1
EXHIBIT 4.1
EXECUTION COPY
================================================================================
Southern Foods Group, L.P.
SFG Capital Corporation
9 7/8% Senior Subordinated Notes due 2007
-------------------------
INDENTURE
Dated as of September 4, 1997
-------------------------
Texas Commerce Bank National Association,
Trustee
================================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . 32
SECTION 1.03. Incorporation by Reference of Trust Indenture Act . . . .
33
SECTION 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . 33
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . 34
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . 36
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . 37
SECTION 2.04. Paying Agent to Hold Money in Trust . . . . . . . . . . . 38
SECTION 2.05. Securityholder Lists . . . . . . . . . . . . . . . . . . 38
SECTION 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . 39
SECTION 2.07. Replacement Securities . . . . . . . . . . . . . . . . . 40
SECTION 2.08. Outstanding Securities . . . . . . . . . . . . . . . . . 40
SECTION 2.09. Temporary Securities . . . . . . . . . . . . . . . . . . 41
SECTION 2.10. Cancelation . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . 42
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.13. Book Entry Provisions for U.S. Global
Securities . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.14. Special Transfer Provisions . . . . . . . . . . . . . . . 44
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . 50
SECTION 3.02. Selection of Securities
To Be Redeemed . . . . . . . . . . . . . . . . . . . . 50
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . 51
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . 52
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . 52
SECTION 3.06. Securities Redeemed in Part . . . . . . . . . . . . . . . 52
SECTION 3.07. Optional Redemption . . . . . . . . . . . . . . . . . . . 52
SECTION 3.08. No Sinking Fund . . . . . . . . . . . . . . . . . . . . . 53
3
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . 53
SECTION 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.03. Limitation on Indebtedness . . . . . . . . . . . . . . . 55
SECTION 4.04. Limitation on Restricted Payments . . . . . . . . . . . . 58
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries . . . . . . . . . . . . . . . 62
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Equity
Interests . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 4.07. Limitation on Transactions with Affiliates . . . . . . . 67
SECTION 4.08. Change of Control . . . . . . . . . . . . . . . . . . . . 69
SECTION 4.09. Compliance Certificate . . . . . . . . . . . . . . . . . 70
SECTION 4.10. Further Instruments and Acts . . . . . . . . . . . . . . 70
SECTION 4.11. Limitation on Liens . . . . . . . . . . . . . . . . . . . 71
SECTION 4.12. Future Note Guarantors . . . . . . . . . . . . . . . . . 71
SECTION 4.13. Limitation on Lines of Business . . . . . . . . . . . . . 71
SECTION 4.14. Limitation on Sale/Leaseback Transactions . . . . . . . .
71
SECTION 4.15. Limitation on the Sale or Issuance of Equity Interests
of Restricted Subsidiaries . . . . . . . . . . . . . . 72
SECTION 4.16. Limitation on Business Activities of SFG
Capital. . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 5
Successor to Issuers
SECTION 5.01. When Issuers May Merge or Transfer Assets . . . . . . . . 72
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . 74
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . 77
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 77
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . 77
4
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . 78
SECTION 6.07. Rights of Holders to Receive Payment . . . . . . . . . . 78
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . 78
SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . 79
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . 80
SECTION 6.12. Waiver of Stay or Extension Laws . . . . . . . . . . . . 80
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . 82
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . 83
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . 83
SECTION 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . 83
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . 84
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . 84
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . 85
SECTION 7.09. Successor Trustee by Merger . . . . . . . . . . . . . . . 86
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . 87
SECTION 7.11. Preferential Collection of Claims Against Issuers . . . . 87
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance . . . . 87
SECTION 8.02. Conditions to Defeasance . . . . . . . . . . . . . . . . 89
SECTION 8.03. Application of Trust Money . . . . . . . . . . . . . . . 90
SECTION 8.04. Repayment to Issuers . . . . . . . . . . . . . . . . . . 90
SECTION 8.05. Indemnity for Government Obligations . . . . . . . . . . 90
SECTION 8.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . 91
ARTICLE 9
Amendment
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . . 91
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . 92
SECTION 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . 94
SECTION 9.04. Revocation and Effect of Consents and Waivers . . . . . .
SECTION 9.05. Notation on or Exchange
of Securities. . . . . . . . . . . . . . . . . . . . . 94
5
SECTION 9.06. Trustee to Sign Amendments . . . . . . . . . . . . . . . 95
SECTION 9.07. Payment for Consent . . . . . . . . . . . . . . . . . . . 95
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate . . . . . . . . . . . . . . . . 95
SECTION 10.02. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . 96
SECTION 10.03. Default on Senior Indebtedness . . . . . . . . . . . . . 96
SECTION 10.04. Acceleration of Payment of Securities . . . . . . . . . . 97
SECTION 10.05. When Distribution Must Be Paid Over . . . . . . . . . . . 98
SECTION 10.06. Subrogation . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 10.07. Relative Rights . . . . . . . . . . . . . . . . . . . . . 98
SECTION 10.08. Subordination May Not Be Impaired by Issuers . . . . . . 98
SECTION 10.09. Rights of Trustee and Paying Agent . . . . . . . . . . . 98
SECTION 10.10. Distribution or Notice to Representative . . . . . . . . 99
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate . . . . . . . . . . . . . 99
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . 99
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . . . . 100
SECTION 10.14. Trustee to Effectuate Subordination . . . . . . . . . . . 100
SECTION 10.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness. . . . . . . . . . . . . . . . . . 101
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions . . . . . . . . . . . . . . 101
SECTION 10.17. Trustee's Compensation Not Prejudiced . . . . . . . . . . 101
ARTICLE 11
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls . . . . . . . . . . . . . . 101
SECTION 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 11.03. Communication by Holders with Other Holders . . . . . . . 102
SECTION 11.04. Certificate of Opinion as to Conditions Precedent . . . . 102
SECTION 11.05. Statements Required in Certificate or Opinion . . . . . . 103
SECTION 11.06. When Securities Disregarded . . . . . . . . . . . . . . . 103
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar . . . . . . 104
SECTION 11.08. Legal Holidays . . . . . . . . . . . . . . . . . . . . . 104
6
SECTION 11.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . 104
SECTION 11.10. No Recourse Against Others . . . . . . . . . . . . . . . 104
SECTION 11.11. Successors . . . . . . . . . . . . . . . . . . . . . . . 104
SECTION 11.12. Multiple Originals . . . . . . . . . . . . . . . . . . . 104
SECTION 11.13. Table of Contents; Headings . . . . . . . . . . . . . . . 105
SECTION 11.14. Separability . . . . . . . . . . . . . . . . . . . . . . 105
Exhibit A - Form of Initial Security
Exhibit B - Form of Exchange Security
Exhibit C - Form of Note Guarantee
Exhibit D - Form of Certificate to be delivered in
Connection with Transfers pursuant to Rule 144A
Exhibit E - Form of Certificate to be delivered in
Connection with Transfers pursuant to
Regulation S
Exhibit F - Form of Transferee Letter of Representation
Exhibit G - Form of Certificate to be delivered upon
Termination of Restricted Period
7
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------
310(a)(1) . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . 11.03
313(a) . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . 11.02
(d) . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . 4.02; 4.12; 11.02
(b) . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . 4.12
315(a) . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . 7.05; 11.02
(c) . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last
sentence) . . . . . . . . . . . . . . . . . . . . . 11.06
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . 11.01
N.A. means Not Applicable.
---------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
8
INDENTURE dated as of September 4, 1997,
among SOUTHERN FOODS GROUP, L.P., a Delaware limited
partnership, and SFG Capital CORPORATION, a Delaware
corporation, as issuers, and TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a nation banking association,
as trustee.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuers' 9
7/8% Senior Subordinated Notes due 2007 (the "Initial Securities") and, if and
when issued as provided in the Exchange and Registration Rights Agreement of
even date herewith, the Issuers' 9 7/8% Senior Subordinated Series A Notes due
2007(the "Exchange Securities", and together with the Initial Notes, the
"Securities").
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Acquisition Indebtedness" means Indebtedness of the Company
or a Restricted Subsidiary Incurred in connection with the acquisition of (i)
all or substantially all of the assets or operations of a dairy processing
facility or all or substantially all of the assets or operations of a Person
primarily engaged in the distribution of milk or other dairy related products,
(ii) all or substantially all of the outstanding Equity Interests of a Person
engaged primarily in the distribution or processing of milk or other dairy
related products and (iii) trademarks of milk or other dairy related products.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Equity Interests) to be used by the Company or a
Restricted Subsidiary in a Related Business; (ii) the Equity Interests of a
Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Equity Interests by the Company or another Restricted Subsidiary; or (iii)
Equity Interests constituting a minority interest in any Person that at such
time is a Restricted Subsidiary; provided, however, that any such
9
2
Restricted Subsidiary described in clauses (ii) or (iii) above is primarily
engaged in a Related Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Sections 4.06 and 4.07 only, "Affiliate" of the
Company shall also mean any owner of shares representing 10% or more of the
total voting power of the Voting Equity Interests of the General Partner (as
long as the Company remains a limited partnership) or the Company or of rights
or warrants to purchase such Voting Equity Interests (whether or not currently
exercisable) and any Person who would be an Affiliate of any such owner
pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition of Equity Interests of a Restricted Subsidiary (other than
directors' qualifying Equity Interests), property or other assets (each
referred to for the purposes of this definition as a "disposition") by the
Company or any of its Restricted Subsidiaries (including any disposition by
means of a merger, consolidation or similar transaction) other than (i) a
disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
inventory in the ordinary course of business, (iii) any disposition in the
ordinary course of business of obsolete and worn out equipment or equipment
that is no longer used or useful in the conduct of the business of the Company
or any Restricted Subsidiary, (iv) any dispositions or series of related
dispositions for a consideration valued in the good faith judgment of the
Company at less than $1,000,000, (v) transactions permitted by Section 5.01,
(vi) for purposes of Section 4.06 only, a disposition subject to Section 4.04
and (vii) any asset swap or other exchange of a dairy processing facility for
another dairy processing facility with any Person who is not an Affiliate of
the Company; provided that third party appraisals of all material properties to
be exchanged are received by the
10
3
Company in connection with such exchange and the terms of such exchange are no
less favorable to the Company than those indicated by such appraisals.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Equity Interest, the quotient obtained
by dividing (i) the sum of the products of the numbers of years from the date
of determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Equity Interest multiplied by the amount of such payment by (ii) the
sum of all such payments.
"Bank Indebtedness" means any and all amounts payable under or
in respect of the Credit Agreement, the other Senior Credit Documents and any
Refinancing Indebtedness with respect thereto, as amended from time to time,
including principal, premium (if any), interest (including interest accruing on
or after the filing of any petition in bankruptcy or for reorganization
relating to either of the Issuers whether or not a claim for post-filing
interest is allowed in such proceedings), fees, charges, expenses,
reimbursement obligations, guarantees and all other amounts payable thereunder
or in respect thereof.
"Business Day" means a day other than a Saturday, Sunday or
other day on which banking institutions in the State of New York or the State
of Texas are authorized or required by law to close.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease.
11
4
"Change of Control" means the occurrence of any of the
following events:
(i) the sale, lease, exchange or transfer, in one transaction
or a series of transactions, of all or substantially all of the assets
of the Company and its Restricted Subsidiaries, to any Person other
than a Permitted Holder;
(ii) the adoption of a plan relating to the liquidation or
dissolution of the Company or SFG Capital;
(iii) the Permitted Holders fail to own in the aggregate,
directly or indirectly, at least 50% of each class of Voting Equity
Interests in the Company or, for as long as the Company remains a
limited partnership, the General Partner; or
(iv) the Company fails to own, of record and beneficially,
100% of the Equity Interests of SFG Capital.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Southern Foods Group, L.P., a Delaware limited
partnership, until a successor replaces it and, thereafter, means the
successor.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the
most recent four consecutive fiscal quarters ending prior to the date of such
determination and as to which financial statements are available to (ii)
Consolidated Interest Expense for such four fiscal quarters; provided, however,
that (A) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro
12
5
forma basis to such Indebtedness as if such Indebtedness had been Incurred on
the first day of such period and the discharge of any other Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the first day of such
period, (B) if since the beginning of such period any Indebtedness of the
Company or any of its Restricted Subsidiaries has been repaid, repurchased,
defeased or otherwise discharged (other than Indebtedness under a revolving
credit or similar arrangement unless such revolving credit Indebtedness has
been permanently repaid and has not been replaced) Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto as if such Indebtedness had been repaid, repurchased, defeased or
otherwise discharged on the first day of such period, (C) if since the
beginning of such period the Company or any Restricted Subsidiary shall have
made any Asset Disposition, the EBITDA for such period shall be reduced by an
amount equal to the EBITDA (if positive) directly attributable to the assets
that are the subject of such Asset Disposition for such period or increased by
an amount equal to the EBITDA (if negative) directly attributable thereto for
such period, and Consolidated Interest Expense for such period shall be reduced
by an amount equal to the Consolidated Interest Expense directly attributable
to any Indebtedness of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Company and
its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Equity Interests of any Restricted
Subsidiary are sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent
the Company and its continuing Restricted Subsidiaries are no longer liable for
such Indebtedness after such sale), and increased by the interest income
attributable to the assets which are the subject of such Asset Disposition for
such period, (D) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary)
or an acquisition of assets, including any investment in a Restricted
Subsidiary or any acquisition of assets occurring in connection with a
transaction causing a calculation to be made hereunder, which constitutes all
or substantially all of an operating unit of a business, EBITDA and
Consolidated Interest Expense
13
6
for such period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (E) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or
any Investment or acquisition of assets that would have required an adjustment
pursuant to clause (C) or (D) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto as if
such Asset Disposition, Investment or acquisition of assets occurred on the
first day of such period. For purposes of this definition, whenever pro forma
effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred in connection therewith, the pro
forma calculations shall be determined in good faith by a responsible financial
or accounting Officer of the Company. If any Indebtedness bears a floating
rate of interest and is being given pro forma effect, the interest expense on
such Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Subsidiaries, plus, to
the extent Incurred by the Company and its Restricted Subsidiaries in such
period but not included in such interest expense, (i) interest expense
attributable to Capitalized Lease Obligations, (ii) amortization of debt
discount and debt issuance cost, (iii) capitalized interest, (iv) noncash
interest expense, (v) commissions, discounts and other fees and charges with
respect to letters of credit and bankers' acceptance financing, (vi) interest
accruing on any Indebtedness of any other Person to the extent such
Indebtedness is Guaranteed by the Company or any Restricted Subsidiary;
provided that payment of such amounts by the Company or any Restricted
Subsidiary is being made to, or is sought by, the holders of such Indebtedness
pursuant to such Guarantee, (vii) net
14
7
costs associated with Hedging Obligations (including amortization of fees),
(viii) Preferred Equity Interests distributions or dividends, other than
payment-in-kind distributions, in respect of all Preferred Equity Interests of
the Company and its Subsidiaries and Disqualified Interests of the Company held
by Persons other than the Company or a Wholly Owned Subsidiary and (ix) the
cash contributions to any employee participation plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or
fees to any Person (other than the Company) in connection with Indebtedness
Incurred by such plan or trust and less, (a) to the extent included in such
interest expense, the amortization of capitalized debt issuance costs related
to the Transactions and (b) interest income.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its Restricted Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income:
(i) any net income (loss) of any Person if such Person is not
a Subsidiary of the Company, except that (A) subject to the
limitations contained in clause (iv) below, the Company's equity in
the net income of any such Person for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the Company
or a Subsidiary of the Company as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a
Subsidiary of the Company, to the limitations contained in clause
(iii) below) and (B) the Company's equity in a net loss of any such
Person for such period but only to the extent of the aggregate
Investment of the Company and any Restricted Subsidiary in such Person
shall be included in determining such Consolidated Net Income;
(ii) any net income (loss) of any person acquired by the
Company or a Restricted Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition;
(iii) any net income (loss) of any Restricted Subsidiary if
such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such
15
8
Restricted Subsidiary, directly or indirectly, to the Company, except
that (A) subject to the limitations contained in clause (iv) below,
the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash that could have been
distributed by such Restricted Subsidiary during such period to the
Company or another Restricted Subsidiary as a dividend (subject, in
the case of a dividend that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted Subsidiary for
such period, but only to the extent of the Investment of the Company
and its Restricted Subsidiaries in such Person, shall be included in
determining such Consolidated Net Income;
(iv) any gain or loss realized upon the sale or other
disposition of any asset of the Company or its Restricted Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) that is not
sold or otherwise disposed of in the ordinary course of business and
any gain or loss realized upon the sale or other disposition of any
Equity Interest of any Person;
(v) any extraordinary gain or loss;
(vi) exchange or translation gains or losses on foreign
currencies; and
(vii) the cumulative effect of a change in accounting
principles.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its Restricted Subsidiaries, determined
on a Consolidated basis, as of the end of the most recent fiscal quarter of the
Company ending prior to the taking of any action for the purpose of which the
determination is being made and for which financial statements are available,
as (i) the par or stated amount of all outstanding Equity Interests of the
Company plus (ii) paid-in capital or capital surplus relating to such Equity
Interests plus (iii) any retained earnings or earned surplus less (A) any
accumulated deficit and less (B) any amounts attributable to Disqualified
Interests.
