Shelf Registration Statement and the Securities and
Exchange Securities, as applicable, in customary form, (ii) its officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities and
Exchange Securities being sold, their Special Counsel or the managing
underwriters (if any) and (iii) its independent public accountants to provide a
comfort letter in customary form subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing Standards No.
72.
6. Registration Expenses. The Company will bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 1, 2, 3, 4 and 5 and the Company will reimburse the Holders for the
reasonable fees and disbursements of one firm of attorneys in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Securities and Exchange Securities to be sold pursuant to each
Registration Statement or Shelf Registration Statement (including, without
limitation, any underwritten registrations) (the "Special Counsel") acting for
the Holders in connection therewith and other reasonable and necessary
out-of-pocket expenses of the Holders incurred in connection with the
registration of Exchange Securities. The Company shall pay all documentary,
stamp, transfer or other transactional taxes attributable to the issuance or
delivery of the Exchange Securities in exchange for the Securities; provided
that the Company shall not be required to pay taxes payable in respect of any
transfer involved in the issuance or delivery of any Exchange Security in a name
other than that of the holder of the Securities in respect of which such
Exchange Security is being issued.
7. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer, as applicable, the Company
shall indemnify and hold harmless each Holder (including, without limitation,
any such Exchanging Dealer), its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 7 and Section 8 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to
<PAGE>
13
purchases and sales of Securities or Exchange Securities), to which that Holder
may become subject, whether commenced or threatened, under the Securities Act,
the Exchange Act, any other federal or state statutory law or regulation, at
common law or otherwise as incurred, insofar as such loss, claim, damage,
liability or action, directly or indirectly, arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
each Holder promptly upon demand for any legal or other expenses reasonably
incurred by that Holder in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action (including, without
limitation, reasonable costs and expenses incurred in connection with
investigating, preparing, pursing or defending against any of the foregoing) as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Holders' Information; and
provided, further, that with respect to any such untrue statement in or omission
from any related preliminary prospectus, the indemnity agreement contained in
this Section 7(a) shall not inure to the benefit of any Holder from whom the
person asserting any such loss, claims, damage, liability or action received
Securities or Exchange Securities to the extent that such loss, claim, damage,
liability or action of or with respect to such Holder results from the fact that
(A) a copy of the final prospectus was not sent or given to such person at or
prior to the written confirmation of the sale of such Securities or Exchange
Securities to such person and (B) the untrue statement in or omission from the
related preliminary prospectus was corrected in the final prospectus unless, in
either case, such failure to deliver the final prospectus was a result of
non-compliance by the Company with Section 5(d), 5(e) or 5(g).
(b) In the event of a Shelf Registration Statement, each
Holder shall indemnify and hold harmless the Company, its affiliates, their
respective officers, directors, employees, representatives and agents, each
person, if any, who controls the Company within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
7(b) and Section 8 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
<PAGE>
14
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, in the light of the circumstances
under which they were made, not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any Holders'
Information furnished to the Company by such Holder, and shall reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that no such Holder shall be liable for any indemnity claims hereunder in excess
of the amount of net proceeds received by such Holder from the sale of
Securities or Exchange Securities pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 7(a) or 7(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 7 except to the extent
(but only to the extent) that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under this Section 7. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party
within 20 business days after receipt of written notice from such indemnified
party of such claim or action, to assume, at its expense, the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to retain its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expenses of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the
<PAGE>
15
defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 7(a) and 7(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding (whether or not any indemnified party is a party thereto).
8. Contribution. If the indemnification provided for in Section 7 is
unavailable or insufficient to hold harmless an indemnified party under Section
7(a) or 7(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, shall have a joint and several obligation to contribute to
the amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the Company
from the offering and sale of the Securities, on the one hand, and a Holder with
respect to the sale by such Holder of Securities or Exchange Securities, on the
other, or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and such Holder on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and a Holder on the other with respect to such offering and such sale shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Securities (before deducting expenses) received by or on behalf of the
Company as set forth in the table on the cover of the Offering Circular, on the
one hand, bear to the total proceeds received by such Holder with respect to its
sale of Securities or Exchange Securities,
<PAGE>
16
on the other. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to the
Company or information supplied by the Company on the one hand or to any
Holders' Information supplied by such Holder on the other, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 8 were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to herein. The amount paid or payable by an indemnified party as a result of
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 8 shall be deemed to include, for purposes of this Section
8, any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim to the extent such party would have been indemnified for such
fees. Notwithstanding the provisions of this Section 8, an indemnifying party
that is a Holder of Securities or Exchange Securities shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities or Exchange Securities sold by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from a person who was not guilty of such
misrepresentation. The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the indemnifying parties may
have to the indemnified parties.
9. Rules 144 and 144A. The Company covenants that it shall file the
reports required to be filed by it under the Securities Act and the Exchange Act
in a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the written request of any Holder of Registrable
Securities, make publicly available other information so long as necessary to
permit sales of such Holder's securities pursuant to Rules 144 and 144A. The
Company covenants that it will take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including, without limitation, the requirements
of Rule 144(d)(4)). Upon the written request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 9 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
10. Underwritten Registrations. If any of the Registrable Securities
covered by any Shelf Registration Statement are to be sold in an underwritten
<PAGE>
17
offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of such Registrable Securities included in such
offering, subject to the consent of the Company (which shall not be unreasonably
withheld or delayed). No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Registrable
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements; provided that the provisions of this sentence
may not be amended, modified or supplemented except in accordance with the
provisions of the first sentence of this paragraph.
11. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities or Exchange Securities, taken as a single
class. Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Securities or Exchange Securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of a majority in
aggregate principal amount of the Securities or Exchange Securities being sold
by such Holders pursuant to such Registration Statement; provided, that Section
1(a), 3 and 7 shall not be amended, modified or supplemented, and waivers or
consents to departures from this proviso may not be given, unless the Company
has obtained the written consent of each Holder.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, certified
first-class mail, telecopier or air courier guaranteeing next-day delivery:
(i) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 11(b), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar under the
Indenture; and
(ii) if to the Company, initially at the address of the
Company set forth in the Offering Circular.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in
<PAGE>
18
the mail postage prepaid; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(c) Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopier) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning thereof.
(g) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York.
(h) No Inconsistent Agreements. The Company represents,
warrants and agrees that (i) it has not entered into, shall not, on or after the
date of this Agreement, enter into any agreement that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, (ii) it has not previously entered into any agreement which
remains in effect granting any registration rights with respect to any of its
debt securities to any person and (iii) without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Registrable Securities, it shall not
grant to any person the right to request the Company to register any debt
securities of the Company under the Securities Act unless the rights so granted
are not in conflict or inconsistent with the provisions of this Agreement.
(i) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders of Registrable Securities in
<PAGE>
19
such capacity) shall have the right to include any securities of the Company in
any Shelf Registration or Registered Exchange Offer other than Registrable
Securities.
(j) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
(k) Entire Agreement. This Agreement contains the entire
agreement among the parties hereto with respect to the transactions contemplated
herein and supersedes all prior agreements, negotiations, or understandings
between the parties with respect to such subject matter.
(l) Attorneys' Fees. In any proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by the courts, shall be
entitled to recover reasonable attorney's fees in addition to its costs and
expenses and any other available remedy.
(m) Securities Held by the Company or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than Holders deemed to be such affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the holders of such required
percentage.
<PAGE>
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
SFC NEW HOLDINGS, INC.
By: /s/ Sean M. Stack
------------------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer
and Assistant Secretary
HOLDERS:
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
By:
-------------------------------------------
Name:
Title:
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter"within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until __________, __, all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will
- ----------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer prospectus.
<PAGE>
2
indemnify the Holders of the Securities (including any broker-dealers) against
certain liabilities, including under the Securities Act.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name: ____________________________________
Address: _________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Exhibit 4.2
================================================================================
SFC NEW HOLDINGS, INC.
$220,695,000
11 1/4% SERIES A SENIOR NOTES DUE 2001
and
UP TO $225,000,000
11 1/4% SERIES B SENIOR NOTES DUE 2001
---------------------------------------
INDENTURE
Dated as of June 11, 1999
---------------------------------------
---------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
---------------------------------------
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.................1
Section 1.1 Definitions.........................................1
Section 1.2 Other Definitions..................................18
Section 1.3 Incorporation by Reference of Trust Indenture Act..18
Section 1.4 Rules of Construction..............................19
ARTICLE 2 THE NOTES.................................................19
Section 2.1 Form and Dating....................................19
Section 2.2 Execution and Authentication.......................20
Section 2.3 Registrar and Paying Agent.........................20
Section 2.4 Paying Agent to Hold Money in Trust................21
Section 2.5 Holder Lists.......................................21
Section 2.6 Transfer and Exchange..............................21
Section 2.7 Replacement Notes..................................28
Section 2.8 Outstanding Notes..................................28
Section 2.9 Treasury Notes.....................................29
Section 2.10 Temporary Notes....................................29
Section 2.11 Cancellation.......................................29
Section 2.12 Defaulted Interest.................................29
ARTICLE 3 REDEMPTION................................................30
Section 3.1 Notices to Trustee.................................30
Section 3.2 Selection of Notes to Be Redeemed..................30
Section 3.3 Notice of Redemption...............................30
Section 3.4 Effect of Notice of Redemption.....................31
Section 3.5 Deposit of Redemption Price........................31
Section 3.6 Notes Redeemed in Part.............................32
Section 3.7 Optional Redemption................................32
Section 3.8 Mandatory Redemption...............................32
Section 3.9 Offer to Purchase by Application of Excess
Proceeds.........................................32
ARTICLE 4 COVENANTS.................................................34
Section 4.1 Payment of Notes...................................34
Section 4.2 Maintenance of Office or Agency....................35
Section 4.3 Reports............................................35
Section 4.4 Compliance Certificate.............................36
Section 4.5 Taxes..............................................37
Section 4.6 Stay, Extension and Usury Laws.....................37
Section 4.7 Restricted Payments................................37
Section 4.8 Dividend and Other Payment Restrictions
Affecting Subsidiaries.............................39
i
<PAGE>
Page
----
Section 4.9 Incurrence of Indebtedness and Issuance
of Preferred Stock.................................40
Section 4.10 Asset Sales........................................42
Section 4.11 Transactions with Affiliates.......................43
Section 4.12 Liens..............................................44
Section 4.13 Accounts Receivable Subsidiary.....................44
Section 4.14 Corporate Existence................................47
Section 4.15 Offer to Repurchase Upon Change of Control.........47
ARTICLE 5 SUCCESSORS................................................48
Section 5.1 Merger, Consolidation, or Sale of Assets...........48
Section 5.2 Successor Corporation Substituted..................49
ARTICLE 6 DEFAULTS AND REMEDIES.....................................50
Section 6.1 Events of Default..................................50
Section 6.2 Acceleration.......................................52
Section 6.3 Other Remedies.....................................52
Section 6.4 Waiver of Past Defaults............................52
Section 6.5 Control by Majority................................53
Section 6.6 Limitation on Suits................................53
Section 6.7 Rights of Holders of Notes to Receive Payment......53
Section 6.8 Collection Suit by Trustee.........................54
Section 6.9 Trustee May File Proofs of Claim...................54
Section 6.10 Priorities.........................................54
Section 6.11 Undertaking for Costs..............................55
ARTICLE 7 TRUSTEE...................................................55
Section 7.1 Duties of Trustee..................................55
Section 7.2 Rights of Trustee..................................56
Section 7.3 Individual Rights of Trustee.......................57
Section 7.4 Trustee's Disclaimer...............................57
Section 7.5 Notice of Defaults.................................57
Section 7.6 Reports by Trustee to Holders of the Notes.........58
Section 7.7 Compensation and Indemnity.........................58
Section 7.8 Replacement of Trustee.............................59
Section 7.9 Successor Trustee by Merger, Etc...................60
Section 7.10 Eligibility; Disqualification......................60
Section 7.11 Preferential Collection of Claims Against Company..60
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..................61
Section 8.1 Option to Effect Legal Defeasance or
Covenant Defeasance................................61
Section 8.2 Legal Defeasance and Discharge.....................61
Section 8.3 Covenant Defeasance................................61
ii
<PAGE>
Page
----
Section 8.4 Conditions to Legal or Covenant Defeasance.........62
Section 8.5 Deposited Money and Government Securities
to Be Held in Trust; Other Miscellaneous
Provisions.........................................63
Section 8.6 Repayment to Company...............................64
Section 8.7 Reinstatement......................................64
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER...........................65
Section 9.1 Without Consent of Holders of Notes................65
Section 9.2 With Consent of Holders of Notes...................65
Section 9.3 Compliance with Trust Indenture Act................67
Section 9.4 Revocation and Effect of Consents..................67
Section 9.5 Notation on or Exchange of Notes...................67
Section 9.6 Trustee to Sign Amendments, Etc....................67
ARTICLE 10 MISCELLANEOUS..............................................68
Section 10.1 Trust Indenture Act Controls.......................68
Section 10.2 Notices............................................68
Section 10.3 Communication by Holders of Notes with
Other Holders of Notes.............................69
Section 10.4 Certificate and Opinion as to Conditions Precedent.69
Section 10.5 Statements Required in Certificate or Opinion......69
Section 10.6 Rules by Trustee and Agents........................70
Section 10.7 No Personal Liability of Directors, Officers,
Employees and Stockholders.........................70
Section 10.8 Governing Law......................................70
Section 10.9 No Adverse Interpretation of Other Agreements......70
Section 10.10 Successors.........................................70
Section 10.11 Severability.......................................70
Section 10.12 Counterpart Originals..............................71
Section 10.13 Table of Contents, Headings, Etc...................71
SCHEDULES
Schedule 1 - First Tier Subsidiaries
Schedule 2 - Transaction Liens
Schedule 3 - SFC Sale Assets
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Certificate of Transferor
iii
<PAGE>
INDENTURE dated as of June 11, 1999 between SFC New Holdings, Inc.,
a Delaware corporation (the "Company"), and United States Trust Company of New
York, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 11 1/4% Series
A Senior Notes due 2001 (the "Series A Notes") and the 11 1/4% Series B Senior
Notes due 2001 (the "Series B Notes" and, together with the Series A Notes, the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.
"Accounts Receivable Agreements" means (i) the Pooling Agreement,
dated as of November 16, 1994, as amended, among the Accounts Receivable
Subsidiary, the Company or SFC, as Master Servicer and The Chase Manhattan Bank,
as trustee on behalf of the Certificateholders, (ii) the Series 1998-1
Supplement to the Pooling Agreement, dated as of March 31, 1998, as amended,
among the Accounts Receivable Subsidiary, the Company or SFC, as Master
Servicer, and The Chase Manhattan Bank, as trustee on behalf of the
Certificateholders, (iii) the Servicing Agreement dated as of November 16, 1994,
as amended, among the Accounts Receivable Subsidiary, the Company or SFC, as
Master Servicer, certain subsidiaries of the Company, as Servicers, and The
Chase Manhattan Bank, as trustee, (iv) the Amended and Restated Receivables Sale
Agreement, dated as of November 16, 1994, as amended, among the Accounts
Receivable Subsidiary, the Company or SFC, as Master Servicer, and certain
subsidiaries of the Company, as Sellers and (v) any related instruments and
agreements executed in connection therewith, together with any replacement or
additional Pooling Agreements and Receivables Sale Agreements, and including any
related instruments and agreements executed in connection therewith, and in each
case as amended, supplemented, extended, modified, renewed, refunded, replaced
or refinanced from time to time, whether or not with the same parties.
"Accounts Receivable Discount" means, with respect to any account
receivable sold by the Company or any of its Subsidiaries to the Accounts
Receivable Subsidiary, (a) the difference between (i) the face amount of such
account receivable and (ii) the aggregate amount of consideration (after giving
effect to any subsequent adjustments thereto) received upon the sale of such
account receivable (with any Accounts Receivable Subsidiary Notes received as
consideration in such sale being valued at the principal amount thereof for this
purpose), less (b) the amount of such difference that is calculated on the basis
of, or with reference to, (i) the historical bad debt allowance or accounts
receivable write-offs of the seller of such account
<PAGE>
2
receivable, (ii) fees and other operating expenses of the Accounts Receivable
Subsidiary payable to Persons other than the Company and its Subsidiaries and
acquirors of accounts receivable or participation interests therein (in their
capacity as acquirors) to the extent that such fees and expenses do not exceed
such amounts as would be obtained in an arm's length transaction and (iii)
credits to the obligor of such account receivable applied to the face amount of
such account receivable in respect of discounts expense (including prompt
payment and volume discounts), rebates, refunds, promotional allowances, billing
error expense and similar adjustments and allowances made by the seller of such
account receivable.
"Accounts Receivable Subsidiary" means a wholly owned subsidiary of
the Company, designated as such by the Company, (a) that has total assets at the
time of such designation with a book value of $100,000 or less and (b) with
which neither the Company nor any other Subsidiary of the Company has any
obligation (i) to subscribe for additional shares of Capital Stock or other
equity interests therein (other than to finance the purchase of additional
accounts receivable of the Company and its Subsidiaries) or (ii) to maintain or
preserve such Accounts Receivable Subsidiary's financial condition or to cause
it to achieve certain levels of operating results.
"Accounts Receivable Subsidiary Notes" means the notes to be issued
by the Accounts Receivable Subsidiary for the purchase of accounts receivable.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person.
"Additional Exchange Offer" means the offer that may be made by the
Company in accordance with the terms of the Offering Circular to exchange Series
B Notes for Untendered SFC Notes.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that (i) beneficial ownership of 20% or more of the voting securities of a
Person shall be deemed to be control, (ii) no lender party to the Term Loan
Agreement or the Revolving Credit Agreement (or any of its affiliates) shall be
deemed to be an Affiliate of the Company or any of its Subsidiaries solely by
virtue of being party to the Term Loan Agreement or the Revolving Credit
<PAGE>
3
Agreement and (iii) an officer of a Person shall not be deemed an Affiliate of
such Person unless such officer directly or indirectly controls such Person.
"Agent" means any Registrar or Paying Agent.
"Archway" means Archway Cookies, LLC, a Delaware limited liability
company and a Wholly Owned Subsidiary of Mother's.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of the Directors.
"Business Day" means each day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the liability in respect of a capital lease that would at
such time be required to be capitalized on the balance sheet in accordance with
GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests.
"Cash Equivalents" means (i) cash, (ii) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof having maturities of not more than six months
from the date of acquisition, (iii) certificates of deposit and Eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Term Loan Agreement or the
Revolving Credit Agreement or with any domestic commercial bank having capital
and surplus in excess of $500,000,000, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper issued
by any lender party to the Term Loan Agreement or the Revolving Credit Agreement
(or the parent company of any such lender) and commercial paper rated A-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related transactions, of
all or substantially all of the assets of the Company, Holdings, SFC Sub, SFC
Sub, SFC or SFAC to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) (other than the Principals or their Specified
Parties), (ii) the adoption
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4
of a plan relating to the liquidation or dissolution of the Company, Holdings,
SFC Sub, SFAC or SFC, (iii) the consummation of any transaction the result of
which is that any Person or group (as defined above) (other than the Principals
and their Specified Parties) owns, directly or indirectly, more of the voting
power of the voting stock of the Company, Holdings, SFC Sub, SFAC or SFC other
than the Principals and their Specified Parties or (iv) the first day on which a
majority of the members of the Board of Directors of the Company, Holdings, SFC
Sub, SFAC or SFC are not Continuing Directors. For the purposes of the foregoing
sentence, any shares of voting stock that are required to be voted for a nominee
of any Principal or Specified Party pursuant to a binding agreement between the
holder thereof and such Principal or Specified Party will be deemed to be held
by such Principal or Specified Party, as the case may be, for purposes of
determining the percentage of voting power held by any Person.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (a) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing
Consolidated Net Income), plus (b) provision for taxes based on income or
profits to the extent such provision for taxes was included in computing
Consolidated Net Income, plus (c) consolidated interest expense of such Person
for such period, whether paid or accrued (including amortization of original
issue discount, non-cash interest payments and the interest component of any
payments associated with Capital Lease Obligations), to the extent such expense
was deducted in computing Consolidated Net Income, plus (d) all depreciation,
amortization (including amortization of goodwill and other intangibles) and
other non-cash charges (excluding any non-cash charge constituting an
extraordinary item of loss or expense and any non-cash charge that requires an
accrual of or a reserve for cash charges for any future period) of such Person
for such period to the extent such depreciation, amortization and other non-cash
charges were deducted in computing Consolidated Net Income, plus (e) one-third
of all operating lease payments of such Person paid or accrued during such
period, in each case, on a consolidated basis and determined in accordance with
GAAP, plus (f) without duplication, the amount of Accounts Receivable Discount
attributable to, and any commitment, availability or other fees payable to the
Accounts Receivable Subsidiary in respect of, sales of accounts receivable by
such Person and its Subsidiaries to the Accounts Receivable Subsidiary during
such period to the extent such amount was deducted in computing Consolidated Net
Income for such period.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
Person or a Wholly Owned Subsidiary of the referent Person, (ii) the Net Income
of any Subsidiary of the referent Person
<PAGE>
5
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval (which has
not been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person, the sum
of (i) the consolidated equity of the common stockholders of such Person and its
consolidated Subsidiaries plus (ii) the respective amounts reported on such
Person's most recent balance sheet with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock, less (x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business)
subsequent to the date of this Indenture in the book value of any asset owned by
such Person or a consolidated Subsidiary of such Person, (y) all investments in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in
each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges, all of the foregoing determined in
accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company, Holdings, SFC Sub, SFC or SFAC,
as applicable who (i) was a member of such Board of Directors on the date of
this Indenture or (ii) was nominated for election or elected to such Board of
Directors with the affirmative vote of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 10.2 hereof or such other address as to which
the Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
<PAGE>
6
"Definitive Notes" means Notes that are in the form of Exhibit A
attached hereto and that do not include the information called for by footnotes
1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means, with respect to the Notes, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date on which the Notes mature.
"85% Owned Subsidiary" of a Person means any Subsidiary of such
Person at least 85% of the outstanding Capital Stock or other ownership
interests (including at least 51% of the outstanding voting Capital Stock or
other voting ownership interests) of which are owned directly or indirectly by
such Person.
"11% Debenture Indenture" means that certain indenture, dated as of
the date hereof, by and between SFC Sub and United States Trust Company of New
York, as trustee, as amended or supplemented from time to time, relating to the
11% Debentures.
"11% Debentures" means, collectively, SFC Sub's 11% Series A Senior
Subordinated Discount Debentures due 2009 and SFC Sub's 11% Series B Senior
Subordinated Discount Debentures due 2009, issued pursuant to the 11% Debenture
Indenture.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series A Notes for
Series B Notes.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than under the Term Loan Agreement, the Revolving Credit
<PAGE>
7
Agreement, the 12 1/8% Senior Indenture, the Senior Subordinated Indenture and
this Indenture) in existence on the date of this Indenture, until such amounts
are repaid.
"First Tier Subsidiaries" means direct Wholly Owned Subsidiaries of
the Company on the date of this Indenture as set forth on Schedule 1 attached
hereto and any such Subsidiaries acquired thereafter other than the Accounts
Receivable Subsidiary.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs or redeems any Indebtedness (other
than revolving credit borrowings) or issues or redeems preferred stock or
consummates an Asset Sale or any Material Acquisition subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, guarantee or redemption of
Indebtedness, or such issuance or redemption of preferred stock, or the
consummation of such Asset Sale or such Material Acquisition, as if the same had
occurred at the beginning of the applicable period. For purposes of calculating
the Fixed Charge Coverage Ratio of the Company for any period commencing prior
to the date of the Transaction, pro forma effect shall be given to the
Transaction and the financing thereof as if the same had occurred at the
beginning of such period.
"Fixed Charges" means, with respect to any Person for any period,
the sum of (a) consolidated interest expense of such Person for such period,
whether paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments and the interest component of any payments associated
with Capital Lease Obligations but excluding amortization of deferred financing
fees), plus (b) the interest expense of any other Person for such period with
respect to Indebtedness that is guaranteed by the referent Person, plus (c) the
product of (i) all cash dividend payments (and non-cash dividend payments in the
case of a Person that is a Subsidiary) on any series of preferred stock of such
Person, times (ii) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, plus (d) one-third of
all operating lease payments of such Person paid or accrued during such period,
in each case, on a consolidated basis and in accordance with GAAP, plus (e) the
amount of Accounts Receivable Discount attributable to, and any commitment,
availability or other fees payable to the Accounts Receivable Subsidiary in
respect of, sales of accounts receivable by such Person and its Subsidiaries to
the Accounts Receivable Subsidiary during such period.
<PAGE>
8
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect on the date of this Indenture.
"Global Note" means a Note that is in the form of Exhibit A attached
hereto that contains the paragraph referred to in footnote 1 and the additional
schedule referred to in footnote 2 thereto.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means SFAC New Holdings, Inc., a Delaware corporation and
a Wholly Owned Subsidiary of SFC Sub.
"Indebtedness" means, with respect to any Person, the principal
amount of any indebtedness of such Person, whether or not contingent, in respect
of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or representing Capital Lease Obligations or the balance deferred and
unpaid of the purchase price of any property (including pursuant to capital
leases) or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and also includes, to the extent not otherwise included,
the guarantee of items that would be included within this definition.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Initial Exchange Offers" means the exchange offers for the SFC
Notes made by the Company in accordance with the terms and conditions set forth
in the Offering Circular.
<PAGE>
9
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans
(including guarantees), advances or capital contributions (excluding commission,
travel, relocation and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in New York City or at a place payment are authorized by law or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to the Registration Rights Agreement.
"Marketable Securities" means, in connection with any Asset Sale,
any readily marketable equity or debt securities that are received by the
Company or any Subsidiary of the Company as consideration for such Asset Sale
and are (a) traded on the New York Stock Exchange, the American Stock Exchange
or the National Association of Securities Dealers Automated Quotation National
Market System and (b) issued by a corporation that has outstanding one or more
issues of debt or preferred stock securities that are rated investment grade by
Moody's Investor Services, Inc. or Standard & Poor's Corporation; provided, that
in no event shall the excess of the aggregate amount of securities of any one
such corporation held immediately following the consummation of any Asset Sale
by the Company and its Subsidiaries over 10 times the average daily trading
volume of such securities during the 20 trading days immediately preceding the
consummation of such Asset Sale be deemed Marketable Securities.
"Material Acquisition" means any material acquisition of business,
Capital Stock, property or assets or any other material transaction as a result
of which a Person becomes a Subsidiary of the Company. For the purposes of this
definition, an acquisition or other transaction shall be deemed "material" if it
has an aggregate value of $5 million or more.
<PAGE>
10
"Metz" means Metz Baking Company, an Iowa corporation and a Wholly
Owned Subsidiary of the Company.
"Mother's" means Mother's Cake & Cookie Co., a California
corporation and a Wholly Owned Subsidiary of the Company.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, any gain
(but not loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets.
"Non-Recourse Indebtedness" of any Person means Indebtedness of such
Person that (i) is not guaranteed by any other Person (except a Wholly Owned
Subsidiary of the referent Person), (ii) is not recourse to and does not
obligate any other Person (except a Wholly Owned Subsidiary of the referent
Person) in any way, (iii) does not subject any property or assets of any other
Person (except a Wholly Owned Subsidiary of the referent Person), directly or
indirectly, contingently or otherwise, to the satisfaction thereof and (iv) is
not required by GAAP to be reflected on the financial statements of any other
Person (other than a Subsidiary of the referent Person) prepared in accordance
with GAAP.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness. With respect to the
Notes, "Obligations" shall include, without limitation, with respect to the
Notes, liabilities in respect of any indemnity, any reimbursement, compensation
or contribution obligations, any liquidated damage provision (including
Liquidated Damages), any breach of representation or warranty or any rights of
redemption or rescission under
<PAGE>
11
this Indenture, the Registration Rights Agreement or by law or otherwise other
than amounts payable to the Trustee pursuant to Section 7.7.
"Offering Circular" means the Offers to Exchange and Consent
Solicitations of the Company dated May 10, 1999 pursuant to which the Company
(i) offered to exchange (a) up to $225,000,000 aggregate principal amount of
Notes and up to $5,659,368 aggregate principal amount of 11% Debentures for all
outstanding SFC 10 1/4% Senior Notes; (b) up to $150,000,000 aggregate principal
amount of 12 1/8% Senior Notes and up to $3,772,912 aggregate principal amount
of 11% Debentures for all outstanding SFC 11 1/8% Senior Notes; and (c) up to
$200,000,000 aggregate principal amount of Senior Subordinated Notes and up to
$18,864,558 aggregate principal amount of 11% Debentures for all outstanding SFC
Subordinated Notes; and (ii) solicited consents from the holders of the SFC
Notes to certain amendments to the indentures pursuant to which such SFC Notes
were issued.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate that meets the
requirements of Section 10.5 hereof and is signed on behalf of the Company by
the Chairman of the Board, the President or any Vice President and by the
Treasurer, or Assistant Treasurer, the Secretary or Assistant Secretary.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.5 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Permitted Investments" means (a) any Investments in the Company or
in an 85% Owned Subsidiary of the Company that is engaged in the same or a
similar or related line of business as the Company or any of its Subsidiaries
were engaged in on the date of this Indenture; (b) any Investments in Cash
Equivalents; (c) Investments by the Company or any Subsidiary of the Company in
a Person that is engaged in the same or a similar or related line of business as
the Company or any of its Subsidiaries were engaged in on the date of this
Indenture, if as a result of such Investment (i) such Person becomes an 85%
Owned Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or an 85% Owned Subsidiary of the
Company; (d) Investments in the Accounts Receivable Subsidiary permitted by
Section 4.13 hereof; (e) Investments in agricultural commodities futures,
options and other hedging obligations in the ordinary course of business; and
(f) Investments in any Person other than Holdings or a Subsidiary of Holdings
that is not also a Subsidiary of the Company (in addition to Investments
<PAGE>
12
permitted by the foregoing clauses (a) through (e)) that, in the aggregate, do
not exceed $25 million at any one time outstanding.
"Permitted Liens" means (a) Liens on the Capital Stock of the First
Tier Subsidiaries and the Accounts Receivable Subsidiary and other assets of the
Company, if any, securing Senior Term Debt and any Indebtedness permitted under
clause (h) or (i) of the second paragraph of Section 4.9 hereof; (b) Liens
securing the Senior Revolving Debt; (c) Liens in favor of the Company and its
Wholly Owned Subsidiaries; (d) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation; (e) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such acquisition; (f) Liens to secure Indebtedness permitted by
clause (e) of the second paragraph of Section 4.9 hereof covering solely the
assets acquired with such Indebtedness and the proceeds of such assets; (g)
Liens existing on the date of SFC 10 1/4% Senior Indenture (including under the
Accounts Receivable Agreements) and Liens created on the date hereof in
connection with the Transaction and as set forth on Schedule 2 attached hereto
and renewals, extensions and replacements thereof; provided that such renewals,
extensions or renewals shall not apply to any property or assets not previously
subject to such Liens or increase the principal amount of Obligations secured
thereby; (h) Liens for taxes, assessments, or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently pursued; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (i) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, landlords' or other like
Liens arising in the ordinary course of business; (j) pledges or deposits in
connection with workers' compensation, unemployment insurance and other social
security legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements; (k) deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business; (l) easements,
rights-of-way, encroachments and other survey defects, restrictions and other
similar encumbrances and title defects which, in the aggregate, do not in any
case materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the Company
and its Subsidiaries; (m) any Lien arising pursuant to any order of attachment,
distraint or other legal process arising in connection with court or arbitration
proceedings so long as the execution or other enforcement thereof is effectively
stayed, the claims secured thereby are being contested in good faith by
appropriate proceedings, adequate reserves have been established with respect to
such claims in accordance with GAAP and no Default or Event of Default would
result thereby; (n) licenses for the use of intellectual property rights or like
intangible assets; and (o) Liens incurred in the ordinary course of
<PAGE>
13
business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5 million at any one time outstanding and that
are not incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"PIK Notes" means any additional Senior Subordinated Notes issued by
the Company as interest payable-in-kind in lieu of a cash payment of $5.00 per
$1,000 principal amount of Senior Subordinated Notes due on the interest payment
date for such Senior Subordinated Notes in accordance with the terms of the
Senior Subordinated Indenture.
"Principal Business Asset Sale" means any sale, issuance,
conveyance, transfer, lease or other disposition (including, without limitation,
by way of merger, consolidation or sale and leaseback transaction but not the
grant of a pledge or security interest), directly or indirectly, in one or a
series of related transactions, of all of the Capital Stock or all or
substantially all of the properties and assets of Mother's, Metz or Archway,
other than the SFC Sale Assets.
"Principals" means Haas Wheat & Partners Incorporated, Acadia
Partners, L.P. and Keystone, Inc.
"Receivables Trust" means a trust organized solely for the purpose
of securitizing the accounts receivable held by the Accounts Receivable
Subsidiary that (a) shall not engage in any business other than (i) the purchase
of accounts receivable or participation interests therein from the Accounts
Receivable Subsidiary and the servicing thereof, (ii) the issuance of and
distribution of payments with respect to the securities permitted to be issued
under clause (b) below and (iii) other activities incidental to the foregoing,
(b) shall not at any time incur Indebtedness or issue any securities, except (i)
certificates representing undivided interests in the Receivables Trust issued to
the Accounts Receivable Subsidiary and (ii) debt securities issued in an arm's
length transaction for consideration solely in the form of cash and Cash
Equivalents, all of which (net of any issuance fees and expenses) shall promptly
be paid to the Accounts Receivable Subsidiary, and (c) shall distribute to the
Accounts Receivable Subsidiary as a distribution on the Accounts Receivable
Subsidiary's beneficial interest in the Receivables Trust no less frequently
that once every six months all available cash and Cash Equivalents held by it,
to the extent not required for reasonable operating expenses or reserves
therefor or to service any securities issued pursuant to clause (b) above that
are not held by the Accounts Receivable Subsidiary.
<PAGE>
14
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of June 11, 1999, by and among the Company and the
holders of the Notes, the Senior Subordinated Notes and the 12 1/8% Senior
Notes, as such agreement may be amended, modified or supplemented from time to
time.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Agreement" means that certain Revolving Credit
Agreement, dated as of March 16, 1998 by and among certain Subsidiaries of SFC,
the lenders party thereto and DLJ Funding Corp., as administrative agent,
providing for up to $125 million in aggregate principal amount of revolving
loans and letters of credit, together with any replacement or additional loan
agreement or agreements, and including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, supplemented, extended, modified, renewed, refunded,
replaced or refinanced from time to time, whether or not with the same lenders.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Revolving Debt" means all Obligations from time to time
outstanding under the Revolving Credit Agreement.
"Senior Subordinated Indenture" means that certain indenture, dated
as of the date hereof, by and between the Company and U.S. Company of Texas,
N.A., as trustee, as amended or supplemented from time to time, relating to the
Senior Subordinated Notes.
"Senior Subordinated Notes" means, collectively, the Company's
13 1/4% Series A Senior Subordinated Notes due 2003 and the Company's 13 1/4%
Series B Senior Subordinated Notes due 2003, issued pursuant to the Senior
Subordinated Indenture.
"Senior Term Debt" means all Obligations from time to time
outstanding under the Term Loan Agreement.
<PAGE>
15
"SFAC" means Specialty Foods Acquisition Corporation, a Delaware
corporation.
"SFC" means Specialty Foods Corporation, a Delaware corporation and
a Wholly Owned Subsidiary of SFAC.
"SFC 11 1/8% Senior Notes" means the 11 1/8% Senior Notes due 2002
issued by SFC pursuant to the SFC 11 1/8% Senior Indenture.
"SFC 11 1/8% Senior Indenture" means that certain Indenture, dated
as of July 17, 1995, by and between SFC and United States Trust Company of New
York, as trustee, as amended from time to time, relating to the SFC 11 1/8%
Senior Notes.
"SFC Notes" means, collectively, the SFC 10 1/4% Senior Notes, the
SFC 11 1/8% Senior Notes and the SFC Subordinated Notes.
"SFC Sale Assets" means the real estate of Mother's, Metz and
Archway listed on Schedule 3 attached hereto which is being held for sale by SFC
as of the date of this Indenture.
"SFC Sub" means SFC Sub, Inc., a Delaware corporation and a Wholly
Owned Subsidiary of SFC.
"SFC Subordinated Notes" means the 11 1/4% Senior Subordinated Notes
due 2003 issued by SFC pursuant to the SFC Subordinated Note Indenture.
"SFC Subordinated Note Indenture" means that certain Indenture,
dated as of August 16, 1993, by and between SFC and United States Trust Company
of New York, as trustee, as amended from time to time, relating to the SFC
Subordinated Notes.
"SFC 10 1/4% Senior Notes" means the 10 1/4% Senior Notes due 2001
issued by SFC pursuant to the SFC 10 1/4% Senior Indenture.
"SFC 10 1/4% Senior Indenture" means that certain Indenture, dated
as of August 16, 1993, by and between SFC and United States Trust Company of New
York, as trustee, as amended from time to time, relating to the SFC 10 1/4%
Senior Notes.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act of 1933, as such Regulation is in
effect on the date of this Indenture.
<PAGE>
16
"Specified Party" with respect to any Principal means (A) any
controlling stockholder or partner, a direct or indirect 80% (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an individual)
of such Principal, (B) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A) or the clauses
succeeding (D) or (E), (C) any partner or stockholder of any Principal as of the
date of this Indenture who acquires any assets or voting stock of the Company,
Holdings, SFC Sub, SFAC or SFC pursuant to a general distribution by such
Principal to each of its partners or stockholders, (D) any officer or director
of any Principal as of the date of this Indenture or (E) co-investment entities
established by any Principal within 90 days of the date of this Indenture and
controlled by such Principal, any affiliated party (including any officer or
director) of such Principal or of the general partner of such Principal (or of
the general partner of any general partner of such Principal) or any combination
of the foregoing; provided, however, that (x) each of Douglas D. Wheat and HWP
Specialty Partners, L.P. shall be deemed a Specified Party of Haas Wheat &
Partners Incorporated and (y) any officer or director of Oak Hill Partners, Inc.
as of the date of this Indenture shall be deemed a Specified Party of Acadia
Partners, L.P. and Keystone, Inc.
"Subsidiary" of any Person means any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person or a combination thereof; provided,
however, that the Accounts Receivable Subsidiary and its Subsidiaries shall not
be deemed Subsidiaries of the Company or of any of its other Subsidiaries.
"Tax Sharing Agreement" that certain Tax Sharing Agreement, as
amended, dated as of August 16, 1993, between SFAC and SFC, as amended to
include the Company and Holdings as parties as of the date of this Indenture.
"Term Loan Agreement" means that certain Term Loan Agreement, dated
as of August 16, 1993, by and among SFC, and the lenders party thereto and
Chemical Bank, as administrative agent, providing for up to $315 million in
aggregate principal amount of term loans, together with any replacement or
additional credit agreement or agreements, and including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, supplemented, extended,
modified, renewed, refunded, replaced or refinanced from time to time, whether
or not with the same lenders.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
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17
"Transaction" means the corporate and financial restructuring of
SFAC, SFC and their subsidiaries, including the Company, Holdings and SFC Sub,
described in the Offering Circular, of which the Initial Exchange Offers are one
component.
"Transfer Restricted Notes" means each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Securities Act, (b) the date on
which such Note has been effectively registered under the Securities Act and
disposed of in accordance with a shelf registration statement pursuant to the
Registration Rights Agreement and (c) the date on which such Note is distributed
to the public pursuant to Rule 144 under the Securities Act.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"12 1/8% Senior Indenture" means that certain indenture, dated as of
the date hereof, by and between the Company and United States Trust Company of
New York, as trustee, as amended or supplemented from time to time, relating to
the 12 1/8% Senior Notes.
"12 1/8% Senior Notes" means, collectively, the Company's 12 1/8%
Series A Senior Notes due 2002 and the Company's 12 1/8% Series B Senior Notes
due 2002, issued pursuant to the 12 1/8% Senior Indenture.
"Untendered SFC Notes" means the SFC 10 1/4% Senior Notes that are
not acquired by the Company in exchange for Notes in accordance with the terms
and conditions of the Initial Exchange Offers.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other scheduled required payments
of principal, including payment at final maturity, in respect thereof, by (y)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
<PAGE>
18
Section 1.2 Other Definitions. Terms not otherwise defined herein
shall have the meanings assigned to them in the Notes. As used in this
Indenture, the following terms shall have the meanings assigned in the Sections
referred to opposite such terms below.
Defined in
Term Section
---- -------
"Affiliate Transaction"............................. 4.11
"Asset Sale"........................................ 4.10
"Asset Sale Offer".................................. 3.9
"Change of Control Offer"........................... 4.15
"Change of Control Payment"......................... 4.15
"Change of Control Payment Date".................... 4.15
"Covenant Defeasance"............................... 8.3
"DLJSC"............................................. 4.11
"DTC"............................................... 2.3
"Event of Default".................................. 6.1
"Excess Proceeds"................................... 4.10
"incur"............................................. 4.9
"Legal Defeasance".................................. 8.2
"Offer Amount"...................................... 3.9
"Offer Period"...................................... 3.9
"Paying Agent"...................................... 2.3
"Payment Default"................................... 6.1
"Permitted Refinancing"............................. 4.9
"Purchase Date"..................................... 3.9
"Refinancing Indebtedness".......................... 4.9
"Registrar"......................................... 2.3
"Restricted Payments"............................... 4.7
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee;
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19
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement or
successor sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.1 Form and Dating. The Notes and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including footnotes 1 and 2 thereto), or in
definitive form,
<PAGE>
20
substantially in the form of Exhibit A hereto (not including footnotes 1 and 2
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect he amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.6 hereof.
Section 2.2 Execution and Authentication. Two Officers shall sign
the Notes for the Company by manual or facsimile signature. The Company's seal
shall be reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee. The signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon receipt of a written order of the Company
signed by two Officers, authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar, and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or
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21
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar,
Paying Agent and the Note Custodian with respect to the Global Notes.
Section 2.4 Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Trustee all
money held by the Paying Agent for the payment of principal or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent and conversion agent (if any) for the Notes.
Section 2.5 Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of all Holders and shall otherwise comply with TIA
ss.312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes.
