<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 9, 1998 (February 20, 1998)
Suiza Foods Corporation
-----------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 1-12755 75-2559681
-------- ------- ----------
(STATE OR OTHER
JURISDICTION OF (COMMISSION FILE NUMBER) (IRS EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
3811 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(214) 528-0939
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 20, 1998, Suiza completed the acquisition of Land-O-Sun
Dairies, L.L.C., ("Land-O-Sun") for a purchase price of approximately $248
million, consisting of approximately $128 million in cash, $100 million of trust
issued redeemable convertible preferred securities of Suiza Capital Trust and
$20 million of Land-0-Sun preferred interests. In addition, Suiza refinanced
Land-O-Sun's existing outstanding long-term indebtedness, which totaled
approximately $52 million as of the closing date. In connection with the
issuance of the trust issued redeemable convertible preferred securities, Suiza
Capital Trust acquired $100 million in aggregate principal amount of convertible
subordinated debentures issued by Suiza. The Company financed the cash portion
of the purchase price and the refinancing of existing long-term indebtedness
with borrowings under its senior credit facility with a group of banks led by
First Union National Bank and First National Bank of Chicago. Land-O-Sun is
based in Johnson City, Tennessee and operates 13 fluid dairy and ice cream
processing facilities in Tennessee, North Carolina, South Carolina, Georgia,
Illinois, Kentucky and Virginia. Land-O-Sun recorded net sales of approximately
$464 million for its fiscal year ended December 31, 1997. The Land-O-Sun
acquisition was accounted for using the purchase method of accounting.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
In accordance with paragraph (a)(4) of Item 7 of Form 8-K,
the historical financial statements required in connection with the Land-O-Sun
acquisition are not included in this initial report but will be filed not later
than 60 days after the date hereof.
(b) Pro Forma Financial Information
In accordance with paragraph (b)(2) of Item 7 of Form 8-K,
the pro forma financial information required in connection with the Land-O-Sun
acquisition are not included in this initial report but will be filed not later
than 60 days after the date hereof.
(c) Exhibits
2.1 Membership Interest Purchase Agreement and Recapitalization
Agreement, dated as of January 31, 1998, by and among Suiza
Foods Corporation, Dairy Farmers of America, Inc., DFA
Investment Company and Land-O-Sun Dairies, Inc.
2.2 First Amendment to Membership Interest Purchase Agreement and
Recapitalization Agreement, dated as of February 20, 1998, by
and among LOS Holdings, Inc. (as assignee of Suiza Foods
Corporation), Dairy Farmers of America, Inc., DFA Investment
Company and LOS Dairies, Inc. (as assignee of Land-O-Sun
Dairies, Inc.).
10.1 Indenture, dated as of February 20, 1998, between Suiza Foods
Corporation, as Issuer, and Wilmington Trust Company, as
Trustee.
<PAGE> 3
10.2 Amended and Restated Declaration of Trust of Suiza Capital
Trust, dated as of February 20, 1998.
10.3 5% Convertible Subordinated Debenture due 2018, issued by
Suiza Foods Corporation to Suiza Capital Trust on February
20, 1998.
10.4 Certificate for Preferred Securities of Suiza Capital Trust,
issued to DFA Investment Company on February 20, 1998.
10.5 Certificate for Common Securities of Suiza Capital Trust,
issued to Suiza Foods Corporation on February 20, 1998.
10.6 Preferred Securities Guarantee Agreement of Suiza Foods
Corporation, dated as of February 20, 1998.
10.7 Registration Rights Agreement, dated as of February 20, 1998,
between DFA Investment Company and Suiza Foods Corporation.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 9, 1998 SUIZA FOODS CORPORATION
By: /s/ Tracy L. Noll
--------------------------------------
Tracy L. Noll
Vice President and Chief
Financial Officer
<PAGE> 5
INDEX TO EXHIBITS
-----------------
EXHIBIT
NUMBERS DESCRIPTION
------- -----------
2.1 Membership Interest Purchase Agreement and Recapitalization
Agreement, dated as of January 31, 1998, by and among Suiza
Foods Corporation, Dairy Farmers of America, Inc., DFA
Investment Company and Land-O-Sun Dairies, Inc.
2.2 First Amendment to Membership Interest Purchase Agreement and
Recapitalization Agreement, dated as of February 20, 1998, by
and among LOS Holdings, Inc. (as assignee of Suiza Foods
Corporation), Dairy Farmers of America, Inc., DFA Investment
Company and LOS Dairies, Inc. (as assignee of Land-O-Sun
Dairies, Inc.).
10.1 Indenture, dated as of February 20, 1998, between Suiza Foods
Corporation, as Issuer, and Wilmington Trust Company, as
Trustee.
10.2 Amended and Restated Declaration of Trust of Suiza Capital
Trust, dated as of February 20, 1998.
10.3 5% Convertible Subordinated Debenture due 2018, issued by
Suiza Foods Corporation to Suiza Capital Trust on February
20, 1998.
10.4 Certificate for Preferred Securities of Suiza Capital Trust,
issued to DFA Investment Company on February 20, 1998.
10.5 Certificate for Common Securities of Suiza Capital Trust,
issued to Suiza Foods Corporation on February 20, 1998.
10.6 Preferred Securities Guarantee Agreement of Suiza Foods
Corporation, dated as of February 20, 1998.
10.7 Registration Rights Agreement, dated as of February 20, 1998,
between DFA Investment Company and Suiza Foods Corporation.
<PAGE> 1
EXHIBIT 2.1
EXECUTION COPY
================================================================================
MEMBERSHIP INTEREST PURCHASE AGREEMENT
AND RECAPITALIZATION AGREEMENT
AMONG
SUIZA FOODS CORPORATION
AS BUYER
AND
THE HOLDERS OF THE LIMITED LIABILITY COMPANY INTERESTS
OF LAND-O-SUN DAIRIES, L.L.C.,
AS SELLERS
AND
DAIRY FARMERS OF AMERICA, INC.
DATED AS OF
JANUARY 31, 1998
===============================================================================
<PAGE> 2
MEMBERSHIP INTEREST PURCHASE AGREEMENT
AND RECAPITALIZATION AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2 SALE AND TRANSFER OF INTERESTS; CLOSING; RECAPITALIZATION . . . . . . . . . . . . . . . . . . . . 8
2.1 Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Purchase Price Payable to LOS Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Closing Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Authority; No Conflict; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.9 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Compliance with Legal Requirements;
Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.12 Legal Proceedings; Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.13 Absence of Certain Changes and Events . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Contracts; No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.17 Labor Relations; Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.18 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.19 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.20 Competing Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.21 No Misrepresentations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
Page i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Authority; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.3 Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4 Certain Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5 COVENANTS OF SELLERS PRIOR TO CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 Access and Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Operation of the Business of the Company . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Negative Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.4 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 Distributions and Certain Other Restricted Payments . . . . . . . . . . . . . . . . . . 26
5.6 Payment of Indebtedness by Related Persons . . . . . . . . . . . . . . . . . . . . . . 29
5.7 No Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.8 Change of Control Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.9 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.10 Assistance with Permits and Filings. . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6 COVENANTS OF BUYER PRIOR TO CLOSING DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 7 CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Accuracy of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Sellers' Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Absence of Material Adverse Effects . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.4 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.5 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 No Claim Regarding Interest Ownership or Sale Proceeds . . . . . . . . . . . . . . . . 31
7.7 No Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.8 HSR Act Waiting Period Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.9 Amended and Restated Operating Agreement. . . . . . . . . . . . . . . . . . . . . . . . 32
7.10 Supply Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.11 Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.12 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
Page ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 8 CONDITIONS PRECEDENT TO SELLERS' AND
DFA'S OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1 Accuracy of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Buyer's Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 HSR Act Waiting Period Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 Amended and Restated Operating Agreement . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 Supply Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.7 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.8 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.9 Tax Cooperation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 10 INDEMNIFICATION; REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.1 Representations; Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.2 Indemnification and Payment of Damages by Sellers . . . . . . . . . . . . . . . . . . . 35
10.3 Indemnification and Payment of Damages by Buyer . . . . . . . . . . . . . . . . . . . . 35
10.4 Limitations on Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.5 Procedure for Indemnification - Third Party Claims . . . . . . . . . . . . . . . . . . 36
10.6 Procedure for Indemnification - Other Claims . . . . . . . . . . . . . . . . . . . . . 37
SECTION 11 POST CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.1 Repayment of Long Term Indebtedness and
Redemption of Preferred Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.2 Nondisclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.3 Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.4 Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.5 Records Retention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 12 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.2 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
Page iii
<PAGE> 5
<TABLE>
<S> <C> <C>
12.4 Attorney's Fees and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.7 Entire Agreement and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.8 Assignments, Successors and No Third Party Rights . . . . . . . . . . . . . . . . . . . 43
12.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.10 Section Headings, Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.11 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.14 Waivers by DFA and LOS Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
Page iv
<PAGE> 6
<TABLE>
<S> <C>
EXHIBITS
Exhibit A Principal Terms of Tax Preferred Securities
Exhibit B Amended and Restated Operating Agreement
Exhibit C Milk Supply Agreement
Exhibit D Sellers' Closing Certificate
Exhibit E Certificate of the Secretaries of Sellers
Exhibit F Form of Legal Opinion of Sellers' Counsel
Exhibit G Buyer's Closing Certificate
Exhibit H Certificate of the Secretary of Buyer
Exhibit I Form of Legal Opinion of Buyer's Counsel
Exhibit J Tax Cooperation Agreement
SCHEDULES
Schedule 2.5 Allocation of Purchase Price
</TABLE>
Page v
<PAGE> 7
MEMBERSHIP INTEREST PURCHASE AGREEMENT
AND RECAPITALIZATION AGREEMENT
This Membership Interest Purchase Agreement and Recapitalization
Agreement ("AGREEMENT") is made as of January 31, 1998, by and among Suiza
Foods Corporation, a Delaware corporation ("BUYER"), Dairy Farmers of America,
Inc., a Kansas cooperative marketing association formerly named Mid-America
Dairymen, Inc. ("DFA"), DFA Investment Company, a Nevada corporation ("DFA
INVESTMENT"), and Land-O-Sun Dairies, Inc., a Delaware corporation ("LOS INC.")
(DFA Investment and LOS Inc. referred to collectively herein as "SELLERS" and
individually as a "SELLER").
R E C I T A L S
LOS Inc. desires to sell, and Buyer desires to purchase, all of the
issued and outstanding limited liability company percentage interests (the
"INTERESTS") of Land-O-Sun Dairies, L.L.C., a Delaware limited liability
company (the "COMPANY"), owned by LOS Inc. for the consideration and on the
terms set forth in this Agreement. Immediately following consummation of the
purchase of the Interests owned by LOS Inc. as described in the immediately
preceding sentence, Buyer, DFA Investment and DFA will recapitalize the Company
on the terms set forth in this Agreement and thereafter DFA Investment will
sell to Buyer a portion of the New DFA Preferred Capital Interests (as
hereinafter defined) issued to DFA Investment as part of such recapitalization.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
SECTION 1
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"AFFILIATE" - means any stockholder, director or officer (or person
performing similar functions) of the Company or of either Seller or of any
Person that controls, is controlled by or is under common control with the
Company or either Seller.
"BUYER" - as defined in the first paragraph of this Agreement.
"BUYER'S ADVISORS" - as defined in Section 5.1.
Page 1
<PAGE> 8
"BUYER'S INDEMNIFIED PERSONS" - as defined in Section 10.2.
"CHANGE OF CONTROL AGREEMENT" - as defined in Section 5.8.
"CHANGE OF CONTROL PAYMENTS" - as defined in Section 5.8.
"CLOSING" - as defined in Section 2.3.
"CLOSING DATE" - the date and time as of which the Closing actually
takes place.
"COMPANY" - as defined in the Recitals of this Agreement.
"COMPANY BONUS PLAN" - any plan, scheme or arrangement, written or
otherwise, pursuant to which the Company may be required to make a payment or
other transfer to any Affiliate, employee, or independent contractor of cash or
property the amount or value of which is in any way contingent on the
objectively or subjectively determined attainment of any individual or group
performance goals.
"COMPANY ERISA PLAN" - any Company Pension Plan or Company Welfare
Plan.
"COMPANY FRINGE BENEFIT PLAN" - any plan, scheme, or arrangement
currently maintained by Company for the provision of "fringe benefits" to
current or former employees within the meaning of IRC Sections 61(a) or 132(a).
"COMPANY PAYROLL POLICY" - any policy of making payments or other
awards to employees other than a Company Bonus Plan, a Company Fringe Benefit
Plan, a Company Pension Plan, a Company Stock Plan, or a Company Welfare Plan.
Company Payroll Policies include, but are not limited to, paid sick days,
vacation days, and personal time off.
"COMPANY PENSION PLAN" - any Pension Plan maintained by the Company
or to which the Company is required to contribute for any current or former
employee.
"COMPANY PLAN" - each Company Bonus Plan, Company ERISA Plan, Company
Fringe Benefit Plan, Company Payroll Policy, Company Pension Plan, Company
Stock Plan and Company Welfare Plan.
"COMPANY STOCK PLAN" - any compensatory interest option, restricted
interest, interest appreciation right, phantom interest, or similar plan,
program, or arrangement maintained by the Company for the current, deferred, or
contingent compensation of any employee, Affiliate or independent contractor
with an interest in or other equity security of the Company, a discount on the
purchase price of any interest in or other equity security of the Company, or a
payment or other transfer of cash or property the amount or value of which is
in any way contingent on any change in value of any interest in or other equity
security of the Company.
Page 2
<PAGE> 9
"COMPANY WELFARE PLAN" - any Welfare Plan (as defined in Section 3(1)
of ERISA) maintained by the Company or to which the Company is required to
contribute for any current or former employees.
"COMPETITIVE PRODUCTS" - as defined in Section 11.3(a).
"CONFIDENTIAL INFORMATION" - as defined in Section 11.2.
"CONSENT" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" - all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Interests by Sellers to Buyer;
(b) the performance by Buyer and Sellers of their
respective covenants and obligations under this Agreement;
(c) Buyer's acquisition and ownership of the Interests
and exercise of control over the Company; and
(d) the Recapitalization of the Company as provided in
this Agreement.
"CONTRACT" - any agreement, contract, obligation, promise, or
undertaking that is legally binding.
"CONTROLLED GROUP PLANS" - as defined in Section 3.10(b)(ix).
"DAMAGES" - as defined in Section 10.2.
"DEFINED BENEFIT PLAN" - with the meaning of ERISA Section 3(35).
"DFA" - as defined in the first paragraph of this Agreement.
"DISCLOSURE LETTER" - the disclosure letter delivered by Sellers to
Buyer concurrently with the execution and delivery of this Agreement.
"DOJ" - the United States Department of Justice.
"DOL" - the United States Department of Labor.
"EMPLOYEE BENEFIT PLAN" - - as defined in Section 3.10(b)(ix).
Page 3
<PAGE> 10
"ENCUMBRANCE" - any lien, mortgage, easement, servitude, right of way,
charge, pledge, security interest, or other encumbrance.
"ENVIRONMENT" - soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air, plant and animal life, and any other environmental medium.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" - any cost, damage,
expense, liability, or obligation arising from or under any Environmental Law
or Occupational Safety and Health Law.
"ENVIRONMENTAL LAW" - any Legal Requirement that relates to the
Environment.
"ERISA" - the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA AFFILIATE" - The Company, the Sellers, and each corporation,
partnership or other trade or business, whether or not incorporated, which is
or has been treated as a single employer or a controlled group member with any
Seller or the Company pursuant to IRC Section 414 or Section 4001 of ERISA.
"FACILITIES" - any real property, leaseholds, or other interests in
real property owned or operated by the Company and any buildings, plants,
structures, or fixtures owned or operated by the Company.
"FINANCIAL STATEMENTS" - as defined in Section 3.4.
"FTC" - the United States Federal Trade Commission.
"GOVERNMENTAL AUTHORIZATION" - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" - any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature; or
Page 4
<PAGE> 11
(d) other body exercising any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or
power.
"HAZARDOUS ACTIVITY" - the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, or use of Hazardous
Materials from the Facilities into the Environment that is not in compliance
with Environmental Law.
"HAZARDOUS MATERIALS" - any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law.
"HSR ACT" - the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INDEBTEDNESS OWED TO HARRIS TRUST" - the aggregate amount of
indebtedness and other obligations (including prepayment penalties, if any)
owed by the Company to Harris Trust and Savings Bank as of the Closing Date
pursuant to the terms of that certain Credit Agreement dated October 31, 1996.
"INDEBTEDNESS OWED TO MID-AM CAPITAL" - the aggregate amount of
indebtedness and other obligations (including prepayment penalties, if any)
owed by the Company to Mid-Am Capital, L.L.C. or Mid-Am Finance, Inc. as of the
Closing Date pursuant to the terms of (a) that certain Subordinated Promissory
Note (Interest to be Paid) dated October 31, 1996 in the original principal
amount of $9,000,000 and (b) that certain Subordinated Working Capital Line of
Credit dated December 17, 1997 providing for a line of credit of up to
$5,000,000.
"INDEMNIFIED PERSONS" - as defined in Section 10.3.
"INTELLECTUAL PROPERTY ASSETS" - as defined in Section 3.18(a).
"INTERESTS" - as defined in the Recitals of this Agreement.
"INTERIM BALANCE SHEET" - as defined in Section 3.4.
"IRC" - the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KEY EMPLOYEES" - as defined in Section 5.8.
Page 5
<PAGE> 12
"KNOWLEDGE" - a Person (other than an individual) will be deemed to
have "Knowledge" of a particular fact or other matter if any individual who is
serving as a director, officer, or partner, of such Person (or in any similar
capacity) has knowledge of such fact or other matter.
"LEGAL REQUIREMENT" - any administrative order, constitution, law,
ordinance, principle of common law, regulation, rule or statute of any
Governmental Body, including without limitation all federal, state and local
laws related to Taxes, ERISA, Hazardous Materials and the Environment, zoning
and land use, Occupational Safety and Health Laws, product quality and safety,
employment and labor matters.
"LOS ASSIGNEE" - as defined in Section 12.8.
"LOS INC." - as defined in the first paragraph of this Agreement.
"LOS INC. INTERESTS" - as defined in Section 2.5.
"LOS OWNERS" - Allen A. Meyer and Robert L. Fleming
"MARKS" - as defined in Section 3.18(a)(i).
"MATERIAL ADVERSE EFFECT" - any material adverse effect on the
business, properties, assets, condition (financial or otherwise), liabilities
or results of operation of the Company taken as a whole, other than any effects
arising out of or resulting from changes affecting the economy or financial
conditions generally or the dairy industry generally.
"MATERIAL CUSTOMERS" - as defined in Section 3.14(c).
"NEW DFA PREFERRED CAPITAL INTERESTS" - as defined in Section 2.1(b).
"OCCUPATIONAL SAFETY AND HEALTH LAW" - any Legal Requirement designed
to provide safe working conditions and to reduce occupational safety and health
hazards.
"OPERATING AGREEMENT" - the Operating Agreement of the Company dated
as of October 10, 1996 together with any amendments thereto.
"ORDER" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person; and
Page 6
<PAGE> 13
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or Group of
Persons exercising similar authority).
"ORGANIZATIONAL DOCUMENTS" - (a) the certificate of formation of the
Company; (b) the Operating Agreement; (c) the organizational minutes or
resolutions of the Company; and (d) any amendment to any of the foregoing.
"OUTSTANDING AMOUNT OF LONG TERM INDEBTEDNESS" - the sum of (i) the
Indebtedness Owed to Harris Trust (ii) the Indebtedness Owed to Mid-Am Capital
and (iii) any other indebtedness for borrowed money, including any prepayment
penalties and other amounts required to be paid to the lender thereof in
connection with the repayment thereof.
"OUTSTANDING AMOUNT OF PREFERRED CAPITAL" - the sum of the Unreturned
Preferred Capital Balance and the Preferred Return (each as defined in the
Operating Agreement) of the Preferred Capital as of the Closing Date.
"PENSION PLAN" - any pension plan within the meaning of ERISA Section
3(2).
"PERSON" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, or other entity.
"PREFERRED CAPITAL" - the Preferred Capital (as defined in the
Operating Agreement) in the Company held by DFA.
"PROCEEDING" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, any
Governmental Body or arbitrator.
"RECAPITALIZATION" - as defined in Section 2.1(b).
"RELEASE" - any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment.
"REPORTABLE EVENT" as defined in Section 4043 of ERISA.
"REPRESENTATIVE" - with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT" - the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS" - as defined in the first paragraph of this Agreement.
Page 7
<PAGE> 14
"SELLERS' CLOSING DOCUMENTS" - as defined in Section 3.2.
"SELLERS' INDEMNIFIED PERSONS" - as defined in Section 10.3.
"TAXES" - all taxes, charges, fees, duties, levies or other
assessments, including, without limitation, income, gross receipts, net
proceeds, ad valorem, real and personal property (tangible and intangible),
sales, use, franchise, user, transfer, fuel, excess profits, occupational,
employees' income withholding, unemployment and Social Security taxes, which
are imposed by any Governmental Body.
"TAX DISTRIBUTION" - as defined in Section 5.5.
"TAX PREFERRED SECURITIES" - as defined in Section 2.1(c).
"TAX RETURN" - any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax.
"TAX YEAR" - as defined in Section 5.5.
"TERRITORY" - as defined in Section 11.3(a).
"TRADE SECRETS" - as defined in Section 3.18(a)(ii).
"TRUST" - as defined in Section 2.1(c).
SECTION 2
SALE AND TRANSFER OF INTERESTS; CLOSING; RECAPITALIZATION
2.1 INTERESTS. Subject to the terms and conditions of this
Agreement, at the Closing, (a) LOS Inc. will sell and transfer all of its
Interests to Buyer, and Buyer will purchase all of such Interests from LOS
Inc., (b) Buyer, DFA Investment and DFA will recapitalize the Company and
pursuant to such recapitalization (the "Recapitalization"), DFA Investment's
Interests in the Company will be converted into new preferred capital interests
in the Company (the "New DFA Preferred Capital Interests") in a net aggregate
stated amount of $111,000,000 and the Outstanding Amount of Preferred Capital
will be converted into an equal net aggregate stated amount (which will be
specified in a certificate delivered by DFA to Buyer one business day prior to
Closing) of New DFA Preferred Capital Interests, (c) DFA Investment will retain
$20 million in net aggregate stated amount of New DFA Preferred Capital
Interests and will sell $91,000,000 in net aggregate stated amount of New DFA
Preferred Capital Interests to Buyer and Buyer will pay DFA Investment
$91,000,000 in cash for such New DFA Preferred Capital Interests, (d) Buyer
will
Page 8
<PAGE> 15
cause the Company to redeem the New DFA Preferred Capital Interests issued to
DFA pursuant to the Recapitalization, and (e) DFA Investment will purchase for
$100 million in cash from the Suiza Capital Trust, a statutory business trust
to be created by Buyer under the laws of the State of Delaware (the "Trust"),
trust issued preferred equity securities ("TIPES") of the Trust in a net
aggregate stated amount of $100 million. The TIPES will have material terms
and conditions substantially as set forth in Exhibit A.
2.2 PURCHASE PRICE PAYABLE TO LOS INC. The purchase price to be
paid by Buyer to LOS Inc. for the Interests of LOS Inc. will be (a)
$119,000,000 if the Closing occurs prior to May 4, 1998 and (b) $111,000,000 if
the Closing occurs on May 4, 1998 or thereafter.
2.3 CLOSING. The purchase and sale (the "CLOSING") provided for
in this Agreement will take place at the offices of Sellers' counsel at Suite
4300, 901 Main Street, Dallas, Texas, at 10:00 a.m. (local time) on the third
business day following the satisfaction or waiver of all conditions precedent
set forth in Sections 7 and 8, or at such other time and place as the parties
agree. Subject to the provisions of Section 9, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at
the place determined pursuant to this Section 2.3 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
2.4 CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver or will cause to be delivered to
Buyer a certificate executed by Sellers representing and warranting to
Buyer that Sellers' representations and warranties in this Agreement
are accurate in all material respects as if made on the Closing Date;
(b) LOS Inc. will deliver or will cause to be delivered
to Buyer documents evidencing the transfer of all of LOS Inc.'s
Interests to Buyer;
(c) Buyer will deliver or will cause to be delivered (i)
to LOS Inc. by wire transfer, the purchase price specified in Section
2.2 and (ii) to Sellers a certificate executed by Buyer to the effect
that, except as otherwise stated in such certificate, Buyer's
representations and warranties in this Agreement are accurate in all
material respects as if made on the Closing Date;
(d) Buyer, DFA Investment and DFA will execute and
deliver an amendment and restatement of the Operating Agreement in the
form attached hereto as Exhibit B which will effect the
Recapitalization and, among other things, will provide for the
issuance of the New DFA Preferred Capital Interests and for a put in
favor of DFA Investment and a call in favor of Buyer with respect to
the $20 million in net aggregate stated amount of New DFA Preferred
Capital Interests which are not sold by DFA Investment to Buyer at
Closing;
Page 9
<PAGE> 16
(e) DFA Investment will deliver or will cause to be
delivered to Buyer documents evidencing the transfer to Buyer of New
DFA Preferred Capital Interests having a net aggregate stated value
equal to $91,000,000, and Buyer will deliver to DFA Investment, by
wire transfer, $91,000,000;
(f) DFA Investment will pay to the Trust, by wire
transfer, $100 million and upon receipt thereof the Trust will issue
to DFA Investment $100 million in net aggregate stated amount of
TIPES; and
(g) Buyer will cause the Company to redeem the New DFA
Preferred Capital Interests issued to DFA pursuant to the
Recapitalization.
2.5 ALLOCATION OF PURCHASE PRICE The parties agree that, in
accordance with IRC Sections 751 and 1060, the purchase price to be paid by
Buyer for the Interests held by LOS Inc. and for the New DFA Preferred Capital
Interests, and by the Company for the redemption of the New DFA Preferred
Capital Interests issued to DFA pursuant to the Recapitalization, shall be
allocated among the assets of the Company attributable to such interests in the
Company as set forth on Schedule 2.5 attached to and made a part of this
Agreement. For this purpose, such purchase price shall include any liabilities
of the Company that are treated as part of the purchase price of the LOS Inc.
Interests for Federal income tax purposes. Each party agrees not to, and
agrees to cause the Company not to, take a position on any Tax Return that is
inconsistent with the allocation set forth on Schedule 2.5. LOS Inc., DFA
Investment, DFA and the Buyer each agree, to the extent such filing is
required, to file Form 8594 (Asset Acquisition Statement under Section 1060)
consistent with such allocation.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer as follows (provided, however,
that the Disclosure Letter sets forth certain exceptions to such
representations and warranties or discloses certain matters in response to such
representations and warranties, in each case identified by the applicable
Section numbers below):
3.1 ORGANIZATION AND GOOD STANDING.
(a) The Company is a limited liability company duly
organized, validly existing, and in good standing under the laws of
the State of Delaware, with full limited liability company power and
authority to conduct its business as it is now being conducted. The
Company is duly qualified to do business as a foreign limited
liability company and is in good standing under the laws of each state
or other jurisdiction in which the nature of the activities conducted
by it requires such qualification, except where such failure to so
qualify does not have a Material Adverse Effect.
Page 10
<PAGE> 17
(b) Sellers have delivered to Buyer copies of the
Organizational Documents of the Company, as currently in effect.
(c) The Company does not own any direct or indirect
equity or debt interest in any other Person and is not obligated or
committed to acquire any such interest.
3.2 AUTHORITY; NO CONFLICT; CONSENTS.
(a) This Agreement constitutes the legal, valid, and
binding obligation of each of the Sellers, enforceable against such
Seller in accordance with its terms except to the extent that its
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other laws relating
or affecting creditors' rights generally and by general equity
principles.
(b) Each Seller has the requisite cooperative or
corporate right, power, authority, and capacity to execute and deliver
this Agreement and to perform its obligations under this Agreement.
The execution, delivery and performance of this Agreement by each of
the Sellers have been duly authorized by all necessary corporate or
cooperative action, as the case may be, on the part of the Company,
the Sellers and the owners of the Sellers.
(c) Except for any Consent which may be required under
the HSR Act, neither the execution and delivery of this Agreement nor
the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly:
(i) conflict with (A) any provision of the
Organizational Documents, or (B) any resolution adopted by the
Representative Committee of the Company or the owners of the
Interests of the Company;
(ii) result in a violation of, or give any
Governmental Body or other Person the right to exercise any
remedy or obtain any relief under, any Legal Requirement or
any Order to which the Company is subject;
(iii) result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company;
(iv) result in a violation or breach of any
provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or
modify, any Contract of the Company described in Section
3.14(a); or
(v) result in the imposition or creation of any
Encumbrance upon any of the assets owned or used by the
Company.
Page 11
<PAGE> 18
(d) No Seller or the Company is or will be required to
obtain any Consent from any Person or Governmental Body in connection
with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions, except for:
(i) Consents, if any, required under the HSR Act; (ii) Consents as
will be obtained by Closing; or (iii) where the failure to obtain such
Consents will not have a Material Adverse Effect.
3.3 CAPITALIZATION. The authorized and outstanding limited
liability company interests of the Company are listed in Section 3.3 of the
Disclosure Letter. Sellers are and will be on the Closing Date the record and
beneficial owners and holders of the Interests, free and clear of all
Encumbrances, and the Interests are the only outstanding ownership interests in
the Company. The LOS Owners own all of the outstanding ownership interests in
LOS Inc. At the Closing, after giving effect to the Recapitalization, DFA
Investment and DFA will be the sole record and beneficial owners and holders of
the New DFA Preferred Capital Interests, free and clear of all Encumbrances.
All of the outstanding Interests of the Company to be purchased by Buyer have
been duly authorized and validly issued and are fully paid and nonassessable.
All of the New DFA Preferred Capital Interests to be purchased by Buyer will
have been duly authorized and validly issued and will be fully paid and
nonassessable. Except for certain rights of first refusal set forth in the
Operating Agreement, (which are being waived with respect to the Contemplated
Transactions pursuant to Section 12.14 of this Agreement) there are no
Contracts relating to the issuance, sale, or transfer of any Interests of the
Company. None of the outstanding Interests of the Company was issued in
violation of the Securities Act.
3.4 FINANCIAL STATEMENTS. Included within Section 3.4 of the
Disclosure Letter are: (a) the audited financial statements (i) of the Company
for the two month period ended December 31, 1996 and (ii) of LOS Inc. for the
year ended December 31, 1996, (b) an unaudited balance sheet of the Company as
at November 30, 1997 (the "INTERIM BALANCE SHEET") and a profit and loss
statement for the 11 months ended on the Interim Balance Sheet Date
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements fairly
present in all material respects the assets and liabilities, financial
condition and the results of operations, changes in stockholders' equity or
membership equity, as applicable, and cash flow of LOS Inc. or the Company, as
applicable, as at the respective dates of and for the periods referred to in
such Financial Statements. The Financial Statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
subject in the case of the unaudited statements to the absence of footnote
disclosure and other presentation items and to changes resulting from normal
period-end adjustments for recurring accruals, which will not have a Material
Adverse Effect. Subject to the limitations provided in the immediately
preceding sentence, the Financial Statements have been prepared from the books
and records of the Company and LOS Inc., as applicable, which accurately and
fairly reflect in all material respects the transactions of, acquisitions and
dispositions of assets by, and incurrence of liabilities by the Company and LOS
Inc., as applicable. All inventories and raw materials reflected in the
Interim Balance Sheet or acquired since the date thereof are of good and
merchantable quality and are salable in the ordinary course of business (in the
case of inventory held for sale) or currently usable (in the case of other
inventory and raw materials) or adequate reserves have been established with
respect thereto. All
Page 12
<PAGE> 19
accounts receivable reflected in the Interim Balance Sheet or acquired since
the date thereof arose in the Ordinary Course of Business and are not subject
to set-off, counterclaim or other reduction. As of the Interim Balance Sheet
Date, the Outstanding Amount of Long Term Indebtedness was $41,516,000, and
since such date the Outstanding Amount of Long Term Indebtedness has not
changed except (A) for changes specifically permitted under Section 3.13(h) and
(B) for distributions or bonuses paid by the Company for the 1997 fiscal year
of the Company which are set forth in Section 3.8 of the Disclosure Letter. As
of December 31, 1997, the Outstanding Amount of Preferred Capital equaled
$13,564,200, and such amount has not increased since such date except to
reflect accrued but unpaid distributions after such date.
3.5 BOOKS AND RECORDS. The books of account, minute books, and
other records of the Company, all of which have been made available to Buyer,
are complete and correct. At the Closing, all of those books and records will
be in the possession of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES.
(a) Section 3.6(a) of the Disclosure Letter includes a
complete list (including the street address, where applicable) of each
Facility and of each material item of tangible personal property owned
by the Company as of the date indicated. The tangible personal
property listed in the Disclosure Letter is in good repair and
operating condition, normal wear and tear excepted.
(b) The Company owns all the properties and assets
(whether real, personal, or mixed and whether tangible or intangible)
that it purports to own located in the Facilities owned or operated by
the Company or reflected as owned in the books and records of the
Company, including all of the properties and assets reflected in the
Interim Balance Sheet (except for personal property sold since the
date of the Interim Balance Sheet in the Ordinary Course of Business),
and all of the properties and assets purchased or otherwise acquired
by the Company since the date of the Interim Balance Sheet (except for
personal property acquired and sold since the date of the Interim
Balance Sheet in the Ordinary Course of Business). Except as
described in Section 3.6(b) of the Disclosure Letter, all material
properties and assets reflected in the Interim Balance Sheet are free
and clear of all Encumbrances except for (a) security interests
incurred in connection the Indebtedness Owed to Harris Bank and (b)
liens for current Taxes not yet due.
(c) Permanent certificates of occupancy have been issued
for the improvements included within the Facilities permitting the
existing use of such improvements. To Sellers' knowledge, there are
no proceedings pending or threatened that would alter the current
zoning classification of the Facilities or alter any applicable laws,
statutes, regulations, codes, conditions or restrictions related to
zoning or land use that would adversely affect the existing use of the
Facilities in the Company's business. Except as described in Section
3.6(c) of the Disclosure Letter, the Company has not received any
written notice from any insurance company of any defects or
inadequacies in the Facilities that would, if not corrected, result in
the termination of existing insurance coverage or a
Page 13
<PAGE> 20
material increase in the present cost thereof. The Company has not
received any written notice providing for or threatening the
discontinuation of necessary utilities to the Facilities. None of the
Sellers or LOS owners is a "foreign person" as that term is defined in
Section 1445 of the IRC.
3.7 NO UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for (a) liabilities or obligations
reflected or reserved against in the Interim Balance Sheet (b) current
liabilities incurred in the Ordinary Course of Business since the date thereof
and (c) matters disclosed in Section 3.7 of the Disclosure Letter.
3.8 TAXES. Except as set forth in Section 3.8 of the Disclosure
Letter:
(a) The Company has filed or caused to be filed on a
timely basis all Tax Returns that are or were required to be filed by
it pursuant to applicable Legal Requirements. The Company has paid,
or made provision for the payment of, all Taxes that have become due
and payable as Taxes imposed on the Company pursuant to those Tax
Returns or otherwise, or pursuant to any assessment received by the
Company, except such Taxes, if any, as are being contested in good
faith and as to which adequate reserves have been provided in the
Interim Balance Sheet.
(b) The Company has not been granted an extension of time
for filing any Tax Return that has not yet been filed.
(c) The charges, accruals, and reserves with respect to
Taxes on the respective books of the Company are adequate in all
material respects. There exists no proposed tax assessment against the
Company except as disclosed in the Interim Balance Sheet. All Taxes
that the Company is or was required by Legal Requirements to withhold
or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper Governmental Body.
(d) All Tax Returns filed by the Company are true,
correct, and complete with respect to Taxes imposed on the Company.
The Company is not, and within the five-year period preceding the
Closing Date has not been, an "S" corporation.
(e) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable
to any claim for, or the period for the collection or assessment of,
Taxes due from or with respect to the Company for any taxable period.
(f) No Proceeding is pending or, to Sellers' knowledge,
threatened in regard to any Taxes due from or with respect to the
Company or any Tax Return filed by or with respect to the Company.
Page 14
<PAGE> 21
(g) The Company has made distributions to its members in
order to reimburse them for Taxes resulting from the inclusion in
their taxable income of income of the Company. The amount, date and
recipient of each such distribution (i) made since the incorporation
of LOS Inc. or the formation of the Company, as applicable, or (ii)
that the Company anticipates making prior to the Closing Date, the
period of the income the Tax upon which each such distribution was or
will be designed to reimburse and the Tax computations for such
periods, are set forth in Section 3.8 of the Disclosure Letter.
3.9 NO MATERIAL ADVERSE CHANGE. Since the date of the Interim
Balance Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition (financial or
otherwise) of the Company.
3.10 EMPLOYEE BENEFITS.
(a) Section 3.10(a) of the Disclosure Letter lists each
Company Plan.
(b) Except as set forth in Section 3.10(b) of the
Disclosure Letter:
(i) The terms and operations of each and every
Company Plan have at all times been in accordance with ERISA,
the IRC, and/or any and all other applicable laws and
regulations.
(ii) All governmental reports and returns
(including, but not limited to, annual IRS/DOL 5500-series
information returns/reports) required to be filed in
connection with all Company Plans have been timely filed, and
were true and complete when filed.
(iii) The Company does not have a contribution
obligation to a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA.
(iv) The Company has not participated in any
transaction that could reasonably be expected to result in a
Material Adverse Effect to the Company under ERISA Section
4069.
(v) All required contributions to all Company
Plans and all premiums, fees, or other payments required to be
made in connection with any Company Plan have either been
timely made or are reflected in the Financial Statements on an
accrual basis.
(vi) No Company Plan is currently under audit by
the IRS or the DOL.
(vii) Other than routine claims for benefits, there
are no actions, suits, claims or investigations pending, or to
Sellers' knowledge, threatened against or with respect to any
of the Company Plans or their assets.