16
9
"Consolidation" means the consolidation of the amounts of each
of the Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied. The term "Consolidated" has a correlative meaning.
"Corporate Trust Office of the Trustee" means the address of
the Trustee specified in Section 11.02 or such other address as to which the
Trustee may give notice to the Issuers.
"Credit Agreement" means the credit agreement dated as of
September 4, 1997, among the Company, Mid-Am, The Chase Manhattan Bank, as
administrative agent, and the lenders party thereto from time to time, as
amended, waived or otherwise modified from time to time (except to the extent
that any such amendment, waiver or other modification thereto would, on the
date of such amendment, waiver or modification, be prohibited by the terms of
this Indenture, unless otherwise agreed to by the Holders of at least a
majority in aggregate principal amount of Securities at the time outstanding),
including any such amendments or modifications (or any other credit agreement
or credit agreements) that replace, refund or refinance, in whole or in part,
any of the commitments or loans thereunder.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form
of Exhibit A or Exhibit B attached hereto that do not include the Global
Securities Legend thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section 2.03
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depository" shall mean or include such successor.
17
10
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof, are committed to lend
up to, at least $50,000,000 and is specifically designated by the Company in
the instrument evidencing or governing such Senior Indebtedness as "Designated
Senior Indebtedness" for purposes of this Indenture.
"Disqualified Interest" means, with respect to any Person, any
Equity Interest which by its terms (or by the terms of any security or other
interest into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event (i) matures or is mandatorily
redeemable pursuant to a sinking fund obligation or otherwise, (ii) is
convertible or exchangeable for Indebtedness or Disqualified Interests
(excluding Equity Interests which are convertible or exchangeable solely at the
option of the Company or a Restricted Subsidiary) or (iii) is redeemable at the
option of the holder thereof, in whole or in part, in each case on or prior to
91 days after the Stated Maturity of the Securities; provided, that only the
portion of Equity Interests which so matures or is mandatorily redeemable, is
so convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such Stated Maturity shall be deemed to be Disqualified
Interests.
"EBITDA" for any period means the Consolidated Net Income for
such period plus, to the extent deducted in calculating such Consolidated Net
Income, (i) income tax expense or Partnership Tax Amount, (ii) Consolidated
Interest Expense; provided that the distributions or dividends referred to in
clause (viii) of the definition of Consolidated Interest Expense shall be
included only to the extent, if any, that such distributions or dividends are
deducted in calculating Consolidated Net Income, (iii) depreciation expense,
(iv) amortization expense and (v) all other non-cash charges (excluding all
such charges to the extent they represent future cash disbursements or cash
receipts reasonably expected to materialize prior to the Stated Maturity of the
Securities), in each case for such period. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization of, a Subsidiary of the Company shall be added to Consolidated Net
Income to compute
18
11
EBITDA only to the extent (and in the same proportion) that the net income of
such Subsidiary was included in calculating Consolidated Net Income and only if
a corresponding amount would be permitted at the date of determination to be
paid as a dividend to the Company by such Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Subsidiary or its equityholders.
"Eligible Partner" means Xx. Xxxx Xxxxxxxx as a holder of
direct or indirect partnership interests in the Company or any taxable
successor(s) to all or part of his direct or indirect partnership interests in
the Company.
"Equity Interest" in any partnership, limited liability
company or corporation means any general, limited, preferred or other interest
or evidence of equity participation in such partnership, any interest in such
limited liability company and any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such corporation, including any
Preferred Equity Interests, but excluding any debt securities convertible into
such equity.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange and Registration Rights Agreement" means the
Exchange and Registration Rights Agreement dated September 4, 1997, by and
among the Initial Purchaser and the Issuers, as such agreement may be amended,
modified, or supplemented from time to time in accordance with the terms
thereof.
"Exchange Securities" means the 9 7/8% Senior Subordinated
Series A Notes due 2007 to be issued pursuant to this Indenture in connection
with the offer to exchange Securities for the Initial Securities that may be
made by the Issuers pursuant to the Exchange and Registration Rights Agreement.
"Existing Agreement" means any written agreement to which
either of the Issuers was a party on the Issue Date as in effect on the Issue
Date.
19
12
"Xxxx-X-Xxxx Facility" means the dairy plant located in
Canton, Mississippi which on the Issue Date was subject to a lease by the
Company from Xxxx-X-Xxxx, Inc., a Kentucky cooperative association.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"General Partner" means the Partner of the Company that has
the power to direct the management and set the policies of the Company.
"Global Security" means a Security that is in the form of
Exhibit A or Exhibit B hereto that includes the Global Securities Legend
thereof.
"Governing Board" of the Company means (i) the Representative
Committee of the members or other controlling authority of the General Partner,
as long as the Company remains a limited partnership, (ii) the board of
directors of the Company, if the Company has reorganized as, or otherwise
changed form into, a corporation or (iii) the manager or managing members or
any controlling committee of members, if the Company has reorganized as a
limited liability company.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or
20
13
other obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep- well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Equity Interest
of a Person existing at the time such person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such person at the time it becomes a Restricted Subsidiary.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication),
(i) the principal of and premium or discount (if any) in
respect of indebtedness of such Person for borrowed money;
(ii) the principal of and premium or discount (if any) in
respect of obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement
obligations with respect thereto)(other than obligations with respect
to letters of credit securing obligations (other than obligations
described in clauses (i), (ii) and (iii) entered into
21
14
in the ordinary course of business of such Person to the extent that
such letters of credit are not drawn upon);
(iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services (except Trade Payables,
accrued expenses Incurred in the ordinary course of business and
contingent obligations to pay purchase price or earn-outs), which
purchase price is due more than six months after the date of placing
such property in service or taking delivery and title thereto or the
completion of such services;
(v) all Capitalized Lease Obligations and all Attributable
Debt of such Person;
(vi) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of Disqualified
Interests or, with respect to any Restricted Subsidiary, any Preferred
Equity Interests to the extent such obligation arises on or before 91
days following the Stated Maturity of the Securities (but excluding,
in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed
by such Person; provided, however, that the amount of Indebtedness of
such Person shall be the lesser of (A) the fair market value of such
asset at such date of determination and (B) the amount of such
Indebtedness of such other Persons;
(viii) all Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above as
such amount would be reflected on a balance sheet prepared in accordance with
GAAP and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
22
15
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Initial Purchaser" means Chase Securities Inc.
"Initial Securities" means the 9 7/8% Senior Subordinated
Notes due 2007, issued under this Indenture on or about the date hereof.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person) or other extension of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Equity Interests,
Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Initial Securities
are originally issued.
"Issuers" means the Company and SFG Capital and, for purposes
of any provision contained herein and required by the TIA, each other obligor
on the indenture securities.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Limited Partner" means any Partner of the Company that
generally has limited liability with respect to the obligations of the Company
and does not have the right to control, through its ownership of limited
partnership interests, the day-to-day operations of the Company.
"Meadow Gold Dairies" means the dairy operations of
Xxxxxx/Meadow Gold Dairies Holdings, Inc., a Delaware
23
16
corporation, operated under the Meadow Gold trademarks, as constituted prior to
the Transactions, and its predecessors.
"Mid-Am" means Mid-America Dairymen, Inc., a Kansas
cooperative marketing association, and its successors following any merger or
consolidation involving Mid-Am.
"Mid-Am Capital 9 1/2% Preferred Interests" means the
$30,000,000 stated amount of Series D 9 1/2% preferred limited partner
interests in the Company originally issued by the Company to Mid-Am Capital,
L.L.C., a Delaware limited liability company, on the Issue Date, as amended
(except to the extent that any such amendment thereto would be prohibited by
the terms of this Indenture, unless otherwise agreed to by the Holders of at
least a majority in aggregate principal amount of Securities at the time
outstanding).
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring person of Indebtedness or other
obligations relating to the properties or assets that are the subject of such
Asset Disposition or received in any other noncash form) therefrom, in each
case net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all federal, state, provincial, foreign
and local taxes required to be paid or accrued as a liability under GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to any person
owning a beneficial interest in assets subject to sale or minority interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, (iv) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition and (v) any portion of the
purchase price from an Asset Disposition placed in escrow (whether as a reserve
for adjustment of the purchase price, for satisfaction of indemnities in
respect of such Asset Disposition or
24
17
otherwise in connection with such Asset Disposition); provided, however, that
upon termination of any such escrow, Net Available Cash shall be increased by
any portion of funds therein released to the Company or any Restricted
Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Equity Interests, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters', initial purchasers' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance or sale and net
of taxes paid or payable as a result thereof.
"Note Guarantee" means any Guarantee of the Securities that
may from time to time be executed and delivered by a Restricted Subsidiary
pursuant to the terms of this Indenture. Each such Note Guarantee shall have
subordination provisions equivalent to those contained in this Indenture and
shall be substantially in the form of Exhibit D hereto.
"Note Guarantor" means any Restricted Subsidiary that has
issued a Note Guarantee.
"Officer" of either Issuer, as the case may be, means the
Chief Executive Officer, the Chief Financial Officer, the Chief Accounting
Officer, the President, any Vice President, the Treasurer or any Assistant
Treasurer or the Secretary or any Assistant Secretary of such Issuer and, in
the case of the Company, the General Partner acting on behalf of the Company.
"Officers' Certificate" of either Issuer, as the case may be,
means a certificate signed by two Officers of such Issuer.
"Opinion of Counsel" means a written opinion from
legal counsel who is acceptable to the Trustee. The counsel may be an employee
of, or counsel to, the Issuers or the Trustee.
"Partner" means any Person owning an Equity Interest in a
partnership.
"Partnership Tax Amount" means the amount of money directly or
indirectly payable as a distribution with respect to the Eligible Partner's
direct or indirect partnership interests in the Company (including such
25
18
Eligible Partner's direct or indirect interests in the General Partner) to
enable such Eligible Partner to pay Federal, state and local Income Taxes
(including quarterly estimated Income Taxes) with respect to the Company's net
income or any division or segment thereof allocable to such Eligible Partner.
For the purposes of this definition:
(a) "Income Taxes" means all Federal, state and local taxes,
fees, assessment 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 resect to
an Eligible Partner's allocable share of net income or any division or
segment thereof, and "Income Tax" means any one of such Income Taxes.
(b) The Partnership Tax Amount in any applicable fiscal year
shall equal the greater of (1) the product of (i) the sum of (A) the
highest marginal Federal tax rate (taking into account deductions or
credits for state and local taxes) applicable to the Eligible Partner
(at either individual or corporate rates, as applicable) with respect
to the Company's taxable income directly or indirectly allocable to
such Eligible Partner with respect to such applicable fiscal year, (B)
the highest state tax rate (taking into account deductions or credits
for local taxes) applicable to the Eligible Partner (at either
individual or corporate rates, as applicable) with respect to the
Company's taxable income directly or indirectly allocable to such
Eligible Partner with respect to such applicable fiscal year and (C)
the highest local tax rate applicable to the Eligible Partner (at
either individual or corporate rates, as applicable) with respect to
the Company's taxable income directly or indirectly allocable to such
Eligible Partner with respect to such applicable fiscal year,
multiplied by (ii) the Company's taxable income directly or indirectly
allocable to such Eligible Partner with respect to such fiscal year or
(2) the product of (i) the sum of (A) the highest Federal alternative
minimum tax rate (taking into account deductions or credits for state
and local taxes) applicable to the Eligible Partner (at either
individual or corporate rates, as applicable) with respect to the
Company's alternative minimum taxable income directly or indirectly
allocable to such Eligible Partner with respect to such applicable
fiscal year, (B) the highest state tax rate (taking into
26
19
account deductions or credits for local taxes) applicable to the
Eligible Partner (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 Eligible Partner with respect to such
applicable fiscal year and (C) the highest local tax rate applicable
to the Eligible Partner (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 Eligible Partner with respect to such
applicable fiscal year, multiplied by (ii) the Company's taxable
income or alternative minimum taxable income, as applicable, directly
or indirectly allocable to such Eligible Partner with respect to such
fiscal year. The Partnership Tax Amount for each applicable fiscal
year shall be appropriately adjusted to reflect (i) any tax losses of
the Company arising in any prior fiscal year (assuming that any such
losses are carried forward and used to offset the Company's taxable
income in the applicable fiscal year) and (ii) the Company's payment
of any withholding taxes that would give rise to a credit or other tax
benefit to the Company (or the Eligible Partner).
(c) Payments or distributions in connection with the
Partnership Tax Amount related to payments of estimated Federal Income
Tax shall be payable in quarterly installments with respect to the
applicable fiscal year, in each case no more than five days prior to
the Federal estimated tax due dates applicable to the Eligible
Partner. Such quarterly installments shall be based upon the
Company's then good faith estimate of its taxable income (or
alternative minimum taxable income, as applicable) directly or
indirectly allocable to the Eligible Partner (as calculated in the
manner described in paragraph (b) above), subject to appropriate
adjustment to reflect over and under payment of any prior quarterly
periods during the applicable fiscal year, and in each quarter shall
be no greater than the applicable estimated tax payment to be paid by
such Eligible Partner to the applicable Governmental Authority.