Section 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations,
<PAGE>
22
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing;
and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Note, such request shall be accompanied by the following
information and documents, as applicable:
(A) if such Transfer Restricted Note is being delivered
to the Registrar by a Holder for registration in the name of such
Holder, without transfer, a certification to that effect from such
Holder (in substantially the form of Exhibit B hereto); or
(B) if such Transfer Restricted Note is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
(C) if such Transfer Restricted Note is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that effect
from such Holder (in substantially the form of Exhibit B hereto) and
an Opinion of Counsel from such Holder or the transferee reasonably
acceptable to the Company and to the Registrar to the effect that
such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in
a Global Note. A Definitive Note may not be exchanged for a beneficial
interest in a Global Note except upon satisfaction of the requirements set
forth below. Upon receipt by the Trustee of a Definitive Note, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
(i) if such Definitive Note is a Transfer Restricted
Note, a certification from the Holder thereof (in substantially the
form of Exhibit B hereto) to the effect that such Definitive Note is
being transferred by such Holder to a "qualified institutional
buyer" (as defined in Rule 144A
<PAGE>
23
under the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Note, written instructions from the Holder thereof
directing the Trustee to make, or to direct the Note Custodian to
make, an endorsement on the Global Note to reflect an increase in
the aggregate principal amount of the Notes represented by the
Global Note,
in which case the Trustee shall cancel such Definitive Note and
cause, or direct the Note Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depository
and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no
Global Notes are then outstanding, the Company shall issue and, upon
receipt of an authentication order in accordance with Section 2.2,
the Trustee shall authenticate a new Global Note in the appropriate
principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture, which shall
include restrictions on transfer comparable to those set forth herein to
the extent required by the Securities Act and the procedures of the
Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in a Global
Note may upon written request exchange such beneficial interest for
a Definitive Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for
the Depository, from the Depository or its nominee on behalf of any
Person having a beneficial interest in a Global Note, and, in the
case of a Transfer Restricted Note, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depository as
being the beneficial owner, a certification to that effect
from such Person (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act or pursuant to an exemption from
registration in
<PAGE>
24
accordance with Rule 144 or Rule 904 under the Securities Act
or pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B hereto) and an Opinion of
Counsel from the transferee or transferor reasonably
acceptable to the Company and to the Registrar to the effect
that such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian, cause
the aggregate principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and, upon receipt
of an authentication order in accordance with Section 2.2, the Trustee
shall authenticate and deliver to the transferee a Definitive Note in the
appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Note may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of
Depository. If at any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as Depository for
the Global Notes and a successor Depository for the Global Notes is not
appointed by the Company within 90 days after delivery of such notice; or
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25
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof authenticate and
deliver Definitive Notes in an aggregate principal amount equal to the principal
amount of the Global Notes, in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY
RULE 144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR IN ACCORDANCE
WITH RULE 144 UNDER THE SECURITIES ACT, OR PURSUANT TO ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL), (b) TO THE COMPANY, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE
<PAGE>
26
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Note (including any Transfer Restricted Note represented by Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Note
that is a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Note for a Definitive
Note that does not bear the legend set forth in (i) above and
rescind any restriction on the transfer of such Transfer Restricted
Note; and
(B) in the case of any Transfer Restricted Note
represented by a Global Note, such Transfer Restricted Note shall
not be subject to the provisions set forth in (i) above and shall
only be subject to the provisions of Section 2.6(c) hereof;
provided, however, that with respect to any request for an exchange
of a Transfer Restricted Note that is represented by a Global Note
for a Definitive Note that does not bear a legend, which request is
made in reliance upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being made pursuant to
Rule 144 (such certification to be substantially in the form of
Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation
of the Exchange Offer and the Additional Exchange Offer, the Company shall
issue, and, upon receipt of an authentication order in accordance with
Section 2.2, the Trustee shall authenticate, Series B Notes in exchange
for (A) Series A Notes accepted for exchange in the Exchange Offer and (B)
Untendered SFC Notes accepted for exchange in the Additional Exchange
Offer, which Series B Notes shall not bear the legend set forth in (i)
above, and the Registrar shall rescind any restriction on the transfer of
such Notes, in each case unless the Holder of the Series A Notes tendered
into the Exchange Offer or, as applicable, the Holder of the Untendered
SFC Notes tendered into the Additional Exchange Offer is either (A) a
broker-dealer who purchased such Series A Notes directly from the Company
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (B) a Person participating in the distribution of the
Series A Notes or the Untendered SFC Notes, as applicable, or (C) a Person
who is an affiliate (as defined in Rule 144A) of the Company.
<PAGE>
27
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have either been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, all Global Notes shall be
returned to or retained and cancelled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the principal amount of
Notes represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee or the Note
Custodian, at the direction of the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 3.7, 4.10, 4.15 and 9.5 hereto).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon
any registration of transfer or exchange of Definitive Notes or Global
Notes shall be valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Definitive
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of business
15 days before the day of any selection of Notes for redemption
under Section 3.2 hereof and ending at the close of business on the
day of selection; or
(B) to register the transfer or to exchange any
Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or
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28
(C) to register the transfer of or to exchange a
Note between a record date and the next succeeding interest payment
date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Note, and neither the Trustee, any Agent nor the
Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes upon receipt of an authentication order in accordance
with the provisions of Section 2.2 hereof.
Section 2.7 Replacement Notes. If any mutilated Note is surrendered
to the Trustee or the Company and the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon the receipt of a written order of the Company signed
by two Officers of the Company, shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Company to protect the Company, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a Note
is replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.8 Outstanding Notes. The Notes outstanding at any time are
all the Notes authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth in
Section 2.9 hereof, a Note does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
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29
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.9 Treasury Notes. In determining whether the Holders of
the required principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company or by any Affiliate of the Company shall
be considered as though not outstanding, except for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes that a Trustee knows are so owned shall be so
disregarded.
Section 2.10 Temporary Notes. Until Definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes upon the receipt of a written order of the Company signed by two Officers
of the Company. Temporary Notes shall be substantially in the form of Definitive
Notes but may have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11 Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all cancelled Notes shall
be delivered to the Company. The Company may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12 Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay the defaulted interest in any
lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in
each case at the rate provided in the Notes and in Section 4.1 hereof. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note and the date of the proposed payment. The
Company shall fix or cause to be fixed each such special record date and payment
date, provided that no such special record date shall be less than 10 days prior
to the related payment date for such defaulted interest. At least 15 days before
the special record date, the Company (or the Trustee in the name of and at the
expense of the Company) shall mail or cause to
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30
be mailed to Holders a notice that states the special record date, the related
payment and the amount of such interest to be paid.
ARTICLE 3
REDEMPTION
Section 3.1 Notices to Trustee. If the Company elects to redeem
Notes pursuant to the optional redemption provisions of Section 3.7 hereof, it
shall furnish to the Trustee, at least 40 days but not more than 60 days before
a redemption date, an Officers' Certificate setting forth (i) the Section of
this Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption
price.
Section 3.2 Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed
among the Holders of the Notes on a pro rata basis, by lot or in accordance with
any other method the Trustee considers fair and appropriate (and in such manner
as complies with applicable legal and stock exchange requirements, if any). In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3 Notice of Redemption. Subject to the provisions of
Section 3.9 hereof, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Notes are to be redeemed at
its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
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31
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP, ISIN or Common Code number, if any, listed in such notice
or printed on the Notes.
At the Company's written request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.4 Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.3 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.
Section 3.5 Deposit of Redemption Price. One Business Day prior to
the redemption date, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date. The Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then
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32
any accrued and unpaid interest shall be paid to the Person in whose name such
Note was registered at the close of business on such record date. If any Note
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the preceding paragraph, interest
shall be paid on the unpaid principal, from the redemption date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Notes and in Section
4.1 hereof.
Section 3.6 Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall issue and the Trustee shall authenticate for
the Holder at the expense of the Company a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
Section 3.7 Optional Redemption.
(a) The Company shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' notice to the
Holders, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
15 of the years indicated below:
Year Percentage
- ---- ----------
1998............................................................. 105.625%
1999............................................................. 102.813%
2000 and thereafter.............................................. 100.000%
========
(b) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Sections 3.1 through 3.6 hereof.
Section 3.8 Mandatory Redemption. Except as set forth in Section 3.9
hereof or pursuant to Section 4.15 hereof, the Company is not required to make
mandatory redemption or sinking fund payments with respect to the Notes.
Section 3.9 Offer to Purchase by Application of Excess Proceeds. In
the event that, pursuant to Section 4.10 hereof, the Company shall be required
to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"),
it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to
<PAGE>
33
Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Asset Sale Offer. Payment
for any Notes so purchased shall be made in the same manner as interest payments
are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.9 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a Depository, if appointed by the Company, or a
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Purchase Date;
(g) that Holders shall be entitled to withdraw their election
if the Company, the Depository or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission
<PAGE>
34
or letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes tendered pursuant to the Asset Sale Offer, or if less than
the Offer Amount has been tendered, all Notes tendered, and shall deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 3.9. The Company, the Depository or the Paying Agent, as the case may
be, shall promptly (but in any case not later than five days after the Purchase
Date) mail or deliver to each tendering Holder an amount equal to the purchase
price of the Notes tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Note, and the Trustee shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on the Purchase Date.
Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1 through 3.6 hereof.
ARTICLE 4
COVENANTS
Section 4.1 Payment of Notes. The Company shall pay or cause to be
paid the principal of, premium, if any, and interest on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if other
than the Company or a Subsidiary thereof holds as of 11:00 a.m. Eastern Time on
the due date money deposited by the Company in immediately available funds and
designated for and
<PAGE>
35
sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement and
shall inform the Trustee of any such payments of Liquidated Damages pursuant
thereto.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
on overdue Liquidated Damages (without regard to any applicable grace period) at
the same rate to the extent lawful.
Section 4.2 Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee or
Registrar) where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 4.3 Reports.
(a) Whether or not required by the rules and regulations of
the SEC, so long as any Notes are outstanding, the Company shall furnish to all
Holders all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual
<PAGE>
36
information only, a report thereon by the Company's certified independent
accountants. In addition, the Company will provide in each such quarterly and
annual report such income statement information as its Board of Directors
determines in good faith to be appropriate with respect to each of its major
product groupings. Whether or not required by the rules and regulations of the
SEC, the Company shall file a copy of all such information with the SEC for
public availability (so long as the SEC will accept such filings) and shall
promptly make such information available to all investors who request it in
writing.
(b) For so long as any Transfer Restricted Notes remain
outstanding, the Company shall furnish to all Holders and prospective purchasers
of the Notes designated by the Holders of Transfer Restricted Notes, promptly
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
Section 4.4 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company, its Subsidiaries and the Accounts
Receivable Subsidiary during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.3(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such
<PAGE>
37
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 4.5 Taxes. The Company shall pay, and shall cause each of
its Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
Section 4.6 Stay, Extension and Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 4.7 Restricted Payments. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any distribution on account of the Company's or any of
its Subsidiaries' Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable by a Subsidiary of the Company to the Company
or any Wholly Owned Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or any
Subsidiary or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness of Holdings or any Indebtedness that is subordinated in right of
payment to the Notes; or (iv) make any Restricted Investment (all such payments
and other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
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38
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.9 hereof; and
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries after the
date of this Indenture (including Restricted Payments permitted by the next
succeeding paragraph (except clause (iv) thereof and, to the extent deducted in
determining the Consolidated Net Income of the Company in clause (x) below,
clause (vi) thereof)), is less than the sum of (x) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from the
date of this Indenture to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, 100% of such deficit), plus (y) 100% of the aggregate Net Proceeds
received by the Company since the date of this Indenture (excluding any proceeds
received on such date in connection with the Transaction) from the issue or sale
of Equity Interests of the Company (other than Equity Interests sold to a
Subsidiary of the Company and other than Disqualified Stock) or any debt
security of the Company that is convertible into or exchangeable for any Equity
Interest of the Company (other than Disqualified Stock) that has been so
converted or exchanged, plus (z) 100% of any common equity capital contribution
received by the Company subsequent to the date of this Indenture.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any of the Company's Equity Interests or any Indebtedness that is subordinated
in right of payment to the Notes in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock); (iii)
the repurchase, redemption or other acquisition or retirement for value (or the
payment of a dividend to Holdings for such repurchase, redemption or other
acquisition or retirement for value) of any Equity Interests of the Company,
Holdings or any Subsidiary of the Company held by any member of the Company's
(or any of its Subsidiaries') management; provided, however, that the aggregate
price paid since the date of this Indenture for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed an amount equal to $5
million plus the aggregate cash proceeds received by the Company or any
Subsidiary of the Company from any reissuance of Equity Interests by the Company
or such Subsidiary to members of management of the Company and its Subsidiaries;
(iv) Permitted Refinancings of Indebtedness that is subordinated in right of
payment to the Notes; (v) payments to Holdings to reimburse it for its
out-of-pocket administrative expenses in an aggregate amount not to exceed $1
million in
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39
any fiscal year; (vi) payments to Holdings pursuant to the Tax Sharing Agreement
as in effect on the date of this Indenture to the extent that Holdings is
actually required to make cash outlays to pay taxes; and (vii) payments or
distributions to Holdings in an aggregate amount equal to the interest required
to be paid by SFC from time to time on any SFC Notes that remain outstanding
after the Initial Exchange Offers.
Not later than the date of making any Restricted Payment (other than
Restricted Payments pursuant to clauses (iv), (v), (vi) and (vii) of the
foregoing paragraph), the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.7 were
computed, which calculations may be based upon the Company's latest available
financial statements.
Section 4.8 Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction (other than
encumbrances or restrictions imposed by law or judicial or regulatory action) if
such encumbrance or restriction would by its terms prohibit or limit any
Subsidiary from (a)(i) paying dividends or making any other distributions to the
Company or any of its Subsidiaries (A) on its Capital Stock or (B) with respect
to any other interest or participation in, or measured by, its profits or (ii)
paying any indebtedness owed to the Company or any of its Subsidiaries, (b)
making loans or advances to the Company or any of its Subsidiaries or (c)
transferring any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) Existing Indebtedness as in effect on the date of this Indenture,
(ii) the Term Loan Agreement and the Revolving Credit Agreement as in effect as
of the date of this Indenture, (iii) this Indenture, the Notes, the 12 1/8%
Senior Indenture, the 12 1/8% Senior Notes, the Senior Subordinated Indenture
and the Senior Subordinated Notes, (iv) applicable law, (v) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in anticipation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (vi) customary non-assignment
provisions in leases entered into in the ordinary course of business, (vii) with
respect to clause (c) above, purchase money obligations for property acquired in
the ordinary course of business; provided that such restrictions are only
applicable to the property acquired through such purchase money obligations,
(viii) permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced or (ix) any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of the
Indebtedness or the Capital Stock referred to in the foregoing clauses (i), (ii)
or (v); provided that such amendments,
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40
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are not more restrictive with respect to such
dividend and other payment restrictions than those contained in the applicable
instrument governing such Indebtedness or Capital Stock (as the case may be) as
in effect on the date of this Indenture.
Section 4.9 Incurrence of Indebtedness and Issuance of Preferred
Stock. The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and the Company shall not issue any
Disqualified Stock and shall not permit any of its Subsidiaries to issue any
shares of preferred stock; provided, however, that the Company may incur
Indebtedness or issue shares of Disqualified Stock, and Subsidiaries of the
Company may incur up to $10 million in aggregate principal amount of
Indebtedness at any time outstanding, if:
(i) the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued
would have been at least 2.75 to 1 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of such four-quarter
period; and
(ii) in the case of any incurrence of additional
Indebtedness of the Company, such Indebtedness is unsecured and
subordinated or pari passu in right of payment to the Notes and has a
Weighted Average Life to Maturity that is greater than the remaining
Weighted Average Life to Maturity of the Notes.
The foregoing limitations shall not apply to:
(a) the incurrence by the Company of Senior Term Debt in an
aggregate principal amount at any time outstanding not to exceed an amount equal
to $315 million less the aggregate amount of all repayments, optional or
mandatory, of the principal of any Senior Term Debt (other than repayments that
are immediately reborrowed) that have been made since the date of the SFC
10 1/4% Senior Note Indenture (provided, however, that Subsidiaries of the
Company shall not be permitted to guarantee the Senior Term Debt);
(b) the incurrence by the Company or its Subsidiaries of
Senior Revolving Debt (and guarantees thereof by the Company and its
Subsidiaries) in an aggregate principal amount at any time outstanding not to
exceed an amount equal to $125 million, less the aggregate amount of all
proceeds of sales or other
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41
dispositions of assets applied to permanently reduce the commitments with
respect to such Indebtedness pursuant to Section 4.10 hereof;
(c) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(d) the incurrence by the Company of Indebtedness represented
by the Notes, the 12 1/8% Senior Notes and the Senior Subordinated Notes
(including any PIK Notes);
(e) the incurrence by the Company or any of its Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case, incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property used in the business of the Company or such Subsidiary, in an aggregate
principal amount not to exceed $5 million at any time outstanding;
(f) the incurrence by the Company or any of its Subsidiaries
of Indebtedness issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace, defease or refund, Indebtedness referred to
in clauses (c), (d) or (e) above or previously incurred under this clause (f)
(the "Refinancing Indebtedness"); provided, however, that:
(i) the principal amount of such Refinancing
Indebtedness shall not exceed the aggregate principal amount, tender or
prepayment premium and unpaid interest on the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith);
(ii) any Refinancing Indebtedness incurred by any
Subsidiary shall only extend, refinance, renew, replace, defease or refund
Indebtedness of such Subsidiary or any Wholly Owned Subsidiary of the
Company;
(iii) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than either (x) the remaining
Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded or (y) the remaining
Weighted Average Life to Maturity of the Notes; and
(iv) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, the Refinancing Indebtedness shall be subordinated
in right of payment to the Notes on terms at least as favorable to the
holders of the Notes as those contained in the documentation governing the
Indebtedness being
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42
extended, refinanced, renewed, replaced, defeased or refunded (any such
extension, refinancing, renewal, replacement, defeasance or refunding, a
"Permitted Refinancing");
(g) intercompany Indebtedness between or among the Company and
any of its Wholly Owned Subsidiaries;
(h) the incurrence by the Company or its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding; and
(i) the incurrence by the Company of Indebtedness (in addition
to Indebtedness permitted by any other clause of this paragraph) in an aggregate
principal amount at any time outstanding not to exceed the sum of (A) $35
million plus (B) up to $40 million of permanent reductions in commitments for
Senior Revolving Debt (other than pursuant to the mandatory repayment provisions
thereof) made since the date of this Indenture.
Section 4.10 Asset Sales. (a) The Company shall not, and shall not
permit any of its Subsidiaries to, (i) sell, lease, convey or otherwise dispose
of any assets (including by way of a sale-and-leaseback) other than in the
ordinary course of business and other than sales of accounts receivable to the
Accounts Receivable Subsidiary in accordance with the provisions of Section 4.13
hereof (provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company shall be governed by Section 5.1
hereof) or (ii) issue or sell equity securities of any of its Subsidiaries, in
each case, whether in a single transaction or a series of related transactions,
(a) that have a fair market value in excess of $3 million or (b) for net
proceeds in excess of $3 million (each of the foregoing, an "Asset Sale"),
unless (x) the Company (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets sold or otherwise
disposed of and (y) at least 80% of the consideration therefor received by the
Company or such Subsidiary is in the form of cash or Cash Equivalents; provided,
however, that the amount of (A) any liabilities (as shown on the Company's or
such Subsidiary's most recent balance sheet or in the notes thereto) of the
Company or any Subsidiary (other than liabilities that are by their terms
subordinated in right of payment to the Notes) that are assumed by the
transferee of any such assets and (B) any notes or other obligations of such
transferee or Marketable Securities received by the Company or any such
Subsidiary from such transferee that, within 30 days (or 90 days, in the case of
Marketable Securities received in connection with a pooling of interest
transaction) of the consummation of the Asset Sale, are converted by the Company
or such Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision.
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43
(b) Within 30 days after the receipt of cash proceeds from any
Principal Business Asset Sale, the Company (or such Subsidiary) shall apply 75%
of the Net Proceeds thereof to permanently reduce Senior Term Debt and, to the
extent that cash proceeds are not used in connection therewith, to permanently
reduce Senior Revolving Debt. To the extent that such Net Proceeds exceed the
amounts required to permanently reduce Senior Term Debt and Senior Revolving
Debt, such excess Net Proceeds shall be deemed to constitute "Excess Proceeds"
(as defined in Subsection 4.10(c) hereof) and shall be applied in accordance
with the procedures set forth in Subsection 4.10(c) below.
(c) Within 365 days after the receipt of cash proceeds from any
Asset Sale (other than 75% of the cash proceeds from a Principal Business Asset
Sale), the Company (or such Subsidiary) may, at its option, apply the Net
Proceeds from such Asset Sale either (a) to permanently reduce Senior Term Debt,
(b) to permanently reduce Senior Revolving Debt with a corresponding permanent
reduction in commitments with respect thereto or (c) to an investment in another
business, capital expenditures or other long-term assets, in each case, in the
same, similar or related line of business as the Company or any of its
Subsidiaries were engaged in on the date of this Indenture. Pending the final
application of any such Net Proceeds, the Company (or such Subsidiary) may
temporarily reduce Senior Revolving Debt or invest such Net Proceeds in cash or
Cash Equivalents. Any Net Proceeds from an Asset Sale that are not finally
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15 million, within five days of such date, the Company shall
be required to make an Asset Sale Offer pursuant to Section 3.9 hereof to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer, in accordance with the
procedures of Section 3.9 hereof. To the extent that the aggregate amount of
Notes tendered pursuant to an Asset Sale Offer is less than the amount of Excess
Proceeds, the Company may use such deficiency for general corporate purposes or
to offer to redeem Senior Subordinated Notes pursuant to the provisions of the
Senior Subordinated Indenture. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess Proceeds shall be
deemed to be reset at zero.
Neither Section 3.9 nor this Section 4.10 shall apply to Asset Sales
to the Company or any of its Wholly Owned Subsidiaries.
Section 4.11 Transactions with Affiliates. The Company shall not,
and shall not permit any of its Subsidiaries to, in one or a series of related
transactions, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement,
<PAGE>
44
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (including the Accounts Receivable Subsidiary and its Subsidiaries)
(each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate
Transaction is on terms that are no less favorable to the Company or the
relevant Subsidiary than those that would have been obtained in a comparable
transaction by the Company or such Subsidiary with an unrelated Person and (b)
the Company delivers to the Trustee (i) with respect to (x) any Affiliate
Transaction constituting the purchase or sale of goods and services in the
ordinary course of business in excess of $10 million or (y) any other Affiliate
Transaction involving aggregate payments in excess of $500,000, a resolution of
the Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (a) above and such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (ii) with respect to any Affiliate Transaction (other
than the purchase or sale of goods and services in the ordinary course of
business) involving aggregate payments in excess of $20 million, an opinion as
to the fairness to the Company or such Subsidiary from a financial point of view
issued by an investment banking firm of national standing; provided, however,
that (A) any employment agreement entered into by the Company or any of its
Subsidiaries in the ordinary course of business and consistent with business
practices of companies similarly situated, (B) transactions between or among the
Company and/or its Wholly Owned Subsidiaries, (C) transactions permitted by
Section 4.7 above (including payments under the Tax Sharing Agreement as in
effect on the date of this Indenture), (D) fees payable pursuant to financial
advisory agreements as in effect on the date of this Indenture, (E) transactions
permitted by Section 4.13 hereof and (F) transactions between the Company or any
of its Subsidiaries on the one hand, and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC") or any of its Affiliates on the other hand, involving the
provision of financial, consulting or underwriting services by DLJSC, provided
that the fees payable to DLJSC do not exceed the usual and customary fees of
DLJSC for similar services, in each case, shall not be deemed Affiliate
Transactions.
Section 4.12 Liens. The Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or suffer
to exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens.
Section 4.13 Accounts Receivable Subsidiary. The Company:
(a) may, and may permit any of its Subsidiaries to,
notwithstanding the provisions of Section 4.7 hereof, make Investments in the
Accounts Receivable Subsidiary (i) the proceeds of which are applied within five
Business Days of the making thereof solely to finance (A) the purchase of
accounts receivable of the Company and its Subsidiaries (provided that the
aggregate amount of Investments pursuant to this clause (i)(A) made since the
date of this Indenture
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45
(including any such Investments made concurrently with the consummation of the
Transaction) shall not exceed $56 million, plus the amount of any return of
capital (excluding payment of dividends) or any repayment of the principal
amount of any Indebtedness constituting such Investments by the Accounts
Receivable Subsidiary since the date of this Indenture) or (B) payments required
in connection with the termination of all then existing arrangements relating to
the sale of accounts receivable or participation interests therein by the
Accounts Receivable Subsidiary (provided that the Accounts Receivable Subsidiary
shall receive cash, Cash Equivalents and accounts receivable having an aggregate
fair market value not less than the amount of such payments in exchange
therefor) and (ii) in the form of Accounts Receivable Subsidiary Notes to the
extent permitted by clause (b) below;
(b) shall not, and shall not permit any of its Subsidiaries
to, sell accounts receivable to the Accounts Receivable Subsidiary except for
consideration in an amount not less than that which would be obtained in an
arm's length transaction and solely in the form of cash or Cash Equivalents;
provided that the Accounts Receivable Subsidiary may pay the purchase price for
any such accounts receivable in the form of Accounts Receivable Subsidiary Notes
so long as, after giving effect to the issuance of any such Accounts Receivable
Subsidiary Notes, the aggregate principal amount of all Accounts Receivable
Subsidiary Notes outstanding shall not exceed 10% of the aggregate purchase
price paid for all outstanding accounts receivable purchased by the Accounts
Receivable Subsidiary since the date of this Indenture (and not written off or
required to be written off in accordance with the normal business practice of
the Accounts Receivable Subsidiary);
(c) shall not permit the Accounts Receivable Subsidiary to
sell any accounts receivable purchased from the Company and its Subsidiaries or
participation interests therein to any other Person except on an arm's length
basis and solely for consideration in the form of cash or Cash Equivalents or
certificates representing undivided interests of a Receivables Trust; provided
that the Accounts Receivable Subsidiary may not sell such certificates to any
other Person except on an arm's length basis and solely for consideration in the
form of cash or Cash Equivalents;
(d) shall not, and shall not permit any of its Subsidiaries
to, enter into any guarantee, subject any of their respective properties or
assets (other than the accounts receivable sold by them to the Accounts
Receivable Subsidiary) to the satisfaction of any liability or obligation or
otherwise incur any liability or obligation (contingent or otherwise), in each
case, on behalf of the Accounts Receivable Subsidiary or in connection with any
sale of accounts receivable or participation interests therein by or to the
Accounts Receivable Subsidiary, other than customary obligations relating to
breaches of representations, warranties, covenants and other agreements of the
Company or any of its Subsidiaries with respect to the accounts receivable sold
by the Company or any of its Subsidiaries to the Accounts Receivable Subsidiary
or with respect to the servicing thereof as set forth in the
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46
Accounts Receivable Agreements as in effect on the date of this Indenture or in
any replacement or substitute agreement, so long as the obligations set forth in
such replacement or substitute agreement are no more burdensome in any material
respect than those contained in the Accounts Receivable Agreements as in effect
on the date of this Indenture provided that neither the Company nor any of its
Subsidiaries shall at any time guarantee or be otherwise liable for the
collectibility of accounts receivable sold by them;
(e) shall not permit the Accounts Receivable Subsidiary to
engage in any business or transaction other than the purchase and sale of
accounts receivable or participation interests therein of the Company and its
Subsidiaries and activities incidental thereto;
(f) shall not permit the Accounts Receivable Subsidiary to
incur any Indebtedness other than the Accounts Receivable Subsidiary Notes,
Indebtedness owed to the Company and Non-Recourse Indebtedness; provided that
the aggregate principal amount of all such Indebtedness of the Accounts
Receivable Subsidiary shall not exceed the book value of its total assets as
determined in accordance with GAAP;
(g) shall cause the Accounts Receivable Subsidiary to remit to
the Company on a monthly basis as a distribution, all available cash and Cash
Equivalents not held in a collection account pledged to acquirors of accounts
receivable or participation interests therein, to the extent not applied (x) to
pay interest or principal on the Accounts Receivable Subsidiary Notes or any
Indebtedness of the Accounts Receivable Subsidiary owed to the Company, (y) to
pay or maintain reserves for reasonable operating expenses of the Accounts
Receivable Subsidiary or to satisfy reasonable minimum operating capital
requirements or (z) to finance the purchase of additional accounts receivable of
the Company and its Subsidiaries; and
(h) shall not, and, shall not permit any of its Subsidiaries
to, sell accounts receivable to, or enter into any other transaction with or for
the benefit of, the Accounts Receivable Subsidiary (i) if the Accounts
Receivable Subsidiary pursuant to or within the meaning of any Bankruptcy Law
(A) commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, or (E) generally is not
paying its debts as they become due; or (ii) if a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for
relief against the Accounts Receivable Subsidiary in an involuntary case, (B)
appoints a Custodian of the Accounts Receivable Subsidiary or for all or
substantially all of the property of the Accounts Receivable Subsidiary, or (C)
orders the liquidation of the Accounts Receivable Subsidiary, and, with respect
to clause (ii) hereof, the order or decree remains unstayed and in effect 60
consecutive days.
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47
Section 4.14 Corporate Existence. Subject to Article 5 hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time to
time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
Section 4.15 Offer to Repurchase Upon Change of Control. (a) Upon
the occurrence of a Change of Control, each Holder of Notes shall have the right
to require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a purchase price equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase (the "Change of Control Payment"). Within 30
days following any Change of Control, the Company shall mail a notice to each
Holder stating:
(i) that the Change of Control Offer is being made
pursuant to this Section 4.15 and that all Notes tendered shall be
accepted for payment;
(ii) the purchase price and the purchase date, which
shall be no later than 30 Business Days from the date such notice is
mailed (the "Change of Control Payment Date");
(iii) that any Note not tendered shall continue to
accrue interest;
(iv) that, unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(v) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer shall be required to surrender the
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
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48
(vi) that Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing his election to
have such Notes purchased; and
(vii) that Holders whose Notes are being purchased only
in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple
thereof.
The Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
in connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (1) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal to
the purchase price for such Notes, and the Trustee shall promptly authenticate
and mail to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
ARTICLE 5
SUCCESSORS
Section 5.1 Merger, Consolidation, or Sale of Assets. The Company
shall not consolidate or merge with or into (whether or not the Company is the
surviving corporation) or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to, another corporation, Person or entity unless:
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49
(a) the Company is the surviving corporation or the entity or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(b) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and this Indenture;
(c) immediately after such transaction, no Default or Event of
Default exists; and
(d) the Company or any entity or Person formed by or surviving
any such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) shall have
Consolidated Net Worth (immediately after the transaction) equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) shall, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.9 hereof.
Section 5.2 Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in accordance with Section
5.1 hereof, the successor corporation formed by such consolidation or into or
with which the Company is merged or to which such sale, lease, conveyance or
other disposition is made shall succeed to, and be substituted for (so that from
and after the date of such consolidation, merger, sale, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor corporation and not to the Company), and
may exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person has been named as the Company herein;
provided, however, that the predecessor Company shall not be released from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that complies with the provisions of
this Article 5.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest or
Liquidated Damages on any Note when the same becomes due and payable and the
Default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Note when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(3) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or performed
pursuant to Sections 4.10 or 5.1 hereof or the Company fails for a period of 15
days to observe or perform any covenant, condition or agreement on the part of
the Company to be observed or performed pursuant to Sections 4.7 or 4.9 hereof;
(4) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Notes or this Indenture and
the Default continues for the period and after the notice specified below;
(5) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, which default (a) is caused by a failure to
pay when due principal of such Indebtedness within the grace period provided in
such Indebtedness (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of such Indebtedness, together with the principal amount of any other
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $10 million or more;
(6) the Company, or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, fails to pay any final judgment or judgments (other than any
judgment to the extent a reputable insurance company has accepted liability)
aggregating in excess of $10 million, which judgments remain undischarged or
unstayed for a period of 60 days;
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51
(7) the Company, or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become
due; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary case,
(ii) appoints a Custodian of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, or
(iii) orders the liquidation of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive days.
An Event of Default shall not be deemed to have occurred under
clause (3), (5) or (6) until the Trustee shall have received written notice from
the Company or any of the Holders or unless a Responsible Officer shall have
actual knowledge of such Event of Default. A Default under clause (4) is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the then outstanding Notes notify the Company
and the Trustee in writing, of the Default and the Company does not cure the
Default within 60 days
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52
after receipt of the notice. The notice must specify the Default, demand that it
be remedied and state that the notice is a "Notice of Default."
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium, if any, that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to Section
3.7(a) hereof, an equivalent premium shall also become and be immediately due
and payable to the extent permitted by law, anything in this Indenture or in the
Notes to the contrary notwithstanding.
Section 6.2 Acceleration. If an Event of Default (other than an
Event of Default specified in clauses (7) or (8) of Section 6.1) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the then outstanding Notes by written notice to the
Company and the Trustee, may declare the unpaid principal of and any accrued
interest on all the Notes to be due and payable. Upon such declaration the
principal and interest shall be due and payable immediately. If an Event of
Default specified in clause (7) or (8) of Section 6.1 relating to the Company,
any Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
principal amount of the then outstanding Notes by written notice to the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.
Section 6.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4 Waiver of Past Defaults. Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences, except a continuing
Default or Event of Default in the payment of the principal of, premium, if any,
or interest on,
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53
the Notes (including in connection with an offer to purchase); provided,
however, that the Holders of a majority in aggregate principal amount of the
outstanding Notes may rescind an acceleration and its consequences, including
any related payment default that resulted from such acceleration. 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 6.5 Control by Majority. Holders of a majority in principal
amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with the law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.
Section 6.6 Limitation on Suits. A Holder of a Note may pursue a
remedy with respect to this Indenture or the Notes only if.
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.7 Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal of, premium, if any, and interest on
the Note, on or after the respective due dates expressed in the Note (including
in connection with an offer to purchase), or to bring suit for the enforcement
of any such payment
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54
on or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal of, premium, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders of the Notes may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
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55
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes.
Section 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 6.7 hereof, or a suit
by Holders of more than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1 Duties of Trustee.
(a) 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 its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the
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56
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and
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57
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
Section 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
Section 7.4 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or any other document in connection
with the sale of the Notes or pursuant to this Indenture other than its
certificate of authentication.
Section 7.5 Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is actually known by the Trustee, the Trustee
shall mail to Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the
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58
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of the
Notes.
Section 7.6 Reports by Trustee to Holders of the Notes. Within 60
days after each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed. The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange.
Section 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.7) and defending itself against
any claim (whether asserted by the Company or any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
All payments and reimbursements under this Section shall be made
with interest at the rate per annum borne by the Notes. As security for the
performance of the obligations of the Company under this Section, the Trustee
shall have a first lien on any property or funds held by the Trustee under this
Indenture, except that held in
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59
trust to pay principal and interest on particular Notes. The Company's payment
obligations pursuant to this Section and any lien arising hereunder shall
survive the resignation or removal of the Trustee, the discharge of the
Company's obligations pursuant to Article 8 or otherwise and the termination of
this Indenture; provided, however, that such lien shall survive only for so long
as the Trustee shall hold any property or funds hereunder. The Trustee's right
to receive payment of any amounts due under this Section shall not be
subordinate to any other liability or indebtedness of the Company.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(7) or (8) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 7.8 Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes
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60
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification. There shall at all times
be a Trustee hereunder that is a corporation organized and doing business under
the laws of the United States of America or of any state thereof, that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
Section 7.11 Preferential Collection of Claims Against Company. The
Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed
in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject
to TIA ss. 311(a) to the extent indicated therein.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Section 8.2 Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.1 hereof of the option applicable to this Section 8.2,
the Company shall, subject to the satisfaction of the conditions set forth in
Section 8.4 hereof, be deemed to have been discharged from its obligations with
respect to all outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (i) the rights
of holders of such outstanding Notes to receive, solely from the trust fund
described in Section 8.5, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (ii) the Company's
obligations with respect to the Notes under Article 2 and Section 4.2 hereof,
(iii) the rights, powers, trust, duties and immunities of the Trustee, and the
Company's obligations in connection therewith and (iv) this Article 8. Subject
to compliance with this Article 8, the Company may exercise its option under
this Section 8.2 notwithstanding the prior exercise of its option under Section
8.3 hereof.
Section 8.3 Covenant Defeasance. Upon the Company's exercise under
Section 8.1 hereof of the option applicable to this Section 8.3, the Company
shall, subject to the satisfaction of the conditions set forth in Section 8.4
hereof, be released from its obligations under the covenants contained in
Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.15 and Article 5 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes, the Company may omit to comply with and shall have no liability
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62
in respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.1 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.1 hereof of the option applicable to this Section 8.3, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(5)
and 6.1(6) hereof shall not constitute Events of Default.
Section 8.4 Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.2 or
8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee or
Paying Agent, in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on such Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, of such principal or installment
of principal of, premium, if any, or interest on the Notes;
(b) in the case of an election under Section 8.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) 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 of Counsel shall confirm that, the Holders of the Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
<PAGE>
63
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.1(7) and 6.1(8)
hereof are concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a Default under, this
Indenture or a default under, the Term Loan Agreement, the Revolving Credit
Agreement or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and in Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
Section 8.5 Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 8.6 hereof, all money
and non-callable Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
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 cash or non-callable
Government Securities deposited pursuant to Section 8.4 hereof or the principal
and interest
<PAGE>
64
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or non-callable Government Securities held by it as provided
in Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.6 Repayment to Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest on any Note and
remaining unclaimed for two years after such principal, and premium, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), 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 notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.7 Reinstatement. If the Trustee or Paying Agent is unable
to apply any United States dollars or non-callable Government Securities in
accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.2 or 8.3 hereof, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium, if any, or interest on
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
<PAGE>
65
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1 Without Consent of Holders of Notes. Notwithstanding
Section 9.2 of this Indenture, the Company and the Trustee may amend or
supplement this Indenture or the Notes without the consent of any Holder of a
Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(c) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger or consolidation pursuant to
Article Five hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2 With Consent of Holders of Notes. The Company and the
Trustee may amend or supplement this Indenture (including Section 4.10 hereof)
and the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with
<PAGE>
66
a tender offer or exchange offer for the Notes). Without the consent of at least
75% in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for such Notes), no
waiver or amendment to this Indenture may make any change in the provisions of
Section 4.15 hereof that adversely affects the rights of any Holder of such
Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.2 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter or waive any of the provisions with respect to the redemption
of the Notes except as provided above with respect to Sections 4.15 and 4.10
hereof;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal
<PAGE>
67
amount of the then outstanding Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in Section 6.4 or 6.7 hereof or in the
foregoing amendment and waiver provisions.
Section 9.3 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall be set forth in a amended or
supplemental Indenture that complies with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by the Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder of a Note or subsequent Holder of a Note may revoke the consent
as to its Note if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
Section 9.5 Notation on or Exchange of Notes. The Trustee may place
an appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Company in exchange for all Notes may issue and
the Trustee shall authenticate new Notes that reflect the amendment, supplement
or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.6 Trustee to Sign Amendments, Etc. The Trustee shall sign
any amended or supplemental indenture authorized pursuant to this Article 9 if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an amendment
or supplemental Indenture until the Board of Directors approves it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Officers'
<PAGE>
68
Certificate and an Opinion of Counsel stating that the execution of such amended
or supplemental indenture is authorized or permitted by this Indenture.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.
318(c), the imposed duties shall control.
Section 10.2 Notices. Any notice or communication by the Company or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company:
SFC New Holdings, Inc.
520 Lake Cook Road, Suite 550
Deerfield, Illinois 60015
Telecopier No.: (847) 405-5310
Attention: Secretary
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopier No.: (212) 757-3990
Attention: Mitchell S. Fishman, Esq.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Telecopier No.: (212) 852-1626
Attention: Corporate Trust Administration
The Company, or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
<PAGE>
69
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 10.3 Communication by Holders of Notes with Other Holders of
Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
Section 10.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 10.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall
include:
<PAGE>
70
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
Section 10.6 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Holders of Notes. The
Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.
Section 10.7 No Personal Liability of Directors, Officers, Employees
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
Section 10.8 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES.
Section 10.9 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Company or its Subsidiaries or of any other Person. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 10.10 Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors.
Section 10.11 Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
<PAGE>
71
Section 10.12 Counterpart Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 10.13 Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
72
[Senior Indenture - Signature Page]
Dated as of June 11, 1999 SFC New Holdings, Inc.
By: /s/ Sean M. Stack
------------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer and
Assistant Secretary
Dated as of June 11, 1999 United States Trust Company of New York
Trustee
By: /s/ Cynthia Chaney
------------------------------------
Name: Cynthia Chaney
Title: Assistant Vice-President
<PAGE>
73
SCHEDULE 1
FIRST TIER SUBSIDIARIES
Metz Baking Company
Mother's Cake & Cookie Co.
Archway Cookies, LLC
Andre-Boudin Bakeries, Inc.
Pane Corporation (dba San Diego Bread Company)
Clear Lake Bakery, Inc.
<PAGE>
74
SCHEDULE 2
TRANSACTION LIENS
1. A lien in respect of the pledge by Specialty Foods Corporation of 100
shares of common stock of SFC Sub, Inc. securing Specialty Food
Corporation's obligations under the Term Loan Agreement (as defined in the
Indenture).
2. A lien in respect of the pledge by SFC New Holdings, Inc. of 100% of the
sole membership interest of MA Holdings, LLC securing SFC New Holdings,
Inc.'s obligations under the Term Loan Agreement (as defined in the
Indenture).
3. A lien in respect of the pledge by SFAC New Holdings, Inc. of 100 shares
of common stock, 225 shares of Series A Preferred Stock, 150 shares of
Series B Preferred Stock and 200 shares of Series C Preferred Stock of SFC
New Holdings, Inc. securing SFAC New Holdings, Inc.'s obligations under
the 13% Senior Secured Discount Debentures due 2009.
<PAGE>
75
SCHEDULE 3
SFC SALE ASSETS
1. Property owned by Archway Cookies, LLC (formerly Archway Cookies, Inc.),
consisting of:
(a) Property situated at 5351 West Dickman Road - Fort Custer Urban
Renewal Plat of Battle Creek Lot 63, except the easterly 10 feet
hereof.
(b) Property situated at 5451 West Dickman Road - Fort Custer Urban
Renewal Plat of Battle Creek Lots 84 and 85.
2. Property owned by Mother's Cake & Cookie Co., consisting of:
(a) Lot 1, Block 1, Standard Meat Company Addition to the City of Fort
Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 388-58, Page 846, Plat Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above-described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 696, Real
Property Records, Tarrant County, Texas.
(b) Lot 2, Block 1, Standard Meat Company Addition to the City of Fort
Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 388-114, Page 881, Plat Records, Tarrant County, Texas.
(c) Lot 1 and a portion of Lot 2, Block 1, Gulf States Subdivision to
the City of Forth Worth, Tarrant County, Texas, according to the
Plat recorded in Volume 388-66, Page 25, Plat Records, Tarrant
County, Texas, SAVE AND EXCEPT that portion of Lot 1 conveyed to the
City of Forth Worth by deed recorded in Volume 9016, Page 700, Real
Property Records, Tarrant County, Texas.
(d) 0.517 acres of land, more or less, situated in the A. McLemore
Survey, Abstract No. 1056, Tarrant County, Texas, and being the same
tract of land as described in deed to Standard Meat Company recorded
in Volume 6009, Page 423, Deed Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 692, Real
Property Records, Tarrant County, Texas.
(e) 0.48 acres of land, more or less, situated in the A. McLemore
Survey, Abstract No. 1056, Tarrant County, Texas, and being the same
tract of land as described in deed to Standard Meat Company recorded
in Volume 6927, Page 2119, Deed Records, Tarrant County, Texas,
<PAGE>
76
SAVE AND EXCEPT that portion of the above described tract conveyed
to the City of Fort Worth, by deed recorded in Volume 9016, Page
692, Real Property Records, Tarrant County, Texas
(f) Lot 6, Block 12, Riverside Addition, Third Filing, to the City of
Fort Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 204-A, Page 114, Plat Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 682, Real
Property Records, Tarrant County, Texas.
(g) Lot 15, Block 12, Riverside Addition, Third Filing, to the City of
Fort Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 204-A, Page 114, Plat Records, Tarrant County, Texas.
(h) A portion of Lots 1 and 2, Block 1, of Page Land Company's East Side
Addition to the City of Fort Worth, Tarrant County, Texas, according
to Plat recorded in Volume 204, Page 74, Plat Records, Tarrant
County, Texas, SAVE AND EXCEPT that portion of the above described
tract conveyed to the City of Fort Worth by deed recorded in Volume
9016, Page 682, Real Property Records, Tarrant County, Texas.
<PAGE>
EXHIBIT A
(Face of Note)
11 1/4% [Series A] [Series B] Senior Notes Due 2001
No. $__________________
SFC NEW HOLDINGS, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on August 15, 2001.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Dated:__________ SFC New Holdings, Inc.