Page 15
<PAGE> 22
(viii) With respect to any Employee Benefit Plan
which is a "Defined Benefit Plan" with the meaning of ERISA
Section 3(35), (A) the Company has not incurred and is not
reasonably likely to incur any liability under Title IV of
ERISA (other than for the payment of premiums, all of which
have been paid when due), (B) the Company has not incurred any
accumulated funding deficiency within the meaning of IRC
Section 412 and has not applied for or obtained a waiver of
any minimum funding standard or an extension of any
amortization period under IRC Section 412, and (C) no
"Reportable Event" as defined in Section 4043 of ERISA) has
occurred or is expected to occur.
(ix) With respect to each "Employee Benefit Plan"
(as defined in ERISA) maintained or contributed to, currently
or in the past, by the Company or any ERISA Affiliate, or with
respect to which the Company or any ERISA Affiliate has
liability (the "Controlled Group Plans"); (A) there are no
unfunded liabilities existing under any Control Group Plan and
each Controlled Group Plan could be terminated as of the date
of Closing with no liability to the Company, any Seller or
Buyer; and (B) each such Control Group Plan has been operated
in compliance with ERISA, applicable tax qualification
requirements and all other applicable laws.
(x) Neither the Company any Seller, any ERISA
Affiliate nor any plan fiduciary of any Company Plan has
engaged in any transaction in violation of Section 406(a) of
ERISA or any "prohibited transaction" (as defined in IRC
Section 4975(c)(1) that would subject the Company, any Seller,
Buyer or any ERISA Affiliate to any taxes, penalties or other
liabilities resulting from such transaction.
(c) Except as set forth in Section 3.10(c) of the
Disclosure Letter, the Company is not a party to or subject to any
collective bargaining agreement, contract, commitment or arrangement,
nor does any other written agreement determine the terms and
conditions of employment of any employee of the Company, nor will this
Agreement or the transactions contemplated hereby cause a termination
or renegotiation of, or trigger any rights or result in a default
under, any such agreement. To Seller's Knowledge, no attempts are
presently being made, to organize or represent any employees or group
of employees of the Company.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS. Except as set forth in Section 3.11 of the Disclosure Letter:
(a) The Company is in compliance with each Legal
Requirement that is applicable to it or to the conduct or operation of
its business.
(b) No event has occurred or circumstance exists that
(with or without notice or lapse of time) (i) constitutes a violation
by the Company of, or a failure on the part of the Company to comply
with, any Legal Requirement, or (ii) may give rise to any
Page 16
<PAGE> 23
obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action.
(c) The Company has not received any outstanding notice
from any Governmental Body or any other Person regarding (i) any
actual or alleged violation of any Legal Requirement, or (ii) any
actual or alleged obligation on the part of the Company to undertake,
or to bear the cost of, any remedial action of any nature.
(d) The Company holds all Governmental Authorizations
that are required in connection with the business of the Company.
Each such Governmental Authorization is valid and in full force and
effect except where the failure to keep such authorization valid and
in full force and effect will not have a Material Adverse Effect.
(e) The Company is in compliance with all of the terms
and requirements of each Governmental Authorization.
(f) The Company has not received any outstanding notice
from any Governmental Body or any other Person regarding (i) any
actual or alleged violation of any term or requirement of any
Governmental Authorization, or (ii) any actual or proposed revocation,
withdrawal, suspension, cancellation, termination of, or modification
to any Governmental Authorization.
(g) All applications required to have been filed for the
renewal of the Governmental Authorizations have been duly filed on a
timely basis with the appropriate Governmental Bodies, and all other
filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the
appropriate Governmental Bodies.
(h) The Governmental Authorizations held by the Company
constitute all of the Governmental Authorizations necessary to permit
the Company to lawfully conduct and operate its business in the manner
it currently operates such business.
(i) To the Sellers' knowledge, since September 1, 1994,
none of the Company's officers, employees or agents, nor any other
Person acting on behalf of any of them or the Company has, directly or
indirectly, given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person in violation
of any Legal Requirement, including, without limitation, the Foreign
Corrupt Practices Act.
(j) Since September 1, 1994 the Company has not effected
a recall or withdrawal of any of its products for health reasons, and,
to the Sellers' Knowledge, no facts have existed that, if known by the
applicable Governmental Body, would have resulted in such a recall or
withdrawal.
Page 17
<PAGE> 24
3.12 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Section 3.12(a) of the
Disclosure Letter, there is no Proceeding:
(i) pending or threatened against the Company
which, alone or in the aggregate, has had or would (if decided
adversely) have, a Material Adverse Effect; or
(ii) that challenges, or that may have the effect
of preventing or making illegal, any of the Contemplated
Transactions.
Sellers have delivered, or have caused the Company to deliver,
to Buyer copies of all pleadings, correspondence, and other documents
relating to each pending Proceeding related to the Company.
(b) Except as set forth in Section 3.12(b) of the
Disclosure Letter:
(i) there is no Order to which the Company is
subject;
(ii) no Affiliate, agent, or employee of the
Company is subject to any Order that prohibits such Affiliate,
agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of the Company
which would have a Material Adverse Effect; and
(iii) no event has occurred or circumstance exists
that constitutes or results in (with or without notice or
lapse of time) a violation of or failure to comply with any
term or requirement of any Order to which the Company is
subject.
3.13 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Section 3.13 of the Disclosure Letter, since the date of the Interim Balance
Sheet, the Company has conducted its businesses only in the Ordinary Course of
Business and there has not been any Material Adverse Effect or any:
(a) change in the Company's authorized or issued
Interests; grant of any option or right to purchase Interests of the
Company; issuance of any security convertible into Interests; grant of
any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any Interests; or declaration or payment
of any dividend or other distribution or payment in respect of
Interests;
(b) amendment to the Organizational Documents of the
Company;
Page 18
<PAGE> 25
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any Affiliate, or (except in the
Ordinary Course of Business) employee or entry into any employment,
severance, or similar Contract with any Affiliate, or employee;
(d) adoption of, or increase in the payments to or
benefits under, any profit sharing, bonus, deferred compensation,
savings, insurance, pension, retirement, or other employee benefit
plan for or with any employees of the Company;
(e) damage to or destruction or loss of any material
asset or property of the Company that is not covered by insurance;
(f) entry into, termination of, or receipt of notice of
termination of any Contract or transaction involving a total remaining
commitment by or to the Company that could exceed $100,000 or any
material breach or material default (or event that with notice or
lapse of time would constitute a material breach or material default)
under any such Contract;
(g) sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or
property of the Company or any Encumbrance on any material asset or
property of the Company;
(h) any incurrence of indebtedness for borrowed money or
any other change in the Outstanding Amount of Long Term Indebtedness,
except for (i) decreases resulting from scheduled principal payments
on the term loan portion of the Indebtedness Owed to Harris Trust,
(ii) increases or decreases resulting from borrowings and repayments
made in the Ordinary Course of Business pursuant (A) to the
Subordinated Working Capital Line of Credit in the amount of
$5,000,000 owed to Mid-Am Capital, L.L.C. and (B) to the revolving
credit portion of the Indebtedness Owed to Harris Trust; (iii)
increases or decreases resulting from borrowings and repayments made
pursuant to the revolving credit portion of the Indebtedness Owed to
Harris Trust to make Tax Distributions permitted under Section 5.5,
and (iv) increases resulting from the accrual of interest on the
Indebtedness Owed to Harris Trust and the Indebtedness Owed to Mid-Am
Capital in accordance with the terms thereof;
(i) material change in the accounting methods used by the
Company; or
(j) Contract, whether oral or written, by the Company to
do any of the foregoing.
3.14 CONTRACTS; NO DEFAULTS.
(a) Section 3.14(a) of the Disclosure Letter contains a
complete and accurate list of:
Page 19
<PAGE> 26
(i) each Contract that involves performance of
services or delivery of goods or materials by or to the
Company of an amount or value that could exceed $100,000;
(ii) each Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures
or receipts of the Company that could exceed $100,000 or that
is otherwise material to the Company;
(iii) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Contract affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or
personal property (except personal property leases and
installment and conditional sales agreements having a value
per item or aggregate payments of less than $100,000 and with
terms of less than one year);
(iv) each Contract containing covenants that
materially restrict the business activity of the Company or
limit the freedom of the Company to engage in any line of
business or to compete with any Person;
(v) each employment, consulting, noncompetition,
separation, collective bargaining, union or labor Contract;
(vi) each Contract with or for the benefit of any
Seller or Affiliate or, to the Sellers' knowledge, any
immediate family member of an Affiliate;
(vii) each Contract under which the Company is
obligated to indemnify, or entitled to indemnification from,
any third party, excluding any agreement that requires
indemnification solely for a breach of such agreement:
(viii) each Contract for capital expenditures in
excess of $100,000; and
(ix) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
(b) With respect to the Contracts identified in Section
3.14(a) of the Disclosure Letter:
(i) each Contract is in full force and effect
and is valid and enforceable in accordance with its terms
except to the extent that its enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other laws relating or affecting creditors'
rights generally and by general equity principles;
Page 20
<PAGE> 27
(ii) the Company has delivered to Buyer a copy of
each such Contract that is in writing and a written summary
accurately describing the material provisions of each such
Contract that is not in writing;
(iii) the Company is in compliance with all
material terms and requirements; and
(iv) the Company has not given to or received from
any other Person any notice regarding any actual or alleged
violation of any Contract.
(c) Section 3.14(c) of the Disclosure Letter includes a
complete list of each customer of the Company that accounted for more
than $1,000,000 in gross sales of the Company during the years ended
December 31, 1996 and December 31, 1997 (the "MATERIAL CUSTOMERS") and
indicating the amount of gross sales attributable to each Material
Customer during such years. None of the Material Customers has
notified the Company or either Seller of any intention to, or to
Sellers' Knowledge otherwise threatened to, terminate or materially
alter its relationship with the Company, and there has been no
material dispute with a Material Customer since January 1, 1996.
3.15 INSURANCE.
(a) Sellers have delivered to Buyer true and complete
copies of all policies of insurance to which the Company is a party or
under which the Company, or any director of the Company, is covered.
(b) Section 3.15 of the Disclosure Letter describes:
(i) any self-insurance arrangement by the
Company, including any reserves established thereunder; and
(ii) all material obligations of the Company to
third parties with respect to insurance (including such
obligations under leases and service agreements) and
identifies the policy under which such coverage is provided.
(c) All policies to which the Company is a party or that
provide coverage to the Company taken together provide adequate
insurance coverage for the assets and the operations of the Company
for all risks normally insured against by a Person carrying on the
same business as the Company.
(d) The Company has not received (i) any refusal of
coverage or any notice that a defense will be afforded with
reservation of rights, or (ii) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or will not be renewed or will be renewed only with a material
increase in cost or that the issuer of any policy is not willing or
able to perform its obligations thereunder.
Page 21
<PAGE> 28
3.16 ENVIRONMENTAL MATTERS. Except as set forth in Section 3.16 of
the Disclosure Letter:
(a) The Company has not violated and is not in violation
of any Environmental Law.
(b) None of the Facilities contains any Hazardous
Materials in amounts exceeding the levels permitted by applicable
Environmental Law or under circumstances that would require
remediation or removal under Environmental Law.
(c) The Company has not engaged in any Hazardous
Activities, and no Hazardous Materials have been disposed of, released
or transported in violation of any applicable Environmental Law to or
from any of the Facilities.
(d) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance
or noncompliance with any Environmental Law conducted by or on behalf
of the Company, or which are in the possession of the Company,
relating to the activities of the Company or any of the Facilities
that have not been delivered to Buyer.
(e) No Seller or the Company has received any actual or
threatened Order or notice from any Governmental Body or the current
or prior owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any Environmental Law,
or of any actual or threatened obligation to undertake or bear the
cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities.
3.17 LABOR RELATIONS; COMPLIANCE. Section 3.17 of the Disclosure
Letter includes a complete list of all current employees of the Company as of
the date set forth therein, including date of employment, current title and
compensation, and date and percentage of last increase in compensation and
indicating any employees on disability or other permitted leaves of absence.
There is not presently pending or existing (a) any strike, slowdown, picketing,
work stoppage, or employee grievance process, or (b) any Proceeding against or
affecting the Company relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters. To Sellers'
Knowledge, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute. There is no lockout of any
employees by the Company. The Company has complied with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health, and plant
closing.
3.18 INTELLECTUAL PROPERTY.
(a) The term "INTELLECTUAL PROPERTY ASSETS" includes:
Page 22
<PAGE> 29
(i) the name Land-O-Sun, all fictional business
names, trading names, registered and unregistered trademarks,
service marks, and applications (collectively, "MARKS") owned,
used, or licensed by the Company as licensee or licensor; and
(ii) all know-how, trade secrets, confidential
information, customer lists, software, technical information,
data, process technology, plans, drawings, and blue prints
(collectively, "TRADE SECRETS") owned, used, or licensed by
the Company as licensee or licensor.
(b) The Company has the right to use all of the
Intellectual Property Assets without infringing on or otherwise acting
adversely to the rights or claimed rights of any Person. Section
3.18(b) of the Disclosure Letter contains a complete and accurate list
and summary description, including any royalties paid or received by
the Company, of all Contracts relating to the Intellectual Property
Assets to which the Company is a party or by which the Company is
bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs
with a value of less than $50,000 under which the Company is the
licensee. There are no outstanding disputes or disagreements with
respect to any such Contract.
(c) Section 3.18(c) of the Disclosure Letter contains a
complete and accurate list and summary description of all Marks.
Except for Marks used under licences disclosed in Section 3.18(b) of
the Disclosure Letter, the Company is the owner of all right, title,
and interest in and to each of the Marks, free and clear of all
Encumbrances. To Sellers' Knowledge, there is no potentially
interfering trademark or trademark application of any third party, and
no Mark is infringed or has been challenged or threatened in any way.
To Sellers' Knowledge, none of the Marks used by the Company infringes
or is alleged to infringe any trade name, trademark, or service mark
of any third party.
3.19 BROKERS OR FINDERS. Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement for which Buyer will be liable.
3.20 COMPETING INTERESTS. Except as set forth in Section 3.20 of
the Disclosure Letter, neither of the Sellers, nor any Person that controls, is
controlled by or is under common control with either Seller, nor, to the
Sellers' Knowledge, any Affiliate owns, directly or indirectly, an interest in
any Person that is a competitor, customer or supplier of the Company or that
otherwise has material business dealings with the Company, other than ownership
of less than 1% of publicly traded securities of such Person.
3.21 NO MISREPRESENTATIONS. The representations, warranties and
statements made by the Sellers in or pursuant to this Agreement are true,
complete and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact
Page 23
<PAGE> 30
necessary to make any such representation, warranty or statement, under the
circumstances in which it is made, not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware and has the corporate power to carry on its business as it is now
being conducted or currently proposed to be conducted. Buyer is duly qualified
to do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which the nature of the activities
conducted by it requires such qualification, except where such failure to so
qualify does not have a material adverse effect on Buyer.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement has been duly authorized for execution
by the Board of Directors of Buyer and constitutes the legal, valid,
and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms except to the extent that its enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other laws relating or affecting creditors'
rights generally and by general equity principles. Buyer has the
absolute and requisite corporate right, power, and authority to
execute and deliver this Agreement and to perform its obligations
under this Agreement.
(b) Neither the execution and delivery of this Agreement
by Buyer nor the consummation or performance of any of the
Contemplated Transactions by Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated
Transactions pursuant to:
(i) any provision of Buyer's Organizational
Documents;
(ii) any Legal Requirement or Order to which Buyer
may be subject; or
(iii) any Contract to which Buyer is a party or by
which Buyer may be bound.
(c) Buyer is not required to obtain any Consent from any
Person or Governmental Body in connection with the execution and
delivery of this Agreement or
Page 24
<PAGE> 31
the consummation of any of the Contemplated Transactions, except under
the HSR Act and except for such Consents as will be obtained by Buyer
prior to Closing.
4.3 INVESTMENT INTENT. Buyer is acquiring the Interests from LOS
Inc. and the New DFA Preferred Capital Interests from DFA for its own account
and not with a view to their distribution within the meaning of Section 2(11)
of the Securities Act.
4.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
preventing or making illegal any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been threatened.
4.5 BROKERS OR FINDERS. Buyer and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection
with this Agreement for which Sellers will be liable.
SECTION 5
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION. Following the date of this
Agreement, Sellers will, and will cause the Company and its Representatives to,
(a) afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "BUYER'S ADVISORS") reasonable access during
normal business hours to the Company's personnel, properties, contracts, books
and records, and other documents and data, (b) furnish Buyer and Buyer's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request with respect to the
Company, and (c) furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information with respect to the
Company as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY. Between the date of
this Agreement and the Closing Date, Sellers will, and will cause the Company
to:
(a) conduct the business of the Company only in the
Ordinary Course of Business;
(b) use their best efforts to preserve intact the current
business organization of the Company, keep available the services of
the current officers, employees, and agents of the Company, and
maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with the Company; and
(c) otherwise report periodically to Buyer concerning the
status of the business, operations, and finances of the Company.
Page 25
<PAGE> 32
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date,
Sellers will not, and will cause the Company not to, without the prior consent
of Buyer, take any affirmative action, or fail to take any reasonable action
within their or its control, as a result of which any of the changes or events
listed in Section 3.13 will occur; provided, however, that Sellers may amend
the Operating Agreement to permit Tax Distributions to be made to DFA in
accordance with Section 5.5.
5.4 NOTIFICATION. Between the date of this Agreement and the
Closing Date, each Seller will promptly notify Buyer in writing if such Seller
or the Company becomes aware of any fact or condition that causes or
constitutes a material breach of any of Sellers' representations and warranties
as of the date of this Agreement, or if any Seller or the Company becomes aware
of the occurrence after the date of this Agreement of any fact or condition
that would (except as expressly contemplated by this Agreement) cause or
constitute a material breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, each Seller will promptly
notify Buyer of the occurrence of any material breach of any covenant of
Sellers in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible.
5.5 DISTRIBUTIONS AND CERTAIN OTHER RESTRICTED PAYMENTS. Between
the date of this Agreement and the Closing Date, Sellers will cause the Company
not to during any fiscal year of the Company (a) declare or pay any
distributions in respect of any Interests of or (b) directly or indirectly
purchase, redeem or otherwise acquire or retire any Interests; provided,
however, that the Company may pay distributions ("Tax Distributions") to the
members of the Company to enable such members or their Flow-Through Owners (as
defined below) to make payments of Income Taxes, as defined below (including
estimates therefor) which shall become due and payable either before, on or
after the Closing Date with respect to any fiscal year or portion thereof
beginning on or after January 1, 1995 and ending or occurring on or prior to
the Closing Date (a "Pre-Closing Tax Period"), provided, however, that the "Tax
Distributions" for any such Pre-Closing Tax Period shall not exceed the
Undistributed Income Tax Liability (as defined below) for such Pre-Closing Tax
Period. The Company may make borrowings under the revolving credit portion of
the Indebtedness Owed to Harris Trust to make the Tax Distributions provided
for in this Section 5.5.
(a) "UNDISTRIBUTED INCOME TAX LIABILITY" of a member for
any Pre-Closing Tax Period means the excess of (i) the Flow-Through
Tax Amount, as hereinafter defined, for such Pre-Closing Tax Period
for such member, over (ii) all prior distributions made by the Company
to such member with respect to the Flow-Through Tax Amount for such
Pre-Closing Tax Period for such member; provided, however, that the
aggregate Undistributed Income Tax Liability of all members for all
Pre-Closing Tax Periods ending on or before December 31, 1996,
including without limitation any interest and penalties in connection
therewith, shall be limited to and shall not exceed $5,000,000 in the
aggregate.
Page 26
<PAGE> 33
(b) "FLOW-THROUGH OWNER" of a member shall mean a direct
or indirect owner of a member that is taxable on such owner's share of
the various items of taxable income or loss or alternative minimum
taxable income or loss of the Company by reason of owning an interest
in the Company through one or more S corporations or entities taxed as
non-exempt cooperatives or partnerships for Federal income tax
purposes.
(c) "FLOW-THROUGH TAX AMOUNT" of a member means the
amount of money to enable such member or its Flow-Through Owners to
pay Income Taxes (including quarterly estimated Income Taxes) with
respect to the Company's net income or any division or segment thereof
allocable to such member for Pre-Closing Tax Periods. For the purpose
of this definition:
(i) "Income Taxes" means all Federal, state and
local taxes, fees, assessments or charges of any kind, imposed
on, or determined with reference to, net income of the Company
or any division or segment thereof, or any allocable portion
thereof, including without limitation any self-employment or
similar tax imposed with respect a member's or Flow-Through
Owner's allocable share of net income or any division or
segment thereof, together with any interest and penalties,
additions to tax or additional amounts with respect thereto
and "Income Tax" means any one of such Income Taxes.
(ii) The Flow-Through Tax Amount of a member in
any applicable Pre-Closing Tax Period shall equal the greater
of (1) the product of (i) the sum of (A) the highest marginal
federal tax rate (taking into account actual deductions or
credits for state and local taxes) applicable to the member or
its Flow-Through Owners (at either individual or corporate
rates, as applicable) with respect to the taxable income
directly or indirectly allocable to such member or
Flow-Through Owners with respect to such applicable
Pre-Closing Tax Period, (B) the highest state tax rate (taking
into account actual deductions or credits for local taxes)
applicable to the member or its Flow-Through Owners (at either
individual or corporate rates, as applicable) with respect to
the taxable income directly or indirectly allocable to such
member or Flow-Through Owners with respect to such applicable
Pre-Closing Tax Period and (C) the highest local tax rate
applicable to the member or its Flow-Through Owners (at either
individual or corporate rates, as applicable) with respect to
the Company's taxable income, directly or indirectly allocable
to such member or Flow-Through Owners with respect to such
applicable Pre-Closing Tax Period, multiplied by (ii) the
Company's taxable income directly or indirectly allocable to
such member or its Flow-Through Owners with respect to such
Pre-Closing Tax Period, or (2) the product of (i) the sum of
(A) the highest Federal alternative minimum tax rate (taking
into account actual deductions or credits for state and local
taxes) applicable to the member or its Flow-Through Owners (at
either individual or corporate rates, as applicable) with
respect to the Company's alternative minimum taxable income
directly or indirectly allocable to such member or
Flow-Through Owners with respect to such applicable
Pre-Closing
Page 27
<PAGE> 34
Tax Period, (B) the highest state tax rate (taking into
account actual deductions or credits for local taxes)
applicable to the member or its Flow-Through Owners (at either
individual or corporate rates, as applicable) with respect to
the Company's taxable income or alternative minimum taxable
income, as applicable, directly or indirectly allocable to
such member or Flow-Through Owners with respect to such
applicable Pre-Closing Tax Period and (C) the highest local
tax rate applicable to the member or its Flow-Through Owners
(at either individual or corporate rates, as applicable) with
respect to the Company's taxable income or alternative minimum
taxable income, as applicable, directly or indirectly
allocable to such member or Flow-Through Owners with respect
to such applicable Pre-Closing Tax Period, multiplied by (ii)
the Company's taxable income or alternative minimum taxable
income, as applicable, directly or indirectly allocable to
such member or its Flow-Through Owners with respect to such
Pre-Closing Tax Period.
(d) For purposes of this Section 5.5, "net income" or
"taxable income" of the Company shall not include any gain or income,
including recapture income, (i) resulting from the purchase of
Interests by the Buyer pursuant to this Agreement or (ii) recognized
by the Company in any transaction in which the Company was formed.
(e) The intent of this Section 5.5 is that distributions
can be made between the date of this Agreement and the Closing Date so
that each member can receive such distributions as necessary to fully
reimburse such member or its Flow-Through Owner(s) for all Income
Taxes incurred as a result of such member or its Flow-Through Owner(s)
being required to report, and pay Income Tax with respect to, his, her
or its allocable share of the items of income, gain, loss, deduction
and credit of the Company for all Pre-Closing Tax Periods (excluding
such items resulting from the transactions contemplated by this
Agreement and excluding any gain or income recognized by the Company
in any transaction in which the Company was formed), subject to the
limitation stated in Section 5.5(a) that limits distributions of
Undistributed Income Tax Liability under this Section 5.5 for all
Pre-Closing Tax Periods ending on or before December 31, 1996 to
$5,000,000 in the aggregate for all members.
(f) The LOS Owners and DFA agree that they are bound by
and shall comply with the provisions of Section 5.5(a) of the
Operating Agreement which obligates LOS Inc., the LOS Owners and DFA
to pay to the Company certain tax benefits realized by DFA, LOS Inc.
or the Flow-Through Owners. In addition, Allen A. Meyer ("Meyer")
hereby agrees that, to the extent that the bonus paid to him by the
Company on January 23, 1998, in the amount of $933,673 less the amount
of Income Taxes and Medicare Taxes that he pays as a result of such
bonus (computed using the highest marginal Income Tax rates applicable
to Meyer for 1998), exceeds the additional Income Taxes that he pays
for tax year 1994 as a result of the examination of Tax Returns of the
Company and LOS Inc. for such year, he will pay such excess to the
Company within ten (10) business days after the amount of such excess
is finally determined (meaning, if applicable, at the final conclusion
of any controversy concerning the amount of Tax liabilities affecting
the amount of such
Page 28
<PAGE> 35
excess, either by settlement or by judgment of a court when the period
for appeal of such judgment has expired). The LOS Owners and DFA also
agree that any decrease in Income Taxes or other Tax Benefit, as
described in Section 5.5(a) of the Operating Agreement, realized with
respect to tax years subsequent to tax year 1994 by reason of any Net
Tax Addition, as defined in Section 5.5(a) of the Operating Agreement,
paid by Meyer for tax year 1994 will be subject to the provisions of
Section 5.2(a)(i)(F) of the Operating Agreement.
(g) The provisions of Section 7 of the Tax Cooperation
Agreement shall determine the Person or Persons who shall control the
conduct of all examinations and audits by any Governmental Body.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as
expressly provided in this Agreement, Sellers will cause all indebtedness owed
to the Company by either Seller or any Person (including, without limitation,
the Indebtedness Owed by LOS Inc.) in any way related to or affiliated with
either Seller to be paid in full prior to Closing.
5.7 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers and DFA will not, and will cause
their Representatives, the Company and the Company's Representatives not to,
directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to any Person (other than Buyer and Buyer's Advisors) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the Interests of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
5.8 CHANGE OF CONTROL PAYMENTS. Notwithstanding anything
contained in this Agreement to the contrary, Buyer acknowledges and agrees that
the Company may enter into change of control agreements (each a "Change of
Control Agreement") providing for aggregate payments to be made by the Company
of up to $2,000,000 (the "Change of Control Payments") to certain key employees
of the Company (collectively, the "Key Employees") in the event that fifty
percent (50%) of the Interests are acquired by any Person that does not
currently hold any Interests. Such Change of Control Agreements will provide
that the Closing will be a condition precedent to the Company's obligation to
make the Change of Control Payment although the Company may, in its discretion,
make such Change of Control Payments prior to Closing, and the Company will
make such Change of Control Payment within two days prior to the Closing if
requested to do so by Buyer. The Company may make borrowings under the
revolving credit portion of the Indebtedness Owed to Harris Trust to make the
Change of Control Payments provided for in this Section 5.8.
5.9 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, Sellers and DFA will use their best efforts to cause the
conditions in Sections 7 and 8 to be satisfied.
Page 29
<PAGE> 36
5.10 ASSISTANCE WITH PERMITS AND FILINGS. The Company and the
Sellers will furnish Buyer with all information that is required for inclusion
in any application or filing to be made by Buyer or its affiliates to any
Governmental Body in connection with the Contemplated Transactions. The
Company and the Sellers will use commercially reasonable efforts to assist
Buyer in obtaining any Governmental Authorizations, or any Consents related
thereto, that Buyer will require in connection with the Contemplated
Transactions.
5.11 CONFIDENTIALITY. The Sellers, DFA and, prior to the Closing,
the Company will maintain in confidence, and will cause their respective
Representatives to maintain in confidence, any non-public information furnished
to them by Buyer or Buyer's Representatives in connection with this Agreement
or the Contemplated Transactions to the extent required by, and in accordance
with, the provisions of the letter dated December 12, 1997 executed by Buyer
and LOS Inc. (as if each such Seller and the Company were a party thereto).
SECTION 6
COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, Buyer will use its best efforts to cause the conditions in
Sections 7 and 8 to be satisfied; provided that Buyer shall be required to use
only commercially reasonable efforts to satisfy the condition set forth in
Section 7.8 with respect to the HSR Act, and Buyer shall have no obligation to
comply with any request or requirement imposed by the FTC, the DOJ or any other
Governmental Body in connection with the satisfaction of such condition if
Buyer, in the exercise of its reasonable discretion, elects not to do so.
Without limiting the generality of the foregoing, Buyer shall not be obligated
to comply with any request by, or any requirement of, the FTC, the DOJ or any
other Governmental Body (i) to disclose confidential information of Buyer; (ii)
to dispose of any assets or operations; or (iii) to comply with any restriction
on the manner in which it conducts its operations.
6.2 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, Buyer will maintain in confidence, and will cause Buyer's
Advisors to maintain in confidence, any non-public information furnished to
Buyer or Buyer's Advisors by Sellers or the Company in connection with this
Agreement or the Contemplated Transactions, to the extent required by, and in
accordance with, the provisions of the letter dated December 12, 1997, executed
by Buyer and LOS Inc.
Page 30
<PAGE> 37
SECTION 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Interests of LOS Inc. and to take
the other actions required to be taken by Buyer at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of Sellers' representations
and warranties in this Agreement must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
7.2 SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers and
DFA are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered by Sellers and
DFA pursuant to Section 2.4 must have been delivered, and each of the
other covenants and obligations of Sellers in this Agreement must have
been performed and complied with in all respects.
7.3 ABSENCE OF MATERIAL ADVERSE EFFECTS. Since the date of this
Agreement, the Company shall not have suffered any Material Adverse Effect.
7.4 CONSENTS. Any Consents which Buyer, any Seller, DFA or the
Company may be required to obtain to consummate the Contemplated Transactions
must have been obtained and must be in full force and effect.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing or making illegal
any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING INTEREST OWNERSHIP OR SALE PROCEEDS. There
must not have been made or threatened by any Person any claim asserting that
such Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any Interest in the Company, or
(b) is entitled to all or any portion of the consideration payable for the
Interests or the New DFA Preferred Capital Interests.
7.7 NO PROHIBITION. Neither the consummation nor the performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time)
Page 31
<PAGE> 38
result in a material violation of, or cause Buyer or any Person affiliated with
Buyer to suffer any Material Adverse Effect under any applicable Legal
Requirement or Order.
7.8 HSR ACT WAITING PERIOD EXPIRED. All applicable waiting
periods specified under the HSR Act with respect to the Contemplated
Transactions shall have lapsed or been terminated.
7.9 AMENDED AND RESTATED OPERATING AGREEMENT. DFA Investment and
DFA shall have executed and delivered an amendment and restatement of the
Operating Agreement in the form attached hereto as Exhibit A.
7.10 SUPPLY AGREEMENT. The Company shall have entered into a
Supply Agreement with DFA with respect to the supply of raw milk to the Company
in the form attached hereto as Exhibit C.
7.11 CERTIFICATES. The Sellers shall have delivered to Buyer a
closing certificate, substantially in the form attached hereto as Exhibit D,
and a certificate of the Secretaries of the Sellers, substantially in the form
attached hereto as Exhibit E.
7.12 LEGAL OPINION. The Sellers shall have delivered to Buyer a
legal opinion of the Sellers' counsel, substantially in the form attached
hereto as Exhibit F.
SECTION 8
CONDITIONS PRECEDENT TO SELLERS' AND DFA'S OBLIGATION TO CLOSE
LOS Inc.'s obligation to sell its Interests and the obligation of the
Sellers and DFA to take the other actions required to be taken by them at the
Closing is subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Sellers and DFA, in
whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations
and warranties in this Agreement must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
8.2 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing must have been performed and complied with in all
material respects.
Page 32
<PAGE> 39
(b) Buyer must have delivered, or caused to be delivered,
each of the documents required to be delivered by Buyer pursuant to
Section 2.4 and must have made the payments required to be made by
Buyer pursuant to Sections 2.4(c).
8.3 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that prohibits the sale of the
Interests by Sellers to Buyer that has been adopted or issued since the date of
this Agreement.
8.4 HSR ACT WAITING PERIOD EXPIRED. All applicable waiting
periods specified under HSR Act with respect to the Contemplated Transactions
shall have lapsed or been terminated.
8.5 AMENDED AND RESTATED OPERATING AGREEMENT. Buyer shall have
executed and delivered an amendment and restatement of the Operating Agreement
in the form attached hereto as Exhibit B.
8.6 SUPPLY AGREEMENT. The Company shall have entered into a
Supply Agreement with DFA with respect to the supply of raw milk to the Company
in the form attached hereto as Exhibit C.
8.7 CERTIFICATES. Buyer shall have delivered to Sellers a closing
certificate, substantially in the form attached as Exhibit G, and a certificate
of the Secretary of Buyer, substantially in the form attached hereto as Exhibit
H.
8.8 LEGAL OPINION. Buyer shall have delivered to Sellers a legal
opinion of the Buyer's counsel, substantially in the form attached hereto as
Exhibit I.
8.9 TAX COOPERATION AGREEMENT. Buyer shall have entered into a
Tax Cooperation Agreement with Sellers in the form attached hereto as Exhibit
J.
SECTION 9
TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of
any provision of this Agreement has been committed by the other party
and such Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7
has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the
failure of Buyer to comply with its obligations under this Agreement)
and Buyer has not waived such condition on or before the Closing Date
or (ii) by Sellers and
Page 33
<PAGE> 40
DFA, if any of the conditions in Section 8 has not been satisfied as
of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers or DFA
to comply with their respective obligations under this Agreement) and
Sellers and DFA have not waived such condition on or before the
Closing Date;
(c) by mutual consent of Buyer, Sellers and DFA; or
(d) by either Buyer or Sellers and DFA if the Closing has
not occurred (other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations under
this Agreement) on or before May 30, 1998 or such later date as the
parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of termination
under Section 9.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
9.1, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 5.10, 6.2 and 12.1 will
survive; provided, however, that if this Agreement is terminated by a party
because of the breach of the Agreement by the other party or because one or
more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
SECTION 10
INDEMNIFICATION; REMEDIES
10.1 REPRESENTATIONS; SURVIVAL. Except for the express
representations and warranties contained in Section 3 and in any certificate
delivered by Sellers pursuant to this Agreement, Sellers are making no
representation or warranty whatsoever, express or implied, including but not
limited to any implied warranty or representation as to condition,
merchantability or suitability, as to any of the properties or assets of the
Company and Buyer takes the Company "AS IS" and "WHERE IS." It is understood
that, except as otherwise specified in this Agreement and except to the extent
included within or incorporated into the Disclosure Letter, any cost estimates,
projections or other predictions, any data, any financial information or any
memoranda or offering materials or presentations provided or addressed to Buyer
are not and shall not be deemed to be or to include representations or
warranties of Sellers. Except as otherwise provided in this Section 10.1, all
representations and warranties in this Agreement and any other certificate or
document delivered pursuant to this Agreement will terminate twelve months
after the Closing; provided, however, that (a) if any breach of the
representations and warranties set forth in Sections 3.1, 3.2, 3.8, 3.10, 3.11,
3.12 and 3.16 constitutes a violation of any Legal Requirement, then such
representations and warranties and any claim for indemnification applicable to
such a violation shall survive for the applicable statute of limitation with
respect thereto; and (b) with
Page 34
<PAGE> 41
respect to the representations and warranties set forth in Section 3.3, such
representations and warranties and any claim for indemnification with respect
thereto shall survive indefinitely.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS.
Notwithstanding any investigation by Buyer or its Representatives, Sellers and
the LOS Owners, jointly and severally will indemnify, defend and hold harmless
Buyer, the Company, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "BUYER'S INDEMNIFIED
PERSONS") for, and will pay to the Buyer's Indemnified Persons the amount of,
any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a third-party
claim (collectively, "DAMAGES"), arising, directly or indirectly, from or in
connection with:
(a) any breach of any representation or warranty made by
Sellers in this Agreement or in any certificate delivered by Sellers
pursuant to this Agreement that survives the Closing in accordance
with Section 10.1 or any allegation by a third party that, if true,
would constitute such a breach provided, that any claim for
indemnification pursuant to this subparagraph (a) is made within the
time period specified in Section 10.1 for the survival of the
applicable representation or warranty that has been breached or is the
subject of the third party claim;
(b) any breach by any Seller of any covenant or
obligation of such Seller in this Agreement;
(c) any Proceeding commenced by any third party after
Closing relating to actions or omissions of the Company which occurred
prior to Closing except to the extent reduced by insurance in
accordance with the provisions of Section 10.4; or
(d) any claim by any Person, including, without
limitation, for brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding alleged to have
been made by any such Person with Sellers or the Company (or any
Person acting on their behalf) in connection with any of the
Contemplated Transactions.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER.
Notwithstanding any investigation by Sellers or their Representatives, Buyer
will indemnify, defend and hold harmless Sellers and their respective
representatives, stockholders, members, controlling persons and affiliates (the
"SELLERS' INDEMNIFIED PERSONS" and, together with the Buyer's Indemnified
Persons, the "INDEMNIFIED PERSONS") and will pay to Sellers' Indemnified
Persons the amount of any Damages arising, directly or indirectly, from or in
connection with (a) any breach of any representation or warranty made by Buyer
in this Agreement or in any certificate delivered by Buyer pursuant to this
Agreement, (b) any breach by Buyer of any covenant or obligation of Buyer in
this Agreement, or (c) any claim by any Person for brokerage or finder's fees
or commissions
Page 35
<PAGE> 42
or similar payments based upon any agreement or understanding alleged to have
been made by such Person with Buyer (or any Person acting on its behalf) in
connection with any of the Contemplated Transactions.
10.4 LIMITATIONS ON AMOUNT.
(a) The liability of each Seller and the LOS Owners under
Section 10.2 shall not exceed the value of the portion of the
consideration pursuant to Section 2.4 ultimately received by such
Seller or LOS Owner. Additionally, in determining the amount of
Damages for which an Indemnified Person is entitled to indemnification
under Section 10.2 or Section 10.3, any insurance proceeds that are
realized or that could reasonably be expected to be realized by such
Indemnified Person (if a claim were properly pursued under the
relevant insurance arrangements), as well as any costs associated with
obtaining such insurance proceeds, will be considered.