(d) Payments or distributions in connection with the
Partnership Tax Amount related to the filing of extensions of time for
filing Income Tax returns for a fiscal year shall be payable in each
case no more than
27
20
five days prior to the applicable date on which such payment of Income
Tax is due, shall be based upon the Company's then good faith estimate
of its taxable income (or alternative minimum taxable income, as
applicable) directly or indirectly allocable to the Eligible Partner
for such fiscal year, and shall be no greater than the applicable tax
payment to be paid by such Eligible Partner to the applicable
Governmental Authority.
(e) The aggregate amount of all payments made in connection
with the Partnership Tax Amount with respect to the applicable fiscal
year shall be based upon the Company's taxable income (or alternative
minimum taxable income, as applicable) directly or indirectly
allocable to the Eligible Partner with respect to such applicable
fiscal year as shown on the Company's filed Federal Income Tax return
for such fiscal year, or if such return is not filed when the
financial statements referred to in Section 5.01(a) of the Credit
Agreement for such fiscal year are delivered, the Company's then good
faith estimate of the amount of its taxable income (or alternative
minimum taxable income, as applicable), taking into account any
separately stated items, for such fiscal year. In the event that the
Company files an amended Income Tax return (or upon the Company's
filing of its original return for the applicable fiscal year if the
Partnership Tax Amount was based upon the Company's good faith
estimate of its taxable income or alternative minimum taxable income,
as applicable, that is inconsistent with its calculation of its
taxable income (or alternative minimum taxable income, as applicable)
for any such fiscal year(s)), or in the event that a Governmental
Authority determines that information reflected in any of the
Company's Income Tax returns for such fiscal year is inaccurate or
incomplete, then the Company shall make a proper adjustment (including
any penalties, interest or other charges related to the adjustment or
correction of information reflected in such returns(s) or the filing
of such return(s)) to the amount payable in connection with the
Partnership Tax Amount for such fiscal year(s). According to whether
such adjustments to the amounts payable in connection with the
Partnership Tax Amount for the applicable year are positive or
negative with respect to the Eligible Partner, the Company shall, as
applicable, either promptly pay to the Eligible Partner as a
distribution as needed to fund payment to a Governmental Authority by
such Eligible Partner, or shall require the Eligible Partner to
28
21
promptly pay to it, the amount of any such adjustment (and no further
payments in connection with the Partnership Tax Amount shall be paid
until the Eligible Partner has repaid any such excess to the Company).
Payments or distributions to the Eligible Partner upon the Eligible
Partner's filing original Income Tax returns for a fiscal year shall
be payable in each case no more than five days prior to the applicable
date on which the Income Tax payment is due in connection with such
return filing, and shall be no greater than the applicable tax payment
to be paid by such Eligible Partner to the applicable Governmental
Authority.
(f) In the event that the aggregate amount of payments in
connection with the Partnership Tax Amount actually distributed in
respect of any fiscal year exceeds the amounts determined as indicated
in paragraph (e) above for such fiscal year, the Eligible Partner
shall promptly repay any such excess to the Company (and no further
payments in connection with the Partnership Tax Amount shall be paid
until the Eligible Partner has repaid any such excess to the Company).
(g) For all periods from and after the inception of the
Company as a partnership, the amount of the aggregate payments in
connection with the Partnership Tax Amount made with respect to the
direct or indirect partnership interests held by an Eligible Partner
for each fiscal year shall be appropriately adjusted in the current
fiscal year or in future fiscal years, regardless of whether such
Eligible Partner has held, or now or in the future holds, a direct or
indirect partnership interest in the Company (to allow additional
payments in connection with the Partnership Tax Amount for the benefit
of such Eligible Partner in the case of tax increases or in the case
of tax decreases by the Eligible Partner paying any tax decrease to
the Company) to reflect any adjustments in Income Tax liabilities as a
result of adjustments made for any reason to items of income, gain,
loss, deduction or credit of the Company, or adjustments made in the
Eligible Partner's allocable shares of such items (regardless of
whether occurring as a result of the Company's filing of an amended
return or as a result of an examination or audit by a Governmental
Authority). For the period up to and including Xx. Xxxxxxxx'x
purchase of Xx. Xxxxx'x direct or indirect partnership interests in
the Company, "Eligible Partner" shall also include Xx. Xxxxx Xxxxx as
a former holder of a partnership interest in the Company.
29
22
(h) In the event that, for any reason, all or any portion of
the Partnership Tax Amount cannot be distributed to an Eligible
Partner, such deficiency in payments in connection with the
Partnership Tax Amount shall be distributed to such Eligible Partner
in any subsequent fiscal year.
"Permitted Holders" means Mid-Am or any of its Subsidiaries,
Xxxxxxxx and any Person acting in the capacity of an underwriter or initial
purchaser in connection with a public or private offering of Equity Interests
in the Company.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary (other
than SFG Capital); provided, however, that such Person's primary business is a
Related Business; (iii) Temporary Cash Investments; (iv) receivables owing to
the Company or any Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include
such concessionary trade terms as the Company or any such Restricted Subsidiary
deems reasonable under the circumstances; (v) payroll, travel and similar
advances to cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes and that are made
in the ordinary course of business; (vi) loans or advances to employees made in
the ordinary course of business consistent with past practices of the Company
or such Restricted Subsidiary and not exceeding $2,000,000 in the aggregate
outstanding at any one time; and (vii) Equity Interests, obligations or
securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any Restricted Subsidiary or in
satisfaction of judgments.
30
23
"Permitted Liens" means with respect to the Company and its
Subsidiaries:
(a) Liens to secure Indebtedness permitted under the
provisions described under clause (b)(i) or (ii) of Section 4.03;
(b) pledges or deposits made or other Liens granted by the
Company and its Restricted Subsidiaries (1) under workmen's
compensation laws, unemployment insurance laws or similar legislation,
(2) in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which the Company or a
Restricted Subsidiary is a party or (3) to secure public or statutory
obligations of the Company or a Restricted Subsidiary or deposits of
cash or United States government bonds to secure surety or appeal
bonds to which the Company or a Restricted Subsidiary is a party, or
deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of
business;
(c) Liens imposed by law, such as carriers', warehousemen's,
mechanics', employees' and other like Liens, in each case for sums not
yet due or being contested in good faith by appropriate proceedings or
other Liens arising out of judgments, awards, decrees or orders of any
court or other Governmental Authority against the Company or a
Restricted Subsidiary with respect to which the Company or a
Restricted Subsidiary shall then be proceeding with an appeal or other
proceedings for review;
(d) Liens for property taxes not yet due or payable or subject
to penalties for non-payment or which are being contested in good
faith and by appropriate proceedings;
(e) Liens in favor of issuers of surety, performance,
judgment, appeal and other like bonds or letters of credit issued
pursuant to the request of and for the account of the Company or a
Restricted Subsidiary in the ordinary course of its business;
(f) minor survey exceptions, minor encumbrances, easements, or
reservations of, or rights of others for,
31
24
licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning provisions,
carveouts, conditional waivers or other restrictions as to the use of
real properties or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, Liens and other
encumbrances Incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
property, with or without consent of the lessee) or Liens incidental
to the conduct of the business of the Company and its Restricted
Subsidiaries or to the ownership of their properties which were not
Incurred in connection with Indebtedness and which do not in the
aggregate materially impair the use of such properties in the
operation of the business of the Company and its Restricted
Subsidiaries;
(g) Liens existing or provided for under written arrangements
existing on the Issue Date;
(h) Liens securing Indebtedness or other obligations of a
Restricted Subsidiary owing to the Company or a Wholly Owned
Subsidiary;
(i) Liens securing Hedging Obligations so long as the related
Indebtedness is, and is permitted to be under this Indenture, secured
by a Lien on the same property securing such Hedging Obligations;
(j) Liens to secure any refinancing, refunding, replacement,
renewal, repayment or extension (or successive refinancings,
refundings, replacements, renewals, repayments or extensions) as a
whole, or in part, of any Indebtedness secured by any Lien referred to
in clause (g), (i), (l), (m) or (n) of this definition; provided,
however, that (x) such new Lien shall be limited to all or part of the
same property that secured the original Lien (plus improvements on
such property) and (y) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (g), (i), (l), (m) and (n) at the
time original Lien became a Permitted Lien and (B) an amount necessary
to pay any fees and expenses, including premiums, related to such
refinancing, refunding, replacement, renewal, repayment or extension;
32
25
(k)(i) Liens or restrictions that have been placed by any
developer, landlord or other third party on property over which the
Company or any Restricted Subsidiary has easement rights or on any
real property leased by the Company and subordination or similar
agreements relating thereto and (ii) any condemnation or eminent
domain proceedings affecting any real property;
(l) Liens on property, assets or Equity Interests of a Person
at the time such Person becomes a Subsidiary of the Company; provided,
however, such Liens are not created, Incurred or assumed by such
Person in connection with, or in contemplation of, such other Person
becoming a Subsidiary of the Company; provided further, however, that
such Liens may not extend to any other property owned by the Company
or any Restricted Subsidiary;
(m) Liens on property or assets at the time the Company or a
Restricted Subsidiary acquired the property or assets, including any
acquisition by means of a merger or consolidation with or into the
Company or a Restricted Subsidiary; provided, however, that such Liens
are not created in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend
to any other property owned by the Company or any Restricted
Subsidiary; and
(n) any Lien on Equity Interests or other securities of an
Unrestricted Subsidiary that secures Indebtedness of such Unrestricted
Subsidiary.
"Person" means any individual, corporation, partnership,
limited partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization, government or any
agency or political subdivision thereof or any other entity.
"Preferred Equity Interests", as applied to the Equity
Interests of any partnership, limited liability company or corporation, means
Equity Interests of any class
33
26
or classes (however designated) which are preferred as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such partnership, limited liability company or
corporation, over Equity Interests of any other class of such partnership,
limited liability company or corporation.
"principal" of a Security means the principal of the Security
plus the premium (if any) payable on the Security which is due or overdue or is
to become due at the relevant time.
"Public Equity Offering" means an underwritten primary public
offering of Equity Interests of the Company pursuant to an effective
registration statement under the Securities Act.
"Public Market" means any time after (i) a Public Equity
Offering has been consummated and (ii) at least 15% of the total issued and
outstanding Equity Interests of the Company have been distributed by means of
an effective registration statement under the Securities Act.
"Purchase Agreement" means the agreement for the purchase of
$150,000,000 aggregate principal amount of senior subordinated Securities among
the Issuers and the Initial Purchaser dated August 27, 1997.
"Purchase Money Mortgages" means Indebtedness consisting of
the deferred purchase price of an asset or assets including any conditional
sale obligation, any obligation under any title retention agreement or other
purchase money obligation; provided that (i) such Indebtedness is Incurred
within 180 days of the acquisition of such asset or assets by the Company or
its Restricted Subsidiaries, (ii) the Average Life of such Indebtedness is less
than the anticipated useful life of such asset or assets and (iii) such
Indebtedness is secured by a first priority Lien on such asset or assets.
"Redemption Date" means the date on which the Securities are
optionally redeemed pursuant to Section 3.07.
"Refinancing Indebtedness" means Indebtedness that is Incurred
to refund, refinance, replace, renew, repay or extend (including pursuant to
any defeasance or
34
27
discharge mechanism) (collectively, "refinances", and "refinanced" shall have a
correlative meaning), in whole or in part, any Indebtedness existing on the
date of this Indenture or Incurred in compliance with this Indenture (including
Indebtedness of the Company or SFG Capital that refinances Indebtedness of any
Restricted Subsidiary (to the extent permitted in this Indenture) and
Indebtedness of any Restricted Subsidiary that refinances Indebtedness of
another Restricted Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that, with respect to any
Refinancing Indebtedness (other than Bank Indebtedness), (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced or 91 days following the Stated Maturity of the
Securities, if shorter, (ii) the Refinancing Indebtedness has an Average Life
at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and (iii)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is equal
to or less than the aggregate principal amount (or if issued with original
issue discount, the aggregate accreted value) then outstanding of the
Indebtedness being refinanced; provided further, however, that Refinancing
Indebtedness shall not include Indebtedness of a Restricted Subsidiary (other
than SFG Capital) that refinances Indebtedness of the Company or SFG Capital.
"Registered Exchange Offer" shall have the meaning set forth
in the Exchange and Registration Rights Agreement.
"Related Business" means any business which is the same as or
related, ancillary or complementary to the businesses of the Company on the
Issue Date.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Indebtedness.
"Restricted Payment" with respect to any Person means (i) the
distribution of any sort in respect of its Equity Interests, including any
payment in connection with any merger or consolidation involving such Person
(other than dividends or distributions payable solely in its
35
28
Equity Interests (other than Disqualified Interests) or in options, warrants or
other rights to purchase its Equity Interests, as the case may be, or dividends
or distributions payable solely to such Person and its wholly owned
Subsidiaries), (ii) the purchase, redemption or other acquisition or retirement
for value of any Equity Interest of such Person or any direct or indirect
parent of such Person, (iii) the purchase, repurchase, redemption or other
acquisition or retirement for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, of any Subordinated Obligation of
such Person (other than the purchase, repurchase, or other acquisition of a
Subordinated Obligation acquired in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity due within one year of the
date of the acquisition of such Subordinated Obligation) or (iv) the making of
any Investment (other than a Permitted Investment) in any Unrestricted
Subsidiary or in any Affiliate of such Person other than a wholly owned
Subsidiary of such Person or a Person which will become a wholly owned
Subsidiary of such Person as a result of such Investment.
"Restricted Securities Legend" means the legend of the same
name set forth in Exhibit A hereto.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person, and the Company or such
Restricted Subsidiary leases it from such Person, other than leases between the
Company and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries.
"Xxxxxxxx" means Xxxx Xxxxxxxx and any entity in which
Xxxxxxxx and members of his family (consisting of persons described in Section
318(a)(1) of the Code) own more than a 50% interest.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of either of the
Issuers secured by a Lien.
36
29
"Securities" means, collectively, the Initial Securities and,
when and if issued as provided in the Exchange and Registration Rights
Agreement, the Exchange Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depository), or any successor entity
thereto and shall initially be the Trustee.
"Senior Credit Documents" means the collective reference to
the Credit Agreement, the notes issued pursuant thereto and the Guarantees
thereof, and the Security Agreements, the Mortgages and the Pledge Agreements
(each as defined in the Credit Agreement).
"Senior Indebtedness" of the Company or SFG Capital means all
principal of, premium (if any), accrued and unpaid interest (if any)(including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or SFG Capital whether or not a claim
for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, Guarantees and other amounts owing with
respect to all Indebtedness of the Company or SFG Capital, and including all
Bank Indebtedness, and all Refinancing Indebtedness with respect thereto,
whether outstanding on the Issue Date or thereafter Incurred, unless in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding it is expressly provided that such obligations are not superior in
right of payment to the Securities; provided, however, that Senior Indebtedness
shall not include (i) any obligation of the Company to any Subsidiary of the
Company, (ii) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities), (iii) any Indebtedness or obligation
of the Company or SFG Capital which is subordinate or junior in any respect to
any other Indebtedness or obligation of the Company or SFG Capital, as the case
may be, including any Senior Subordinated Indebtedness and any Subordinated
Obligations, (iv) any obligations with respect to any Equity Interest, (v) any
Indebtedness Incurred in violation of this
37
30
Indenture or (vi) any liability for federal, foreign, state, local or other
taxes owed or owing by the Company or SFG Capital.