By:________________________________
Name:
Title:
(SEAL)
By:________________________________
Name:
Title:
This is one of the Notes
referred to in the within-
mentioned Indenture:
United States Trust Company of New York,
as Trustee
By ______________________
Authorized Signatory
<PAGE>
(Back of Note)
11 1/4% [Series A] [Series B] Senior Notes Due 2001
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]1/
["THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE
144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
OR IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, OR PURSUANT TO ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL), (b) TO THE COMPANY, (c) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT OR (d) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH
- --------
1/ This paragraph should be included only if the Note is issued in global form.
A-2
<PAGE>
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (1) ABOVE."]*
* This legend should be included only if the Note is a Transfer Restricted
Note.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest. SFC New Holdings, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate of 11 1/4% per annum from and including the date hereof until maturity and
promises to pay Liquidated Damages (as defined below) in accordance with the
following paragraphs. The Company shall pay interest and Liquidated Damages
semi-annually on February 15 and August 15 of each year, or if any such day is
not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from and
including June 11, 1999; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be August 15, 1999.
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated June 11, 1999, among the Company and the
Holders of the Notes named therein (the "Registration Rights Agreement")
pursuant to which the Company has agreed (a) to file with the SEC promptly (but
in any event on or prior to 120 days) after the Original Issue Date, the
Exchange Offer Registration Statement on the appropriate form relating to the
Registered Exchange Offer for the Notes under the Securities Act, and (b) to
cause such Exchange Offer Registration Statement to become effective within 180
days after the Original Issue Date. Upon the occurrence of certain Registration
Defaults (as defined in the Registration Rights Agreement), the Company will pay
or cause to be paid, in addition to amounts otherwise due under the Indenture
and the Exchange Securities, as liquidated damages, and not as a penalty
("Liquidated Damages"), to each holder of Registrable Securities (as defined in
the Registration Rights Agreement), during the first 90-day period immediately
following the occurrence of such Registration Default an amount equal to $.05
per week per $1,000 principal amount of Registrable Securities held by such
holder. The amount of the liquidated damages thereafter will increase each week
by an additional $.05 per $1,000 principal amount of Registrable Securities, up
to a maximum amount of liquidated damages of $0.30 per week per $1,000 principal
amount of Registrable Securities, until all Registration Defaults are cured. All
accrued Liquidated Damages will be paid in the same manner as interest payments
on the Notes on semiannual
A-3
<PAGE>
damages payment dates that correspond to interest payment dates for the
Debentures and upon redemption dates, Change of Control Payment Dates and Asset
Sale payment dates. Following the cure of a Registration Default, the accrual of
Liquidated Damages will cease.
The Company shall pay interest (including post-petition interest in
any proceeding under Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest and Liquidated
Damages will be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest and Liquidated
Damages on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the February 1 or August
1 next preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable both as to principal and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders.
3. Paying Agent and Registrar. Initially, United States Trust
Company of New York, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of June 11, 1999 (the "Indenture"), between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. [The Notes are unsecured obligations of the Company limited to
$220,695,000 in aggregate principal amount.]** [The Notes are unsecured
obligations of the Company limited to $225 million in aggregate principal
amount.]***
** This language should be included only for the Series A Notes.
*** This language should be included only for the Series B Notes. The
aggregate amount of Series B Notes will be either $225 million or, if less
than all of the holders of the Untendered SFC Notes exchange such notes in
the Additional
A-4
<PAGE>
Exchange Offer, the excess of (a) $225 million over (b) the aggregate
principal amount of Untendered SFC Notes.
5. Optional Redemption. The Company shall have the option to redeem
the Notes, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
15 of the years indicated below:
Year Percentage
---- ----------
1998........................................ 105.625%
1999........................................ 102.813%
2000 and thereafter......................... 100.000%
=========
6. Mandatory Redemption. Except as set forth in paragraph 7 below,
or pursuant to Section 4.15 of the Indenture, the Company is not required to
make mandatory redemption or sinking fund payments with respect to the Notes.
7. Redemption or Repurchase at Option of Holder.
(a) If there is a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the aggregate principal amount thereof plus the accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder stating: (1) that the Change of Control Offer is
being made pursuant to Section 4.15 of the Indenture and that all Notes tendered
shall be accepted for payment; (2) the purchase price and the purchase date,
which shall be no later than 30 Business Days from the date such notice is
mailed (the "Change of Control Payment Date"); (3) that any Note not tendered
shall continue to accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; (5) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer shall be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (6) that Holders shall be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of Holder, the principal amount of Notes
A-5
<PAGE>
delivered for purchase, and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (7) that Holders whose Notes are
being purchased only in part shall be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
(b) If the Company or a Subsidiary consummates any Asset Sale
(other than a Principal Business Asset Sale), within five days of each date on
which the aggregate amount of Excess Proceeds exceeds $15 million, the Company
shall commence an offer to all Holders of Notes (an "Asset Sale Offer") pursuant
to Section 3.9 of the Indenture to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date fixed for the closing of such offer in
accordance with the procedures set forth in Section 3.9 of the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes or to offer to redeem Senior
Subordinated Notes pursuant to the provisions of the Senior Subordinated
Indenture. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
A-6
<PAGE>
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendments Supplement and Waivers. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act. Without the
consent of the Holders of at least 75% in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for such Notes), no waiver or amendment to the Indenture may make
any change in the provisions of Section 4.15 of the Indenture that adversely
affects the rights of any Holder of such Notes.
12. Defaults and Remedies. Events of Defaults include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of, or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise; (iii) failure
by the Company to comply with the provisions described under Sections 4.10 or
5.1 of the Indenture or failure by the Company for 15 days to comply with the
provisions described under Sections 4.7 or 4.9 of the Indenture; (iv) failure by
the Company for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding to
comply with any other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay when due principal of such
Indebtedness within the grace period provided in such Indebtedness (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of such Indebtedness,
together with the principal amount of any other Indebtedness under which there
has been a Payment Default or the maturity of which has been so accelerated,
aggregates $10 million or more; (vi) failure by the Company, any of its
Significant Subsidiaries or any group of
A-7
<PAGE>
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary,
to pay any final judgment or judgments (other than any judgment to the extent a
reputable insurance company has accepted liability) aggregating in excess of $10
million, which judgments remain unstayed or undischarged for a period of 60
days; and (vii) certain events of bankruptcy or insolvency with respect to the
Company, any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, any Significant Subsidiary or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. If an Event of Default
occurs by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding payment of the premium
that the Company would have had to pay if the Company then had elected to redeem
any Notes pursuant to the optional redemption provisions of the Indenture, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law. The Holders of a majority in aggregate principal amount
of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and
its consequences under the Indenture (including annulling a declaration of
acceleration of maturity) except a continuing Default or Event of Default in the
payment of interest on, or the principal of, such Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each
A-8
<PAGE>
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of an authorized signatory of the Trustee or an
authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Additional Rights of Holders of Transfer Restricted Notes. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement referred to above.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or Registration Rights Agreement.
Requests may be made to:
SFC New Holdings, Inc.
520 Lake Cook Road, Suite 550
Deerfield, Illinois 60015
Attention: Secretary
A-9
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to___________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:____________________
Your Signature:______________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-10
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $______________
Date:_________________ Your Signature:______________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:______________________________
Signature Guarantee.
A-11
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE2/
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Amount of Principal Amount
decrease in Amount of increase of this Global Signature of
Principal in Principal Note following authorized officer
Amount of this Amount of this such decrease (or of Trustee or
Date of Exchange Global Note Global Note increase) Note Custodian
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------
2/ This should be included only if the Note is issued in global form.
A-12
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: 11 1/4% [Series A] [Series B] Senior Notes due 2001 of SFC New Holdings,
Inc
This Certificate relates to $____________ principal amount of Notes
held in *____________ book-entry or * ___________ definitive form by __________
_______________________________________________ (the "Transferor").
The Transferor*:
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture related to the above captioned Notes and as provided in Section 2.6 of
such Indenture, the transfer of this Note does not require registration under
the Securities Act (as defined below) because:*
|_| Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
|_| Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.6(a)(ii)(B), Section 2.6(b)(A) or Section 2.6(d)(i)(B) of the Indenture) or
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
- ----------------------
* Check applicable box.
A-13
<PAGE>
|_| Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
|_| Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
____________________________________
[INSERT NAME OF TRANSFEROR]
By:_________________________________
Date:_____________________________
- ----------------
* Check applicable box.
A-14
Exhibit 4.3
================================================================================
SFC NEW HOLDINGS, INC.
$149,925,000
12 1/8% SERIES A SENIOR NOTES DUE 2002
and
UP TO $150,000,000
12 1/8% SERIES B SENIOR NOTES DUE 2002
-------------------------------------------------
INDENTURE
Dated as of June 11, 1999
-------------------------------------------------
-------------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
-------------------------------------------
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE .................. 1
Section 1.1 Definitions ............................................ 1
Section 1.2 Other Definitions ...................................... 18
Section 1.3 Incorporation by Reference of Trust Indenture Act ...... 19
Section 1.4 Rules of Construction .................................. 20
ARTICLE 2 THE NOTES ................................................... 20
Section 2.1 Form and Dating ........................................ 20
Section 2.2 Execution and Authentication ........................... 21
Section 2.3 Registrar and Paying Agent ............................. 21
Section 2.4 Paying Agent to Hold Money in Trust .................... 22
Section 2.5 Holder Lists ........................................... 22
Section 2.6 Transfer and Exchange .................................. 22
Section 2.7 Replacement Notes ...................................... 29
Section 2.8 Outstanding Notes ...................................... 29
Section 2.9 Treasury Notes ......................................... 29
Section 2.10 Temporary Notes ........................................ 30
Section 2.11 Cancellation ........................................... 30
Section 2.12 Defaulted Interest ..................................... 30
ARTICLE 3 REDEMPTION .................................................. 31
Section 3.1 Notices to Trustee ..................................... 31
Section 3.2 Selection of Notes to Be Redeemed ...................... 31
Section 3.3 Notice of Redemption ................................... 31
Section 3.4 Effect of Notice of Redemption ......................... 32
Section 3.5 Deposit of Redemption Price ............................ 32
Section 3.6 Notes Redeemed in Part ................................. 33
Section 3.7 Optional Redemption .................................... 33
Section 3.8 Mandatory Redemption ................................... 33
Section 3.9 Offer to Purchase by Application of Excess Proceeds .... 33
ARTICLE 4 COVENANTS ................................................... 35
Section 4.1 Payment of Notes ....................................... 35
Section 4.2 Maintenance of Office or Agency ........................ 36
Section 4.3 Reports ................................................ 36
Section 4.4 Compliance Certificate ................................. 37
Section 4.5 Taxes .................................................. 38
Section 4.6 Stay, Extension and Usury Laws ......................... 38
Section 4.7 Restricted Payments .................................... 38
Section 4.8 Dividend and Other Payment Restrictions
Affecting Subsidiaries ................................. 40
i
<PAGE>
Page
----
Section 4.9 Incurrence of Indebtedness and Issuance
of Preferred Stock ..................................... 41
Section 4.10 Asset Sales ............................................ 43
Section 4.11 Transactions with Affiliates ........................... 45
Section 4.12 Liens .................................................. 45
Section 4.13 Accounts Receivable Subsidiary ......................... 46
Section 4.14 Corporate Existence .................................... 48
Section 4.15 Offer to Repurchase Upon Change of Control ............. 48
ARTICLE 5 SUCCESSORS .................................................. 50
Section 5.1 Merger, Consolidated, or Sale of Assets ................ 50
Section 5.2 Successor Corporation Substituted ...................... 50
ARTICLE 6 DEFAULTS AND REMEDIES ....................................... 51
Section 6.1 Events of Default ...................................... 51
Section 6.2 Acceleration ........................................... 53
Section 6.3 Other Remedies ......................................... 53
Section 6.4 Waiver of Past Defaults ................................ 54
Section 6.5 Control by Majority .................................... 54
Section 6.6 Limitation on Suits .................................... 54
Section 6.7 Rights of Holders of Notes to Receive Payment .......... 55
Section 6.8 Collection Suit by Trustee ............................. 55
Section 6.9 Trustee May File Proofs of Claim ....................... 55
Section 6.10 Priorities ............................................. 56
Section 6.11 Undertaking for Costs .................................. 56
ARTICLE 7 TRUSTEE ..................................................... 56
Section 7.1 Duties of Trustee ...................................... 56
Section 7.2 Rights of Trustee ...................................... 58
Section 7.3 Individual Rights of Trustee ........................... 58
Section 7.4 Trustee's Disclaimer ................................... 58
Section 7.5 Notice of Defaults ..................................... 59
Section 7.6 Reports by Trustee to Holders of the Notes ............. 59
Section 7.7 Compensation and Indemnity ............................. 59
Section 7.8 Replacement of Trustee ................................. 60
Section 7.9 Successor Trustee by Merger, Etc ....................... 61
Section 7.10 Eligibility; Disqualification .......................... 61
Section 7.11 Preferential Collection of Claims Against Company ...... 61
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE .................... 62
Section 8.1 Option to Effect Legal Defeasance or
Covenant Defeasance .................................... 62
Section 8.2 Legal Defeasance and Discharge ......................... 62
Section 8.3 Covenant Defeasance .................................... 62
ii
<PAGE>
Page
----
Section 8.4 Conditions to Legal or Covenant Defeasance ............ 63
Section 8.5 Deposited Money and Government Securities
to Be Held in Trust; Other Miscellaneous Provisions ... 64
Section 8.6 Repayment to Company .................................. 65
Section 8.7 Reinstatement ......................................... 65
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER ............................ 66
Section 9.1 Without Consent of Holders of Notes ................... 66
Section 9.2 With Consent of Holders of Notes ...................... 66
Section 9.3 Compliance with Trust Indenture Act ................... 68
Section 9.4 Revocation and Effect of Consents ..................... 68
Section 9.5 Notation on or Exchange of Notes ...................... 68
Section 9.6 Trustee to Sign Amendments, Etc ....................... 68
ARTICLE 10 MISCELLANEOUS ............................................... 69
Section 10.1 Trust Indenture Act Controls .......................... 69
Section 10.2 Notices ............................................... 69
Section 10.3 Communication by Holders of Notes with
Other Holders of Notes ................................ 70
Section 10.4 Certificate and Opinion as to Conditions Precedent .... 70
Section 10.5 Statements Required in Certificate or Opinion ......... 70
Section 10.6 Rules by Trustee and Agents ........................... 71
Section 10.7 No Personal Liability of Directors, Officers,
Employees and Stockholders ............................ 71
Section 10.8 Governing Law ......................................... 71
Section 10.9 No Adverse Interpretation of Other Agreements ......... 71
Section 10.10 Successors ............................................ 71
Section 10.11 Severability .......................................... 71
Section 10.12 Counterpart Originals ................................. 72
Section 10.13 Table of Contents, Headings, Etc ...................... 72
SCHEDULES
Schedule 1 - First Tier Subsidiaries
Schedule 2 - Transaction Liens
Schedule 3 - SFC Sale Assets
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Certificate of Transferor
iii
<PAGE>
INDENTURE dated as of June 11, 1999 between SFC New Holdings, Inc.,
a Delaware corporation (the "Company"), and United States Trust Company of New
York, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 12 1/8% Series
A Senior Notes due 2002 (the "Series A Notes") and the 12 1/8% Series B Senior
Notes due 2002 (the "Series B Notes" and, together with the Series A Notes, the
"Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.
"Accounts Receivable Agreements" means (i) the Pooling Agreement,
dated as of November 16, 1994, as amended, among the Accounts Receivable
Subsidiary, the Company or SFC, as Master Servicer and The Chase Manhattan Bank,
as trustee on behalf of the Certificateholders, (ii) the Series 1998-1
Supplement to the Pooling Agreement, dated as of March 31, 1998, as amended,
among the Accounts Receivable Subsidiary, the Company or SFC, as Master
Servicer, and The Chase Manhattan Bank, as trustee on behalf of the
Certificateholders, (iii) the Servicing Agreement dated as of November 16, 1994,
as amended, among the Accounts Receivable Subsidiary, the Company or SFC, as
Master Servicer, certain subsidiaries of the Company, as Servicers, and The
Chase Manhattan Bank, as trustee, (iv) the Amended and Restated Receivables Sale
Agreement, dated as of November 16, 1994, as amended, among the Accounts
Receivable Subsidiary, the Company or SFC, as Master Servicer, and certain
subsidiaries of the Company, as Sellers and (v) any related instruments and
agreements executed in connection therewith, together with any replacement or
additional Pooling Agreements and Receivables Sale Agreements, and including any
related instruments and agreements executed in connection therewith, and in each
case as amended, supplemented, extended, modified, renewed, refunded, replaced
or refinanced from time to time, whether or not with the same parties.
"Accounts Receivable Discount" means, with respect to any account
receivable sold by the Company or any of its Subsidiaries to the Accounts
Receivable Subsidiary, (a) the difference between (i) the face amount of such
account receivable and (ii) the aggregate amount of consideration (after giving
effect to any subsequent adjustments thereto) received upon the sale of such
account receivable (with any Accounts Receivable Subsidiary Notes received as
consideration in such sale being valued at the principal amount thereof for this
purpose), less (b) the amount of such difference that is calculated on the basis
of, or with reference to, (i) the historical bad debt allowance or accounts
receivable write-offs of the seller of such account
<PAGE>
2
receivable, (ii) fees and other operating expenses of the Accounts Receivable
Subsidiary payable to parties other than the Company and its Subsidiaries and
acquirors of accounts receivable or participation interests therein (in their
capacity as acquirors) to the extent that such fees and expenses do not exceed
such amounts as would be obtained in an arm's length transaction and (iii)
credits to the obligor of such account receivable applied to the face amount of
such account receivable in respect of discount expense (including prompt payment
and volume discounts), rebates, refunds, promotional allowances, billing error
expense and similar adjustments and allowances made by the seller of such
account receivable.
"Accounts Receivable Subsidiary" means a Wholly Owned Subsidiary of
the Company, designated as such by the Company, (a) that has total assets at the
time of such designation with a book value of $100,000 or less and (b) with
which neither the Company nor any other Subsidiary of the Company has any
obligation (i) to subscribe for additional shares of Capital Stock or other
equity interests therein (other than to finance the purchase of additional
accounts receivable of the Company and its Subsidiaries) or (ii) to maintain or
preserve such Accounts Receivable Subsidiary's financial condition or to cause
it to achieve certain levels of operating results.
"Accounts Receivable Subsidiary Notes" means the notes to be issued
by the Accounts Receivable Subsidiary for the purchase of accounts receivable.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person.
"Additional Exchange Offer" means the offer that may be made by the
Company in accordance with the terms of the Offering Circular to exchange Series
B Notes for Untendered SFC Notes.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that (i) beneficial ownership of 20% or more of the voting securities of a
Person shall be deemed to be control, (ii) no lender party to the Term Loan
Agreement or the Revolving Credit Agreement (or any of its affiliates) shall be
deemed to be an Affiliate of the Company or any of its Subsidiaries solely by
virtue of being party to the Term Loan Agreement or the Revolving Credit
<PAGE>
3
Agreement and (iii) an officer of a Person shall not be deemed an Affiliate of
such Person unless such officer directly or indirectly controls such Person.
"Agent" means any Registrar or Paying Agent.
"Applicable Spread" is defined as 100 basis points.
"Archway" means Archway Cookies, LLC, a Delaware limited liability
company and a Wholly Owned Subsidiary of Mother's.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means each day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the liability in respect of a capital lease that would at
such time be required to be capitalized on the balance sheet in accordance with
GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests.
"Cash Equivalents" means (i) cash, (ii) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof having maturities of not more that six months
from the date of acquisition, (iii) certificates of deposit and Eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Term Loan Agreement or the
Revolving Credit Agreement or with any domestic commercial bank having capital
and surplus in excess of $500,000,000, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper issued
by any lender party to the Term Loan Agreement or the Revolving Credit Agreement
(or the parent company of any such lender) and commercial paper rated A-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related transactions, of
all or substantially all of the assets of the Company, Holdings, SFC Sub, SFC or
SFAC to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act)
<PAGE>
4
(other than the Principals or their Specified Parties), (ii) the adoption of a
plan relating to the liquidation or dissolution of the Company, Holdings, SFC
Sub, SFAC or SFC, (iii) the consummation of any transaction the result of which
is that any Person or group (as defined above) (other than the Principals and
their Specified Parties) owns, directly or indirectly, more of the voting power
of the voting stock of the Company, Holdings, SFC Sub, SFAC or SFC other than
the Principals and their Specified Parties or (iv) the first day on which a
majority of the members of the Board of Directors of the Company, Holdings, SFC
Sub, SFAC or SFC are not Continuing Directors. For the purposes of the foregoing
sentence, any shares of voting stock that are required to be voted for a nominee
of any Principal or Specified Party pursuant to a binding agreement between the
holder thereof and such Principal or Specified Party will be deemed to be held
by such Principal or Specified Party, as the case may be, for purposes of
determining the percentage of voting power held by any Person.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (a) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing
Consolidated Net Income), plus (b) provision for taxes based on income or
profits to the extent such provision for taxes was included in computing
Consolidated Net Income, plus (c) consolidated interest expense of such Person
for such period, whether paid or accrued (including amortization of original
issue discount, non-cash interest payments and the interest component of any
payments associated with Capital Lease Obligations), to the extent such expense
was deducted in computing Consolidated Net Income, plus (d) all depreciation,
amortization (including amortization of goodwill and other intangibles) and
other non-cash charges (excluding any non-cash charge constituting an
extraordinary item of loss or expense and any non-cash charge that requires an
accrual of or a reserve for cash charges for any future period) of such Person
for such period to the extent such depreciation, amortization and other non-cash
charges were deducted in computing Consolidated Net Income, plus (e) one-third
of all operating lease payments of such Person paid or accrued during such
period, in each case, on a consolidated basis and determined in accordance with
GAAP, plus (f) without duplication, the amount of Accounts Receivable Discount
attributable to, and any commitment, availability or other fees payable to the
Accounts Receivable Subsidiary in respect of, sales of accounts receivable by
such Person and its Subsidiaries to the Accounts Receivable Subsidiary during
such period to the extent such amount was deducted in computing Consolidated Net
Income for such period.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
Person or a Wholly Owned Subsidiary
<PAGE>
5
of the referent Person, (ii) the Net Income of any Subsidiary of the referent
Person shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person, the sum
of (i) the consolidated equity of the common stockholders of such Person and its
consolidated Subsidiaries plus (ii) the respective amounts reported on such
Person's most recent balance sheet with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock, less (x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business)
subsequent to the date of this Indenture in the book value of any asset owned by
such Person or a consolidated Subsidiary of such Person, (y) all investments in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in
each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges, all of the foregoing determined in
accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company, Holdings, SFC Sub, SFAC or SFC,
as applicable who (i) was a member of such Board of Directors on the date of
this Indenture or (ii) was nominated for election or elected to such Board of
Directors with the affirmative vote of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 10.2 hereof or such other address as to which
the Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
<PAGE>
6
"Definitive Notes" means Notes that are in the form of Exhibit A
attached hereto, that do not include the information called for by footnotes 1
and 2 thereof.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means, with respect to the Notes, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date on which the Notes mature.
"85% Owned Subsidiary" of a Person means any Subsidiary of such
Person at least 85% of the outstanding Capital Stock or other ownership
interests (including at least 51% of the outstanding voting Capital Stock or
other voting ownership interests) of which are owned directly or indirectly by
such Person.
"11% Debenture Indenture" means that certain indenture, dated as of
the date hereof, by and between SFC Sub and United States Trust Company of New
York, as trustee, as amended or supplemented from time to time, relating to the
11% Debentures.
"11% Debentures" means, collectively, SFC Sub's 11% Series A Senior
Subordinated Discount Debentures due 2009 and SFC Sub's 11% Series B Senior
Subordinated Discount Debentures due 2009, issued pursuant to the 11% Debenture
Indenture.
"11 1/4% Senior Indenture" means that certain indenture, dated as of
the date hereof, by and between the Company and United States Trust Company of
New York, as trustee, as amended or supplemented from time to time, relating to
the 11 1/4% Senior Notes.
"11 1/4% Senior Notes" means, collectively, the Company's 11 1/4%
Series A Senior Notes due 2001 and the Company's 11 1/4% Series B Senior Notes
due 2001, issued pursuant to the 11 1/4% Senior Indenture.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
<PAGE>
7
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series A Notes for
Series B Notes.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than under the Term Loan Agreement, the Revolving Credit
Agreement, the 11 1/4% Senior Indenture, the Senior Subordinated Indenture and
this Indenture) in existence on the date of this Indenture, until such amounts
are repaid.
"First Tier Subsidiaries" means direct Wholly Owned Subsidiaries of
the Company on the date of this Indenture as set forth on Schedule 1 attached
hereto and any such Subsidiaries acquired thereafter other than the Accounts
Receivable Subsidiary.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs or redeems any Indebtedness (other
than revolving credit borrowings) or issues or redeems preferred stock or
consummates an Asset Sale or any Material Acquisition subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, guarantee or redemption of
Indebtedness, or such issuance or redemption of preferred stock, or the
consummation of such Asset Sale or such Material Acquisition, as if the same had
occurred at the beginning of the applicable period. For purposes of calculating
the Fixed Charge Coverage Ratio of the Company for any period commencing prior
to the date of the Transaction, pro forma effect shall be given to the
Transaction and the financing thereof as if the same had occurred at the
beginning of such period.
"Fixed Charges" means, with respect to any Person for any period,
the sum of (a) consolidated interest expense of such Person for such period,
whether paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments and the interest component of any payments associated
with Capital Lease Obligations but excluding amortization of deferred financing
fees), plus (b) the interest expense of any other Person for such period with
respect to Indebtedness that is guaranteed by the referent Person, plus (c) the
product of (i) all cash dividend payments (and non-cash dividend payments in the
case of a Person that is a Subsidiary) on any series of preferred stock of such
Person, times (ii) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, plus (d) one-third
<PAGE>
8
of all operating lease payments of such Person paid or accrued during such
period, in each case, on a consolidated basis and in accordance with GAAP, plus
(e) the amount of Accounts Receivable Discount attributable to, and any
commitment, availability or other fees payable to the Accounts Receivable
Subsidiary in respect of, sales of accounts receivable by such Person and its
Subsidiaries to the Accounts Receivable Subsidiary during such period.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect on the date of this Indenture.
"Global Note" means a Note that is in the form of Exhibit A attached
hereto that contains the paragraph referred to in footnote 1 and the additional
schedule referred to in footnote 2 thereto.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means SFAC New Holdings, Inc., a Delaware corporation and
a Subsidiary of SFC Sub.
"Indebtedness" means, with respect to any Person, the principal
amount of any indebtedness of such Person, whether or not contingent, in respect
of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or representing Capital Lease Obligations or the balance deferred and
unpaid of the purchase price of any property (including pursuant to capital
leases) or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and also includes, to the extent not otherwise included,
the guarantee of items that would be included within this definition.
<PAGE>
9
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Initial Exchange Offers" means the exchange offers for the SFC
Notes made by the Company in accordance with the terms and conditions set forth
in the Offering Circular.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans
(including guarantees), advances or capital contributions (excluding commission,
travel, relocation and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in New York City or at a place of payment are authorized by law or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Marketable Securities" means, in connection with any Asset Sale,
any readily marketable equity or debt securities that are received by the
Company or any Subsidiary of the Company as consideration for such Asset Sale
and are (a) traded on the New York Stock Exchange, the American Stock Exchange
or the National Association of Securities Dealers Automated Quotation National
Market System and (b) issued by a corporation that has outstanding one or more
issues of debt or preferred stock securities that are rated investment grade by
Moody's Investor Services, Inc. or Standard & Poor's Corporation; provided, that
in no event shall the excess of aggregate amount of securities of any one such
corporation held immediately following the consummation of any Asset Sale by the
Company and its Subsidiaries exceed ten times the average daily trading volume
of such securities during the 20 trading days immediately preceding the
consummation of such Asset Sale be deemed Marketable Securities.
<PAGE>
10
"Material Acquisition" means any material acquisition of a business,
Capital Stock, property or assets or any other material transaction as a result
of which a Person becomes a Subsidiary of the Company. For the purposes of this
definition, an acquisition or other transaction shall be deemed "material" if it
has an aggregate value of $5 million or more.
"Metz" means Metz Baking Company, an Iowa corporation and a Wholly
Owned Subsidiary of the Company.
"Mother's" means Mother's Cake & Cookie Co., a California
corporation and a Wholly Owned Subsidiary of the Company.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, any gain
(but not loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets.
"Non-Recourse Indebtedness" of any Person means Indebtedness of such
Person that (i) is not guaranteed by any other Person (except a Wholly Owned
Subsidiary of the referent Person), (ii) is not recourse to and does not
obligate any other Person (except a Wholly Owned Subsidiary of the referent
Person) in any way, (iii) does not subject any property or assets of any other
Person (except a Wholly Owned Subsidiary of the referent Person), directly or
indirectly, contingently or otherwise, to the satisfaction thereof and (iv) is
not required by GAAP to be reflected on the financial statements of any other
Person (other than a Subsidiary of the referent Person) prepared in accordance
with GAAP.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Note Indentures" means this Indenture, the 11 1/4% Senior Indenture
and the Senior Subordinated Indenture.
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11
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness. With respect to the
Notes, "Obligations" shall include, without limitation, with respect to the
Notes, liabilities in respect of any indemnity, any reimbursement, compensation
or contribution obliga tions, any liquidated damage provision (including
Liquidated Damages), any breach of representation or warranty or any rights of
redemption or rescission under this Indenture, the Registration Rights Agreement
or by law or otherwise (other than amounts payable to the Trustee pursuant to
Section 7.7).
"Offering Circular" means the Offers to Exchange and Consent
Solicitations of the Company dated May 10, 1999 pursuant to which the Company
(i) offered to exchange (a) up to $225,000,000 aggregate principal amount of 11
1/4% Senior Notes and up to $5,659,368 aggregate principal amount of 11%
Debentures for all outstanding SFC 10 1/4% Senior Notes; (b) up to $150,000,000
aggregate principal amount of Notes and up to $3,772,912 aggregate principal
amount of 11% Debentures for all outstanding SFC 11 1/8% Senior Notes; and (c)
up to $200,000,000 aggregate principal amount of Senior Subordinated Notes and
up to $18,864,558 aggregate principal amount of 11% Debentures for all
outstanding SFC Subordinated Notes; and (ii) solicited consents from the holders
of the SFC Notes to certain amendments to the indentures pursuant to which such
SFC Notes were issued.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate that meets the
requirements of Section 10.5 hereof and is signed on behalf of the Company by
the Chairman of the Board, the President or any Vice President and by the
Treasurer, or Assistant Treasurer, the Secretary or Assistant Secretary.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.5 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Paying Agent" means United States Trust Company of New York.
"Permitted Investments" means (a) any Investments in the Company or
in an 85% Owned Subsidiary of the Company that is engaged in the same or a
similar or related line of business as the Company or any of its Subsidiaries
were engaged in on the date of this Indenture; (b) any Investments in Cash
Equivalents; (c) Investments by the Company or any Subsidiary of the Company in
a Person that is engaged in the same or a similar or related line of business as
the Company or any of its Subsidiaries were engaged in on the date of this
Indenture, if as a result of such
<PAGE>
12
Investment (i) such Person becomes an 85% Owned Subsidiary of the Company or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or an 85% Owned Subsidiary of the Company; (d) Investments in the
Accounts Receivable Subsidiary permitted by Section 4.13 hereof; (e) Investments
in agricultural commodities futures, options and other hedging obligations in
the ordinary course of business; and (f) Investments in any Person other than
Holdings or a Subsidiary of Holdings that is not also a Subsidiary of the
Company (in addition to Investments permitted by the foregoing clauses (a)
through (e)) that, in the aggregate, do not exceed $25 million at any one time
outstanding.
"Permitted Liens" means (a) Liens on the Capital Stock of the First
Tier Subsidiaries and the Accounts Receivable Subsidiary and other assets of the
Company, if any, securing Senior Term Debt and any Indebtedness permitted under
clause (h) or (i) of the second paragraph of Section 4.9 hereof; (b) Liens
securing the Senior Revolving Debt; (c) Liens in favor of the Company and its
Wholly Owned Subsidiaries; (d) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation; (e) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such acquisition; (f) Liens to secure Indebtedness permitted by
clause (e) of the second paragraph of Section 4.9 hereof covering solely the
assets acquired with such Indebtedness and the proceeds of such assets; (g)
Liens existing on the date of the SFC 11 1/8% Senior Indenture (including under
the Accounts Receivable Agreements) and Liens created on the date hereof in
connection with the Transaction as set forth on Schedule 2 attached hereto and
renewals, extensions and replacements thereof; provided that such renewals,
extensions or replacements shall not apply to any property or assets not
previously subject to such Liens or increase the principal amount of Obligations
secured thereby; (h) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently pursued; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (i) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, landlords' or other like
Liens arising in the ordinary course of business; (j) pledges or deposits in
connection with workers' compensation, unemployment insurance and other social
security legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements; (k) deposits to secure the performance
of bids, trade contracts (other than for borrowed money), leases, statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business; (l) easements,
rights-of-way, encroachments and other survey defects, restrictions and other
similar encumbrances and title defects which, in the aggregate, do not in any
case materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the Company
and its Subsidiaries; (m) any Lien
<PAGE>
13
arising pursuant to any order of attachment, distraint or other legal process
arising in connection with court or arbitration proceedings so long as the
execution or other enforcement thereof is effectively stayed, the claims secured
thereby are being contested in good faith by appropriate proceedings, adequate
reserves have been established with respect to such claims in accordance with
GAAP and no Default or Event of Default would result thereby; (n) licenses for
the use of intellectual property rights or like intangible assets; and (o) Liens
incurred in the ordinary course of business of the Company or any Subsidiary of
the Company with respect to obligations that do not exceed $5 million at any one
time outstanding and that are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, or unincorporated organization
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"PIK Notes" means any additional Senior Subordinated Notes issued by
the Company as interest payable-in-kind in lieu of a cash payment of $5.00 per
$1,000 principal amount of Senior Subordinated Notes due on the interest payment
date for such Senior Subordinated Notes in accordance with the terms of the
Senior Subordinated Indenture.
"Principal Business Asset Sale" means any sale, issuance,
conveyance, transfer, lease or other disposition (including, without limitation,
by way of merger, consolidation or sale and leaseback transaction but not the
grant of a pledge or security interest), directly or indirectly, in one or a
series of related transactions, of all of the Capital Stock or all or
substantially all of the properties and assets of Mother's, Metz or Archway,
other than the SFC Sale Assets.
"Principals" means Haas Wheat & Partners Incorporated, Acadia
Partners, L.P. and Keystone, Inc.
"Receivables Trust" means a trust organized solely for the purpose
of securitizing the accounts receivable held by the Accounts Receivable
Subsidiary that (a) shall not engage in any business other than (i) the purchase
of accounts receivable or participation interests therein from the Accounts
Receivable Subsidiary and the servicing thereof, (ii) the issuance of and
distribution of payments with respect to the securities permitted to be issued
under clause (b) below and (iii) other activities incidental to the foregoing,
(b) shall not at any time incur Indebtedness or issue any securities, except (i)
certificates representing undivided interests in the Receivables Trust issued to
the Accounts Receivable Subsidiary and (ii) debt securities issued in an arm's
length transaction for consideration solely in the form of cash and Cash
Equivalents, all of which (net of any issuance fees and expenses) shall promptly
be paid to the Accounts Receivable Subsidiary, and (c) shall distribute to the
Accounts Receivable Subsidiary as a distribution on the Accounts Receivable
Subsidiary's
<PAGE>
14
beneficial interest in the Receivables Trust no less frequently than once every
six months all available cash and Cash Equivalents held by it, to the extent not
required for reasonable operating expenses or reserves therefor or to service
any securities issued pursuant to clause (b) above that are not held by the
Accounts Receivable Subsidiary.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of June 11, 1999, by and among the Company and the
holders of the Notes, the Senior Subordinated Notes and the 11 1/4% Senior
Notes, as such agreement may be amended, modified or supplemented from time to
time.
"Responsible Officer" when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Agreement" means that certain Revolving Credit
Agreement, dated as of March 16, 1998 by and among certain Subsidiaries of SFC,
the lenders party thereto and DLJ Funding Corp., as administrative agent,
providing for up to $125 million in aggregate principal amount of revolving
loans and letters of credit, together with any replacement or additional loan
agreement or agreements, and including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, supplemented, extended, modified, renewed, refunded,
replaced or refinanced from time to time, whether or not with the same lenders.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Revolving Debt" means all Obligations from time to time
outstanding under the Revolving Credit Agreement.
"Senior Subordinated Indenture" means that certain indenture, dated
as of the date hereof, between the Company and U.S. Trust Company of Texas,
N.A., as trustee, as amended or supplemented from time to time, relating to the
Senior Subordinated Notes.
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15
"Senior Subordinated Notes" means, collectively, the Company's 13
1/4% Series A Senior Subordinated Notes due 2003 and 13 1/4% Series B Senior
Subordinated Notes due 2003, issued pursuant to the Senior Subordinated
Indenture.
"Senior Term Debt" means all Obligations from time to time
outstanding under the Term Loan Agreement and the Notes, together with any
replacement or additional credit agreements, credit agreement, indenture or
indentures, and including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection with any of the foregoing, and
in each case as amended, supplemented, extended, modified, renewed, refunded,
repealed or refinanced from time to time, whether or not with the same Lenders.
"SFAC" means Specialty Foods Acquisition Corporation, a Delaware
corporation.
"SFC" means Specialty Foods Corporation, a Delaware corporation and
a Wholly Owned Subsidiary of SFAC.
"SFC 11 1/8% Senior Notes" means the 11 1/8% Senior Notes due 2002
issued by SFC pursuant to the SFC 11 1/8% Senior Indenture.
"SFC 11 1/8% Senior Indenture" means that certain Indenture, dated
as of July 17, 1995, by and between SFC and United States Trust Company of New
York, as trustee, as amended from time to time, relating to the SFC 11 1/8%
Senior Notes.
"SFC Notes" means, collectively, the SFC 10 1/4% Senior Notes, the
SFC 11 1/8% Senior Notes and the SFC Subordinated Notes.
"SFC Sale Assets" means the real estate of Mother's, Metz and
Archway listed on Schedule 3 attached hereto which is being held for sale by SFC
as of the date of this Indenture.
"SFC Sub" means SFC Sub, Inc., a Delaware corporation, and a Wholly
Owned Subsidiary of SFC.
"SFC Subordinated Notes" means the 11 1/4% Senior Subordinated Notes
due 2003 issued by SFC pursuant to the SFC Subordinated Note Indenture.
"SFC Subordinated Note Indenture" means that certain Indenture,
dated as of August 16, 1993, by and between SFC and United States Trust Company
of New York, as trustee, as amended from time to time, relating to the SFC
Subordinated Notes.
"SFC 10 1/4% Senior Notes" means the 10 1/4% Senior Notes due 2001
issued by SFC pursuant to the SFC 10 1/4% Senior Indenture.
<PAGE>
16
"SFC 10 1/4% Senior Indenture" means that certain Indenture, dated
as of August 16, 1993, by and between SFC and United States Trust Company of New
York, as trustee, as amended from time to time, relating to the SFC 10 1/4%
Senior Notes.
"Significant Subsidiary" means any Subsidiary which would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulations S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Specified Party" with respect to any Principal means (A) any
controlling stockholder or partner, a direct or indirect 80% (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an individual)
of such Principal, (B) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A) or the
succeeding clauses (D) or (E), (C) any partner or stockholder of any Principal
as of the date of this Indenture who has acquired or acquires any assets or
voting stock of the Company, Holdings, SFC Sub, SFAC or SFC pursuant to a
general distribution by such Principal to each of its partners or stockholders,
(D) any officer or director of any Principal as of the date of this Indenture or
(E) co-investment entities established by any Principal within 90 days of this
Indenture and controlled by such Principal, any affiliated party (including any
officer or director) of such Principal or of the general partner of such
Principal (or of the general partner of any general partner of such Principal)
or any combination of the foregoing; provided, however, that (x) each of Douglas
D. Wheat and HWP Specialty Partners, L.P. shall be deemed a Specified Party of
Haas Wheat & Partners Incorporated and (y) any officer or director of Oak Hill
Partners, Inc. as of the date of this Indenture shall be deemed a Specified
Party of Acadia Partners, L.P. and Keystone, Inc.
"Subsidiary" of any Person means any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person or a combination thereof; provided,
however, that the Accounts Receivable Subsidiary and its Subsidiaries shall not
be deemed Subsidiaries of the Company or of any of its other Subsidiaries.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement, as
amended, dated as of August 16, 1993 between SFAC and SFC, as amended to include
the Company and Holdings as parties as of the date of the Indenture.
"Term Loan Agreement" means that certain Term Loan Agreement, dated
as of July 17, 1995, by and among SFC, Chemical Bank and the other lenders
<PAGE>
17
party thereto, providing for up to $175 million in aggregate principal amount of
term loans, together with any replacement or additional credit agreement or
agreements, and including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, supplemented, extended, modified, renewed, refunded, replaced or
refinanced from time to time, whether or not with the same lenders.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Transaction" means the corporate and financial restructuring of
SFAC, SFC and their Subsidiaries, including the Company, Holdings and SFC Sub,
described in the Offering Circular, of which the Initial Exchange Offers are one
component.
"Transfer Restricted Notes" means each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Securities Act, (b) the date on
which such Note has been effectively registered under the Securities Act and
disposed of in accordance with a shelf registration statement pursuant to the
Registration Rights Agreement and (c) the date on which such Note is distributed
to the public pursuant to Rule 144 under the Securities Act.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15 (519) that has become publicly available at least two Business Days prior
to the date fixed for prepayment (or, if such Statistical Release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the then remaining Weighted Average Life to Maturity of the Notes;
provided that if the Weighted Average Life to Maturity of such Notes is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Weighted Average Life to Maturity of such Notes is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
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18
"Untendered SFC Notes" means the SFC 11 1/8% Senior Notes that are
not acquired by the Company in exchange for Notes in accordance with the terms
and conditions of the Initial Exchange Offers.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other scheduled required payments
of principal, including payment at final maturity, in respect thereof, by (y)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
"Yield Protection Amount" means, with respect to the Notes, the
greater of (i) 1.0% of the principal amount of the Notes to be redeemed and (ii)
the excess, expressed as a percentage of the total principal amount of the Notes
outstanding on the date of determination and applied to the principal amount of
such Notes to be redeemed, of (A) the present value of all remaining required
interest and principal payments due on all such Notes outstanding on the date of
determination through the final stated maturity of all such Notes, computed
using a discount rate equal to the Treasury Rate plus the Applicable Spread,
over (B) the principal amount of all such Notes outstanding on the date of
determination.
Section 1.2 Other Definitions. Terms not otherwise defined herein
shall have the meanings assigned to them in the Notes. As used in this
Indenture, the following terms shall have the meanings assigned in the Sections
referred to opposite such terms below.
Defined in
Term Section
---- -------
"Affiliate Transaction" ............................. 4.11
"Asset Sale" ........................................ 4.10
"Asset Sale Offer" .................................. 3.9
"Bankruptcy Law" .................................... 4.1
"Change of Control Offer" ........................... 4.15
"Change of Control Payment" ......................... 4.15
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19
Defined in
Term Section
---- -------
"Change of Control Payment Date" ..................... 4.15
"Covenant Defeasance" ................................ 8.3
"DLJSC" .............................................. 4.11
"DTC" ................................................ 2.3
"Event of Default" ................................... 6.1
"Excess Proceeds" .................................... 4.10
"incur" .............................................. 4.9
"Legal Defeasance" ................................... 8.2
"Offer Amount" ....................................... 3.9
"Offer Period" ....................................... 3.9
"Paying Agent" ....................................... 2.3
"Payment Default" .................................... 6.1
"Permitted Refinancing" .............................. 4.9
"Purchase Date" ...................................... 3.9
"Refinancing Indebtedness" ........................... 4.9
"Registrar" .......................................... 2.3
"Restricted Payments" ................................ 4.7
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
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20
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement or successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.1 Form and Dating. The Notes and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the text referred to in footnotes 1 and 2
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding
<PAGE>
21
Notes from time to time endorsed thereon and that the aggregate amount of
outstanding Notes represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Note to reflect the amount of any increase or decrease in the amount
of outstanding Notes represented thereby shall be made by the Trustee or the
Note Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.6 hereof.