(b) Buyer's Indemnified Persons will be entitled to
indemnification under paragraph (a) of Section 10.2, and Sellers'
Indemnified Persons will be entitled to indemnification under
paragraph (a) of Section 10.3, only to the extent and in the amount
that the aggregate amount of indemnifiable Damages incurred by all
Buyer's Indemnified Persons and Sellers' Indemnified Persons,
respectively, under such paragraphs exceeds $2 million.
(c) The maximum aggregate amount to which Buyer's
Indemnified Persons will be entitled to indemnification under
paragraph (a) of Section 10.2 is limited to $15 million.
(d) Notwithstanding the foregoing, the limitations set
forth in Section 10.4(b) and (c) will not apply to Damages arising
from or in connection with a breach or alleged breach of the
representations and warranties (i) of the Sellers set forth in Section
3.3 or the last sentence of Section 3.4 or (ii) of the Buyer set forth
in Section 4.2(c).
10.5 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person under
Section 10.2 or 10.3 of notice of the commencement of any Proceeding
against it, such Indemnified Person will, if a claim is to be made
against an indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the failure
to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any Indemnified Person,
except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 10.5(a) is
brought against an Indemnified Person and it gives notice to the
indemnifying party of the commencement of such Proceeding, the
indemnifying party will, to the extent that it wishes (unless (i) the
Page 36
<PAGE> 43
indemnifying party is also a party to such Proceeding and the
Indemnified Person determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the Indemnified Person of its
financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), assume the defense
of such Proceeding with counsel satisfactory to the Indemnified Person
and, after notice from the indemnifying party to the Indemnified
Person of its election to assume the defense of such Proceeding and an
acknowledgment of its indemnification obligation with respect thereto,
the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the Indemnified Person under this Section
10 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by
the Indemnified Person in connection with the defense of such
Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding in accordance
with the preceding sentence, (i) no compromise or settlement of such
claims may be effected by the indemnifying party without the
Indemnified Person's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of
the rights of any Person and no effect on any other claims that may be
made against the Indemnified Person, and (B) the sole relief provided
is monetary damages that are paid in full by the indemnifying party
and (ii) the Indemnified Person will have no liability with respect to
any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not,
within ten days after the Indemnified Person's notice is given, give
notice to the Indemnified Person of its election to assume the defense
of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement
reasonably effected by the Indemnified Person.
(c) Notwithstanding the foregoing, if an Indemnified
Person determines in good faith that there is a reasonable probability
that a Proceeding may adversely affect it or its Affiliates other than
as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by
notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent
(which may not be unreasonably withheld).
10.6 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third party claim may be
asserted by notice to the party from whom indemnification is sought.
Page 37
<PAGE> 44
SECTION 11
POST CLOSING COVENANTS
11.1 REPAYMENT OF LONG TERM INDEBTEDNESS AND REDEMPTION OF
PREFERRED INTERESTS. After Closing, the parties hereto agree to take all
actions necessary so that immediately after or simultaneously with Closing, the
Company repays the Outstanding Amount of Long Term Indebtedness and redeems the
Preferred Capital held by DFA.
11.2 NONDISCLOSURE. The Sellers, the LOS Owners and DFA
acknowledge and agree that all customer, prospect and marketing lists, sales
data, intellectual property, proprietary information, trade secrets and other
confidential information of the Company (collectively, "CONFIDENTIAL
INFORMATION") are valuable assets of the Company and will continue to be owned
exclusively by the Company following the Closing. The Sellers, the LOS Owners
and DFA agree to, and agree to cause their respective Representatives to, treat
the Confidential Information as confidential and not to disclose such
information or make use of such information for their own purposes or for the
benefit of any other Person (other than the Company or, after the Closing,
Buyer). The foregoing confidentiality obligations will not apply to
information that (a) is at the time of receipt or thereafter becomes publicly
known through no wrongful act of any Seller or LOS Owner or DFA, (b) is
received from a third party not under an obligation to keep such information
confidential and without breach of this Agreement or (c) is required to be
disclosed pursuant to any Proceedings or an Order.
11.3 NONCOMPETITION.
(a) Each of the Sellers, the LOS Owners and DFA
acknowledges and agrees for a period of two (2) years after Closing,
they will not call on, solicit, interfere with or attempt to entice
away, either directly or indirectly, any employee or customer (who is
not also currently a customer of DFA) of the Company either for their
own benefit or purposes or for the benefit or purposes of any other
Person within the geographic area currently served by the Company (the
"TERRITORY"). For the purposes of the foregoing, a customer shall be
any Person with which the Company had a written or verbal agreement in
any way relating to any products or services provided to such customer
by the Company within the twelve-month period preceding the date of
Closing.
(b) For a period of five (5) years after Closing, each of
the Sellers, the LOS Owners, shall not, directly or indirectly, engage
or participate in, assist or have any interest in any Person (whether
as an employee, officer, director, agent, creditor, consultant or
otherwise) which directly is competitive with or engaged in
substantially the same or similar business as the Company. The
foregoing shall not preclude any Seller from being a passive investor
or security holder of an interest constituting less than 5% of the
equity ownership, voting rights or debt of any of the foregoing. For
a period of five (5) years after Closing, DFA shall not directly
engage in or participate in or assist any Person which directly is
competitive with or engaged in substantially the same business as
Page 38
<PAGE> 45
the Company provided, however, that nothing in this Section 11.3 shall
be construed as preventing DFA from engaging (a) in any business after
Closing that it engaged in within the Territory prior to Closing; (b)
in any business outside the Territory; or (c) in any business within
the Territory in products and services not provided by the Company.
The parties acknowledge and agree that any current affiliate of DFA
shall not be competitively restricted in any form or manner in the
Territory by the terms, conditions and provisions of this Section
11.3.
(c) If following the Closing, as a result of a merger,
sale of the Company Interests, sale of substantially all of the assets
of the Company or other reorganization, there is a change in the
voting control of the Company such that the holders of 100% of the
votes prior to the event hold less than 30% after the event, then the
provisions of this Section 11.3 shall automatically terminate and be
of no further force or effect.
11.4 ENFORCEMENT.
(a) The Sellers, the LOS Owners and DFA acknowledge and
agree that their respective obligations under Section 11.3 are a
material inducement and condition to Buyer's entering into this
Agreement and performing its obligations hereunder and that the
restrictions and remedies contained in Section 11.3 are reasonable as
to time, geographic area and scope of activity and do not impose a
greater restraint than is necessary to protect the goodwill and other
legitimate business interests of Buyer. It is the intent of all
parties hereto that the foregoing restrictions against unlawful and
unfair competitive activities be given the fullest effect consistent
with applicable law.
(b) If the provisions of Section 11.3 are found by a
court of competent jurisdiction to contain unreasonable or unnecessary
limitations as to time, geographic area or scope of activity, then
such court is hereby directed to reform such provisions to the minimum
extent necessary to cause the limitations contained therein as to
time, geographical area and scope of activity to be reasonable and
enforceable.
(c) The Sellers, the LOS Owners and DFA acknowledge and
agree that Buyer would be irreparably harmed by any violation of its
obligations under Section 11.3 and that, in addition to all other
rights or remedies available at law or in equity, Buyer will be
entitled to injunctive and other equitable relief to prevent or enjoin
any such violation, without posting any bond whatsoever.
11.5 RECORDS RETENTION. Sellers and Buyer agree that so long as
any books, records and files, including Tax Records (as defined below) relating
to the Company that are retained by Sellers relating to the Company, or
Business Records of the Company delivered to the control of Buyer pursuant to
this Agreement (collectively, "Business Records"), remain in existence and
available, each of the parties hereto (at its expense) shall have the right
upon prior notice to inspect and make copies of the same at any time during
business hours for any proper purpose. Each party hereto shall undertake
reasonable measures (a) to preserve in good order to the extent
Page 39
<PAGE> 46
required by law the Business Records relating to the Company, (b) not destroy
or allow the destruction of any such Business Records without first offering in
writing to deliver them to the other party, (c) retain to the extent required
by law and provide the other parties with any records or other information
relating to liability for Taxes, and (d) provide the other parties with any
final determination of any such amount required to be shown on any Tax Return
of the other parties for any period. Without limiting the generality of the
foregoing, each of the parties hereto shall retain until the expiration of the
applicable statutory period of limitations (including any extensions), complete
copies of all returns, supporting work schedules and other records or
information (collectively, "TAX RECORDS"), delivered to such party, or retained
by such Party, pursuant to this Agreement, which are relevant to such Return
for all tax periods or portions thereof ending before or including the Closing
Date.
SECTION 12
GENERAL PROVISIONS
12.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, Buyer and Sellers each will bear the expenses incurred by them in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of their
Representatives. Sellers agree to reimburse the Company for all expenses
incurred by the Company in connection with the preparation, execution and
performance of this Agreement and the Contemplated Transactions (the "Company
Expenses"), including all fees and expenses of the Company's Representatives
(to the extent paid or payable by the Company), provided, however, that any
fees and expenses relating to the preparation, filing, audit or examination of
the Company's Tax Returns shall be paid by the Company and Sellers shall not be
obligated to reimburse the Company for such fees and expenses. Prior to the
Closing, Buyer and Sellers will agree on a good faith estimate of the Company
Expenses, and the Sellers will reimburse Buyer for such estimated Company
Expenses at the Closing (or Buyer may offset such amount against the
consideration payable to the Sellers at the Closing). Within 60 days after the
Closing, Buyer and the Sellers will agree on the actual Company Expenses and
make any payments that may be necessary to reconcile any difference between the
estimated and actual Company Expenses. In the event of termination of this
Agreement, the obligation of each party to pay its own expenses will be subject
to any rights of such party arising from a breach of this Agreement by another
party.
12.2 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Sellers and Buyer agree to consult with each other in issuing any press release
or otherwise making any public statement with respect to the transactions
contemplated by this Agreement, and none of them shall issue any press release
or make any public statement prior to such consultation, except as may be
required by Legal Requirements.
12.3 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by
Page 40
<PAGE> 47
hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), or (c) when received by the addressee, if
sent by a nationally recognized overnight delivery service, in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the
other parties):
Sellers:
If to LOS Inc. or the c/o Allen A. Meyer
LOS Owners: Milk Products, LLC
5327 S. Lamar St.
Dallas, Texas 75215
with a copy to:
Counsel to LOS Inc.: Strasburger & Price, L.L.P.
901 Main Street, Suite 4300
Dallas, Texas 75202
Attention: Frederick J. Fowler, Esq.
Facsimile No.: (214) 651-4330
If to DFA Investment or DFA: Gerald L. Bos
Vice President
Dairy Farmers of America, Inc.
3253 East Chestnut Expressway
Springfield, Missouri 65802
Facsimile No.: (417) 865-1093
with a copy to:
Counsel to DFA Investment David A. Geisler, Esq.
and DFA: General Counsel
Dairy Farmers of America, Inc.
3253 East Chestnut Expressway
Springfield, Missouri 65802
Facsimile No.: (417) 865-1093
Page 41
<PAGE> 48
Buyer: Suiza Foods Corporation
3811 Turtle Creek Boulevard, Suite 1300
Dallas, Texas 75219
Attn: Gregg L. Engles
Facsimile No.: (214) 528-9929
with a copy to:
Counsel for Buyer: Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: William A. McCormack, Esq.
Facsimile No.: (214) 939-6100
12.4 ATTORNEY'S FEES AND COSTS. In the event of a breach by any
party to this Agreement and commencement of a subsequent legal action in a
court of law or forum of arbitration, or in the event legal counsel is
consulted in the event of any such breach or in anticipation of any such
prospective legal action, the prevailing party in any such dispute shall be
entitled to reimbursement of reasonable attorney's fees and expenses.
12.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
12.6 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power,
or privilege. To the maximum extent permitted by applicable law, (a) no claim
or right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in a writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.
12.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
Page 42
<PAGE> 49
12.8 ASSIGNMENTS, SUCCESSORS AND NO THIRD PARTY RIGHTS. No party
may assign any of its rights under this Agreement or its Interests without the
prior consent of the other parties; provided that (a) LOS Inc. may assign its
rights and obligations hereunder and all or a portion of its Interests to any
wholly-owned subsidiary of LOS Inc. and such wholly-owned subsidiary may in its
discretion further transfer and assign such transferred Interests to a limited
partnership of which it is a limited partner and LOS Inc. or another duly
formed wholly-owned subsidiary of LOS Inc. is the general partner, if LOS Inc.
remains liable for its obligations hereunder and (b) provided that Buyer may
assign its rights and obligations hereunder to a wholly-owned subsidiary of
Buyer, if Buyer remains liable for its obligations hereunder. In connection
with an assignment pursuant to the preceding sentence from LOS Inc. to a
wholly-owned subsidiary of LOS Inc. and any further assignment by such
wholly-owned subsidiary to another entity (collectively, the "LOS Assignee"),
LOS Inc. may also transfer its Interests to the LOS Assignee, and such
assignment and transfer will not be deemed to violate any of the
representations, warranties or covenants of LOS Inc. hereunder, if LOS Inc.
agrees in writing to guarantee all obligations of the LOS Assignee hereunder.
Additionally, at any time prior to Closing, any actions necessary to cause the
Company to become a "manager managed" rather than a "member managed" limited
liability company under Delaware law may be taken by the Company and its
members. Neither the transfers and assignments referred to in this Section
12.8, nor the actions related to changing the form of management of the Company
shall be deemed a violation of any obligation of LOS Inc. or DFA Investment
under this Agreement. Subject to the preceding provisions of this Section
12.8, this Agreement will apply to, be binding in all respects upon, and inure
to the benefit of the successors (including the LOS Owners) and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement
will be construed to give any Person other than the parties to this Agreement
any legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
12.9 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
12.10 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
12.11 TIME OF ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
Page 43
<PAGE> 50
12.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
SUBSTANTIVE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
CHOICE-OF-LAW RULES THAT MAY REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
12.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
12.14 WAIVERS BY DFA AND LOS INC. By executing this Agreement, each
of DFA Investment and LOS Inc. waive any right of first refusal or similar
right which either of them may have pursuant to the terms of the Operating
Agreement and consent to the sale or conversion of the Interests pursuant to
the terms hereof.
[Remainder of page intentionally left blank]
Page 44
<PAGE> 51
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
SUIZA FOODS CORPORATION
By: /s/ TRACY L. NOLL
-----------------------------------------
Its: Vice President
-----------------------------------
SELLERS:
DFA INVESTMENT COMPANY
By: /s/ STEVE R. STOUT
-----------------------------------------
Its: President
-----------------------------------
LAND-O-SUN DAIRIES, INC.
By: /s/ ALLEN A. MEYER
-----------------------------------------
Its: Chief Executive Officer
-----------------------------------
DAIRY FARMERS OF AMERICA, INC
By: /s/ GERALD L. BOS
-----------------------------------------
Its: Chief Financial Officer
-----------------------------------
Page 45
<PAGE> 52
The undersigned LOS Owners have executed this Agreement for the sole purpose of
agreeing to the provisions of Section 5.5(f), Section 10, Sections 11.2, 11.3
and 11.4 and Section 12.
/s/ ALLEN A. MEYER
---------------------------------------------
Allen A. Meyer
/s/ ROBERT L. FLEMING
---------------------------------------------
Robert L. Fleming
DFA hereby unconditionally guarantees the payment and performance in full of
all obligations of DFA Investment under this Agreement.
DAIRY FARMERS OF AMERICA, INC.
By: /s/ GERALD L. BOS
-----------------------------------------
Its: CFO
-----------------------------------
Page 46
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO
MEMBERSHIP INTEREST PURCHASE AGREEMENT
AND RECAPITALIZATION AGREEMENT
This First Amendment to Membership Interest Purchase Agreement and
Recapitalization Agreement (this "First Amendment") is made as of February 20,
1998, by and among LOS Holdings, Inc., a Delaware corporation ("LOS Holdings"),
Dairy Farmers of America, Inc., a Kansas cooperative marketing association
formerly named Mid-America Dairymen, Inc. ("DFA"), DFA Investment Company, a
Kansas cooperative marketing association ("DFA Investment"), and LOS Dairies,
Inc., a Nevada corporation ("LOS Dairies").
RECITALS
A. Suiza Foods Corporation ("Suiza"), DFA, DFA Investment and
Land-O-Sun Dairies, Inc. ("LOS Inc.") entered into that certain Membership
Interest Purchase Agreement and Recapitalization Agreement dated as of January
31, 1998 (the "Agreement").
B. Pursuant to the terms and provisions of the Agreement, Suiza
has assigned its rights under the Agreement to LOS Holdings and LOS Inc. has
assigned its rights under the Agreement to LOS Dairies.
C. The parties hereto desire to amend the Agreement as
hereinafter provided.
NOW THEREFORE, the parties hereto agree as follows:
1. Amendment to Section 2.2 of the Agreement. Section 2.2 of the
Agreement is hereby amended in its entirety to read as follows:
"2.2 PURCHASE PRICE PAYABLE TO LOS DAIRIES. The purchase
price to be paid by Buyer to LOS Dairies for the Interests of
LOS Dairies will be (a) $118,433,500 if the Closing occurs
prior to May 4, 1998 and (b) $110,433,500 if the Closing
occurs on May 4, 1998 or thereafter."
2. Amendment to Section 5.3 of the Agreement. Section 5.3 of the
Agreement is hereby amended in its entirety to read as follows:
"5.3 NEGATIVE COVENANT. Except as otherwise expressly
permitted by this Agreement, between the date of this
Agreement and the Closing Date, Sellers will not, and will
cause the Company not to, without the prior consent of Buyer,
take any affirmative action, or fail to take any reasonable
action within their or its control, as a result of which any
of the changes or events listed in Section 3.13 will occur;
provided, however, (a) that Sellers may amend the Operating
-1-
<PAGE> 2
Agreement to permit Tax Distributions to be made to DFA in
accordance with Section 5.5 and (b) the Company may make a
payment of up to $1,000,000 in the aggregate to Jarold Glick
and Michael G. Jackson, for consulting services rendered by
them to the Company in connection with securing raw fluid milk
for the Company for the Company's plants at Kingsport,
Tennessee and Spartanburg, South Carolina.
3. Confirmation of the Agreement. Except as modified by this
First Amendment, the parties hereto acknowledge and confirm the terms and
conditions of the Agreement and agree that the Agreement as modified by this
First Amendment remains in full force and effect and is binding on the parties
hereto.
4. Counterparts. This First Amendment may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
First Amendment and all of which, when taken together, will be deemed to
constitute one and the same agreement.
[Remainder of page intentionally left blank]
- 2 -
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed and delivered this First
Amendment as of the date first written above.
LOS HOLDINGS, INC.
By: /s/ TRACY L. NOLL
-----------------------------------
Its: Vice President
----------------------------------
DFA INVESTMENT COMPANY
By: /s/ JANICE C. GEORGE
-----------------------------------
Its: Vice President
----------------------------------
DAIRY FARMERS OF AMERICA, INC.
By: /s/ GARY HANMAN
-----------------------------------
Its: Vice President
----------------------------------
LOS DAIRIES, INC.
By: /s/ ALLEN A. MEYER
-----------------------------------
Its: Chief Executive Officer
----------------------------------
- 3 -
<PAGE> 1
EXHIBIT 10.1
- --------------------------------------------------------------------------------
SUIZA FOODS CORPORATION,
AS ISSUER
TO
WILMINGTON TRUST COMPANY,
AS TRUSTEE
- --------------------------------------------------------------------------------
INDENTURE
DATED AS OF FEBRUARY 20, 1998
- --------------------------------------------------------------------------------
$100,000,000
5% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2018
- --------------------------------------------------------------------------------
<PAGE> 2
SUIZA FOODS CORPORATION
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO
SECTIONS 310 THROUGH 318 OF THE TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C>
Section 310 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)(1)609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608, 610
Section 311 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)613
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Section 312 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)701, 702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a)703(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)704
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)601
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)101
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104(c)
Section 317 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)(1)503, 504
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402, 1003
Section 318 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (a)107
</TABLE>
- --------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
PAGE
<TABLE>
<S> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . . . . . . . . . . . . 2
SECTION 101. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 104. ACTS OF HOLDERS; RECORD DATES . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 105. NOTICES, ETC., TO TRUSTEE AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . 11
SECTION 106. NOTICE TO HOLDERS; WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 109. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 110. SEPARABILITY CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 111. BENEFITS OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 112. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 113. LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE TWO - SECURITY FORMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 201. FORMS GENERALLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 202. INITIAL ISSUANCE TO PROPERTY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE THREE - THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 301. TITLE AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 302. DENOMINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATE . . . . . . . . . . . . . . . . . . . . 16
SECTION 304. TEMPORARY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE . . . . . . . . . . . . . . . . 17
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES . . . . . . . . . . . . . . . . . . 19
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED . . . . . . . . . . . . . . . . . . . 19
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 308. PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 309. CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 310. RIGHT OF SET OFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 311. CUSIP NUMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 312. OPTION TO EXTEND INTEREST PAYMENT PERIOD . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 313. PAYING AGENT, SECURITY REGISTRAR AND
CONVERSION AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE FOUR - SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 402. APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE FIVE - REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 501. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT . . . . . . . . . . . . . . . . . 26
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES . . . . . . . . . . . . 28
SECTION 506. APPLICATION OF MONEY COLLECTED . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 507. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL AND INTEREST AND CONVERT . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 511. DELAY OR OMISSION NOT WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 512. CONTROL BY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 513. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 514. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 516. ENFORCEMENT BY HOLDERS OF PREFERRED SECURITIES . . . . . . . . . . . . . . . . . . . 32
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE SIX - THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 602. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 603. CERTAIN RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES . . . . . . . . . . . . . . . 34
SECTION 605. MAY HOLD SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 606. MONEY HELD IN TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 607. COMPENSATION AND REIMBURSEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR . . . . . . . . . . . . . . . . . 36
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS . . . . . . . . . . . . 37
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY . . . . . . . . . . . . . . . . . 38
ARTICLE SEVEN - HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY . . . . . . . . . . . . . . . . . . . . . 38
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSEES OF HOLDERS . . . . . . . . . . . . . 38
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS
TO HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 703. REPORTS BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 704. REPORTS BY COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE EIGHT - CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . . . . . . . . . . . . . . . . . . 40
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS . . . . . . . . . . . . . . . . 40
SECTION 802. SUCCESSOR SUBSTITUTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE NINE - SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS . . . . . . . . . . . . . . . . . 41
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS . . . . . . . . . . . . . . . . . . 42
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . 44
ARTICLE TEN - COVENANTS; REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST . . . . . . . . . . . . . . . . . . 45
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 1005. LIMITATION ON DIVIDENDS; TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 1006. PAYMENT OF EXPENSES OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE ELEVEN - REDEMPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 1101. RIGHT OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 1102. APPLICABILITY OF ARTICLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED . . . . . . . . . . . . . . . . . 48
SECTION 1105. NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 1106. DEPOSIT OF REDEMPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 1108. SECURITIES REDEEMED IN PART . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 1109. OPTIONAL REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 1110. EXCHANGE OF TRUST SECURITIES FOR SECURITIES . . . . . . . . . . . . . . . . . . . . 51
SECTION 1111. NO SINKING FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE TWELVE - SUBORDINATION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 1201. AGREEMENT TO SUBORDINATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 1202. DEFAULT ON SENIOR INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1203. LIQUIDATION; DISSOLUTION; BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 1204. SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 1205. TRUSTEE TO EFFECTUATE SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 1206. NOTICE BY THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 1207. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS . . . . . . . . . . . . . . . 57
SECTION 1208. SUBORDINATION MAY NOT BE IMPAIRED . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
SECTION 1209. CERTAIN CONVERSIONS DEEMED PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1210. ARTICLE APPLICABLE TO PAYING AGENTS . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE THIRTEEN - CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1301. CONVERSION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1302. CONVERSION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 1303. CONVERSION PRICE ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 1304. FUNDAMENTAL CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1306. PRIOR NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1307. CERTAIN DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1308. RESTRICTIONS ON COMMON STOCK ISSUABLE
UPON CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1309. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR ADJUSTMENTS . . . . . . 67
ARTICLE FOURTEEN - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1401. NO RECOURSE; IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
vi
<PAGE> 8
INDENTURE, dated as of February 20, 1998, between Suiza Foods
Corporation, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
3811 Turtle Creek Blvd., Suite 1300, Dallas, Texas 75219, and Wilmington Trust
Company, a Delaware banking corporation, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, Suiza Capital Trust, a Delaware business trust (the "Trust"),
formed under the Amended and Restated Declaration of Trust among the Company,
as sponsor, Wilmington Trust Company, as property trustee (the "Property
Trustee"), Wilmington Trust Company, as Delaware trustee (the "Delaware
Trustee") and Michael Lewis, as regular trustee (the "Regular Trustee"), dated
as of February 20, 1998 (the "Declaration"), pursuant to the Purchase Agreement
(the "Purchase Agreement"), dated February 20, 1998, among the Company, the
Trust and the Initial Purchaser named therein, will issue and sell all
(2,000,000 shares) of its 5% Trust Convertible Preferred Securities (the
"Preferred Securities") with a liquidation amount of $50 per Preferred Security
having an aggregate liquidation amount with respect to the assets of the Trust
of $100,000,000;
WHEREAS, the Regular Trustees of the Trust, on behalf of the Trust,
will execute and deliver to the Company 100 common securities, evidencing all
of the common undivided beneficial interest in the Trust (the "Common
Securities");
WHEREAS, the Trust will use the proceeds from the sale of the
Preferred Securities to purchase from the Company the Securities (as defined
below) in an aggregate principal amount of $100,000,000;
WHEREAS, the Company is guaranteeing the payment of distributions on
the Preferred Securities, payment of the Redemption Price and payments on
liquidation with respect to the Preferred Securities, to the extent provided in
the Preferred Securities Guarantee Agreement (the "Guarantee") between the
Company and Wilmington Trust Company, as guarantee trustee, for the benefit of
the holders of the Preferred Securities from time to time;
WHEREAS, the Company has duly authorized the creation of an issue of
5% Convertible Subordinated Debentures due 2018 (the "Securities"), of
substantially the tenor and amount hereinafter set forth and to provide
therefor, the Company has duly authorized the execution and delivery of this
Indenture; and
WHEREAS, so long as the Trust is a Holder of Securities, and any
Preferred Securities are outstanding, the Declaration provides that the holders
of Preferred Securities may cause the Conversion Agent to (a) exchange such
Preferred Securities for Securities held by the Trust and (b) immediately
convert such Securities into Common Stock;
WHEREAS all things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations
1
<PAGE> 9
of the Company, and to make this Indenture a valid agreement of the Company, in
accordance with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as of the relevant date; and
(4) except as otherwise indicated, the words "herein", "hereof"
and "hereunder" and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision.
"ACT," when used with respect to any Holder, has the meaning specified
in Section 104(a).
"ADDITIONAL INTEREST" has the meaning specified in Section 301.
"ADDITIONAL PAYMENTS" means Compounded Interest, Additional Interest
and Extension Period Interest, if any.
"AFFILIATE", of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or
2
<PAGE> 10
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGENT" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"BOARD OF DIRECTORS" means the board of directors of the Company or
any duly authorized committee of such board.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the applicable Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"BUSINESS DAY" means any day other than a day on which banking
institutions in New York, New York, Dallas, Texas or in Wilmington, Delaware
are authorized or required by law to close.
"CLOSING PRICE" has the meaning specified in Section 1307(b).
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"COMMON SECURITIES" has the meaning specified in the recitals to this
Instrument.
"COMMON STOCK" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company pursuant to its
terms. However, subject to the provisions of Article Thirteen, shares issuable
on conversion of Securities shall include only shares of the class designated
as Common Stock of the Company at the date of this instrument or shares of any
class or classes resulting from any reclassification or reclassifications
thereof and which have no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which are not subject to redemption by the
Company pursuant to their terms; PROVIDED, that if at any time there shall be
more than one such resulting class, the shares of each such class then so
issuable on conversion shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
3
<PAGE> 11
"COMPANY'S REQUEST" or "COMPANY'S ORDER" means a written request or
order delivered to the Trustee and signed in the name of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"COMPOUNDED INTEREST" has the meaning specified in Section 312(a).
"CONVERSION AGENT" means the Person appointed to act on behalf of the
holders of Preferred Securities in effecting the conversion of Preferred
Securities as and in the manner set forth in the Declaration and Section 1302
hereof.
"CONVERSION DATE" has the meaning specified in Section 1302(a).
"CONVERSION EXPIRATION DATE" has the meaning specified in Section
1301.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee in
the State of Delaware, at which at any particular time its corporate trust
business shall be administered and which at the date of this Indenture is
Rodney Square North, 1100 Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.
"DECLARATION" has the meaning specified in the Recitals of this
instrument.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DELAWARE TRUSTEE" has the meaning given it in the Recitals of this
instrument.
"DIRECT ACTION" means a proceeding directly instituted by a holder of
Preferred Securities for enforcement of payment to such holder of the principal
of or interest on the Securities having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such holder on or
after the respective due date specified in the Securities, if a Declaration
Event of Default has occurred and is continuing and such event is attributable
to the failure of the Company to pay interest or principal on the Securities on
the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date.)
"DISSOLUTION EVENT" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance
with the Declaration and the Securities held by the Property Trustee are to be
distributed to the holders of Preferred Securities issued by the Trust PRO RATA
in accordance with the Declaration.
"EVENT OF DEFAULT" has the meaning specified in Section 501.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
4
<PAGE> 12
"EXTENSION PERIOD" has the meaning specified in Section 312(a).
"EXTENSION PERIOD INTEREST" has the meaning specified in Section
312(a).
"GUARANTEE" has the meaning specified in the Recitals to this
instrument.
"HOLDER" means a Person in whose name a Security is registered in the
Security Register.
"INDENTURE" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"INITIAL PURCHASER," with respect to the Preferred Securities, means
DFA Investment Company, a Kansas cooperative marketing association.
"INTEREST PAYMENT DATE" has the meaning specified in Section 301.
"MATURITY," when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"MINISTERIAL ACTION" has the meaning specified in Section 1110.
"NOTICE OF CONVERSION" means the notice to be given by a holder of
Preferred Securities to the Conversion Agent directing the Conversion Agent to
exchange such Preferred Securities for Securities and to convert such
Securities into Common Stock on behalf of such holder.
"OFFICERS' CERTIFICATE" means a certificate signed by either the
Chairman of the Board, Chief Executive Officer, the Vice Chairman of the Board,
the President or a Vice President, and whose signature is attested to by either
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 1004 shall be the principal
executive, financial or accounting officer of the Company.
"OPINION OF COUNSEL" means a written opinion of counsel who shall be
reasonably acceptable to the Trustee.
"OUTSTANDING," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, EXCEPT: (i) Securities theretofore canceled by the
Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose
payment or redemption money in the necessary amount has
5
<PAGE> 13
been theretofore deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as Paying Agent on its own behalf) for the Holders of such
Securities; PROVIDED, that if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and (iii) Securities that
have been paid pursuant to Section 306, converted into Common Stock pursuant to
Section 1301, or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any such
Securities in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company; PROVIDED,
HOWEVER, that, in determining whether the Holders of the requisite principal
amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other Company or any Affiliate of the Company controlled
by the Company shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon
the Securities or any Affiliate of the Company controlled by the Company.
"PAYING AGENT" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"PERSON" means any individual, corporation, company, partnership,
joint venture, trust, unincorporated organization or government or any agency
or political subdivision thereof.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"PREFERRED SECURITIES" has the meaning specified in the Recitals to
this instrument.
"PROPERTY TRUSTEE" has the meaning specified in the Recitals of this
instrument.
"PURCHASE AGREEMENT" has the meaning specified in the Recitals to this
instrument.
"REDEMPTION DATE," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
6
<PAGE> 14
"REDEMPTION PRICE," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" has the meaning specified in Section 301.
"REGULAR TRUSTEES" has the meaning specified in the Declaration.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means
any vice-president, any assistant vice- president, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer or any other officer in
the Corporate Trust Department of the Property Trustee with direct
responsibility for the administration of this Declaration and also means, with
respect to a particular corporate trust matter, any other officer of the
Property Trustee to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"RESTRICTED SECURITIES LEGEND" has the meaning specified in Section
202.
"SECURITIES" has the meaning specified in the Recitals to this
instrument.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305(a).
"SENIOR INDEBTEDNESS" means in respect of the Company (i) the
principal, premium, if any, and interest (including interest accruing
subsequent to the commencement of any proceeding under any bankruptcy,
reorganization, moratorium, insolvency or other similar laws from time to time
in effect affecting the enforcement of creditors' rights generally, whether or
not such interest is allowed as a claim under such proceeding) in respect of
(A) indebtedness of such obligor for money borrowed and (B) indebtedness
evidenced by securities, debentures, bonds, notes or other similar instruments
issued by such obligor or credit facilities with lending institutions or
commercial lenders, (ii) all capital lease obligations of such obligor, (iii)
all obligations of such obligor issued or assumed as the deferred purchase
price of property, all conditional sale obligations of such obligor and all
obligations of such obligor under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business), (iv) all
obligations of such obligor for the reimbursement of any letter of credit,
banker's acceptance, security purchase facility or similar credit transaction,
(v) commitment or standby fees due and payable to lending institutions with
respect to credit facilities available to the Company, (vi) obligations under
interest rate and currency swaps, floors, caps and other arrangements intended
to fix interest rate obligations; (vii) all obligations of the type referred to
in clauses (i) through (vi) above of other persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise, and
(viii) all obligations of the type referred to in clauses (i) through (vii)
above of other persons secured by any lien on any property or asset of such
obligor (whether or not such obligation is assumed by such obligor), except for
(1) the Securities, (2) any such indebtedness that is by its terms subordinated
to or PARI PASSU with the Securities and (3) any indebtedness between or among
such obligor or its Affiliates, including all other debt securities and
guarantees in respect of those debt securities issued to any
7
<PAGE> 15
other trust, or a trustee of such trust, partnership, or other entity
affiliated with the Company that is, directly or indirectly, a financing
vehicle of the Company (a "Financing Entity") in connection with the issuance
by such Financing Entity of preferred securities or other securities which rank
PARI PASSU with, or junior to, the Preferred Securities. Such Senior
Indebtedness shall continue to be Senior Indebtedness and entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
"SPECIAL EVENT" has the meaning specified in the Declaration.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"STATED MATURITY," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal, together with any accrued and unpaid
interest (including Compounded Interest), of such Security or such installment
of interest is due and payable.
"SUBSIDIARY" of any Person means (i) a corporation more than 50% of
the outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"TAX EVENT" has the meaning specified in the Declaration.
"TRADING DAY" has the meaning specified in Section 1307(h).
"TRUST" has the meaning specified in the Recitals to this instrument.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee", shall mean such successor Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; PROVIDED, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"TRUST SECURITIES" means Common Securities and Preferred Securities.
"VICE PRESIDENT," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
8
<PAGE> 16
"VOTING STOCK" of any Person means capital stock of such Person which
ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to take any action
under any provision of this Indenture, the Company shall furnish to the Trustee
such certificates and opinions as may be required under the Trust Indenture Act
or reasonably requested by the Trustee in connection with such application or
request. Each such certificate or opinion shall be given in the form of an
Officer's Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
applicable requirements of the Trust Indenture Act and any other applicable
requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual
9
<PAGE> 17
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 601) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee or the Company, as the case may be, deems
or deem sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining
the Holders of Outstanding Securities entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action, or to vote on any action, authorized or permitted to be given or taken
by Holders. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of any
such vote, prior to such vote, the record date for any such action or vote
shall be the 30th day (or, if later, the date of the most recent list of
Holders required to be provided pursuant to Section 701) prior to such first
solicitation or vote, as the case may be. With regard to any record date, only
the Holders on such date (or their duly designated proxies) shall be entitled
to give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
10
<PAGE> 18
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(f) Without limiting the foregoing, a Holder entitled hereunder to
give or take any such action with regard to any particular Security may do so
with regard to all or any part of the principal amount of such Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND THE COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the Company
addressed to it at its principal offices specified in the first paragraph of
this instrument or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at such Holder's address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice
to Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice when
mailed to a Holder in the aforesaid manner shall be conclusively deemed to have
been received by such Holder whether or not actually received by such Holder.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
11
<PAGE> 19
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Preferred Securities (to the extent provided herein)
and the Holders of Securities, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a
12
<PAGE> 20
Business Day, then (notwithstanding any other provision of this Indenture or of
the Securities) payment of interest or principal or conversion of the
Securities need not be made on such date, but may be made on the next
succeeding Business Day (except that, if such Business Day is in the next
succeeding calendar year, such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, shall be the immediately preceding Business Day)
with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity or on such last day for conversion,
PROVIDED, that no interest shall accrue for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.
ARTICLE TWO
Security Forms
SECTION 201. FORMS GENERALLY.
The Securities and the Trustee's certificates of authentication shall
be substantially in the form of Exhibit A which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such
notation, legend or endorsement is in a form acceptable to the Company). The
Company shall furnish any such legend not contained in Exhibit A to the Trustee
in writing. Each Security shall be dated the date of its authentication. The
terms and provisions of the Securities set forth in Exhibit A are part of the
terms of this Indenture and to the extent applicable, 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.
The definitive Securities shall be typewritten or printed,
lithographed or engraved or produced by any combination of these methods, all
as determined by the Company, in its sole discretion.
SECTION 202. INITIAL ISSUANCE TO PROPERTY TRUSTEE.
The Securities initially issued to the Property Trustee of the Trust
shall be in the form of one or more individual certificates in definitive,
fully registered form without distribution coupons and shall bear the following
legend (the "Restricted Securities Legend") unless the Company determines
otherwise in accordance with applicable law:
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY
BY
13
<PAGE> 21
ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER (OR SUCH SHORTER PERIOD
UNDER RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR RULE) THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH SUIZA FOODS
CORPORATION (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION
TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
ARTICLE THREE
The Securities
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is limited to the sum of $100,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
304, 305, 306, 906, 1108 or 1301.