"Senior Subordinated Indebtedness" means the Securities and
any other Indebtedness of the Company or SFG Capital that specifically provides
that such Indebtedness is to rank pari passu with the Securities and is not
subordinated by its terms to any Indebtedness or other obligation of the
Company or SFG Capital, as the case may be, which is not Senior Indebtedness.
"Series E 10% Preferred Interests" means the Series E 10%
Payment-in-Kind Preferred Limited Partner Interests of the Company.
"SFG Capital" means SFG Capital Corporation, a Delaware
corporation.
"Significant Subsidiary" means any Subsidiary of the Company,
other than SFG Capital, that would be a "Significant Subsidiary" of the Company
within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer thereof unless
such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company or SFG Capital (whether outstanding on the Issue Date or thereafter
Incurred) that is subordinate or junior in right of payment to the Securities
pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of the Equity Interests entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, representatives, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
38
31
(i) such Person or (ii) one or more Subsidiaries of such Person or both;
provided, however, that the Company shall not be deemed to be a Subsidiary of
Mid-Am.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations Guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250,000,000 (or the foreign
currency equivalent thereof) and whose long-term debt is rated "A" (or such
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organized (as defined in Rule 436 under the Securities Act),
(iii) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (i) above entered into
with a bank meeting the qualifications described in clause (ii) above, (iv)
investments in commercial paper, maturing not more than 90 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America or any foreign country recognized by the United States of America with
a rating at the time as of which any investment therein is made of "P-1" (or
higher) according to Xxxxx'x Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Service, a division of The XxXxxx-Xxxx
Companies, Inc. ("S&P"), (v) investments in securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States of America, or by any
political subdivision or taxing authority thereof, and rated at least "A" by
S&P or "A" by Xxxxx'x Investors Service, Inc. and (vi) investments in mutual
funds and bank collective investments or trust funds whose investment
guidelines restrict such funds' investments to those satisfying the provisions
of clauses (i) through (v) above.
39
32
"Term Loans" means the Tranche A Term Loans and the Tranche B
Term Loans outstanding under the Credit Agreement.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture, or such
other date as may be established by the TIA.
"Trade Payables" means, with respect to any Person, any
accounts payable or any indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person arising in the ordinary course of
business in connection with the acquisition of goods or services.
"Transactions" means the series of related transactions
occurring substantially simultaneously with the original offering of the
Initial Securities for resale by the Initial Purchaser as more fully described
and defined in the offering memorandum dated August 27, 1997 prepared by the
Issuers in conjunction with such offering.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the terms of this Indenture
and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the
Trustee to administer its corporate trust matters with responsibility for the
administration of this Indenture, and, in the case of any certification
required to be signed by a Trust Officer, such officer who is authorized by the
Trustee from time to time to execute such certificates.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the
40
33
Governing Board in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Governing Board may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company), other than SFG Capital, to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Equity Interest in, or
Indebtedness of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary that is not a Subsidiary to be so designated;
provided, however, that either (A) the Subsidiary to be so designated has total
consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under Section 4.04. The Governing Board may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.03(a) and (y) no Default shall
have occurred and be continuing. Any such designation by the Governing Board
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the authorization of the Governing Board giving effect to such designation and
an Officers' Certificate of the Company certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the option of the issuer
thereof.
"Voting Equity Interests" of a partnership, limited liability
company or corporation means all classes of Equity Interests of such
partnership, limited liability company or corporation then outstanding and that
normally entitle the holders of such interests to participate in the management
or to elect those participating in the management of such partnership, limited
liability company or corporation.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Equity Interests of which (other than
41
34
directors' qualifying Equity Interests) are owned by the Company or another
Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . 4.07
"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . 2.13(a)
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . 10.03
"covenant defeasance option" . . . . . . . . . . . . . . . . . . 8.01(b)
"cross acceleration provision" . . . . . . . . . . . . . . . . . 6.01
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . 6.01
"IAIs" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
"IAI Global Note" . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
"judgment default provision" . . . . . . . . . . . . . . . . . . 6.01
"legal defeasance option" . . . . . . . . . . . . . . . . . . . . 8.01(b)
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . 11.08
"Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Offshore Securities Exchange Date" 2.01(c)
"Permanent Offshore Physical
Securities" . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(c)
"pay the Securities" . . . . . . . . . . . . . . . . . . . . . . 10.03
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . 10.03
"Physical Securities" . . . . . . . . . . . . . . . . . . . . . . 2.01(e)
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"QIBs" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
"Rule 144A" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Successor Company" . . . . . . . . . . . . . . . . . . . . . . . 5.01
"Temporary Offshore Physical
Securities" . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(c)
"U.S. Global Security" . . . . . . . . . . . . . . . . . . . . . 2.01(b)
"U.S. Physical Securities" . . . . . . . . . . . . . . . . . . . 2.01(b)
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA, which
are incorporated by
42
35
reference in and made a part of this Indenture. The following TIA terms have
the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means each of the
Issuers and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any non-interest bearing or other
discount security at any date shall
43
36
be the principal amount thereof that would be shown on a balance sheet
of the issuer thereof dated such date prepared in accordance with GAAP
and accretion of principal on such security shall be deemed to be the
Incurrence of Indebtedness; and
(8) the principal amount of any Preferred Equity Interest
shall be (i) the maximum liquidation value of such Preferred Equity
Interest or (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Equity interest,
whichever is greater.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. (a) The Initial Securities and
the Trustee's certificate of authentication shall be substantially in the form
of Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article 2. Any Exchange
Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit B, which is incorporated in and expressly
made a part of this Indenture, and as otherwise provided in this Article 2.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule, agreements to which the Issuers or the Note Guarantors (if
any) are subject (provided that any such notation, legend or endorsement is in
a form acceptable to the Issuers). Each Security shall be dated the date of
its authentication. The terms of the Securities set forth in Exhibit A and B
are part of the terms of this Indenture. The Securities shall be issuable only
in registered form without coupons and only in denominations of $1,000 and
integral multiples thereof.
(b) The Initial Securities are being jointly offered and sold
by the Issuers pursuant to the Purchase Agreement. Initial Securities offered
and sold to "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act ("Rule 144A")) ("QIBs") in accordance with Rule 144A as provided
in the Purchase Agreement, shall be issued on the Issue Date initially in the
form of a permanent Global Security substantially in
44
37
the form set forth in Exhibit A (the "QIB Global Security"). On the Issue
Date, a similar Global security (the "IAI Global Security", and with the QIB
Global Security each a "U.S. Global Security") will also be issued to
accommodate transfers of Securities from QIBs to institutional "Accredited
Investors" (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) ("IAIs"). On the Issue Date, each U.S. Global Security will be
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Issuers and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of each U.S. Global Security may from time to time
be increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Transfers of Initial Securities from QIBs to IAIs, and from IAIs to QIBs, will
be represented by appropriate increases and decreases to the respective amounts
of the appropriate U.S. Global Securities, as more fully provided in Section
2.13.
(c) Initial Securities offered and sold in reliance on
Regulation S, if any, shall be issued initially in the form of temporary
certificated Securities in registered form substantially in the form set forth
in Exhibit A (the "Temporary Offshore Physical Securities"). The Temporary
Offshore Physical Securities will be registered in the name of, and held by, a
temporary certificate holder designated by the Initial Purchaser until the
later of the completion of the distribution of the Initial Securities and the
termination of the "restricted period" (as defined in Regulation S) with
respect to the offer and sale of the Initial Securities (the "Offshore
Securities Exchange Date"). The Issuers shall promptly notify the Trustee in
writing of the occurrence of the Offshore Securities Exchange Date and, at any
time following the Offshore Securities Exchange Date, upon receipt by the
Trustee and the Issuers of a certificate substantially in the form set forth in
Exhibit E, the Issuers shall execute, and the Trustee shall authenticate and
make available for delivery, one or more permanent certificated Securities in
registered form substantially in the form set forth in Exhibit A (the
"Permanent Offshore Physical Securities") in exchange for the Temporary
Offshore Physical Securities of like tenor and amount.
45
38
(d) Initial Securities offered and sold other than as
described in the preceding two paragraphs, if any, shall be issued in the form
of permanent certificated Securities in registered form in substantially the
form set forth in Exhibit A (the "U.S. Physical Securities").
(e) The Temporary Offshore Physical Securities, Permanent
Offshore Physical Securities and U.S. Physical Securities are at times
collectively herein referred to as the "Physical Securities".
SECTION 2.02. Execution and Authentication. One or more
Officers of each of the Issuers shall sign the Securities for such Issuer by
manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and make available for delivery
(1) Initial Securities for original issue in an aggregate principal amount of
$150,000,000 and (2) Exchange Securities for issue only in a Registered
Exchange Offer, pursuant to the Exchange and Registration Rights Agreement, for
Initial Securities for a like principal amount of Initial Securities exchanged
pursuant thereto, in each case upon a written order of the Issuers signed by
two Officers of the Company and two Officers of SFG Capital. Such order shall
specify the amount of the Securities to be authenticated, the date on which the
original issue of Securities is to be authenticated and whether the Securities
are to be Initial Securities or Exchange Securities. The aggregate principal
amount of Securities outstanding at any time may not exceed $150,000,000 except
as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Securities. Any such appointment
shall be evidenced by an
46
39
instrument signed by an authorized officer of the Trustee, a copy of which
shall be furnished to the Issuers. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Issuers shall
jointly maintain an office or agency where Securities may be presented for
registration of transfer or for exchange (the "Registrar") and an office or
agency where Securities may be presented for payment (the "Paying Agent"). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Issuers may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional
paying agent.
The Issuers shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co- registrar not a party to this
Indenture, which shall incorporate the terms of the TIA. The agreement shall
implement the provisions of this Indenture that relate to such agent. The
Issuers shall notify the Trustee of the name and address of any such agent. If
the Issuers fail to maintain a Registrar or Paying Agent, the Trustee shall act
as such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.07. Either of the Issuers or any domestically organized Wholly Owned
Subsidiary may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Issuers initially appoint the Trustee as Registrar and
Paying Agent in connection with the Securities.
The Issuers initially appoint The Depository Trust Company to
act as Depositary with respect to the Global Securities, and the Trustee shall
initially be the Securities Custodian with respect to the Global Securities.
The Issuers may remove any Registrar or Paying Agent upon
written notice to such Registrar or Paying Agent and to the Trustee; provided
that no such removal shall become effective until (1) acceptance of an
appointment by
47
40
a successor as evidenced by an appropriate agreement entered into by the Issuers
and such successor Registrar or Paying Agent, as the case may be, and delivered
to the Trustee or (2) notification to the Trustee that the Trustee shall serve
as Registrar or Paying Agent until the appointment of a successor in accordance
with clause (1) above. The Registrar or Paying Agent may resign at any time
upon written notice; provided, however, that the Trustee may resign as Paying
Agent or Registrar only if the Trustee also resigns as Trustee in accordance
with Section 7.08.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Issuers shall
deposit with the Paying Agent (or if either of the Issuers or a permitted
Wholly Owned Subsidiary is acting as Paying Agent, segregate and hold in trust
for the benefit of the Persons entitled thereto) a sum sufficient to pay such
principal and interest when so becoming due. The Issuers shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of Securityholders or the Trustee all money
held by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Issuers in making
any such payment. If either of the Issuers or a permitted Wholly Owned
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
Any money deposited with any Paying Agent, or then held by
either of the Issuers or a permitted Wholly Owned Subsidiary in trust for the
payment of principal or interest on any Security and remaining unclaimed for
two years after such principal and interest has become due and payable shall be
paid to the Issuers at their request, or, if then held by either of the Issuers
or a permitted Wholly Owned Subsidiary, shall be discharged from such trust;
and the Securityholders shall thereafter, as unsecured general creditors, look
only to the Issuers for payment thereof, and all liability of the Paying Agent
with respect to such money, and all liability of either of the Issuers or such
permitted Wholly Owned Subsidiary as trustee thereof, shall thereupon cease.
48
41
SECTION 2.05. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee
is not the Registrar, the Issuers shall furnish, or cause the Registrar to
furnish, to the Trustee, in writing at least five Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of
a Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the
Registrar shall register the transfer as requested if the requirements of
Section 8-401(l) of the Uniform Commercial Code are met. When Securities are
presented to the Registrar or a co-registrar with a request to exchange them
for an equal principal amount of Securities of other denominations, the
Registrar shall make the exchange as requested if the same requirements are
met. To permit registration of transfers and exchanges, the Issuers shall
execute and the Trustee shall authenticate Securities at the Registrar's or
co-registrar's request. The Issuers may require payment of a sum sufficient to
pay all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Issuers shall not be
required to make, and the Registrar need not register, transfers or exchanges
of Securities selected for redemption (except, in the case of Securities to be
redeemed in part, the portion thereof not to be redeemed) or transfers or
exchanges of any Securities for a period of 15 days before a selection of
Securities to be redeemed.
Prior to the due presentation for registration of transfer of
any Security, the Issuers, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and accrued and unpaid
49
42
interest (if any) on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Issuers, the Trustee,
the Paying Agent, the Registrar or any co-registrar shall be affected by notice
to the contrary.
Any Holder of a U.S. Global Security shall, by acceptance of
such Global Security, agree that transfers of beneficial interests in such
Global Security may be effected only through a book-entry system maintained by
the Holder of such Global Security (or its agent), and that ownership of a
beneficial interest in such Global Security shall be required to be reflected
in a book entry.
All Securities issued upon any transfer or exchange pursuant
to this Section 2.06 will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated
Security is surrendered to the Registrar or if the Holder of a Security claims
that the Security has been lost, destroyed or wrongfully taken, the Issuers
shall issue and the Trustee shall authenticate a replacement Security if the
requirements of Section 8-405 of the Uniform Commercial Code are met, such that
the Holder (i) satisfies the Issuers or the Trustee within a reasonable time
after he has notice of such loss, destruction or wrongful taking and the
Registrar does not register a transfer prior to receiving such notification,
(ii) makes such request to the Issuers or the Trustee prior to the Security
being acquired by a bona fide purchaser and (iii) satisfies any other
reasonable requirements of the Trustee. If required by the Trustee or the
Issuers, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Trustee to protect the Issuers, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss that any of them may suffer if a
Security is replaced. The Issuers and the Trustee may charge the Holder for
their expenses in replacing a Security. In the event any such mutilated, lost,
destroyed or wrongfully taken Security has become or is about to become due and
payable, the Issuers in their discretion may pay such Security instead of
issuing a new Security in replacement thereof.
50
43
Every replacement Security is an additional joint obligation
of the Issuers.
The provisions of this Section 2.07 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because either of the Issuers or an Affiliate of either of the Issuers holds
the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Issuers receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by either of the Issuers or any of their Affiliates shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be disregarded.
SECTION 2.09. Temporary Securities. Until Definitive
Securities and Global Securities are ready for delivery, the Issuers may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities
51
44
shall be substantially in the form of Definitive Securities but may have
variations that the Issuers consider appropriate for temporary Securities.
Without unreasonable delay, the Issuers shall prepare and the Trustee shall
authenticate Definitive Securities and deliver them in exchange for temporary
Securities upon surrender of such temporary Securities at the office or agency
of the Issuers, without charge to the Holder.