Section 2.2 Execution and Authentication. Two Officers shall sign
the Notes for the Company by manual or facsimile signature. The Company's seal
shall be reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee. The signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon receipt of a written order of the Company
signed by two Officers, authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar, and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Notes.
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22
The Company initially appoints the Trustee to act as the Registrar,
Paying Agent and the Note Custodian with respect to the Global Notes.
Section 2.4 Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Trustee all
money held by the Paying Agent for the payment of principal or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.5 Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of all Holders and shall otherwise comply with TIA ss.
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company shall otherwise comply with TIA ss.
312(a).
Section 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive
Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his/her attorney, duly authorized in
writing; and
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23
(ii) in the case of a Definitive Note that is a Transfer
Restricted Note, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Note is being
delivered to the Registrar by a Holder for registration in the name
of such Holder, without transfer, a certification to that effect
from such Holder (in substantially the form of Exhibit B hereto); or
(B) if such Transfer Restricted Note is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
(C) if such Transfer Restricted Note is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that effect
from such Holder (in substantially the form of Exhibit B hereto) and
an Opinion of Counsel from such Holder or the transferee reasonably
acceptable to the Company and to the Registrar to the effect that
such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in
a Global Note. A Definitive Note may not be exchanged for a beneficial interest
in a Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted
Note, a certification from the Holder thereof (in substantially the form
of Exhibit B hereto) to the effect that such Definitive Note is being
transferred by such Holder to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Note, written instructions from the Holder thereof directing
the Trustee to make, or to direct the Note Custodian to make, an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note,
<PAGE>
24
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture, which shall include
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act and the procedures of the Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in a Global
Note may upon written request exchange such beneficial interest for a
Definitive Note. Upon receipt by the Trustee of written instructions or
such other form of instructions as is customary for the Depository, from
the Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Note, and, in the case of a Transfer Restricted Note,
the following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depository as being the
beneficial owner, a certification to that effect from such Person
(in substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act, a certification to that effect from the transferor (in
substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that effect
from the transferor (in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from the transferee or transferor
reasonably
<PAGE>
25
acceptable to the Company and to the Registrar to the effect that
such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and procedures
existing between the Depository and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly and, following such
reduction, the Company shall execute and, upon receipt of an authentication
order in accordance with Section 2.2 hereof, the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a
beneficial interest in a Global Note pursuant to this Section 2.6(d) shall
be registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.6), a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of
Depository. If at any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as Depository for
the Global Notes and a successor Depository for the Global Notes is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver Definitive Notes in an aggregate principal amount equal to the principal
amount of the Global Notes in exchange for such Global Notes.
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26
(g) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)
(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY
OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Note (including any Transfer Restricted Note represented by a Global Note)
<PAGE>
27
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Note
that is a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Note for a Definitive
Note that does not bear the legend set forth in (i) above and
rescind any restriction on the transfer of such Transfer Restricted
Note; and
(B) in the case of any Transfer Restricted Note
represented by a Global Note, such Transfer Restricted Note shall
not be required to bear the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section 2.6(c) hereof;
provided, however, that with respect to any request for an exchange
of a Transfer Restricted Note that is represented by a Global Note
for a Definitive Note that does not bear the legend set forth in (i)
above, which request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that such request
is being made pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation
of the Exchange Offer and the Additional Exchange Offer, the Company shall
issue and, upon receipt of an authentication order in accordance with
Section 2.2 hereof, the Trustee shall authenticate Series B Notes in
exchange for (A) Series A Notes accepted for exchange in the Exchange
Offer and (B) Untendered SFC Notes accepted for exchange in the Additional
Exchange Offer, which Series B Notes shall not bear the legend set forth
in (i) above, and the Registrar shall rescind any restriction on the
transfer of such Notes, in each case unless the Holder of the Series A
Notes tendered into the Exchange Offer or, as applicable, the Holder of
the Untendered SFC Notes tendered into the Additional Exchange Offer is
either (A) a broker-dealer who purchased such Series A Notes directly from
the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, (B) a Person participating in the
distribution of the Series A Notes or the Untendered SFC Notes, as
applicable, or (C) a Person who is an affiliate (as defined in Rule 144A)
of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, all Global Notes shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or
cancelled, the principal amount of Notes represented by such Global Note shall
be reduced
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28
accordingly and an endorsement shall be made on such Global Note by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 3.7, 4.10, 4.15 and 9.5 hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon
any registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Definitive Notes or Global Notes surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of business
15 days before the day of any selection of Notes for redemption
under Section 3.2 hereof and ending at the close of business on the
day of selection; or
(B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a
Note between a record date and the next succeeding interest payment
date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on
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29
such Note, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes upon receipt of an authentication order in accordance
with the provisions of Section 2.2 hereof.
Section 2.7 Replacement Notes. If any mutilated Note is surrendered
to the Trustee, or the Company and the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon the receipt of a written order of the Company signed
by two Officers of the Company, shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Company to protect the Company, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a Note
is replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.8 Outstanding Notes. The Notes outstanding at any time are
all the Notes authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth in
Section 2.9 hereof, a Note does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.9 Treasury Notes. In determining whether the Holders of
the required principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company, or by any Affiliate of the Company,
shall be considered as though not outstanding, except that for the purposes of
determining
<PAGE>
30
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Notes that a Trustee knows are so owned shall be so
disregarded.
Section 2.10 Temporary Notes. Until Definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes upon the receipt of a written order of the Company signed by two Officers
of the Company. Temporary Notes shall be substantially in the form of Definitive
Notes but may have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11 Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all cancelled Notes shall
be delivered to the Company. The Company may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12 Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay the defaulted interest in any
lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in
each case at the rate provided in the Notes and in Section 4.1 hereof. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note and the date of the proposed payment. The
Company shall fix or cause to be fixed each such special record date and payment
date, provided that no such special record date shall be less than 10 days prior
to the related payment date for such defaulted interest. At least 15 days before
the special record date, the Company (or, upon the written request of the
Company, the Trustee in the name of and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.
<PAGE>
31
ARTICLE 3
REDEMPTION
Section 3.1 Notices to Trustee. If the Company elects to redeem
Notes pursuant to the optional redemption provisions of Section 3.7 hereof, it
shall furnish to the Trustee, at least 40 days but not more than 60 days before
a redemption date, an Officers' Certificate setting forth (i) the Section of
this Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption
price.
Section 3.2 Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, the Trustee shall select the Notes to
be redeemed among the Holders of the Notes on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate (and
in such manner as complies with applicable legal and stock exchange
requirements, if any). In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3 Notice of Redemption. Subject to the provisions of
Section 3.9 hereof, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Notes are to be redeemed at
its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued;
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32
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP, ISIN or Common Code number, if any, listed in such notice
or printed on the Notes.
At the Company's written request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.4 Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.3 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.
Section 3.5 Deposit of Redemption Price. One Business Day prior to
the redemption date, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date. The Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the
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33
extent lawful on any interest not paid on such unpaid principal, in each case at
the rate provided in the Notes and in Section 4.1 hereof.
Section 3.6 Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall issue and, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.7 Optional Redemption. (a) Except as set forth in clause
(b) of this Section 3.7, the Notes are not redeemable at the Company's option
prior to October 1, 1999. Thereafter, the Notes will be subject to redemption at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' notice to the Holders, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on October 1, of the years indicated below:
Year Percentage
---- ----------
1999 ................ 106.063%
2000 ................ 103.031%
2001 (and thereafter) 100.000%
(b) If a Change of Control shall occur prior to October 1,
1999, within 90 days after the occurrence of such Change of Control, the Company
shall have the option to redeem the Notes, in whole or in part, upon not less
than 30 nor more than 60 days' notice to the Holders, at a redemption price
equal to the principal amount thereof plus the Yield Protection Amount, plus
accrued and unpaid interest thereon to the applicable redemption date.
(c) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Sections 3.1 through 3.6 hereof.
Section 3.8 Mandatory Redemption. Except as set forth in Section 3.9
hereof or pursuant to Section 4.15 hereof, the Company shall not be required to
make mandatory redemption or sinking fund payments with respect to the Notes.
Section 3.9 Offer to Purchase by Application of Excess Proceeds. In
the event that, pursuant to Section 4.10 hereof, the Company shall be required
to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"),
it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer
<PAGE>
34
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.9 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a Depository, if appointed by the Company, or a
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Purchase Date;
<PAGE>
35
(g) that Holders shall be entitled to withdraw their election
if the Company, the Depository or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.9. The Company, the Depository or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee shall authenticate and mail or deliver such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company shall publicly announce the results of the Asset
Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1 through 3.6 hereof.
ARTICLE 4
COVENANTS
Section 4.1 Payment of Notes. The Company shall pay or cause to be
paid the principal of, premium, if any, and interest on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if other
than the Company or
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36
a Subsidiary thereof holds as of 11:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement and
shall inform the Trustee of any such payments of Liquidated Damages pursuant
thereto.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.2 Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee or
Registrar) where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 4.3 Reports.
(a) Whether or not required by the rules and regulations of
the SEC, so long as any Notes are outstanding, the Company shall furnish to all
Holders all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual
<PAGE>
37
information only, a report thereon by the Company's certified independent
accountants. In addition, the Company will provide in each such quarterly and
annual report such income statement information as its Board of Directors
determines in good faith to be appropriate with respect to each of its major
product groupings. Whether or not required by the rules and regulations of the
SEC, the Company shall file a copy of all such information with the SEC for
public availability (so long as the SEC will accept such filings) and shall
promptly make such information available to all investors who request it in
writing.
(b) For so long as any Transfer Restricted Notes remain
outstanding, the Company shall furnish to all Holders and prospective purchasers
of the Notes designated by the Holders of Transfer Restricted Notes, promptly
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
Section 4.4 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company, its Subsidiaries and the Accounts
Receivable Subsidiary during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.3(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
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(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 4.5 Taxes. The Company shall pay, and shall cause each of
its Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
Section 4.6 Stay, Extension and Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 4.7 Restricted Payments. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any distribution on account of the Company's or any of
its Subsidiaries' Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable by a Subsidiary of the Company to the Company
or any Wholly Owned Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or any
Subsidiary or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness of Holdings or any Indebtedness that is subordinated to the Notes;
or (iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.9 hereof; and
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39
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries after the
date of this Indenture (including all Restricted Payments permitted by the next
succeeding paragraph except clause (iv) thereof and, to the extent deducted in
determining the Consolidated Net Income of the Company in clause (x) below,
clause (vi) thereof), is less than the sum of (x) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period) from the
date of this Indenture to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, 100% of such deficit), plus (y) 100% of the aggregate Net Proceeds
received by the Company since the date of this Indenture from the issue or sale
of Equity Interests of the Company (other than Equity Interests sold to a
Subsidiary of the Company and other than Disqualified Stock) or any debt
security of the Company that is convertible into or exchangeable for any Equity
Interest of the Company (other than Disqualified Stock) that has been so
converted or exchanged, plus (z) 100% of any common equity capital contribution
received by the Company subsequent to the date of this Indenture.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any of the Company's Equity Interests or Indebtedness subordinated in right of
payment to the Notes of the Company in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock); (iii)
the repurchase, redemption or other acquisition or retirement for value (or the
payment of a dividend to Holdings for such repurchase, redemption or other
acquisition or retirement for value) of (x) any Equity Interests of the Company,
Holdings or any Subsidiary of the Company held by any member (or former member)
of the management of the Company, Holdings or Subsidiary of the Company or such
member's estate or (y) any Subordinated Debentures held by any member (or former
member) of the management of the Company, Holdings or Subsidiaries of the
Company of by such member's estate; provided, however, that the aggregate price
paid since the date of this Indenture for all such repurchased, redeemed,
acquired or retired Equity Interests or Subordinated Debentures shall not exceed
an amount equal to $5 million plus the aggregate cash proceeds received by the
Company or any Subsidiary of the Company from any reissuance of Equity Interests
or Subordinated Debentures by the Company or such Subsidiary to members of
management of the Company, Holdings and Subsidiaries of the Company; (iv)
Permitted Refinancings of Indebtedness subordinated in right of payment to the
Notes; (v) payments to Holdings to reimburse it for its out-of-pocket
administrative expenses in an aggregate amount not to exceed $1 million in any
fiscal year; (vi) payments to Holdings pursuant to the Tax Sharing Agreement to
the extent that Holdings is actually required to make cash outlays in connection
therewith; and (vii) payments or distributions to Holdings in an aggregate
<PAGE>
40
amount equal to the interest required to be paid by SFC from time to time on any
SFC Notes that remain outstanding after the Initial Exchange Offers.
Not later than the date of making any Restricted Payment (other than
Restricted Payments pursuant to clauses (iv), (v), (vi) and (vii) of the
foregoing paragraph), the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.7 were
computed, which calculations may be based upon the Company's latest available
financial statements.
Section 4.8 Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction (other than
encumbrances or restrictions imposed by law or judicial or regulatory action) if
such encumbrance or restriction would by its terms prohibit or limit any
Subsidiary from (a)(i) paying dividends or making any other distributions to the
Company or any of its Subsidiaries (A) on its Capital Stock or (B) with respect
to any other interest or participation in, or measured by, its profits or (ii)
paying any indebtedness owed to the Company or any of its Subsidiaries, (b)
making loans or advances to the Company or any of its Subsidiaries or (c)
transferring any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) Existing Indebtedness as in effect on the date of this Indenture,
(ii) the Term Loan Agreement and the Revolving Credit Agreement as in effect as
of the date of this Indenture, (iii) this Indenture, the Notes, the 11 1/4%
Senior Indenture, the 11 1/4% Senior Notes, the Senior Subordinated Indenture
and the Senior Subordinated Notes, (iv) applicable law, (v) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in anticipation
of such acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (vi) customary non- assignment
provisions in leases entered into in the ordinary course of business, (vii) with
respect to clause (c) above, purchase money obligations for property acquired in
the ordinary course of business; provided that such restrictions are only
applicable to the property acquired through such purchase money obligations,
(viii) permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced or (ix) any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of the
Indebtedness or the Capital Stock referred to in the foregoing clauses (i), (ii)
or (v); provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are not more
restrictive with respect to such dividend and other payment restrictions than
those contained in the applicable instrument
<PAGE>
41
governing such Indebtedness or Capital Stock (as the case may be) as in effect
on the date of this Indenture.
Section 4.9 Incurrence of Indebtedness and Issuance of Preferred
Stock. The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and the Company shall not issue any
Disqualified Stock and shall not permit any of its Subsidiaries to issue any
shares of preferred stock; provided, however, that the Company may incur
Indebtedness or issue shares of Disqualified Stock, and Subsidiaries of the
Company may incur up to $10 million in aggregate principal amount of
Indebtedness at any time outstanding, if:
(i) the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued
would have been at least 2.75 to 1 determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of such four-quarter
period; and
(ii) in the case of any incurrence of additional
Indebtedness of the Company, such Indebtedness is unsecured and
subordinated or pari passu in right of payment to the Notes and has a
Weighted Average Life to Maturity that is greater than the remaining
Weighted Average Life to Maturity of the Notes.
The foregoing limitations shall not apply to:
(a) the incurrence by the Company of Senior Term Debt in an
aggregate principal amount at any time outstanding not to exceed an amount equal
to $315 million less the aggregate amount of all repayments, optional or
mandatory, of the principal of any Senior Term Debt (other than repayments that
are immediately reborrowed) that have been made since the date of the SFC
11 1/8% Senior Note Indenture (provided, however, that Subsidiaries of the
Company shall not be permitted to guarantee the Senior Term Debt);
(b) the incurrence by the Company or its Subsidiaries of
Senior Revolving Debt (and guarantees thereof by the Company and its
Subsidiaries) in an aggregate principal amount at any time outstanding not to
exceed an amount equal to $125 million less the aggregate amount of all proceeds
of sales or other dispositions of assets applied after the date of this
Indenture to permanently reduce the commitments with respect to such
Indebtedness pursuant to Section 4.10 hereof;
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42
(c) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(d) the incurrence by the Company of Indebtedness represented
by the Notes, the 11 1/4% Senior Notes and the Senior Subordinated Notes
(including any PIK Notes);
(e) the incurrence by the Company or any of its Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property used in the business of the Company or such Subsidiary, in an aggregate
principal amount not to exceed $5 million at any time outstanding;
(f) the incurrence by the Company or any of its Subsidiaries
of Indebtedness issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace, defease or refund, Indebtedness referred to
in clauses (c), (d) or (e) above or previously incurred under this clause (f)
(the "Refinancing Indebtedness"); provided, however, that:
(1) the principal amount of such Refinancing
Indebtedness shall not exceed the aggregate principal amount, tender or
prepayment premium and unpaid interest on the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith);
(2) any Refinancing Indebtedness incurred by any
Subsidiary shall only extend, refinance, renew, replace, defease or refund
Indebtedness of such Subsidiary or any Wholly Owned Subsidiary of the
Company;
(3) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than either (x) the remaining
Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded or (y) the remaining
Weighted Average Life to Maturity of the Notes; and
(4) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, the Refinancing Indebtedness shall be subordinated
in right of payment to the Notes on terms at least as favorable to the
holders of the Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded (any such extension, refinancing, renewal, replacement,
defeasance or refunding, a "Permitted Refinancing");
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43
(g) intercompany Indebtedness between or among the Company and
any of its Wholly Owned Subsidiaries;
(h) the incurrence by the Company or its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding; and
(i) the incurrence by the Company of Indebtedness since the
date of this Indenture (in addition to Indebtedness permitted by any other
clause of this paragraph in an aggregate principal amount at any time
outstanding not to exceed the sum of (A) $35 million plus (B) up to $40 million
of permanent reductions in commitments for Senior Revolving Debt (other than
pursuant to the mandatory repayment provisions thereof) made since the date of
this Indenture.
For purposes of the preceding paragraph, (1) the incurrence, as of
the date of this Indenture, by the Company of Indebtedness under the Term Loan
Agreement in principal amount of $175 million (and any refinancing or
replacement thereof) shall be deemed to be included in the Indebtedness
permitted by clause (a) of such preceding paragraph, (2) the incurrence by the
Company of Indebtedness under the Notes shall be deemed to be included in the
Indebtedness permitted by such preceding paragraph as follows: $127 million in
principal amount thereof (and any refinancing or replacement thereof) under such
clause (a) and $23 million in principal amount thereof under clause (i) of such
preceding paragraph, and (3) any repayment (other than repayments that are
immediately reborrowed) of principal amount under the Notes (or any refinancing
or replacement thereof) shall be deemed to reduce the principal amount of
Indebtedness outstanding under such clause (a) or such clause (i), as the case
may be, as designated in a notice by the Company to the Trustee at the time of
such repayment.
Section 4.10 Asset Sales. (a) The Company shall not, and shall not
permit any of its Subsidiaries to, (i) sell, lease, convey or otherwise dispose
of any assets (including by way of a sale-and-leaseback) other than in the
ordinary course of business and other than sales of accounts receivable to the
Accounts Receivable Subsidiary in accordance with the provisions of Section 4.13
hereof (provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company shall be governed by Section 5.1
hereof) or (ii) issue or sell equity securities of any of its Subsidiaries, in
each case whether in a single transaction or a series of related transactions,
(a) that have a fair market value in excess of $3 million or (b) for net
proceeds in excess of $3 million (each of the foregoing, an "Asset Sale"),
unless (x) the Company (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets sold or otherwise
disposed of and (y) at least 80% of the consideration therefor received by the
Company or such Subsidiary is in the form of cash or Cash Equivalents; provided,
however, that the
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44
amount of (A) any liabilities (as shown on the Company's or such Subsidiary's
most recent balance sheet or in the notes thereto) of the Company or any
Subsidiary (other than liabilities that are by their terms subordinated in right
of payment to the Notes) that are assumed by the transferee of any such assets
and (B) any notes or other obligations of such transferee or Marketable
Securities received by the Company or any such Subsidiary from such transferee
that, within 30 days (or 90 days, in the case of Marketable Securities received
in connection with a pooling of interest transaction) of the consummation of the
Asset Sale, are converted by the Company or such Subsidiary into cash (to the
extent of the cash received), shall be deemed to be cash for purposes of this
provision.
(b) Within 30 days after the receipt of cash proceeds from any
Principal Business Asset Sale, the Company (or such Subsidiary) shall apply 75%
of the Net Proceeds thereof to permanently reduce Senior Term Debt and, to the
extent that cash proceeds are not used in connection therewith, to permanently
reduce Senior Revolving Debt. To the extent that such Net Proceeds exceed the
amounts required to permanently reduce Senior Term Debt and Senior Revolving
Debt, such excess Net Proceeds shall be deemed to constitute "Excess Proceeds"
(as defined in Subsection 4.10(c) hereof) and shall be applied in accordance
with the procedures set forth in Subsection 4.10(c) below.
(c) Within 365 days after the receipt of cash proceeds from
any Asset Sale (other than 75% of the cash proceeds from a Principal Business
Asset Sale), the Company (or such Subsidiary) may, at its option, apply the Net
Proceeds from such Asset Sale either (a) to permanently reduce Senior Term Debt,
(b) to permanently reduce Senior Revolving Debt with a corresponding permanent
reduction in commitments with respect thereto, or (c) to an investment in
another business, capital expenditures or other long-term assets, in each case,
in the same, similar or related line of business as the Company or any of its
Subsidiaries were engaged in on the date of this Indenture. Pending the final
application of any such Net Proceeds, the Company (or such Subsidiary) may
temporarily reduce Senior Revolving Debt or invest such Net Proceeds in cash or
Cash Equivalents. Any Net Proceeds from an Asset Sale that are not finally
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15 million, within five days of such date, the Company shall
be required to make an Asset Sale Offer pursuant to Section 3.9 hereof to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer, in accordance with the
procedures of Section 3.9 hereof. To the extent that the aggregate amount of
Notes tendered pursuant to an Asset Sale Offer is less than the amount of Excess
Proceeds, the Company may use such deficiency for general corporate purposes or
to offer to redeem 11 1/4% Senior Notes pursuant to the provisions of the 11
1/4% Senior Indenture and Senior Subordinated Notes pursuant to the provisions
of the Senior Subordinated Indenture. If the aggregate principal amount of Notes
surrendered by Holders thereof
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45
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be deemed to be reset at zero.
Neither Section 3.9 nor this Section 4.10 shall apply to Asset Sales
to the Company or any of its Wholly Owned Subsidiaries.
Section 4.11 Transactions with Affiliates. The Company shall not,
and shall not permit any of its Subsidiaries to, in one or a series of related
transactions, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (including the Accounts Receivable Subsidiary and
its Subsidiaries) (each of the foregoing, an "Affiliate Transaction"), unless
(a) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person and (b) the Company delivers to the Trustee (i) with respect to (x) any
Affiliate Transaction constituting the purchase or sale of goods and services in
the ordinary course of business in excess of $10 million or (y) any other
Affiliate Transaction involving aggregate payments in excess of $500,000, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
such Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (ii) with respect to any Affiliate
Transaction (other than the purchase or sale of goods and services in the
ordinary course of business) involving aggregate payments in excess of $20
million, an opinion as to the fairness to the Company or such Subsidiary from a
financial point of view issued by an investment banking firm of national
standing; provided, however, that (A) any employment agreement entered into by
the Company or any of its Subsidiaries in the ordinary course of business and
consistent with business practices of companies similarly situated, (B)
transactions between or among the Company and/or its Wholly Owned Subsidiaries,
(C) transactions permitted by the provisions of the Note Indentures described in
Section 4.07 above, (D) financial advisory fees payable pursuant to financial
advisory agreements as in effect on the date of this Indenture, (E) transactions
permitted by Section 4.13 hereof and (F) transactions between the Company or any
of its Subsidiaries on the one hand, and Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJSC") or any of its Affiliates on the other hand, involving the
provision of financial, consulting or underwriting services by DLJSC; provided,
that the fees payable to DLJSC do not exceed the usual and customary fees of
DLJSC for similar services, in each case, shall not be deemed Affiliate
Transactions.
Section 4.12 Liens. The Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or suffer
to exist any Lien on any asset now owned or hereafter acquired, or any income or
profits
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46
therefrom or assign or convey any right to receive income therefrom, except
Permitted Liens.
Section 4.13 Accounts Receivable Subsidiary. The Company:
(a) may, and may permit any of its Subsidiaries to,
notwithstanding the provisions of Section 4.7 hereof, make Investments in the
Accounts Receivable Subsidiary (i) the proceeds of which are applied within five
Business Days of the making thereof solely to finance (A) the purchase of
accounts receivable of the Company and its Subsidiaries (provided that the
aggregate amount of Investments pursuant to this clause (i)(A) made since the
date of this Indenture (including such Investments made concurrently with the
consummation of the Transaction) shall not exceed $56 million, plus the amount
of any return of capital (excluding payment of dividends) or any repayment of
the principal amount of any Indebtedness constituting such Investments by the
Accounts Receivable Subsidiary since the date of this Indenture) or (B) payments
required in connection with the termination of all then existing arrangements
relating to the sale of accounts receivable or participation interests therein
by the Accounts Receivable Subsidiary (provided that the Accounts Receivable
Subsidiary shall receive cash, Cash Equivalents and accounts receivable having
an aggregate fair market value not less than the amount of such payments in
exchange therefor) and (ii) in the form of Accounts Receivable Subsidiary Notes
to the extent permitted by clause (b) below;
(b) shall not, and shall not permit any of its Subsidiaries
to, sell accounts receivable to the Accounts Receivable Subsidiary except for
consideration in an amount not less than that which would be obtained in an
arm's length transaction and solely in the form of cash or Cash Equivalents;
provided that the Accounts Receivable Subsidiary may pay the purchase price for
any such accounts receivable in the form of Accounts Receivable Subsidiary Notes
so long as, after giving effect to the issuance of any such Accounts Receivable
Subsidiary Notes, the aggregate principal amount of all Accounts Receivable
Subsidiary Notes outstanding shall not exceed 10% of the aggregate purchase
price paid for all outstanding accounts receivable purchased by the Accounts
Receivable Subsidiary since the date of this Indenture (and not written off or
required to be written off in accordance with the normal business practice of
the Accounts Receivable Subsidiary);
(c) shall not permit the Accounts Receivable Subsidiary to
sell any accounts receivable purchased from the Company and its Subsidiaries or
participation interests therein to any other Person except on an arm's length
basis and solely for consideration in the form of cash or Cash Equivalents or
certificates representing undivided interests of a Receivables Trust; provided
that the Accounts Receivable Subsidiary may not sell such certificates to any
other Person except on an arm's length basis and solely for consideration in the
form of cash or Cash Equivalents;
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47
(d) shall not, and shall not permit any of its Subsidiaries
to, enter into any guarantee, subject any of their respective properties or
assets (other than the accounts receivable sold by them to the Accounts
Receivable Subsidiary) to the satisfaction of any liability or obligation or
otherwise incur any liability or obligation (contingent or otherwise), in each
case, on behalf of the Accounts Receivable Subsidiary or in connection with any
sale of accounts receivable or participation interests therein by or to the
Accounts Receivable Subsidiary, other than customary obligations relating to
breaches of representations, warranties, covenants and other agreements of the
Company or any of its Subsidiaries with respect to the accounts receivable sold
by the Company or any of its Subsidiaries to the Accounts Receivable Subsidiary
or with respect to the servicing thereof as set forth in the Accounts Receivable
Agreements as in effect on the date of this Indenture or in any replacement or
substitute agreements, so long as the obligations set forth in such replacement
or substitute agreements are no more burdensome in any material respect than
those contained in the Accounts Receivable Agreements as in effect on the date
of this Indenture; provided that neither the Company nor any of its Subsidiaries
shall at any time guarantee or be otherwise liable for the collectibility of
accounts receivable sold by them;
(e) shall not permit the Accounts Receivable Subsidiary to
engage in any business or transaction other than the purchase and sale of
accounts receivable or participation interests therein of the Company and its
Subsidiaries and activities incidental thereto;
(f) shall not permit the Accounts Receivable Subsidiary to
incur any Indebtedness other than the Accounts Receivable Subsidiary Notes,
Indebtedness owed to the Company and Non-Recourse Indebtedness; provided that
the aggregate principal amount of all such Indebtedness of the Accounts
Receivable Subsidiary shall not exceed the book value of its total assets as
determined in accordance with GAAP;
(g) shall cause the Accounts Receivable Subsidiary to remit to
the Company on a monthly basis as a distribution, all available cash and Cash
Equivalents not held in a collection account pledged to acquirors of accounts
receivable or participation interests therein, to the extent not applied (x) to
pay interest or principal on the Accounts Receivable Subsidiary Notes or any
Indebtedness of the Accounts Receivable Subsidiary owed to the Company, (y) to
pay or maintain reserves for reasonable operating expenses of the Accounts
Receivable Subsidiary or to satisfy reasonable minimum operating capital
requirements or (z) to finance the purchase of additional accounts receivable of
the Company and its Subsidiaries; and
(h) shall not, and shall not permit any of its Subsidiaries
to, sell accounts receivable to, or enter into any other transaction with or for
the benefit of, the Accounts Receivable Subsidiary (i) if the Accounts
Receivable Subsidiary pursuant to or within the meaning of any Bankruptcy Law
(A) commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case,
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(C) consents to the appointment of a Custodian of it or for all or substantially
all of its property, (D) makes a general assignment for the benefit of its
creditors, or (E) generally is not paying its debts as they become due; or (ii)
if a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Accounts Receivable Subsidiary
in an involuntary case, (B) appoints a Custodian of the Accounts Receivable
Subsidiary or for all or substantially all of the property of the Accounts
Receivable Subsidiary, or (C) orders the liquidation of the Accounts Receivable
Subsidiary, and, with respect to clause (ii) hereof, the order or decree remains
unstayed and in effect 60 consecutive days.
Section 4.14 Corporate Existence. Subject to Article 5 hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time to
time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
Section 4.15 Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made
pursuant to this Section 4.15 and that all Notes tendered shall be
accepted for payment;
(2) the purchase price and the purchase date, which
shall be no later than 30 Business Days from the date such notice is
mailed (the "Change of Control Payment Date");
(3) that any Note not tendered shall continue to accrue
interest;
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(4) that, unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(5) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer shall be required to surrender the
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(6) that Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing his election to
have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in
part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple
thereof.
The Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
in connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (1) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal to
the purchase price for such Notes, and the Trustee shall promptly authenticate
and mail to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
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ARTICLE 5
SUCCESSORS
Section 5.1 Merger, Consolidated, or Sale of Assets. The Company
shall not consolidate or merge with or into (whether or not the Company is the
surviving corporation) or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to, another corporation, Person or entity unless:
(i) the Company is the surviving corporation or the
entity or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any
such consolidation or merger (if other than the Company) or the entity or
Person to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made assumes all the obligations of the
Company pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Notes and this Indenture;
(iii) immediately after such transaction, no Default or
Event of Default exists; and
(iv) the Company or any entity or Person formed by or
surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made (A) shall have Consolidated Net Worth (immediately after the
transaction) equal to or greater than the Consolidated Net Worth of the
Company immediately preceding the transaction and (B) shall, at the time
of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $l.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.9
hereof.
Section 5.2 Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in accordance with Section
5.1 hereof, the successor corporation formed by such consolidation or into or
with which the Company is merged or to which such sale, lease, conveyance or
other disposition is made shall succeed to, and be substituted for (so that from
and after the date of such consolidation, merger, sale, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor
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51
corporation and not to the Company), and may exercise every right and power of
the Company under this Indenture with the same effect as if such successor
Person has been named as the Company herein; provided, however, that the
predecessor Company shall not be released from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that complies with the provisions of this Article 5.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest or
Liquidated Damages on any Note when the same becomes due and payable and the
Default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Note when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(3) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or performed
pursuant to Sections 4.10 or 5.1 hereof or the Company fails for a period of 15
days to observe or perform any covenant, condition or agreement on the part of
the Company to be observed or performed pursuant to Sections 4.7 or 4.9 hereof;
(4) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Notes or this Indenture and
the Default continues for the period and after the notice specified below;
(5) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, which default (a) is caused by a failure to
pay when due principal of such Indebtedness within the grace period provided in
such Indebtedness (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of such Indebtedness, together with the principal amount of any other
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $10 million or more;
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52
(6) the Company, or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, fails to pay any final judgment or judgments (other than any
judgment to the extent a reputable insurance company has accepted liability)
aggregating in excess of $10 million, which judgments remain undischarged or
unstayed for a period of 60 days;
(7) the Company, or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against
it in an involuntary case,
(c) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become
due; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, or
(c) orders the liquidation of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive days.
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53
An Event of Default shall not be deemed to have occurred under
clause (3), (5) or (6) until the Trustee shall have received written notice from
the Company or any of the Holders or unless a Responsible Officer shall have
actual knowledge of such Event of Default. A Default under clause (4) is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the then outstanding Notes notify the Company
and the Trustee in writing, of the Default and the Company does not cure the
Default within 60 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default."
If an Event of Default occurs on or after October 1, 1999 by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium, if any, that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.7(a) hereof, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law, anything in
this Indenture or in the Notes to the contrary notwithstanding. If an Event of
Default occurs prior to October 1, 1999 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Notes prior to such date
pursuant to Section 3.7(a) hereof, then the premium payable for purposes of this
paragraph for the year beginning on October 1, 1998 shall, to the extent
permitted by law, be 106.954% (expressed as a percentage of the principal amount
of such Notes).
Section 6.2 Acceleration. If an Event of Default (other than an
Event of Default specified in clauses (7) or (8) of Section 6.1) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the then outstanding Notes by written notice to the
Company and the Trustee, may declare the unpaid principal of and any accrued
interest on all the Notes to be due and payable. Upon such declaration the
principal and interest shall be due and payable immediately (together with the
premium specified in Section 6.1, if applicable). If an Event of Default
specified in clause (7) or (8) of Section 6.1 relating to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
principal amount of the then outstanding Notes by written notice to the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.
Section 6.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
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54
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4 Waiver of Past Defaults. Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences, except a continuing
Default or Event of Default in the payment of the principal of, premium, if any,
or interest on, the Notes (including in connection with an offer to purchase);
provided, however, that the Holders of a majority in aggregate principal amount
of the outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration. 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 6.5 Control by Majority. Holders of a majority in principal
amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with the law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.
Section 6.6 Limitation on Suits. A Holder of a Note may pursue a
remedy with respect to this Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
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55
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.7 Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal of, premium, if any, and interest on
the Note, on or after the respective due dates expressed in the Note (including
in connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal of, premium, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders of the Notes may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
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56
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes.
Section 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit
by Holders of more than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1 Duties of Trustee.
(a) 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 its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
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57
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
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Section 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
Section 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
Section 7.4 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use
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59
or application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
Section 7.5 Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is actually known by the Trustee, the Trustee
shall mail to Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
Section 7.6 Reports by Trustee to Holders of the Notes. Within 60
days after each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed. The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange.
Section 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.7) and defending itself against
any claim (whether asserted by the Company or any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the
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60
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
All payments and reimbursements under this Section shall be made
with interest at the rate per annum borne by the Notes. As security for the
performance of the obligations of the Company under this Section, the Trustee
shall have a first lien on any property or funds held by the Trustee under this
Indenture, except that held in trust to pay principal and interest on particular
Notes. The Company's payment obligations pursuant to this Section and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article 8 or otherwise and
the termination of this Indenture; provided, however, that such lien shall
survive only for so long as the Trustee shall hold any property or funds
hereunder. The Trustee's right to receive payment of any amounts due under this
Section shall not be subordinate to any other liability or indebtedness of the
Company.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(7) or (8) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 7.8 Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
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Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification. There shall at all times
be a Trustee hereunder that is a corporation organized and doing business under
the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
Section 7.11 Preferential Collection of Claims Against Company. The
Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed
in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject
to TIA ss. 311(a) to the extent indicated therein.
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ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Section 8.2 Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.1 hereof of the option applicable to this Section 8.2,
the Company shall, subject to the satisfaction of the conditions set forth in
Section 8.4 hereof, be deemed to have been discharged from its obligations with
respect to all outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (i) the rights
of holders of such outstanding Notes to receive, solely from the trust fund
described in Section 8.5, payments in respect of the principal of, premium, if
any, and interest on such Notes when such payments are due, (ii) the Company's
obligations with respect to the Notes under Article 2 and Section 4.2 hereof,
(iii) the rights, powers, trust, duties and immunities of the Trustee, and the
Company's obligations in connection therewith and (iv) this Article 8. Subject
to compliance with this Article 8, the Company may exercise its option under
this Section 8.2 notwithstanding the prior exercise of its option under Section
8.3 hereof.
Section 8.3 Covenant Defeasance. Upon the Company's exercise under
Section 8.1 hereof of the option applicable to this Section 8.3, the Company
shall, subject to the satisfaction of the conditions set forth in Section 8.4
hereof, be released from its obligations under the covenants contained in
Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.15 and Article 5 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, such Covenant Defeasance means that, with respect to the outstanding
Notes, the Company may omit to comply with and shall have no liability
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63
in respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.1 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.1 hereof of the option applicable to this Section 8.3, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(5)
and 6.1(6) hereof shall not constitute Events of Default.
Section 8.4 Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.2 or
8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee or
Paying Agent, in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest on such Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be, of such principal or installment
of principal of, premium, if any, or interest on the Notes;
(b) in the case of an election under Section 8.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) 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 of Counsel shall confirm that, the Holders of the Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
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64
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.1(7) and 6.1(8)
hereof are concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a Default under, this
Indenture, or a default under, the Term Loan Agreement, the Revolving Credit
Agreement or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and in Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
Section 8.5 Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 8.6 hereof, all money
and non-callable Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
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 cash or non-callable
Government Securities deposited pursuant to Section 8.4 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
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65
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or non-callable Government Securities held by it as provided
in Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.6 Repayment to Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, or interest on any Note and
remaining unclaimed for two years after such principal, and premium, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in The New York
Times and The Wall Street Journal (national edition), 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 notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.7 Reinstatement. If the Trustee or Paying Agent is unable
to apply any United States dollars or non-callable Government Securities in
accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.2 or 8.3 hereof, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium, if any, or interest on
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
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66
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1 Without Consent of Holders of Notes. Notwithstanding
Section 9.2 of this Indenture, the Company and the Trustee may amend or
supplement this Indenture or the Notes without the consent of any Holder of a
Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(c) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2 With Consent of Holders of Notes. The Company and the
Trustee may amend or supplement this Indenture (including Section 4.10 hereof)
and the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including consents obtained in connection with a tender offer or exchange offer
for the Notes). Without the consent of at least 75%
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67
in principal amount of the Notes then outstanding (including consents obtained
in connection with a tender offer or exchange offer for such Notes), no waiver
or amendment to this Indenture may make any change in the provisions of Section
4.15 hereof that adversely affects the rights of any Holder of such Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.2 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter or waive any of the provisions with respect to the redemption
of the Notes except as provided above with respect to Sections 4.15 and 4.10
hereof;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of, premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
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68
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in Section 6.4 or 6.7 hereof or in the
foregoing amendment and waiver provisions.
Section 9.3 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall be set forth in a amended or
supplemental Indenture that complies with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by the Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder of a Note or subsequent Holder of a Note may revoke the consent
as to its Note if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
Section 9.5 Notation on or Exchange of Notes. The Trustee may place
an appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Company in exchange for all Notes may issue and
the Trustee shall authenticate new Notes that reflect the amendment, supplement
or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.6 Trustee to Sign Amendments, Etc. The Trustee shall sign
any amended or supplemental indenture authorized pursuant to this Article 9 if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an amendment
or supplemental Indenture until the Board of Directors approves it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.
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ARTICLE 10
MISCELLANEOUS
Section 10.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.
318(c), the imposed duties shall control.
Section 10.2 Notices. Any notice or communication by the Company or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company:
SFC New Holdings, Inc.
520 Lake Cook Road, Suite 550
Deerfield, IL 60015-4927
Telecopier No.: (847) 405-5310
Attention: Secretary
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopier No.: (212) 757-3990
Attention: Mitchell S. Fishman, Esq.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Telecopier No.: (212) 852-1626
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied;
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70
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 10.3 Communication by Holders of Notes with Other Holders of
Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
Section 10.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 10.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall
include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
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71
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
Section 10.6 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Holders of Notes. The
Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.
Section 10.7 No Personal Liability of Directors, Officers, Employees
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
Section 10.8 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES.
Section 10.9 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Company or its Subsidiaries or of any other Person. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 10.10 Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors.
Section 10.11 Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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72
Section 10.12 Counterpart Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 10.13 Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the ten as or provisions hereof.
[Signatures on following page]
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73
[Indenture - Signature Page]
Dated as of June 11, 1999 SFC NEW HOLDINGS, INC.
By: /s/ Sean M. Stack
-----------------------------------
Name: Sean M. Stack
Title:Vice President, Treasurer and
Assistant Secretary
Dated as of June 11, 1999 UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Cynthia Chaney
-----------------------------------
Name: Cynthia Chaney
Title: Assistant Vice-President
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SCHEDULE 1
FIRST TIER SUBSIDIARIES
Metz Baking Company
Mother's Cake & Cookie Co.
Archway Cookies, LLC
Andre-Boudin Bakeries, Inc.
Pane Corporation (dba San Diego Bread Company)
Clear Lake Bakery, Inc.
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SCHEDULE 2
TRANSACTION LIENS
1. A lien in respect of the pledge by Specialty Foods Corporation of 100
shares of common stock of SFC Sub, Inc. securing Specialty Food
Corporation's obligations under the Term Loan Agreement (as defined in the
Indenture).
2. A lien in respect of the pledge by SFC New Holdings, Inc. of 100% of the
sole membership interest of MA Holdings, LLC securing SFC New Holdings,
Inc.'s obligations under the Term Loan Agreement (as defined in the
Indenture).
3. A lien in respect of the pledge by SFAC New Holdings, Inc. of 100 shares
of common stock, 225 shares of Series A Preferred Stock, 150 shares of
Series B Preferred Stock and 200 shares of Series C Preferred Stock of SFC
New Holdings, Inc. securing SFAC New Holdings, Inc.'s obligations under
the 13% Senior Secured Discount Debentures due 2009.
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76
SCHEDULE 3
SFC SALE ASSETS
1. Property owned by Archway Cookies, LLC (formerly Archway Cookies, Inc.),
consisting of:
(a) Property situated at 5351 West Dickman Road - Fort Custer Urban
Renewal Plat of Battle Creek Lot 63, except the easterly 10 feet
hereof.
(b) Property situated at 5451 West Dickman Road - Fort Custer Urban
Renewal Plat of Battle Creek Lots 84 and 85.
2. Property owned by Mother's Cake & Cookie Co., consisting of:
(a) Lot 1, Block 1, Standard Meat Company Addition to the City of Fort
Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 388-58, Page 846, Plat Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above-described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 696, Real
Property Records, Tarrant County, Texas.
(b) Lot 2, Block 1, Standard Meat Company Addition to the City of Fort
Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 388-114, Page 881, Plat Records, Tarrant County, Texas.