14
<PAGE> 22
The Securities shall be known and designated as the "5% Convertible
Subordinated Debentures due 2018" of the Company. Their Stated Maturity shall
be February 20, 2018, and they shall bear interest at the rate of 5% per annum,
from February 20, 1998 or from the most recent Interest Payment Date (as
defined below) to which interest has been paid or duly provided for, as the
case may be, payable quarterly (subject to deferral as set forth herein), in
arrears, on February 15, May 15, August 15 and November 15 (each an "Interest
Payment Date") of each year, commencing May 15, 1998 until the principal
thereof is paid or made available for payment, and they shall be paid to the
Person in whose name the Security is registered at the close of business on the
regular record date for such interest installment, which shall be the close of
business on the Business Day immediately preceding such Interest Payment Date;
PROVIDED, HOWEVER, that for so long as the Securities are held by the Trust or
the Property Trustee of the Trust, if any Preferred Securities (or if the Trust
is liquidated in connection with a Special Event, any Securities) are held in
certificated form, the record date for each Interest Payment Date shall be 15
days prior to such Interest Payment Date (in each case, a "Regular Record
Date"). Interest will compound quarterly and will accrue at the rate of 7% per
annum on any interest installment in arrears for more than one quarter or
during an extension of an interest payment period, as set forth in Section 312
hereof.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than
a full quarterly period for which interest is computed will be computed on the
basis of the actual number of days elapsed. In the event that any date on
which interest is payable on the Securities is not a Business Day, then payment
of interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
If at any time while the Property Trustee is the Holder of any
Securities, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any such case, the Company will pay as additional interest
("Additional Interest") on the Securities held by the Property Trustee, such
amounts as shall be required so that the net amounts received and retained by
the Trust and the Property Trustee after paying any such taxes, duties,
assessments or other governmental charges will be not less than the amounts the
Trust and the Property Trustee would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
The principal of and interest on the Securities shall be payable at
the office or agency in the United States maintained by the Company for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; PROVIDED,
HOWEVER, that unless the Securities are held by the Trust or any successor
permissible under the Declaration, at the option of the Company payment of
interest may be made
15
<PAGE> 23
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register.
The Securities shall be redeemable as provided in Article Eleven
hereof.
The Securities shall be convertible as provided in Article Thirteen
hereof.
SECTION 302. DENOMINATIONS.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $50 and integral multiples thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATE.
The Securities shall be executed on behalf of the Company by either
its Chairman of the Board, Chief Executive Officer, its Vice Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries or its Treasurer or one of its Assistant Treasurers. The signature
of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with Company's Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company's Order shall authenticate and make available for delivery
such Securities as provided in this Indenture, and not otherwise.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company may
execute, and upon receipt of a Company's Order, the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations
16
<PAGE> 24
as the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and
make available for delivery in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) GENERAL.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate
principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written
17
<PAGE> 25
instrument of transfer in form satisfactory to the Company and the Security
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1108 or 1301 not involving any
transfer.
The Company shall not be required (i) in the case of a partial
redemption of the Securities, to issue, register the transfer of or exchange
any Security during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of Securities selected
for redemption under Section 1104 and ending at the close of business on the
day of such mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
(b) TRANSFER PROCEDURES AND RESTRICTIONS.
The Securities may not be transferred except in compliance with the
Restricted Securities Legend unless otherwise determined by the Company in
accordance with applicable law. Upon any distribution of the Securities to the
holders of the Preferred Securities in accordance with the Declaration, the
Company and the Trustee shall enter into a supplemental indenture pursuant to
Section 901(f) to provide for transfer procedures and restrictions with respect
to the Securities substantially similar to those contained in the Declaration
to the extent applicable in the circumstances existing at the time of such
distribution.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously Outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
"protected" purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a
number not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
18
<PAGE> 26
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of the Holders with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date, subject to any right to
defer the payment of Interest hereunder.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided.
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and not less than 10 days after
the receipt by the-Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record Date.
Notice of the
19
<PAGE> 27
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and, if so listed, upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause, such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue (including in each such case Compounded Interest),
which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date (and for which Notice of Conversion is delivered on or after such
Regular Record Date) and on or prior to the next succeeding Interest Payment
Date (other than any Security whose Maturity is prior to such Interest Payment
Date), interest whose Stated Maturity is on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion prior to
such Interest Payment Date, and such interest (whether or not punctually paid
or duly provided for) shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on such Regular Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security that is converted,
interest whose Stated Maturity is on or after the date of conversion of such
Security shall not be payable, and the Company shall not make nor be required
to make any other payment, adjustment or allowance with respect to accrued but
unpaid interest (including Additional Interest, Extension Period Interest and
Compounded Interest) on the Securities being converted, which shall be deemed
to be paid in full.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 307) interest (including Additional Interest, Extension Period Interest
and Compounded Interest) on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee
20
<PAGE> 28
and shall be promptly canceled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities held by the Trustee shall
be disposed of as directed by a Company's Order; PROVIDED, HOWEVER, that the
Trustee shall not be required to destroy the certificates representing such
canceled Securities.
SECTION 310. RIGHT OF SET OFF.
Notwithstanding anything to the contrary in this Indenture, the
Company shall have the right to set off any payment it is otherwise required to
make hereunder to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee.
SECTION 311. CUSIP NUMBERS.
The Company, as Company, in issuing the Securities may, at its sole
discretion, use "CUSIP" numbers, and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; PROVIDED, that
any such notice may state that no representation is made as to the correctness
of such numbers either as printed on the Securities or as contained in any
notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
SECTION 312. OPTION TO EXTEND INTEREST PAYMENT PERIOD.
(a) The Company shall have the right at any time during the term
of the Securities to defer interest payments from time to time by extending the
interest payment period for successive periods (each, an "Extension Period")
not exceeding 20 consecutive quarters for each such period; PROVIDED, no
Extension Period may extend beyond the Maturity of the Securities. At the end
of each Extension Period, the Company shall be responsible for the payment of,
and the Company shall pay all interest then accrued and unpaid (including
Additional Interest, if any); PROVIDED, that during any Extension Period,
interest on the Securities shall accrue at 7% per annum ("Extension Period
Interest") instead of the stated rate of 5% per annum, together with interest
thereon compounded quarterly at the rate of 7% per annum, to the extent
permitted by applicable law ("Compounded Interest"). During any Extension
Period, the Company shall not repay, repurchase or redeem any capital stock or
debt securities issued by the Company, or make any guarantee payments with
respect to indebtedness for borrowed money, that rank junior to or PARI PASSU
with the Securities. Prior to the termination of any such Extension Period,
the Company may further extend such Extension Period; PROVIDED, that such
Extension Period together with all previous and further extensions thereof may
not exceed 20 consecutive quarters and may not extend beyond the Maturity of
the Securities. Upon the termination of any Extension Period and the payment
of all amounts then due, the Company may commence a new Extension
21
<PAGE> 29
Period, subject to the above requirements. No interest during an Extension
Period, except at the end thereof, shall be due and payable.
(b) If the Property Trustee is the sole Holder of the Securities
at the time the Company selects an Extension Period, the Company shall give
written notice to the Regular Trustees, the Property Trustee and the Trustee of
its selection of such Extension Period at least one Business Day prior to the
earlier of (i) the date the distributions on the Preferred Securities are
payable or (ii) if the Preferred Securities are listed on the New York Stock
Exchange, Inc. ("NYSE") or other stock exchange or quotation system, the date
the Trust is required to give notice to the NYSE or other applicable self-
regulatory organization or to holders of the Preferred Securities of the record
date or the date such distributions are payable, but in any event not less than
ten Business Days prior to such record date.
(c) The Trustee shall promptly give notice of the Company's
selection of such Extension Period to the holders of the Preferred Securities.
If the Property Trustee is not the sole Holder at the time the Company selects
an Extension Period, the Company shall give the Holders and the Trustee written
notice of its selection of such Extension Period at least ten Business Days
prior to the earlier of (i) the next succeeding Interest Payment Date or (ii)
if the Preferred Securities are listed on the NYSE or other stock exchange or
quotation system, the date the Company is required to give notice to the NYSE
or other applicable self-regulatory organization or to Holders of the
Securities on the record or payment date of such related interest payment, but
in any event not less than two Business Days prior to such record date.
(d) The quarter in which any notice is given pursuant to
paragraphs (b) and (c) hereof shall be counted as one of the 20 quarters
permitted in the maximum Extension Period permitted under paragraph (a) hereof.
(e) The Company currently has no intention of exercising its right
to defer interest payments pursuant to this Section 312.
SECTION 313. PAYING AGENT, SECURITY REGISTRAR AND CONVERSION
AGENT.
The Trustee will initially act as Paying Agent, Security Registrar and
Conversion Agent. The Company may change any Paying Agent, Security Registrar,
co-registrar or, with the consent of the Trustee, Conversion Agent without
prior notice. The Company or any of its Affiliates may act in any such
capacity.
22
<PAGE> 30
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of the
Company and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation have become due and payable, and the Company has
deposited or caused to be deposited with the Trustee as trust funds in trust
for the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for principal and interest (including any Compounded Interest and
Extension Period Interest) to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that, in their opinion, all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any
23
<PAGE> 31
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal and
interest for whose payment such money has been deposited with the Trustee. All
moneys deposited with the Trustee pursuant to Section 401 (and held by it or
any Paying Agent) for the payment of Securities subsequently converted shall be
returned to the Company promptly following such conversion or, if sooner, upon
receipt of a Company's Request.
ARTICLE FIVE
Remedies
SECTION 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(1) failure for 30 days to pay interest on the Securities,
including any Additional Interest, Extension Period Interest and Compounded
Interest in respect thereof, when due; PROVIDED that a valid extension of an
interest payment period pursuant to Section 312 hereof will not constitute a
default in the payment of interest (including any Additional Interest,
Compounded Interest or Extension Period Interest) for this purpose;
(2) failure to pay principal of or premium, if any, on the
Securities when due whether at maturity, upon redemption, by declaration or
otherwise;
(3) failure by the Company to deliver shares of its Common Stock
upon an election by a holder of Preferred Securities to convert such Preferred
Securities;
(4) failure to observe or perform in all material respects any
other covenant contained in the Indenture for 90 days after notice to the
Company by the Trustee or by the Holders of not less than 25% in aggregate
Outstanding principal amount of the Securities;
(5) entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company as the case may be, under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, as the case may be, or
of substantially all of the property of the Company, as the case may be, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 90 consecutive days;
24
<PAGE> 32
(6) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent, or the consent by the Company to the entry
of a decree or order for relief in respect of itself in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against the Company, as the case may be, or the
filing by the Company of a petition or answer or consent seeking reorganization
or relief under any applicable Federal or State law, or the consent by the
Company to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, as the case may be, or
of substantially all of the property of Company, or the making by the Company
of a general assignment for the benefit of creditors, or the admission by the
Company in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by the Company in furtherance of any
such action;
(7) the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Securities to holders of Preferred Securities in liquidation of the Trust upon
the redemption of all of the outstanding Preferred Securities of the Trust or
(ii) certain mergers, consolidations or amalgamations, each as permitted by the
Declaration.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Securities may declare the principal of all the Securities,
all accrued interest thereon and any other amounts payable hereunder to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal, all
accrued interest and such other amounts shall become immediately due and
payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as provided in this Article hereinafter, the Holders of a majority
in aggregate principal amount of the Outstanding Securities, by written notice
to the Company and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest (including any Additional
Interest, Extension Period Interest and Compounded Interest) on all Securities,
(B) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and interest thereon at the
rate borne by the Securities, and
25
<PAGE> 33
(C) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of and/or interest on and/or all other amounts in respect of
Securities which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
If the holders of a majority in aggregate principal amount of the
Outstanding Securities fail to rescind and annul such declaration and its
consequences, the holders of a majority in aggregate liquidation amount of the
Preferred Securities then outstanding shall have such right.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any interest (including any
Additional Interest, Extension Period Interest or Compounded Interest) on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of any
Security at the Maturity thereof, the Company will, upon demand of the Trustee,
pay to it, for the benefit of the Holders of such Securities, the whole amount
then due and payable on such securities for principal and interest (including
any Additional Payments) and, to the extent that payment thereof shall be
legally enforceable, interest on any overdue principal and on any overdue
interest (including any Additional Payments), at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
26
<PAGE> 34
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or interest
(including any Additional Payments and Extension Period Interest), upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including any Additional Payments and Extension
Period Interest) on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without
27
<PAGE> 35
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and interest (including any Compounded Interest),
respectively.
THIRD: The balance, if any, shall be paid to the Company.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) if the Trust is not the sole holder of the Outstanding
Securities, the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities; it being understood and
intended that no one or more Holders shall have any right in any manner
whatever by virtue of, or by availing itself of, any provision of this
Indenture to affect, disturb or prejudice the rights of any other Holders, or
to obtain or to seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST AND CONVERT.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest
(including any Additional Payments) on such Security on the Stated Maturity
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to convert such Security in accordance with Article Thirteen and to
institute suit for the enforcement of any such payment and right to convert,
and such rights shall not be impaired without the consent of such Holder.
28
<PAGE> 36
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; PROVIDED, that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture; and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
29
<PAGE> 37
SECTION 513. WAIVER OF PAST DEFAULTS.
Subject to Section 902 hereof, the Holders of greater than 50% in
principal amount of the Outstanding Securities may on behalf of the Holders of
all the Securities waive any past default hereunder and its consequences,
except a default
(1) in the payment of the principal of, premium, if any, or
interest (including any Additional Payments) on any Security (unless such
default has been cured and a sum sufficient to pay all matured installments of
interest (including any Additional Payments) and principal due otherwise than
by acceleration has been deposited with the Trustee); or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected; PROVIDED, HOWEVER, that if the Securities
are held by the Trust or a trustee of the Trust, such waiver shall not be
effective until the holders of greater than 50% in liquidation amount of Trust
Securities shall have consented to such waiver; PROVIDED, FURTHER, that if the
consent of the Holder of each Outstanding Security is required, such waiver
shall not be effective until each holder of the Trust Securities shall have
consented to such waiver.
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 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act; PROVIDED, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company
or the Trustee or in any suit for the enforcement of the right to receive the
principal of and interest (including any Additional Payments) on any Security
or to convert any Security in accordance with Article Thirteen.
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
30
<PAGE> 38
SECTION 516. ENFORCEMENT BY HOLDERS OF PREFERRED SECURITIES.
Notwithstanding the foregoing, if an Indenture Event of Default has
occurred and is continuing and such Event of Default is attributable to the
failure of the Company to pay interest or principal on the Securities on the
date such interest or principal is otherwise payable, the Company acknowledges
that, in such event, a holder of Preferred Securities may institute a Direct
Action for payment on or after the respective due date specified in the
Securities. The Company may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of all the
holders of Preferred Securities. Notwithstanding any payment made to such
holder of Preferred Securities by the Company in connection with a Direct
Action, the Company shall remain obligated to pay the principal of or interest
on the Securities held by the Trust or the Property Trustee and the Company
shall be subrogated to the rights of the holders of such Preferred Securities
with respect to payments on the Preferred Securities to the extent of any
payments made by the Company to any such holders in any Direct Action. Except
as set forth elsewhere herein or in the Declaration, the holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the Holders.
ARTICLE SIX
The Trustee
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice (at the address as they
appear in the Security Register) of any default hereunder as and to the extent
provided by the Trust Indenture Act; PROVIDED, however, that in the case of any
default of the character specified in Section 501(4), no such notice to Holders
shall be given until at least 60 days after a responsible Officer of the
Trustee has obtained actual knowledge of the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
31
<PAGE> 39
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company's Request or Company's Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory to
the Trustee against the costs, expenses and liabilities which might be incurred
by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled
to reasonable examination of the books, records and premises of the Company,
personally or by agent or attorney; PROVIDED HOWEVER, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expenses or liability as a condition to so
proceeding;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
32
<PAGE> 40
(h) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith, without negligence or
willful misconduct, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Company of the Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company or any Affiliate thereof with the same rights
it would have if it were not Trustee, Paying Agent, Security Registrar, or such
other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Trustee from time to time such reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) as the Company and the
Trustee shall from time to time agree in writing for all services rendered by
it hereunder;
(b) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, fees, disbursements
and advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee (including in its individual
capacity) and any predecessor Trustee for, and to hold it harmless against, any
loss, liability, claim, action, suit, cost, damage or
33
<PAGE> 41
reasonable expense, including taxes (other than taxes based on the income of
the Trustee), incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of this trust,
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(6) or Section 501(7), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the resignation or
removal of the Trustee and the termination of this Indenture.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture provided,
however, nothing shall prohibit or disqualify an employee of the Company from
acting as Trustee solely because that Person is employed by the Company.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder appointed by the
Company which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such. If such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of its federal, state,
District of Columbia or territorial supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
34
<PAGE> 42
(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered to
the Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of removal, the removed Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608
after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (i) the Company by Board
Resolution may remove the Trustee, or (ii) subject to Section 514, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
35
<PAGE> 43
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; PROVIDED, that on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
all amounts then due to it hereunder, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments required to more fully and certainly vest in and confirm to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
the Trustee, shall be the successor of the Trustee hereunder, provided such
Person shall be otherwise qualified and eligible under this Article, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto. In case any Securities shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
36
<PAGE> 44
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSEES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(a) quarterly, at least one Business Day prior to February 15, May
15, August 15 and November 15 of each year, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders as of a date
not more than 15 days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar and PROVIDED that the Company shall not be
obligated to provide a list of Holders at any time such list of Holders does
not differ from the most recent list of Holders given to the Trustee by the
Company.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the
most recent list furnished to the Trustee as provided in Section 701 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act or this Indenture.
SECTION 703. REPORTS BY TRUSTEE.
Within 60 days after January 15 of each year, commencing January 15,
1999, the Trustee shall transmit by mail to the Holders such reports concerning
the Trustee and its actions under this
37
<PAGE> 45
Indenture as may be required pursuant to the Trust Indenture Act in the manner
provided pursuant thereto.
SECTION 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission, and
transmit to the Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant to such Act; PROVIDED, that
any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed
with the Trustee within 15 days after the same is so required to be filed with
the Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of their covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
The Company shall also provide to the Trustee on a timely basis such
information as the Trustee requires to enable the Trustee to prepare and file
any form required to be submitted by the Company with the Internal Revenue
Service and the holders of the Preferred Securities relating to original issue
discount, including, without limitation, Form 1099-OID or any successor form.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge with or into any other
Person or, directly or indirectly, convey, transfer or lease all or
substantially all its assets substantially as an entirety to any Person,
unless:
(a) the Person formed by such consolidation or into which the
Company is merged (if the Company is not the survivor) or the Person which
acquires by conveyance, transfer or lease, all or substantially all the
Company's assets substantially as an entirety shall be a corporation, shall be
organized and validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities and the
performance or observance of every covenant of this Indenture on the part of
the Company to be performed or observed and shall have provided for conversion
rights in accordance with Article Thirteen;
38
<PAGE> 46
(b) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that, in their opinion,
such consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture, comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
This Section shall only apply to (i) a merger or consolidation in
which the Company is not the surviving corporation, and (ii) to conveyances,
leases and transfers by the Company as transferor or lessor.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all the Company's assets substantially as an entirety in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein, and thereafter the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(b) to evidence and to provide for the acceptance of appointment
hereunder by a Successor Trustee with respect to the Securities; or
39
<PAGE> 47
(c) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company;
or
(d) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article Thirteen; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture; or
(f) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(g) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any, to be
placed on Securities, and all other matters required pursuant to Section 305(b)
or otherwise necessary, desirable or appropriate in connection with the
issuance of Securities to holders of Preferred Securities in the event of a
distribution of Securities by the Trust if a Special Event occurs and is
continuing.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make any
further appropriate agreements and stipulations which may be therein contained
and to accept the conveyance, transfer and assignment of any property
thereunder.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of greater than 50% in principal
amount of the Outstanding Securities, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders under this Indenture; PROVIDED, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(a) extend the Stated Maturity of the principal of, or any
installment of interest (including any Additional Payments or Extension Period
Interest) on, any Security, or reduce the principal amount thereof, or reduce
the rate or extend the time for payment of interest thereon (including any
Additional Payments or Extension Period Interest), or reduce any premium
payable upon the redemption thereof, or change the place of payment where, or
the coin or currency in which, any Security or interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption, on or
after the Redemption Date), or adversely affect the right to convert any
Security as provided in Article Thirteen (except as permitted by Section
901(c)) or modify the
40
<PAGE> 48
provisions of Article Twelve with respect to the subordination of the Notes in
a manner adverse to the Holders in any material respect,
(b) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(c) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Outstanding Security affected thereby; PROVIDED that if
the Securities are held by the Trust or a trustee of the Trust, such
supplemental indenture shall not be effective until the holders of greater than
50% in liquidation amount of Trust Securities shall have consented to such
supplemental indenture; PROVIDED, further, that if the consent of the Holder of
each Outstanding Security is required, such supplemental indenture shall not be
effective as to a given holder of Trust Securities of the Trust until such
holder of the Trust Securities of the Trust shall have consented to such
supplemental indenture.
Notwithstanding the foregoing, so long as any Preferred Securities
remain outstanding no such amendment of the Indenture that adversely affects
the holders of the Preferred Securities in any material respect shall be
entered into, no termination of this Indenture shall occur and no waiver of any
Event of Default or compliance with any covenant under this Indenture shall be
effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation preference of such Preferred Securities then
outstanding unless and until the principal of the Securities and all accrued
and unpaid interest (including any Additional Payments) thereon have been paid
in full; provided, however, that where a consent under the Indenture would
require the consent of each Holder of Securities affected thereby, no such
consent shall be effective until the prior consent of each holder of Preferred
Securities has been obtained.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record
date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date; PROVIDED that unless such consent shall
have become effective by virtue of the requisite percentage having been
obtained prior to the date which is 90 days after such record date, any such
consent previously given shall automatically and without further action by any
Holder be canceled and of no further effect.
41
<PAGE> 49
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, in its
discretion, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act (and the Trustee shall
be entitled to receive and conclusively rely upon an opinion of legal counsel
to that effect in form and substance satisfactory to the Trustee); PROVIDED,
that this requirement shall not constitute an admission or acknowledgment by
any party hereto that any qualification is required prior to the time this
Indenture and the Trustee are required by the Trust Indenture Act to be so
qualified.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities. Failure to undertake the foregoing shall
have no effect on such supplemental indenture.
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the principal of and interest
(including any Additional Payments and Extension Period Interest) on the
Securities in accordance with the terms of the Securities and this Indenture.
42
<PAGE> 50
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the United States an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location and any change in the location, of any such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoint the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in the United States) where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; PROVIDED, however, that no such designation or
rescission shall in any manner relieve the Company of its obligations to
maintain an office or agency in the United States for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of their action or failure so to
act.
Whenever the Company shall have one or more Paying Agents other than
the Company, the Company will, prior to each due date of the principal of or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
such amount, such sum to be held as provided by the Trust Indenture Act, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of such action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture
Act applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by the Company's Order direct any Paying
43
<PAGE> 51
Agent to pay, to the Trustee all sums held in trust by the Company or such
Paying Agent, such sums to be held by the Trustee upon the same terms as those
upon which such sums were held by the Company or such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on any
Security and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company upon the Company's
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of any such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, unless an abandoned
property law designates another person, 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.
SECTION 1004. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the material terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 1005. LIMITATION ON DIVIDENDS; TRANSACTIONS WITH AFFILIATES;
COVENANTS AS TO THE TRUST.
(a) The Company covenants that so long as the Securities are
Outstanding, if (i) there shall have occurred and be continuing any event that
with the giving of notice or the lapse of time or both, would constitute an
Event of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the Guarantee, or (iii) the Company has
exercised its option to defer interest payments on the Securities by extending
the interest payment period and such period, or any extension thereof, shall be
continuing, then the Company shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any capital stock or debt
securities issued by the Company, or make any guarantee payments with respect
to indebtedness for borrowed money, that rank junior to or PARI PASSU with the
Securities (except by conversion into or exchange for shares of its capital
stock).
(b) The Company also covenants and agrees (i) that it shall
directly or indirectly maintain 100% ownership of the Common Securities of the
Trust; PROVIDED, HOWEVER, that any permitted successor of the Company hereunder
may succeed to the Company's ownership of such Common Securities (ii) NOT TO
CAUSE OR PERMIT THE DISSOLUTION, WINDING-UP OR TERMINATION OF THE TRUST, EXCEPT
IN CONNECTION WITH A DISTRIBUTION OF THE SECURITIES TO THE HOLDERS OF PREFERRED
SECURITIES IN LIQUIDATION OF THE TRUST OR IN CONNECTION
44
<PAGE> 52
WITH CERTAIN MERGERS, CONSOLIDATIONS OR AMALGAMATIONS PERMITTED BY THE
DECLARATION AND (iii) that it shall use its reasonable efforts, consistent with
the terms and provisions of the Declaration, to cause the Trust (x) to remain a
statutory business trust, except in connection with the distribution of the
Securities to the holders of Preferred Securities in liquidation of the Trust,
the redemption of all of the Trust Securities of the Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration, and (y)
to otherwise continue to be classified as a grantor trust for United States
Federal income tax purposes.
SECTION 1006. PAYMENT OF EXPENSES OF THE TRUST.
In connection with the offering, sale and issuance of the Securities
to the Property Trustee in connection with the sale of the Trust Securities by
the Trust, the Company shall be responsible for the payment of:
(a) all costs, fees and expenses relating to the offering, sale
and issuance of the Securities and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 607 of the Indenture;
(b) all debts and obligations (other than with respect to the
Trust Securities) of the Trust, all costs and expenses of the Trust (including,
but not limited to, costs and expenses relating to the organization of the
Trust, the offering, sale and issuance of the Trust Securities, the fees and
expenses of the Property Trustee and the Delaware Trustee (including the
payment of counsel fees and expenses), the costs and expenses relating to the
operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing and disposition of Trust assets); and
(c) all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. RIGHT OF REDEMPTION.
(a) The Securities may be redeemed at the election of the Company,
in whole or in part, at any time or from time to time after February 20, 2001,
at the Redemption Prices set forth in Section 1109 below upon not less than 30
or more than 60 days' notice.
(b) As set forth more fully in Section 1109 below, the Securities
may also be redeemed, in whole (but not in part), at the election of the
Company at any time after the third
45
<PAGE> 53
anniversary of the date of issuance upon the occurrence of a Tax Event (in
whole but not in part); PROVIDED, HOWEVER, that if, at the time there is
available to the Company or the Trust the opportunity to eliminate the Tax
Event, within a reasonable amount of time as conclusively determined by the
Company in its sole discretion, by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure, which in the sole judgment of the Company has or will cause no adverse
effect on the Trust, the holders of the Trust Securities or the Company or will
involve no material cost, then the Company or the Trust shall pursue such
measure in lieu of redemption.
(c) Notwithstanding any other provision of this Indenture, the
Company may not redeem any of the outstanding Securities unless all accrued and
unpaid interest (including any Additional Interest, Extension Period Interest
and Compounded Interest) has been paid on all Securities for all quarterly
interest periods terminating on or before the date of redemption and through
and including the Redemption Date.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company, as permitted
by Section 1101, shall be made in accordance with such provision and this
Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem Securities pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at
the election of the Company, the Company shall, at least 30 days and no more
than 60 days prior to the Redemption Date fixed by the Company, notify the
Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed and provide a copy of the notice of redemption given
to Holders of Securities to be redeemed pursuant to Section 1104.
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the Outstanding Securities not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to $50 or
any integral multiple thereof) of the principal amount of the Securities.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to
be redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal
46
<PAGE> 54
amount of the Security shall be in an authorized denomination (which shall not
be less than the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at such Holder's address
appearing in the Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including, if relevant, the CUSIP or ISIN number, if any) and shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date, and
(d) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's Request, by the
Trustee in the name and at the expense of the Company. The notice, if mailed
in the manner herein provided, shall be conclusively presumed to have been duly
given, whether or not the Holder receives such notice. In any case, a failure
to give such notice by mail or any defect in the notice to the Holder of any
Security designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Security.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate which may be done by book entry and hold in trust as provided
in Section 1003) an amount of money sufficient to pay the Redemption Price of,
and (except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Securities which are to be redeemed on that date.
47
<PAGE> 55
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held
in trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon the
Company's Request or, if then held by the Company, shall be discharged from
such trust.
SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest (including Additional Payments, if any) to the Redemption Date;
PROVIDED, however, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant record dates according to the terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Security.
SECTION 1108. SECURITIES REDEEMED IN PART.
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Security during
a period beginning at the opening of business 15 days before any selection for
redemption of Securities and ending at the close of business on the earliest
date on which the relevant notice of redemption is deemed to have been given to
all holders of Securities to be so redeemed and (ii) register the transfer of
or exchange any Securities so selected for redemption, in whole or in part,
except for the unredeemed portion of any Securities being redeemed in part.
Any Security which is to be redeemed only in part shall be surrendered
at a place of payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
prepare and execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Security without service charge, a new Security
or Securities, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
48
<PAGE> 56
SECTION 1109. OPTIONAL REDEMPTION.
The Company shall have the right to redeem the Securities, in whole or
in part, at any time or from time to time on or after February 20, 2001 upon
not less than 30 nor more than 60 days' notice, at a redemption price equal at
the following optional redemption prices (expressed as a percentage of the
principal amount of Securities) if redeemed during the 12-month period
beginning February __ of the respective years shown below:
<TABLE>
<CAPTION>
Percentage of
Year Principal Year Amount
----------------------- --------------------------
<S> <C>
2001 103.50%
2002 103.00
2003 102.50
2004 102.00
2005 101.50
2006 101.00
2007 100.50
2008 and thereafter 100.00
</TABLE>
plus any accrued and unpaid interest, including Additional Payments, if any, to
the Redemption Date.
If at any time following the Conversion Expiration Date less than five
percent (5%) of the original aggregate principal amount of the Securities
remains Outstanding, such Securities shall be redeemable at the option of the
Company, in whole but not in part, at a redemption price equal to the principal
amount thereof, plus any accrued and unpaid interest (including any Additional
Payments) to the Redemption Date.
If a Tax Event shall occur and be continuing, the Company shall have
the right upon not less than 30 nor more than 60 days' notice, to redeem the
Securities in whole or in part, for cash upon the later of (i) the occurrence
of such Tax Event or (ii) February 20, 2001, at a redemption price equal to the
principal amount at Stated Maturity of such Securities plus any accrued and
unpaid interest (including any Additional Payments) to the Redemption Date.
Any redemption pursuant to this Section 1109 shall be made pursuant to
the provisions of Sections 1101 through 1108 hereof.
SECTION 1110. EXCHANGE OF TRUST SECURITIES FOR SECURITIES.
(a) At any time, the Company shall have the right to
terminate the Trust and cause the Securities to be distributed to the holders
of the Preferred Securities in liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust as provided by the Declaration and
applicable law.
49
<PAGE> 57
(b) If a Special Event in respect of the Trust shall
occur, the Company shall give the Trustee notice of the same. If a Special
Event in respect of the Trust shall occur and be continuing, the Declaration
requires the Property Trustee to direct the Conversion Agent (as defined in the
Declaration) to exchange all outstanding Preferred Securities for Securities
having a principal amount at Stated Maturity equal to the aggregate liquidation
amount of the Trust Securities to be exchanged, PROVIDED, that, in the case of
a Tax Event, the Company shall have the right to direct the Property Trustee
that less than all, or none of the Preferred Securities be so exchanged (i) if
for so long as the Company shall have elected to pay any Additional Interest
such that the net amounts received by holders of the Preferred Securities not
so exchanged in respect of distributions are not reduced as a result of such
Tax Event, and shall not have revoked any such election or failed to make such
payments or (ii) if the Company shall instead elect to redeem the Securities,
in whole or in part, in the manner set forth in Section 1109; PROVIDED,
HOWEVER, that if, at the time there is available to the Company or the Trust
the opportunity to eliminate the Special Event, within a reasonable amount of
time as conclusively determined by the Company in its sole discretion, by
taking some ministerial action ("Ministerial Action"), such as filing a form or
making an election, or pursuing some other similar reasonable measure which, in
the sole judgment of the Company, has or will cause no adverse effect on the
Company, the Trust or the holders of the Trust Securities and will involve no
material cost, the Company or the Trust shall pursue such Ministerial Action or
other measure in lieu of redemption, and PROVIDED, FURTHER, that the Company
shall have no right to redeem the Securities while the Trust is pursuing any
Ministerial Action.
SECTION 1111. NO SINKING FUND.
The Securities are not entitled to the benefit of any sinking fund.
ARTICLE TWELVE
Subordination of Securities
SECTION 1201. AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each Holder of Securities by
such Holder's acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article Twelve;
and each Holder of a Security, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions. The
payment by the Company of the principal of, premium, if any, and interest
(including Additional Payments) on all Securities issued hereunder shall, to
the extent and in the manner hereinafter set forth, be subordinated and junior
in right of payment to the prior payment in full of all existing and future
Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred; PROVIDED HOWEVER, that no provision of this Article Twelve
shall prevent the occurrence of any default or Event of Default hereunder.
50
<PAGE> 58
SECTION 1202. DEFAULT ON SENIOR INDEBTEDNESS.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness continuing beyond the period of grace, if any, specified in
the instrument evidencing such Senior Indebtedness, unless and until such
default shall have been cured or waived or shall have ceased to exist, and in
the event that the maturity of any Senior Indebtedness has been accelerated
because of a default, then no payment shall be made by the Company with respect
to the principal of (including redemption payments, if any), premium, if any,
or interest on the Securities.
In the event of any default (other than a default described in the
immediately preceding paragraph) by the Company under the terms of any
instrument evidencing any Senior Indebtedness, continuing beyond the period of
grace, if any, specified in such instrument, written notice of which default
shall have been given by any holder of such Senior Indebtedness to the Trustee,
unless and until the earlier of (i) such default shall have been cured or
waived or shall have ceased to exist, or (ii) the continuation of such default
for a period of one hundred eighty days after notice of the occurrence of such
default shall have been given to the Trustee, no payment shall be made by the
Company with respect to the principal of (including redemption payments, if
any), premium, if any, or interest on the Securities.
Notwithstanding anything contained herein to the contrary, so long as
the Company shall be prohibited from making any payment on account of the
Securities pursuant to the foregoing paragraphs, neither the Trustee nor any
Holders shall take any action to (i) collect, demand payment of or accelerate
any of the Securities, (ii) foreclose or otherwise realize upon any security
for the Securities, (iii) initiate against the Company any proceeding under any
bankruptcy, reorganization, moratorium, insolvency or other similar laws from
time to time in effect affecting the enforcement of creditors' rights
generally, or (iv) exercise any of their other rights or remedies against the
Company under this Indenture or otherwise, unless and until a proceeding shall
have been commenced against the Company under any bankruptcy, reorganization,
moratorium, insolvency or other similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 1202, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.
51
<PAGE> 59
SECTION 1203. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization
of the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, and premium, if any, and
interest due or to become due on, all Senior Indebtedness must be paid in full
before any payment is made on account of the principal (and premium, if any) or
interest on the Securities; and upon any such dissolution or winding up or
liquidation or reorganization, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders or the Trustee would be entitled, except for
the provisions of this Article Twelve, shall be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders or by the Trustee under
this Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts
of Senior Indebtedness held by such holders, as calculated by the Company) or
their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, to
the extent necessary to pay such Senior Indebtedness in full, in money or
money's worth, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness, before any payment or
distribution is made to the Holders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee or the Holders before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior Indebtedness in
full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
For purposes of this Article Twelve, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article Twelve with respect to the Securities to the payment of all Senior
Indebtedness which may at the time be outstanding; provided, that (i) such
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Company with,
or the merger of the
52
<PAGE> 60
Company with or into, another Person or the liquidation or dissolution of the
Company following the conveyance, transfer or lease of all or substantially all
its properties and assets on a consolidated basis to another Person upon the
terms and conditions provided for in Article Eight hereof shall not be deemed a
dissolution, winding up, liquidation or reorganization for the purposes of this
Section 1203 if such other Person shall, as a part of such consolidation,
merger, conveyance, transfer or lease, comply with the conditions stated in
Article Eight hereof. Nothing in Section 1202 or in this Section 1203 shall
apply to claims of, or payments to, the Trustee (including in its individual
capacity) under or pursuant to Section 607 hereof.
SECTION 1204. SUBROGATION.
Subject to the payment in full of all Senior Indebtedness, the rights
of the Holders shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of cash, property or
securities of the Company, as the case may be, applicable to such Senior
Indebtedness until the principal of (and premium, if any,) and interest on the
Securities shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Holders or the Trustee would be
entitled except for the provisions of this Article Twelve, and no payment over
pursuant to the provisions of this Article Twelve, to or for the benefit of the
holders of such Senior Indebtedness by Holders or the Trustee, shall, as
between the Company, its creditors other than holders of Senior Indebtedness,
and the Holders, be deemed to be a payment by the Company to or on account of
such Senior Indebtedness. It is understood that the provisions of this Article
Twelve are and are intended solely for the purposes of defining the relative
rights of the Holders, on the one hand, and the holders of such Senior
Indebtedness on the other hand.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of (and premium, if any) and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of the Company, as the case may be, other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent
the Trustee or the Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article Twelve of the holders of such Senior Indebtedness in
respect of cash, property or securities of the Company, as the case may be,
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article Twelve, the Trustee, subject to the provisions of Section 603,
and the Holders, shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
receiver, trustee in bankruptcy, liquidation trustee, agent or other Person
making such payment or distribution, delivered to the Trustee or to the
Holders, for the purposes of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior
53
<PAGE> 61
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Twelve.
SECTION 1205. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder by such Holder's acceptance thereof authorizes and directs
the Trustee on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Twelve and
appoints the Trustee as such Holder's attorney-in-fact for any and all such
purposes; provided, that the Trustee shall not be required to take action
unless it receives written authorization for such action pursuant to a specific
provision of this Indenture.