SECTION 2.10. Cancelation. The Issuers at any time may
deliver Securities to the Trustee for cancelation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel all Securities surrendered for registration of transfer, exchange,
payment or cancelation and deliver canceled Securities to the Issuers pursuant
to written direction by an Officer of the Company and an Officer of SFG
Capital. The Issuers may not issue new Securities to replace Securities they
have redeemed, paid or delivered to the Trustee for cancelation. The Trustee
shall not authenticate Securities in place of canceled Securities other than
pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Issuers default in
a payment of interest on the Securities, the Issuers shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Issuers may pay the defaulted interest to the persons who
are Securityholders on a subsequent special record date. The Issuers shall fix
or cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail or cause to be
mailed to each Securityholder a notice that states the special record date, the
payment date and the amount of defaulted interest to be paid.
The Issuers may make payment of any defaulted interest in any
other lawful manner not inconsistent with the requirements (if applicable) of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Issuers to the Trustee of the proposed payment pursuant to this paragraph, such
manner of payment shall be deemed practicable by the Trustee.
52
45
SECTION 2.12. CUSIP Numbers. The Issuers in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the 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 2.13. Book-Entry Provisions for U.S. Global Security.
(a) Each U.S. Global Security initially shall (i) be
registered in the name of the Depositary for such U.S. Global Security or the
nominee of such Depositary and (ii) be delivered to the Trustee as the initial
Securities Custodian for such Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any U.S.
Global Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under such U.S. Global Security, and the Depositary may be
treated by the Issuers, the Trustee and any agent of the Issuers or the Trustee
as the absolute owner of such U.S. Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuers, the
Trustee or any agent of the Issuers or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of a U.S. Global Security shall be limited
to transfers of such U.S. Global Security in whole, but not in part, to the
Depositary, its successors or their respective nominees. Interests of
beneficial owners in a U.S. Global Security may be transferred in accordance
with the rules and procedures of the Depositary and the provisions of Section
2.14. If required to do so pursuant to any applicable law or regulation,
beneficial owners may obtain U.S. Physical Securities in exchange for their
53
46
beneficial interests in a U.S. Global Security upon written request in
accordance with the Depositary's and the Registrar's procedures. In addition,
U.S. Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in a U.S. Global Security if (i) the
Depositary notifies the Issuers that it is unwilling or unable to continue as
Depositary for such U.S. Global Security or the Depositary ceases to be a
clearing agency registered under the Exchange Act, at a time when the
Depositary is required to be so registered in order to act as Depositary, and
in each case a successor depositary is not appointed by the Issuers within 90
days of such notice or, (ii) the Issuers execute and deliver to the Trustee and
Security Registrar an Officers' Certificate of each of the Issuers stating that
such U.S. Global Security shall be so exchangeable or (iii) an Event of Default
has occurred and is continuing and the Registrar has received a request from
the Depositary.
(c) In connection with any transfer of a portion of the
beneficial interest in a U.S. Global Security pursuant to subsection (b) of
this Section to beneficial owners who are required to hold U.S. Physical
Securities, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of such U.S. Global Security in an amount
equal to the principal amount of the beneficial interest in the U.S. Global
Security to be transferred, and the Issuers shall execute, and the Trustee
shall authenticate and deliver, one or more U.S. Physical Securities of like
tenor and amount.
(d) In connection with the transfer of an entire U.S.
Global Security to beneficial owners pursuant to subsection (b) of this
Section, such U.S. Global Security shall be deemed to be surrendered to the
Trustee for cancelation, and the Issuers shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depositary
in exchange for its beneficial interest in such U.S. Global Security, an equal
aggregate principal amount of U.S. Physical Securities of authorized
denominations.
(e) Any U.S. Physical Security delivered in exchange for
an interest in a U.S. Global Security pursuant to subsection (c) or subsection
(d) of this Section shall, except as otherwise provided by paragraph (f) of
Section 2.14, bear the Restricted Securities Legend.
54
47
(f) The registered holder of a U.S. Global Security may
grant proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Securities.
SECTION 2.14. Special Transfer Provisions.
Unless and until an Initial Security is transferred or
exchanged under an effective registration statement under the Securities Act,
the following provisions shall apply:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to the
registration of any proposed transfer of an Initial Security to any IAI which
is not a QIB (excluding Non-U.S. Persons) that is consistent with the
Restricted Securities Legend:
(i) The Registrar shall register the transfer of such
Initial Security if (x) the requested transfer is after the date that
is two years after the later of the Issue Date and the last date on
which either of the Issuers or any of their Affiliates was the owner
of such Initial Security (such later date, the "Resale Restriction
Termination Date") or (y) the proposed transferee has delivered to the
Registrar a certificate substantially in the form set forth in Exhibit
C.
(ii) If the proposed transferee is an Agent Member, and
the Initial Security to be transferred consists of U.S. Physical
Securities or an interest in the QIB Global Security, upon receipt by
the Registrar of (x) the document, if any, required by paragraph (i)
and (y) instructions given in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and an increase in the principal amount of
the IAI Global Security in an amount equal to (x) the principal amount
of the U.S. Physical Securities to be transferred, and the Trustee
shall cancel the U.S. Physical Security so transferred or (y) the
amount of the beneficial interest in the QIB Global Security to be so
transferred (in which case
55
48
the Registrar shall reflect on its books and records the date and an
appropriate decrease in the principal amount of the QIB Global
Security).
(iii) If the proposed transferee is entitled to receive a
U.S. Physical Security as provided in Section 2.13 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Security, upon receipt by the Registrar of (x) the documents,
if any, required by paragraph (i) and (y) instructions given in
accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of such U.S. Global
Security in an amount equal to the principal amount of the beneficial
interest in such U.S. Global Security to be transferred, and the
Issuers shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Securities of like tenor and amount.
(iv) If the Initial Security to be transferred consists of
U.S. Physical Securities and the proposed transferee is entitled to
receive a U.S. Physical Security as provided in Section 2.13, upon
receipt by the Registrar of the document, if any, required by
paragraph (i), the Registrar shall register such transfer and the
Issuers shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Securities of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of an Initial
Security to a QIB (excluding Non-U.S. Persons):
(i) If the Security to be transferred consists of U.S.
Physical Securities, Temporary Offshore Physical Securities, Permanent
Offshore Physical Securities or an interest in the IAI Global
Security, the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has provided the Registrar
with a certificate substantially in the form set forth in Exhibit F
hereto.
56
49
(ii) If the proposed transferee is an Agent Member, and
the Initial Security to be transferred consists of U.S. Physical
Securities, Temporary Offshore Physical Securities, Permanent Offshore
Physical Securities or an interest in the IAI Global Security, upon
receipt by the Registrar of (x) the document, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in the
principal amount of the QIB Global Security in an amount equal to (x)
the principal amount of the U.S. Physical Securities, Temporary
Offshore Physical Securities or Permanent Offshore Physical
Securities, as the case may be, to be transferred, and the Trustee
shall cancel the Physical Security so transferred or (y) the amount of
the beneficial interest in the IAI Global Security to be so
transferred (in which case the Registrar shall reflect on its books
and records the date and an appropriate decrease in the principal
amount of the IAI Global Security).
(iii) If the proposed transferee is entitled to receive a
U.S. Physical Security as provided in Section 2.13 and the proposed
transferor is an Agent Member holding a beneficial interest in a U.S.
Global Security, upon receipt by the Registrar of (x) the documents,
if any, required by paragraph (i) and (y) instructions given in
accordance with the Depositary's and the Registrar's procedures
therefor, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of such U.S. Global
Security in an amount equal to the principal amount of the beneficial
interest in such U.S. Global Security to be transferred, and the
Issuers shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Securities of like tenor and amount.
(iv) If the Initial Security to be transferred consists of
U.S. Physical Securities, Temporary Offshore Physical Securities or
Permanent Offshore Physical Securities and the proposed transferee is
entitled to receive a U.S. Physical Security as provided in Section
2.13, upon receipt by the Registrar of the document, if any, required
by
57
50
paragraph (i), the Registrar shall register such transfer and the
Issuers shall execute, and the Trustee shall authenticate and deliver,
one or more U.S. Physical Securities of like tenor and amount.
(c) Transfers by Non-U.S. Persons Prior to October 14,
1997. The following provisions shall apply with respect to registration of any
proposed transfer of an Initial Security by a Non-U.S. Person prior to October
14, 1997.
(i) The Registrar shall register the transfer of any
Initial Security (x) if the proposed transferee is a Non-U.S. Person
and the proposed transferor has provided the Registrar with a
certificate substantially in the form set forth in Exhibit G hereto or
(y) if the proposed transferee is a QIB and the proposed transferor
has provided the Registrar with a certificate substantially in the
form set forth in Exhibit F hereto. Unless clause (ii) below is
applicable, the Issuers shall execute, and the Trustee shall
authenticate and deliver, one or more Temporary Offshore Physical
Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Security to a QIB,
upon receipt by the Registrar of (x) the document, if any, required by
paragraph (i) and (y) instructions given in accordance with the
Depositary's and the Registrar's procedures therefor, the Registrar
shall reflect on its books and records the date and an increase in the
principal amount of the QIB Global Security in an amount equal to the
principal amount of the Temporary Offshore Physical Security to be
transferred, and the Registrar shall cancel the Temporary Offshore
Physical Securities so transferred.
(d) Transfers by Non-U.S. Persons on or After October 14,
1997. The following provisions shall apply with respect to any transfer of an
Initial Security by a Non-U.S. Person on or after October 14, 1997:
(i) (x) If the Initial Security to be transferred is a
Permanent Offshore Physical Note, the Registrar shall register such
transfer, (y) if the Initial Security to be transferred is a Temporary
58
51
Offshore Physical Note, upon receipt of a certificate substantially in
the form set forth in Exhibit E from the proposed transferor, the
Registrar shall register such transfer and (z) in the case of either
clause (x) or (y), unless clause (ii) below is applicable, the Issuers
shall execute, and the Trustee shall authenticate and deliver, one or
more Permanent Offshore Physical Securities of like tenor and amount.
(ii) If the proposed transferee is an Agent Member in
connection with a proposed transfer of an Initial Security to a QIB,
upon receipt by the Registrar of instructions given in accordance with
the Depositary's and the Registrar's procedures therefor, the
Registrar shall reflect on its books and records the date and an
increase in the principal amount of the QIB Global Security in an
amount equal to the principal amount of the Temporary Offshore
Physical Security or of the Permanent Offshore Physical Security to be
transferred, and the Trustee shall cancel the Physical Security so
transferred.
(e) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any transfer of an Initial
Security to a Non-U.S. Person:
(i) Prior to October 14, 1997, the Registrar shall
register any proposed transfer of an Initial Security to a Non-U.S.
Person upon receipt of a certificate substantially in the form set
forth in Exhibit G from the proposed transferor and the Issuer shall
execute, and the Trustee shall authenticate and make available for
delivery, one or more Temporary Offshore Physical Securities.
(ii) On and after October 14, 1997, the Registrar shall
register any proposed transfer to any Non- U.S. Person (w) if the
Initial Security to be transferred is a Permanent Offshore Physical
Security, (x) if the Initial Security to be transferred is a Temporary
Offshore Physical Security, upon receipt of a certificate
substantially in the form set forth in Exhibit E from the proposed
transferor, (y) if the Initial Security to be transferred is a U.S.
Physical Security or an interest in a U.S. Global Security, upon
receipt of a certificate substantially in the form set forth in
Exhibit E from the proposed
59
52
transferor and (z) in the case of either clause (w), (x) or (y), the
Issuers shall execute, and the Trustee shall authenticate and deliver,
one or more Permanent Offshore Physical Securities of like tenor and
amount.
(iii) If the proposed transferor is an Agent Member holding a
beneficial interest in a U.S. Global Security, upon receipt by the
Registrar of (x) the document, if any, required by paragraph (i), and
(y) instructions in accordance with the Depositary's and the
Registrar's procedures therefor, the Registrar shall reflect on its
books and records the date and a decrease in the principal amount of
such U.S. Global Security in an amount equal to the principal amount
of the beneficial interest in the U.S. Global Security to be
transferred and the Issuers shall execute, and the Trustee shall
authenticate and deliver, one or more Permanent Offshore Physical
Securities of like tenor and amount.
(f) Restricted Securities Legend. Upon the transfer,
exchange or replacement of Securities not bearing the Restricted Securities
Legend, the Registrar shall deliver Securities that do not bear the Restricted
Securities Legend. Upon the transfer, exchange or replacement of Securities
bearing the Restricted Securities Legend, the Registrar shall deliver only
Securities that bear the Restricted Securities Legend unless either (i) such
transfer, exchange or replacement of such Securities occurs after the Resale
Restriction Termination Date or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Issuers and the Trustee to
the effect that neither such legend nor the related restrictions on transfer
are required in order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Security bearing
the Restricted Securities Legend, each Holder of such a Security acknowledges
the restrictions on transfer of such Security set forth in this Indenture and
in the Restricted Securities Legend and agrees that it will transfer such
Security only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.13 or this Section
2.14. The Issuers shall have the right to inspect and make copies of all such
60
53
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
Interest payable on the Securities shall be computed on the
basis of a 360-day year comprised of 30-day months.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Issuers elect to
redeem Securities pursuant to paragraph 5 of the Securities, they shall notify
the Trustee in writing of the redemption date, the principal amount of
Securities to be redeemed and the paragraph of the Securities pursuant to which
the redemption will occur.
The Issuers shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from each of the Issuers and an Opinion of Counsel to the effect
that such redemption will comply with the conditions herein. If fewer than all
the Securities are to be redeemed, the record date relating to such redemption
shall be selected by the Issuers and given to the Trustee, which record date
shall be not fewer than 15 days after the date of notice to the Trustee. Any
such notice may be canceled at any time prior to notice of such redemption
being mailed to any Holder and shall thereby be void and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of Securities that the Trustee selects shall be in amounts of
$1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply
to
61
54
Securities called for redemption also apply to portions of Securities called
for redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Issuers shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Issuers default in making such redemption
payment or the Paying Agent is prohibited from making such payment
pursuant to the terms of this Indenture, interest on Securities (or
portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
(9) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' names and at the
62
55
Issuers' expense. In such event, the Issuers shall provide the Trustee with
the information required by this Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued and unpaid interest (if any) to the
redemption date; provided that if the redemption date is after a regular record
date and on or prior to the interest payment date, the accrued interest shall
be payable to the Securityholder of the redeemed Securities registered on the
relevant record date. Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00
a.m. on the redemption date, the Issuers shall deposit with the Paying Agent
(or, if either or both of the Issuers or a permitted Wholly Owned Subsidiary is
the Paying Agent, shall segregate and hold in trust) money sufficient to pay
the redemption price of and accrued and unpaid interest (if any) on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption that have been delivered by the Issuers to the
Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of
a Security that is redeemed in part, the Issuers shall execute and the Trustee
shall authenticate for the Holder (at the Issuers' expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. Optional Redemption. (a) Except as set forth
in the next paragraph, the Securities may not be redeemed prior to September 1,
2002. On and after such date, the Issuers may redeem the Securities in whole
at any time or in part from time to time upon not less than 30 nor more than 60
days' prior notice mailed by first-class mail to each Holder's registered
address at the following redemption prices (expressed as a percentage of
principal amount), plus accrued and unpaid interest (if any) to the
63
56
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date that
is on or prior to the Redemption Date), if redeemed during the 12-month period
commencing on or after September 1 of the years set forth below:
Period
Price Redemption
------ ----------
2002 104.938%
2003 103.292%
2004 101.646%
2005 and thereafter 100.000%
(b) Notwithstanding the foregoing, at any time and from
time to time prior to September 1, 2000, the Issuers may redeem in the
aggregate up to one-third of the original aggregate principal amount of
Securities with the proceeds of one or more Public Equity Offerings by the
Company following which there is a Public Market, at a redemption price
(expressed as a percentage of principal amount thereof) of 109.875% plus
accrued and unpaid interest (if any) to the Redemption Date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the Redemption
Date); provided, however, that at least two-thirds of the original aggregate
principal amount of the Securities must remain outstanding after each such
redemption.