(c) Lot 1 and a portion of Lot 2, Block 1, Gulf States Subdivision to
the City of Forth Worth, Tarrant County, Texas, according to the
Plat recorded in Volume 388-66, Page 25, Plat Records, Tarrant
County, Texas, SAVE AND EXCEPT that portion of Lot 1 conveyed to the
City of Forth Worth by deed recorded in Volume 9016, Page 700, Real
Property Records, Tarrant County, Texas.
(d) 0.517 acres of land, more or less, situated in the A. McLemore
Survey, Abstract No. 1056, Tarrant County, Texas, and being the same
tract of land as described in deed to Standard Meat Company recorded
in Volume 6009, Page 423, Deed Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 692, Real
Property Records, Tarrant County, Texas.
(e) 0.48 acres of land, more or less, situated in the A. McLemore
Survey, Abstract No. 1056, Tarrant County, Texas, and being the same
tract of land as described in deed to Standard Meat Company recorded
in Volume 6927, Page 2119, Deed Records, Tarrant County, Texas,
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77
SAVE AND EXCEPT that portion of the above described tract conveyed
to the City of Fort Worth, by deed recorded in Volume 9016, Page
692, Real Property Records, Tarrant County, Texas
(f) Lot 6, Block 12, Riverside Addition, Third Filing, to the City of
Fort Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 204-A, Page 114, Plat Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 682, Real
Property Records, Tarrant County, Texas.
(g) Lot 15, Block 12, Riverside Addition, Third Filing, to the City of
Fort Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 204-A, Page 114, Plat Records, Tarrant County, Texas.
(h) A portion of Lots 1 and 2, Block 1, of Page Land Company's East Side
Addition to the City of Fort Worth, Tarrant County, Texas, according
to Plat recorded in Volume 204, Page 74, Plat Records, Tarrant
County, Texas, SAVE AND EXCEPT that portion of the above described
tract conveyed to the City of Fort Worth by deed recorded in Volume
9016, Page 682, Real Property Records, Tarrant County, Texas.
<PAGE>
EXHIBIT A
(Face of Note)
12 1/8 % [Series A] [Series B] Senior Notes Due 2002
No. $__________________
SFC NEW HOLDINGS, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on October 1, 2002.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Dated:____________________ SFC New Holdings, Inc.
By:_____________________________
Name:
Title:
(SEAL)
By:_____________________________
Name:
Title:
This is one of the Notes referred
to in the within-mentioned Indenture.
United States Trust Company of
New York, as Trustee
By:_________________________________
Authorized Signatory
A-1
<PAGE>
(Back of Note)
12 1/8% [Series A] [Series B] Senior Notes Due 2002
[Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as may be requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or such other entity as may be requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein. Unless and until it
is exchanged in whole or in part for Notes in definitive form, this Note may not
be transferred except as a whole (i) by the Depository to a nominee of the
Depository or (ii) by a nominee of the Depository to the Depository or another
nominee of the Depository or (iii) by the Depository or any such nominee of a
successor Depository or a nominee of such successor Depository.(1)
["THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
- ----------
(1) This paragraph should be included only if the Note is issued in global
form.
A-2
<PAGE>
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."]*
* This legend should be included only if the Note is a Transfer Restricted
Note.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest. SFC New Holdings, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate of 12 1/8% per annum from and including the date hereof until maturity and
promises to pay Liquidated Damages (as defined below) in accordance with the
following paragraphs. The Company shall pay interest and Liquidated Damages
semi-annually on April 1 and October 1 of each year, or if any such date is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from and including June
11, 1999; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be October 1, 1999.
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated June 11, 1999, among the Company and the
Holders of the Notes named therein (the "Registration Rights Agreement")
pursuant to which the Company has agreed (a) to file with the SEC promptly (but
in any event on or prior to 120 days) after the Original Issue Date, the
Exchange Offer Registration Statement on the appropriate form relating to the
Registered Exchange Offer for the Notes under the Securities Act, and (b) to
cause such Exchange Offer Registration Statement to become effective within 180
days after the Original Issue Date. Upon the occurrence of certain Registration
Defaults (as defined in the Registration Rights Agreement), the Company will pay
or cause to be paid, in addition to amounts otherwise due under the Indenture
and the Exchange Securities, as liquidated damages, and not as a penalty
("Liquidated Damages"), to each holder of Registrable Securities (as defined in
the Registration Rights Agreement), during the first 90-day period immediately
following the occurrence of such Registration Default an amount equal to $.05
per week per $1,000 principal amount of Registrable Securities held by such
holder. The amount of the liquidated damages thereafter will increase each week
by an additional $.05 per $1,000 principal amount of Registrable Securities, up
to a maximum amount of liquidated damages of $0.30 per week per $1,000 principal
amount of Registrable Securities, until all Registration Defaults are cured. All
accrued Liquidated Damages
A-3
<PAGE>
will be paid in the same manner as interest payments on the Notes on semiannual
damages payment dates that correspond to interest payment dates for the
Debentures and upon redemption dates, Change of Control Payment Dates and Asset
Sale payment dates. Following the cure of a Registration Default, the accrual of
Liquidated Damages will cease.
The Company shall pay interest (including post-petition interest in
any proceeding under Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest and Liquidated
Damages will be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest and Liquidated
Damages on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable both as to principal and interest at the
office or agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company, payment of
interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders.
3. Paying Agent and Registrar. Initially, United States Trust
Company of New York, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of June 11, 1999 (the "Indenture"), between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. [The Notes are unsecured obligations of the Company limited to
$149,925,000 in aggregate principal amount.]** [The Notes are unsecured
obligations of the Company limited to $150 million in aggregate principal
amount.]***
** This language should be included only for the Series A Notes.
*** This language should be included only for the Series B Notes. The
aggregate amount of Series B Notes will be either $150 million or, if less
than all of the
A-4
<PAGE>
holders of the Untendered SFC Notes exchange such notes in the Additional
Exchange Offer, the excess of (a) $150 million over (b) the aggregate
principal amount of Untendered SFC Notes.
5. Optional Redemption. The Company shall have the option to redeem
the Notes, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on October
1 of the years indicated below:
Year Percentage
---- ----------
1999 .............. 106.063%
2000 .............. 103.031%
2001 and thereafter 100.000%
=======
6. Mandatory Redemption. Except as set forth in paragraph 7 below,
or pursuant to Section 4.15 of the Indenture, the Company is not required to
make mandatory redemption or sinking fund payments with respect to the Notes.
7. Redemption or Repurchase at Option of Holder.
(a) If there is a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the aggregate principal amount thereof plus the accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder stating: (1) that the Change of Control Offer is
being made pursuant to Section 4.15 of the Indenture and that all Notes tendered
shall be accepted for payment; (2) the purchase price and the purchase date,
which shall be no later than 30 Business Days from the date such notice is
mailed (the "Change of Control Payment Date"); (3) that any Note not tendered
shall continue to accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; (5) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer shall be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (6) that Holders shall be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile
A-5
<PAGE>
transmission or letter setting forth the name of Holder, the principal amount of
Notes delivered for purchase, and a statement that such Holder is withdrawing
his election to have such Notes purchased; and (7) that Holders whose Notes are
being purchased only in part shall be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
(b) If the Company or a Subsidiary consummates any Asset Sale
(other than a Principal Business Asset Sale), within five days of each date on
which the aggregate amount of Excess Proceeds exceeds $15 million, the Company
shall commence an offer to all Holders of Notes (an "Asset Sale Offer") pursuant
to Section 3.9 of the Indenture to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date fixed for the closing of such offer in
accordance with the procedures set forth in Section 3.9 of the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
A-6
<PAGE>
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendments Supplement and Waivers. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act. Without the
consent of the Holders of at least 75% in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for such Notes), no waiver or amendment to the Indenture may make
any change in the provisions of Section 4.15 of the Indenture that adversely
affects the rights of any Holder of such Notes.
12. Defaults and Remedies. Events of Defaults include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of, or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise; (iii) failure
by the Company to comply with the provisions described under Sections 4.10 or
5.1 of the Indenture or failure by the Company for 15 days to comply with the
provisions described under Sections 4.7 or 4.9 of the Indenture; (iv) failure by
the Company for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding to
comply with any other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay when due principal of such
Indebtedness within the grace period provided in such Indebtedness (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of such Indebtedness,
together with the principal amount of any other Indebtedness under which there
has been a Payment Default or the maturity of which has been so accelerated,
aggregates $10 million or more; (vi) failure by the Company, any of its
Significant Subsidiaries or any group of
A-7
<PAGE>
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary,
to pay any final judgment or judgments (other than any judgment to the extent a
reputable insurance company has accepted liability) aggregating in excess of $10
million, which judgments remain unstayed or undischarged for a period of 60
days; and (vii) certain events of bankruptcy or insolvency with respect to the
Company, any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, any Significant Subsidiary or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. If an Event of Default
occurs by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding payment of the premium
that the Company would have had to pay if the Company then had elected to redeem
any Notes pursuant to the optional redemption provisions of the Indenture, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law. The Holders of a majority in aggregate principal amount
of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and
its consequences under the Indenture (including annulling a declaration of
acceleration of maturity) except a continuing Default or Event of Default in the
payment of interest on, or the principal of, such Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each
A-8
<PAGE>
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
15. Authentication. This Note shall not be valid until authenticated
by the manual signature of an authorized signatory of the Trustee or an
authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
18. Additional Rights of Holders of Transfer Restricted Notes. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement referred to above.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or Registration Rights Agreement.
Requests may be made to:
SFC New Holdings, Inc.
520 Lake Cook Road, Suite 550
Deerfield, Illinois 60015
Attention: Secretary
A-9
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to___________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:_________________
Your Signature:__________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-10
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $______________
Date:_____________ Your Signature:______________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_____________________
Signature Guarantee.
A-11
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE(2)
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
Amount of Principal Amount
decrease in Amount of increase of this Global Signature of
Principal in Principal Note following authorized officer
Amount of this Amount of this such decrease of Trustee or
Date of Exchange Global Note Global Note increase) (or Note Custodian
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(2) This should be included only if the Note is issued in global form.
A-12
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: 12 1/8% [Series A] [Series B] Senior Notes due 2002 of SFC New Holdings,
Inc.
This Certificate relates to $____________ principal amount of Notes
held in *____________ book-entry or * ___________ definitive form by __________
_______________________________________________ (the "Transferor").
The Transferor*:
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture related to the above captioned Notes and as provided in Section 2.6 of
such Indenture, the transfer of this Note does not require registration under
the Securities Act (as defined below) because:*
|_| Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
|_| Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.6(a)(ii)(B), Section 2.6(b)(A) or Section 2.6(d)(i)(B) of the Indenture) or
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
- ----------
* Check applicable box.
<PAGE>
|_| Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
|_| Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
_______________________________________
[INSERT NAME OF TRANSFEROR]
By:____________________________________
Date:_____________________________
- ----------
* Check applicable box.
B-2
Exhibit 4.4
================================================================================
SFC NEW HOLDINGS, INC.
$197,646,000
13 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2003
and
UP TO $200,000,000
13 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2003
------------------------------------------
INDENTURE
Dated as of June 11, 1999
------------------------------------------
------------------------------------------
U.S. TRUST COMPANY OF TEXAS, N.A.
------------------------------------------
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..........................1
Section 1.1 Definitions....................................................1
Section 1.2 Other Definitions.............................................18
Section 1.3 Incorporation by Reference of Trust Indenture Act.............18
Section 1.4 Rules of Construction.........................................19
ARTICLE 2 THE NOTES..........................................................19
Section 2.1 Form and Dating...............................................19
Section 2.2 Execution and Authentication; Payments-in-Kind................20
Section 2.3 Registrar and Paying Agent....................................21
Section 2.4 Paying Agent to Hold Money in Trust...........................21
Section 2.5 Holder Lists..................................................22
Section 2.6 Transfer and Exchange.........................................22
Section 2.7 Replacement Notes.............................................28
Section 2.8 Outstanding Notes.............................................29
Section 2.9 Treasury Notes................................................29
Section 2.10 Temporary Notes...............................................29
Section 2.11 Cancellation..................................................30
Section 2.12 Defaulted Interest............................................30
ARTICLE 3 REDEMPTION.........................................................30
Section 3.1 Notices to Trustee............................................30
Section 3.2 Selection of Notes to Be Redeemed.............................30
Section 3.3 Notice of Redemption..........................................31
Section 3.4 Effect of Notice of Redemption................................32
Section 3.5 Deposit of Redemption Price...................................32
Section 3.6 Notes Redeemed in Part........................................32
Section 3.7 Optional Redemption...........................................32
Section 3.8 Mandatory Redemption..........................................33
Section 3.9 Offer to Purchase by Application of Excess Proceeds...........33
ARTICLE 4 COVENANTS..........................................................35
Section 4.1 Payment of Notes..............................................35
Section 4.2 Maintenance of Office or Agency...............................36
Section 4.3 Reports.......................................................36
Section 4.4 Compliance Certificate........................................37
Section 4.5 Taxes.........................................................38
Section 4.6 Stay, Extension and Usury Laws................................38
Section 4.7 Restricted Payments...........................................38
Section 4.8 Dividend and Other Payment Restrictions
Affecting Subsidiaries........................................40
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Section 4.9 Incurrence of Indebtedness and Issuance
of Preferred Stock............................................40
Section 4.10 Asset Sales...................................................43
Section 4.11 Transactions with Affiliates..................................44
Section 4.12 Liens.........................................................45
Section 4.13 Accounts Receivable Subsidiary................................45
Section 4.14 Corporate Existence...........................................47
Section 4.15 Offer to Repurchase Upon Change of Control....................48
Section 4.16 No Senior Subordinated Indebtedness...........................49
ARTICLE 5 SUCCESSORS.........................................................49
Section 5.1 Merger, Consolidation, or Sale of Assets......................49
Section 5.2 Successor Corporation Substituted.............................50
ARTICLE 6 DEFAULTS AND REMEDIES..............................................51
Section 6.1 Events of Default.............................................51
Section 6.2 Acceleration..................................................53
Section 6.3 Other Remedies................................................53
Section 6.4 Waiver of Past Defaults.......................................54
Section 6.5 Control by Majority...........................................54
Section 6.6 Limitation on Suits...........................................54
Section 6.7 Rights of Holders of Notes to Receive Payment.................55
Section 6.8 Collection Suit by Trustee....................................55
Section 6.9 Trustee May File Proofs of Claim..............................55
Section 6.10 Priorities....................................................56
Section 6.11 Undertaking for Costs.........................................56
ARTICLE 7 TRUSTEE............................................................57
Section 7.1 Duties of Trustee.............................................57
Section 7.2 Rights of Trustee.............................................58
Section 7.3 Individual Rights of Trustee..................................58
Section 7.4 Trustee's Disclaimer..........................................59
Section 7.5 Notice of Defaults............................................59
Section 7.6 Reports by Trustee to Holders of the Notes....................59
Section 7.7 Compensation and Indemnity....................................59
Section 7.8 Replacement of Trustee........................................60
Section 7.9 Successor Trustee by Merger, Etc..............................61
Section 7.10 Eligibility; Disqualification.................................62
Section 7.11 Preferential Collection of Claims Against Company.............62
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE...........................62
Section 8.1 Option to Effect Legal Defeasance or
Covenant Defeasance...........................................62
Section 8.2 Legal Defeasance and Discharge................................62
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Section 8.3 Covenant Defeasance...........................................63
Section 8.4 Conditions to Legal or Covenant Defeasance....................63
Section 8.5 Deposited Money and Government Securities
to Be Held in Trust; Other Miscellaneous Provisions...........65
Section 8.6 Repayment to Company..........................................65
Section 8.7 Reinstatement.................................................66
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER...................................66
Section 9.1 Without Consent of Holders of Notes...........................66
Section 9.2 With Consent of Holders of Notes..............................67
Section 9.3 Compliance with Trust Indenture Act...........................68
Section 9.4 Revocation and Effect of Consents.............................69
Section 9.5 Notation on or Exchange of Notes..............................69
Section 9.6 Trustee to Sign Amendments, Etc...............................69
ARTICLE 10 SUBORDINATION......................................................69
Section 10.1 Agreement to Subordinate......................................69
Section 10.2 Certain Definitions...........................................70
Section 10.3 Liquidation; Dissolution; Bankruptcy..........................70
Section 10.4 Default on Designated Senior Debt.............................71
Section 10.5 Acceleration of Notes.........................................72
Section 10.6 When Distribution Must Be Paid Over...........................72
Section 10.7 Notice by Company.............................................73
Section 10.8 Subrogation...................................................73
Section 10.9 Relative Rights...............................................73
Section 10.10 Subordination May Not be Impaired by Company..................73
Section 10.11 Payment, Distribution.........................................74
Section 10.12 Rights of Trustee and Paying Agent............................74
Section 10.13 Authorization to Effect Subordination.........................74
Section 10.14 Amendments....................................................75
Section 10.15 Limited Waiver................................................75
ARTICLE 11 MISCELLANEOUS......................................................75
Section 11.1 Trust Indenture Act Controls..................................75
Section 11.2 Notices.......................................................75
Section 11.3 Communication by Holders of Notes with
Other Holders of Notes........................................76
Section 11.4 Certificate and Opinion as to Conditions Precedent............77
Section 11.5 Statements Required in Certificate or Opinion.................77
Section 11.6 Rules by Trustee and Agents...................................77
Section 11.7 No Personal Liability of Directors, Officers,
Employees and Stockholders....................................77
Section 11.8 Governing Law.................................................78
Section 11.9 No Adverse Interpretation of Other Agreements.................78
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Section 11.10 Successors....................................................78
Section 11.11 Severability..................................................78
Section 11.12 Counterpart Originals.........................................78
Section 11.13 Table of Contents, Headings, Etc..............................78
SCHEDULES
Schedule 1 - First Tier Subsidiaries
Schedule 2 - Transaction Liens
Schedule 3 - SFC Sale Assets
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Certificate of Transferor
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<PAGE>
INDENTURE dated as of June 11, 1999 between SFC New Holdings, Inc.,
a Delaware corporation (the "Company"), and U.S. Trust Company of Texas, N.A.,
as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 13 1/4% Series
A Senior Subordinated Notes due 2003 (the "Series A Notes") and the 13 1/4%
Series B Senior Subordinated Notes due 2003 (the "Series B Notes" and, together
with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1 Definitions.
"Accounts Receivable Agreements" means (i) the Pooling Agreement,
dated as of November 16, 1994, as amended, among the Accounts Receivable
Subsidiary, the Company or SFC, as Master Servicer and The Chase Manhattan Bank,
as trustee on behalf of the Certificateholders, (ii) the Series 1998-1
Supplement to the Pooling Agreement, dated as of March 31, 1998, as amended,
among the Accounts Receivable Subsidiary, the Company or SFC, as Master
Servicer, and The Chase Manhattan Bank, as trustee on behalf of the
Certificateholders, (iii) the Servicing Agreement dated as of November 16, 1994,
as amended, among the Accounts Receivable Subsidiary, the Company or SFC, as
Master Servicer, certain subsidiaries of the Company, as Servicers, and The
Chase Manhattan Bank, as trustee, (iv) the Amended and Restated Receivables Sale
Agreement, dated as of November 16, 1994, as amended, among the Accounts
Receivable Subsidiary, the Company, as Master Servicer, and certain subsidiaries
of the Company, as Sellers and (v) any related instruments and agreements
executed in connection therewith, together with any replacement or additional
Pooling Agreements and Receivables Sale Agreements, and including any related
instruments and agreements executed in connection therewith, and in each case as
amended, supplemented, extended, modified, renewed, refunded, replaced or
refinanced from time to time, whether or not with the same parties.
"Accounts Receivable Discount" means, with respect to any account
receivable sold by the Company or any of its Subsidiaries to the Accounts
Receivable Subsidiary, (a) the difference between (i) the face amount of such
account receivable and (ii) the aggregate amount of consideration (after giving
effect to any subsequent adjustments thereto) received upon the sale of such
account receivable (with any Accounts Receivable Subsidiary Notes received as
consideration in such sale being valued at the principal amount thereof for this
purpose), less (b) the amount of such difference that is calculated on the basis
of, or with reference to, (i) the historical bad debt allowance or accounts
receivable write-offs of the seller of such account receivable, (ii) fees and
other operating expenses of the Accounts Receivable
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2
Subsidiary payable to Persons other than the Company and its Subsidiaries and
acquirors of accounts receivable or participation interests therein (in their
capacity as acquirors) to the extent that such fees and expenses do not exceed
such amounts as would be obtained in an arm's length transaction and (iii)
credits to the obligor of such account receivable applied to the face amount of
such account receivable in respect of discount expense (including prompt payment
and volume discounts), rebates, refunds, promotional allowances, billing error
expense and similar adjustments and allowances made by the seller of such
account receivable.
"Accounts Receivable Subsidiary" means a Wholly Owned Subsidiary of
the Company, designated as such by the Company, (a) that has total assets at the
time of such designation with a book value of $100,000 or less and (b) with
which neither the Company nor any other Subsidiary of the Company has any
obligation (i) to subscribe for additional shares of Capital Stock or other
equity interests therein (other than to finance the purchase of additional
accounts receivable of the Company and its Subsidiaries) or (ii) to maintain or
preserve such Accounts Receivable Subsidiary's financial condition or to cause
it to achieve certain levels of operating results.
"Accounts Receivable Subsidiary Notes" means the notes to be issued
by the Accounts Receivable Subsidiary for the purchase of accounts receivable.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Subsidiary of such specified Person, including
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary of such specified Person.
"Additional Exchange Offer" means the offer that may be made by the
Company in accordance with the terms of the Offering Circular to exchange Series
B Notes for Untendered SFC Notes.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that (i) beneficial ownership of 20% or more of the voting securities of a
Person shall be deemed to be control, (ii) no lender party to the Term Loan
Agreement or the Revolving Credit Agreement (or any of its affiliates) shall be
deemed to be an Affiliate of the Company or any of its Subsidiaries solely by
virtue of being party to the Term Loan Agreement or the Revolving Credit
<PAGE>
3
Agreement and (iii) an officer of a Person shall not be deemed an Affiliate of
such Person unless such officer directly or indirectly controls such Person.
"Agent" means any Registrar or Paying Agent.
"Archway" means Archway Cookies, LLC, a Delaware limited liability
company, and a Wholly Owned Subsidiary of Mother's.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means each day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the liability in respect of a capital lease that would at
such time be required to be capitalized on the balance sheet in accordance with
GAAP.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, partnership interests.
"Cash Equivalents" means (i) cash, (ii) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof having maturities of not more than six months
from the date of acquisition, (iii) certificates of deposit and Eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Term Loan Agreement or the
Revolving Credit Agreement or with any domestic commercial bank having capital
and surplus in excess of $500,000,000, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper issued
by any lender party to the Term Loan Agreement or the Revolving Credit Agreement
(or the parent company of any such lender) and commercial paper rated A-1 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related transactions, of
all or substantially all of the assets of the Company, Holdings, SFC Sub, SFC or
SFAC to any Person or group (as such term is used in Section 13(d)(3) of the
Exchange Act) (other than the Principals or their Specified Parties), (ii) the
adoption of a plan
<PAGE>
4
relating to the liquidation or dissolution of the Company, Holdings, SFC Sub,
SFAC or SFC, (iii) the consummation of any transaction the result of which is
that any Person or group (as defined above) (other than the Principals and their
Specified Parties) owns, directly or indirectly, more of the voting power of the
voting stock of the Company, Holdings, SFC Sub, SFAC or SFC other than the
Principals and their Specified Parties or (iv) the first day on which a majority
of the members of the Board of Directors of the Company, Holdings, SFC Sub, SFAC
or SFC are not Continuing Directors. For the purposes of the foregoing sentence,
any shares of voting stock that are required to be voted for a nominee of any
Principal or Specified Party pursuant to a binding agreement between the holder
thereof and such Principal or Specified Party will be deemed to be held by such
Principal or Specified Party, as the case may be, for purposes of determining
the percentage of voting power held by any Person.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (a) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing
Consolidated Net Income), plus (b) provision for taxes based on income or
profits to the extent such provision for taxes was included in computing
Consolidated Net Income, plus (c) consolidated interest expense of such Person
for such period, whether paid or accrued (including amortization of original
issue discount, non-cash interest payments and the interest component of any
payments associated with Capital Lease Obligations), to the extent such expense
was deducted in computing Consolidated Net Income, plus (d) all depreciation,
amortization (including amortization of goodwill and other intangibles) and
other non-cash charges (excluding any non-cash charge constituting an
extraordinary item of loss or expense and any non-cash charge that requires an
accrual of or a reserve for cash charges for any future period) of such Person
for such period to the extent such depreciation, amortization and other non-cash
charges were deducted in computing Consolidated Net Income, plus (e) one-third
of all operating lease payments of such Person paid or accrued during such
period, in each case, on a consolidated basis and determined in accordance with
GAAP, plus (f) without duplication, the amount of Accounts Receivable Discount
attributable to, and any commitment, availability or other fees payable to the
Accounts Receivable Subsidiary in respect of, sales of accounts receivable by
such Person and its Subsidiaries to the Accounts Receivable Subsidiary during
such period to the extent such amount was deducted in computing Consolidated Net
Income for such period.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
Person or a Wholly Owned Subsidiary of the referent Person, (ii) the Net Income
of any Subsidiary of the referent Person
<PAGE>
5
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval (which has
not been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person, the sum
of (i) the consolidated equity of the common stockholders of such Person and its
consolidated Subsidiaries plus (ii) the respective amounts reported on such
Person's most recent balance sheet with respect to any series of preferred stock
(other than Disqualified Stock) that by its terms is not entitled to the payment
of dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock, less (x) all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within 12 months after the acquisition of such business)
subsequent to the date of this Indenture in the book value of any asset owned by
such Person or a consolidated Subsidiary of such Person, (y) all investments in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in
each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges, all of the foregoing determined in
accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company, Holdings, SFC Sub, SFC or SFAC,
as applicable who (i) was a member of such Board of Directors on the date of
this Indenture or (ii) was nominated for election or elected to such Board of
Directors with the affirmative vote of a majority of the Continuing Directors
who were members of such Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 11.2 hereof or such other address as to which
the Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
<PAGE>
6
"Definitive Notes" means Notes that are in the form of Exhibit A
attached hereto and that do not include the information called for by footnotes
1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means, with respect to the Notes, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date on which the Notes mature.
"85% Owned Subsidiary" of a Person means any Subsidiary of such
Person at least 85% of the outstanding Capital Stock or other ownership
interests (including at least 51% of the outstanding voting Capital Stock or
other voting ownership interests) of which are owned directly or indirectly by
such Person.
"11% Debenture Indenture" means that certain indenture, dated as of
the date hereof, by and between SFC Sub and United States Trust Company of New
York, as trustee, as amended or supplemented from time to time, relating to the
11% Debentures.
"11% Debentures" means, collectively, SFC Sub's 11% Series A Senior
Subordinated Discount Debentures due 2009 and SFC Sub's 11% Series B Senior
Subordinated Discount Debentures due 2009, issued pursuant to the 11% Debenture
Indenture.
"11 1/4% Senior Indenture" means that certain indenture, dated as of
the date hereof, by and between the Company and United States Trust Company of
New York, as trustee, as amended and supplemented from time to time, relating to
the 11 1/4% Senior Notes.
"11 1/4% Senior Notes" means, collectively, the Company's 11 1/4%
Series A Senior Notes due 2001 and the Company's 11 1/4% Series B Senior Notes
due 2001, issued pursuant to the 11 1/4% Senior Indenture.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
<PAGE>
7
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series A Notes for
Series B Notes.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than under the Term Loan Agreement, the Revolving Credit
Agreement the 12 1/8% Senior Indenture, the 11 1/4% Senior Indenture and this
Indenture) in existence on the date of this Indenture, until such amounts are
repaid.
"First Tier Subsidiaries" means direct Wholly Owned Subsidiaries of
the Company on the date of this Indenture as set forth on Schedule 1 attached
hereto and any such Subsidiaries acquired thereafter other than the Accounts
Receivable Subsidiary.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs or redeems any Indebtedness (other
than revolving credit borrowings) or issues or redeems preferred stock or
consummates an Asset Sale or any Material Acquisition subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, guarantee or redemption of
Indebtedness, or such issuance or redemption of preferred stock, or the
consummation of such Asset Sale or such Material Acquisition, as if the same had
occurred at the beginning of the applicable period. For purposes of calculating
the Fixed Charge Coverage Ratio of the Company for any period commencing prior
to the date of the Transaction, pro forma effect shall be given to the
Transaction and the financing thereof as if the same had occurred at the
beginning of such period.
"Fixed Charges" means, with respect to any Person for any period,
the sum of (a) consolidated interest expense of such Person for such period,
whether paid or accrued, to the extent such expense was deducted in computing
Consolidated Net Income (including amortization of original issue discount,
non-cash interest payments and the interest component of any payments associated
with Capital Lease Obligations but excluding amortization of deferred financing
fees), plus (b) the interest expense of any other Person for such period with
respect to Indebtedness that is guaranteed by the referent Person, plus (c) the
product of (i) all cash dividend payments (and non-cash dividend payments in the
case of a Person that is a Subsidiary) on any series of preferred stock of such
Person, times (ii) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state
<PAGE>
8
and local statutory tax rate of such Person, expressed as a decimal, plus (d)
one-third of all operating lease payments of such Person paid or accrued during
such period, in each case, on a consolidated basis and in accordance with GAAP,
plus (e) the amount of Accounts Receivable Discount attributable to, and any
commitment, availability or other fees payable to the Accounts Receivable
Subsidiary in respect of, sales of accounts receivable by such Person and its
Subsidiaries to the Accounts Receivable Subsidiary during such period.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, which are in effect on the date of this Indenture.
"Global Note" means a Note that is in the form of Exhibit A attached
hereto that contains the paragraph referred to in footnote 1 and the additional
schedule referred to in footnote 2 thereto.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means SFAC New Holdings, Inc., a Delaware corporation and
a Subsidiary of SFC Sub.
"Indebtedness" means, with respect to any Person, the principal
amount of any indebtedness of such Person, whether or not contingent, in respect
of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or representing Capital Lease Obligations or the balance deferred and
unpaid of the purchase price of any property (including pursuant to capital
leases) or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and also includes, to the extent not otherwise included,
the guarantee of items that would be included within this definition.
<PAGE>
9
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Initial Exchange Offers" means the exchange offers for the SFC
Notes made by the Company in accordance with the terms and conditions set forth
in the Offering Circular.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of loans
(including guarantees), advances or capital contributions (excluding commission,
travel, relocation and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities and all other items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in New York City or at a place of payment are authorized by law or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to the Registration Rights Agreement.
"Marketable Securities" means, in connection with any Asset Sale,
any readily marketable equity or debt securities that are received by the
Company or any Subsidiary of the Company as consideration for such Asset Sale
and are (a) traded on the New York Stock Exchange, the American Stock Exchange
or the National Association of Securities Dealers Automated Quotation National
Market System and (b) issued by a corporation that has outstanding one or more
issues of debt or preferred stock securities that are rated investment grade by
Moody's Investor Services, Inc. or Standard & Poor's Corporation; provided, that
in no event shall the excess of the aggregate amount of securities of any one
such corporation held immediately following the consummation of any Asset Sale
by the Company and its Subsidiaries over 10 times the average daily trading
volume of such securities during the 20 trading days immediately preceding the
consummation of such Asset Sale be deemed Marketable Securities.
<PAGE>
10
"Material Acquisition" means any material acquisition of business,
Capital Stock, property or assets or any other material transaction as a result
of which a Person becomes a Subsidiary of the Company. For the purposes of this
definition, an acquisition or other transaction shall be deemed "material" if it
has an aggregate value of $5 million or more.
"Metz" means Metz Baking Company, an Iowa corporation and a Wholly
Owned Subsidiary of the Company.
"Mother's" means Mother's Cake & Cookie Co., a California
corporation and a Wholly Owned Subsidiary of the Company.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, any gain
(but not loss), together with any related provision for taxes on such gain (but
not loss), realized in connection with any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), and
excluding any extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets.
"Non-Recourse Indebtedness" of any Person means Indebtedness of such
Person that (i) is not guaranteed by any other Person (except a Wholly Owned
Subsidiary of the referent Person), (ii) is not recourse to and does not
obligate any other Person (except a Wholly Owned Subsidiary of the referent
Person) in any way, (iii) does not subject any property or assets of any other
Person (except a Wholly Owned Subsidiary of the referent Person), directly or
indirectly, contingently or otherwise, to the satisfaction thereof and (iv) is
not required by GAAP to be reflected on the financial statements of any other
Person (other than a Subsidiary of the referent Person) prepared in accordance
with GAAP.
"Non-Redemption Payment" means the payment of $50.00 per $1,000
principal amount of outstanding Notes payable under Section 3.7 in connection
with the Non-Redemption Event.
<PAGE>
11
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" means the Notes described above and issued under this
Indenture, including any PIK Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness. With respect to the
Notes, "Obligations" shall include, without limitation, with respect to the
Notes, liabilities in respect of any indemnity, any reimbursement, compensation
or contribution obligations, any liquidated damage provision (including
Liquidated Damages), any breach of representation or warranty or any rights of
redemption or rescission under this Indenture, the Registration Rights Agreement
or by law or otherwise (other than amounts payable to the Trustee pursuant to
Section 7.7).
"Offering Circular" means the Offers to Exchange and Consent
Solicitations of the Company dated May 10, 1999 pursuant to which the Company
(i) offered to exchange (a) up to $225,000,000 aggregate principal amount of 11
1/4% Senior Notes and up to $5,659,368 aggregate principal amount of 11%
Debentures for all outstanding SFC 10 1/4% Senior Notes; (b) up to $150,000,000
aggregate principal amount of 12 1/8% Senior Notes and up to $3,772,912
aggregate principal amount of 11% Debentures for all outstanding SFC 11 1/8%
Senior Notes; and (c) up to $200,000,000 aggregate principal amount of Notes and
up to $18,864,558 aggregate principal amount of 11% Debentures for all
outstanding SFC Subordinated Notes; and (ii) solicited consents from the holders
of the SFC Notes to certain amendments to the indentures pursuant to which such
SFC Notes were issued.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate that meets the
requirements of Section 11.5 hereof and is signed on behalf of the Company by
the Chairman of the Board, the President or any Vice President and by the
Treasurer, or Assistant Treasurer, the Secretary or Assistant Secretary.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.5 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Permitted Investments" means (a) any Investments in the Company or
in an 85% Owned Subsidiary of the Company that is engaged in the same or a
similar
<PAGE>
12
or related line of business as the Company or any of its Subsidiaries were
engaged in on the date of this Indenture; (b) any Investments in Cash
Equivalents; (c) Investments by the Company or any Subsidiary of the Company in
a Person that is engaged in the same or a similar or related line of business as
the Company or any of its Subsidiaries were engaged in on the date of this
Indenture, if as a result of such Investment (i) such Person becomes an 85%
Owned Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or an 85% Owned Subsidiary of the
Company; (d) Investments in the Accounts Receivable Subsidiary permitted by
Section 4.13 hereof; (e) Investments in agricultural commodities futures,
options and other hedging obligations in the ordinary course of business; and
(f) Investments in any Person other than Holdings or a Subsidiary of Holdings
that is not also a Subsidiary of the Company (in addition to Investments
permitted by the foregoing clauses (a) through (e)) that, in the aggregate, do
not exceed $25 million at any one time outstanding.
"Permitted Liens" means (a) Liens on the Capital Stock of the First
Tier Subsidiaries and the Accounts Receivable Subsidiary and other assets of the
Company, if any, securing Senior Term Debt and any Indebtedness permitted under
clause (h) or (i) of the second paragraph of Section 4.9 hereof; (b) Liens
securing the Senior Revolving Debt; (c) Liens in favor of the Company and its
Wholly Owned Subsidiaries; (d) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation; (e) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such acquisition; (f) Liens to secure Indebtedness permitted by
clause (e) of the second paragraph of Section 4.9 hereof covering solely the
assets acquired with such Indebtedness and the proceeds of such assets; (g)
Liens existing on the date of the SFC Subordinated Note Indenture (including
under the Accounts Receivable Agreements) and Liens created on the date hereof
in connection with the Transaction as set forth on Schedule 2 attached hereto
and renewals, extensions and replacements thereof; provided that such renewals,
extensions or renewals shall not apply to any property or assets not previously
subject to such Liens or increase the principal amount of Obligations secured
thereby; (h) Liens for taxes, assessments, or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently pursued; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (i) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, landlords' or other like
Liens arising in the ordinary course of business; (j) pledges or deposits in
connection with workers' compensation, unemployment insurance and other social
security legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements; (k) deposits to secure the performance
of bids, trade contracts (other than for borrowed money),
<PAGE>
13
leases, statutory obligations, surety or appeal bonds, performance bonds or
other obligations of a like nature incurred in the ordinary course of business;
(l) easements, rights-of-way, encroachments and other survey defects,
restrictions and other similar encumbrances and title defects which, in the
aggregate, do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the Company and its Subsidiaries; (m) any Lien arising pursuant to
any order of attachment, distraint or other legal process arising in connection
with court or arbitration proceedings so long as the execution or other
enforcement thereof is effectively stayed, the claims secured thereby are being
contested in good faith by appropriate proceedings, adequate reserves have been
established with respect to such claims in accordance with GAAP and no Default
or Event of Default would result thereby; (n) licenses for the use of
intellectual property rights or like intangible assets; and (o) Liens incurred
in the ordinary course of business of the Company or any Subsidiary of the
Company with respect to obligations that do not exceed $5 million at any one
time outstanding and that are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principal Business Asset Sale" means any sale, issuance,
conveyance, transfer, lease or other disposition (including, without limitation,
by way of merger, consolidation or sale and leaseback transaction but not the
grant of a pledge or security interest), directly or indirectly, in one or a
series of related transactions, of all of the Capital Stock or all or
substantially all of the properties and assets of Mother's, Metz or Archway,
other than the SFC Sale Assets.
"Principals" means Haas Wheat & Partners Incorporated, Acadia
Partners, L.P. and Keystone, Inc.
"Receivables Trust" means a trust organized solely for the purpose
of securitizing the accounts receivable held by the Accounts Receivable
Subsidiary that (a) shall not engage in any business other than (i) the purchase
of accounts receivable or participation interests therein from the Accounts
Receivable Subsidiary and the servicing thereof, (ii) the issuance of and
distribution of payments with respect to the securities permitted to be issued
under clause (b) below and (iii) other activities incidental to the foregoing,
(b) shall not at any time incur Indebtedness or issue any securities, except (i)
certificates representing undivided interests in the Receivables Trust issued to
the Accounts Receivable Subsidiary and (ii) debt securities issued in an arm's
length transaction for consideration solely in the form of cash and Cash
Equivalents, all of which (net of any issuance fees and expenses) shall promptly
be paid to the Accounts Receivable Subsidiary, and (c) shall distribute to the
Accounts
<PAGE>
14
Receivable Subsidiary as a distribution on the Accounts Receivable Subsidiary's
beneficial interest in the Receivables Trust no less frequently that once every
six months all available cash and Cash Equivalents held by it, to the extent not
required for reasonable operating expenses or reserves therefor or to service
any securities issued pursuant to clause (b) above that are not held by the
Accounts Receivable Subsidiary.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of June 11, 1999, by and among the Company and the
holders of the Notes, the 12 1/8% Senior Notes and the 11 1/4% Senior Notes as
such agreement may be amended, modified or supplemented from time to time.
"Responsible Officer" means, when used with respect to the Trustee,
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Revolving Credit Agreement" means that certain Revolving Credit
Agreement, dated as of March 16, 1998 by and among certain Subsidiaries of SFC,
the lenders party thereto and DLJ Funding Corp., as administrative agent,
providing for up to $125 million in aggregate principal amount of revolving
loans and letters of credit, together with any replacement or additional loan
agreement or agreements, and including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, supplemented, extended, modified, renewed, refunded,
replaced or refinanced from time to time, whether or not with the same lenders.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Revolving Debt" means all Obligations from time to time
outstanding under the Revolving Credit Agreement.
"Senior Term Debt" means all Obligations from time to time
outstanding under the Term Loan Agreement.
"SFAC" means Specialty Foods Acquisition Corporation, a Delaware
corporation.
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15
"SFC" means Specialty Foods Corporation, a Delaware corporation and
a Wholly Owned Subsidiary of SFAC.
"SFC Notes" means, collectively, the SFC 10 1/4% Senior Notes, the
SFC 11 1/8% Senior Notes and the SFC Subordinated Notes.
"SFC Sale Assets" means the real estate of Mother's, Metz and
Archway listed on Schedule 3 attached hereto which is being held for sale by SFC
as of the date of this Indenture.
"SFC Sub" means SFC Sub, Inc., a Delaware corporation, and a Wholly
Owned Subsidiary of SFC.
"SFC Subordinated Notes" means the 11 1/4% Senior Subordinated Notes
due 2003 issued by SFC pursuant to the SFC Subordinated Note Indenture.
"SFC Subordinated Note Indenture" means that certain Indenture,
dated as of August 16, 1993, by and between SFC and United States Trust Company
of New York, as trustee, as amended from time to time, relating to the SFC
Subordinated Notes.
"SFC 10 1/4% Senior Notes" means the 10 1/4% Senior Notes due 2001
issued by SFC pursuant to the SFC 10 1/4% Senior Indenture.
"SFC 10 1/4% Senior Indenture" means that certain Indenture, dated
as of August 16, 1993, by and between SFC and United States Trust Company of New
York, as trustee, as amended from time to time, relating to the SFC 10 1/4%
Senior Notes.
"SFC 11 1/8% Senior Notes" means the 11 1/8% Senior Notes due 2002
issued by SFC pursuant to the SFC 11 1/8% Senior Indenture.
"SFC 11 1/8% Senior Indenture" means that certain Indenture, dated
as of July 17, 1995, by and between SFC and United States Trust Company of New
York, as trustee, as amended from time to time, relating to the SFC 111/8%
Senior Notes.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Specified Party" with respect to any Principal means (A) any
controlling stockholder or partner, a direct or indirect 80% (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an individual)
of
<PAGE>
16
such Principal, (B) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of such Principal and/or such
other Persons referred to in the immediately preceding clause (A) or the
succeeding clauses (D) or (E), (C) any partner or stockholder of any Principal
as of the date of this Indenture who acquires any assets or voting stock of the
Company, Holdings, SFAC or SFC pursuant to a general distribution by such
Principal to each of its partners or stockholders, (D) any officer or director
of any Principal as of the date of this Indenture or (E) co-investment entities
established by any Principal within 90 days of the date of this Indenture and
controlled by such Principal, any affiliated party (including any officer or
director) of such Principal or of the general partner of such Principal (or of
the general partner of any general partner of such Principal) or any combination
of the foregoing; provided, however, that (x) each of Douglas D. Wheat and HWP
Specialty Partners, L.P. shall be deemed a Specified Party of Haas Wheat &
Partners Incorporated and (y) any officer or director of Oak Hill Partners, Inc.
as of the date of this Indenture shall be deemed a Specified Party of Acadia
Partners, L.P. and Keystone, Inc.
"Subsidiary" of any Person means any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of that Person or a combination thereof; provided,
however, that the Accounts Receivable Subsidiary and its Subsidiaries shall not
be deemed Subsidiaries of the Company or of any of its other Subsidiaries.
"Tax Sharing Agreement" that certain Tax Sharing Agreement, as
amended, dated as of August 16, 1993, between SFAC and SFC, as amended to
include the Company and Holdings as parties as of the date of this Indenture.
"Term Loan Agreement" means that certain Term Loan Agreement, dated
as of August 16, 1993, by and among SFC, and the lenders party thereto,
providing for up to $315 million in aggregate principal amount of term loans,
together with any replacement or additional credit agreement or agreements, and
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
supplemented, extended, modified, renewed, refunded, replaced or refinanced from
time to time, whether or not with the same lenders.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Transaction" means the corporate and financial restructuring of
SFAC, SFC and their Subsidiaries, including the Company, Holdings, and SFC Sub,
<PAGE>
17
described in the Offering Circular of which the Initial Exchange Offers are one
component.