SECTION 1206. NOTICE BY THE COMPANY.
The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company which would prohibit the making
of any payment of monies to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article Twelve. Notwithstanding the
provisions of this Article Twelve or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provision of this Article Twelve,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Section 603 hereof, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 1206 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of (and premium, if any) or interest on any Security),
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such money and to apply the same
to the purposes for which they were received, and shall not be affected by any
notice to the contrary which may be received by it within two Business Days
prior to such date.
The Trustee, subject to the provisions of Section 603, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of such Senior Indebtedness or a trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled
to participate in such payment or distribution and any other facts pertinent to
the right of such Person under this Article Twelve,
54
<PAGE> 62
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 1207. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Twelve in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 603, the Trustee shall not be liable to
any holder of such Senior Indebtedness if it shall pay over or deliver to
Holders, the Company or any other Person money or assets to which any holder of
such Senior Indebtedness shall be entitled by virtue of this Article Twelve or
otherwise. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations
as are specifically set forth in this Article Twelve and no implied covenants
or obligations with respect to holders of Senior Indebtedness shall be read
into this Indenture against the Trustee.
SECTION 1208. SUBORDINATION MAY NOT BE IMPAIRED.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have
or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the holders of the Securities and without impairing
or releasing the subordination provided in this Article Twelve or the
obligations hereunder of the Holders of the Securities to the holders of Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
55
<PAGE> 63
SECTION 1209. CERTAIN CONVERSIONS DEEMED PAYMENT.
For the purposes of this Article Twelve only, (1) the issuance and
delivery of junior securities upon conversion of Securities in accordance with
Article Thirteen shall not be deemed to constitute a payment or distribution on
account of the principal of (or premium, if any) or interest on Securities or
on account of the purchase or other acquisition of Securities, and (2) the
payment, issuance or delivery of cash (except in satisfaction of fractional
shares), property or securities (other than junior securities) upon conversion
of a Security shall be deemed to constitute payment on account of the principal
of such Security. For the purposes of this Section 1209, the term "junior
securities" means (a) shares of any stock of any class of the Company, or (b)
securities of the Company which are subordinated in right of payment to all
Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this
Article. Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than holders of Senior Indebtedness and the
Holders, the right, which is absolute and unconditional, of the Holder to
convert such Security in accordance with Article Thirteen.
SECTION 1210. ARTICLE APPLICABLE TO PAYING AGENTS.
If at any time any paying agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall (unless the context otherwise requires) be construed
as extending to and including such paying agent within its meaning as fully for
all intents and purposes as if such paying agent were named in this Article in
addition to or in place of the Trustee; PROVIDED, HOWEVER, that the first
paragraph of Section 1207 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as paying agent.
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. CONVERSION RIGHTS.
Subject to and upon compliance with the provisions of this Article,
the Securities are convertible, at the option of the Holder, into the number of
fully paid and nonassessable shares of Common Stock obtained by dividing $50
per Security by the applicable conversion price (initially $70 per share of
Common Stock for each Security), rounded to the nearest 1/1000th of one share
(equivalent to conversion rate of .7143 Shares of Common Stock per Security),
subject to adjustment as described in this Article Thirteen. The conversion
rights of the Holders shall expire on the close of business on the Business Day
prior to the Maturity date of the Securities, or, in case a Security or portion
thereof is called for redemption, at the close of business on the Business Day
immediately preceding the corresponding Redemption Date (the "Conversion
Expiration Date"), unless the Company defaults in making the payment due upon
redemption.
56
<PAGE> 64
The Company shall at all times reserve and keep available out of its authorized
and unissued Common Stock, solely for issuance upon the conversion of the
Securities, free from any preemptive or other similar rights, such number of
shares of Common Stock as shall from time to time be issuable upon the
conversion of all the Securities then outstanding.
SECTION 1302. CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Securities, the
Holder thereof shall deliver to the Conversion Agent an irrevocable Notice of
Conversion setting forth the principal amount of Securities to be converted,
together with the name or names, if other than the Holder, in which the shares
of Common Stock should be issued upon conversion and, if such Securities are
definitive Securities, surrender to the Conversion Agent the Securities to be
converted, duly endorsed or assigned to the Company or in blank. In addition,
a holder of Preferred Securities may exercise its right under the Declaration
to convert such Preferred Securities into Common Stock by delivering to the
Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
Agent (i) to exchange such Preferred Security for a portion of the Securities
held by the Trust (at an exchange rate of $50 principal amount of Securities
for each Preferred Security) and (ii) to immediately convert such Securities,
on behalf of such holder, into Common Stock of the Company pursuant to this
Article Thirteen and, if such Preferred Securities are in definitive form,
surrendering such Preferred Securities, duly endorsed or assigned to the
Company or in blank. So long as any Preferred Securities are Outstanding, the
Trust shall not convert any Securities except pursuant to a Notice of
Conversion delivered to the Conversion Agent by a holder of Preferred
Securities.
If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the next succeeding Interest Payment Date (other than any
Security whose Maturity is prior to such Interest Payment Date), the Holder
will be entitled to receive the interest payable on the subsequent Interest
Payment Date on the portion of Securities to be converted notwithstanding the
conversion thereof prior to such Interest Payment Date. Except as otherwise
provided in the immediately preceding sentence, in the case of any Security
which is converted, interest whose Stated Maturity is on or after the date of
conversion of such Security shall not be payable, and the Company shall not
make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest (including Additional Interest,
Extension Period Interest and Compounded Interest) on the Securities being
converted, which shall be deemed to be paid in full. Each conversion shall be
deemed to have been effected immediately prior to the close of business on the
day on which the Notice of Conversion was received (the "Conversion Date") by
the Conversion Agent from the Holder or from a holder of the Preferred
Securities effecting a conversion thereof pursuant to its conversion rights
under the Declaration, as the case may be. The Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of the
Conversion Date and such Person or Persons will cease to be a record holder or
record holders of the Securities on that date. As promptly as practicable on
or after the Conversion Date, the Company shall issue and deliver at the office
of the Conversion Agent, unless otherwise directed by the Holder in the Notice
of Conversion, a certificate or certificates for the number of full shares of
Common Stock issuable upon such conversion, together with the
57
<PAGE> 65
cash payment, if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same. The Conversion Agent shall deliver such
certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Common Stock into which the Securities are convertible (together with
the cash payment, if any, in lieu of fractional shares) shall be deemed to
satisfy the Company's obligation to pay the principal amount at Maturity of the
portion of Securities so converted and any unpaid interest (including
Additional Interest, Extension Period Interest and Compounded Interest) accrued
on such Securities at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the last reported sale price of such fractional interest on the date on which
the Securities or Preferred Securities, as the case may be, were duly
surrendered to the Conversion Agent for conversion, or, if such day is not a
Trading Day, on the next Trading Day, and the Conversion Agent in turn will
make such payment, if any, to the Holder or the holder of the Preferred
Securities so converted.
(d) In the event of the conversion of any Security in part only, a
new Security or Securities for the unconverted portion thereof will be issued
in the name of the Holder thereof upon the cancellation of the Security
converted in part in accordance with Section 305.
(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as agent of the holders of Preferred
Securities (in the exchange of Preferred Securities for Securities) and as
agent of the Holders of Securities (in the conversion of Securities into Common
Stock), as the case may be, directing it to effect such conversion
transactions. The Conversion Agent is hereby authorized (i) to exchange
Securities held by the Trust from time to time for Preferred Securities in
connection with the conversion of such Preferred Securities in accordance with
this Article Thirteen and (ii) to convert all or a portion of the Securities
into Common Stock and thereupon to deliver such shares of Common Stock in
accordance with the provisions of this Article Thirteen and to deliver to the
Trust a new Security or Securities for any resulting unconverted principal
amount.
(f) All shares of Common Stock delivered upon any conversion of
Securities required to bear the Restricted Securities Legend shall bear a
restrictive legend substantially in the form of the legend required to be set
forth on such Securities and shall be subject to the restrictions on transfer
provided in such legend and in Section 305(b) hereof. Neither the Trustee nor
the Conversion Agent shall have any responsibility for the inclusion or content
of any such restrictive legend on such Common Stock; PROVIDED, however, that
the Trustee or the Conversion Agent shall have provided to the Company or to
the Company's transfer agent for such Common Stock, prior to or concurrently
with a request to the Company to deliver to such Conversion Agent certificates
for such Common Stock, written notice that the Securities delivered for
conversion are Securities required to bear the Restricted Securities Legend.
58
<PAGE> 66
SECTION 1303. CONVERSION PRICE ADJUSTMENTS.
The conversion price shall be subject to adjustment (without
duplication) from time to time as follows:
(a) In case the Company shall, while any of the Securities are
Outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Company, the conversion
privilege and the conversion price in effect immediately prior to such action
shall be adjusted so that the Holder of any Securities thereafter surrendered
for conversion shall be entitled to receive the number of shares of capital
stock of the Company which he would have owned immediately following such
action had such Securities been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or other
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification (or immediately after
the record date if a record date shall have been established for such event).
If, as a result of an adjustment made pursuant to this subsection (a), the
Holder of any Security thereafter surrendered for conversion shall become
entitled to receive shares of two or more classes or series of capital stock of
the Company, the Board of Directors (whose determination shall be conclusive
and shall be described in a Board Resolution filed with the Trustee) shall
determine the allocation of the adjusted conversion price between or among
shares of such classes or series of capital stock. In the event that such
dividend, distribution, subdivision, combination or issuance is not so paid or
made, the conversion price shall again be adjusted to be the conversion price
which would then be in effect if such record date had not been fixed.
(b) The Company may make such reductions in the conversion price,
in addition to that required by subparagraph (a), as it considers to be
advisable to avoid or diminish any income tax to holders of Common Stock or
rights to purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for income
tax purposes. The Company from time to time may reduce the conversion price by
any amount for any period of time if the period is at least twenty (20) days,
the reduction is irrevocable during the period, and the Board of Directors of
the Company shall have made a determination that such reduction would be in the
best interest of the Company, which determination shall be conclusive.
Whenever the conversion price is reduced pursuant to the preceding sentence,
the Company shall mail to holders of record of the Securities a notice of the
reduction at least fifteen (15) days prior to the date the reduced conversion
price takes effect, and such notice shall state the reduced conversion price
and the period it will be in effect.
(c) No adjustment of the conversion price shall be required solely
as a result of the issuance of capital stock by the Company. No adjustment in
the conversion price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the conversion price; PROVIDED, however,
that any adjustments which by reason of this
59
<PAGE> 67
subparagraph are not required to be made shall be carried forward and taken
into account in determining whether any subsequent adjustment shall be
required.
(d) If any action would require adjustment of the conversion price
pursuant to more than one of the provisions of subparagraph (a) described
above, only one adjustment shall be made and such adjustment shall be the
amount of adjustment that has the highest absolute value to the Holder of the
Securities.
SECTION 1304. FUNDAMENTAL CHANGE.
(a) In the event that the Company shall be a party to any
transaction (including without limitation (i) any recapitalization or
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination of the Common Stock), (ii) any consolidation of
the Company with, or merger of the Company into, any other Person, any merger
of another Person into the Company (other than a merger which does not result
in a reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock of the Company), (iii) any sale or transfer of all or
substantially all of the assets of the Company or (iv) any compulsory share
exchange) pursuant to which either shares of Common Stock shall be converted
into the right to receive other securities, cash or other property, or, in the
case of a sale or transfer of all or substantially all of the assets of the
Company, the holders of Common Stock shall be entitled to receive other
securities, cash or other property, then lawful provision shall be made as part
of the terms of such transaction whereby the Holder of each Security then
outstanding shall have the right thereafter to convert such Security only into:
(1) in the case of any such transaction that does not
constitute a Common Stock Fundamental Change (as defined below) and subject to
funds being legally available for such purpose under applicable law at the time
of such conversion, the kind and amount of the securities, cash or other
property that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer or share exchange by a
holder of the number of shares of Common Stock issuable upon conversion of such
Security immediately prior to such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange, after giving effect,
in the case of any Non- Stock Fundamental Change (as defined below), to any
adjustment in the Conversion Price in accordance with Section 1304(c)(1); and
(2) in the case of any such transaction that constitutes
a Common Stock Fundamental Change, common stock of the kind received by holders
of Common Stock as a result of such Common Stock Fundamental Change in an
amount determined in accordance with Section 1304(c)(2).
(b) The Company or the Person formed by such consolidation or
resulting from such merger or that acquired such assets or that acquires the
Company's shares, as the case may be, shall expressly assume all obligations
under this Indenture, the Declaration, the Guarantee and all Outstanding
Securities by entering into a supplemental indenture to this Indenture and by
becoming a party to the Declaration and the Guarantee (as applicable) to amend
each of such
60
<PAGE> 68
agreements to provide for such right provided for above with respect to the
Securities and the Preferred Securities. Such amendments and supplements shall
provide for adjustments which, for events subsequent to the effective date of
such agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article Thirteen. The above provisions shall
similarly apply to successive transactions of the foregoing type.
(c) Notwithstanding any other provision of this Section 1304 to
the contrary, but without duplication with Section 1303, if any Fundamental
Change (as defined below) occurs, then the Conversion Price in effect will be
adjusted immediately after such Fundamental Change as follows:
(1) in the case of a Non-Stock Fundamental Change, the
Conversion Price of the Securities immediately following such Non-Stock
Fundamental Change shall be the lower of (A) the Conversion Price in effect
immediately prior to such Non-Stock Fundamental Change, but after giving effect
to any other prior adjustments effected pursuant to Section 1303, and (B) the
product of (1) the greater of the Applicable Price (as defined in Section 1307)
and the then applicable Reference Market Price (as defined in Section 1307) and
(2) a fraction, the numerator of which is $50 and the denominator of which is
(x) the amount of the Redemption Price set forth in Section 1109 for $50 in
principal amount of Securities if the Redemption Date were the date of such
Non-Stock Fundamental Change (or, for the twelve month periods commencing
February 20, 1998, February 20, 1999 and February 20, 2000, the product of
105.00%, 104.50% and 104.00%, respectively, times $50) plus (y) any
then-accrued and unpaid interest, including Additional Interest, Extension
Period Interest and Compounded Interest, if any on one Preferred Security; and
(2) in the case of a Common Stock Fundamental Change, the
conversion price of the Securities immediately following such Common Stock
Fundamental Change shall be the conversion price in effect immediately prior to
such Common Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to Section 1303, multiplied by a fraction,
the numerator of which is the Purchaser Stock Price (as defined in Section
1307) and the denominator of which is the Applicable Price; PROVIDED, however,
that in the event of a Common Stock Fundamental Change in which (A) 100% of the
value of the consideration received by a holder of Common Stock is common stock
of the successor, acquiror or other third party (and cash, if any, paid with
respect to any fractional interests in such common stock resulting from such
Common Stock Fundamental Change) and (B) all of the Common Stock shall have
been exchanged for, converted into or acquired for, common stock of the
successor, acquiror or other third party (and any cash with respect to
fractional interests or with respect to appraisal or similar rights), the
conversion price of the Securities immediately following such Common Stock
Fundamental Change shall be the conversion price in effect immediately prior to
such Common Stock Fundamental Change multiplied by a fraction, the numerator of
which is one and the denominator of which is the number of shares of common
stock of the successor, acquiror or other third party received by a holder of
one share of Common Stock as a result of such Common Stock Fundamental Change.
61
<PAGE> 69
SECTION 1305. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price and
shall prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Trustee, the Conversion
Agent and the transfer agent for the Preferred Securities and the Securities;
and
(b) a notice stating the conversion price has been adjusted and
setting forth the adjusted conversion price shall as soon as practicable be
mailed by the Company to all record holders of Preferred Securities and the
Securities at their last addresses as they appear upon the stock transfer books
of the Company and the Trust.
SECTION 1306. PRIOR NOTICE OF CERTAIN EVENTS.
In case:
(a) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value),
or of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company shall be required, or of the sale
or transfer of all or substantially all of the assets of the Company or of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or other property; or
(b) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (a) if any Preferred Securities are outstanding, shall
cause to be mailed to the holders of record of the Preferred Securities, at
their last addresses as they shall appear upon the stock transfer books the
Trust or (b) shall cause to be mailed to all Holders at their last addresses as
they shall appear in the Security Register, at least 15 days prior to the
applicable record or effective date hereinafter specified, a notice stating the
date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
62
<PAGE> 70
SECTION 1307. CERTAIN DEFINED TERMS.
The following definitions shall apply to terms used in this Article
Thirteen:
(a) "APPLICABLE PRICE" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of Common Stock receive only cash, the
amount of cash received by a holder of one share of Common Stock and (ii) in
the event of any other Fundamental Change, the average of the daily Closing
Price for one share of Common Stock during the 10 Trading Days immediately
prior to the record date for the determination of the holders of Common Stock
entitled to receive cash, securities, property or other assets in connection
with such Fundamental Change or, if there is no such record date, prior to the
date upon which the holders of Common Stock shall have the right to receive
such cash, securities, property or other assets.
(b) "CLOSING PRICE" of any common stock on any day shall mean the
last reported sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices
regular way of such common stock, in each case on the NYSE Composite Tape or,
if the common stock is not listed or admitted to trading on such exchange, on
the principal national securities exchange or interdealer quotation system on
which such common stock is listed or admitted to trading, or, if not listed or
admitted to trading on any national securities exchange or inter-dealer
quotation system, the average of the closing bid and asked prices as furnished
by any NYSE member firm selected from time to time by the Board of Directors of
the Company for that purpose or, if not so available in such manner, as
otherwise determined in good faith by the Board of Directors.
(c) "COMMON STOCK FUNDAMENTAL CHANGE" means any Fundamental Change
in which more than 50% of the value (as determined in good faith by the Board
of Directors) of the consideration received by holders of Common Stock consists
of common stock, that, for the 10 Trading Days immediately prior to such
Fundamental Change, has been admitted for listing or admitted for listing
subject to notice of issuance on a national securities exchange or quoted on
the Nasdaq Stock Market; PROVIDED, HOWEVER, that a Fundamental Change shall not
be a Common Stock Fundamental Change unless either (i) the Company continues to
exist after the occurrence of such Fundamental Change and the outstanding
Securities continue to exist as outstanding Securities or (ii) not later than
the occurrence of such Fundamental Change, all obligations of the Company under
this Indenture, the Declaration, the Guarantee and all outstanding Securities
are expressly assumed by the Person succeeding to the business of the Company
by becoming a party to the Declaration and the Guarantee and by entering into a
supplemental indenture to this Indenture (as applicable), which obligations
shall include the right of the holders of the Preferred Securities to convert
the Preferred Securities (and the Securities) into the common stock of such
successor entity and providing for adjustments that, for events subsequent to
the effective date thereof, shall be as nearly equivalent as may be practicable
to the relevant adjustments provided for in this Article Thirteen.
(d) "FUNDAMENTAL CHANGE" means the occurrence of any transaction
or event or series of transactions or events pursuant to which all or
substantially all of the Common Stock shall be exchanged for, converted into,
acquired for or shall constitute solely the right to receive
63
<PAGE> 71
cash, securities, property or other assets (whether by means of an exchange
offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); PROVIDED, however, in the
case of any such series of transactions or events, for purposes of adjustment
of the conversion price, such Fundamental Change shall be deemed to have
occurred when substantially all of the Common Stock shall have been exchanged
for, converted into or acquired for, or shall constitute solely the right to
receive, such cash, securities, property or other assets, but the adjustment
shall be based upon the consideration that the holders of Common Stock received
in the transaction or event as a result of which more than 50% of the Common
Stock outstanding shall have been exchanged for, converted into or acquired
for, or shall constitute solely the right to receive, such cash, securities,
property or other assets.
(e) "NON-STOCK FUNDAMENTAL CHANGE", means any Fundamental Change
other than a Common Stock Fundamental Change.
(f) "PURCHASER STOCK PRICE" means, with respect to any Common
Stock Fundamental Change, the average of the daily Closing Price for one share
of the common stock received by holders of Common Stock in such Common Stock
Fundamental Change during the 10 Trading Days immediately prior to the date
fixed for the determination of the holders of Common Stock entitled to receive
such common stock or, if there is no such date, prior to the date upon which
the holders of Common Stock shall have the right to receive such common stock.
(g) "REFERENCE MARKET PRICE" initially means $____ and, in the
event of any adjustment to the conversion price other than as a result of a
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of $70 per
share.
(h) "TRADING DAY" shall mean a day on which securities are traded
on the national securities exchange or quotation system used to determine the
Closing Price.
SECTION 1308. RESTRICTIONS ON COMMON STOCK ISSUABLE UPON CONVERSION.
(a) Shares of Common Stock to be issued upon conversion of a
Security in respect of Preferred Securities bearing a Restricted Securities
Legend (as defined in the Declaration) shall bear such restrictive legends as
the Company may provide in accordance with applicable law.
(b) If shares of Common Stock to be issued upon conversion of a
Security in respect of Preferred Securities bearing a Restricted Securities
Legend are to be registered in a name other than that of the holder of such
Preferred Security, then the Person in whose name such shares of Common Stock
are to be registered must deliver to the Conversion Agent a certificate
satisfactory to the Company and signed by such Person, as to compliance with
the restrictions on transfer applicable to such Preferred Security. Neither
the Trustee nor any Conversion Agent or Registrar shall be required to register
in a name other than that of the Holder shares of Common Stock
64
<PAGE> 72
issued upon conversion of any such Security in respect of such Preferred
Securities not so accompanied by a properly completed certificate.
SECTION 1309. TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION PRICE OR
ADJUSTMENTS.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Security to determine
whether any facts exist which may require any adjustment of the conversion
price, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any Conversion Agent shall be accountable with respect to the validity or value
(or the kind of account) of any shares of Common Stock or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Security; and neither the Trustee nor any Conversion Agent makes any
representation with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion, or to comply with any of the covenants of the
Company contained in Article Ten or this Article Thirteen.
ARTICLE FOURTEEN
Miscellaneous
SECTION 1401. NO RECOURSE; IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS.
No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of any Security, or for any claim based thereon or otherwise
in respect thereof, shall be had against any incorporator, stockholder,
attorneys, agents, officer or director, past, present or future as such, of the
Company or of any predecessor or successor corporation, either directly or
through the Company or any such predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate
obligations, and that no such personal liability whatever shall attach to, or
is or shall be incurred by, the incorporators, stockholders, attorneys, agents,
officers or directors as such, of the Company or of any predecessor or
successor corporation, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities
or implied therefrom; and that any and all such personal liability of every
name and nature, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, stockholder, attorneys, agents, officer or director as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied
65
<PAGE> 73
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of such
Securities.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
SUIZA FOODS CORPORATION
By /s/ Tracy L. Noll
---------------------------------------------------
Name: Tracy L. Noll
-----------------------------------------------
Title: Vice President
-----------------------------------------------
WILMINGTON TRUST COMPANY,
as Trustee
By: /s/ Patricia A. Evans
---------------------------------------------------
Name: Patricia A. Evans
-------------------------------------------------
Title: Financial Services Officer
----------------------------------------------
66
<PAGE> 1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SUIZA CAPITAL TRUST
DATED AS OF FEBRUARY 20, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I - INTERPRETATION AND DEFINITIONS........................................................................1
SECTION 1.1 Definitions........................................................................1
ARTICLE II - TRUST INDENTURE ACT..................................................................................7
SECTION 2.1 Trust Indenture Act; Application...................................................7
SECTION 2.2 Lists of Holders of Securities.....................................................7
SECTION 2.3 Reports by the Property Trustee....................................................8
SECTION 2.4 Periodic Reports to Property Trustee...............................................8
SECTION 2.5 Evidence of Compliance with Conditions Precedent...................................8
SECTION 2.6 Events of Default; Waiver..........................................................8
SECTION 2.7 Event of Default; Notice..........................................................10
ARTICLE III - ORGANIZATION.......................................................................................11
SECTION 3.1 Name..............................................................................11
SECTION 3.2 Office............................................................................11
SECTION 3.3 Purpose...........................................................................11
SECTION 3.4 Authority.........................................................................11
SECTION 3.5 Title to Property of the Trust....................................................12
SECTION 3.6 Powers and Duties of the Regular Trustees.........................................12
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees..............................15
SECTION 3.8 Powers and Duties of the Property Trustee.........................................15
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.......................17
SECTION 3.10 Certain Rights of Property Trustee................................................19
SECTION 3.11 Delaware Trustee..................................................................21
SECTION 3.12 Not Responsible for Recitals or Issuance of Securities............................21
SECTION 3.13 Duration of Trust.................................................................21
SECTION 3.14 Mergers...........................................................................21
SECTION 3.15 Filing of Amendments to Certificate of Trust......................................23
ARTICLE IV - SPONSOR AND THE DEBENTURE ISSUER....................................................................24
SECTION 4.1 Sponsor's Purchase of Common Securities...........................................24
SECTION 4.2 Responsibilities of the Debenture Issuer..........................................24
ARTICLE V - TRUSTEES.............................................................................................24
SECTION 5.1 Number of Trustees................................................................24
SECTION 5.2 Delaware Trustee..................................................................25
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.3 Property Trustee; Eligibility.....................................................25
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee
Generally.........................................................................26
SECTION 5.5 Initial Trustees..................................................................26
SECTION 5.6 Appointment, Removal and Resignation of Trustees..................................27
SECTION 5.7 Vacancies among Trustees..........................................................28
SECTION 5.8 Effect of Vacancies...............................................................28
SECTION 5.9 Meetings..........................................................................29
SECTION 5.10 Delegation of Power...............................................................29
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business.......................29
ARTICLE VI - DISTRIBUTIONS.......................................................................................30
SECTION 6.1 Distributions.....................................................................30
ARTICLE VII - ISSUANCE OF SECURITIES.............................................................................30
SECTION 7.1 General Provisions Regarding Securities...........................................30
SECTION 7.2 Execution and Authentication......................................................31
SECTION 7.3 Form and Dating...................................................................31
SECTION 7.4 Registrar, Paying Agent and Conversion Agent......................................32
SECTION 7.5 Paying Agent to Hold Money in Trust...............................................32
SECTION 7.6 Replacement Securities............................................................33
SECTION 7.7 Outstanding Preferred Securities..................................................33
SECTION 7.8 Preferred Securities in Treasury..................................................34
SECTION 7.9 Temporary Securities..............................................................34
SECTION 7.10 Cancellation......................................................................34
ARTICLE VIII - DISSOLUTION OF TRUST..............................................................................34
SECTION 8.1 Dissolution of Trust..............................................................34
ARTICLE IX - TRANSFER AND EXCHANGE...............................................................................35
SECTION 9.1 General...........................................................................35
SECTION 9.2 Transfer Procedures and Restrictions..............................................36
SECTION 9.3 Deemed Security Holders...........................................................40
ARTICLE X - LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS...................................................................................40
SECTION 10.1 Liability.........................................................................40
SECTION 10.2 Exculpation.......................................................................41
SECTION 10.3 Fiduciary Duty....................................................................41
SECTION 10.4 Indemnification...................................................................42
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 10.5 Outside Businesses................................................................45
ARTICLE XI - ACCOUNTING..........................................................................................46
SECTION 11.1 Fiscal Year.......................................................................46
SECTION 11.2 Certain Accounting Matters........................................................46
SECTION 11.3 Banking ..........................................................................46
SECTION 11.4 Withholding.......................................................................47
ARTICLE XII - AMENDMENTS AND MEETINGS............................................................................47
SECTION 12.1 Amendments........................................................................47
SECTION 12.2 Meetings of the Holders of Securities; Action by Written
Consent...........................................................................49
ARTICLE XIII - REPRESENTATIONS OF PROPERTY TRUSTEE AND
DELAWARE TRUSTEE..................................................................................50
SECTION 13.1 Representations and Warranties of Property Trustee................................50
SECTION 13.2 Representations and Warranties of Delaware Trustee................................51
ARTICLE XIV - REGISTRATION RIGHTS................................................................................52
SECTION 14.1 Registration Rights...............................................................52
ARTICLE XV - MISCELLANEOUS.......................................................................................52
SECTION 15.1 Notices...........................................................................52
SECTION 15.2 Governing Law.....................................................................54
SECTION 15.3 Intention of the Parties..........................................................54
SECTION 15.4 Headings..........................................................................54
SECTION 15.5 Successors and Assigns............................................................54
SECTION 15.6 Partial Enforceability............................................................54
SECTION 15.7 Counterparts......................................................................54
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SUIZA CAPITAL TRUST
FEBRUARY 20, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"), dated and
effective as of February 20, 1998, by and among the undersigned trustees
(together with all other Persons from time to time duly appointed and serving as
trustees in accordance with the provisions of this Declaration, the "Trustees"),
Suiza Foods Corporation, a Delaware corporation, as trust sponsor (the
"Sponsor"), and by the holders, from time to time, of undivided beneficial
interests in the Trust issued pursuant to this Declaration.
WHEREAS, the Delaware Trustee and the Sponsor established Suiza Capital
Trust (the "Trust"), a trust under the Business Trust Act (as defined herein)
pursuant to a Declaration of Trust dated as of February 18, 1998 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
Delaware on February 18, 1998, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain Debentures (as defined
herein) of the Debenture Issuer (as defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
1
<PAGE> 6
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"ADDITIONAL INTEREST" means, if the Trust is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any other taxing authority,
such amounts as shall be required so that the net amounts received and retained
by the Trust after paying such taxes, duties, assessments and governmental
charges will not be less than the amounts the Trust would have received had no
such taxes, duties, assessments or governmental charges been imposed.
"AFFILIATE" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"AGENT" means any Registrar, Paying Agent, or Conversion Agent.
"AUTHORIZED OFFICER" of a Person means any Person that is authorized to
bind such Person.
"BUSINESS DAY" means any day other than a day on which banking
institutions in New York, New York, Dallas, Texas or in Wilmington, Delaware are
authorized or required by law to close.
"BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. Section 3801, et seq., as it may be amended from time to time, or any
successor legislation.
"CERTIFICATE" means a certificate in definitive form representing a
Common Security or a Preferred Security.
"CLOSING DATE" means February 20, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"COMMISSION" means the Securities and Exchange Commission.
2
<PAGE> 7
"COMMON SECURITIES" has the meaning specified in Section 7.1(a).
"COMMON SECURITIES PURCHASE AGREEMENT" has the meaning specified in
Section 7.3(b).
"COMPANY" means the Sponsor.
"COMPANY INDEMNIFIED PERSON" means (a) any Regular Trustee; (b) any
Affiliate of any Regular Trustee; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Regular Trustee;
or (d) any officer, employee or agent of the Trust or its Affiliates.
"COMPOUNDED INTEREST" means interest compounded quarterly at the rate
specified for the Debentures, to the extent permitted by applicable law, upon
interest accrued and unpaid (including Additional Interest and Extension Period
Interest) at the end of each Extension Period.
"CONVERSION AGENT" has the meaning specified in Section 7.4.
"CORPORATE TRUST DEPARTMENT" means the office of the Property Trustee
at which the corporate trust business of the Property Trustee shall, at the time
of reference thereto, be principally administered, which office at the date of
this Declaration is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware, 19890-0001.
"COVERED PERSON" means (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) any of the
Trust's Affiliates; and (b) any Holder of Securities.
"DEBENTURE ISSUER" means the Sponsor in its capacity as issuer of the
Debentures under the Indenture.
"DEBENTURE TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"DEBENTURES" means the series of Convertible Subordinated Debentures to
be issued by the Debenture Issuer under the Indenture to be held by the Property
Trustee, a specimen certificate for such series of Debentures being Exhibit A to
the Indenture.
"DEFINITIVE PREFERRED SECURITIES" means the Restricted Definitive
Preferred Security and any other Preferred Securities in definitive form issued
by the Trust.
"DELAWARE TRUSTEE" has the meaning set forth in Section 5.2.
3
<PAGE> 8
"DISTRIBUTION" means a distribution payable to Holders of Preferred
Securities in accordance with Section 6.1.
"EVENT OF DEFAULT" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"EXTENSION PERIOD INTEREST" shall have the meaning set forth in the
Indenture.
"FIDUCIARY INDEMNIFIED PERSON" has the meaning set forth in Section
10.4(b).
"HOLDER" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"INDEMNIFIED PERSON" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"INDENTURE" means the Indenture dated as of February 20, 1998, between
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"INITIAL PURCHASER" means DFA Investment Company, a Kansas cooperative
marketing association.
"INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"INVESTMENT COMPANY EVENT" has the meaning set forth in the terms of
the Securities as set forth in Annex I hereto.
"LEGAL ACTION" has the meaning set forth in Section 3.6(g).
"MAJORITY IN LIQUIDATION AMOUNT" means, with respect to the Securities,
except as otherwise provided in the terms of the Preferred Securities or by the
Trust Indenture Act, Holder(s) of outstanding Securities voting together as a
single class or, as the context may require, Holders of outstanding Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
4
<PAGE> 9
"MINISTERIAL ACTION" has the meaning set forth in the terms of the
Securities as set forth in Annex I hereto.
"OFFICER'S CERTIFICATE" means, with respect to any Person, a
certificate signed by an Authorized Officer of such Person. Any Officer's
Certificate delivered by the Trust shall be signed by at least one Regular
Trustee. Any Officer's Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"PAYING AGENT" has the meaning specified in Section 7.4(ii).
"PAYMENT AMOUNT" shall have the meaning set forth in Section 6.1.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"PREFERRED SECURITIES" has the meaning specified in Section 7.1(a).
"PREFERRED SECURITIES GUARANTEE" means the guarantee agreement dated as
of February 20, 1998, of the Sponsor in respect of the Preferred Securities.
"PROPERTY TRUSTEE" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"PROPERTY TRUSTEE ACCOUNT" has the meaning set forth in Section
3.8(c)(i).
"PURCHASE AGREEMENT" shall have the meaning set forth in Section
7.3(b).
"QUORUM" means a majority of the Regular Trustees or, if there are only
two Regular Trustees, both of them.
5
<PAGE> 10
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated February 20, 1998, among the Debenture Issuer, the Trust, and
the Initial Purchaser.
"REGISTRAR" has the meaning set forth in Section 7.4.
"REGULAR TRUSTEE" means any Trustee other than the Property Trustee and
the Delaware Trustee.
"RELATED PARTY" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"RESPONSIBLE OFFICER" means, with respect to the Property Trustee, any
vice-president, any assistant vice-president, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer or any other officer in
the Corporate Trust Department of the Property Trustee with direct
responsibility for the administration of this Declaration and also means, with
respect to a particular corporate trust matter, any other officer of the
Property Trustee to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"RESTRICTED DEFINITIVE PREFERRED SECURITY" has the meaning set forth in
Section 7.3(b).
"RULE 3a-5" means Rule 3a-5 under the Investment Company Act.
"SECURITIES" means the Common Securities and the Preferred Securities.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"SHELF REGISTRATION STATEMENT" has the meaning specified in Section
14.1.
"SPECIAL EVENT" has the meaning set forth in Annex I hereto.
"SPONSOR" means Suiza Foods Corporation, a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"SUPER MAJORITY" has the meaning set forth in Section 2.6(a)(ii).
"SUPPLEMENTAL SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT" means the
Supplemental Subsidiary Guarantee and Security Agreement dated February 20, 1998
between the Trust and First Union National Bank, as administrative agent for the
banks or other financial institutions or entities party to the Credit Agreement
(as defined therein).
6
<PAGE> 11
"TAX EVENT" has the meaning set forth in Annex I hereto.
"10% IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as provided
in the terms of the Preferred Securities or by the Trust Indenture Act, Holders
of outstanding Securities voting together as a single class or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"TRUSTEE" or "TRUSTEES" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration, which are
incorporated by reference in and made part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
7
<PAGE> 12
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Debenture Issuer and the Regular Trustees on behalf of
the Trust shall provide the Property Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, PROVIDED that neither the
Debenture Issuer nor the Regular Trustees on behalf of the Trust shall be
obligated to provide such List of Holders at any time the List of Holders does
not differ from the most recent List of Holders given to the Property Trustee by
the Debenture Issuer and the Regular Trustees on behalf of the Trust, and (ii)
at any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Property Trustee. The Property Trustee shall preserve,
in as current a form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity), PROVIDED that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.
Within 60 days after January 15 of each year, the Property Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officer's Certificate.
8
<PAGE> 13
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, PROVIDED that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under
the Declaration may only be waived by the vote of the Holders of at
least the proportion in liquidation amount of the Preferred Securities
that the relevant required Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Upon such waiver, any such default shall cease to
exist, and any Event of Default with respect to the Preferred
Securities arising exclusively therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall
extend to any subsequent or other default or an Event of Default with
respect to the Preferred Securities or impair any right consequent
thereon. Any waiver by the Holders of the Preferred Securities of an
Event of Default with respect to the Preferred Securities shall also be
deemed to constitute a waiver by the Holders of the Common Securities
of any such Event of Default with respect to the Common Securities for
all purposes of this Declaration without any further act, vote or
consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, PROVIDED that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under the Declaration as provided below in this Section
2.6(b), the Event of Default under the Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under the Declaration as provided
below in this Section 2.6(b), the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least
9
<PAGE> 14
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding;
PROVIDED further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of the Preferred Securities and only the Holders of the Preferred Securities
will have the right to direct the Property Trustee in accordance with the terms
of the Securities. The foregoing provisions of this Section 2.6(b) shall be in
lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and
such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are
hereby expressly excluded from this Declaration and the Securities, as permitted
by the Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration.
The foregoing provisions of this Section 2.6(c) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Property Trustee shall, within 90 days after a Responsible
Officer of the Property Trustee obtains actual knowledge of the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders
of the Securities, notices of all such defaults with respect to the Securities
actually known to a Responsible Officer of the Property Trustee, unless such
defaults have been cured before the giving of such notice (the term "defaults"
for the purposes of this Section 2.7(a) being hereby defined to be an Event of
Default as defined in the Indenture, not including any periods of grace provided
for therein and irrespective of the giving of any notice provided therein);
provided that, except for a default in the payment of principal of (or premium,
if any) or interest on any of the Debentures or in the payment of any sinking
fund installment established for the Debentures, the Property Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Property Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities.