SECTION 3.08. No Sinking Fund. There shall be no sinking
fund for the payment of principal on the Securities to the Securityholders.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Issuers shall
promptly pay the principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent (but only if other than the Issuers or a Wholly Owned
Subsidiary) holds by 11:00 a.m., New York City time, in accordance with this
Indenture money in available funds sufficient to pay all principal and interest
then due and the Trustee or the
64
57
Paying Agent, as the case may be, is not prohibited from paying such money to
the Securityholders on that date pursuant to the terms of this Indenture.
The Issuers shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Prior to the filing of the
registration statement pursuant to the Exchange and Registration Rights
Agreement, the Issuers shall provide within a reasonable time (not to exceed 45
days following the end of the first three fiscal quarters of any fiscal year
and 90 days following the end of such year) to the Trustee, Securityholders and
prospective Securityholders (upon request) quarterly and annual financial
statements prepared in accordance with GAAP (provided that, in the case of such
quarterly financial statements, such financial statements may be prepared in
substantial compliance with Part I of Form 10-Q), together with management's
discussion and analysis of financial condition and results of operations and,
in the case of annual financial statements, a description of any changes in, or
disagreements with, accountants on accounting and financial disclosure, a brief
description of the Company's business, a discussion of any material legal
proceedings in which the Issuers are involved (other than routine legal
proceedings incidental to the conduct of business) and a discussion of the
compensation paid to, and any material arrangements with, executive officers.
Following the filing of such registration statement, notwithstanding that the
Issuers may not be required to be or remain subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Issuers shall file
with the SEC, and provide the Trustee and Securityholders within 15 days after
they file them with the SEC, copies of the Company's annual report and the
information, documents and other reports that are specified in Section 13 or
15(d) of the Exchange Act (commencing with the quarterly report on Form 10-Q
for the quarter ended March 31, 1998). In addition, following a Public Equity
Offering, the Issuers shall furnish to the Trustee, the Securityholders and any
Prospective Securityholder (upon request), promptly upon their becoming
available, copies of the annual report to partners or equityholders and any
other information provided by the Company to its equityholders generally. The
Issuers also shall comply with the other provisions of TIA Section 314(a).
65
58
SECTION 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any of its Restricted Subsidiaries to, Incur
any Indebtedness; provided, however, that the Company or any Restricted
Subsidiary may Incur Indebtedness if on the date thereof the Consolidated
Coverage Ratio would be greater than 2.00:1.00 if such Indebtedness is Incurred
on or prior to September 1, 1999, and 2.25:1.00 if such Indebtedness is
Incurred thereafter. Notwithstanding the foregoing, the Company shall not
permit SFG Capital or any other future Restricted Subsidiary to issue, to any
party other than the Company or any Wholly Owned Subsidiary, any Preferred
Equity Interest.
(b) Notwithstanding Section 4.03(a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
(i) Indebtedness under the Credit Agreement (as the same may
be amended from time to time without increasing the committed amount
outstanding, except as otherwise permitted by this Section) in an
aggregate principal amount on the date of Incurrence which, when added
to all other Indebtedness Incurred pursuant to this clause (i) and
then outstanding, shall not exceed $190,000,000 less the aggregate
amount of all prepayments of principal applied to reduce the then
outstanding Indebtedness under the Term Loans actually made since the
Issue Date;
(ii) Indebtedness in an aggregate principal amount at any time
outstanding not in excess of $60,000,000 in respect of revolving
credit, working capital and letter of credit facilities;
(iii) Indebtedness of the Company owing to and held by any
Wholly Owned Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by the Company or any Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any
Equity Interest or any other event that results in any such Wholly
Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of any such Indebtedness (except to the Company or
a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof;
(iv)(A) Indebtedness represented by the Securities and (B) any
Indebtedness (other than the Indebtedness described in clauses (i)
through (iii) above) outstanding on the Issue Date;
66
59
(v) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted
Subsidiary was acquired by the Company (other than Indebtedness
Incurred as consideration in connection with, in contemplation of, or
to provide all or any portion of the funds or credit support utilized
to consummate, the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was otherwise acquired by the Company); provided,
however, that at the time such Restricted Subsidiary is acquired by
the Company, the Company would have been able to Incur $1.00 of
additional Indebtedness pursuant to Section 4.03(a) after giving
effect to the Incurrence of such Indebtedness pursuant to this clause
(v);
(vi) Indebtedness (A) in respect of performance bonds,
bankers' acceptances, letters of credit and surety or appeal bonds
provided by the Company or any of its Restricted Subsidiaries to
customers in the ordinary course of business, (B) in respect of
performance bonds or similar obligations of the Company or any of its
Restricted Subsidiaries in connection with pledges, deposits or
payments made or given in the ordinary course of business in
connection with or to secure statutory, regulatory or similar
obligations, including obligations under milk market orders and (C)
under Currency Agreements and Interest Rate Agreements, in each case
entered into for bona fide hedging purposes of the Company in the
ordinary course of business; provided, however, that, in the case of
Currency Agreements and Interest Rate Agreements, such Currency
Agreements and Interest Rate Agreements do not increase the
Indebtedness of the Company outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest
rates or by reason of fees, indemnities and compensation payable
thereunder;
(vii) Indebtedness (other than Indebtedness permitted to be
Incurred pursuant to Section 4.03(a) or any other clause of this
Section 4.03(b)) in an aggregate principal amount on the date of
Incurrence which, when added to all other Indebtedness Incurred
pursuant to this clause (vii) and then outstanding, shall not exceed
$30,000,000; provided, however, that
67
60
the Indebtedness permitted by this clause (vii) shall only be
Indebtedness of the Company and shall not be Indebtedness of any
Subsidiary of the Company (other than SFG Capital acting as co-issuer
or co-obligor of Indebtedness of the Company);
(viii) Indebtedness represented by the Note Guarantees and
Guarantees of Indebtedness Incurred pursuant to clause (i), (ii) or
(iii) above;
(ix) Purchase Money Mortgages and Capitalized Lease
Obligations in an aggregate principal amount not in excess of
$10,000,000 at any time outstanding;
(x) Acquisition Indebtedness not in excess of $15,000,000 at
any time outstanding;
(xi) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations,
or from Guarantees or letters of credit, surety bonds or performance
bonds securing any obligation of the Company or any of its Restricted
Subsidiaries pursuant to such agreements, in each case Incurred in
connection with the disposition of any business assets or Restricted
Subsidiary (other than Guarantees of Indebtedness or any other
obligations Incurred by any Person acquiring all or any portion of
such business assets or Restricted Subsidiary for the purpose of
financing such acquisition) in a principal amount not to exceed the
gross proceeds actually received by the Company or any of its
Restricted Subsidiaries in connection with such disposition; provided,
however, that the principal amount of any Indebtedness Incurred
pursuant to this clause (xi), when taken together with all
Indebtedness Incurred pursuant to this clause (xi) and then
outstanding, shall not exceed $5,000,000; or
(xii) Any Refinancing Indebtedness incurred in respect of any
Indebtedness incurred pursuant to paragraph (a) or this paragraph (b),
other than clauses (iii), (iv)(A), (vi) and (viii) hereof.
(c) Notwithstanding the foregoing, the Company shall not
Incur any Indebtedness pursuant to paragraph (b) above if the proceeds thereof
are used, directly or indirectly, to repay, prepay, redeem, defease, retire,
refund or refinance any Subordinated Obligations unless such Indebtedness shall
be subordinated to the Securities to at least the same extent as such
Subordinated
68
61
Obligations. The Company shall not Incur any Indebtedness pursuant to Section
4.03(a) or 4.03(b) if such Indebtedness is subordinate or junior in ranking in
any respect of any Senior Indebtedness unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness. In addition, the Company shall not Incur any
Secured Indebtedness which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Securities equally and
ratably with such Secured Indebtedness for so long as such Secured Indebtedness
is secured by a Lien.
(d) Notwithstanding any other provision of this Section 4.03,
the maximum amount of Indebtedness that the Company or any Restricted
Subsidiary may Incur pursuant to this Section shall not be deemed to be
exceeded solely as a result of fluctuations in the exchange rates of
currencies. For purposes of determining the outstanding principal amount of
any particular Indebtedness Incurred pursuant to this Section 4.03, (i)
Indebtedness permitted by this Section 4.03 need not be permitted solely by
reference to one provision permitting such Indebtedness but may be permitted in
part by one such provision and in part by one or more other provisions of this
Section permitting such Indebtedness and (ii) in the event that Indebtedness or
any portion thereof meets the criteria of more than one of the types of
Indebtedness described in this Section, the Company, in its sole discretion,
shall classify such Indebtedness and only be required to include the amount of
such Indebtedness in one of such clauses.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to make any Restricted Payment if at the time the
Company or such Restricted Subsidiary makes such Restricted Payment:
(i) a Default shall have occurred and be continuing (or would
result therefrom);
(ii) the Company could not Incur at least $1.00 of additional
Indebtedness under Section 4.03(a); or
69
62
(iii) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in
cash, to be determined in good faith by the Governing Board, whose
determination shall be conclusive and evidenced by a resolution of the
Governing Board) declared or made subsequent to the Issue Date would
exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during
the periods (such periods to be treated as one accounting
period) (x) from the Issue Date to the end of the most recent
fiscal quarter for which financial statements are available at
the time of such Restricted Payment and (y) with respect to
Consolidated Net Income attributable to SFG and not
attributable to Meadow Gold Dairies, from July 1, 1997 to the
Issue Date (or, in case such Consolidated Net Income for such
periods shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Equity Interests (other
than Disqualified Interests) subsequent to the Issue Date
(other than an issuance or sale to a Subsidiary of the Company
or, except as provided for in clause (D), an employee
participation plan or other trust established by the Company
or any of its Subsidiaries);
(C) the amount by which Indebtedness of the Company
or its Restricted Subsidiaries is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a
Subsidiary) subsequent to the Issue Date of any Indebtedness
of the Company or its Restricted Subsidiaries issued after the
Issue Date and convertible or exchangeable for Equity
Interests (other than Disqualified Interests) of the Company
(less the amount of any cash or other property distributed by
the Company or any Subsidiary of the Company upon such
conversion or exchange); and
(D) the aggregate Net Cash Proceeds received by the
Company from the issue or sale of its Equity Interests (other
than Disqualified Interests) to an employee participation plan
or similar trust subsequent to the Issue Date;
70
63
provided, however, that if such plan or trust Incurs any
Indebtedness to, or Guaranteed by, the Company or any of its
Restricted Subsidiaries to finance the acquisition of such
Equity Interests, such aggregate amount shall be limited to
such Net Cash Proceeds less such Indebtedness Incurred to or
Guaranteed by the Company or any of its Restricted
Subsidiaries and any increase in the Consolidated Net Worth of
the Company resulting from principal repayments made by such
plan or trust with respect to Indebtedness Incurred by it to
finance the purchase of such Equity Interests.