"Transfer Restricted Notes" means each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Securities Act, (b) the date on
which such Note has been effectively registered under the Securities Act and
disposed of in accordance with a shelf registration statement pursuant to the
Registration Rights Agreement and (c) the date on which such Note is distributed
to the public pursuant to Rule 144 under the Securities Act.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"12 1/8% Senior Indenture" means that certain indenture, dated as of
the date hereof, by and between the Company and United States Trust Company of
New York, as trustee, as amended or supplemented from time to time, relating to
the 12 1/8% Senior Notes.
"12 1/8% Senior Notes" means, collectively, the Company's 12 1/8%
Series A Senior Notes due 2002 and the Company's 12 1/8% Series B Senior Notes
due 2002, issued pursuant to the 12 1/8% Senior Indenture.
"Untendered SFC Notes" means the SFC Subordinated Notes that are not
acquired by the Company in exchange for Notes in accordance with the terms and
conditions of the Initial Exchange Offers.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other scheduled required payments
of principal, including payment at final maturity, in respect thereof, by (y)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
<PAGE>
18
Section 1.2 Other Definitions. Terms not otherwise defined herein
shall have the meanings assigned to them in the Notes. As used in this
Indenture, the following terms shall have the meanings assigned in the Sections
referred to opposite such terms below.
Defined in
Term Section
---- ----------
"Affiliate Transaction"................................ 4.11
"Asset Sale"........................................... 4.10
"Asset Sale Offer"..................................... 3.9
"Change of Control Offer".............................. 4.15
"Change of Control Payment"............................ 4.15
"Change of Control Payment Date"....................... 4.15
"Covenant Defeasance".................................. 8.3
"DLJSC"................................................ 4.11
"DTC".................................................. 2.3
"Event of Default"..................................... 6.1
"Excess Proceeds"...................................... 4.10
"Final Payment Default................................. 6.1
"incur"................................................ 4.9
"Legal Defeasance"..................................... 8.2
"Non-Redemption Event"................................. 3.7
"Offer Amount"......................................... 3.9
"Offer Period"......................................... 3.9
"Paying Agent"......................................... 2.3
"Permitted Refinancing"................................ 4.9
"PIK Interest"......................................... 2.2
"PIK Notes"............................................ 2.2
"Purchase Date"........................................ 3.9
"Refinancing Indebtedness"............................. 4.9
"Registrar"............................................ 2.3
"Restricted Payments".................................. 4.7
"Senior Debt".......................................... 10.2
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
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19
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement or successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.1 Form and Dating. The Notes and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its authentication.
The Notes shall be in denominations of $1,000 and integral multiples thereof.
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20
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including footnotes 1 and 2 thereto), or in
definitive form, substantially in the form of Exhibit A hereto (not including
footnotes 1 and 2 thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon and that the aggregate amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.6 hereof.
Section 2.2 Execution and Authentication; Payments-in-Kind. (a) Two
Officers shall sign the Notes for the Company by manual or facsimile signature.
The Company's seal shall be reproduced on the Notes and may be in facsimile
form.
(b) If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
(c) A Note shall not be valid until authenticated by the manual
signature of an authorized signatory of the Trustee. The signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.
(d) The Trustee shall, upon receipt of a written order of the
Company signed by two Officers, authenticate Notes (i) for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes and (ii) for
issuance as provided in Section 2.7(e). The aggregate principal amount of Notes
outstanding at any time may not exceed the amount stated in paragraph 4 of the
Notes except as provided in Section 2.2(e) and 2.7 hereof.
(e) On each Interest Payment Date (as defined in Exhibit A to this
Indenture), the Company shall, in lieu of a cash payment of $5.00 per $1,000
principal amount of Notes (the "PIK Interest") due on the Notes on any Interest
Payment Date up to and including August 15, 2003, deliver to the Trustee or an
authenticating agent for authentication for original issue and delivery
additional Notes ("PIK Notes"), in an aggregate principal amount equal to the
PIK Interest due on the Notes on each such Interest Payment Date. For purposes
of determining the principal amount of PIK Notes to be issued to a Holder, the
Trustee shall aggregate the amount
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21
of PIK Interest payable on all Notes registered in the name of the Holder. Each
issuance of PIK Notes shall be made pro rata with respect to the outstanding
Notes, provided that PIK Notes shall be issuable only in denominations of $1,000
or integral multiples thereof and the Company shall pay in cash to each Holder
the difference (if any) between the amount of interest payable to such Holder on
such Interest Payment Date and the face value of PIK Notes issued to such Holder
by the Company pursuant to this Section 2.2(e). PIK Notes shall bear interest
from the Interest Payment Date with respect to which they are issued.
(f) The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar, and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee in writing of the
name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar,
Paying Agent and the Note Custodian with respect to the Global Notes.
Section 2.4 Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Trustee all
money and PIK Notes held by the Paying Agent for the payment of principal or
interest on the Notes, and will notify the Trustee of any default by the Company
in making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money and PIK Notes held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money and PIK
Notes held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money and PIK Notes. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and
<PAGE>
22
hold in a separate trust fund for the benefit of the Holders all money held by
it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating
to the Company, the Trustee shall serve as Paying Agent and conversion agent (if
any) for the Notes.
Section 2.5 Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of all Holders and shall otherwise comply with TIA ss.
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes.
Section 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive
Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing;
and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Note, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Note is being
delivered to the Registrar by a Holder for registration in the name
of such Holder, without transfer, a certification to that effect
from such Holder (in substantially the form of Exhibit B hereto); or
(B) if such Transfer Restricted Note is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under
the
<PAGE>
23
Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
(C) if such Transfer Restricted Note is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that effect
from such Holder (in substantially the form of Exhibit B hereto) and
an Opinion of Counsel from such Holder or the transferee reasonably
acceptable to the Company and to the Registrar to the effect that
such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in
a Global Note. A Definitive Note may not be exchanged for a beneficial interest
in a Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted
Note, a certification from the Holder thereof (in substantially the form
of Exhibit B hereto) to the effect that such Definitive Note is being
transferred by such Holder to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Note, written instructions from the Holder thereof directing
the Trustee to make, or to direct the Note Custodian to make, an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note and cause, or
direct the Note Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Note
Custodian, the aggregate principal amount of Notes represented by the
Global Note to be increased accordingly. If no Global Notes are then
outstanding, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.2, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture, which shall include
restrictions on
<PAGE>
24
transfer comparable to those set forth herein to the extent required by the
Securities Act and the procedures of the Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in a Global
Note may upon request exchange such beneficial interest for a Definitive
Note. Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Note, and, in the case of a Transfer Restricted Note,
the following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depository as being the
beneficial owner, a certification to that effect from such Person
(in substantially the form of Exhibit B hereto); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or Rule 904 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act, a certification to that effect from the transferor (in
substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that effect
from the transferor (in substantially the form of Exhibit B hereto)
and an Opinion of Counsel from the transferee or transferor
reasonably acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian, cause
the aggregate principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and, upon receipt
of an authentication order in accordance with Section 2.2, the Trustee
shall authenticate and deliver to the transferee a Definitive Note in the
appropriate principal amount.
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25
(ii) Definitive Notes issued in exchange for a
beneficial interest in a Global Note pursuant to this Section 2.6(d) shall
be registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Note may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of
Depository. If at any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as Depository for
the Global Notes and a successor Depository for the Global Notes is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes, in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution thereof)
shall bear a legend in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE
<PAGE>
26
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT
THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A
UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR IN ACCORDANCE
WITH RULE 144 UNDER THE SECURITIES ACT, OR PURSUANT TO ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL), (b) TO THE COMPANY, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Note (including any Transfer Restricted Note represented by Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Note
that is a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Note for a Definitive
Note that does not bear the legend set forth in (i) above and
rescind any restriction on the transfer of such Transfer Restricted
Note; and
(B) in the case of any Transfer Restricted Note
represented by a Global Note, such Transfer Restricted Note shall
not be subject to the provisions set forth in (i) above and shall
only be subject to the provisions of Section 2.6(c) hereof;
provided, however, that with respect to any request for an exchange
of a Transfer
<PAGE>
27
Restricted Note that is represented by a Global Note for a
Definitive Note that does not bear a legend, which request is made
in reliance upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being made pursuant to
Rule 144 (such certification to be substantially in the form of
Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation
of the Exchange Offer and the Additional Exchange Offer, the Company shall
issue, and, upon receipt of an authentication order in accordance with
Section 2.2, the Trustee shall authenticate, Series B Notes in exchange
for (A) Series A Notes accepted for exchange in the Exchange Offer and (B)
Untendered SFC Notes accepted for exchange in the Additional Exchange
Offer, which Series B Notes shall not bear the legend set forth in (i)
above, and the Registrar shall rescind any restriction on the transfer of
such Notes, in each case unless the Holder of the Series A Notes tendered
into the Exchange Offer or, as applicable, the Holder of the Untendered
SFC Notes tendered into the Additional Exchange Offer is either (A) a
broker-dealer who purchased such Series A Notes directly from the Company
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act, (B) a Person participating in the distribution of the
Series A Notes or the Untendered SFC Notes, as applicable, or (C) a Person
who is an affiliate (as defined in Rule 144A) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have either been exchanged for
Definitive Notes, redeemed, repurchased or cancelled all Global Notes shall be
returned to or retained and cancelled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the principal amount of
Notes represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note, by the Trustee or the Note
Custodian, at the direction of the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 3.7, 4.10, 4.15 and 9.5 hereto).
<PAGE>
28
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon
any registration of transfer or exchange of Definitive Notes or Global
Notes shall be valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Definitive
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of business
15 days before the day of any selection of Notes for redemption
under Section 3.2 hereof and ending at the close of business on the
day of selection; or
(B) to register the transfer or to exchange any
Note so selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a
Note between a record date and the next succeeding interest payment
date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Note, and neither the Trustee, any Agent nor the
Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes upon receipt of an authentication order in accordance
with the provisions of Section 2.2 hereof.
Section 2.7 Replacement Notes. If any mutilated Note is surrendered
to the Trustee or the Company and the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon the receipt of a written order of the Company signed
by two Officers of the Company, shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Company to protect the Company, the Trustee, any Agent
and any authenticating agent from any
<PAGE>
29
loss that any of them may suffer if a Note is replaced. The Company may charge
for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.8 Outstanding Notes. The Notes outstanding at any time are
all the Notes authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. PIK Notes shall be
deemed outstanding as of the Interest Payment Date on which they are issued in
lieu of cash interest pursuant to Subsection 2.2(e) hereof. Except as set forth
in Section 2.9 hereof, a Note does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.9 Treasury Notes. In determining whether the Holders of
the required principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company or by any Affiliate of the Company shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Trustee knows are so owned shall
be so disregarded.
Section 2.10 Temporary Notes. Until Definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes upon the receipt of a written order of the Company signed by two Officers
of the Company. Temporary Notes shall be substantially in the form of Definitive
Notes but may have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Notes in exchange for temporary Notes.
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30
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
Section 2.11 Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Notes (subject to the record retention requirement of
the Exchange Act). Certification of the destruction of all cancelled Notes shall
be delivered to the Company. The Company may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12 Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay the defaulted interest in any
lawful manner plus, to the extent lawful, interest payable on the defaulted
interest, to the Persons who are Holders on a subsequent special record date, in
each case at the rate provided in the Notes and in Section 4.1 hereof. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note and the date of the proposed payment. The
Company shall fix or cause to be fixed each such special record date and payment
date, provided that no such special record date shall be less than 10 days prior
to the related payment date for such defaulted interest. At least 15 days before
the special record date, the Company (or the Trustee in the name of and at the
expense of the Company) shall mail or cause to be mailed to Holders a notice
that states the special record date, the related payment and the amount of such
interest to be paid.
ARTICLE 3
REDEMPTION
Section 3.1 Notices to Trustee. If the Company elects to redeem
Notes pursuant to the optional redemption provisions of Section 3.7 hereof, it
shall furnish to the Trustee, at least 40 days but not more than 60 days before
a redemption date, an Officers' Certificate setting forth (i) the Section of
this Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption
price.
Section 3.2 Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed
among the Holders of the Notes on a pro rata basis, by lot or in accordance with
any other method the Trustee considers fair and appropriate (and in such manner
as complies with applicable legal and stock exchange requirements, if any). In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected,
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31
unless otherwise provided herein, not less than 30 nor more than 60 days prior
to the redemption date by the Trustee from the outstanding Notes not previously
called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3 Notice of Redemption. Subject to the provisions of
Section 3.9 hereof, at least 30 days but not more than 60 days before a
redemption date, the Company shall mail or cause to be mailed, by first class
mail, a notice of redemption to each Holder whose Notes are to be redeemed at
its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, ISIN or Common Code, if any, listed in such notice
or printed on the Notes.
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32
At the Company's written request, the Trustee shall give the notice
of redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.4 Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.3 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.
Section 3.5 Deposit of Redemption Price. One Business Day prior to
the redemption date, the Company shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date. The Trustee or the Paying
Agent shall promptly return to the Company any money deposited with the Trustee
or the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.1 hereof.
Section 3.6 Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall issue and the Trustee shall authenticate for
the Holder at the expense of the Company a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
Section 3.7 Optional Redemption.
(a) The Company shall have the option to redeem the Notes, in
whole or in part, upon not less than 30 nor more than 60 days' notice to the
Holders, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
15 of the years indicated below:
<PAGE>
33
Year Percentage
- ---- ----------
1998................................................................. 103.786%
1999................................................................. 101.893%
2000 and thereafter.................................................. 100.000%
========
(b) If the Company fails to redeem the Notes, in whole, on or
before November 15, 2002 (the "Non-Redemption Event"), the Company shall direct
the Trustee to pay the Non-Redemption Payment to the Person in whose name such
Note was registered at the close of business on November 15, 2002. If the
Company is required to pay the Non-Redemption Payment, on November 15, 2002 the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the Non-Redemption Payment. On November 16, 2002, the Company (or the
Trustee in the name of and at the expense of the Company) shall mail or cause to
be mailed to Holders the Non-Redemption Payment.
(c) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Sections 3.1 through 3.6 hereof.
Section 3.8 Mandatory Redemption. Except as set forth in Section 3.9
hereof or pursuant to Section 4.15 hereof, the Company is not required to make
mandatory redemption or sinking fund payments with respect to the Notes.
Section 3.9 Offer to Purchase by Application of Excess Proceeds. In
the event that, pursuant to Section 4.10 hereof, the Company shall be required
to commence an offer to all Holders to purchase Notes (an "Asset Sale Offer"),
it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
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34
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.9 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a Depository, if appointed by the Company, or a
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Purchase Date;
(g) that Holders shall be entitled to withdraw their election
if the Company, the Depository or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
<PAGE>
35
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes tendered pursuant to the Asset Sale Offer, or if less than
the Offer Amount has been tendered, all Notes tendered, and shall deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by the Company in accordance with the terms of this
Section 3.9. The Company, the Depository or the Paying Agent, as the case may
be, shall promptly (but in any case not later than five days after the Purchase
Date) mail or deliver to each tendering Holder an amount equal to the purchase
price of the Notes tendered by such Holder and accepted by the Company for
purchase, and the Company shall promptly issue a new Note, and the Trustee shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on the Purchase Date.
Other than as specifically provided in this Section 3.9, any
purchase pursuant to this Section 3.9 shall be made pursuant to the provisions
of Sections 3.1 through 3.6 hereof.
ARTICLE 4
COVENANTS
Section 4.1 Payment of Notes. The Company shall pay or cause to be
paid the principal of, premium, if any, the Non-Redemption Payment, if any, and
interest on the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, the Non-Redemption Payment, if any, and interest
shall be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary thereof holds as of 11:00 a.m. Eastern Time on the due
date money deposited by the Company in immediately available funds and PIK Notes
designated for and sufficient to pay all principal, premium, if any, the
Non-Redemption Payment, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement and shall inform the Trustee of
any such payments of Liquidated Damages pursuant thereto.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent
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36
lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and on
overdue Liquidated Damages (without regard to any applicable grace period) and
Non-Redemption Payments at the same rate to the extent lawful.
Section 4.2 Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee or
Registrar) where Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 4.3 Reports.
(a) Whether or not required by the rules and regulations of
the SEC, so long as any Notes are outstanding, the Company shall furnish to all
Holders all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's certified independent
accountants. In addition, the Company will provide in each such quarterly and
annual report such income statement information as its Board of Directors
determines in good faith to be appropriate with respect to each of its major
product groupings. Whether or not required by the rules and regulations of the
SEC, the Company shall file a copy of all such information with the SEC for
public availability (so long as the SEC will accept such filings) and shall
promptly make such information available to all investors who request it in
writing.
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37
(b) For so long as any Transfer Restricted Notes remain
outstanding, the Company shall furnish to all Holders and prospective purchasers
of the Notes designated by the Holders of Transfer Restricted Notes, promptly
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
Section 4.4 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company, its Subsidiaries and the Accounts
Receivable Subsidiary during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.3(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
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38
Section 4.5 Taxes. The Company shall pay, and shall cause each of
its Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
Section 4.6 Stay, Extension and Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 4.7 Restricted Payments. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any distribution on account of the Company's or any of
its Subsidiaries' Equity Interests (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable by a Subsidiary of the Company to the Company
or any Wholly Owned Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company or any
Subsidiary or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness of Holdings or any Indebtedness that is subordinated in right of
payment to the Notes; or (iv) make any Restricted Investment (all such payments
and other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of such Restricted
Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.9 hereof; and
(c) such Restricted Payment, together with the aggregate of
all other Restricted Payments made by the Company and its Subsidiaries after the
date of this Indenture (including Restricted Payments permitted by the next
succeeding
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39
paragraph (except clause (iv) thereof and, to the extent deducted in determining
the Consolidated Net Income of the Company in clause (x) below, clause (vi)
thereof)), is less than the sum of (x) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the date of this
Indenture to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a deficit, 100%
of such deficit), plus (y) 100% of the aggregate Net Proceeds received by the
Company since the date of this Indenture (excluding any proceeds received on
such date in connection with the Transaction) from the issue or sale of Equity
Interests of the Company (other than Equity Interests sold to a Subsidiary of
the Company and other than Disqualified Stock) or any debt security of the
Company that is convertible into or exchangeable for any Equity Interest of the
Company (other than Disqualified Stock) that has been so converted or exchanged,
plus (z) 100% of any common equity capital contribution received by the Company
subsequent to the date of this Indenture.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement or other acquisition of
any of the Company's Equity Interests or any Indebtedness that is subordinated
in right of payment to the Notes in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the Company) of
other Equity Interests of the Company (other than any Disqualified Stock); (iii)
the repurchase, redemption or other acquisition or retirement for value (or the
payment of a dividend to Holdings for such repurchase, redemption or other
acquisition or retirement for value) of any Equity Interests of the Company,
Holdings or any Subsidiary of the Company held by any member of the Company's
(or any of its Subsidiaries') management; provided, however, that the aggregate
price paid since the date of this Indenture for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed an amount equal to $5
million plus the aggregate cash proceeds received by the Company or any
Subsidiary of the Company from any reissuance of Equity Interests by the Company
or such Subsidiary to members of management of the Company and its Subsidiaries;
(iv) Permitted Refinancings of Indebtedness that is subordinated in right of
payment to the Notes; (v) payments to Holdings to reimburse it for its
out-of-pocket administrative expenses in an aggregate amount not to exceed $1
million in any fiscal year; (vi) payments to Holdings pursuant to the Tax
Sharing Agreement as in effect on the date of this Indenture to the extent that
Holdings is actually required to make cash outlays to pay taxes; and (vii)
payments or distributions to Holdings in an aggregate amount equal to the
interest required to be paid by SFC from time to time on any SFC Notes that
remain outstanding after the Initial Exchange Offers.
Not later than the date of making any Restricted Payment (other than
Restricted Payments pursuant to clauses (iv), (v), (vi) and (vii) of the
foregoing paragraph), the Company shall deliver to the Trustee an Officers'
Certificate stating
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40
that such Restricted Payment is permitted and setting forth the basis upon which
the calculations required by this Section 4.7 were computed, which calculations
may be based upon the Company's latest available financial statements.
Section 4.8 Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction (other than
encumbrances or restrictions imposed by law or judicial or regulatory action) if
such encumbrance or restriction would by its terms prohibit or limit any
Subsidiary from (a)(i) paying dividends or making any other distributions to the
Company or any of its Subsidiaries (A) on its Capital Stock or (B) with respect
to any other interest or participation in, or measured by, its profits or (ii)
paying any indebtedness owed to the Company or any of its Subsidiaries, (b)
making loans or advances to the Company or any of its Subsidiaries or (c)
transferring any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions existing under or by
reason of (i) Existing Indebtedness as in effect on the date of this Indenture,
(ii) the Term Loan Agreement and the Revolving Credit Agreement as in effect as
of the date of this Indenture, (iii) this Indenture, the Notes, the 12 1/8%
Senior Indenture, the 12 1/8% Senior Notes, the 11 1/4% Senior Indenture and the
11 1/4% Senior Notes, (iv) applicable law, (v) any instrument governing
Indebtedness or Capital Stock of a Person acquired by the Company or any of its
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in anticipation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, (vi) customary non-assignment
provisions in leases entered into in the ordinary course of business, (vii) with
respect to clause (c) above, purchase money obligations for property acquired in
the ordinary course of business; provided that such restrictions are only
applicable to the property acquired through such purchase money obligations,
(viii) permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced or (ix) any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of the
Indebtedness or the Capital Stock referred to in the foregoing clauses (i), (ii)
or (v); provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are not more
restrictive with respect to such dividend and other payment restrictions than
those contained in the applicable instrument governing such Indebtedness or
Capital Stock (as the case may be) as in effect on the date of this Indenture.
Section 4.9 Incurrence of Indebtedness and Issuance of Preferred
Stock. The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become
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41
directly or indirectly liable with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and the Company shall not issue any
Disqualified Stock and shall not permit any of its Subsidiaries to issue any
shares of preferred stock; provided, however, that the Company may incur
Indebtedness or issue shares of Disqualified Stock, and Subsidiaries of the
Company may incur up to $10 million in aggregate principal amount of
Indebtedness at any time outstanding, if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.75 to 1 determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The foregoing limitations shall not apply to:
(a) the incurrence by the Company of Senior Term Debt in an
aggregate principal amount at any time outstanding not to exceed an amount equal
to $315 million less the aggregate amount of all repayments, optional or
mandatory, of the principal of any Senior Term Debt (other than repayments that
are immediately reborrowed) that have been made since the date of the SFC
Subordinated Note Indenture (provided, however, that Subsidiaries of the Company
shall not be permitted to guarantee the Senior Term Debt);
(b) the incurrence by the Company or its Subsidiaries of
Senior Revolving Debt (and guarantees thereof by the Company and its
Subsidiaries) in an aggregate principal amount at any time outstanding not to
exceed an amount equal to $125 million, less the aggregate amount of all
proceeds of sales or other dispositions of assets applied to permanently reduce
the commitments with respect to such Indebtedness pursuant to Section 4.10
hereof;
(c) the incurrence by the Company and its Subsidiaries of the
Existing Indebtedness;
(d) the incurrence by the Company of Indebtedness represented
by the Notes (including any PIK Notes), the 12 1/8% Senior Notes and the 11 1/4%
Senior Notes;
(e) the incurrence by the Company or any of its Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage financings or
purchase money obligations, in each case, incurred for the purpose of financing
all or any part of the purchase price or cost of construction or improvement of
property used in the business of the Company or such Subsidiary, in an aggregate
principal amount not to exceed $5 million at any time outstanding;
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42
(f) the incurrence by the Company or any of its Subsidiaries
of Indebtedness issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace, defease or refund, Indebtedness referred to
in clauses (c), (d) or (e) above or previously incurred under this clause (f)
(the "Refinancing Indebtedness"); provided, however, that:
(i) the principal amount of such Refinancing
Indebtedness shall not exceed the aggregate principal amount, tender or
prepayment premium and unpaid interest on the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith);
(ii) any Refinancing Indebtedness incurred by any
Subsidiary shall only extend, refinance, renew, replace, defease or refund
Indebtedness of such Subsidiary or any Wholly Owned Subsidiary of the
Company;
(iii) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than either (x) the remaining
Weighted Average Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded or (y) the remaining
Weighted Average Life to Maturity of the Notes; and
(iv) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, the Refinancing Indebtedness shall be subordinated
in right of payment to the Notes on terms at least as favorable to the
holders of the Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded (any such extension, refinancing, renewal, replacement,
defeasance or refunding, a "Permitted Refinancing");
(g) intercompany Indebtedness between or among the Company and
any of its Wholly Owned Subsidiaries;
(h) the incurrence by the Company or its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Indenture to be outstanding; and
(i) the incurrence by the Company of Indebtedness (in addition
to Indebtedness permitted by any other clause of this paragraph) in an aggregate
principal amount at any time outstanding not to exceed the sum of (A) $35
million plus (B) up to $40 million of permanent reductions in commitments for
Senior
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43
Revolving Debt (other than pursuant to the mandatory repayment provisions
thereof) made since the date of this Indenture.
Section 4.10 Asset Sales. (a) The Company shall not, and shall not
permit any of its Subsidiaries to (i) sell, lease, convey or otherwise dispose
of any assets (including by way of a sale-and-leaseback) other than in the
ordinary course of business and other than sales of accounts receivable to the
Accounts Receivable Subsidiary in accordance with the provisions of Section 4.13
hereof (provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company shall be governed by Section 5.1
hereof) or (ii) issue or sell equity securities of any of its Subsidiaries, in
each case, whether in a single transaction or a series of related transactions,
(a) that have a fair market value in excess of $3 million or (b) for net
proceeds in excess of $3 million (each of the foregoing, an "Asset Sale"),
unless (x) the Company (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets sold or otherwise
disposed of and (y) at least 80% of the consideration therefor received by the
Company or such Subsidiary is in the form of cash or Cash Equivalents; provided,
however, that the amount of (A) any liabilities (as shown on the Company's or
such Subsidiary's most recent balance sheet or in the notes thereto) of the
Company or any Subsidiary (other than liabilities that are by their terms
subordinated in right of payment to the Notes) that are assumed by the
transferee of any such assets and (B) any notes or other obligations of such
transferee or Marketable Securities received by the Company or any such
Subsidiary from such transferee that, within 30 days (or 90 days, in the case of
Marketable Securities received in connection with a pooling of interest
transaction) of the consummation of the Asset Sale, are converted by the Company
or such Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision.
(b) Within 30 days after the receipt of cash proceeds from any
Principal Business Asset Sale, the Company (or such Subsidiary) shall apply 75%
of the Net Proceeds thereof to permanently reduce Senior Term Debt and, to the
extent that cash proceeds are not used in connection therewith, to permanently
reduce Senior Revolving Debt. To the extent that such Net Proceeds exceed the
amounts required to permanently reduce Senior Term Debt and Senior Revolving
Debt, such excess Net Proceeds shall be deemed to constitute "Excess Proceeds"
(as defined in Subsection 4.10(c) hereof) and shall be applied in accordance
with the procedures set forth in Subsection 4.10(c) below.
(c) Within 365 days after the receipt of cash proceeds from any
Asset Sale (other than 75% of the cash proceeds from a Principal Business Asset
Sale), the Company (or such Subsidiary) may, at its option, apply the Net
Proceeds from such Asset Sale either (a) to permanently reduce Senior Term Debt,
(b) to permanently reduce Senior Revolving Debt with a corresponding permanent
reduction
<PAGE>
44
in commitments with respect thereto, (c) to offer to redeem 11 1/4% Senior Notes
pursuant to the provisions of the 11 1/4% Senior Indenture or (d) to an
investment in another business, capital expenditures or other long-term assets,
in each case, in the same, similar or related line of business as the Company or
any of its Subsidiaries were engaged in on the date of this Indenture. Pending
the final application of any such Net Proceeds, the Company (or such Subsidiary)
may temporarily reduce Senior Revolving Debt or invest such Net Proceeds in cash
or Cash Equivalents. Any Net Proceeds from an Asset Sale that are not finally
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15 million, within five days of such date, the Company shall
be required to make an Asset Sale Offer pursuant to Section 3.9 hereof to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
outstanding principal amount thereof plus accrued and unpaid interest, if any,
to the date fixed for the closing of such offer, in accordance with the
procedures of Section 3.9 hereof. To the extent that the aggregate amount of
Notes tendered pursuant to an Asset Sale Offer is less than the amount of Excess
Proceeds, the Company may use such deficiency for general corporate purposes. If
the aggregate principal amount of Notes surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be deemed to be reset at zero.
Neither Section 3.9 nor this Section 4.10 shall apply to Asset Sales
to the Company or any of its Wholly Owned Subsidiaries.
Section 4.11 Transactions with Affiliates. The Company shall not,
and shall not permit any of its Subsidiaries to, in one or a series of related
transactions, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (including the Accounts Receivable Subsidiary and
its Subsidiaries) (each of the foregoing, an "Affiliate Transaction"), unless
(a) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
Person and (b) the Company delivers to the Trustee (i) with respect to (x) any
Affiliate Transaction constituting the purchase or sale of goods and services in
the ordinary course of business in excess of $10 million or (y) any other
Affiliate Transaction involving aggregate payments in excess of $500,000, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
such Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (ii) with respect to any Affiliate
Transaction (other than the purchase or sale of goods and services in the
ordinary course of business) involving aggregate payments in excess of $20
million, an opinion as to the fairness
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45
to the Company or such Subsidiary from a financial point of view issued by an
investment banking firm of national standing; provided, however, that (A) any
employment agreement entered into by the Company or any of its Subsidiaries in
the ordinary course of business and consistent with business practices of
companies similarly situated, (B) transactions between or among the Company
and/or its Wholly Owned Subsidiaries, (C) transactions permitted by Section 4.7
above (including payments under the Tax Sharing Agreement as in effect on the
date of this Indenture), (D) fees payable pursuant to financial advisory
agreements as in effect on the date of this Indenture, (E) transactions
permitted by Section 4.13 hereof and (F) transactions between the Company or any
of its Subsidiaries on the one hand, and Donaldson, Lufkin & Jenrette Securities
Corporation or any of its Affiliates ("DLJSC") on the other hand, involving the
provision of financial, consulting or underwriting services by DLJSC; provided
that the fees payable to DLJSC do not exceed the usual and customary fees of
DLJSC for similar services, in each case, shall not be deemed Affiliate
Transactions.
Section 4.12 Liens. The Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or suffer
to exist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except Permitted Liens.
Section 4.13 Accounts Receivable Subsidiary. The Company:
(a) may, and may permit any of its Subsidiaries to,
notwithstanding the provisions of Section 4.7 hereof, make Investments in the
Accounts Receivable Subsidiary (i) the proceeds of which are applied within five
Business Days of the making thereof solely to finance (A) the purchase of
accounts receivable of the Company and its Subsidiaries (provided that the
aggregate amount of Investments pursuant to this clause (i)(A) made since the
date of this Indenture (including any such Investments made concurrently with
the consummation of the Transaction) shall not exceed $56 million, plus the
amount of any return of capital (excluding payment of dividends) or any
repayment of the principal amount of any Indebtedness constituting such
Investments by the Accounts Receivable Subsidiary since the date of this
Indenture) or (B) payments required in connection with the termination of all
then existing arrangements relating to the sale of accounts receivable or
participation interests therein by the Accounts Receivable Subsidiary (provided
that the Accounts Receivable Subsidiary shall receive cash, Cash Equivalents and
accounts receivable having an aggregate fair market value not less than the
amount of such payments in exchange therefor) and (ii) in the form of Accounts
Receivable Subsidiary Notes to the extent permitted by clause (b) below;
(b) shall not, and shall not permit any of its Subsidiaries
to, sell accounts receivable to the Accounts Receivable Subsidiary except for
consideration in an amount not less than that which would be obtained in an
arm's
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46
length transaction and solely in the form of cash or Cash Equivalents; provided
that the Accounts Receivable Subsidiary may pay the purchase price for any such
accounts receivable in the form of Accounts Receivable Subsidiary Notes so long
as, after giving effect to the issuance of any such Accounts Receivable
Subsidiary Notes, the aggregate principal amount of all Accounts Receivable
Subsidiary Notes outstanding shall not exceed 10% of the aggregate purchase
price paid for all outstanding accounts receivable purchased by the Accounts
Receivable Subsidiary since the date of this Indenture (and not written off or
required to be written off in accordance with the normal business practice of
the Accounts Receivable Subsidiary);
(c) shall not permit the Accounts Receivable Subsidiary to
sell any accounts receivable purchased from the Company and its Subsidiaries or
participation interests therein to any other Person except on an arm's length
basis and solely for consideration in the form of cash or Cash Equivalents or
certificates representing undivided interests of a Receivables Trust; provided
that the Accounts Receivable Subsidiary may not sell such certificates to any
other Person except on an arm's length basis and solely for consideration in the
form of cash or Cash Equivalents;
(d) shall not, and shall not permit any of its Subsidiaries
to, enter into any guarantee, subject any of their respective properties or
assets (other than the accounts receivable sold by them to the Accounts
Receivable Subsidiary) to the satisfaction of any liability or obligation or
otherwise incur any liability or obligation (contingent or otherwise), in each
case, on behalf of the Accounts Receivable Subsidiary or in connection with any
sale of accounts receivable or participation interests therein by or to the
Accounts Receivable Subsidiary, other than customary obligations relating to
breaches of representations, warranties, covenants and other agreements of the
Company or any of its Subsidiaries with respect to the accounts receivable sold
by the Company or any of its Subsidiaries to the Accounts Receivable Subsidiary
or with respect to the servicing thereof as set forth in the Accounts Receivable
Agreements as in effect on the date of this Indenture or in any replacement or
substitute agreement, so long as the obligations set forth in such replacement
or substitute agreement are no more burdensome in any material respect than
those contained in the Accounts Receivable Agreements as in effect on the date
of this Indenture provided that neither the Company nor any of its Subsidiaries
shall at any time guarantee or be otherwise liable for the collectibility of
accounts receivable sold by them;
(e) shall not permit the Accounts Receivable Subsidiary to
engage in any business or transaction other than the purchase and sale of
accounts receivable or participation interests therein of the Company and its
Subsidiaries and activities incidental thereto;
(f) shall not permit the Accounts Receivable Subsidiary to
incur any Indebtedness other than the Accounts Receivable Subsidiary Notes,
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Indebtedness owed to the Company and Non-Recourse Indebtedness; provided that
the aggregate principal amount of all such Indebtedness of the Accounts
Receivable Subsidiary shall not exceed the book value of its total assets as
determined in accordance with GAAP;
(g) shall cause the Accounts Receivable Subsidiary to remit to
the Company on a monthly basis as a distribution, all available cash and Cash
Equivalents not held in a collection account pledged to acquirors of accounts
receivable or participation interests therein, to the extent not applied (x) to
pay interest or principal on the Accounts Receivable Subsidiary Notes or any
Indebtedness of the Accounts Receivable Subsidiary owed to the Company, (y) to
pay or maintain reserves for reasonable operating expenses of the Accounts
Receivable Subsidiary or to satisfy reasonable minimum operating capital
requirements or (z) to finance the purchase of additional accounts receivable of
the Company and its Subsidiaries; and
(h) shall not, and shall not permit any of its Subsidiaries
to, sell accounts receivable to, or enter into any other transaction with or for
the benefit of, the Accounts Receivable Subsidiary (i) if the Accounts
Receivable Subsidiary pursuant to or within the meaning of any Bankruptcy Law
(A) commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, or (E) generally is not
paying its debts as they become due; or (ii) if a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for
relief against the Accounts Receivable Subsidiary in an involuntary case, (B)
appoints a Custodian of the Accounts Receivable Subsidiary or for all or
substantially all of the property of the Accounts Receivable Subsidiary, or (C)
orders the liquidation of the Accounts Receivable Subsidiary, and, with respect
to clause (ii) hereof, the order or decree remains unstayed and in effect 60
consecutive days.
Section 4.14 Corporate Existence. Subject to Article 5 hereof, the
Company shall do or cause to be done all things necessary to preserve and keep
in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Subsidiaries, in accordance with
the respective organizational documents (as the same may be amended from time to
time) of the Company or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Subsidiaries;
provided, however, that the Company shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
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48
Section 4.15 Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder stating:
(i) that the Change of Control Offer is being made
pursuant to this Section 4.15 and that all Notes tendered shall be
accepted for payment;
(ii) the purchase price and the purchase date, which
shall be no later than 30 Business Days from the date such notice is
mailed (the "Change of Control Payment Date");
(iii) that any Note not tendered shall continue to
accrue interest;
(iv) that, unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date;
(v) that Holders electing to have any Notes purchased
pursuant to a Change of Control Offer shall be required to surrender the
Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(vi) that Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes delivered for
purchase, and a statement that such Holder is withdrawing his election to
have such Notes purchased; and
(vii) that Holders whose Notes are being purchased only
in part shall be issued new Notes equal in principal amount to the
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49
unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple
thereof.
The Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
in connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (1) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Notes or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal to
the purchase price for such Notes, and the Trustee shall promptly authenticate
and mail to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Prior to making the Change of Control Payment in respect of the Notes,
but in any event within 60 days following a Change of Control, the Company shall
either repay all outstanding Senior Debt or obtain the requisite consents, if
any, under all agreements governing outstanding Senior Debt to permit the
repurchase of the Notes required by this Section 4.15. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
Section 4.16 No Senior Subordinated Indebtedness. The Company shall
not incur, create, issue, assume, guarantee or otherwise become directly or
indirectly liable for any Indebtedness that is subordinate or junior in any
respect in right of payment to any Senior Debt and senior in any respect in
right of payment to the Notes.
ARTICLE 5
SUCCESSORS
Section 5.1 Merger, Consolidation, or Sale of Assets. The Company
shall not consolidate or merge with or into (whether or not the Company is the
surviving corporation) or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions to, another corporation, Person or entity unless:
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50
(i) the Company is the surviving corporation or the entity or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and this Indenture;
(iii) immediately after such transaction, no Default or Event
of Default exists; and
(iv) the Company or any entity or Person formed by or
surviving any such consolidation or merger, or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (A) shall
have Consolidated Net Worth (immediately after the transaction) equal to or
greater than the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) shall, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in Section 4.9 hereof.
Section 5.2 Successor Corporation Substituted. Upon any
consolidation or merger, or any sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company in accordance with Section
5.1 hereof, the successor corporation formed by such consolidation or into or
with which the Company is merged or to which such sale, lease, conveyance or
other disposition is made shall succeed to, and be substituted for (so that from
and after the date of such consolidation, merger, sale, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor corporation and not to the Company), and
may exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person has been named as the Company herein;
provided, however, that the predecessor Company shall not be released from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that complies with the provisions of
this Article 5.
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51
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest (including
the payment of interest in PIK Notes), Liquidated Damages or the Non-Redemption
Payment on any Note when the same becomes due and payable and the Default
continues for a period of 30 days, whether or not such payment is prohibited by
the provisions of Article 10 hereof;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Note when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise, whether or not such payment is prohibited by the provisions of
Article 10 hereof;
(3) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or performed
pursuant to Sections 4.10 or 5.1 hereof or the Company fails for a period of 15
days to observe or perform any covenant, condition or agreement on the part of
the Company to be observed or performed pursuant to Sections 4.7 or 4.9 hereof;
(4) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Notes or this Indenture and
the Default continues for the period and after the notice specified below;
(5) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, which default (a) is caused by a failure to
pay at final maturity principal of such Indebtedness within the grace period
provided in such Indebtedness (a "Final Payment Default") or (b) results in the
acceleration of such Indebtedness prior to its express final maturity and, in
each case, either (1) the principal amount of such Indebtedness, together with
the principal amount of any other Indebtedness under which there has been a
Final Payment Default or the maturity of which has been so accelerated,
aggregates $10 million or more, and such Final Payment Default or acceleration
shall not have been cured or remedied within 10 days after the occurrence
thereof, or (2) the principal amount of such Indebtedness, together with the
principal amount of any other Indebtedness under which there has been a Final
Payment Default or the maturity of which has been so accelerated, aggregates $50
million or more, or (3) a Final Payment Default or
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52
acceleration shall have occurred with respect to the Senior Term Debt, the
Senior Revolving Debt, the 12 1/8% Senior Notes or the 11 1/4% Senior Notes;
(6) the Company, or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, fails to pay any final judgment or judgments (other than any
judgment to the extent a reputable insurance company has accepted liability)
aggregating in excess of $10 million, which judgments remain undischarged or
unstayed for a period of 60 days;
(7) the Company, or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become
due; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, or
(C) orders the liquidation of the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary,
<PAGE>
53
and the order or decree remains unstayed and in effect for 60 consecutive days.
An Event of Default shall not be deemed to have occurred under
clause (3), (5) or (6) until the Trustee shall have received written notice from
the Company or any of the Holders or unless a Responsible Officer shall have
actual knowledge of such Event of Default. A Default under clause (4) is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the then outstanding Notes notify the Company
and the Trustee in writing, of the Default and the Company does not cure the
Default within 60 days after receipt of the notice. The notice must specify the
Default, demand that it be remedied and state that the notice is a "Notice of
Default."
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium, if any, that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to Section
3.7(a) hereof, an equivalent premium shall also become and be immediately due
and payable to the extent permitted by law, anything in this Indenture or in the
Notes to the contrary notwithstanding.
Section 6.2 Acceleration. If an Event of Default (other than an
Event of Default specified in clauses (7) or (8) of Section 6.1) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the then outstanding Notes by written notice to the
Company and the Trustee, may declare the unpaid principal of and any accrued
interest on all the Notes to be due and payable. Upon such declaration the
principal and interest shall be due and payable immediately. If an Event of
Default specified in clause (7) or (8) of Section 6.1 relating to the Company,
any Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
principal amount of the then outstanding Notes by written notice to the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.
Section 6.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of, premium, if any, the Non-Redemption Payment, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission
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54
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4 Waiver of Past Defaults. Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences, except a continuing
Default or Event of Default in the payment of the principal of, premium, if any,
the Non-Redemption Payment, if any, or interest on, the Notes (including in
connection with an offer to purchase); provided, however, that the Holders of a
majority in aggregate principal amount of the outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration. 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 6.5 Control by Majority. Holders of a majority in principal
amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with the law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.
Section 6.6 Limitation on Suits. A Holder of a Note may pursue a
remedy with respect to this Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
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55
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.7 Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, but subject to Article 10
hereof, the right of any Holder of a Note to receive payment of principal of,
premium, if any, the Non-Redemption Payment, if any, and interest on the Note,
on or after the respective due dates expressed in the Note (including in
connection with an offer to purchase), or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal of, premium, if any,
the Non-Redemption Payment, if any, and interest remaining unpaid on the Notes
and interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders of the Notes may
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56
be entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to the holders of Senior Debt to the extent required by
Article 10 hereof;
Third: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, the Non-Redemption Payment, if any, and
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium, if any, the
Non-Redemption Payment, if any, and interest, respectively; and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Notes.
Section 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder of a Note pursuant to Section 6.7 hereof, or a suit
by Holders of more than 10% in principal amount of the then outstanding Notes.
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ARTICLE 7
TRUSTEE
Section 7.1 Duties of Trustee.
(a) 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 its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
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58
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders of Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
Section 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may
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otherwise deal with the Company or any Affiliate of the Company with the same
rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
Section 7.4 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or any other document in connection
with the sale of the Notes or pursuant to this Indenture other than its
certificate of authentication.