10
<PAGE> 15
(b) The Property Trustee shall not be deemed to have knowledge of
any default or Event of Default except:
(i) a default under Sections 501(l) and 501(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Declaration
shall have actual knowledge.
(c) The Sponsor and the Regular Trustees shall file annually with
the Property Trustee a certification as to whether or not they are in compliance
with all the conditions and covenants applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME.
The Trust is named "Suiza Capital Trust," as such name may be modified
from time to time by the Regular Trustees following written notice to the
Delaware Trustee, the Property Trustee and the Holders of Securities. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.
SECTION 3.2 OFFICE.
The address of the principal office of the Trust is Suiza Foods
Corporation, 3811 Turtle Creek Blvd., Suite 1300, Dallas, Texas 75219,
Attention: Chief Financial Officer. At any time, upon prior written notice to
the Delaware Trustee, the Property Trustee and the Holders of the Preferred
Securities, the Regular Trustees may designate another principal office.
SECTION 3.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto including, without limitation,
the execution and performance of those documents, instruments and agreements
necessary to effectuate the transactions contemplated hereby, and those
activities specified or contemplated in Sections 3.4, 3.6, 3.8, 3.9, 3.10 and/or
3.11. Except as otherwise specifically provided herein, the Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
11
<PAGE> 16
SECTION 3.4 AUTHORITY.
(a) Subject to the limitations provided for in this Declaration
and to the specific duties of the Property Trustee, any Regular Trustee shall
have exclusive and complete authority to carry out the purposes of the Trust. An
action taken by any Regular Trustee in accordance with the powers granted to
each of the Regular Trustees under this Declaration shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting on behalf of
the Trust, no person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
(b) Unless this Declaration requires a specific vote or consent of
the Regular Trustees or unless the Regular Trustees in their discretion
determine to require a vote or consent on such matter, any right, power or duty
of the Regular Trustees with respect to such matter may be exercised or
performed, as the case may be, by any Regular Trustee acting alone.
(c) Unless this Declaration requires a specific vote or consent of
the Regular Trustees or unless the Regular Trustees in their discretion
determine to require a vote or consent on such matter, each Regular Trustee
acting alone is authorized to execute and deliver on behalf of the Trust any
documents, agreements, instruments or certificates which the Regular Trustees
have the power and authority to cause the Trust to execute pursuant to Section
3.6.
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures and
the Property Trustee Account or as otherwise provided in this Declaration, legal
title to all assets of the Trust shall be vested in the Trust. The Holders shall
not have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial interest in the assets of the Trust.
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.
Any of the Regular Trustees shall have the exclusive power, duty and
authority, and are hereby authorized and directed, to cause the Trust to engage
in the following activities:
(a) to execute, deliver, issue and sell the Preferred Securities
and the Common Securities in accordance with this Declaration; PROVIDED,
however, that the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities, and, PROVIDED,
FURTHER, that there shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall be limited to simultaneous
issuance of both Preferred Securities and Common Securities on the Closing Date;
(b) notwithstanding any provision of this Declaration to the
contrary, to execute, deliver and enter into, on behalf of the Trust, the
Purchase Agreement, Registration Rights Agreement, Common Securities Purchase
Agreement, Supplemental Guarantee and Security
12
<PAGE> 17
Agreement and each other related agreement, instrument, document and certificate
providing for or entered into in connection with the issue and sale of the
Preferred Securities or the Common Securities and perform or cause the Trust to
perform the Trust's obligations thereunder;
(c) to acquire as Trust assets the Debentures with the proceeds of
the sale of the Preferred Securities and the Common Securities; PROVIDED,
however, that the Regular Trustees shall cause legal title to the Debentures to
be held of record in the name of the Property Trustee for the benefit of the
Holders of the Preferred Securities;
(d) to give the Debenture Issuer and the Property Trustee prompt
written notice of the occurrence of a Special Event; PROVIDED that the Regular
Trustees shall consult with the Debenture Issuer and the Property Trustee before
taking or refraining from taking any Ministerial Action in relation to a Special
Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities (including,
without limitation, redeeming the Securities upon the occurrence of certain
events and circumstances on the terms of the Securities set forth on Annex I
hereto);
(g) to the fullest extent permitted by law, to bring or defend,
pay, collect, compromise, arbitrate, resort to legal action, or otherwise adjust
claims or demands of or against the Trust ("Legal Action"), unless pursuant to
Section 3.8(e), the Property Trustee has the power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(j) to give the certificate required by 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust or seek reimbursement from the Debenture
Issuer;
(l) to act as, or appoint another Person to act as, Registrar and
Conversion Agent for the Securities;
13
<PAGE> 18
(m) to give prompt written notice to the Property Trustee and to
the Holders of the Preferred Securities of any notice received from the
Debenture Issuer of an election by the Debenture Issuer to defer payments of
interest on the Debentures by extending the interest payment period under the
Indenture;
(n) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action (provided that such action does not
adversely affect the interests of Holders), not inconsistent with this
Declaration or with applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust;
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes; and
(p) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and timely filed by the Regular Trustees, on
behalf of the Trust; and
(q) to execute and deliver all documents, agreements, instruments,
and certificates, exercise all rights and powers and perform all duties, and do
all things for and on behalf of the Trust in all matters necessary, advisable or
incidental to the foregoing and the transactions contemplated thereby.
The Regular Trustees must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Regular Trustees shall not take any action that
is inconsistent with the purposes and functions of the Trust set forth in
Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
14
<PAGE> 19
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, and the Regular Trustees shall cause the Trust not to,
engage in any activity other than as required or authorized by this Declaration.
In particular, the Trust shall not:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders of
Preferred Securities pursuant to the terms of this Declaration and of
the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures and the indebtedness guaranteed and
secured by the Supplemental Subsidiary Guarantee and Security
Agreement;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets, except pursuant to the Supplemental Subsidiary
Guarantee and Security Agreement, or the terms of the Securities in any
way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex I
hereto, (A) direct the time, method and place of exercising any trust
or power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless
the Trust shall have received an opinion of counsel to the effect that
such modification will not cause more than an insubstantial risk that
(x) the Trust will be deemed an Investment Company required to be
registered under the Investment Company Act, or (y) for United States
federal income tax purposes the Trust will not be classified as a
grantor trust.
SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Property Trustee in trust for the benefit of the
Holders of the Preferred Securities. The right, title and interest of the
Property Trustee to the Debentures shall vest automatically in each
15
<PAGE> 20
Person who may hereafter be appointed as Property Trustee in accordance with
Section 5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not act as the Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and under
the exclusive control of the Property Trustee on behalf of the Holders
of the Preferred Securities and, upon the receipt of payments of funds
made in respect of the Debentures held by the Property Trustee, deposit
such funds into the Property Trustee Account and make payments to the
Holders of the Preferred Securities from the Property Trustee Account
in accordance with Section 6.1. Funds in the Property Trustee Account
shall be held uninvested until disbursed in accordance with this
Declaration. The Property Trustee Account shall be an account that is
maintained with a federally insured banking institution or publicly
traded mutual fund;
(ii) engage in such ministerial activities as so directed and
as shall be necessary or appropriate to effect the redemption of the
Preferred Securities, to the extent the Debentures are redeemed or
mature, and the Common Securities, on the terms of the Securities set
forth on Annex I hereto; and
(iii) upon written notice of a distribution issued by the
Regular Trustees in accordance with the terms of the Securities, engage
in such ministerial activities as so directed as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Preferred Securities and the redemption of the Common Securities upon
the occurrence of certain Special Events arising from a change in law
or a change in legal interpretation or other specified circumstances
pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with (i) an Event of Default of which a Responsible
Officer of the Property Trustee has actual knowledge or (ii) the Property
Trustee's duties and obligations under this Declaration or the Trust Indenture
Act.
16
<PAGE> 21
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Property Trustee occurs and is continuing, the Property Trustee shall, for
the benefit of Holders of the Preferred Securities, enforce its rights as holder
of the Debentures subject to the rights of the Holders pursuant to the terms of
the Securities.
(h) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more persons to act as additional Paying
Agents and to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such Paying Agent
shall comply with Section 317(b) of the Trust Indenture Act. Any such additional
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be, but are not required to be,
appointed at any time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this Section
3.8 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Property Trustee shall not take any action that
is inconsistent with the purposes and functions of the Trust set out in Section
3.3.
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the Securities and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) of
which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
17
<PAGE> 22
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee
shall be determined solely by the express provisions of this
Declaration and the Property Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Declaration, and no implied
covenants or obligations shall be read into this Declaration
against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same
to determine whether or not on their face they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made or in taking or omitting to take the pertinent action;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to
18
<PAGE> 23
deal with such property in a similar manner as the Property Trustee
deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property
Trustee under this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or sufficiency
of the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor. Money held by the Property Trustee need
not be segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law;
and
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the Property
Trustee be liable for any default or misconduct of the Regular Trustees
or the Sponsor.
SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration may be sufficiently evidenced
by an Officer's Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall reasonably deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officer's Certificate which, upon
receipt of such request, shall be promptly delivered by the Sponsor or
the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel of its
choice or other experts and the advice or opinion of such counsel and
experts with respect to legal matters
19
<PAGE> 24
or advice within the scope of such expert's area of expertise shall be
full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to
the Debenture Issuer or any of its Affiliates, and may include any of
its employees. The Property Trustee shall have the right at any time
to seek instructions concerning the administration of this Declaration
from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee adequate security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of
the Property Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by
the Property Trustee; PROVIDED that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, security, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the Property
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys, and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any such person appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and
the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same proportion in liquidation amount of the Securities
as would be entitled to direct the Property Trustee under the terms of
the Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions;
20
<PAGE> 25
(xi) except as otherwise expressly required by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act. In the event the Delaware Trustee shall at any time be
required to take any action or perform any duty hereunder, the Delaware Trustee
shall be entitled to the benefits of Section 3.9(b)(ii) to (viii), inclusive,
and Section 3.10. No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
SECTION 3.12 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness.
The Trustees make no representations as to the value or condition of
the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.
SECTION 3.13 DURATION OF TRUST.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall exist until December 31, 2025, PROVIDED that such date may be
extended to the extent necessary to permit the winding up of the affairs of the
Trust.
21
<PAGE> 26
SECTION 3.14 MERGERS.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other Person, except as
described in Section 3.14(b) and (c) and except with respect to the distribution
of Debentures to Holders pursuant to Section 8.1(a).
(b) The Trust may, at the request of the Sponsor, with the consent
of the Regular Trustees or, if there are more than two, a majority of the
Regular Trustees, and without the consent of the Holders of the Securities, the
Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety to, a trust organized as such
under the laws of any State of the United States; PROVIDED that:
(i) if the Trust is not the survivor, such successor entity
(the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Declaration and the Securities; or
(B) substitutes for the Preferred Securities and the
Common Securities other securities having substantially the
same terms as the Preferred Securities and the Common
Securities, respectively, (as applicable, the "Successor
Securities") so long as the Successor Securities rank the same
as the Preferred Securities and the Common Securities,
respectively, with respect to Distributions, assets and
payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly agrees that a trustee of
the Successor Entity that possesses the same powers and duties as the
Property Trustee may act as the Holder of the Debentures;
(iii) the Preferred Securities or any Successor Securities to
the Preferred Securities are listed, or any Successor Securities to the
Preferred Securities will be listed upon notification of issuance, on
any national securities exchange or with another organization on which
the Preferred Securities are then listed or quoted;
(iv) if the Preferred Securities are rated, such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities thereof) to be
downgraded by any nationally recognized statistical rating
organization;
(v) such merger, consolidation, amalgamation or replacement,
or conveyance, transfer or lease, does not adversely affect the rights,
preferences and privileges of the Holders of the Preferred Securities
(including any Successor Securities thereof) in any
22
<PAGE> 27
material respect (other than with respect to any dilution of the
Holders' interest in the Successor Entity);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) the Company guarantees the obligations of such
Successor Entity under the Successor Securities of the Preferred
Securities at least to the extent provided by the Preferred Securities
Guarantee; and
(viii) prior to such merger, consolidation, amalgamation or
replacement, or conveyance, transfer or lease, the Sponsor has received
an opinion of independent counsel to the Trust, reasonably acceptable
to the Property Trustee, experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or
replacement, or conveyance, transfer or lease, will not
adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities)
in any material respect (other than with respect to any
dilution of the Holders' interest in the new entity);
(B) following such merger, consolidation, amalgamation
or replacement, or conveyance, transfer or lease, neither the
Trust nor the Successor Entity will be required to register as
an Investment Company;
(C) following such merger, consolidation, amalgamation
or replacement, or conveyance, transfer or lease, the Trust
(or the Successor Entity) will be treated as a grantor trust
for United States federal income tax purposes; and
(ix) there shall have been furnished to the Property Trustee
an Officer's Certificate and an Opinion of Counsel, each to the effect
that all conditions precedent in this Declaration to such transaction
have been satisfied.
(c) Notwithstanding Section 3.14(b), the Trust shall not, except
with the consent of the Holders of 100% in liquidation amount of the Common
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace its, or convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety, if such consolidation,
amalgamation, merger or replacement, or conveyance, transfer or lease, would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
23
<PAGE> 28
SECTION 3.15 FILING OF AMENDMENTS TO CERTIFICATE OF TRUST.
The Certificate of Trust as filed with the Secretary of State of the
State of Delaware on February 18, 1998 is attached hereto as Exhibit B. On or
after the date of execution of this Declaration, the Trustees shall cause the
filing with the Secretary of State of the State of Delaware of such amendments
to the Certificate of Trust as the Trustees deem necessary or desirable to
reflect this Declaration.
ARTICLE IV
SPONSOR AND THE DEBENTURE ISSUER
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
The Sponsor shall purchase the Common Securities upon formation of the
Trust.
SECTION 4.2 RESPONSIBILITIES OF THE DEBENTURE ISSUER.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to determine the States and foreign jurisdictions in which to take
appropriate action to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions that must be
taken by the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deem necessary or advisable in order to comply with the applicable
laws of any such States and foreign jurisdictions; and
(b) to negotiate the terms of the Purchase Agreement, Registration
Rights Agreement and other related agreements providing for the sale of the
Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES.
The number of Trustees shall be three (3), one of which shall initially
be a Regular Trustee, and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the Holders of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities;
24
<PAGE> 29
PROVIDED, however, that the number of Trustees shall in no event be less than
three (3); PROVIDED FURTHER that (1) one Trustee, the Delaware Trustee, shall be
a Person who, in the case of a natural person, is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its principal
place of business in the State of Delaware; (2) there shall be at least one
Regular Trustee who is an employee or officer of, or is affiliated with the
Sponsor; and (3) one Trustee shall be the Property Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture
Act, and such Trustee may also serve as Delaware Trustee if it meets the
applicable requirements
SECTION 5.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
PROVIDED that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
(i) not be an Affiliate of the Debenture Issuer; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000
U.S. dollars, and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.3(a)(ii),
the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a) or 5.3(c), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.6(c) and 5.6(d).
25
<PAGE> 30
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be set forth in Section 5.5
hereof.
SECTION 5.4 QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE TRUSTEE
GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5 INITIAL TRUSTEES.
(a) The initial Regular Trustee shall be:
Michael Lewis
The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Phone: 302-651-1000
Telecopy: 302-651-8882
The initial Property Trustee shall be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Phone: 302-651-1000
Telecopy: 302-651-8882
26
<PAGE> 31
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by the vote of the
Holders of a Majority in liquidation amount of the Common Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the removed Property
Trustee, the Regular Trustees and the Sponsor; and
(ii) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections
5.2 and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the removed Delaware
Trustee, the Property Trustee (if the removed Delaware Trustee is not
also the Property Trustee), the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the other Trustees, the Sponsor and the Trust, which resignation shall take
effect upon such delivery or upon such later date as is specified therein;
PROVIDED, however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to
the Trust, the Sponsor, the Delaware Trustee (if the resigning
Property Trustee is not also the Delaware Trustee) and the
resigning Property Trustee; or
(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders
of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such
27
<PAGE> 32
appointment by instrument executed by such Successor Delaware Trustee
and delivered to the Trust, the Sponsor, the Property Trustee (if the
resigning Delaware Trustee is not also the Property Trustee) and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Property Trustee, Successor Delaware
Trustee, or, if there is one Regular Trustee, a Regular Trustee, as the case may
be, if the Property Trustee or the Delaware Trustee or such sole Regular Trustee
delivers an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery pursuant to this Section 5.6 of an instrument
of resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Property Trustee or Successor Delaware Trustee, as
the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
(g) Upon the resignation or removal of the Property Trustee or the
Delaware Trustee, the Sponsor shall promptly pay to such Trustee all amounts
that may be owed to such Trustee pursuant to Section 10.4.
SECTION 5.7 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to dissolve, terminate or annul the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.
28
<PAGE> 33
SECTION 5.9 MEETINGS.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. If this
Declaration requires a specific vote or consent of the Regular Trustees or if
the Regular Trustees in their discretion determine to require a vote on any
matter, such action of the Regular Trustees may be taken at a meeting by vote of
a majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting by the unanimous written consent of the Regular
Trustees. Subject to any specific requirement in this Declaration that requires
a vote of the Regular Trustees, nothing in this section shall be deemed to
restrict the authority granted to any Regular Trustee pursuant to Section 3.4 of
this Declaration.
SECTION 5.10 DELEGATION OF POWER.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, or making any other governmental filing; and
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the
29
<PAGE> 34
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, unless otherwise required by the Business Trust Act.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
Holders of Preferred Securities shall receive Distributions (as defined
herein) in accordance with the applicable terms of the relevant Holder's
Securities. Distributions shall be made on the Preferred Securities in
accordance with their terms. If and to the extent that the Debenture Issuer
makes payment of interest (including Compounded Interest (as defined in the
Indenture), Additional Interest (as defined in the Indenture), and Extension
Period Interest (as defined in the Indenture), premium and/or principal on the
Debentures held by the Property Trustee (the amount of any such payment being a
"Payment Amount"), the Property Trustee shall and is directed, to the extent
funds are available for that purpose, to make a distribution (a "Distribution")
of the Payment Amount to Holders of Preferred Securities.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall, on behalf of the Trust, issue one
class of convertible preferred securities, representing undivided beneficial
interests in the assets of the Trust (the "Preferred Securities"), having such
terms (the "Terms") as are set forth in Annex I and one class of common
securities, representing undivided beneficial interests in the assets of the
Trust (the "Common Securities"), having such terms as are set forth in Annex I.
The Trust shall issue no securities or other interests in the assets of the
Trust other than the Preferred Securities and the Common Securities.
(b) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and nonassessable.
(d) Every Person, by virtue of having become a Holder in
accordance with the terms of this Declaration, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this Declaration.
(e) The Securities shall have no preemptive rights to subscribe
for any additional Securities.
30
<PAGE> 35
SECTION 7.2 EXECUTION AND AUTHENTICATION.
(a) The Securities shall be signed on behalf of the Trust by a
Regular Trustee. In case any Regular Trustee of the Trust who shall have signed
any of the Securities shall cease to be such Regular Trustee before the
Securities so signed shall be delivered by the Trust, such Securities
nevertheless may be delivered as though the person who signed such Securities
had not ceased to be such Regular Trustee; and any Securities may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such a
Regular Trustee.
(b) One Regular Trustee shall sign the Preferred Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Preferred Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Preferred Security has been
authenticated under this Declaration. A Common Security shall be valid upon
execution by a Regular Trustee without any act of the Property Trustee.
Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Preferred Securities for original issue
in accordance with the fifth paragraph of the Preferred Securities. The
aggregate number of Preferred Securities outstanding at any time shall not
exceed the number set forth in the Terms in Annex I hereto except as provided in
Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Preferred Securities. An authenticating agent may
authenticate Preferred Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee with respect to the Sponsor.
SECTION 7.3 FORM AND DATING.
(a) The Preferred Securities and the Property Trustee's
certificate of authentication shall be evidenced by one or more certificates
substantially in the form of Exhibit A-1 and the Common Securities shall be
evidenced by one or more certificates substantially in the form of Exhibit A-2,
each of which is hereby incorporated in and expressly made a part of this
Declaration. Such certificates may be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof. The Securities may have
letters, numbers, notations or other marks of identification or designation and
such legends or endorsements required by law, stock exchange rule, agreements to
which the Trust is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Trust). The Trust at the
direction of the Sponsor shall furnish any such legend not contained in Exhibit
A-1 to the Property Trustee in
31
<PAGE> 36
writing. Each Preferred Security shall be dated the date of its authentication.
The terms and provisions of the Securities set forth in Annex I and the forms of
Securities set forth in Exhibits A-1 and A-2 are part of the terms of this
Declaration and to the extent applicable, the Property Trustee and the Sponsor,
by their execution and delivery of this Declaration, expressly agree to such
terms and provisions and to be bound thereby.
(b) The Preferred Securities are being offered and sold by the
Trust pursuant to a Preferred Securities Purchase Agreement relating to the
Preferred Securities, dated February 20, 1998 among the Trust, the Sponsor and
the Initial Purchaser named therein (the "Purchase Agreement"). The Common
Securities are being offered and sold by the Trust pursuant to a Common
Securities Purchase Agreement relating to the Common Securities, dated February
20, 1998 among the Trust and the Sponsor (the "Common Securities Purchase
Agreement").
The Preferred Securities shall be issued in the form of individual
certificates in definitive, fully registered form without distribution coupons
and with the Restricted Securities Legend set forth in Exhibit A-1 hereto.
Securities issued with the Restricted Securities Legend ("Restricted Definitive
Preferred Securities") will continue to bear such legend unless removed in
accordance with Section 9.2.
SECTION 7.4 REGISTRAR, PAYING AGENT AND CONVERSION AGENT.
The Trust (directly or through an affiliate) shall maintain in
Wilmington, Delaware (i) an office or agency where Preferred Securities may be
presented for registration of transfer or exchange ("Registrar"), (ii) an office
or agency where Preferred Securities may be presented for payment ("Paying
Agent") and an office or agency where Securities may be presented for conversion
("Conversion Agent"). The Registrar shall keep a register of the Preferred
Securities and of their transfer and exchange. The Trust may appoint the
Registrar, the Paying Agent and the Conversion Agent and may appoint one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents in such other locations as it shall determine. The term
"Paying Agent" includes any additional paying agent and the term "Conversion
Agent" includes any additional conversion agent. The Trust may change any Paying
Agent, Registrar, co-registrar or Conversion Agent without prior notice to any
Holder. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Property Trustee (if the Property Trustee is not
also the Paying Agent) and the Regular Trustees. The Trust shall notify the
Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Conversion Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar or
Conversion Agent. The Trust shall act as Paying Agent, Registrar, co-registrar
and Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent and Conversion Agent for the Preferred Securities.
32
<PAGE> 37
SECTION 7.5 PAYING AGENT TO HOLD MONEY IN TRUST.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by such Paying Agent
for the payment of liquidation amounts or Distributions on the Securities, and
will notify the Property Trustee if there are insufficient funds for such
purpose. While any such insufficiency continues, the Property Trustee may
require a Paying Agent to pay all money held by it to the Property Trustee. The
Trust at any time may require a Paying Agent to pay all money held by it to the
Property Trustee and to account for any money disbursed by it. Upon payment over
to the Property Trustee, the Paying Agent (if other than the Trust or an
Affiliate of the Trust) shall have no further liability for the money. If the
Trust or the Debenture Issuer or an Affiliate of the Trust or the Sponsor 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.
SECTION 7.6 REPLACEMENT SECURITIES.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, a Regular Trustee shall prepare and execute and, in the case
of Preferred Securities, the Property Trustee shall authenticate a replacement
Security if the Property Trustee's requirements are met. If required by the
Property Trustee or the Trust, an indemnity bond must be sufficient in the
judgment of both to protect the Trustees, the Property Trustee, the Sponsor and
any authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge for its expenses in replacing a
Security.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, or is about to be purchased by the
Debenture Issuer, the Debenture Issuer in its discretion may, instead of the
Trust issuing a new Security, pay or purchase such Security, as the case may be.
Every replacement Security is an additional Security of the Trust
entitled to the same benefits hereunder as the Security being replaced.
SECTION 7.7 OUTSTANDING PREFERRED SECURITIES.
The Preferred Securities outstanding at any time are all the Preferred
Securities authenticated by the Property Trustee except for those canceled by
it, those delivered to it for cancellation and those described in this Section
as not outstanding.
If a Preferred Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Preferred
Security is held by a "protected" purchaser.
If Preferred Securities are considered paid in full in accordance with
the terms of this Declaration, they cease to be outstanding and interest on them
ceases to accrue.
33
<PAGE> 38
A Preferred Security does not cease to be outstanding because one of
the Trust, the Debenture Issuer or an Affiliate of the Debenture Issuer holds
the Security.
SECTION 7.8 PREFERRED SECURITIES IN TREASURY.
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Preferred Securities owned
by the Trust, the Debenture Issuer or an Affiliate of the Debenture Issuer, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Securities
which the Property Trustee actually knows are so owned shall be so disregarded.
SECTION 7.9 TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the Trust may
prepare and, in the case of the Preferred Securities, the Property Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Trust
considers appropriate for temporary Securities. Without unreasonable delay, the
Trust shall prepare and, in the case of the Preferred Securities, the Property
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
SECTION 7.10 CANCELLATION.
The Trust at any time may deliver Preferred Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent shall
forward to the Property Trustee any Preferred Securities surrendered to them for
registration of transfer, redemption, conversion, exchange or payment. The
Property Trustee shall promptly cancel all Preferred Securities, surrendered for
registration of transfer, redemption, conversion, exchange, payment, replacement
or cancellation and shall dispose of canceled Preferred Securities in accordance
with its customary procedures, unless the Trust otherwise directs. The Trust may
not issue new Preferred Securities to replace Preferred Securities that it has
paid or that have been delivered to the Property Trustee for cancellation (other
than pursuant to Section 7.6) or that any Holder has converted.
ARTICLE VIII
DISSOLUTION OF TRUST
SECTION 8.1 DISSOLUTION OF TRUST.
(a) The Trust shall dissolve:
(i) upon the bankruptcy of the Sponsor;
34
<PAGE> 39
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, or the revocation of the
charter of the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of
the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof, including
any Additional Interest, Extension Period Interest and Compounded
Interest, shall have been paid to the Holders in accordance with the
terms of the Securities;
(v) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance
with the terms of the Securities and all of the Debentures endorsed in
connection with such Special Event shall have been distributed to the
Holders of Securities in exchange for all of the Securities;
(vi) the expiration of the term of the Trust on December 31,
2025, subject to extension as necessary in accordance with Section
3.13;
(vii) before the issuance of any Securities, with the consent
of all the Regular Trustees and the Sponsor; or
(viii) upon the exchange of all of the Preferred Securities
for Debentures and the conversion of such Debentures into Common Stock
(as defined in the Indenture) of the Debenture Issuer and delivery of
all such shares of Common Stock (and any cash in lieu of fractional
shares) to the exchanging Holders, and upon the redemption of the
Common Securities in connection therewith.
(b) As soon as is practicable upon completion of a winding up of
the Trust following the occurrence of an event referred to in Section 8.1(a),
the Regular Trustees shall prepare and the Trustees shall execute and file a
certificate of cancellation with the Secretary of State of the State of Delaware
in accordance with the Business Trust Act.
(c) The provisions of Section 3.9, Section 3.10 and Article X
shall survive the dissolution and termination of the Trust.
ARTICLE IX
TRANSFER AND EXCHANGE
SECTION 9.1 GENERAL.
(a) Where Preferred Securities are presented to the Registrar or a
co-registrar with a request to register a transfer or to exchange them for an
equal number of Preferred Securities represented by different certificates, the
Registrar shall register the transfer or make the exchange
35
<PAGE> 40
if its requirements for such transactions are met. To permit registrations of
transfers and exchanges, a Regular Trustee shall prepare and execute and the
Property Trustee shall authenticate new Preferred Securities issued by the Trust
in connection with such transfers or exchanges.
(b) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration, the
terms of the Securities and in accordance with applicable securities laws;
provided, that the Sponsor or a Related Party of the Sponsor may pledge or grant
a security interest in the Common Securities to secure payment of any
indebtedness of the Sponsor or such Related Party. The Property Trustee and
Registrar shall be entitled to receive and conclusively rely upon a legal
opinion provided by and at the expense of the Transferor in connection with any
transfer or exchange concerning compliance with the terms and conditions of this
Declaration and with the registration requirements of the Securities Act and
other applicable securities laws, and any exemptions therefrom. Any transfer or
purported transfer of any Security not made in accordance with this Declaration
shall be null and void.
Subject to this Article IX, except for pledges and security interests
permitted above, the Sponsor and any Related Party may only transfer Common
Securities to the Sponsor or a Related Party of the Sponsor; PROVIDED that, any
such transfer is subject to the condition precedent that the transferor obtain
the written opinion of legal counsel that such transfer would not cause more
than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
(c) The Property Trustee shall provide for the registration of
Securities and of transfers and exchanges of Securities, which will be effected
without charge but only upon payment (with such indemnity as the Property
Trustee may require) in respect of any tax or other governmental charges that
may be imposed in relation to it. Upon surrender for registration of transfer of
any Securities, a Regular Trustee shall prepare and execute, and, in the case of
Preferred Securities, the Property Trustee shall authenticate, one or more new
Securities to be issued in the name of the designated transferee or transferees.
Every Security surrendered for registration of transfer shall be accompanied by
a written instrument of transfer in form satisfactory to the Property Trustee
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Security surrendered for registration of transfer or exchange
shall be canceled by the Property Trustee. A transferee of a Security shall be
entitled to the rights and subject to the obligations of a Holder hereunder upon
the receipt by such transferee of a Security. By acceptance of a Security, each
transferee shall be deemed to have agreed to be bound by this Declaration.
(d) The Trust shall not be required (i) to issue, register the
transfer of, or exchange, Preferred Securities during a period beginning at the
opening of business 15 days before the day
36
<PAGE> 41
of any selection of Preferred Securities for redemption set forth in the terms
of the Preferred Securities and ending at the close of business on the day of
selection, or (ii) to register the transfer or exchange of any Preferred
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Preferred Security being redeemed in part.
SECTION 9.2 TRANSFER PROCEDURES AND RESTRICTIONS.
(a) GENERAL. If Preferred Securities are issued upon the transfer,
exchange or replacement of Preferred Securities bearing the Restricted
Securities Legend set forth in Exhibit A-1 hereto ("Restricted Securities"), or
if a request is made to remove such Restricted Securities Legend on Preferred
Securities, the Preferred Securities so issued shall bear the Restricted
Securities Legend, or the Restricted Securities Legend shall not be removed, as
the case may be, unless there is delivered to the Trust and the Property Trustee
such satisfactory evidence, which shall include an opinion of counsel, as may be
reasonably required by the Trust, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers thereof
comply with the provisions of Rule 144 under the Securities Act or, with respect
to Restricted Securities, that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Property Trustee, at the written direction of the
Trust, shall authenticate and deliver Preferred Securities that do not bear the
legend.
(b) TRANSFER AND EXCHANGE OF DEFINITIVE PREFERRED SECURITIES. When
Definitive Preferred Securities are presented to the Registrar or co-registrar
(x) to register the transfer of such Definitive Preferred
Securities; or
(y) to exchange such Definitive Preferred Securities for an
equal number of Definitive Preferred Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements (including any applicable
requirements of law, as tpo the satisfaction of which the Registrar shall be
entitled to receive and conclusively rely upon a legal opinion provided by and
at the expense of the Transferor in form and substance satisfactory to the
Trust) for such transaction are met; PROVIDED, HOWEVER, that the Definitive
Preferred Securities surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and
the Registrar or co-registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Definitive Preferred Securities that are
Restricted Definitive Preferred Securities, are being transferred or
exchanged pursuant to an effective registration statement under the
Securities Act or, prior to the time of the effectiveness of such
registration statement (or anytime after the effectiveness of such
registration statement when it is not available for effecting resales
of the Preferred Securities),
37
<PAGE> 42
pursuant to clause (A) or (B) below, and are accompanied by the
following additional information and documents, as applicable:
(A) if such Restricted Definitive Preferred Securities
are being delivered to the Registrar by a Holder for
registration in the name of such Holder, without transfer, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Preferred Security); or
(B) if such Restricted Definitive Preferred Securities
are being transferred pursuant to an exemption from
registration in accordance with Rule 144 or any other
exemption available under the Securities Act, including to an
institutional "accredited investor," (i) a certification to
that effect (in the form set forth on the reverse of the
Preferred Security) and (ii) if the Trust or Registrar so
requests, evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the Restricted
Securities Legend.
(c) LEGEND.
(i) Except as permitted by the following paragraph (ii), each
Preferred Security certificate evidencing Definitive Preferred
Securities (and all Preferred Securities issued in exchange therefor or
substitution thereof) shall bear a legend (the "Restricted Securities
Legend") in substantially the following form:
THIS SECURITY, ANY CONVERTIBLE DEBENTURE ISSUED IN EXCHANGE FOR THIS
SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER (OR SUCH SHORTER PERIOD UNDER RULE
144A UNDER THE SECURITIES ACT OR ANY SUCCESSOR RULE) THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH SUIZA FOODS CORPORATION (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
38
<PAGE> 43
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT ITS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
SUIZA CAPITAL TRUST'S (THE "TRUST") RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRUST, THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
(ii) Upon any sale or transfer of a Restricted Definitive
Preferred Security pursuant to an effective registration statement
under the Securities Act or pursuant to Rule 144 under the Securities
Act, the Registrar shall permit the Holder thereof to exchange such
Restricted Definitive Preferred Security for a Definitive Preferred
Security that does not bear the Restricted Securities Legend and
rescind any restriction on the transfer of such Restricted Definitive
Preferred Security.
(d) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF PREFERRED
SECURITIES.
(i) To permit registrations of transfers and exchanges, the
Trust shall execute and the Property Trustee shall authenticate
Definitive Preferred Securities and at the Registrar's or a
co-registrar's request.
(ii) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Trust
or the Sponsor may require) in respect of any tax or other governmental
charge that may be imposed in relation to it.
(iii) The Registrar or a co-registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Preferred
Security selected for Redemption in whole or in part pursuant to
Article III, except the unredeemed portion of any Definitive Preferred
Security being redeemed in part, or (b) any Preferred Security for a
period beginning 15 Business Days before the mailing of a notice of an
offer to repurchase or redeem Preferred Securities or 15 Business Days
before a quarterly distribution date.
39
<PAGE> 44
(iv) Prior to the due presentation for registrations of
transfer of any Preferred Security, the Trust, the Property Trustee,
the Paying Agent, the Registrar or any co-registrar may deem and treat
the person in whose name a Preferred Security is registered as the
absolute owner of such Preferred Security for the purpose of receiving
Distributions on such Preferred Security and for all other purposes
whatsoever, and none of the Trust, the Property Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Preferred Securities issued upon any transfer or
exchange pursuant to the terms of this Declaration shall evidence the
same security and shall be entitled to the same benefits under this
Declaration as the Preferred Securities surrendered upon such transfer
or exchange.
(e) NO OBLIGATION OF THE PROPERTY TRUSTEE.
(i) All notices and communications to be given to the
Holders and all payments to be made to Holders under the Preferred
Securities shall be given or made only to or upon the order of the
registered Holders.
(ii) The Property Trustee and Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Declaration or
under applicable law with respect to any transfer of any interest in
any Preferred Security other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms
of this Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
SECTION 9.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS
OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.
(a) Except as expressly set forth in this Declaration or as
required under applicable law, the Preferred Securities Guarantee and the terms
of the Securities, the Sponsor shall not be:
40
<PAGE> 45
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) be required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 10.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property
41
<PAGE> 46
Trustee under the Trust Indenture Act), are agreed by the parties hereto to
replace such other duties and liabilities of such Indemnified Person to the
fullest extent permitted by law.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
an Indemnified Person and any Covered Person; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities, the Indemnified
Person shall resolve such conflict of interest, take such action or
provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any
applicable generally accepted accounting practices or principles. In
the absence of bad faith by the Indemnified Person, the resolution,
action or term so made, taken or provided by the Indemnified Person
shall not constitute a breach of this Declaration or any other
agreement contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 INDEMNIFICATION.
(a) (i) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified 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
Trust) by reason of the fact that he is or was a Company Indemnified
Person 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 Trust, 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
42
<PAGE> 47
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 Company Indemnified 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 Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent
permitted by law, any Company Indemnified 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 Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company
Indemnified Person 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 Trust and except that no such indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware 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 fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or
such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall
be successful on the merits or otherwise (including dismissal of an
action without prejudice or the settlement of an action without
admission of liability) in defense of any action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a), or in
defense of any claim, issue or matter therein, he shall be indemnified,
to the full extent permitted by law, against expenses (including
attorneys, fees) actually and reasonably incurred by him in connection
therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination
that indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii) Such determination shall be made (1)
by the Regular Trustees by a majority vote of a quorum consisting of
such Regular Trustees who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs,
by independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys, fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Sponsor in advance of the final disposition of such action, suit or
proceeding upon receipt
43
<PAGE> 48
of an undertaking by or on behalf of such Company Indemnified Person to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Sponsor as authorized in this Section
10.4(a). Notwithstanding the foregoing, no advance shall be made by the
Debenture Issuer if a determination is reasonably and promptly made (i)
by the Regular Trustees by a majority vote of a quorum of disinterested
Regular Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs,
by independent legal counsel in a written opinion or (iii) the Common
Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in
bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Regular Trustees,
independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust
or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 10.4(a) shall not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of stockholders or disinterested
directors of the Sponsor or Preferred Security Holders of the Trust or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Sponsor and each Company Indemnified
Person who serves in such capacity at any time while this Section
10.4(a) is in effect. Any repeal or modification of this Section
10.4(a) shall not adversely affect any rights or obligations then
existing.