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any purchase or redemption of Equity Interests of the
Company or Subordinated Obligations made by exchange for, or out of
the proceeds of the substantially concurrent sale of, Equity Interests
of the Company (other than Disqualified Interests and other than
Equity Interests issued or sold to a Subsidiary of the Company or an
employee participation plan or other trust established by the Company
or any of its Subsidiaries); provided, however, that (A) such purchase
or redemption shall be excluded from the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale
applied in the manner set forth in this clause (i) shall be excluded
from clause (iii)(B) of Section 4.04(a);
(ii) any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted by Section 4.06;
provided, however, that such purchase or redemption shall be excluded
from the calculation of the amount of Restricted Payments;
(iii) distributions to the holders of Equity Interests paid
within 60 days after the date of declaration thereof if at such date of
declaration such distribution would have complied with Section
4.04(a); provided, however, that such distributions shall be included
in the calculation of the amount of Restricted Payments;
(iv) as long as the Company remains a limited partnership,
payments to the General Partner in the amount equal to the sum of the
following: (A) franchise taxes and other fees required by the General
Partner to maintain its existence as a limited
71
64
liability company or corporation, as the case may be, and (B) the
operating costs of the General Partner that are attributable to the
governance of the Company in an amount up to $100,000 per fiscal year;
provided, however, that such payments shall be excluded from the
calculation of the amount of Restricted Payments;
(v) as long as the Company remains a limited partnership,
periodic payments to an Eligible Partner in an aggregate amount not to
exceed the Partnership Tax Amount; provided, however, that such
payments shall be excluded from the calculation of the amount of
Restricted Payments;
(vi)(A) issuances of Series E 10% Preferred Interests, (B)
scheduled distributions in kind to holders of Preferred Equity
Interests, (C) scheduled cash distributions to the holders of up to
$15,000,000 in stated amount of the Mid-Am Capital 9 1/2% Preferred
Interests; provided that at the time such distributions are made, and
after giving pro forma effect to such distributions, the Consolidated
Coverage Ratio exceeds 2.25 to 1.00 and (D) scheduled cash
distributions to the holders of the remainder of the stated amount of
the Mid-Am Capital 9 1/2% Preferred Interests; provided that at the
time such distributions are made, and after giving pro forma effect to
such distributions and any distributions to be made pursuant to (C) of
this clause (vi), the Consolidated Coverage Ratio exceeds 2.40 to
1.00; provided further, that such cash distributions shall be included
in the calculation of the amount of Restricted Payments;
(vii) the repurchase of Equity Interests in the Company or its
Subsidiaries from employees, former employees, directors or former
directors of the Company or any of its Subsidiaries (or permitted
transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including
employment agreements) or plans (or amendments thereto) approved by
the Governing Board under which such individuals purchase or sell or
are granted the option to purchase or sell, Equity Interests in the
Company or its Subsidiaries; provided, however, that the aggregate
amount of such repurchases shall not exceed $1,000,000 in any calendar
year; provided further, however, that such repurchases shall be
excluded from the calculation of the amount of Restricted Payments;
72
65
(viii) any payment up to $1,200,000 in the aggregate to
repurchase the Xxxx-X-Xxxx Facility; provided, however, that such
payment shall be excluded from the calculation of the amount of
Restricted Payments; or
(ix) any purchase or redemption of Subordinated Obligations of
the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Subordinated Obligations of the
Company; provided, however, that such purchase or redemption shall be
excluded from the calculation of the amount of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions
from Restricted Subsidiaries. The Company shall not, and shall not permit any
of its Restricted Subsidiaries to, create or otherwise cause or permit to exist
or become effective any consensual encumbrance or restriction on the ability of
any such Restricted Subsidiary to (i) pay dividends or make any other
distributions on its Equity Interests or pay any Indebtedness owed to the
Company, (ii) make any loans or advances to the Company or (iii) transfer any
of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including the Credit
Agreement;
(2) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary prior to the date
on which such Restricted Subsidiary was acquired by the Company (other
than Indebtedness Incurred as consideration in connection with, in
contemplation of, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Subsidiary of the Company or was otherwise acquired by the
Company) and outstanding on such date;
(3) any encumbrance or restriction with respect to such
Restricted Subsidiary pursuant to an agreement constituting
Refinancing Indebtedness of Indebtedness Incurred pursuant to an
agreement referred to in clause (1) of this Section or this clause (3)
or contained in any amendment to an agreement referred to
73
66
in clause (1) of this Section or this clause (3); provided, however,
that the encumbrances and restrictions contained in any such
refinancing agreement or amendment taken as a whole are no less
favorable in any material respect to the Securityholders than
encumbrances and restrictions contained in such agreements;
(4) in the case of clause (iii), any encumbrance or
restriction (A) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a
lease, license or similar contract, (B) by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on,
any property or assets of the Company or any Restricted Subsidiary not
otherwise prohibited by this Indenture or (C) contained in security
agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such encumbrance or restrictions restrict the
transfer of the property subject to such security agreements or
mortgages;
(5) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Equity Interests or assets
of such Restricted Subsidiary pending the closing of such sale or
disposition; and
(6) encumbrances or restrictions arising or existing by
reason of applicable law.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Equity Interests. (a) The Company shall not, and shall not permit any
Restricted Subsidiary to, make any Asset Disposition unless (i) the Company or
such Restricted Subsidiary receives consideration (including by way of relief
from, or by any other Person assuming sole responsibility for, any liabilities,
contingent or otherwise) at the time of such Asset Disposition at least equal
to the fair market value of the Equity Interests and assets subject to such
Asset Disposition, (ii) at least 75% of the consideration thereof received by
the Company or such Restricted Subsidiary is in the form of cash or cash
equivalents and (iii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be) (A) first, to the extent the Company elects (or
is required by the terms of any Senior Indebtedness or Indebtedness (other than
Preferred Equity Interests) of a
74
67
Wholly Owned Subsidiary), to prepay, repay or purchase Senior Indebtedness or
such Indebtedness (in each case other than Indebtedness owed to the Company or
an Affiliate of the Company) within 180 days after the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (B) second,
to the extent of the balance of Net Available Cash after application in
accordance with clause (A), to the extent the Company or such Restricted
Subsidiary elects, to reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary) within 180 days
from the later of such Asset Disposition or the receipt of such Net Available
Cash; (C) third, within 45 days after the later of the application of Net
Available Cash in accordance with clauses (A) and (B) and the date that is 180
days from the date of the Asset Disposition to the extent of the balance of
such Net Available Cash after application in accordance with clauses (A) and
(B), to make an Offer to purchase Securities pursuant to and subject to the
conditions of Section 4.06(b), (D) fourth, to the extent of the balance of such
Net Available Cash after application in accordance with clauses (A), (B) and
(C), to (x) acquire Additional Assets (other than Indebtedness and Equity
Interests) or (y) prepay, repay or purchase Indebtedness of the Company (other
than Indebtedness owed to an Affiliate of the Company and other than
Disqualified Interests of the Company) or Indebtedness of any Restricted
Subsidiary (other than Indebtedness owed to the Company or an Affiliate of the
Company), in each case described in this clause (D) within one year from the
receipt of such Net Available Cash or, if the Company has made an Offer
pursuant to Section 4.06(b), six months from the date such Offer is consummated
and (E) fifth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B), (C) and (D), for any
legitimate business purpose; provided, however that in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to clause (A), (C)
or (D) above, the Company or such Restricted Subsidiary shall retire such
Indebtedness and shall cause the related loan commitment (if any) to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions of this Section
4.06, the Company and the Restricted Subsidiaries shall not be required to
apply any Net Available Cash in accordance with this Section except to the
extent that the aggregate Net Available Cash from all Asset Dispositions that
is not applied in accordance with this Section 4.06 exceeds $5,000,000.
75
68
For purposes of this Section 4.06, the following are deemed to
be cash equivalents: (x) the assumption of Indebtedness of the Company (other
than Disqualified Interests of the Company) or any Restricted Subsidiary and
the release of the Company or such Restricted Subsidiary from all liability on
such Indebtedness in connection with such Asset Disposition (in which case the
Company will, without further action, be deemed to have applied such assumed
Indebtedness in accordance with clause (A) of the preceding paragraph) and (y)
securities received by the Company or any Restricted Subsidiary from the
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to Section 4.06(a)(iii)(C), the Issuers shall
be required to purchase Securities tendered pursuant to an offer by the Issuers
for the Securities (the "Offer") at a purchase price of 100% of their principal
amount plus accrued and unpaid interest (if any) to the Purchase Date in
accordance with the procedures (including prorationing in the event of
oversubscription) set forth in Section 4.06(c). If the aggregate purchase
price of Securities tendered pursuant to the Offer is less than the Net
Available Cash allotted to the purchase of the Securities, the Company shall
apply the remaining Net Available Cash in accordance with clauses (D) and (E)
of Section 4.06(a)(iii). The Issuers shall not be required to make an Offer
for Securities pursuant to this Section if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (A) and (B)
of Section 4.06(a)(iii)) is less than $15,000,000 for any particular Asset
Disposition (which lesser amount shall be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c)(1) Promptly, and in any event within 10 days after the
Issuers become obligated to make an Offer, the Issuers shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Securities purchased by
the Issuers either in whole or in part (subject to prorationing as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Issuers which
76
69
the Issuers in good faith believe will enable such Holders to make an informed
decision (which at a minimum shall include the following documents (or the
equivalent of such documents if the Issuers have yet to file the registration
statement contemplated by the Exchange and Registration Right Agreement): (i)
the most recently filed Annual Report on Form 10-K (including audited
consolidated financial statements) of the Company, the most recent subsequently
filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the
Company filed subsequent to such Quarterly Report, other than Current Reports
describing Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports), (ii) a description of material developments
in the Issuers' business subsequent to the date of the latest of such Reports,
and (iii) if material, appropriate pro forma financial information) and all
instructions and materials necessary to tender Securities pursuant to the
Offer, together with the address referred to in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided above, the Issuers shall deliver
to the Trustee an Officers' Certificate of each of the Issuers as to (i) the
amount of the Offer (the "Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Dispositions pursuant to which such Offer is
being made and (iii) the compliance of such allocation with the provisions of
Section 4.06(a). On such date, the Issuers shall also irrevocably deposit with
the Trustee or with a paying agent (or, if either or both of the Issuers are
acting as its or their own paying agent, segregate and hold in trust) an amount
equal to the Offer Amount to be invested in Temporary Cash Investments and to
be held for payment in accordance with the provisions of this Section. Upon
the expiration of the period for which the Offer remains open (the "Offer
Period"), the Issuers shall deliver to the Trustee for cancelation the
Securities or portions thereof that have been properly tendered to and are to
be accepted by the Issuers. The Trustee (or the Paying Agent, if not the
Trustee) shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the applicable purchase price as set forth in the
written notice delivered to the Trustee and the Holders in accordance with
paragraph c(i) above. In the event that the aggregate purchase price of the
Securities delivered by the Issuers to the Trustee is less than the Offer
Amount, the Trustee shall deliver the excess to the Issuers immediately after
the expiration of the Offer Period for application in accordance with this
Section.
77
70
(3) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Issuers at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their
election if the Trustee or either of the Issuers receives not later than one
Business Day prior to the Purchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered by the Holder for purchase and a
statement that such Holder is withdrawing its election to have such Security
purchased. If at the expiration of the Offer Period the aggregate principal
amount of Securities surrendered by Holders exceeds the Offer Amount, the
Trustee shall select the Securities to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Issuers so that only
Securities in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part shall be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered.
(4) At the time the Issuers deliver Securities to the Trustee
which are to be accepted for purchase, the Issuers shall also deliver an
Officers' Certificate of each of the Issuers stating that such Securities are
to be accepted by such Issuer pursuant to and in accordance with the terms of
this Section. A Security shall be deemed to have been accepted for purchase at
the time the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
(d) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into or conduct any transaction (including, the
purchase, sale, lease or exchange of any
78
71
property or the rendering of any service) with any Affiliate of the Company (an
"Affiliate Transaction") on terms (i) that are materially less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those that
could be obtained in a comparable transaction with a Person who is not such an
Affiliate and (ii) that, in the event such Affiliate Transaction involves an
aggregate amount in excess of $1,000,000, has not been approved by a majority
of the members or directors, as the case may be, of the Governing Board that
have no personal stake in such Affiliate Transaction and are not employed by or
otherwise associated with such Affiliate; provided that if such Affiliate
Transaction involves an amount in excess of $20,000,000, a fairness opinion
must be provided by a nationally recognized appraisal or investment banking
firm; provided further that in the case of arrangements for the purchase or
sale of milk or other dairy products from an Affiliate in the ordinary course
of business such arrangements, purchases and sales shall be considered in the
aggregate and no fairness opinion shall be required.
(b) The provisions of Section 4.07(a) shall not prohibit (i)
any Restricted Payment permitted to be paid pursuant to Section 4.04, (ii) any
issuance of securities (including Equity Interests), or other payments, awards
or grants in cash, securities (including Equity Interests) or otherwise
pursuant to, or the funding of, employment arrangements and participation plans
approved by the Governing Board, (iii) loans or advances to employees in the
ordinary course of business in accordance with past practices of the Company
not to exceed $2,000,000 in the aggregate outstanding at any one time, (iv) the
payment of reasonable fees to directors of the Governing Board or directors of
the Company's Subsidiaries who, in either case, are not employees of the
Company or its Subsidiaries, (v) any transaction effected pursuant to an
Existing Agreement between the Company and any Affiliate, (vi) any Permitted
Investment, (vii) any transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries or any transaction contemplated
by the Transactions, (viii) indemnification agreements with, and the payment of
fees and indemnities to, directors, officers, and employees of the Company and
its Restricted Subsidiaries, in each case in the ordinary course of business
and (ix) any employment, non-competition or confidentiality agreements entered
into by the Company or any Restricted Subsidiary with its employees in the
ordinary course of business.
79
72
SECTION 4.08. Change of Control. (a) Upon a Change of
Control, each Holder shall have the right to require that the Issuers
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest (if any) to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date that is on or prior to the date of purchase), in
accordance with the terms contemplated in Section 4.08(b). In the event that
at the time of such Change of Control the terms of the Bank Indebtedness
restrict or prohibit the repurchase of Securities pursuant to this Section,
then prior to the mailing of the notice to Holders provided for in Section
4.08(b) below but in any event within 30 days following any Change of Control,
the Company shall (i) repay in full all Bank Indebtedness or offer to repay in
full all Bank Indebtedness and repay the Bank Indebtedness of each lender who
has accepted such offer or (ii) obtain the requisite consent under the
agreements governing the Bank Indebtedness to permit the repurchase of the
Securities as provided for in Section 4.08(b).
(b) Within 30 days following any Change of Control, the
Issuers shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Issuers to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest (if any) to the date
of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment
date that is on or prior to the date of purchase);
(2) the circumstances and relevant facts and financial
information regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Issuers, consistent
with this Section, that a Holder must follow in order to have its
Securities purchased.
80
73
(c) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Issuers at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their
election if the Trustee or either of the Issuers receives not later than one
Business Day prior to the purchase date a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election to have such Security
purchased.
(d) On the purchase date, all Securities purchased by the
Issuers under this Section shall be delivered to the Trustee for cancelation,
and the Issuers shall pay the purchase price plus accrued and unpaid interest
(if any) to the Holders entitled thereto.
(e) The Issuers shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached their obligations under this Section by virtue thereof.
SECTION 4.09. Compliance Certificate. The Issuers shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Issuers an Officers' Certificate of each of the Issuers stating that in the
course of the performance by the signers of their duties as Officers of the
Company or SFG Capital, as the case may be, they would normally have knowledge
of any Default and whether or not the signers know of any Default that occurred
during such period. If they do, the certificate shall describe the Default,
its status and what action the Issuers have taken, are taking or propose to
take with respect thereto. The Issuers also shall comply with Section
314(a)(4) of the TIA.
SECTION 4.10. Further Instruments and Acts. Upon request of
the Trustee, the Issuers shall execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
81
74
SECTION 4.11. Limitation on Liens. The Company shall not,
and shall not permit any Restricted Subsidiary to, directly or indirectly,
Incur any Lien on any of its property or assets (including Equity Interests),
whether owned on the original Issue Date or thereafter acquired, securing any
Indebtedness other than Senior Indebtedness of the Company or a Restricted
Subsidiary unless contemporaneously therewith (or prior thereto) effective
provision is made to secure the Securities or the Note Guarantee, as the case
may be, equally and ratably with (or on a senior basis to, in the case of
Indebtedness expressly subordinated in right of payment to the Securities or
the Note Guarantee, as the case may be) such obligation for so long as such
obligation is so secured. The preceding sentence shall not require the Company
or any Subsidiary of the Company to equally and ratably secure the Securities
if such Lien consists of Permitted Liens.
SECTION 4.12. Future Note Guarantors. The Company shall
cause each Restricted Subsidiary (other than SFG Capital) that Incurs
Indebtedness in excess of $100,000 to execute and deliver to the Trustee a Note
Guarantee pursuant to which such Restricted Subsidiary shall Guarantee payment
of the Securities. Each Note Guarantee shall be limited to an amount which the
Company reasonably believes will not exceed the maximum amount that can be
Guaranteed by that Restricted Subsidiary without rendering the Note Guarantee,
as it relates to such Restricted Subsidiary, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
SECTION 4.13. Limitation on Lines of Business. The Company
shall not, and shall not permit any Restricted Subsidiary to, engage in any
business, other than a Related Business.
SECTION 4.14. Limitation on Sale/Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter
into any Sale/Leaseback Transaction with respect to any property unless (a) the
Company or such Restricted Subsidiary would be entitled to (i) Incur
Indebtedness in an amount equal to the Attributable Debt with respect to such
Sale/Leaseback Transaction pursuant to Section 4.03 and (ii) create a Lien on
such property securing such Attributable Debt without equally and ratably
securing the Securities pursuant to Section 4.11, (b) the net cash proceeds
received by the Company or any Restricted Subsidiary in connection with such
Sale/Leaseback Transaction are at least equal to the
82
75
fair value (as determined in good faith by the Governing Board) of such
property and (c) the transfer of such property is permitted by and the Company
applies the proceeds of such transaction in compliance with, Section 4.06.
SECTION 4.15. Limitation on the Sale or Issuance of Equity
Interests of Restricted Subsidiaries. The Company shall not sell any Equity
Interest in a Restricted Subsidiary and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell any of its Equity
Interests except to the Company or a Wholly Owned Subsidiary unless the
proceeds of any sale of such Equity Interests will be treated as Net Available
Cash from an Asset Disposition and are applied in accordance with Section 4.06.