Section 7.5 Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is actually known by the Trustee, the Trustee
shall mail to Holders of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, the Non-Redemption Payment,
if any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
Section 7.6 Reports by Trustee to Holders of the Notes. Within 60
days after each May 15 beginning with the May 15 following the date of this
Indenture, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed. The Company shall promptly notify the
Trustee when the Notes are listed on any stock exchange.
Section 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its
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services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless
against, any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.7) and defending itself against
any claim (whether asserted by the Company or any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. The Company need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
All payments and reimbursements under this Section shall be made
with interest at the rate per annum borne by the Notes. As security for the
performance of the obligations of the Company under this Section, the Trustee
shall have a first lien on any property or funds held by the Trustee under this
Indenture, except that held in trust to pay principal and interest on particular
Notes. The Company's payment obligations pursuant to this Section and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Company's obligations pursuant to Article 8 or otherwise and
the termination of this Indenture; provided, however, that such lien shall
survive only for so long as the Trustee shall hold any property or funds
hereunder. The Trustee's right to receive payment of any amounts due under this
Section shall not be subordinate to any other liability or indebtedness of the
Company (even though the Notes may be subordinate to such other liability or
indebtedness).
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(7) or (8) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 7.8 Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
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majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its
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corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification. There shall at all times
be a Trustee hereunder that is a corporation organized and doing business under
the laws of the United States of America or of any state thereof, that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
Section 7.11 Preferential Collection of Claims Against Company. The
Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed
in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject
to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Section 8.2 Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.1 hereof of the option applicable to this Section 8.2,
the Company shall, subject to the satisfaction of the conditions set forth in
Section 8.4 hereof, be deemed to have been discharged from its obligations with
respect to all outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (i) the rights
of holders of such outstanding Notes to receive, solely from the trust fund
described in Section 8.5, payments in respect of the principal of, premium, if
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any, the Non-Redemption Payment, if any, and interest on such Notes when such
payments are due, (ii) the Company's obligations with respect to the Notes under
Article 2 and Section 4.2 hereof, (iii) the rights, powers, trust, duties and
immunities of the Trustee, and the Company's obligations in connection therewith
and (iv) this Article 8. Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.2 notwithstanding the prior
exercise of its option under Section 8.3 hereof.
Section 8.3 Covenant Defeasance. Upon the Company's exercise under
Section 8.1 hereof of the option applicable to this Section 8.3, the Company
shall, subject to the satisfaction of the conditions set forth in Section 8.4
hereof, be released from its obligations under the covenants contained in
Sections 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.15 and 4.16 and Article 5
hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.1
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.1 hereof of the option applicable to this Section 8.3, subject
to the satisfaction of the conditions set forth in Section 8.4 hereof, Sections
6.1(5) and 6.1(6) hereof shall not constitute Events of Default.
Section 8.4 Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.2 or
8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee or
Paying Agent, in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, the
Non-Redemption Payment, if any, and interest on such Notes on the stated date
for payment thereof or on the applicable redemption date, as the case may be, of
such
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principal or installment of principal of, premium, if any, the Non-Redemption
Payment, if any, or interest on the Notes;
(b) in the case of an election under Section 8.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) 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 of Counsel shall confirm that, the Holders of the Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Legal 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.1(7) and 6.1(8)
hereof are concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a Default under, this
Indenture or a default under the 12 1/8% Senior Indenture, the 11 1/4% Senior
Indenture, the Term Loan Agreement, the Revolving Credit Agreement or any other
material agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the
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intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
Section 8.5 Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 8.6 hereof, all money
and non-callable Government Securities (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, the Non-Redemption Payment, 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 cash or non-callable
Government Securities deposited pursuant to Section 8.4 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the Company's
request any money or non-callable Government Securities held by it as provided
in Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.6 Repayment to Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, the Non-Redemption Payment, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, the Non-Redemption Payment, if any, or interest
has become due and payable shall be paid to the Company on its request or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust
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money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in The New York Times and The Wall Street Journal (national
edition), 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
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 8.7 Reinstatement. If the Trustee or Paying Agent is unable
to apply any United States dollars or non-callable Government Securities in
accordance with Section 8.2 or 8.3 hereof, as the case may be, by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.2 or 8.3 hereof, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium, if any, the
Non-Redemption Payment, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1 Without Consent of Holders of Notes. Notwithstanding
Section 9.2 of this Indenture, the Company and the Trustee may amend or
supplement this Indenture or the Notes without the consent of any Holder of a
Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(c) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Note; or
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(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2 With Consent of Holders of Notes. The Company and the
Trustee may amend or supplement this Indenture (including Section 4.10 hereof)
and the Notes may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, the Non-Redemption Payment, if any, or interest
on the Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes). Without the consent of at least
75% in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for such Notes), no
waiver or amendment to this Indenture may make any change in the provisions of
Section 4.15 hereof that adversely affects the rights of any Holder of such
Notes.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.2 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
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After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter or waive any of the provisions with respect to the redemption
of the Notes except as provided above with respect to Sections 4.15 and 4.10
hereof;
(c) reduce the rate of or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of, premium, if any, the Non-Redemption Payment, if any, or interest
on the Notes (except a rescission of acceleration of the Notes by the Holders of
at least a majority in aggregate principal amount of the then outstanding Notes
and a waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or interest on the Notes;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in Section 6.4 or 6.7 hereof or in the
foregoing amendment and waiver provisions; or
(i) make any change in Article 10 hereof that adversely
affects any Holder.
Section 9.3 Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall be set forth in an amended or
supplemental Indenture that complies with the TIA as then in effect.
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Section 9.4 Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by the Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder of a Note or subsequent Holder of a Note may revoke the consent
as to its Note if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
Section 9.5 Notation on or Exchange of Notes. The Trustee may place
an appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Company in exchange for all Notes may issue and
the Trustee shall authenticate new Notes that reflect the amendment, supplement
or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.6 Trustee to Sign Amendments, Etc. The Trustee shall sign
any amended or supplemental indenture authorized pursuant to this Article 9 if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an amendment
or supplemental Indenture until the Board of Directors approves it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.
ARTICLE 10
SUBORDINATION
Section 10.1 Agreement to Subordinate. The Company agrees, and each
Holder by accepting a Note agrees, that the Obligations with respect to such
Note are subordinated in right of payment, to the extent and in the manner
provided in this Article, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt, including the 12 1/8% Senior Notes and the 11
1/4% Senior Notes (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt. Holders of Senior Debt need not prove reliance on
the subordination provisions hereof.
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Section 10.2 Certain Definitions.
"Designated Senior Debt" means (i) the Senior Term Debt, (ii) the
Senior Revolving Debt, (iii) the 12 1/8% Senior Notes and the 11 1/4% Senior
Notes and (iv) any other Senior Debt permitted hereunder the principal amount of
which is $25 million or more.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Senior Debt"means (i) all Senior Term Debt outstanding from time to
time, (ii) all Senior Revolving Debt outstanding from time to time, (iii) the
12 1/8% Senior Notes and the 11 1/4% Senior Notes, (iv) Hedging Obligations and
(v) any other Indebtedness that is permitted to be incurred by the Company
pursuant to this Indenture unless the instrument under which such Indebtedness
is incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes. "Senior Debt" shall include, without limitation,
interest on any of the Obligations described in the preceding clauses (i)
through (v) accruing after the filing of a petition by or against the Company
under any Bankruptcy Law, in accordance with and at the rate (including any rate
applicable upon any default or event of default) specified in the applicable
agreement under which such Obligations are created, whether or not the claim for
such interest is allowed as a claim after such filing in any proceeding under
such Bankruptcy Law. Notwithstanding anything to the contrary in the foregoing,
Senior Debt shall not include (x) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates, (y) any Indebtedness incurred for the purchase
of goods or materials or for services obtained in the ordinary course of
business (other than the Senior Revolving Debt) and (z) any Indebtedness that is
incurred in violation of this Indenture.
A distribution may consist of cash, securities or other property, by
set-off or otherwise. As used in this Indenture and the Notes, the term
"payment" of or with respect to Obligations relating to the Notes and similar
phrases include any payment (including by issuance of additional securities of
any kind), redemption, acquisition, deposit, segregation, retirement, sinking
fund payment and defeasance of or with respect to any Obligations relating to
the Notes.
Section 10.3 Liquidation; Dissolution; Bankruptcy. Upon any payment
or distribution to creditors of the Company in a liquidation or dissolution of
the Company or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property, in an assignment for
the benefit of creditors or any marshalling of the Company's assets and
liabilities:
(1) holders of Senior Debt shall be entitled to receive
payment in full in cash or Cash Equivalents of all outstanding Obligations
in respect of such Senior Debt before Holders shall be entitled to receive
any
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payment or distribution with respect to the Notes (except that Holders may
receive securities that are subordinated to at least the same extent as
the Notes to (a) Senior Debt and (b) any securities issued in exchange for
Senior Debt; provided that such securities paid or distributed to the
holders of the Notes are authorized by an order or decree giving effect,
and stating in such order or decree that effect is given, to the
subordination of the Notes to the Senior Debt and the provisions of this
clause, and made by a court of competent juris diction in a reorganization
proceeding under any applicable bankruptcy law); and
(2) until all Obligations with respect to Senior Debt
(as provided in subsection (1) above) are paid in full in cash or Cash
Equivalents, any payment or distribution to which Holders would be
entitled but for this Article shall be made to holders of Senior Debt
(except that Holders may receive securities that are subordinated to at
least the same extent as the Notes to (a) Senior Debt and (b) any
securities issued in exchange for Senior Debt; provided that such
securities paid or distributed to the holders of the Notes are authorized
by an order or decree giving effect, and stating in such order or decree
that effect is given to the subordination of the Notes to the Senior Debt
and the provisions of this clause, and made by a court of competent
jurisdiction in a reorganization proceeding under any applicable
bankruptcy law), as their interests may appear.
Section 10.4 Default on Designated Senior Debt. The Company may not
make any payment or distribution to the Trustee or any Holder in respect of
Obligations with respect to the Notes and may not acquire from the Trustee or
any Holder any Notes for cash, securities or other property (other than
securities that are subordinated to at least the same extent as the Notes to (a)
Senior Debt and (b) any Securities issued in exchange for Senior Debt; provided
that such securities paid or distributed to the holders of the Notes are
authorized by an order or decree giving effect, and stating in such order or
decree that effect is given, to the subordination of the Notes to the Senior
Debt and the provisions of this clause, and made by a court of competent
jurisdiction in a reorganization proceeding under any applicable Bankruptcy Law)
until all principal and other Obligations with respect to the Senior Debt have
been paid in full in cash or Cash Equivalents if:
(i) a default in the payment of any principal or other
Obligations with respect to Designated Senior Debt occurs and is
continuing; or
(ii) a default, other than a payment default, on
Designated Senior Debt occurs and is continuing that then permits holders
of the Designated Senior Debt to accelerate its maturity, and the Trustee
receives a written notice of the default from a Person who may give it
pursuant to Section 10.12 hereof. If the Trustee receives any such notice,
a subsequent
<PAGE>
72
notice received within 360 days thereafter shall not be effective for
purposes of this Section. Notwithstanding the foregoing, a notice of
default under this paragraph (ii) may only be given by the Representative
for the holders of Senior Debt under the Term Loan Agreement or the
Revolving Credit Agreement if Senior Debt is outstanding under the Term
Loan Agreement or the Revolving Credit Agreement (including obligations in
respect of letters of credit) at the time such notice is to be given. No
nonpayment default that existed or was continuing on the date of delivery
of any such notice to the Trustee shall be, or be made, the basis for a
subsequent notice unless such default shall have been cured or waived for
a period of not less than 180 days,
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.4(ii)
hereof, 179 days pass after notice is received if the maturity of any
Designated Senior Debt has not been accelerated, if this Article otherwise
permits the payment, distribution or acquisition at the time of such
payment, distribution or acquisition.
Section 10.5 Acceleration of Notes. If payment of the Notes is
accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Debt of the acceleration.
Section 10.6 When Distribution Must Be Paid Over. In the event that
the Trustee or any Holder receives any payment of or distribution with respect
to any Obligations with respect to the Notes at a time when such payment or
distribution is prohibited by this Article, such payment or distribution shall
be held by the Trustee or such Holder, for the benefit of, and shall be paid
forthwith over and delivered, upon written request, to, the holders of Senior
Debt as their interests may appear or their Representative under the indenture
or other agreement (if any) pursuant to which Senior Debt may have been issued,
as their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms in cash or Cash
Equivalents, after giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes
to perform only such obligations on the part of the Trustee as are specifically
set forth in this Article 10 and Section 6.2 hereof, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of
<PAGE>
73
Senior Debt, and shall not be liable to any such holders if the Trustee shall
pay over or distribute to or on behalf of Holders or the Company or any other
Person money or assets to which any holders of Senior Debt shall be entitled by
virtue of this Article 10, except if such payment is made as a result of the
willful misconduct or gross negligence of the Trustee or in violation of Section
10.12.
Section 10.7 Notice by Company. The Company shall promptly notify
the Trustee and the Paying Agent of any facts known to the Company that would
cause a payment of any Obligations with respect to the Notes to violate this
Article, but failure to give such notice shall not affect the subordination of
the Notes to the Senior Debt as provided in this Article.
Section 10.8 Subrogation. After all Senior Debt is paid in full in
cash or Cash Equivalents and until the Notes are paid in full, Holders shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Notes) to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the Holders have been applied to the payment of Senior Debt. A distribution made
under this Article to holders of Senior Debt that otherwise would have been made
to Holders is not, as between the Company and Holders, a payment by the Company
on the Notes.
Section 10.9 Relative Rights. This Article defines the relative
rights of Holders and holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders and creditors
of the Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Holder from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
Section 10.10 Subordination May Not be Impaired by Company. No right
of any holder of Senior Debt to enforce the subordination of the Obligations
with respect to the Notes shall be impaired by any act or failure to act by the
Company or any Holder or by the failure of the Company or any Holder to comply
with this Indenture.
<PAGE>
74
Section 10.11 Payment, Distribution or Notice to Representative.
Whenever a payment or distribution is to be made or a notice given to holders of
Senior Debt, the payment or distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets, securities or other
property of the Company referred to in this Article 10, the Trustee and the
Holders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior Debt
and other Indebtedness of the Company, the amount thereof payable thereon, the
amount or amounts paid or distributed thereon and the other facts pertinent
thereto or to this Article 10.
Section 10.12 Rights of Trustee and Paying Agent. Notwithstanding
the provisions of this Article 10 or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment or distribution by the Trustee, and the
Trustee and the Paying Agent (other than the Company and its Affiliates) may
continue to make payments on the Notes, unless the Trustee shall have received
at its Corporate Trust Office at least two Business Days prior to the date of
such payment written notice of facts that would cause the payment of any
Obligations with respect to the Notes to violate this Article. Only the Company
or a Representative may give the notice. Nothing in this Article 10 shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.7
hereof. Nothing contained in this Section 10.12 shall limit the right of the
holders of Senior Debt to recover payments as contemplated by this Article. Any
deposit of cash, property or securities by or on behalf of the Trustee or any
Paying Agent (whether or not in trust) for payment of Obligations with respect
to the Notes shall be subject to the provisions of this Article. The provisions
of this Article shall apply to each Paying Agent to the extent applicable to the
Trustee, mutatis mutandis.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any
Representative may do the same with like rights.
Section 10.13 Authorization to Effect Subordination. Each Holder of
a Note by the Holder's acceptance thereof authorizes and directs the Trustee on
the Holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article 10, and appoints the
Trustee the Holder's attorney-in-fact for any and all such purposes. If the
Trustee does not file a proper proof of claim or proof of debt in the form
required in any proceeding referred to in Section 6.9 hereof at least 30 days
before the expiration of the time to file such claim,
<PAGE>
75
the Representatives are hereby authorized to file an appropriate claim for and
on behalf of the Holders of the Notes.
Section 10.14 Amendments. The provisions of this Article 10,
Sections 6.1 and 6.2 hereof and all defined terms used herein and therein shall
not be amended or modified without the written consent of the holders of all
Senior Debt.
Section 10.15 Limited Waiver. Each Holder of the Notes by his
acceptance thereof agrees that the Representative of any Senior Debt, in its
discretion, without notice or demand and without affecting any rights of any
holder of Senior Debt under this Article 10, may foreclose any mortgage or deed
of trust covering interests in real property secured thereby, by judicial or
nonjudicial sale; and such Holder hereby waives any defense to the enforcement
by the Representative of any Senior Debt or by any holder of any Senior Debt
against such holder of this Article 10, after a judicial or nonjudicial sale or
other disposition of its interest in real property secured by such mortgage or
deed of trust; and such Holder expressly waives any defense or benefits that may
be derived from California Civil Code ss.ss. 2808, 2809, 2810, 2819, 2845, 2849
or 2850, or California Code of Civil Procedure ss.ss. 580a, 580d or 726, or
comparable provisions of the laws of any other jurisdiction or any similar
statute in effect in any other jurisdiction.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.
318(c), the imposed duties shall control.
Section 11.2 Notices. Any notice or communication by the Company or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company:
SFC New Holdings Inc.
520 Lake Cook Road, Suite 550
Deerfield, Illinois 60015
Telecopier No.: (847) 405-5310
Attention: Secretary
<PAGE>
76
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopier No.: (212) 757-3990
Attention: Mitchell S. Fishman, Esq.
If to the Trustee:
U.S. Trust Company of Texas, N.A.
114 West 47th Street
New York, NY 10036
Telecopier No.: (212) 852-1626
Attention: Corporate Trust Administration
The Company, or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.3 Communication by Holders of Notes with Other Holders of
Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
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77
Section 11.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 11.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall
include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
Section 11.6 Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Holders of Notes. The
Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.
Section 11.7 No Personal Liability of Directors, Officers, Employees
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by
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78
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
Section 11.8 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES.
Section 11.9 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Company or its Subsidiaries or of any other Person. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 11.10 Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors.
Section 11.11 Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 11.12 Counterpart Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
Section 11.13 Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
79
[Senior Subordinated Indenture - Signature Page]
Dated as of June 11, 1999 SFC New Holdings, Inc.
By: /s/ Sean M. Stack
------------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer and
Assistant Secretary
Dated as of June 11, 1999 U.S. Trust Company of Texas, N.A.
By: /s/ Cynthia Chaney
------------------------------------
Name: Cynthia Chaney
Title: Assistant Vice-President
<PAGE>
80
SCHEDULE 1
FIRST TIER SUBSIDIARIES
Metz Baking Company
Mother's Cake & Cookie Co.
Archway Cookies, LLC
Andre-Boudin Bakeries, Inc.
Pane Corporation (dba San Diego Bread Company)
Clear Lake Bakery, Inc.
<PAGE>
81
SCHEDULE 2
TRANSACTION LIENS
1. A lien in respect of the pledge by Specialty Foods Corporation of 100
shares of common stock of SFC Sub, Inc. securing Specialty Food
Corporation's obligations under the Term Loan Agreement (as defined in the
Indenture).
2. A lien in respect of the pledge by SFC New Holdings, Inc. of 100% of the
sole membership interest of MA Holdings, LLC securing SFC New Holdings,
Inc.'s obligations under the Term Loan Agreement (as defined in the
Indenture).
3. A lien in respect of the pledge by SFAC New Holdings, Inc. of 100 shares
of common stock, 225 shares of Series A Preferred Stock, 150 shares of
Series B Preferred Stock and 200 shares of Series C Preferred Stock of SFC
New Holdings, Inc. securing SFAC New Holdings, Inc.'s obligations under
the 13% Senior Secured Discount Debentures due 2009.
<PAGE>
82
SCHEDULE 3
SFC SALE ASSETS
1. Property owned by Archway Cookies, LLC (formerly Archway Cookies, Inc.),
consisting of:
(a) Property situated at 5351 West Dickman Road - Fort Custer Urban
Renewal Plat of Battle Creek Lot 63, except the easterly 10 feet
hereof.
(b) Property situated at 5451 West Dickman Road - Fort Custer Urban
Renewal Plat of Battle Creek Lots 84 and 85.
2. Property owned by Mother's Cake & Cookie Co., consisting of:
(a) Lot 1, Block 1, Standard Meat Company Addition to the City of Fort
Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 388-58, Page 846, Plat Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above-described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 696, Real
Property Records, Tarrant County, Texas.
(b) Lot 2, Block 1, Standard Meat Company Addition to the City of Fort
Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 388-114, Page 881, Plat Records, Tarrant County, Texas.
(c) Lot 1 and a portion of Lot 2, Block 1, Gulf States Subdivision to
the City of Forth Worth, Tarrant County, Texas, according to the
Plat recorded in Volume 388-66, Page 25, Plat Records, Tarrant
County, Texas, SAVE AND EXCEPT that portion of Lot 1 conveyed to the
City of Forth Worth by deed recorded in Volume 9016, Page 700, Real
Property Records, Tarrant County, Texas.
(d) 0.517 acres of land, more or less, situated in the A. McLemore
Survey, Abstract No. 1056, Tarrant County, Texas, and being the same
tract of land as described in deed to Standard Meat Company recorded
in Volume 6009, Page 423, Deed Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 692, Real
Property Records, Tarrant County, Texas.
(e) 0.48 acres of land, more or less, situated in the A. McLemore
Survey, Abstract No. 1056, Tarrant County, Texas, and being the same
tract of land as described in deed to Standard Meat Company recorded
in Volume 6927, Page 2119, Deed Records, Tarrant County, Texas,
<PAGE>
83
SAVE AND EXCEPT that portion of the above described tract conveyed
to the City of Fort Worth, by deed recorded in Volume 9016, Page
692, Real Property Records, Tarrant County, Texas
(f) Lot 6, Block 12, Riverside Addition, Third Filing, to the City of
Fort Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 204-A, Page 114, Plat Records, Tarrant County, Texas, SAVE
AND EXCEPT that portion of the above described tract conveyed to the
City of Fort Worth by deed recorded in Volume 9016, Page 682, Real
Property Records, Tarrant County, Texas.
(g) Lot 15, Block 12, Riverside Addition, Third Filing, to the City of
Fort Worth, Tarrant County, Texas, according to the Plat recorded in
Volume 204-A, Page 114, Plat Records, Tarrant County, Texas.
(h) A portion of Lots 1 and 2, Block 1, of Page Land Company's East Side
Addition to the City of Fort Worth, Tarrant County, Texas, according
to Plat recorded in Volume 204, Page 74, Plat Records, Tarrant
County, Texas, SAVE AND EXCEPT that portion of the above described
tract conveyed to the City of Fort Worth by deed recorded in Volume
9016, Page 682, Real Property Records, Tarrant County, Texas.
<PAGE>
EXHIBIT A
(Face of Note)
13 1/4% [Series A] [Series B] Senior Subordinated Notes Due 2003
No. $__________________
SFC NEW HOLDINGS, INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on August 15, 2003.
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
Dated:__________ SFC New Holdings, Inc.
By: ______________________________________
Name:
Title:
(SEAL)
By: ______________________________________
Name:
Title:
This is one of the Notes
referred to in the within-
mentioned Indenture:
U.S. Trust Company of Texas. N.A.,
as Trustee
By ______________________
Authorized Signatory
<PAGE>
(Back of Note)
13 1/4% [Series A] [Series B] Senior Subordinated Notes Due 2003
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.](1)
["THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE
144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
OR IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, OR PURSUANT TO ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL), (b) TO THE COMPANY, (c) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER
THE SECURITIES ACT OR (d) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (2) IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED
- ----------
(1) This paragraph should be included only if the Note is issued in global
form.
A-2
<PAGE>
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE."]*
* This legend should be included only if the Note is a Transfer Restricted
Note.
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest. SFC New Holdings, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate of 13 1/4% per annum from and including the date hereof until maturity and
promises to pay Liquidated Damages (as defined below) in accordance with the
following paragraphs. On each Interest Payment Date (as defined below), the
Company shall, in lieu of a cash payment of $5.00 per $1,000 principal amount of
Notes (the "PIK Interest") due on the Notes on any Interest Payment Date up to
and including August 15, 2003, deliver to the Trustee or an authenticating agent
for authentication for original issue and delivery additional Notes ("PIK
Notes"), in an aggregate principal amount equal to the PIK Interest payable on
each such Interest Payment Date. For purposes of determining the principal
amount of PIK Notes to be issued to a Holder, the Trustee shall aggregate the
amount of PIK Interest payable on all Notes registered in the name of the
Holder. Each issuance of PIK Notes shall be made pro rata with respect to the
outstanding Notes, provided that PIK Notes shall be issuable only in
denominations of $1,000 or integral multiples thereof and the Company shall pay
in cash to each Holder the difference (if any) between the amount of interest
payable to such Holder on such Interest Payment Date and the face value of PIK
Notes issued to such Holder by the Company pursuant to this Section 2.2(e). PIK
Notes shall bear interest from the Interest Payment Date with respect to which
they are issued. Each PIK Note shall be dated the date of such Interest Payment
Date and shall be in a principal amount equal the PIK Interest due but not paid
on such Interest Payment Date, and with a maturity date, interest rate, and
other terms of, and generally in the form of, this Note. The issuance of such
PIK Note shall constitute full payment of such interest. Each issuance of PIK
Notes shall be made pro rata with respect to the outstanding Notes, provided,
that PIK Notes shall be issuable only in denominations of $1,000 or integral
multiples thereof and the Company shall pay in cash to each Holder the
difference (if any) between the amount of interest payable to such Holder on
such Interest Payment Date and the face value of PIK Notes issued to such Holder
by the Company pursuant to Section 2.2(e) of the Indenture. PIK Notes shall bear
interest from the interest payment date with respect to which they are issued.
The term "Notes" shall include the PIK Notes that may be issued under the
Indenture.
The Company shall pay interest and Liquidated Damages semi-annually
on February 15 and August 15 of each year, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
Interest on
A-3
<PAGE>
the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from and including June 11, 1999; provided
that if there is no existing Default in the payment of interest, and if this
Note is authenticated between a record date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be August 15, 1999.
The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated June 11, 1999, among the Company and the
Holders of the Notes named therein (the "Registration Rights Agreement")
pursuant to which the Company has agreed (a) to file with the SEC promptly (but
in any event on or prior to 120 days) after the Original Issue Date, the
Exchange Offer Registration Statement on the appropriate form relating to the
Registered Exchange Offer for the Notes under the Securities Act, and (b) to
cause such Exchange Offer Registration Statement to become effective within 180
days after the Original Issue Date. Upon the occurrence of certain Registration
Defaults (as defined in the Registration Rights Agreement), the Company will pay
or cause to be paid, in addition to amounts otherwise due under the Indenture
and the Exchange Securities, as liquidated damages, and not as a penalty
("Liquidated Damages"), to each holder of Registrable Securities (as defined in
the Registration Rights Agreement), during the first 90-day period immediately
following the occurrence of such Registration Default an amount equal to $.05
per week per $1,000 principal amount of Registrable Securities held by such
holder. The amount of the liquidated damages thereafter will increase each week
by an additional $.05 per $1,000 principal amount of Registrable Securities, up
to a maximum amount of liquidated damages of $0.30 per week per $1,000 principal
amount of Registrable Securities, until all Registration Defaults are cured. All
accrued Liquidated Damages will be paid in the same manner as interest payments
on the Notes on semiannual damages payment dates that correspond to interest
payment dates for the Debentures and upon redemption dates, Change of Control
Payment Dates and Asset Sale payment dates. Following the cure of a Registration
Default, the accrual of Liquidated Damages will cease.
The Company shall pay interest (including post-petition interest in
any proceeding under Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under Bankruptcy Law) on overdue installments of interest, Liquidated
Damages and the Non-Redemption Payment in cash (without regard to any applicable
grace periods) from time to time on demand at the same rate to the extent
lawful. Interest and Liquidated Damages will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest and Liquidated
Damages on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the February 1 or August
1
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<PAGE>
next preceding the Interest Payment Date, even if such Notes are cancelled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable both as to principal and interest at the office or agency of the
Company maintained for such purpose within or without the City and State of New
York, or, at the option of the Company, payment of interest may be made by check
mailed to the Holders at their addresses set forth in the register of Holders.
3. Paying Agent and Registrar. Initially, U.S. Trust Company of
Texas, N.A., the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture, dated
as of June 11, 1999 (the "Indenture"), between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. [The Notes are unsecured obligations of the Company limited to
$197,646,000 in aggregate principal amount.]** [The Notes are unsecured
obligations of the Company limited to $200 million in aggregate principal
amount.]***
** This language should be included only for the Series A Notes.
*** This language should be included only for the Series B Notes. The
aggregate amount of Series B Notes will be either $200 million or, if less
than all of the holders of the Untendered SFC Notes exchange such notes in
the Additional Exchange Offer, the excess of (a) $200 million over (b) the
aggregate principal amount of Untendered SFC Notes.
5. Optional Redemption. The Company shall have the option to redeem
the Notes, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on August
15 of the years indicated below:
Year Percentage
---- ----------
1998.............................. 103.786%
1999.............................. 101.893%
2000 and thereafter............... 100.000%
=======
If the Company fails to redeem the Notes, in whole, on or before
November 15, 2002 (the "Non-Redemption Event"), the Company shall direct the
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Trustee to pay the Non-Redemption Payment to the Person in whose name such Note
was registered at the close of business on November 15, 2002. If the Company is
required to pay the Non-Redemption Payment, on November 15, 2002 the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the Non-Redemption Payment. On November 16, 2002, the Company (or the Trustee in
the name of and at the expense of the Company) shall mail or cause to be mailed
to Holders the Non-Redemption Payment.
6. Mandatory Redemption. Except as set forth in paragraph 7 below,
or pursuant to Section 4.15 of the Indenture, the Company is not required to
make mandatory redemption or sinking fund payments with respect to the Notes.
7. Redemption or Repurchase at Option of Holder.
(a) If there is a Change of Control, each Holder of Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
equal to 101% of the aggregate principal amount thereof plus the accrued and
unpaid interest, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder stating: (1) that the Change of Control Offer is
being made pursuant to Section 4.15 of the Indenture and that all Notes tendered
shall be accepted for payment; (2) the purchase price and the purchase date,
which shall be no later than 30 Business Days from the date such notice is
mailed (the "Change of Control Payment Date"); (3) that any Note not tendered
shall continue to accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; (5) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer shall be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date; (6) that Holders shall be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of Holder, the principal amount of Notes delivered for purchase, and a statement
that such Holder is withdrawing his election to have such Notes purchased; and
(7) that Holders whose Notes are being purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof.
(b) If the Company or a Subsidiary consummates any Asset Sale
(other than a Principal Business Asset Sale), within five days of each date on
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which the aggregate amount of Excess Proceeds exceeds $15 million, the Company
shall commence an offer to all Holders of Notes (an "Asset Sale Offer") pursuant
to Section 3.9 of the Indenture to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds at an offer price in cash
in an amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date fixed for the closing of such offer in
accordance with the procedures set forth in Section 3.9 of the Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. Subordination. The Notes are subordinated to Senior Debt, whether
outstanding on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. "Senior Debt" means (i) all Senior Term Debt outstanding
from time to time, (ii) all Senior Revolving Debt outstanding from time to time,
(iii) the Company's 12 1/8% Series A Senior Notes due 2002 and the Company's
12 1/8% Series B Senior Notes due 2002, (iv) the Company's 11 1/4% Series A
Senior Notes due 2001 and the Company's 11 1/4% Series B Senior Notes due 2001,
(v) Hedging Obligations and (vi) any other indebtedness that is Permitted to be
incurred by the Company pursuant to the Indenture unless the instrument under
which such indebtedness is incurred expressly provides that it is on a parity
with or subordinated in right of payment to the Notes. "Senior Debt" shall
include, without limitation, interest on any of the obligations described in the
preceding clauses (i) through (vi) accruing after the filing of a petition by or
against the Company under any Bankruptcy Law, in accordance with and at the rate
(including any rate applicable upon any default or event of default) specified
in the applicable agreement under which such obligations are created, whether or
not the claim for such interest is allowed as a claim after such filing in any
proceeding under such Bankruptcy Law. Notwithstanding anything to the contrary
in the foregoing, Senior Debt shall not include (x) any indebtedness of the
Company to any of its Subsidiaries or other Affiliates, (y) any indebtedness
incurred for the purchase of goods or materials or for services obtained in the
ordinary course of business (other than the Senior Revolving Debt) and (z) any
indebtedness that is incurred in violation of the Indenture. To the extent
provided in the Indenture, Senior Debt must be paid before the Notes may be
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<PAGE>
paid. The Company agrees, and each Holder by accepting a Note agrees, to the
Subordination and authorizes the Trustee to give it effect.
10. Denominations, Transfer, Exchange. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
11. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
12. Amendments Supplement and Waivers. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act. Without the
consent of the Holders of at least 75% in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for such Notes), no waiver or amendment to the Indenture may make
any change in the provisions of Section 4.15 of the Indenture that adversely
affects the rights of any Holder of such Notes.
13. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes, whether or not prohibited by the subordination provisions of the
Indenture; (ii) default in payment when due of principal of, or premium, if any,
or the Non-Redemption Payment, if any, on the Notes when the same becomes due
and payable at maturity, upon redemption (including in connection with an offer
to purchase) or otherwise,
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<PAGE>
whether or not prohibited by the subordination provisions of the Indenture;
(iii) failure by the Company to comply with the provisions described under
Sections 4.10 or 5.1 of the Indenture or failure by the Company for 15 days to
comply with the provisions described under Sections 4.7 or 4.9 of the Indenture;
(iv) failure by the Company for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding to comply with any other agreements in the Indenture or the Notes;
(v) default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness
or guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay at final maturity principal of such
Indebtedness within the grace period provided in such Indebtedness (a "Final
Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express final maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other Indebtedness under
which there has been a Final Payment Default or the maturity of which has been
so accelerated, aggregates $10 million or more, and such Final Payment Default
or acceleration shall not have been cured or rescinded within 10 days after the
occurrence thereof, or (2) the principal amount of such Indebtedness, together
with the principal amount of any other Indebtedness under which there has been a
Final Payment Default or the maturity of which has been so accelerated,
aggregates $50 million or more or (3) a Final Payment Default or acceleration
shall have occurred with respect to the Senior Term Debt, the Senior Revolving
Debt, the 12 1/8% Senior Notes or the 11 1/4% Senior Notes; (vi) failure by the
Company, any of its Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary, to pay any final
judgment or judgments (other than any judgment to the extent a reputable
insurance company has accepted liability) aggregating in excess of $10 million,
which judgments remain unstayed or undischarged for a period of 60 days; and
(vii) certain events of bankruptcy or insolvency with respect to the Company,
any of its Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. So long as any Designated Senior Debt is
outstanding, such declaration shall not become effective until the earlier of
(x) the day which is five Business Days after the receipt by representatives of
Designated Senior Debt of such written notice of acceleration (which notice may
only be given during the continuation of an Event of Default) or (y) the date of
acceleration of any Designated Senior Debt. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, any Significant Subsidiary or any group
of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in
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<PAGE>
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. If an Event of Default
occurs by reason of any willful action (or inaction) taken (or not taken) by or
on behalf of the Company with the intention of avoiding payment of the premium
that the Company would have had to pay if the Company then had elected to redeem
any Notes pursuant to the optional redemption provisions of the Indenture, an
equivalent premium shall also become and be immediately due and payable to the
extent permitted by law. The Holders of a majority in aggregate principal amount
of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and
its consequences under the Indenture (including annulling a declaration of
acceleration of maturity) except a continuing Default or Event of Default in the
payment of interest on, or the principal of, such Notes. The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
16. Authentication. This Note shall not be valid until authenticated
by the manual signature of an authorized signatory of the Trustee or an
authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
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<PAGE>
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. Additional Rights of Holders of Transfer Restricted Notes. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transfer Restricted Notes shall have all the rights set forth in the
Registration Rights Agreement referred to above.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or Registration Rights Agreement.
Requests may be made to:
SFC New Holdings Inc.
520 Lake Cook Road, Suite 550
Deerfield, Illinois 60015
Attention: Secretary
A-11
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to __________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: _______________
Your Signature: _____________________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
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<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $______________
Date:_________________ Your Signature: ____________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:_____________________
Signature Guarantee.
A-13
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE(2)
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Amount of Principal Amount
decrease in Amount of increase of this Global Signature of
Principal in Principal Note following authorized officer
Amount of this Amount of this such decrease (or of Trustee or
Date of Exchange Global Note Global Note increase) Note Custodian
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(2) This should be included only if the Note is issued in global form.
A-14
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: 13 1/4% [Series A] [Series B] Senior Subordinated Notes due 2003 of SFC
New Holdings, Inc.
This Certificate relates to $____________ principal amount of Notes
held in * ____________ book-entry or * ___________ definitive form by
_________________________________________________________ (the "Transferor").
The Transferor*:
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depository a Note or
Notes in definitive, registered form of authorized denominations in an aggregate
principal amount equal to its beneficial interest in such Global Note (or the
portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and as provided in Section 2.6
of such Indenture, the transfer of this Note does not require registration under
the Securities Act (as defined below) because:*
|_| Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
|_| Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.6(a)(ii)(B), Section 2.6(b)(A) or Section 2.6(d)(i)(B) of the Indenture) or
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
- ----------
* Check applicable box.
<PAGE>
|_| Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
|_| Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
-----------------------------------------
[INSERT NAME OF TRANSFEROR]
By:______________________________________
Date:_____________________________
- ----------
* Check applicable box.
================================================================================
B-2
Exhibit 10.2
FIRST AMENDED AND RESTATED SFC HOLDINGS GROUP
TAX SHARING AGREEMENT
FIRST AMENDED AND RESTATED TAX SHARING AGREEMENT, made as of June
11, 1999, by and among Specialty Foods Acquisition Corporation ("SFAC"), SFC New
Holdings. Inc. ("SFC Holdings") and those corporations that have executed this
Agreement (all of which are direct or indirect domestic subsidiaries of SFC
Holdings and would be includible in a consolidated Federal income tax return of
the affiliated group (within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as may be amended from time to time (the "Code")) of which SFC
Holdings would be the common parent corporation if it were not a member of
another affiliated group (hereinafter, the "SFC Holdings Group") for the fiscal
year ended December 31, 1999, or portion thereof, and such other parties as may
become members of the SFC Holdings Group in subsequent fiscal years for which a
consolidated Federal income tax return with SFAC as the common parent
corporation is filed which includes the SFC Holdings Group, and who execute this
Agreement (hereinafter, sometimes collectively referred to as the
"Subsidiaries"). SFAC, SFC Holdings, the Subsidiaries and the subsidiaries of
SFAC (other than SFC Holdings and the Subsidiaries) that are includible
corporations in the affiliated group of corporations of which SFAC is the common
parent (all within the meaning attributed to such terms in Section 1504 of the
Code) are hereinafter referred to as the "Group."
<PAGE>
2
WHEREAS, SFAC, Specialty Foods Corporation ("SFC") and their
subsidiaries contemplate a proposed corporate and financial restructuring
transaction (the "Transaction");
WHEREAS, in connection with the Transaction, SFC and SFC Holdings
have entered into an assignment and assumption agreement dated as of June 11,
1999 whereby SFC Holdings has assumed the rights and liabilities of SFC under
the tax sharing agreement dated as of August 16, 1993 between SFC and each of
its subsidiaries;
WHEREAS, simultaneously herewith, SFC Holdings is entering into an
amended and restated tax sharing agreement with SFAC, dated as of June 11, 1999,
pursuant to which SFC Holdings shall make payments to SFAC in respect of the
consolidated Federal income tax and certain state and local tax liabilities of
the SFC Holdings Group and SFAC shall make payment with respect to such taxes to
the relevant taxing authorities;
WHEREAS, simultaneously herewith, SFC, SFC Sub, Inc. and SFAC New
Holdings, Inc. (together, the "SFC Group") are entering into a tax sharing
agreement with SFAC, dated as of June 11, 1999, pursuant to which SFC shall make
payments to SFAC in respect of the consolidated Federal income tax and certain
state and local tax liabilities of the SFC Group and SFAC shall make payment
with respect to such taxes to the relevant taxing authorities;
<PAGE>
3
WHEREAS, SFC Holdings and the Subsidiaries wish to provide for
payment of the consolidated Federal income tax and certain state and local tax
liabilities of the SFC Holdings Group; and
WHEREAS, SFC Holdings and the Subsidiaries wish to provide for the
contribution to such payment by the various members of the SFC Holdings Group to
which such liability may be attributable in whole or in part.
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and promises herein contained, SFC Holdings and the Subsidiaries agree
as follows:
1. Allocation and Payment of Tax
Liability of Members of SFC Holdings Group.
1.1 Each Subsidiary agrees to join with SFC Holdings and SFAC in any
consolidated Federal income tax return ("Consolidated Return") for any taxable
year for which SFAC files a Consolidated Return on behalf of the SFC Holdings
Group that includes the SFC Holdings Group and such Subsidiary.
1.2 Each Subsidiary hereby designates each of SFAC and SFC Holdings
as its agent, as long as such Subsidiary is a member of the SFC Holdings Group
and the Group, for the purpose of taking any and all action necessary or
incidental to the filing of Consolidated Returns. Each Subsidiary agrees to
furnish SFAC and SFC Holdings with any and all information requested by SFAC or
SFC Holdings in order to carry out the provisions of this Agreement; to
cooperate with SFAC and SFC Holdings in filing any return or consent
contemplated by this
<PAGE>
4
Agreement; to take such action as SFAC or SFC Holdings may request, including,
but not limited to, the filing of all elections and the filing of requests for
the extension of time within which to file tax returns; and to cooperate in
connection with any refund claim.
1.3 For the fiscal year ended December 31, 1999, and for each
subsequent fiscal year for which this Agreement may remain in effect, each of
the Subsidiaries listed at the end of this Section 1.3 (as defined below, the
"Major Subsidiaries") shall be required to pay to SFC Holdings (in the manner
provided in Paragraph 1.4 hereof), as a payment in lieu of the share of such
Major Subsidiary and those Subsidiaries which would be includible in a
consolidated Federal income tax return of the affiliated group (within the
meaning of Section 1504 of the Code) of which such Major Subsidiary would be the
common parent if it were not the member of another affiliated group (the
Subsidiaries of each such Major Subsidiary are hereinafter referred to as the
"Minor Subsidiaries") of the consolidated Federal income tax liability and
alternative minimum tax liability of the Group, an amount equal to the Federal
income tax liability or alternative minimum tax liability that would have been
payable by such Major Subsidiary and its Minor Subsidiaries for such year if
such Major Subsidiary had filed a separate consolidated income tax return for
such year and all prior years ending after the date hereof for itself and its
Minor Subsidiaries. In computing such tax liability, each such Major Subsidiary
and its Minor Subsidiaries shall be entitled to take into account deductions and
credits attributable to the carryover or carryback of any losses or credits of
each such
<PAGE>
5
Subsidiary, but only after taking into account any limitations actually imposed
on the use of such losses and credits (including, but not limited to,
limitations imposed pursuant to Section 172, 382, 383, 384, 904, 1212 or 1502 of
the Code or the regulations thereunder). Payments shall be required to be made
in each fiscal year pursuant to this Section 1 without regard to the actual
consolidated Federal income tax liability, if any, of the SFC Holdings Group or
the Group for such year. The Subsidiaries referred to in this Section 1.3 are:
Specialty Foods Finance Corporation
GWI Holdings, Inc.
MA Holdings, LLC
SFC-SPV Corp.
(collectively, the "Major Subsidiaries"). Each of the Minor Subsidiaries shall
be severally liable to its respective Major Subsidiary for the amounts payable
by its Major Subsidiary pursuant hereto.