(vii) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified
Person 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 Sponsor would have the power to indemnify him against such
liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the resulting or surviving
entity, any constituent entity (including any constituent of a
constituent) absorbed in a consolidation or merger, so that any person
who is or was a director, trustee, officer or employee of such
constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent
of another entity, shall stand in the same position under the
provisions of this Section 10.4(a) with respect to the resulting or
surviving entity as he would have with respect to such constituent
entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or
44
<PAGE> 49
ratified, continue as to a person who has ceased to be a Company
Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Sponsor agrees, to the fullest extent permitted by law,
to (A) indemnify the (i) Property Trustee (including in its individual
capacity), (ii) the Delaware Trustee (including in its individual capacity),
(iii) any Affiliate of the Property Trustee and the Delaware Trustee, and (iv)
any officers, directors, shareholders, members, partners, employees,
representatives, custodians, nominees or agents of the Property Trustee and the
Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a
"Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified
Person harmless against, any and all loss, liability or expense including taxes
(other than taxes based on the income of such Fiduciary Indemnified Person)
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration or the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, and (B) to advance, from time to time, prior to the final disposition
of any claim, demand, action, suit or proceeding for which indemnification is
authorized pursuant to subsection (b)(A) above, any expenses (including
reasonable legal fees) incurred by a Fiduciary Indemnified Person in defending
such claim, demand, action, suit or proceeding upon receipt by the Sponsor of an
undertaking by or on behalf of the Fiduciary Indemnified Person to repay such
amount if it shall be determined that the Fiduciary Indemnified Person is not
entitled to be indemnified as authorized in subsection (b)(A) above. The
obligations to indemnify and to advance expenses as set forth in this Section
10.4(b) shall survive the resignation or removal of the Property Trustee and/or
the Delaware Trustee, and shall survive the termination of the Trust and the
satisfaction and discharge of this Indenture.
(c) The Sponsor agrees to pay the Property Trustee and the
Delaware Trustee, from time to time, such compensation for all services rendered
by the Property Trustee and the Delaware Trustee hereunder as may be mutually
agreed upon in writing by the Sponsor and the Property Trustee or the Delaware
Trustee, as the case may be, and, except as otherwise expressly provided herein,
to reimburse the Property Trustee and the Delaware Trustee upon its or their
request for all reasonable expenses (including counsel fees and expenses),
disbursements and advances incurred or made by the Property Trustee or the
Delaware Trustee, as the case may be, in accordance with the provisions of this
Declaration.
SECTION 10.5 OUTSIDE BUSINESSES.
Any Covered Person, the Debenture Issuer, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Debenture Issuer, the
Delaware Trustee or the Property Trustee shall be obligated to present any
particular investment or other opportunity to the Trust
45
<PAGE> 50
even if such opportunity is of a character that, if presented to the Trust,
could be taken by the Trust, and any Covered Person, the Debenture Issuer, the
Delaware Trustee and the Property Trustee shall have the right to take for its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered Person,
the Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Debenture Issuer or any Affiliate of the
Debenture Issuer, or may act as depositary for, trustee or agent for, or act on
any committee or body of holders of, securities or other obligations of the
Debenture Issuer or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year by a firm of independent certified public accountants selected by the
Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust, including a
balance sheet of the Trust as of the end of such Fiscal Year, and the related
statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Trust or by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.
46
<PAGE> 51
SECTION 11.3 BANKING.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Trustee Account and no other funds of the Trust shall be deposited
in the Property Trustee Account. The sole signatories for such accounts shall be
designated by the Regular Trustees; PROVIDED, HOWEVER, that the Property Trustee
shall designate the signatories for the Property Trustee Account.
SECTION 11.4 WITHHOLDING.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustee shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two
Regular Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property
Trustee; and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee;
47
<PAGE> 52
(b) no amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officer's Certificate
from each of the Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of this Declaration (including the terms
of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Property Trustee or the Delaware Trustee, the Property Trustee shall
have first received:
(A) an Officer's Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust and may include an employee thereof) that
such amendment is permitted by, and conforms to, the terms of
this Declaration (including the terms of the Securities); and
(C) the Property Trustee and the Delaware Trustee, as
the case may be, consent thereto in writing (which consent may
be withheld in such Trustee's sole discretion); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified
for purposes of United States federal income taxation as a
grantor trust;
(B) reduce or otherwise adversely affect the powers of
the Property Trustee in contravention of the Trust Indenture
Act; or
(C) cause the Trust to be deemed to be an Investment
Company that is required to be registered under the Investment
Company Act;
(c) at such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only with
such additional requirements as may be set forth in the terms of such
Securities;
(d) this Section 12.1 shall not be amended without the consent of
all of the Holders of the Securities;
48
<PAGE> 53
(e) Article IV shall not be amended without the consent of the
Holders of a majority in liquidation amount of the Common Securities;
(f) the rights of the holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and remove Trustees
shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities; and
(g) notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor; and
(iv) conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the rights, preferences or
privileges of the Holders.
SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any national stock exchange, the Nasdaq National
Market or any inter-dealer quotation system on which the Preferred Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the Holders of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Securities then outstanding. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities represented by the Certificates so specified
shall be counted for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days
and not more than 60 days before the date of
49
<PAGE> 54
such meeting. Whenever a vote, consent or approval of the Holders of
Securities is permitted or required under this Declaration or the rules
of any stock exchange, over the counter market or inter-dealer
quotation system on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given at a
meeting of the Holders of Securities. Any action that may be taken at a
meeting of the Holders of Securities may be taken without a meeting if
a consent in writing setting forth the action so taken is signed by the
Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the Holders
of Securities entitled to vote who have not consented in writing. The
Regular Trustees may specify that any written ballot submitted to the
Holders for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies by Holders, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Holders
of the Securities were stockholders of a Delaware corporation.
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act, or the listing rules
of any national stock exchange, the Nasdaq National Market,
over-the-counter market or inter-dealer quotation system on which the
Preferred Securities are then listed or trading provide otherwise, the
Regular Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any matter
is to be voted on by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
50
<PAGE> 55
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Property Trustee represents and warrants to the Trust and to the
Sponsor at the date of this Declaration, and each Successor Property Trustee
represents and warrants to the Trust and the Sponsor at the time of the
Successor Property Trustee's acceptance of its appointment as Property Trustee
that:
(a) The Property Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the State of Delaware, with trust power and authority to execute and deliver,
and to carry out and perform its obligations under the terms of, this
Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee, and under Delaware law
(excluding securities laws) constitutes a legal, valid and binding obligation of
the Property Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors, rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Property Trustee.
(d) To its knowledge, at the Closing Date, there are no liens or
encumbrances on the Debentures attributable to the Property Trustee in its
individual capacity which are not related to the administration of the Trust, or
the transactions contemplated by this Declaration.
(e) No consent, approval or authorization of, or registration with
or notice to, any Federal or Delaware banking authority is required for the
execution, delivery or performance by the Property Trustee of the Declaration.
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Delaware Trustee represents and warrants to the Trust and to the
Sponsor at the date of this Declaration and at the time of Closing, and each
Successor Delaware Trustee represents and warrants to the Trust and the Sponsor
at the time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the State of Delaware, with trust power
51
<PAGE> 56
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration.
(b) The execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. The Declaration has been duly
executed and delivered by the Delaware Trustee, and under Delaware law
(excluding securities laws) constitutes a legal, valid and binding obligation of
the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors, rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or registration with
or notice to, any Federal or Delaware banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration.
(e) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 REGISTRATION RIGHTS.
The Holders of the Preferred Securities are entitled to the benefits of
the Registration Rights Agreement. Pursuant to the Registration Rights
Agreement, the Debenture Issuer has agreed for the benefit of the Holders of the
Preferred Securities that (i) it will, at its cost, use commercially reasonable
efforts to file, within 60 days after receipt from the Holders representing more
than 50% of the Registrable Securities (as defined below) of a written demand
therefore, a shelf registration statement (the "Shelf Registration Statement")
with the Commission with respect to resales of the shares of Common Stock
issuable upon conversion of the Debentures (the "Registrable Securities"), (ii)
it will use its commercially reasonable efforts to cause such Shelf Registration
Statement to be declared effective by the Commission within 120 days after its
receipt of such demand and (iii) it will use its reasonable efforts to maintain
such Shelf Registration Statement continuously effective under the Securities
Act until such date as the holders of such Registrable Securities are able to
sell such Registrable Securities immediately, without restriction pursuant to
Rule 144(k) under the Securities Act, or any successor rule thereto, or
otherwise or such earlier date as is provided in the Registration Rights
Agreement.
52
<PAGE> 57
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 NOTICES.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, sent by
facsimile or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
c/o Suiza Foods Corporation
3811 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: Chief Financial Officer
Facsimile: (214) 528-9924
(b) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Facsimile: (302) 651-8882
(c) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Facsimile: (302) 651-8882
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
53
<PAGE> 58
Suiza Foods Corporation
3811 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: Chief Financial Officer
Facsimile: (214) 528-9924
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust or the Registrar, as applicable.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 15.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 15.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 15.4 HEADINGS.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 15.5 SUCCESSORS AND ASSIGNS
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
SECTION 15.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
54
<PAGE> 59
SECTION 15.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the parties to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
55
<PAGE> 60
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
SUIZA CAPITAL TRUST
By: /s/ Michael Lewis
-------------------------------
Michael Lewis, as Regular Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Patricia A. Evans
-------------------------------
Name: Patricia A. Evans
----------------------------
Title: Financial Services Officer
----------------------------
WILMINGTON TRUST COMPANY,
as Property Trustee
By: /s/ Patricia A. Evans
-------------------------------
Name: Patricia A. Evans
----------------------------
Title: Financial Services Officer
----------------------------
SUIZA FOODS CORPORATION
as Sponsor
By: /s/ Tracy L. Noll
------------------------------
Name: Tracy L. Noll
---------------------------
Title: Vice President
---------------------------
56
<PAGE> 1
EXHIBIT 10.3
THIS SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER (OR SUCH SHORTER PERIOD
UNDER RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR RULE) THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH SUIZA FOODS
CORPORATION (THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION
TERMINATION DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1),
(2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRANSFER AGENT'S RIGHT, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i)
PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY
THE TRANSFEROR TO THE TRANSFER AGENT. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
1
<PAGE> 2
SUIZA FOODS CORPORATION
5% Convertible Subordinated
Debenture due 2018
No. 0001 $l00,000,000
CUSIP No. 865077 AC 5
SUIZA FOODS CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which
term includes any successor corporation under the Indenture hereinafter
referred to) for value received, hereby promises to pay to Suiza Capital Trust,
a Delaware business trust, or registered assigns, the principal sum of ONE
HUNDRED MILLION DOLLARS ($100,000,000) on February 20, 2018.
Interest Payment Dates: February 15, May 15, August 15 and
November 15, commencing May 15, 1998
Regular Record Dates: the close of business on the
Business Day immediately preceding
each Interest Payment Date, except
as otherwise provided in clause 4
set forth on the reverse side of
this Security
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
2
<PAGE> 3
Dated: February 20, 1998
SUIZA FOODS CORPORATION
By: /s/ Tracy L. Noll
------------------------------
Name: Tracy L. Noll
----------------------------
Title: Chief Financial Officer
----------------------------
[Seal]
Attest:
/s/ Michael Lewis
- -------------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: February 20, 1998 WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Trustee
By: /s/ Patricia A. Evans
--------------------------
Authorized Signatory
3
<PAGE> 4
[REVERSE OF SECURITY]
SUIZA FOODS CORPORATION
5% Convertible Subordinated
Debenture due 20181
1. INTEREST. Suiza Foods Corporation, a Delaware corporation
(the "Company"), is the issuer of this 5% Convertible Subordinated Debenture
due 2018 (the "Security") limited in aggregate principal amount to
$100,000,000.00, issued under the Indenture hereinafter referred to. The
Company promises to pay interest on the Securities in cash from February 20,
1998 or from the most recent interest payment date to which interest has been
paid or duly provided for, quarterly (subject to deferral for up to 20
consecutive quarters as described in Section 3 hereof) in arrears on February
15, May 15, August 15 and November 15 of each year (each such date, an
"Interest Payment Date"), commencing May 15, 1998, at the rate of 5% per annum
PLUS Additional Interest, Compounded Interest and Extension Period Interest, if
any, until the principal hereof shall have become due and payable. Interest
will compound quarterly and will accrue at the rate of 7% per annum on any
interest installment in arrears for more than one quarter or during an
extension of an interest payment period, as set forth in Section 3 hereof.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than
a full quarterly period for which interest is computed will be computed on the
basis of the actual number of days elapsed. In the event that any date on
which interest is payable on the Securities is not a Business Day, then payment
of the interest payable on such date will be made on the next succeeding day
which is a Business Day (without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
2. ADDITIONAL INTEREST. The Company shall pay to Suiza Capital
Trust (and its permitted successors or assigns under the Declaration) (the
"Trust") such amounts as shall be required so that the net amounts received and
retained by the Trust after paying any taxes, duties, assessments or other
governmental charges of whatever nature (other than withholding taxes) imposed
on the Trust by the United States or any other taxing authority ("Additional
Interest") will be not less than the amounts the Trust would have received had
no such taxes, duties, assessment or governmental charges been imposed.
3. OPTION TO EXTEND INTEREST PAYMENT PERIOD. The Company shall
have the right at any time during the term of the Securities to defer interest
payments from time to time by extending the interest payment period for
successive periods (each, an "Extension
- ------------------------
1 All terms used in this Security which are defined in the Indenture
or in the Declaration attached as Annex A thereto shall have the meanings
assigned to them in the Indenture or the Declaration, as the case may be.
4
<PAGE> 5
Period") not exceeding 20 consecutive quarters for each such period; PROVIDED,
no Extension Period may extend beyond the maturity date of the Securities. At
the end of each Extension Period, the Company shall be responsible for the
payment of, and the Company shall pay all interest then accrued and unpaid
(including Additional Interest, if any), PROVIDED, that during any Extension
Period, interest on the Securities shall accrue at 7% per annum ("Extension
Period Interest") instead of the stated rate of 5% per annum, compounded
quarterly to the extent permitted by applicable law ("Compounded Interest").
During any Extension Period, the Company shall not repay, repurchase or redeem,
any capital stock or debt securities issued by the Company, or make any
guarantee payments with respect to indebtedness for borrowed money, that rank
junior to or PARI PASSU with the Securities. Prior to the termination of any
such Extension Period, the Company may further extend such Extension Period;
PROVIDED, that such Extension Period together with all previous and further
extensions thereof may not exceed 20 consecutive quarters and may not extend
beyond the maturity of the Securities. Upon the termination of any Extension
Period and the payment of all amounts then due, the Company may commence a new
Extension Period, subject to the above requirements. No interest during an
Extension Period, except at the end thereof, shall be due and payable.
If the Property Trustee is the sole holder of the Securities at the
time the Company selects an Extension Period, the Company shall give notice to
the Regular Trustees, the Property Trustee and the Trustee of its selection of
such Extension Period at least one Business Day prior to the earlier of (i) the
date the distributions on the Preferred Securities are payable or (ii) if the
Preferred Securities are listed on the New York Stock Exchange, Inc. ("NYSE")
or other stock exchange or quotation system, the date the Trust is required to
give notice to the NYSE or other applicable self-regulatory organization or to
holders of the Preferred Securities on the record date or the date such
distributions are payable, but in any event not less than ten Business Days
prior to such record date.
If the Property Trustee is not the sole holder of the Securities at
the time the Company selects an Extension Period, the Company shall give the
Holders and the Trustee notice of its selection of an Extension Period at least
ten Business Days prior to the earlier of (i) the next succeeding Interest
Payment Date or (ii) if the Preferred Securities are listed on the NYSE or
other stock exchange or quotation system, the date the Company is required to
give notice to NYSE or other applicable self-regulatory organization or to
holders of the Securities on the record or payment date of such related
interest payment, but in any event not less than two Business Days prior to
such record date.
The Extension Period shall commence in the quarter in which any notice
is given pursuant to the second and third paragraphs of this Section 3 and
shall be counted as one of the 20 quarters permitted in the maximum Extension
Period permitted under the first paragraph of this Section 3.
4. METHOD OF PAYMENT. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
regular record date for such interest installment, which shall be the close of
business on the Business Day immediately preceding each Interest Payment Date;
provided,
5
<PAGE> 6
however, that, for so long as the Securities are held by the Trust or the
Property Trustee of the Trust, if any Preferred Securities (or if the Trust is
liquidated in connection with Special Event, any Securities) are held in
certificated form, the Record Date for each Interest Payment Date shall be 15
days prior to such Interest Payment Date (in each case, a "Regular Record
Date"). Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice of which shall be given to Holders of Securities not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of and interest on this Security will be made
at the office or agency of the Company maintained for that purpose in Dallas,
Texas in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; PROVIDED,
however, that, at the option of the Company, payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register.
5. PAYING AGENT, SECURITY REGISTRAR AND CONVERSION AGENT. The
Trustee will act as Paying Agent, Security Registrar and Conversion Agent. The
Company may change any Paying Agent, Security Registrar, co-registrar or, with
the consent of the Trust, Conversion Agent without prior notice. The Company
or any of its Affiliates may act in any such capacity.
6. INDENTURE. The Company issued the Securities under an
indenture, dated as of February 20, 1998 (the "Indenture"), between the Company
and Wilmington Trust Company, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Trustee, the Company and the Holders, and of the
terms upon which the Securities are, and are to be, authenticated and
delivered. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by the Trust Indenture Act of 1939 (15
U.S. Code Sections 77aaa-77bbbb) ("TIA") as in effect on the date of the
Indenture. The Securities are subject to, and qualified by, all such terms,
certain of which are summarized hereon, and Holders are referred to the
Indenture and the TIA for a statement of such terms. The Securities are
unsecured general obligations of the Company limited to $100,000,000.00 in
aggregate principal amount. No reference herein to the Indenture and no
provision of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Security at the times, place and rate, and in
the coin or currency, herein prescribed or to convert this Security as provided
in the Indenture.
7. OPTIONAL REDEMPTION. The Securities are redeemable, in whole
or in part, at the Company's, option at any time and from time to time on or
after February 20, 2001, upon
6
<PAGE> 7
not less than 30 nor more than 60 days' notice, at the following optional
redemption prices (expressed as a percentage of the principal amount of the
Securities) if redeemed during the 12-month period beginning February 20 of the
year shown below:
<TABLE>
<CAPTION>
Percentage of
Year Principal Year Amount
---- ---------------------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . . 103.50%
2002 . . . . . . . . . . . . . . . . . . . . 103.00
2003 . . . . . . . . . . . . . . . . . . . . 102.50
2004 . . . . . . . . . . . . . . . . . . . . 102.00
2005 . . . . . . . . . . . . . . . . . . . . 101.50
2006 . . . . . . . . . . . . . . . . . . . . 101.00
2007 . . . . . . . . . . . . . . . . . . . . 100.50%
2008 and thereafter . . . . . . . . . . . . . 100.00%
</TABLE>
plus, in each case, accrued and unpaid interest, including Additional Interest,
Extension Period Interest and Compounded Interest, if any, to the Redemption
Date. On or after the Redemption Date, interest will cease to accrue on the
Securities, or portion thereof, called for redemption.
The Securities are redeemable at the option of the Company, in whole
but not in part, if at any time following the Conversion Expiration Date less
than five percent (5%) of the original aggregate principal amount of the
Securities remains Outstanding (as defined in the Indenture), at a redemption
price equal to the principal amount thereof, plus any accrued and unpaid
interest (including any Additional Interest, Extension Period Interest and
Compounded Interest) to the Redemption Date.
8. OPTIONAL REDEMPTION UPON TAX EVENT. The Securities are
subject to redemption in whole (but not in part), if a Tax Event (as defined in
the Declaration) shall occur and be continuing, for cash upon the later of (i)
the occurrence of such Tax Event or (ii) February 20, 2001, at a redemption
price equal to the principal amount at Stated Maturity of such Securities plus
any accrued and unpaid interest (including any Additional Interest, Extension
Period Interest and Compounded Interest) to the Redemption Date. Any
redemption pursuant to this Section 8 will be made upon not less than 30 nor
more than 60 days' notice.
9. 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 of the Securities to be redeemed at his address of record. The
Securities in denominations larger than $50 may be redeemed in part but only in
integral multiples of $50. In the event of a redemption of less than all of
the Securities, the Securities will be chosen for redemption by the Trustee in
accordance with the Indenture. On and after the Redemption Date, interest
ceases to accrue on the Securities or portions of them called for redemption.
If this Security is redeemed subsequent to a Regular Record Date with respect
to any Interest Payment Date specified above and on or prior to such Interest
Payment Date, then any accrued interest will be paid to the person in whose
name this Security is registered at the close of business on such record date.
7
<PAGE> 8
10. REDEMPTION. The Securities will mature on February 20, 2018,
and may be redeemed, in whole or in part, at any time after February 20, 2001
as set forth above in Section 8 or at any time in certain circumstances upon
the occurrence of a Tax Event as set forth above. Upon the repayment of the
Securities, whether at maturity or upon redemption, the proceeds from such
repayment or payment shall simultaneously be applied to redeem Preferred
Securities having an aggregate liquidation amount equal to the Securities so
repaid or redeemed at the applicable redemption price together with accrued and
unpaid distributions through the date of redemption; PROVIDED, that holders of
the Preferred Securities shall be given not less than 30 nor more than 60 days
notice of such redemption. Upon the repayment of the Securities at maturity or
upon any acceleration, earlier redemption or otherwise, the proceeds from such
repayment will be applied to redeem the Preferred Securities, in whole, upon
not less than 30 nor more than 60 days' notice. There are no sinking fund
payments with respect to the Securities.
11. EXCHANGE OF TRUST SECURITIES FOR SECURITIES. The Company has
the right to terminate the Trust and cause the Securities to be distributed to
the holders of the Preferred Securities at any time in liquidation of the Trust
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law. If a Special Event (as defined in the Declaration) in respect
of the Trust shall occur and be continuing, the Declaration requires the
Property Trustee to direct the Conversion Agent to exchange all outstanding
Preferred Securities for Securities having a principal amount at Stated
Maturity equal to the aggregate liquidation amount of the Preferred Securities
to be exchanged, PROVIDED, that, in the case of a Tax Event, the Company shall
have the right to direct the Property Trustee that less than all, or none of
the Preferred Securities be so exchanged (i) if for so long as the Company
shall have elected to pay any Additional Interest such that the net amounts
received by holders of the Preferred Securities not so exchanged in respect of
distributions are not reduced as a result of such Tax Event, and shall not have
revoked any such election or failed to make such payments or (ii) if the
Company shall instead elect to redeem the Securities, in whole or in part, in
the manner set forth in Section 1109; PROVIDED, HOWEVER, that if, at the time
there is available to the Company or the Trust the opportunity to eliminate the
Special Event, within a reasonable amount of time as conclusively determined by
the Company in its sole discretion, by taking some ministerial action
("Ministerial Action"), such as filing a form or making an election, or
pursuing some other similar reasonable measure which, in the sole judgment of
the Company, has or will cause no adverse effect on the Company, the Trust or
the holders of the Trust Securities and will involve no material cost, the
Company or the Trust shall pursue such Ministerial Action or other measure in
lieu of redemption, and PROVIDED, FURTHER, that the Company shall have no right
to redeem the Securities while the Trust is pursuing any Ministerial Action.
12. CONVERSION. The Holder of any Security has the right,
exercisable at any time prior to the close of business (New York time) on the
Business Day immediately preceding the date of repayment of such Security
whether at maturity or upon redemption (either at the option of the Company or
pursuant to a Tax Event) (the "Conversion Expiration Date"), to convert the
principal amount thereof (or any portion thereof that is an integral multiple
of $50) into the number of shares of Common Stock obtained by dividing $50 per
Security by the applicable conversion price (initially $70.00 per share of
Common Stock for each Security) (equivalent to a
8
<PAGE> 9
conversion rate of .7143 shares per share of Common Stock of the Company per
Security), subject to adjustment under certain circumstances as set forth in
the Indenture.
To convert a Security, a Holder must (1) complete and sign a
conversion notice substantially in the form attached hereto, (2) surrender the
Security to a Conversion Agent, (3) furnish appropriate endorsements or
transfer documents if required by the Security Registrar or Conversion Agent
and (4) pay any transfer or similar tax, if required. Upon conversion, no
adjustment or payment will be made for interest or dividends, but if any Holder
surrenders a Security for conversion after the close of business on the Regular
Record Date for the payment of an installment of interest and prior to the
opening of business on the next Interest Payment Date, then, notwithstanding
such conversion, the interest payable on such Interest Payment Date will be
paid to the registered Holder of such Security on such Regular Record Date. In
such event, such Security, when surrendered for conversion, need not be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the portion so converted. The number of shares
issuable upon conversion of a Security is determined by dividing the principal
amount of the Security converted by the conversion price in effect on the
Conversion Date. No fractional shares will be issued upon conversion but a
cash adjustment will be made for any fractional interest. The Outstanding
principal amount of any Security shall be reduced by the portion of the
principal amount thereof converted into shares of Common Stock.
13. SUBORDINATION. The indebtedness evidenced by this Security,
including the principal thereof, premium, if any, and interest thereon is, to
the extent and in the manner set forth in the Indenture, expressly subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness, as defined in the Indenture, and this Security is issued subject
to the provisions of the Indenture, and each Holder of this Security, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee on behalf of such Holder to take such action
as may be necessary or appropriate to acknowledge or effectuate, as between the
Holder and the holders of Senior Indebtedness, the subordination as provided in
the Indenture and appoints the Trustee attorney-in-fact of such Holder for any
and all such purposes.
14. REGISTRATION RIGHTS. The holders of Preferred Securities are
entitled to the benefits of a Registration Rights Agreement, dated as of
February 20, 1998, among the Company, the Trust and the Initial Purchaser (the
"Registration Rights Agreement"). Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the holders of the
Preferred Securities to file, within 60 calendar days following the receipt by
the Company of a written request therefore by the holders representing more
than 50% of the Registrable Securities (as defined below) (the "Demand Date"),
with the Commission a shelf registration statement (the "Shelf Registration
Statement") relating to the offer and sale of the shares of Common Stock
issuable upon conversion of the Preferred Securities (the "Registrable
Securities") by the holders of the Preferred Securities from time to time in
accordance with the methods of distribution elected by such holders and set
forth in such Shelf Registration Statement and, thereafter, to use commercially
reasonable efforts to cause such Shelf Registration Statement to be declared
effective under the Act within 120 calendar days following the Demand Date.
The holders of the Preferred Securities as a group shall be entitled to make
only one demand on the Company
9
<PAGE> 10
pursuant to this Agreement, and under no circumstances shall the Company be
required to file more than one Shelf Registration Statement.
The Company has agreed to use its commercially reasonable efforts to
keep the Shelf Registration Statement continuously effective in order to permit
the prospectus forming part thereof to be usable by holders of the Preferred
Securities and the Common Stock issuable upon conversion thereof for a period
from the date the Shelf Registration Statement is declared effective that will
terminate upon the earliest of the following (A) when all outstanding
Registrable Securities held by persons which are not affiliates of the Trust or
the Company may be resold without registration under the Act pursuant to Rule
144(k) under the Act or any successor provision thereto or any other applicable
law, rule or regulation, whether now in effect or hereinafter promulgated,
adopted or issued, or (B) when all outstanding Registrable Securities have been
sold pursuant to the Shelf Registration Statement.
15. REGISTRATION, TRANSFER, EXCHANGE AND DENOMINATIONS. As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Security is registrable in the Security Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in Dallas, Texas or Wilmington, Delaware, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $50 and integral multiples thereof. No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Prior to due presentment of this
Security for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Security
is registered as the owner hereof for all purposes, whether or not this
Security be overdue, and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary. In the event of redemption or
conversion of this Security in part only, a new Security or Securities for the
unredeemed or unconverted portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
16. PERSONS DEEMED OWNERS. Except as provided in Section 4
hereof, the registered Holder of a Security may be treated as its owner for all
purposes.
17. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent
shall pay the money back to the Company at its written request. After that,
holders of Securities entitled to the money must look to the Company for
payment unless an abandoned property law designates another Person and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
10
<PAGE> 11
18. DEFAULTS AND REMEDIES. The Securities shall have the Events
of Default as set forth in Section 501 of the Indenture. Subject to certain
limitations in the Indenture, if an Event of Default occurs and is continuing,
the Trustee by notice to the Company, or the holders of at least 25% in
aggregate principal amount of the then Outstanding Securities by notice to the
Company and the Trustee, may declare all the Securities to be due and payable
immediately.
The holders of a majority in principal amount of the Securities then
Outstanding by written notice to the Trustee may rescind an acceleration and
its consequences if the rescission is prior to a judgment or decree for the
payment of the money due has been obtained by the Trustee as provided in the
Indenture and if all existing Events of Default have been cured or waived
except nonpayment of principal and/or interest that has become due solely
because of the acceleration. Holders may not enforce the Indenture or the
Securities except as provided in the Indenture. Subject to certain
limitations, holders of a majority in principal amount of the then Outstanding
Securities issued under the Indenture may direct the Trustee in its exercise of
any trust or power. The Company must furnish annually compliance certificates
to the Trustee. The above description of Events of Default and remedies is
qualified by reference to, and subject in its entirety by, the more complete
description thereof contained in the Indenture.
19. AMENDMENTS, SUPPLEMENTS AND WAIVERS. The Indenture permits,
with certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of the Securities under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Securities at the time Outstanding. The Indenture also
contains provisions permitting the Holders of specified percentages in
aggregate principal amount of the Securities at the time Outstanding, on behalf
of the Holders of all the Securities, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.
20. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee, in its
individual or any other capacity may become the owner or pledgee of the
Securities and may otherwise deal with the Company or an Affiliate with the
same rights it would have, as if it were not Trustee, subject to certain
limitations provided for in the Indenture and in the TIA. Any Agent may do the
same with like rights.
21. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Securities by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
11
<PAGE> 12
22. GOVERNING LAW. THE INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
23. AUTHENTICATION. The Securities shall not be valid until
authenticated by the manual signature of an authorized signatory of the Trustee
or an authenticating agent.
The Company will furnish to any Holder of the Securities upon written
request and without charge a copy of the Indenture. Request may be made to:
Suiza Foods Corporation
3811 Turtle Creek Blvd.
Suite 1300
Dallas, Texas 75219
Attention of: Chief Financial Officer
Facsimile: (214) 528-9929
12
<PAGE> 13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Your Signature:
--------------------------
(Sign exactly as your name appears on
the other side of this Security)
Date:
------------------------------------
Signature Guarantee:*
------------------------------------
[Include the following if the Preferred Security bears a Restricted Securities
Legend --
In connection with any transfer of any of the Securities evidenced by this
certificate, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without
transfer; or
(2) [ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
- ------------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the NYSE.
13
<PAGE> 14
(3) [ ] transferred pursuant to and in compliance with Regulation
S under the Securities Act of 1933; or
(4) [ ] transferred pursuant to another available exemption from
the registration requirements of the Securities Act of
1933; or
(5) [ ] transferred pursuant to an effective Shelf Registration
Statement.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; PROVIDED, HOWEVER, that if box (3) or (4)
is checked, the Trustee may require, prior to registering any such transfer of
the Securities such legal opinions, certifications and other information as the
Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
------------------------------
Signature
Signature Guarantee:*
------------------------------
Signature
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
of 1933, and is aware that the sale to it is being made in reliance on Rule
144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has
determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
----------------------------- ----------------------------------
NOTICE: To be executed by an
executive officer.]
- --------------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the NYSE.
14
<PAGE> 15
ELECTION TO CONVERT
To: Suiza Foods Corporation
The undersigned owner of this Security hereby irrevocably exercises
the option to convert this Security, or the portion below designated, into
Common Stock of Suiza Foods Corporation in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Any holder, upon the exercise of its conversion rights in accordance
with the terms of the Indenture and the Security, agrees to be bound by the
terms of the Registration Rights Agreement relating to the Common Stock
issuable upon conversion of the Securities.
Date:
---------------------------------
in whole ___ Portions of Security to be in part
in part ___ converted ($50 or integral
multiples thereof):
$
----------------------------------
------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
------------------------------------
------------------------------------
------------------------------------
Signature Guarantee:*
---------------
- -------------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
15
<PAGE> 1
EXHIBIT 10.4
THIS SECURITY, ANY CONVERTIBLE DEBENTURE ISSUED IN EXCHANGE FOR THIS
SECURITY AND ANY COMMON STOCK ISSUED ON CONVERSION THEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER (OR SUCH SHORTER PERIOD UNDER RULE
144A UNDER THE SECURITIES ACT OR ANY SUCCESSOR RULE) THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH SUIZA FOODS CORPORATION (THE
"COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE")
ONLY (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE
501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND SUIZA CAPITAL TRUST'S (THE
"TRUST") RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii)
IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUST. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
1
<PAGE> 2
Certificate Number Number of Preferred Securities
0001 2,000,000
CUSIP NO. 865076 20 2
Preferred Securities
of
Suiza Capital Trust
5% Trust Convertible Preferred Securities
(liquidation amount $50 per Trust Convertible Preferred Security)
Suiza Capital Trust, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that DFA Investment
Company, a Kansas cooperative marketing association (the "Holder"), is the
registered owner of Two Million (2,000,000) preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 5% Trust Convertible Preferred Securities (liquidation amount
$50 per Trust Convertible Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities represented hereby are issued and shall in all
respects be subject to the provisions of the Amended and Restated Declaration
of Trust of the Trust dated as of February 20, 1998, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms
of the Preferred Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Holder is entitled to the benefits of the Preferred
Securities Guarantee to the extent provided therein. The Sponsor will provide
a copy of the Declaration, the Preferred Securities Guarantee and the Indenture
to a Holder without charge upon written request to the Trust at its principal
place of business.
Reference is hereby made to select provisions of the Preferred
Securities set forth on the reverse hereof, which select provisions shall for
all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance hereof, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.
2
<PAGE> 3
Unless the Property Trustee's Certificate of Authentication hereon has
been properly executed, these Preferred Securities shall not be entitled to any
benefit under the Declaration or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Trust has executed this certificate on February
20, 1998.
SUIZA CAPITAL TRUST
By: /s/ Michael Lewis
----------------------------
Name: Michael Lewis
Title: Regular Trustee
3
<PAGE> 4
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
Dated: February 20, 1998
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Property Trustee
By: /s/ Patricia A. Evans
-------------------------------
Authorized Signatory
4
<PAGE> 5
[REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a
rate per annum of 5% (the "Coupon Rate") of the stated liquidation amount of
$50 per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for
more than one quarter will bear interest thereon compounded quarterly at the
rate of 7% per annum (to the extent permitted by applicable law). The term
"Distribution" as used herein includes any such interest including Additional
Interest, Compounded Interest and Extension Period Interest payable unless
otherwise stated, and any premium and/or principal on the Debentures. A
Distribution is payable only to the extent that payments are made in respect of
the Debentures held by the Property Trustee and to the extent the Property
Trustee has funds available therefor. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter
than a full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days
elapsed per 30-day month.
Except as otherwise described below, distributions on the Preferred
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears, on February 15, May 15, August 15 and
November 15 of each year, commencing on May 15, 1998, to Holders of record
fifteen (15) days prior to such payment dates, which payment dates shall
correspond to the interest payment dates on the Debentures. The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for
successive periods not exceeding 20 consecutive quarters (each an "Extension
Period") during which Extension Period no interest shall be due and payable on
the Debentures; PROVIDED, that no Extension Period shall extend beyond the date
of maturity of the Debentures. As a consequence of such extension,
Distributions will also be deferred. Despite such extension, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) compounded quarterly at the rate of 7% per annum
during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further extend such Extension
Period; PROVIDED, that such Extension Period together with all such previous
and further extensions thereof may not exceed 20 consecutive quarters.
Payments of accrued Distributions will be payable to Holders as they appear on
the books and records of the Trust on the first record date after the end of
the Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in the
Declaration.
The Preferred Securities shall be convertible into shares of Common
Stock of Suiza Foods Corporation, through (i) the exchange of Preferred
Securities for a portion of the Debentures and (ii) the immediate conversion of
such Debentures into Common Stock of Suiza Foods Corporation, in the manner and
according to the terms set forth in the Declaration.
1
<PAGE> 6
CONVERSION REQUEST
To: Wilmington Trust Company,
as Property Trustee of
Suiza Capital Trust
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion
below designated, into Common Stock of SUIZA FOODS CORPORATION (the "Suiza
Common Stock") in accordance with the terms of the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of February 20, 1998, by
Michael Lewis, as Regular Trustee, Wilmington Trust Company, as Delaware
Trustee, Wilmington Trust Company, as Property Trustee, Suiza Foods
Corporation, as Sponsor, and by the Holders, from time to time, of undivided
beneficial interests in the Trust issued pursuant to the Declaration. Pursuant
to the aforementioned exercise of the option to convert these Preferred
Securities, the undersigned hereby directs the Conversion Agent (as that term
is defined in the Declaration) to (i) exchange such Preferred Securities for a
portion of the Debentures (as that term is defined in the Declaration) held by
the Trust (at the rate of exchange specified in the terms of the Preferred
Securities set forth as Annex I to the Declaration) and (ii) immediately
convert such Debentures, on behalf of the undersigned, into Suiza Common Stock
(at the conversion rate specified in the terms of the Preferred Securities set
forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Any holder, upon the exercise of its conversion rights in accordance
with the terms of the Declaration and the Preferred Securities, agrees to be
bound by the terms of the Registration Rights Agreement relating to the Suiza
Common Stock issuable upon conversion of the Preferred Securities.
2
<PAGE> 7
Date: ,
-------------------- -----
in whole in part
---- ----
Number of Preferred Securities to be
converted:
-------------------------------------
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Suiza Common
Stock are to be issued, along with
the address or addresses of such
person or persons:
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
Number:
-------------------------------------
-------------------------------------
-------------------------------------
Signature Guarantee:*
----------------
- ---------------------
* Signature Guarantee: (Signature must be guaranteed by an "eligible guarantor
institution" that is, a bank, stockbroker, savings and loan association or
credit union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program" as
may be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.)
3
<PAGE> 8
ASSIGNMENT FORM
To assign this Preferred Security, fill in the form below:
(I) or (we) assign and transfer this Preferred Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Preferred Security on the books of the Company. The agent
may substitute another to act for him.
Your Signature:
-------------------------
(Sign exactly as your name appears on
the other side of this Security)
Date:
----------------------------------
Signature Guarantee:*
----------------------------------
[Include the following if the Preferred Security bears a Restricted Securities
Legend --
In connection with any transfer of any of the Preferred Securities evidenced by
this certificate, the undersigned confirms that such Preferred Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without transfer;
or
(2) [ ] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
- -----------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the NYSE.
4
<PAGE> 9
(4) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) [ ] transferred pursuant to an effective Shelf Registration
Statement.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Preferred Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; PROVIDED, HOWEVER, that if box
(3) or (4) is checked, the Trustee may require, prior to registering any such
transfer of the Preferred Securities such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such
as the exemption provided by Rule 144 under such Act.
--------------------------------
Signature
Signature Guarantee*: ]
-------------------------------
Signature
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Preferred Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
------------------------------- ---------------------------------
NOTICE: To be executed by an
executive officer.]
- ------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the NYSE.
5
<PAGE> 1
EXHIBIT 10.5
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE
REGISTRATION STATEMENT.
OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS
SECURITY MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED EXCEPT TO A RELATED
PARTY (AS DEFINED IN THE DECLARATION) OF SUIZA FOODS CORPORATION OR TO A
CREDITOR PURSUANT TO A BONA FIDE PLEDGE OR GRANT OF A SECURITY INTEREST.
Certificate Number Number of Common Securities
0001 100
Common Securities
of
Suiza Capital Trust
Trust Common Securities
(liquidation amount $50 per Trust Common Security)
Suiza Capital Trust, a statutory business trust formed under the laws
of the State of Delaware (the "Trust"), hereby certifies that Suiza Foods
Corporation, a Delaware corporation (the "Holder"), is the registered owner of
One Hundred (100) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the Trust Common
Securities (liquidation amount $50 per Trust Common Security) (the "Common
Securities"). The Common Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of
this certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust dated as of February 20, 1998, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms
of the Common Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration. The Sponsor will provide a copy of the Declaration and the
Indenture to a Holder without charge upon written request to the Sponsor at its
principal place of business.
The Common Securities shall be redeemable as provided in the Declaration.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
1
<PAGE> 2
By acceptance hereof, the Holder agrees to treat for United States
federal income tax purposes the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate on
February 20, 1998.
SUIZA CAPITAL TRUST
By: /s/ Michael Lewis
-------------------------------
Name: Michael Lewis
Title: Regular Trustee
2
<PAGE> 3
ASSIGNMENT FORM
To assign this Common Security, fill in the form below:
(I) or (we) assign and transfer this Common Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Common Security on the books of the Company. The agent
may substitute another to act for him.
Your Signature:
--------------------------
(Sign exactly as your name appears on
the other side of this Security)
Date:
------------------------------------
Signature Guarantee:*
--------------------
[Include the following if the Common Security bears a Restricted Securities
Legend --
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account without transfer;
or
(2) [ ] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
- ------------------------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the NYSE.
3
<PAGE> 4
(4) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) [ ] transferred pursuant to an effective Shelf Registration
Statement.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Common Securities evidenced by this certificate in the name of any person
other than the registered Holder thereof; PROVIDED, HOWEVER, that if box (3) or
(4) is checked, the Trustee may require, prior to registering any such transfer
of the Common Securities such legal opinions, certifications and other
information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such
as the exemption provided by Rule 144 under such Act.
----------------------------------
Signature
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Common Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
--------------------------- -----------------------------------
NOTICE: To be executed by an
executive officer.]
- --------------------
* Signature must be guaranteed by a commercial bank, trust company or member
firm of the NYSE.
4
<PAGE> 1
EXHIBIT 10.6
================================================================================
PREFERRED SECURITIES GUARANTEE AGREEMENT
SUIZA FOODS CORPORATION
DATED AS OF FEBRUARY 20, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Definitions and Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . 5
SECTION 2.6 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.7 Event of Default Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.8 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED
GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee . . . . . . . . . . . . . . . . 6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee . . . . . . . . . . . . . . . . 10
ARTICLE IV PREFERRED GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.1 Preferred Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.2 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.3 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.4 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.5 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.6 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.7 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.8 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.9 Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.2 Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.1 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.2 Compensation and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.4 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred
Securities Guarantee"), dated as of February 20, 1998, is executed and
delivered by Suiza Foods Corporation, a Delaware corporation (the "Guarantor"),
and Wilmington Trust Company as trustee (the "Preferred Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Preferred Securities (as defined herein) of Suiza Capital Trust, a Delaware
statutory business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
Declaration"), dated as of February 20, 1998, among the trustees of the Trust
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
on the date hereof 2,000,000 preferred securities, having an aggregate
liquidation amount of $100,000,000, designated the 5% Trust Convertible
Preferred Securities (the "Preferred Securities").
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to guarantee the
obligations of the Trust to the Holders of the Preferred Securities on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION.
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(c) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
1
<PAGE> 5
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless otherwise defined in
this Preferred Securities Guarantee or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa;
(g) a reference to any Person shall include its successors and
assigns;
(h) a reference to any agreement or instrument shall mean such
agreement or instrument, as supplemented, modified, amended, or amended and
restated, and in effect from time to time; and
(i) a reference to any statute, law, rule or regulation, shall
include any amendments thereto applicable to the relevant Person, and any
successor statute, law, rule or regulation.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a day on which banking
institutions in New York, New York, Dallas, Texas or Wilmington, Delaware are
authorized or required by law to close.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
"Corporate Trust Office" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall at any particular time be principally administered, which office
at the date of execution of this Agreement is located at Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the 5% Convertible Subordinated Debentures due 2018
of the Guarantor held by the Property Trustee (as defined in the Declaration).
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Trust: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Preferred
Securities to the extent the Trust shall have funds available therefor, (ii)
the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price"), with respect to any Preferred
Securities called for redemption by the Trust to the extent the Trust has funds
available therefor, and (iii) upon a voluntary or involuntary
2
<PAGE> 6
dissolution, winding-up or termination of the Trust (other than in connection
with a distribution of the Debentures to the Holders in exchange for Preferred
Securities or the redemption of all of the Preferred Securities as provided in
the Declaration), the lesser of (a) the aggregate of the liquidation amount and
all accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Trust shall have funds available therefor, and (b)
the amount of assets of the Trust remaining available for distribution to
Holders upon liquidation of the Trust (in either case, the "Liquidation
Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Trust, of any Preferred Securities, PROVIDED, HOWEVER, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee (including
in its individual capacity), any Affiliate of the Preferred Guarantee Trustee,
or any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Preferred Guarantee
Trustee.
"Indenture" means the Indenture dated as of February 20, 1998 among
the Guarantor (the "Convertible Debenture Issuer") and Wilmington Trust
Company, a Delaware banking corporation, as trustee, pursuant to which the
Debentures are to be issued to the Property Trustee of the Trust.
"Indenture Trustee" means the Person acting as trustee under the
Indenture, which trustee initially is Wilmington Trust Company.
"Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.
"Officer's Certificate" means, with regard to any Person, a
certificate signed by an Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officer's
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officer's
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
3
<PAGE> 7
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Guarantee Trustee" means Wilmington Trust Company, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer in the Corporate Trust Department of the Preferred Guarantee Trustee
with direct responsibility for the administration of this Preferred Securities
Guarantee and also means, with respect to a particular corporate trust matter,
any other officer of the Preferred Guarantee Trustee to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall to the extent applicable, be governed
by such provisions; and
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders of the Preferred Securities
("List of Holders") as of such date, (i) within 14 days after each record date
for payment distributions, if any, payable to a Holder, of any payment or
interest, principal or premium amount due on the Preferred Securities, PROVIDED
that the Guarantor
4
<PAGE> 8
shall not be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Preferred Guarantee Trustee by the Guarantor and (ii) at any other time, within
30 days of receipt by the Guarantor of a written request for a List of Holders
as of a date no more than 14 days before such List of Holders is given to the
Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE PREFERRED GUARANTEE TRUSTEE.
Within 60 days after January 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
Preferred Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PREFERRED GUARANTEE TRUSTEE.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 of the Trust
Indenture Act (if any) and the compliance certificate required by Section 314
of the Trust Indenture Act in the form, in the manner and at the times required
by Section 314 of the Trust Indenture Act. Delivery of such reports,
information and documents to the Preferred Guarantee Trustee is for
informational purposes only and the Preferred Guarantee Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Guarantor's compliance with any of its covenants hereunder (as to which the
Preferred Guarantee Trustee is entitled to rely exclusively on Officer's
Certificates).
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions, if any, provided for in this
Preferred Securities Guarantee that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion to be
given by an officer pursuant to Section 314(c)(l) may be given in the form of
an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
5
<PAGE> 9
SECTION 2.7 EVENT OF DEFAULT NOTICE.
(a) The Preferred Guarantee Trustee shall within 90 days after the
occurrence of an Event of Default with respect to this Preferred Security
Guarantee actually known to a Responsible Officer of the Preferred Guarantee
Trustee, transmit by mail, first class postage prepaid, to the Holders of the
Preferred Securities, notices of all such Events of Default, unless such
defaults have been cured before the giving of such notice; PROVIDED that the
Preferred Guarantee Trustee shall be protected in withholding such notice if
and so long as a Responsible Officer of the Preferred Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default, unless the Preferred Guarantee Trustee shall
have received written notice thereof or a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge thereof.
SECTION 2.8 CONFLICTING INTERESTS.
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE PREFERRED GUARANTEE TRUSTEE.
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.5(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee. The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform
6
<PAGE> 10
only such duties as are specifically set forth in this Preferred Securities
Guarantee, and no implied covenants shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
2.6) and is actually known to a Responsible Officer of the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Preferred Securities Guarantee, and use the same
degree of care and skill in its exercise thereof, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may
have occurred,
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express
provisions of this Preferred Securities Guarantee, and the
Preferred Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this
Preferred Securities Guarantee against the Preferred Guarantee
Trustee; and
(B) in the absence of bad faith on the part of
the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the requirements
of this Preferred Securities Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be
under a duty to examine the same to determine whether or not
on their face they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible Officer
of the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less than
a Majority in liquidation amount of the Preferred Securities relating
to the time, method and place of conducting any proceeding for any
remedy available to the Preferred Guarantee Trustee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under
this Preferred Securities Guarantee; and
7
<PAGE> 11
(iv) no provision of this Preferred Securities Guarantee
shall require the Preferred Guarantee Trustee to expend or risk its
own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF PREFERRED GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting
upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred Guarantee
Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel
with respect to legal matters shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with such advice or
opinion. Such counsel may be counsel to the Guarantor or any of its
affiliates and may include any of its employees. The Preferred
Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by
this Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such security and indemnity, reasonably satisfactory
to the Preferred
8
<PAGE> 12
Guarantee Trustee, against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Preferred Guarantee Trustee;
PROVIDED that nothing contained in this Section 3.2(a)(vi) shall be
taken to relieve the Preferred Guarantee Trustee, upon the occurrence
of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall have no
obligation or duty to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but
the Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or
its agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the
authority of the Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by
the Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such
instructions.
(xi) The Preferred Guarantee Trustee shall not be liable
for any action taken, suffered or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Preferred
Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
9
<PAGE> 13
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
GUARANTEE.
The Recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 PREFERRED GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation or other Person organized and doing
business under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a corporation
or Person permitted by the Securities and Exchange Commission to act
as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation or
other Person publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this Section
4.1(a)(ii), the combined capital and surplus of such corporation or
other Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
10
<PAGE> 14
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF PREFERRED
GUARANTEE TRUSTEES.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of removal or
resignation, the resigning or removed Preferred Guarantee Trustee may petition
any court of competent jurisdiction for appointment of a Successor Preferred
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts due to the Preferred Guarantee Trustee accrued to the date of such
termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Trust), as and when due, regardless of any defense, right of
set-off or counterclaim that the Trust may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or upon payment of such
amounts by the Trust.
11
<PAGE> 15
SECTION 5.2 SUBORDINATION.
If an Event of Default (as defined in the Indenture) has occurred and
is continuing, the rights of Holders of Common Securities to receive payments
on liquidation, redemption and otherwise are subordinate to the rights of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
In the event and during the continuation of any default by the
Guarantor in the payment of principal, premium, interest or any other payment
due on any Senior Indebtedness (as defined in the Indenture) continuing beyond
the period of grace, if any, specified in the instrument evidencing such Senior
Indebtedness, unless and until such default shall have been cured or waived or
shall have ceased to exist, and in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then no payment shall
be made hereunder by the Guarantor.
In the event of any default (other than a default described in the
immediately preceding paragraph) by the Guarantor under the terms of any
instrument evidencing any Senior Indebtedness, continuing beyond the period of
grace, if any, specified in such instrument, notice of which default shall have
been given by any holder of such Senior Indebtedness to the Trustee under the
Indenture, unless and until the earlier of (i) such default shall have been
cured or waived or shall have ceased to exist, or (ii) the continuation of such
default for a period of one hundred eighty days after notice of the occurrence
of such default shall have been given to such Trustee, no payment shall be made
hereunder by the Guarantor.
Notwithstanding anything contained herein to the contrary, so long as
the Guarantor shall be prohibited from making any payment hereunder pursuant to
the foregoing paragraphs, neither the Preferred Guarantee Trustee nor any
Holders shall take any action to (i) collect, demand payment of or accelerate
any of the Guarantee Payments, (ii) foreclose or otherwise realize upon any
security for the Guarantee Payments, (iii) initiate against the Guarantor any
proceeding under any bankruptcy, reorganization, moratorium, insolvency or
other similar laws from time to time in effect affecting the enforcement of
creditors' rights generally, or (iv) exercise any of their other rights or
remedies against the Guarantor under this Preferred Securities Guarantee or
otherwise, unless and until a proceeding shall have been commenced against the
Guarantor under any bankruptcy, reorganization, moratorium, insolvency or other
similar laws from time to time in effect affecting the enforcement of
creditors' rights generally.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Preferred Guarantee Trustee when such payment is prohibited by
the preceding paragraph of this Section 5.2, such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders
of Senior Indebtedness or their respective representatives, or to the trustee
or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear,
but only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Preferred Guarantee
Trustee in writing within 90 days of such payment of the amounts then due
12
<PAGE> 16
and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Preferred Guarantee Trustee shall be paid to the holders of
Senior Indebtedness.
Upon any payment by the Guarantor or distribution of assets of the
Guarantor of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization
of the Guarantor, whether voluntary or involuntary, or in bankruptcy,
insolvency, receivership or other proceedings, all principal of, and premium,
if any, and interest due or to become due on, all Senior Indebtedness must be
paid in full before any Guarantee Payment is made; and upon any such
dissolution or winding up or liquidation or reorganization, any payment by the
Guarantor, or distribution of assets of the Guarantor of any kind or character,
whether in cash, property or securities, to which the Holders or the Preferred
Guarantee Trustee would be entitled, except for the provisions of this Article
V, shall be paid by the Guarantor or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders or by the Preferred Guarantee Trustee under this Preferred
Securities Guarantee if received by them or it, directly to the holders of
Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders, as calculated by the
Guarantor) or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay such Senior Indebtedness in full, in
money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Holders or to the Preferred Guarantee
Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Guarantor of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Preferred Guarantee Trustee or the Holders before all Senior Indebtedness
is paid in full, or provision is made for such payment in money in accordance
with its terms, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such
Senior Indebtedness may have been issued, and their respective interests may
appear, as calculated by the Guarantor, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full in money in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
For purposes of this Article V, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Guarantor as
reorganized or readjusted, or securities of the Guarantor or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article V with respect to the Guarantee Payments to the payment of all Senior
Indebtedness which may at the time be outstanding; provided, that (i) such
Senior Indebtedness is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
such Senior Indebtedness are not, without the consent of such holders, altered
by such reorganization or readjustment. The consolidation of the Guarantor
with, or the merger of the
13
<PAGE> 17
Guarantor with or into, another Person or the liquidation or dissolution of the
Guarantor following the conveyance, transfer or lease of all or substantially
all its properties and assets on a consolidated basis to another Person upon
the terms and conditions provided for in Article Eight of the Indenture shall
not be deemed a dissolution, winding up, liquidation or reorganization for the
purposes of this Section 5.2 if such other Person shall, as a part of such
consolidation, merger, conveyance, transfer or lease, comply with the
conditions stated in Article Eight of the Indenture. Nothing in this Section
5.2 shall apply to claims of, or payments to, the Preferred Guarantee Trustee
(including in its individual capacity) under or pursuant to Section 8.2 hereof.
SECTION 5.3 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first
against the Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.4 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance by the Trust of any express or implied agreement, covenant,
term or condition relating to the Preferred Securities to be performed or
observed by the Trust;
(b) the extension of time for the payment by the Trust of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising
out of, or in connection with, the Preferred Securities (other than an
extension of time for payment of Distributions, Redemption Price, Liquidation
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures or any extension of the maturity date
of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Trust or any of the
assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
14
<PAGE> 18
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.4 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.5 RIGHTS OF HOLDERS.
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.
(b) Any Holder of Preferred Securities may directly institute a
legal proceeding against the Guarantor to enforce the obligations of the
Guarantor under this Preferred Securities Guarantee without first instituting a
legal proceeding against the Trust, the Preferred Guarantee Trustee or any
other Person.
(c) If an Event of Default with respect to the Debentures (an
"Indenture Event of Default"), constituting the failure to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable has occurred and is continuing, then a Holder of Preferred Securities
may, to the extent permissible under applicable law and Section 5.2 of this
Preferred Securities Guarantee, directly, at any time, institute a proceeding
for enforcement of payment to such Holder of the principal of or interest on
the Debentures having a principal amount equal to the aggregate liquidation
amount of the Preferred Securities of such Holder on or after the respective
due date specified in the Debentures. The Holders of Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Debentures unless the Property Trustee (as defined in the Indenture) fails
to do so.
SECTION 5.6 GUARANTEE OF PAYMENT.
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.7 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Trust in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; PROVIDED, HOWEVER, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise
15
<PAGE> 19
any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.8 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.4 hereof.
SECTION 5.9 CONVERSION.
The Guarantor agrees and acknowledges its obligations, to issue and
deliver common stock of the Guarantor and, if applicable, other securities and
assets upon the conversion of the Preferred Securities.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS.
So long as any Preferred Securities remain outstanding, if (i) the
Guarantor has exercised its option to defer interest payments on the Debentures
by extending the interest payment period and such period or extension thereof
shall be continuing, (ii) there shall have occurred any Event of Default or
(iii) there shall have occurred and be continuing any event that is or, with
the giving of notice or the lapse of time or both, would constitute an
Indenture Event of Default, then the Guarantor shall not repay, repurchase or
redeem any capital stock or debt securities of the Guarantor, or make any
guarantee payments with respect to indebtedness for borrowed money, that rank
junior to or PARI PASSU with the Debentures.
SECTION 6.2 RANKING.
(a) This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
to other liabilities of the Guarantor except any liabilities that may be PARI
PASSU expressly by their terms, (ii) PARI PASSU with the most senior preferred
or preference stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock or preferred securities of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock.
16
<PAGE> 20
(b) The holders of any obligations of the Guarantor that are
senior in priority to the obligations under this Preferred Securities Guarantee
will be entitled to all of the rights inuring to the holders of "Senior
Indebtedness" under Article 12 of the Indenture, and the Holders of the
Preferred Securities will be subject to all of the terms and conditions of such
Article 12 with respect to any claims or rights hereunder with the same effect
as though fully set forth herein.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION.
This Preferred Securities Guarantee shall terminate as to each Holder
of Preferred Securities upon (i) full payment of the Redemption Price of all
Preferred Securities, (ii) the distribution of the Debentures held by the Trust
to the Holders of all of the Preferred Securities of the Trust, (iii)
liquidation of the Trust and full payment of the amounts payable in accordance
with the Declaration of the Trust, or (iv) the distribution of Guarantor's
common stock to such Holder in respect of the conversion of such Holder's
Preferred Securities into common stock of the Guarantor. Notwithstanding the
foregoing, this Preferred Securities Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
17
<PAGE> 21
SECTION 8.2 COMPENSATION AND INDEMNIFICATION.
(a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder.
(b) The Guarantor agrees to pay the Preferred Guarantee Trustee,
from time to time, such compensation for all services rendered by the Preferred
Guarantee Trustee hereunder as may be mutually agreed upon in writing by the
Guarantor and the Preferred Guarantee Trustee, and, except as otherwise
expressly provided herein, to reimburse the Preferred Guarantee Trustee upon
its request for all reasonable expenses (including counsel fees and expenses),
disbursements and advances incurred or made by the Preferred Guarantee Trustee
in accordance with the provisions of this Guarantee.
(c) The provisions as set forth in this Section 8.2 shall survive
the termination of this Preferred Securities Guarantee and shall survive the
resignation or removal of the Preferred Guarantee Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding. Except in connection with any
merger or consolidation of the Guarantor with or into another entity or any
sale, transfer or lease of the Guarantor's assets to another equity (provided
such transaction is permitted by the Indenture and the requirements of the
Indenture with respect thereto are complied with), the Guarantor may not assign
its rights or delegate its obligations under this Preferred Securities
Guarantee without the prior approval of the Preferred Guarantee Trustee and the
Holders of at least a Majority in liquidation amount of the Preferred
Securities.
SECTION 9.2 AMENDMENTS.
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may be amended only with the
prior approval of the Holders of at least a Majority in liquidation amount of
the Preferred Securities. The provisions of Section 12.2 of the Declaration
with respect to meetings of Holders of the Preferred Securities apply to the
giving of such approval. This Preferred Securities Guarantee may not be
amended, and no amendment hereof that affects the Preferred Guarantee Trustee's
rights, duties or immunities hereunder or otherwise,
18
<PAGE> 22
shall be effective, unless such amendment is executed by the Preferred
Guarantee Trustee (which shall have no obligation to execute any such
amendment, but may do so in its sole discretion).
SECTION 9.3 NOTICES.
All notices provided for in this Preferred Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, sent by facsimile or mailed by registered or certified mail, as
follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
--------------------------------------------
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
--------------------------------------------
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):
Suiza Foods Corporation
3811 Turtle Creek Blvd.
Suite 1300
Dallas, Texas 75219
Attention: Chief Financial Officer
Facsimile: (214) 528-9929
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which notice was given,
such notice or other document shall be deemed to have been delivered on the
date of such refusal or inability to deliver.
19
<PAGE> 23
SECTION 9.4 BENEFIT.
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 GOVERNING LAW.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO
ITS PRINCIPLES OF CONFLICTS OF LAWS.
This PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
SUIZA FOODS CORPORATION,
as Guarantor
By: /s/ Tracy L. Noll
------------------------------
Name: Tracy L. Noll
-----------------------------
Title: Vice President
----------------------------
WILMINGTON TRUST COMPANY,
not in its individual capacity, but
solely as Preferred Guarantee Trustee
By: /s/ Patricia A. Evans
------------------------------
Name: Patricia A. Evans
-----------------------------
Title: Financial Services Officer
------------------------------
20
<PAGE> 1
EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
February 20, 1998
DFA Investment Company
1325 Airmotive Way, Suite 130
Reno, Nevada 89502
Ladies and Gentlemen:
Suiza Capital Trust, a statutory business trust formed under the laws
of the State of Delaware (the "Trust") by Suiza Foods Corporation (the
"Company"), a Delaware corporation, as sponsor, among others, proposes to issue
and sell to DFA Investment Company (the "Initial Purchaser"), upon the terms
set forth in a purchase agreement dated February 20, 1998 (the "Purchase
Agreement"), among the Initial Purchaser, the Company and the Trust, 5% Trust
Convertible Preferred Securities (liquidation amount $50 per Convertible
Preferred Security) (the "Preferred Securities") (the "Initial Placement"). As
an inducement to the Initial Purchaser to enter into the Purchase Agreement and
in satisfaction of a condition to the obligations of the Initial Purchaser
thereunder, the Company agrees with you, for the benefit of the holders (each a
"Holder" and, together, the "Holders") from time to time of the Preferred
Securities and the common stock, $.01 par value per share, of the Company
issuable upon conversion of the Preferred Securities and the 5% Convertible
Subordinated Debentures due 2018 issued by the Company (such Common Stock, the
"Registrable Securities").
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in or pursuant to the Purchase
Agreement. All references to Sections herein are to Sections of this Agreement
unless otherwise indicated. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Act" or "Securities Act" means the Securities Act of 1933, as
amended.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such specified person. For purposes of this definition, control
of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by ownership,
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
"Effectiveness Period" has the meaning set forth in Section 2(b)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
1
<PAGE> 2
"Declaration" means the Amended and Restated Declaration of Trust
dated as of February 20, 1998, among the Company and the Regular Trustee, the
Property Trustee and the Delaware Trustee named therein.
"Indenture" means the Indenture dated as of February 20, 1998, among
the Company, as issuer, and Wilmington Trust Company, as trustee.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities.
"Shelf Registration" means a registration effected pursuant to Section
2 hereof.
"Shelf Registration Statement" means a Shelf Registration statement of
the Company pursuant to the provisions of Section 2 hereof filed with the
Commission which covers the Registrable Securities, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
2. Shelf Registration. (a) The Company shall use its
commercially reasonable efforts to file, within 60 calendar days following the
receipt by the Company of a written request therefore by the Holders
representing more than 50% of the Registrable Securities (the "Demand Date"),
with the Commission a Shelf Registration Statement relating to the offer and
sale of the Registrable Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement and, thereafter, shall use
commercially reasonable efforts to cause such Shelf Registration Statement to
be declared effective under the Act within 120 calendar days following the
Demand Date; provided, however, that no Holder shall be entitled to sell or
otherwise transfer any Registrable Securities held by it unless such Holder is
in compliance with Section 3(g) hereof. The Holders as a group shall be
entitled to make only one demand on the Company pursuant to this Agreement, and
under no circumstances shall the Company be required to file more than one
Shelf Registration Statement pursuant to this Agreement.
(b) The Company shall use its commercially reasonable
efforts to keep the Shelf Registration Statement continuously effective in
order to permit the Prospectus forming part thereof to be usable by Holders for
a period (the "Effectiveness Period") from the date the Shelf Registration
Statement is declared effective that will terminate upon the earliest of the
following: (A) when all outstanding Registrable Securities held by persons
which are not affiliates of the Trust or the Company may be resold without
registration under the Act pursuant to Rule 144(k)
2
<PAGE> 3
under the Act or any successor provision thereto or any other applicable law,
rule or regulation, whether now in effect or hereinafter promulgated, adopted
or issued, or (B) when all outstanding Registrable Securities have been sold
pursuant to the Shelf Registration Statement; provided, that such Effectiveness
Period will be extended by the aggregate number of days during which any
Holders are prevented from selling Registrable Securities as a result of
Section 4 of this Agreement.
3. Registration Procedures. In connection with any Shelf
Registration Statement, the following provisions shall apply:
(a) (1) The Company shall advise the Holders:
(i) when a Shelf Registration Statement,
and any amendment thereto, has been filed with the
Commission and when the Shelf Registration Statement
or any post-effective amendment thereto has become
effective; and
(ii) of any request by the Commission for
amendments or supplements to the Shelf Registration
Statement or the Prospectus included therein or for
additional information.
(2) The Company shall advise the Holders:
(i) the issuance by the Commission of
any stop order suspending effectiveness of the Shelf
Registration Statement or the initiation of any
proceedings for that purpose; and
(ii) the receipt by the Company of any
notification with respect to the suspension of the
qualification of the securities included therein for
sale in any jurisdiction or the initiation of any
proceeding for such purpose.
(b) The Company shall use its commercially reasonable
efforts to prevent the issuance, and, if issued, to obtain the withdrawal, of
any order suspending the effectiveness of any Shelf Registration Statement at
the earliest possible time.
(c) The Company shall furnish to each Holder of
Registrable Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendments thereto, including financial
statements and schedules contained therein, provided, that the Company shall
not be required to furnish to the Holders reports and other documents
incorporated by reference in the Shelf Registration Statement or any exhibits
thereto (including those incorporated by reference).
(d) The Company shall, during the Effectiveness Period,
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)
3
<PAGE> 4
included in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request, and the Company consents (except
upon and during the continuance of any event described in Section 4) to the use
of the Prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto during the Effectiveness Period.
(e) Prior to any offering of Registrable Securities
pursuant to any Shelf Registration Statement, the Company shall register or
qualify or cooperate with the Holders participating in an offering of the
Registrable Securities and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions in the United
States as any such Holders reasonably request 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 Registrable Securities covered by such Shelf
Registration Statement; provided, however, that in no event shall the Company
be obligated to (1) qualify generally to do business or as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to so qualify but for this Section 3(e), (ii) file any
general consent to service of process in any jurisdiction where it is not as of
the date hereof then so subject or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject.
(f) Unless any Registrable Securities shall be in
book-entry only form, the Company shall cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to any Shelf Registration Statement
free of any restrictive legends and in such permitted denominations and
registered in such names as the Holders may request in connection with the sale
of Registrable Securities pursuant to such Shelf Registration Statement.
(g) The Company may require each Holder of Registrable
Securities to be sold pursuant to any Shelf Registration Statement to furnish
to the Company such information regarding the Holder and the distribution by
such Holder of such Registrable Securities required by law to be disclosed in
the Shelf Registration Statement (the "Requisite Information") or as the
Company may otherwise from time to time reasonably require for inclusion in
such Shelf Registration Statement and the Company may exclude from such
registration statement such information as to any Holder that fails to furnish
such information within a reasonable time after receiving such request.
The Company shall file, within 15 business days of the receipt
of notice from any Holder which includes the Requisite Information with respect
to such Holder, a Prospectus supplement pursuant to Rule 424 to amend or
supplement such Shelf Registration Statement to include in the Shelf
Registration Statement the Requisite Information as to such Holder (and the
Registrable Securities held by such Holder), and the Company shall provide such
Holder within 15 business days of such notice with a copy of such Prospectus as
so amended or supplemented containing the Requisite Information in order to
permit such Holder to comply with the
4
<PAGE> 5
Prospectus delivery requirements of the Securities Act in a timely manner with
respect to any proposed disposition of such Holder's Registrable Securities.
No Holder shall be entitled to use the Prospectus unless and
until such Holder shall have furnished the information required by this Section
3(g).
(h) The Company shall use its commercially reasonable
efforts to take all other steps necessary to effect the registration, offering
and sale of the Registrable Securities covered by the Shelf Registration
Statement contemplated hereby pursuant to such Shelf Registration Statement.
4. Standstill.
(a) Any Holder participating in an offering of Registrable
Securities will notify the Company two business days prior to selling any
Registrable Securities pursuant to any Shelf Registration Statement. If, upon
receipt of such a notice, the Company certifies to such Holder in writing that
(i) due to a change in circumstances or a pending transaction, the Shelf
Registration Statement contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) the public disclosure required
to correct such misstatement or omission would be injurious to the Company,
then such Holder will refrain from selling any Registrable Securities pursuant
to the Shelf Registration Statement for the period of time, not to exceed 45
days for each circumstance or transaction, requested by the Company. The
Company will use reasonable efforts to minimize the time period during which
any Holder is required to refrain from selling Registrable Securities under
this paragraph.
(b) If, during the Effectiveness Period, the Company commences an
underwritten offering of Common Stock on its own behalf or on behalf of selling
stockholders, the Holders participating in an offering of Registrable
Securities will refrain from selling Registrable Securities pursuant to the
Shelf Registration Statement for a period of time beginning ten days before the
anticipated effective date of the Company's offering (as disclosed by the
Company to such Holders in writing) and ending 90 days after such effective
date (or 30 days after the beginning of such period, if such effective date has
not yet occurred).
5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 2 and 3 hereof.
6. Indemnification and Contribution. (a) In connection with any
Shelf Registration Statement, the Company shall indemnify and hold harmless the
Initial Purchaser, each Holder participating in an offering of Registrable
Securities, each person, if any, who controls any such Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and each Holder's respective directors, officers, employees, trustees and
agents, as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue
5
<PAGE> 6
statement of a material fact contained in any Shelf
Registration Statement (or any amendment thereto) covering
Registrable Securities, including all documents incorporated
therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or
arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (or
any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of
counsel chosen by the Holders or such Holder (except to the
extent otherwise expressly provided in Section 6(c) hereof)),
reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 6(a);
provided that this indemnity shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or omission
or alleged untrue statement or omission (i) made in reliance upon and in
conformity with written information furnished to the Company by such Holder
participating in an offering of Registrable Securities in writing expressly for
use in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto) or (ii) contained in any
preliminary prospectus if such Holder failed to send or deliver a copy of the
Prospectus (or any amendment or supplement thereto) to the Person asserting
such losses, claims, damages or liabilities on or prior to the delivery of
written confirmation of any sale of securities covered thereby to such Person
in any case where such Prospectus (or any amendment or supplement thereto)
would have cured the defect giving rise to such loss, claim, damage or
liability. Any amounts advanced by the Company to an indemnified party
pursuant to this Section 6 as a result of such losses shall be returned to the
Company if it shall be finally determined by such a court in a judgment not
subject to appeal or final review that such indemnified party was not entitled
to indemnification by the Company.
(b) Each Holder participating in an offering of
Registrable Securities agrees, severally and not jointly, to indemnify and hold
harmless the Company and the other selling
6
<PAGE> 7
Holders and each of their respective directors, officers (including each
officer of the Company who signed the Shelf Registration Statement), employees,
trustees and agents and each Person, if any, who controls the Company, or any
other selling Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all loss, liability,
claim, damage and expense whatsoever described in the indemnity contained in
Section 6(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such selling Holder expressly
for use in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto); provided, however, that no
such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Registrable Securities
pursuant to the Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers served on
such indemnified party, but failure to so notify an indemnifying party shall
not relieve such indemnifying party from any liability which it may have
otherwise than under this Section 6 unless and to the extent it is not
prejudiced as a proximate result of such failure. An indemnifying party may
participate at its own expense in the defense of any such action. If an
indemnifying party so elects within a reasonable time after receipt of such
notice, such indemnifying party, jointly with any other indemnifying party, may
assume the defense of such action with counsel chosen by it (subject to the
approval of the indemnified parties defendant in such action, which approval
shall not be unreasonably withheld), unless such indemnified party reasonably
determines that there may be legal defenses available to such indemnified party
which are different from or in conflict with those available to such
indemnifying party. If an indemnifying party is not entitled to assume the
defense of such action as a result of the proviso to the preceding sentence,
counsel for such indemnifying party shall be entitled to conduct the defense of
such indemnifying party and counsel for each indemnified party or parties shall
be entitled to conduct the defense of such indemnified party or parties. If an
indemnifying party assumes the defense of an action in accordance with and as
permitted by the provisions of this paragraph, such indemnifying party shall
not be liable for any fees and expenses of counsel for the indemnified parties
incurred thereafter in connection with such action. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel (in addition to any local counsel) separate from its own counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnity provision agreement
provided for in this Section 6 is for any reason held to be unavailable to the
indemnified parties although applicable in accordance with its terms, the
Company, and the Holders participating in an offering of Registrable Securities
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Holders, as incurred; provided, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
7
<PAGE> 8
Securities Act) shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between the Company and the
Holders, such parties shall contribute to such aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement in such proportion as shall be appropriate to reflect the relative
fault of the Company, on the one hand, and the Holders, on the other hand, with
respect to the statements or omissions which resulted in such loss, liability,
claim, damage or expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault of the Company, on the
one hand, and of the Holders, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, on the one hand,
or by or on behalf of the Holders, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Holders agree that it would
not be just and equitable if contributions pursuant to this Section 6 were to
be determined by pro rata allocation or by any other method of allocation that
does not take into account the relevant equitable considerations. For purposes
of this Section 6(d), each director, officer, employee, trustee, agent and
Person, if any, who controls a Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Holder, and each director, officer, employee, trustee and
agent of each of the Company, and each Person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company. No
party shall be liable for contribution with respect to any action, suit,
proceeding or claim settled without its written consent.
7. Miscellaneous.
(a) No Inconsistent Agreements; Other Registration
Rights. The Company shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The Company is
not currently a party to any agreement granting any registration rights with
respect to any of its securities to any person which conflicts with the
Company's obligations hereunder or gives any other party the right to include
any securities in any Registration Statement filed pursuant hereto (except in
each case, as have been waived).
(b) Amendments and Waivers. The provision of this
Agreement, including the provisions of this sentence, may not be amended,
qualified, 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 the Holders representing more than 50% of the Registrable
Securities from time to time.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
8
<PAGE> 9
1) if to a Holder, at the address of such Holder
as it appears on the register for the Preferred Securities or
the Common Stock, as applicable; and
2) if to the Company, initially at its address
set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
duly given when received, if delivered in person or by fax;
five days after mailing, if sent by mail, or the day following
transmission, if sent by overnight courier.
The Company by notice to the others may designate additional or
different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the permitted successors and assigns of
each of the parties and the Holders, including, without the need for an express
assignment or any consent by the Company thereto, subsequent holders of
Registrable Securities. The Company hereby agrees to extend the benefits of
this Agreement to any holder of Registrable Securities and any such Holder may
specifically enforce the provisions of this Agreement as if an original party
hereto. In the event of any Fundamental Change as such term is defined in the
Indenture occurring prior to the end of the Effectiveness Period, the Company
shall require that the Person formed by such consolidation or resulting from
such merger or that acquires the assets or shares of the Company, as the case
may be (and its parent corporation, if appropriate), assume the obligations
under this Agreement and amend this Agreement to provide for registration of
any securities of such Persons into which the Preferred Securities or Debenture
may become convertible as a result of such transaction or transactions as
appropriate to provide for the continued benefits hereof are thereby made
applicable to such securities.
(e) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by
the internal laws of the State of Delaware, without regard to principles of
conflicts of law.
(h) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired or affected thereby, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
9
<PAGE> 10
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Trust and you.
Very truly yours,
SUIZA CAPITAL TRUST
By: /s/ Michael Lewis
----------------------------
Name: Michael Lewis
Title: Regular Trustee
SUIZA FOODS CORPORATION
By: /s/ Tracy L. Noll
----------------------------
Name: Tracy L. Noll
Title Vice President
DFA INVESTMENT COMPANY
By: /s/ Janice C. George
-----------------------------
Name: Janice C. George
Title Vice President
10