1.4 Each of the Major Subsidiaries shall make payment to SFC
Holdings of any amount allocated to it pursuant to this Section 1.4, and SFC
Holdings shall have sole responsibility for making any required payments to SFAC
with respect to the consolidated Federal income tax liability of the SFC
Holdings Group for each fiscal year. For each quarter of each fiscal year to
which this agreement applies, each Major Subsidiary, as long as such Subsidiary
is a member of the SFC Holdings Group, shall make payment to SFC Holdings of an
amount equal to the amount of the installment payment of estimated Federal
income tax and alternative minimum tax that
<PAGE>
6
such Subsidiary would have been required to pay to the Internal Revenue Service
("IRS") for such quarter under Section 6655 of the Code if such Subsidiary were
filing a separate consolidated income tax return for such taxable year for
itself and its Minor Subsidiaries, no later than the fifth day prior to the date
an estimated Federal income tax payment is due. The amount of any overpayment or
underpayment pursuant to this Section 1.4 shall be credited against or added to,
as the case may be, the amount otherwise required to be paid for the fiscal
quarter within which the amount of such overpayment or underpayment first
becomes reasonably ascertainable; provided, however, that, upon written request
(including supporting schedules) of any Major Subsidiary, made after the close
of any fiscal year but within the period described in Section 6425(a)(1) of the
Code, SFC Holdings shall repay to such Major Subsidiary, within the period
described in Section 6425(b)(1) of the Code, the amount of any net remaining
overpayment of consolidated tax liability made by such Major Subsidiary for such
year.
2. Payment for Tax Benefits of Members.
From and after the date hereof, if any Major Subsidiary would be
entitled to a refund of Federal income taxes previously paid in any prior fiscal
year, computed on a separate consolidated return basis (in the manner described
in Section 1 hereof), as a result of any losses, deductions or credits claimed
by such Major Subsidiary on account of itself or its Minor Subsidiaries for any
fiscal year for which this Agreement may be in effect (any such entitlement to a
refund being referred to herein as a "Separate Return Tax Benefit"), whether by
reason of a
<PAGE>
7
carryback or carryover of a net operating loss, or a net capital loss or tax
credit, or otherwise, then, upon written request (including supporting
schedules) of such Major Subsidiary, made within the period described in Section
6411(a) of the Code, SFC Holdings shall pay the amount of such Separate Return
Tax Benefit to such Major Subsidiary, within the period described in Section
6411(b) of the Code. The amount of any payment required to be made to any such
Major Subsidiary pursuant to this Section 2 shall be reduced by any amount
previously paid to such Subsidiary with respect to such losses, deductions or
credits pursuant to Section 3 hereof.
3. Adjustments.
Any adjustment of income, deduction or credit of any party to this
Agreement that results after the fiscal year in question by reason of any
carryback, amended return, claim for refund or audit shall be given effect by
redetermining amounts payable and reimbursable for such fiscal year hereunder as
if such adjustment had been part of the original determination hereunder, with
interest payable in the amounts provided in Section 6611 of the Code. Any
increases in the consolidated Federal income tax liability of the SFC Holdings
Group, and any penalties and interest imposed with respect to any Consolidated
Return filed on behalf of the SFC Holdings Group, shall be the sole
responsibility of SFC Holdings and SFAC. Any refunds of consolidated income
taxes previously paid shall be the sole property of SFC Holdings or SFAC, as the
case may be.
<PAGE>
8
4. State Taxes.
4.1 The Subsidiaries agree at the request of SFC Holdings or SFAC to
join with SFC Holdings or SFAC or any direct or indirect subsidiary of SFAC in
any combined or consolidated state or local income or franchise tax return
("Combined Return") for any taxable year for which SFC Holdings, SFAC or any
direct or indirect subsidiary of SFAC files a Combined Return that may include
the Subsidiaries.
4.2 If, at any time from and after the date of this Agreement, the
liability for any state or local income or franchise tax of (i) the Subsidiaries
and (ii) SFC Holdings or SFAC or any other direct or indirect subsidiary of SFAC
is determined on a consolidated or combined basis, this Agreement shall be
applied in like manner to all matters relating to such taxes, after taking into
consideration the extent to which the Subsidiaries have been included in any
Combined Return that relates to such taxes.
5. Adjudications.
In any audit, conference, or other proceeding with the IRS or the
relevant state or local authorities, or in any judicial proceedings concerning
the determination of the Federal income tax liability (including alternative
minimum tax liability) of the Group or the SFC Holdings Group (or any of the
Subsidiaries) or the state or local income tax liability of any combined or
consolidated group including SFC Holdings, SFAC or any direct or indirect
subsidiary of SFAC and any such
<PAGE>
9
Subsidiary shall be represented by persons selected by SFAC. The settlement and
terms of settlement of any issues relating to such proceeding shall be in the
sole discretion of SFAC, and each Subsidiary hereby appoints SFAC as its agent
for the purposes of proposing and concluding any such settlement.
6. Legal and Accounting Fees.
Any fees or expenses for legal, accounting or other professional
services rendered in connection with (i) the preparation of a consolidated
Federal or combined state or local income tax return for the Group (to the
extent that such services reasonably pertain to the tax liability of the
Subsidiaries), (ii) the application of the provisions of this Agreement or (iii)
the conduct of any audit, conference or proceeding of the IRS or relevant state
or local authorities or judicial proceedings relevant to any determination
required to be made with respect to the SFC Holdings Group shall be allocated
among SFC Holdings and each of the Subsidiaries in the manner resulting in a
reasonable approximation of the actual amount of such fees or expenses hereunder
reasonably related to, and for the benefit of, each such Subsidiary, rather than
to or for other members of the SFC Holdings Group.
7. Entire Agreement; Assignment.
This Agreement embodies the entire understanding between the parties
relating to its subject matter and supersedes and terminates all prior
agreements and understandings among the parties with respect to such subject
matter.
<PAGE>
10
8. Termination.
(a) This Agreement may be terminated at any time upon mutual agreement of
the parties hereto; provided, however, that such termination shall not relieve
SFC Holdings of the obligations to make payments to any Subsidiary pursuant to
Section 2 hereof for any Separate Return Tax Benefit to which such Subsidiary
would have been entitled (if this Agreement had remained in effect) as a result
of any losses, deductions or credits taken by such Subsidiary for any fiscal
year for which this Agreement was in effect, nor will it relieve SFC Holdings or
the Subsidiaries of any obligations pursuant to Sections 1.4, 3 and 4 hereof.
(b) This Agreement may be terminated at any time as to any Subsidiary or
group of Subsidiaries upon mutual agreement of the parties hereto. In the event
of the termination of this Agreement with respect to any Subsidiary or group of
Subsidiaries as a result of a sale of the Stock thereof or as a result of any
other transaction which has the effect of removing such Subsidiary or group of
Subsidiaries from the SFC Holdings Group, SFC Holdings shall have the full power
and authority to determine the continuing contractual obligations, if any, that
such Subsidiary or group of Subsidiaries shall have, as between such Subsidiary
or group of Subsidiaries and SFAC, SFC Holdings and the remainder of the SFC
Holdings Group, after such termination.
<PAGE>
11
9. Effective Date.
This Agreement shall be effective for the taxable year of the SFC
Holdings Group ended December 31, 1999, and for all taxable years thereafter.
10. Captions.
All section captions contained in this Agreement are for convenience
only and shall not be deemed a part of this Agreement.
11. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
12. Governing Law.
This Agreement shall be governed by the laws applicable to contracts
entered into and to be fully performed within the State of New York by residents
thereof.
13. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
14. New Members.
Each of the parties to this Agreement recognize that, from time to
time, new members may be added to the SFC Holdings Group. Each of the parties
agree
<PAGE>
12
that provided such new member is an includible corporation in the SFC Holdings
Group, as provided under the Code, such new member may be added to this
Agreement without the express written consent of the other members.
15. Specialty Foods Finance Corporation.
Each of the parties hereto agrees that SFC Holdings may, at its
discretion, release Specialty Foods Finance Corporation from any or all of its
obligations under this Agreement.
16. Notices.
Any payment, notice or communication required or permitted to be
given under this Agreement shall be in writing (including telegraphic, telecopy,
telex, facsimile transmission or cable communication) and mailed, telegraphed,
telecopied, telexed, faxed, cabled or delivered to the parties at the locations
indicated on Schedule A hereto or to such other address as a party shall furnish
in writing in a notice similarly given to the other parties. All such notices
and communications shall be deemed given (i) if mailed, four days after the date
of mailing, or (ii) when delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback, sent by facsimile transmission, or
delivered to the cable company, respectively.
<PAGE>
13
17. No Third-Party Beneficiaries.
Nothing in this document shall be deemed to create any right in any
person not a party hereto and this instrument shall not be construed in any
respect to be a contract in whole or in part for the benefit of any third party
except as aforesaid.
IN WITNESS WHEREOF, SFC Holdings and the Subsidiaries have executed
this Agreement as of the day and year first above written.
SPECIALTY FOODS ACQUISITION CORPORATION
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
SFC NEW HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
SPECIALTY FOODS FINANCE CORPORATION
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
<PAGE>
14
GWI HOLDINGS, INC.
By:
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
MOTHER'S CAKE & COOKIE CO.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
GWI, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
METZ BAKING COMPANY (Iowa)
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President & Assistant Secretary
PACIFIC COAST BAKING CO., INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
<PAGE>
15
SFFB HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President & Assistant Secretary
BELSEA HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
SANFRAN FB, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
GSFBC HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
OFBC HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
<PAGE>
16
SEM HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
ANDRE- BOUDIN BAKERIES, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
SANFRAN SB HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
SAN FRANCISCO BAY AREA EQUIPMENT AND SUPPLY
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
SAN FRANCISCO BAKING CULTURES
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
<PAGE>
17
LANG HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
GBC HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
BOUDIN INTERNATIONAL, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
LAURA TODD OF AMERICA
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
STEVE'S DRAYAGE
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
<PAGE>
18
PBI HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
SFC-SPV CORP.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
ARCHWAY COOKIES, LLC
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President & Assistant Secretary
THE CLEAR LAKE BAKERY, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
METZ BAKING COMPANY (Delaware)
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President & Assistant Secretary
<PAGE>
19
BOUDIN EXECUTIVE SOURDOUGH, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President & Assistant Secretary
GELSI, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
PANE CORPORATION
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
A. TROCANO CONSTRUCTION, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
LARRABURU BAKERY
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
<PAGE>
20
SFSC, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
FISHERMAN'S WHARF SOURDOUGH FRENCH BREAD BAKERIES, INC.
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
GROCER'S BAKING COMPANY
By: /s/ Sean M. Stack
--------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant Secretary
<PAGE>
SCHEDULE A
Specialty Foods Acquisition Corporation
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
SFC New Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
Specialty Foods Finance Corporation
1310 Fort Crook Road North
Bellevue, NE 68005
GWI Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
Mother's Cake & Cookie Co.
810 81st Avenue
Oakland, California 94621
GWI, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
<PAGE>
2
Metz Baking Company (Iowa)
1014 Nebraska Street
Sioux City, IA 51102
Pacific Coast Baking Co., Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
SFFB Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
Belsea Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
SanFran FB, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
GSFBC Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
<PAGE>
3
OFBC Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
SEM Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
Andre-Boudin Bakeries, Inc.
132 Hawthorne Street
San Francisco, California 94107
SanFran SB Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
San Francisco Bay Area Equipment and Supply
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
San Francisco Baking Cultures
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
<PAGE>
4
Lang Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
GBC Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
Boudin International, Inc.
7305 W. 15th Street
Forest Park, Illinois 60130
Laura Todd of America
132 Hawthorne Street
San Francisco, California 94107
Steve's Drayage
132 Hawthorne Street
San Francisco, California 94107
PBI Holdings, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
SFC-SPV Corp.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
<PAGE>
5
Archway Cookies, LLC
5451 W. Dickman Rd.
Battle Creek, MI 49015
The Clear Lake Bakery Inc.
20 N. 4th Street
Clear Lake, IA 50428
Metz Baking Company (Delaware)
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
Boudin Executive Sourdough, Inc.
132 Hawthorne Street
San Francisco, California 94107
Gelsi, Inc.
132 Hawthorne Street
San Francisco, California 94107
Pane Corporation
132 Hawthorne Street
San Francisco, California 94107
A. Trocano Construction, Inc.
132 Hawthorne Street
San Francisco, California 94107
<PAGE>
6
Larraburu Bakery
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
SFSC, Inc.
520 Lake Cook Road
Suite 550
Deerfield, IL 60015
Fisherman's Wharf Sourdough French Bread Bakeries, Inc.
132 Hawthorne Street
San Francisco, California 94107
Grocer's Baking Company
210 28th Street, S.E.
Grand Rapids, MI 49510
Exhibit 10.4
FIRST AMENDED AND RESTATED SFAC TAX SHARING AGREEMENT
FIRST AMENDED AND RESTATED TAX SHARING AGREEMENT, made as of June
11, 1999, by and among Specialty Foods Acquisition Corporation ("SFAC") and SFC
New Holdings, Inc. ("SFC Holdings"). SFAC and all of the direct or indirect
domestic subsidiaries of SFAC which are includible in the consolidated Federal
income tax return ("Consolidated Return") of the affiliated group (within the
meaning of Section 1504 of the Internal Revenue Code of 1986, as may be amended
from time to time (the "Code")) of which SFAC is the common parent corporation
for any fiscal year ending on or after December 31, 1999, or portion thereof,
shall be hereinafter referred to as the "SFAC Group." SFC Holdings and all of
the direct or indirect domestic subsidiaries of SFC Holdings which would be
includible in the Consolidated Return of the affiliated group (all such terms
within the meaning of Section 1504 of the Code) of which SFC Holdings would be
the common parent corporation for any fiscal year ending on or after December
31, 1999, or portion thereof, shall be referred to as the "SFC Holdings Group."
WHEREAS, SFAC, Specialty Foods Corporation ("SFC") and their
subsidiaries contemplate a proposed corporate and financial restructuring
transaction (the "Transaction");
WHEREAS, in connection with the Transaction, SFC and SFC Holdings
have entered into an assignment and assumption agreement dated as of
<PAGE>
2
June 11, 1999 whereby SFC Holdings has assumed the rights and liabilities of SFC
under the tax sharing agreement dated as of August 16, 1993 between SFAC and
SFC;
WHEREAS, simultaneously herewith, SFC, SFC Sub, Inc. and SFAC New
Holdings, Inc. (together, the "SFC Group") are entering into a tax sharing
agreement with SFAC, dated as of June 11, 1999, pursuant to which SFC shall make
payments to SFAC in respect of the consolidated Federal income tax and certain
state and local tax liabilities of the SFC Group and SFAC shall make payment
with respect to such taxes to the relevant taxing authorities;
WHEREAS, simultaneously herewith, the SFC Holdings Group is entering
into an amended and restated tax sharing agreement with SFAC;
WHEREAS, SFAC and SFC Holdings wish to provide for payment of the
consolidated Federal income tax and certain state and local tax liabilities of
the SFC Holdings Group by SFAC; and
WHEREAS, SFAC and SFC Holdings wish to provide for the contribution
to such payment by SFC Holdings;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants and promises herein contained, SFAC and SFC Holdings agree as follows:
<PAGE>
3
1. Allocation and Payment of Tax
Liability of Members of SFAC Group.
1.1 SFC Holdings agrees to join with SFAC in any Consolidated Return
filed by SFAC for any taxable year (or portion thereof) with respect to the SFC
Holdings Group.
1.2 SFC Holdings hereby designates SFAC as its agent, as long as SFC
Holdings or the SFC Holdings Group is a member of the SFAC Group, for the
purpose of taking any and all action necessary or incidental to the filing of
Consolidated Returns. SFC Holdings agrees to furnish SFAC with any and all
information requested by SFAC in order to carry out the provisions of this
Agreement; to cooperate with SFAC in filing any return or consent contemplated
by this Agreement; to take such action as SFAC may request, including, but not
limited to, the filing of all elections and the filing of requests for the
extension of time within which to file tax returns; and to cooperate in
connection with any refund claim.
1.3 For the fiscal year ended December 31, 1999, and for each
subsequent fiscal year for which this Agreement may remain in effect, SFC
Holdings shall be required to pay to SFAC (in the manner provided in Paragraph
1.4 hereof), in satisfaction of the SFC Holdings Group's share of the
consolidated Federal income tax liability (including for all purposes of this
Agreement, alternative minimum tax liability) of the SFAC Group, an amount equal
to the product of the actual consolidated Federal income tax liability of the
SFAC Group, as computed by SFAC, and a fraction, the numerator of which is the
Federal income tax liability that would have been payable by the SFC Holdings
Group for such year if it had filed a separate
<PAGE>
4
consolidated income tax return for such year and all prior years, taking into
account the adjustments provided for in Treasury Regulation
ss.1.1552-1(a)(2)(ii), and the denominator of which is the sum of such Federal
income tax liability and the (positive) Federal income tax liabilities of all
other members of the SFAC Group computed on a similar basis for such year;
provided, however, that SFC Holdings shall not be required to pay to SFAC for
any fiscal year an amount greater than the Federal income tax liability the SFC
Holdings Group would have incurred for such year if it had filed a separate
consolidated income tax return for such year and all prior years during which
this Agreement is in effect.
1.4 SFC Holdings shall make payment to SFAC of any amount allocated
to it pursuant to this Section 1.4, and SFAC shall have sole responsibility for
making any required payments to the Internal Revenue Service (the "IRS") in
satisfaction of the consolidated Federal income tax liability of the SFAC Group
(including the SFC Holdings Group) for each fiscal year. SFAC shall provide
notice to SFC Holdings, in accordance with Section 12 hereof, of any and all
amounts allocated to SFC Holdings pursuant to this Section 1.4 no later than ten
(10) days prior to the date on which such payment is due under this Section 1.4.
For each quarter of each fiscal year after the year ended December 31, 1999, SFC
Holdings, as long as SFC Holdings is a member of the SFAC Group, shall make
payment to SFAC of an amount, determined by SFAC and communicated to SFC
Holdings in a notice given in accordance with Section 12 hereof no later than
five (5) days prior to the date on which such payment is due under this Section
1.4, equal to the product of the installment payment of estimated Federal income
tax that the SFAC Group is required
<PAGE>
5
to pay to the IRS for such quarter under Section 6655 of the Code and a
fraction, the numerator of which is the amount of the installment payment of
estimated Federal income tax that the SFC Holdings Group would have been
required to pay to the IRS for such quarter under Section 6655 of the Code if
the SFC Holdings Group were filing a separate consolidated income tax return for
such taxable year, taking into account the adjustments provided for in Treasury
Regulation ss. 1.1552-1(a)(2)(ii), ("Separate Return Installment") and the
denominator of which is the sum of the installment payments of Federal income
tax of each member of the SFAC Group for such quarter determined on such a
separate income tax return method; provided, however, that SFC Holdings shall
not be required to make any payment to SFAC pursuant to this Section 1.4 for any
quarter in an amount greater than its Separate Return Installment for such
quarter. Payments pursuant to this Section 1.4 shall be made no later than the
fifth day prior to the due date of an estimated Federal income tax payment or,
if later, the fifth day after notice of the amount of such payment is given by
SFAC. The amount of any overpayment or underpayment pursuant to this Section 1.4
shall be credited against or added to, as the case may be, the amount otherwise
required to be paid for the fiscal quarter within which the amount of such
overpayment or underpayment first becomes reasonably ascertainable, and, in the
case of any such underpayment, notice is provided to SFC Holdings by SFAC;
provided, however, that, upon written request (including supporting schedules)
of SFC Holdings, made after the close of any fiscal year but within the period
described in Section 6425(a)(1) of the Code, SFAC shall repay to SFC Holdings,
within the period
<PAGE>
6
described in Section 6425(b)(1) of the Code, the amount of any net remaining
overpayment of consolidated tax liability made by SFC Holdings for such year.
2. Adjustments.
Any adjustment of income, deduction or credit of any party to this
Agreement that results after the fiscal year in question by reason of any
carryback, amended return, claim for refund or audit shall be given effect by
redetermining amounts payable and reimbursable for such fiscal year hereunder as
if such adjustment had been part of the original determination hereunder,
whether such adjustment relates to the SFAC Group, SFC Holdings or any other
member of the SFC Holdings Group. In the case of a refund, SFAC shall pay to SFC
Holdings its share (determined in accordance with the preceding sentence) of the
refund within 20 days after the refund is received, and, in the case of an
increase in tax liability, SFC Holdings shall pay to SFAC its share (determined
in accordance with the preceding sentence) of such increased tax liability
within 20 days after receiving notice of such liability from SFAC. If any
interest is to be paid as a result of a consolidated Federal income tax
deficiency or refund, such interest shall be allocated between SFAC and SFC
Holdings in the same manner as their shares of the deficiency or refund. Any
penalty imposed with respect to any Consolidated Return filed on behalf of the
SFAC Group shall be the sole responsibility of SFAC.
3. State Taxes.
3.1 SFC Holdings agrees, on behalf of itself and the other members
of the SFC Holdings Group, at the request of SFAC, to join, or have any other
<PAGE>
7
member of the SFC Holdings Group join, with SFAC or any direct or indirect
subsidiary of SFAC in any combined or consolidated state or local income or
franchise tax return ("Combined Return") for any taxable year for which SFAC or
any such direct or indirect subsidiary of SFAC files a Combined Return that may
include SFC Holdings or any other member of the SFC Holdings Group.
3.2 If, at any time from and after the date of this Agreement, the
liability for any state or local income or franchise tax of any member of the
SFC Holdings Group and SFAC or any other direct or indirect subsidiary of SFAC
is determined on a consolidated or combined basis, this Agreement shall be
applied in like manner to all matters relating to such taxes.
4. Adjudications.
In any audit, conference, or other proceeding with the IRS or the
relevant state or local authorities, or in any judicial proceedings concerning
the determination of the Federal income tax liability of the SFAC Group
(including any of the members of the SFC Holdings Group) or the state or local
income tax liability of any combined or consolidated group including any member
of the SFAC Group in addition to any member of the SFC Holdings Group, SFAC and
each relevant member of the SFC Holdings Group shall be represented by persons
selected by SFAC. The settlement and terms of settlement of any issues relating
to such proceeding shall be in the sole discretion of SFAC, and SFC Holdings, on
behalf of itself and each member of the SFC Holdings Group, hereby appoints SFAC
as its agent for the purposes of proposing and concluding any such settlement.
<PAGE>
8
5. Entire Agreement; Assignment.
This Agreement embodies the entire understanding between the parties
relating to its subject matter and supersedes and terminates all prior
agreements and understandings among the parties with respect to such subject
matter.
6. Termination.
This Agreement may be terminated at any time upon mutual agreement
of the parties hereto; provided, however, that such termination shall not
relieve SFAC or SFC Holdings of any obligations pursuant to Sections 1.4, 2 and
3 hereof.
7. Effective Date.
This Agreement shall be effective for the taxable year of the SFAC
Group ended December 31, 1999, and for all taxable years thereafter.
8. Captions.
All section captions contained in this Agreement are for convenience
only and shall not be deemed a part of this Agreement.
9. Counterparts.
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
<PAGE>
9
10. Governing Law.
This Agreement shall be governed by the laws applicable to contracts
entered into and to be fully performed within the State of New York by residents
thereof.
11. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
12. Notices.
Any payment, notice or communication required or permitted to be
given under this Agreement shall be in writing (including telegraphic, telecopy,
telex, facsimile transmission or cable communication) and mailed, telegraphed,
telecopied, telexed, faxed, cabled or delivered:
If to SFAC, to it at:
Specialty Foods Acquisition Corporation
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Attention: Robert B. Haas
Telecopy: (847) 405-5310
If to SFC Holdings, to it at:
SFC New Holdings, Inc.
520 Lake Cook Road, Suite 550
Deerfield, IL 60015
Attention: Robert B. Haas
Telecopy: (847) 405-5310
or to such other address as a party shall furnish in writing in a notice
similarly given to the other parties. All such notices and communications shall
be deemed given (i) if
<PAGE>
10
mailed, four days after the date of mailing, or (ii) when delivered to the
telegraph company, transmitted by telecopier, confirmed by telex answerback,
sent by facsimile transmission, or delivered to the cable company, respectively.
13. No Third-Party Beneficiaries.
Nothing in this document shall be deemed to create any right in any
person not a party hereto and this instrument shall not be construed in any
respect to be a contract in whole or in part for the benefit of any third party
except as aforesaid.
IN WITNESS WHEREOF, SFAC and SFC Holdings have executed this
Agreement as of the day and year first above written.
SPECIALTY FOODS ACQUISITION CORPORATION
By: /s/ Sean M. Stack
--------------------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant
Secretary
SFC NEW HOLDINGS, INC.
By: /s/ Sean M. Stack
--------------------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer & Assistant
Secretary
Exhibit 10.5
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of June 11, 1999 (the
"Assumption Agreement"), between Specialty Foods Corporation, a Delaware
corporation (the "Assignor") and SFC New Holdings, Inc., a Delaware corporation
(the "Assignee").
W I T N E S E T H :
WHEREAS, the Assignor and Specialty Foods Acquisition Corporation,
the parent company of the Assignor and a Delaware corporation ("SFAC"), have
entered into a tax sharing agreement dated as of August 16, 1993 (the "SFAC Tax
Sharing Agreement") whereby the Assignor agreed to pay to SFAC the pro rata
share of SFAC's consolidated income tax liability attributable to the Assignor
and each of its subsidiaries;
WHEREAS, the Assignor and each of its subsidiaries have also entered
into a tax sharing agreement dated as of August 16, 1993 (as amended or
otherwise modified from time to time, the "SFC Group Tax Sharing Agreement" and,
together with the SFAC Tax Sharing Agreement, the "Assigned Agreements") whereby
each such subsidiary has agreed to pay to the Assignor its pro rata share of the
Assignor's consolidated income tax liability;
WHEREAS, SFAC, the Assignor and their subsidiaries, including the
Assignee (together, the "Company"), contemplate a proposed corporate and
financial restructuring transaction (the "Transaction");
WHEREAS, the Transaction includes, inter alia, a number of exchange
offers by the Assignee (the "Exchange Offers") with respect to certain
outstanding indebtedness of the Assignor; and
WHEREAS, the Assignor, pursuant to this Assumption Agreement,
desires to assign all of its right, title and interest to, and liabilities and
obligations under, the Assigned Agreements to the Assignee and the Assignee
desires to assume all of the Assignor's right, title and interest thereto and
liabilities and obligations thereunder.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Assignor and the Assignee mutually covenant and agree:
<PAGE>
2
I. Assignment and Assumption
1. Assignment. Assignor hereby grants, assigns, conveys, sets over
and delivers to Assignee and its successors and assigns all of its right, title
and interest to, and liabilities and obligations under, the Assigned Agreements,
to have and hold unto Assignee and its successors and assigns forever.
2. Assumption. In consideration of the assignment made herein to
Assignee, Assignee hereby agrees to assume, pay, perform and observe all
covenants, agreements, liabilities and obligations of Assignor under the
Assigned Agreements.
3. Further Assurances. Each of Assignor and Assignee shall execute
such additional documents and instruments and take such further action as may be
reasonably required or desirable to carry out the provisions hereof.
II. Miscellaneous
4. Severability. In case any provision in this Assumption Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5. Governing Law. This Assumption 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.
6. Multiple Originals. The parties may sign any number of copies of
this Assumption Agreement. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Assumption Agreement.
7. Headings. The Articles and Section headings herein 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.
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Assumption
Agreement to be duly executed as of the date first written above.
SPECIALTY FOODS CORPORATION
By: /s/ Sean M. Stack
-------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer &
Assistant Secretary
SFC NEW HOLDINGS, INC.
By: /s/ Sean M. Stack
-------------------------------
Name: Sean M. Stack
Title: Vice President, Treasurer &
Assistant Secretary
Exhibit 12.1
Specialty Foods Corporation
Computation of Ratio of Earnings to Fixed Charges
(in millions, except ratios)
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 March 1999
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Pre-Tax Income (loss) from continuing operations.... (64.1) (208.5) (284.8) (67.2) (56.4) (22.9)
Add:
Goodwill write-down ................................ 0.0 156.8 203.3 0.0 0.0 0.0
Fixed Charged ...................................... 90.4 98.1 99.3 99.1 98.1 24.7
------- ------- ------- ------- ------- -------
Earnings as adjusted (A) ............................... 26.3 46.4 17.8 31.9 41.7 1.8
------- ------- ------- ------- ------- -------
Fixed charges:
Interest Expense ................................... 75.9 86.8 88.1 87.0 82.9 20.8
Amortization of deferred debt issuance costs ....... 10.4 6.9 5.5 5.5 9.5 2.8
estimate of interest within rental expense ......... 4.1 4.4 5.7 6.6 5.7 1.1
------- ------- ------- ------- ------- -------
Fixed charges as adjusted (B) .......................... 90.4 98.1 99.3 99.1 98.1 24.7
------- ------- ------- ------- ------- -------
Ratio of earnings to fixed charges (A) divided by (B) 0.29(1) 0.47(1) 0.18(1) 0.32(1) 0.43 0.07
------- ------- ------- ------- ------- -------
(1) deficiency ......................................... (64.1) (51.7) (81.5) (67.2) (56.4) (22.9)
------- ------- ------- ------- ------- -------
</TABLE>
Exhibit 21.1
List of Subsidiaries of SFC New Holdings, Inc.
Metz Baking Company (Iowa)
Metz Baking Company (Delaware)
The Clear Lake Bakery, Inc.
Grocers Baking Company
GWI Holdings, Inc.
GWI, Inc.
MA Holdings, LLC
Mother's Cake & Cookie Co.
Archway Cookies, LLC
Pacific Coast Baking Co., Inc.
Belsea Holdings, Inc.
GSFBC Holdings, Inc.
LANG Holdings, Inc.
GBC Holdings, Inc.
OFBC Holdings, Inc.
SEM Holdings, Inc.
Former VB Holdings, Ltd.
SFFB Holdings, Inc.
SanFran FB, Inc.
Andre-Boudin Bakeries, Inc.
Fisherman's Wharf Sourdough French Bread Bakeries, Inc.
Boudin International, Inc.
Laura Todd of America
Steve's Drayage
A. Trocano Construction, Inc.
Gelsi, Inc.
Pane Corporation
San Francisco Bay Area Equipment and Supply
SanFran SB Holdings, Inc.
PBI Holdings, Inc.
San Francisco Baking Cultures
SFSC, Inc.
Larraburu Bakery
Exhibit 23.1
Consent of KPMG LLP
The Board of Directors
SFC New Holdings, Inc.:
We consent to the inclusion herein of our report dated March 19, 1999 relating
to the consolidated balance sheets of Specialty Foods Corporation and
Subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of operations, changes in stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1998 and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Chicago, Illinois
July 15, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
--------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------------
SFC New Holdings, Inc.
(Exact name of obligor as specified in its charter)
Delaware 52-2173533
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
520 Lake Cook Road 60015
Suite 550 (Zip code)
Deerfield, IL
(Address of principal executive offices)
--------------------------
11-1/4% Senior Notes due 2001
12-1/8% Senior Notes due 2002
(Title of the indenture securities)
<PAGE>
- 2 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
SFC New Holdings, Inc., SFC Sub Inc., SFAC New Holdings, Inc., Specialty
Foods Corporation and Specialty Foods Acquisition Corporation currently
are not in default under any of its indentures. Accordingly, responses to
Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of Form T-1 are not
required under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of July 16, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 16th day
of July 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Cynthia Chaney
------------------------------
Cynthia Chaney
Assistant Vice President
CC/kk
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ Gerard F. Ganey
---------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1999
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 139,755
Short-Term Investments 85,326
Securities, Available for Sale 528,160
Loans 2,081,103
Less: Allowance for Credit Losses 17,114
----------
Net Loans 2,063,989
Premises and Equipment 57,765
Other Assets 125,780
----------
Total Assets $3,000,775
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 623,046
Interest Bearing 1,875,364
----------
Total Deposits 2,498,410
Short-Term Credit Facilities 184,281
Accounts Payable and Accrued Liabilities 126,652
----------
Total Liabilities $2,809,343
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 121,759
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 1,637
----------
Total Stockholder's Equity 191,432
----------
Total Liabilities and Stockholder's Equity $3,000,775
==========
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
May 18, 1999
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
---------------
U.S. TRUST COMPANY OF TEXAS, N.A.
(Exact name of trustee as specified in its charter)
75-2353745
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
2001 Ross Ave, Suite 2700 75201
Dallas, Texas (Zip Code)
(Address of trustee's
principal executive offices)
Compliance Officer
U.S. Trust Company of Texas, N.A.
2001 Ross Ave, Suite 2700
Dallas, Texas 75201
(214) 754-1200
(Name, address and telephone number of agent for service)
---------------
SFC New Holdings, Inc.
(Exact name of obligor as specified in its charter)
Delaware 52-2173533
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
520 Lake Cook Road 60015
Suite 550 (Zip code)
Deerfield, IL
(Address of principal executive offices)
--------------------------
13-1/4% Senior Subordinated Notes due 2003
(Title of the indenture securities)
================================================================================
<PAGE>
GENERAL
1. General Information.
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of Dallas (11th District), Dallas, Texas
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Dallas, Texas
The Office of the Comptroller of the Currency, Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with Obligor and Underwriters.
If the obligor or any underwriter for the obligor is an affiliate of the
Trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting securities of
the Trustee:
As of July 16, 1999
- -----------------------------------------------------------------------------
Col A. Col B.
- -----------------------------------------------------------------------------
Title of Class Amount Outstanding
- -----------------------------------------------------------------------------
Capital Stock - par value $100 per share 5,000 shares
4. Trusteeships under Other Indentures.
Not Applicable
5. Interlocking Directorates and Similar Relationships with the Obligor or
Underwriters.
Not Applicable
<PAGE>
6. Voting Securities of the Trustee Owned by the Obligor or its Officials.
Not Applicable
7. Voting Securities of the Trustee Owned by Underwriters or their Officials.
Not Applicable
8. Securities of the Obligor Owned or Held by the Trustee.
Not Applicable
9. Securities of Underwriters Owned or Held by the Trustee.
Not Applicable
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Security Holders of the Obligor.
Not Applicable
11. Ownership or Holdings by the Trustee of any Securities of a Person Owning
50 Percent or More of the Voting Securities of the Obligor.
Not Applicable
12. Indebtedness of the Obligor to the Trustee.
Not Applicable
13. Defaults by the Obligor.
Not Applicable
14. Affiliations with the Underwriters.
Not Applicable
15. Foreign Trustee.
Not Applicable
16. List of Exhibits.
T-1.1 - A copy of the Articles of Association of U.S. Trust Company of
Texas, N.A.; incorporated herein by reference to Exhibit T-1.1
filed with Form T-1 Statement, Registration No. 22-21897.
<PAGE>
16. (con't.)
T-1.2 - A copy of the certificate of authority of the Trustee to
commence business; incorporated herein by reference to Exhibit
T-1.2 filed with Form T-1 Statement, Registration No. 22-21897.
T-1.3 - A copy of the authorization of the Trustee to exercise corporate
trust powers; incorporated herein by reference to Exhibit T-1.3
filed with Form T-1 Statement, Registration No. 22-21897.
T-1.4 - A copy of the By-laws of the U.S. Trust Company of Texas, N.A.,
as amended to date; incorporated herein by reference to Exhibit
T-1.4 filed with Form T-1 Statement, Registration No. 22-21897.
T-1.6 - The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939.
T-1.7 - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its supervising
or examining authority.
NOTE
As of July 16, 1999, the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O. Corp. As of May 21, 1999, U.S. T.L.P.O.
Corp. had 35 shares of Capital Stock outstanding, all of which are owned by U.S.
Trust Corporation. U.S. Trust Corporation had outstanding 18,597,534 shares of
$1 par value Common Stock as of July 16, 1999.
The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.
In as much as this Form T-1 is filed prior to the ascertainment by the Trustee
of all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10
and 11, the answers to said Items are based upon incomplete information. Items
2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by
an amendment to this Form T-1.
In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the Trustee
disclaims responsibility for the accuracy or completeness of such information.
---------------
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, U.S
Trust Company of Texas, N.A., a national banking association organized under the
laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
21st day of May, 1999.
U.S. Trust Company
of Texas, N.A., Trustee
By: /s/ Cynthia Chaney
----------------------
Authorized Officer
<PAGE>
Exhibit T-1.6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of NEXTLINK
Communications, Inc., Senior Discount Notes, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefore.
U.S. Trust Company of Texas, N.A.
By: /s/ Cynthia Chaney
----------------------
Authorized Officer
PG/pg
<PAGE>
Federal Financial Institutions Examination Council
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-005
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 2001
- --------------------------------------------------------------------------------
(LOGO)
(1) Please Refer to Page I, Table of Contents, for the required disclosure of
estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC OFFICES
ONLY AND TOTAL ASSETS OF LESS THAN $100 MILLION OR MORE BUT LESS THAN $300
MILLION - - FFIEC 033
REPORT AT THE CLOSE OF BUSINESS March 31, 1999
This report is required by law: 12 U.S.C. Section ss. 324 (State member banks);
12 U.S.C. Section ss. 1817 (State nonmember banks); and 12 U.S.C. Section ss.
161 (National banks).
(19990331)
- ----------
(RCRI 9999)
This report form is to be filed by banks with domestic offices only. Banks with
branches and consolidated subsidiaries in U.S. territories and possessions, Edge
or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries,
or International Banking Facilities must file FFIEC 031.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Alfred B. Childs, Managing Director
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and belief.
/s/ Alfred B. Childs
----------------------------------------------
Signature of Officer Authorized to Sign Report
April 21, 1999
- -----------------
Date of Signature
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: these instructions may in some
cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ Stuart M. Pearman
- ---------------------
Director (Trustee)
/s/ J. T. More, Jr.
- ---------------------
Director (Trustee)
/s/ Arthur White
- ---------------------
Director (Trustee)
- --------------------------------------------------------------------------------
Submission of Reports
Each bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then file the computer data file directly with the
banking agencies' collection agent, Electronic Data Systems Corporation
(EDS), by modem or on computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert the
paper report to electronic form. That party (if other than EDS) must
transmit the bank's computer data file to EDS.
For electronic filing assistance, contact EDS Call Report Services, 2150 North
Prospect Avenue, Milwaukee, WI 53202, telephone (800) 255-1571.
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page to the
hard-copy record of the completed report that the bank places in its files.
- --------------------------------------------------------------------------------
FDIC Certificate Number 33217
-----------
(RCRI 9050)
US Trust Company of Texas, National Association
- -----------------------------------------------
Legal Title of Bank (TEXT 9010)
Dallas
- -----------------------------------------------
City (TEXT 9130)
TX 75201
- ---------------------------------------------------------
State Abbrev. (TEXT 9200) Zip Code. (TEXT 9220)
<PAGE>
U.S. Trust Company of Texas, N.A. Call Date: 3/31/1999 State#: 48-6797 FFIEC 033
2001 Ross Avenue, Suite 2700 Vendor ID: D Cert#: 33217 RC-1
Dallas, TX 75201 Transit #: 11101765
------------
9
------------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR March 31, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C200<
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions: RCON
---- -------
a. Noninterest-bearing balances and currency and coin (1,2) 0081 1,297 1.a
-------
b. Interest bearing balances (3) 0071 696 1.b
-------
2. Securities:
-------
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 0 2.a
-------
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 131,683 2.b
-------
3. Federal funds sold (4) and securities purchased under agreements to resell: 1350 6,000 3
-------
4. Loans and lease financing receivables: RCON
---- -------
a. Loans and leases, net of unearned income (from Schedule RC-C) 2122 22,709 4.a
-------
b. LESS: Allowance for loan and lease losses 3123 260 4.b
-------
c. LESS: Allocated transfer risk reserve 3128 0 4.c
-------
d. Loans and leases, net of unearned income, allowance, and reserve RCON
---- -------
(item 4.a minus 4.b and 4.c) 2125 22,249 4.d
-------
5. Trading assets 3545 0 5.
-------
6. Premises and fixed assets (including capitalized leases) 2145 917 6.
-------
7. Other real estate owned (from Schedule RC-M) 2150 0 7.
-------
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2130 0 8.
-------
9. Customers' liability to this bank on acceptances outstanding 2155 0 9.
-------
10. Intangible assets (from Schedule RC-M) 2143 1,950 10.
-------
11. Other assets (from Schedule RC-F) 2160 2,527 11.
-------
12. Total assets (sum of items 1 through 11) 2170 167,519 12.
-------
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Included time certificates of deposit not held for trading.
<PAGE>
U.S. Trust Company of Texas, N.A. Call Date: 3/31/1999 State#: 48-6797 FFIEC 033
2001 Ross Avenue, Suite 2700 Vendor ID: D Cert#: 33217 RC-2
Dallas, TX 75201 Transit #: 11101765
------------
10
------------
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits: RCON
a. In domestic offices (sum of totals of ---- -------
columns A and C from Schedule RC-E) RCON 2200 141,618 13.a
a. In domestic offices (sum of totals of ------- -------
(1) Noninterest-bearing (1) 6631 8,794 13.a.1
-------
(2) Interest-bearing 6636 132,824 13.a.2
-------
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing
(2) Interest-bearing
RCON
---- -------
14. Federal funds purchased(2) and securities sold under agreements to repurchase: 2800 0 14
-------
15. a. Demand notes issued to the U.S. Treasury 2840 0 15.a
-------
b. Trading liabilities 3548 0 15.b
-------
16. Other borrowed money:
-------
a. With a remaining maturity of one year or less 2332 0 16.a
-------
b. With a remaining maturity of more than one year through three years A547 2,000 16.b
-------
c. With a remaining maturity of more than three years A548 1,000 16.c
-------
17. Not applicable
-------
18. Bank's liability on acceptances executed and outstanding 2920 0 18.
-------
19. Subordinated notes and debentures 3200 0 19.
-------
20. Other liabilities (from Schedule RC-G) 2930 2,317 20.
-------
21. Total liabilities (sum of items 13 through 20) 2948 146,935 21.
-------
22. Not applicable
EQUITY CAPITAL
RCON
---- -------
23. Perpetual preferred stock and related surplus 3838 7,000 23.
-------
24. Common stock 3230 500 24.
-------
25. Surplus (exclude all surplus related to preferred stock) 3839 8,384 25.
-------
26. a. Undivided profits and capital reserves 3632 4,406 26.a
-------
b. Net unrealized holding gains (losses) on available-for-sale securities 8434 294 26.b
-------
27. Cumulative foreign currency translation adjustments
-------
28. Total equity capital (sum of items 23 through 27) 3210 20,584 28.
-------
29. Total liabilities and equity capital (sum of items 21 and 28) 2257 167,519 29.
-------
</TABLE>
Memorandum
<TABLE>
<CAPTION>
To be reported only with the March Report of Condition. Number
<S> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that -------
best describes the most comprehensive level of auditing work performed for
the bank by independent external auditors as of any date during 1998 6724 1 M.1
-------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Dec-31-1998
<CASH> 5,881
<SECURITIES> 0
<RECEIVABLES> 20,476
<ALLOWANCES> 1,149
<INVENTORY> 23,366
<CURRENT-ASSETS> 142,440
<PP&E> 339,335
<DEPRECIATION> 104,391
<TOTAL-ASSETS> 534,395
<CURRENT-LIABILITIES> 121,970
<BONDS> 1,006,118
19,500
0
<COMMON> 646
<OTHER-SE> (889,274)
<TOTAL-LIABILITY-AND-EQUITY> 534,395
<SALES> 742,315
<TOTAL-REVENUES> 742,315
<CGS> 329,567
<TOTAL-COSTS> 382,237
<OTHER-EXPENSES> 3,129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 133,961
<INCOME-PRETAX> (106,579)
<INCOME-TAX> (613)
<INCOME-CONTINUING> (105,966)
<DISCONTINUED> 9,723
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (96,243)
<EPS-BASIC> (1.53)
<EPS-DILUTED> (1.53)
</TABLE>