SECTION 4.16. Limitation on the Business Activities of SFG
Capital. SFG Capital shall not engage in any trade or business, and shall
conduct no business activity, other than the Incurrence of Indebtedness
permitted under Section 4.03 and the issuance of Equity Interests to the
Company and activities incidental thereto. Furthermore, SFG Capital shall not
create, capitalize or otherwise own or acquire any Subsidiary.
ARTICLE 5
Successor to Issuers
SECTION 5.01. When Issuers May Merge or Transfer Assets.
Neither the Company nor SFG Capital shall consolidate with or merge with or
into, or convey, transfer or lease all or substantially all its assets to, any
Person; provided, however, that the Company may consolidate with or merge with
or into, or convey transfer or lease all or substantially all its assets to any
Person if the following conditions are met:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation, limited liability company
or limited partnership organized and existing under the laws of the
United States of America, any State thereof or the District of
Columbia, and the Successor Company (if not the Company) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture;
83
76
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction
as having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount which
is not less than the Consolidated Net Worth of the Company immediately
prior to such transaction; and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate of the Company and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but the predecessor Company in the case of a conveyance, transfer or
lease of all or substantially all its assets shall not be released from the
obligation to pay the principal of and interest on the Securities.
Notwithstanding the foregoing clauses (ii), (iii) and (iv),
(a) any Restricted Subsidiary, other than SFG Capital, may consolidate with,
merge into or transfer all or part of its properties and assets to the Company
and (b) the Company may merge with an Affiliate of the Company incorporated or
organized for the purpose of (x) incorporating or organizing the Company in
another jurisdiction to realize tax or other benefits or (y) changing
organizational form from a limited partnership to a corporation or limited
liability company.
84
77
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default"
occurs if:
(1) the Issuers default in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article 10, and such default continues
for a period of 30 days;
(2) the Issuers (i) default in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon redemption, upon declaration or otherwise, whether or
not such payment shall be prohibited by Article 10, or (ii) fail to
redeem or purchase Securities when required pursuant to this Indenture
or the Securities, whether or not such redemption or purchase shall be
prohibited by Article 10;
(3) the Issuers fail to comply with Section 5.01;
(4) the Issuers fail to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13 or 4.14 (other than a failure
to purchase Securities when required under Section 4.06 or 4.08) and
such failure continues for 30 days after the notice specified below;
(5) the Issuers fail to comply with any of their agreements in
the Securities or this Indenture (other than those referred to in (1),
(2), (3) or (4) above) and such failure continues for 60 days after
the notice specified below;
(6) Indebtedness of the Issuers or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds
$10,000,000 or its foreign currency equivalent at the time and such
failure continues for 10 days after the notice specified below;
85
78
(7) Either of the Issuers or any Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property;
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against either of the Issuers or
any Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of either of the Issuers or
any Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of either of
the Issuers or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in excess
of $10,000,000 or its foreign currency equivalent (to the extent not
covered by insurance) at the time is entered against either of the
Issuers or any Significant Subsidiary and is not discharged, waived or
stayed and either (A) an enforcement proceeding has been commenced by
any creditor upon such judgment or decree or (B) such judgment or
decree remains outstanding for a period of 60 days after such judgment
becomes final and non-appealable; or
86
79
(10) any Note Guarantee shall cease to be in full force and
effect (except as contemplated by the terms thereof) or any Note
Guarantor or person acting by or on behalf of such Note Guarantor
shall deny or disaffirm its obligations under this Indenture or any
Note Guarantee and such Default continues for 30 days after the notice
specified below.
The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is 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.
The term "Bankruptcy Law" means Xxxxx 00, Xxxxxx Xxxxxx Code,
or any similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4) or (5) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the Issuers of the Default, and the Issuers do
not cure such Default within the time specified after receipt of such notice.
Such notice must specify the Default, demand that it be remedied and state that
such notice is a "Notice of Default".
The Issuers shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of each of the Issuers of any Event of Default under clause (6) and any event
which with the giving of notice or the lapse of time would become an Event of
Default under clause (4), (5) or (9), its status and what action the Issuers
have taken, are taking or propose to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.01(7) or (8) with respect to
the Issuers) occurs and is continuing, the Trustee by notice to the Issuers, or
the Holders of at least 25% in principal amount of the outstanding Securities
by notice to the Issuers, may declare the principal of and accrued and unpaid
interest (if any) on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.01(7) or (8) with respect to
either
87
80
of the Issuers occurs, the principal of and accrued and unpaid interest (if
any) on all the Securities shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Securityholder. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of, or interest on, the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is
deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.01, that the Trustee determines is unduly prejudicial
to the rights of other Securityholders or would
88
81
involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action hereunder, the Trustee shall
be entitled to indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and liquidated damages and interest on the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the
89
82
Issuers for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Issuers, any Subsidiary of
the Company or Note Guarantor, their creditors or their property and, unless
prohibited by law or applicable regulations, may vote on behalf of the Holders
in any election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make 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 its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent
required by Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any liquidated
damages without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal, any
liquidated damages and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Trustee shall mail to each Securityholder and the Issuers
a notice that states the record date, the payment date and amount to be paid.
90
83
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. Neither of
the Issuers nor any Note Guarantor (to the extent it may lawfully do so) shall
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 Issuers and each Note Guarantor (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations
91
84
shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur 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 to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
92
85
(h) 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 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01:
(a) The Trustee may rely on any document believed by it to be genuine and to
have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate of either or both of the Issuers or an Opinion
of Counsel. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on any such Officers' Certificate or Opinion
of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) None of the Trustee or its officers, directors,
employees, affiliates or agents shall be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(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, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the
Securities at the time outstanding and payment to the Trustee of the costs,
expenses and liabilities likely to be incurred in such investigation is, in the
opinion of the Trustee, reasonably assured to it, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
93
86
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of either of the Issuers, personally or by agent or
attorney.
(g) Subject to its duties as Trustee and pursuant to the TIA
and this Indenture, neither the Trustee nor any of its directors, officers,
employees, agents or control persons shall be responsible for any act or
omission of any Custodian, Paying Agent or Registrar that is not an Affiliate
of the Trustee and that is selected other than by the Trustee, performed or
omitted in compliance with any custodial or other agreement, or any act or
omission of the Issuers or any other third Person, including, without
limitation, in connection with actions taken pursuant to this Indenture.
(h) Subject to its duties as Trustee and pursuant to the TIA
and this Indenture, the Trustee shall not be charged with knowledge of any act,
failure to act or breach of any Person upon the occurrence of which the Trustee
may be required to act, unless a Trust Officer of the Trustee obtains actual
knowledge of such failure or unless written notice of any event which is an
Event of Default is received by the Trustee at the Corporate Trust Office of
the Trustee and such notice references the Securities and this Indenture.
SECTION 7.03. Individual Rights of Trustee. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Issuers or their Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuers'
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Issuers in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and
is continuing and if it is known to a Trust
94
87
Officer, the Trustee shall mail to each Securityholder notice of the Default
within the earlier of 90 days after it occurs or 30 days after it is known to a
Trust Officer or written notice is received by the Trustee. Except in the case
of a Default in payment of principal of or interest on any Security (including
payments pursuant to the mandatory redemption provisions of such Security, if
any), the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with, and to the extent such report is required by, Section 313(a) of
the TIA. The Trustee shall also comply with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Issuers agree to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Issuers shall
pay to the Trustee from time to time reasonable compensation for its services,
including services such as default administration. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Issuers shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection,
in addition to the compensation for its services. Such expenses shall include
the reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuers and the Note
Guarantors (if any), jointly and severally, shall indemnify the Trustee, its
officers, directors, employees and agents against any and all loss, liability
or expense (including reasonable attorneys' fees) incurred by them without
negligence or bad faith on their part in connection with the administration of
this trust and the performance of their duties hereunder. The Trustee shall
notify the Issuers of any claim for which it may seek indemnity promptly upon
obtaining actual knowledge thereof; provided that any failure so to notify the
Issuers shall
95
88
not relieve the Issuers or any Note Guarantor of their indemnity obligations
hereunder. The Issuers shall defend the claim and the indemnified party shall
provide reasonable cooperation at the Issuers' expense in the defense. Such
indemnified parties may have separate counsel, and the Issuers shall pay the
fees and expenses of such counsel; provided that the Issuers shall not be
required to pay such fees and expenses if they assume such indemnified parties'
defense and, in such indemnified parties' reasonable judgment, there is no
conflict of interest between the Issuers and such parties in connection with
such defense. The Issuers shall not be required to pay the costs and expenses
of any settlement made without their consent (which consent shall not be
unreasonably withheld). The Issuers need not reimburse any expense or
indemnify against any loss, liability or expense incurred by an indemnified
party through such party's own wilful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Issuers' and the Note Guarantors' (if any) payment
obligations pursuant to this Section shall survive the satisfaction or
discharge of this Indenture, any rejection or termination of this Indenture
under any bankruptcy law or the resignation or removal of the Trustee. When
the Trustee incurs expenses or renders services after the occurrence of a
Default specified in Section 6.01(7) or (8) with respect to either of the
Issuers, the expenses and compensation for services are intended to constitute
expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Issuers. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Issuers shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
96
89
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Issuers or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuers shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Issuers' obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or association
without any further act shall be the successor Trustee; provided that such
corporation or
97
90
banking association shall otherwise be eligible and qualified under this
Article 7.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA Section 310(a). The
Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Issuers are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against
Issuers. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Issuers deliver to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Issuers irrevocably deposit with the
Trustee
98
91
funds or U.S. Government Obligations on which payment of principal and interest
when due will be sufficient to pay at maturity or upon redemption all
outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07), and
if in either case the Issuers pay all other sums payable hereunder by the
Issuers, then this Indenture shall, subject to Section 8.01(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of
this Indenture on demand of the Issuers accompanied by an Officers' Certificate
of each of the Issuers and an Opinion of Counsel and at the cost and expense of
the Issuers.
(b) Subject to Sections 8.01(c) and 8.02, the Issuers at any
time may terminate (i) all of their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16,
5.01(iii) and 5.01(iv) and the operation of Section 6.01(3) (with respect to
Section 5.01(iii) and 5.01(iv) only), 6.01(4), 6.01(6), 6.01(7) (with respect
to Significant Subsidiaries only), 6.01(8) (with respect to Significant
Subsidiaries only) and 6.01(9) ("covenant defeasance option"). The Issuers may
exercise their legal defeasance option notwithstanding their prior exercise of
their covenant defeasance option.
If the Issuers exercise their legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If
the Issuers exercise their covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Section 6.01(4), 6.01(6), 6.01(7) (with respect to Significant Subsidiaries
only), 6.01(8) (with respect to Significant Subsidiaries only) and 6.01(9) or
because of the failure of the Issuers to comply with (iii) and (iv) of Section
5.01.
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05
and 8.06 shall survive until the Securities have been paid in full.
Thereafter, the Issuers' obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
99
92
SECTION 8.02. Conditions to Defeasance. The Issuers may
exercise their legal defeasance option or their covenant defeasance option only
if:
(1) the Issuers irrevocably deposit in trust with the Trustee
money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Securities to maturity or
redemption, as the case may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as
the case may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Issuers occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Issuers and is not prohibited by Article 10;
(5) the Issuers deliver to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Issuers
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Issuers have received from, or there has been published by,
the Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to federal income tax on the same
amounts,
100
93
in the same manner and at the same times as would have been the case
if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Issuers
shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Securityholders will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(8) the Issuers deliver to the Trustee an Officers'
Certificate of each of the Issuers and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance and discharge
of the Securities as contemplated by this Article 8 have been complied
with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Issuers. The Trustee and the
Paying Agent shall promptly turn over to the Issuers upon request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Issuers upon written request any money
held by them for the payment of principal or interest that remains unclaimed
for one year, and, thereafter, Securityholders entitled to the money must look
to the Issuers for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Issuers shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or
101
94
assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuers' obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of their obligations, the Issuers shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Issuers and
the Trustee may amend this Indenture or the Securities without notice to or
consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, that the uncertificated
Securities are issued in registered form for purposes of Section
163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 that would limit or
terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Article 10;
102
95
(5) to add Guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Issuers for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Issuers;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the
rights of any Securityholder; or
(9) to provide for the issuance of the Exchange Securities,
which shall have terms substantially identical in all material
respects to the Initial Securities (except that the transfer
restrictions contained in the Initial Securities shall be modified or
eliminated, as appropriate), and which shall be treated, together with
any outstanding Initial Securities, as a single issue of securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness
(or any group or Representative thereof authorized to give a consent) consent
to such change.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.02. With Consent of Holders. The Issuers, the Note
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the
103
96
Securities. However, without the consent of each Securityholder affected, an
amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest or any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Article 10 that adversely affects the
rights of any Securityholder under Article 10;
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(8) modify or affect in any manner adverse to the Holders the
terms and conditions of the obligation of any Note Guarantor for the
due and punctual payment of the principal of or any liquidated damages
or interest on Securities.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent) consent
to such change.
After an amendment under this Section becomes effective, the
Issuers shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect
104
97
therein, shall not impair or affect the validity of an amendment under this
Section 9.02.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents
and Waivers. A consent to an amendment or a waiver by a Holder of a Security
shall bind the Holder and every subsequent Holder of that Security or portion
of the Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent or waiver is not made on the
Security. However, any such Holder or subsequent Holder may revoke the consent
or waiver as to such Holder's Security or portion of the Security if the
Trustee receives the notice of revocation before the date the amendment or
waiver becomes effective. After an amendment or waiver becomes effective, it
shall bind every Securityholder. An amendment or waiver becomes effective once
the requisite number of consents are received by either of the Issuers or the
Trustee.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall
be valid or effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Trustee or the Issuers so determine, the
Issuers in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
105
98
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate of each of the Issuers and
an Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture, that such amendment is the legal, valid and binding obligation
of the Issuers and the Note Guarantors enforceable against them in accordance
with its terms, subject to customary exceptions, and complies with the
provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Issuers nor
any Affiliate of either of the Issuers shall, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Indenture or the Securities
unless such consideration is offered to be paid to all Holders that so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate. The Issuers agree,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities is subordinated in right of payment, to the extent
and in the manner provided in this Article 10, to the prior payment in full of
all Senior Indebtedness and that the subordination is for the benefit of and
enforceable by the holders of Senior Indebtedness. The Securities shall in all
respects rank pari passu with all other Senior Subordinated Indebtedness of
either of the Issuers and only Indebtedness of either of the Issuers that is
Senior Indebtedness shall rank senior to the Securities in accordance with the
provisions set forth herein. For purposes of these subordination provisions,
the Indebtedness evidenced by the Securities is deemed to include the
liquidated damages payable pursuant to the
106
99
provisions set forth in the Securities and the Exchange and Registration Rights
Agreement. All provisions of this Article 10 shall be subject to Section
10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon
any payment or distribution of the assets of either of the Issuers to creditors
upon a total or partial liquidation or a total or partial dissolution of either
of the Issuers or in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to either of the Issuer or such Issuer's property:
(1) holders of Senior Indebtedness shall be entitled to
receive payment in full of the Senior Indebtedness before
Securityholders shall be entitled to receive any payment of principal
of or interest on the Securities; and
(2) until the Senior Indebtedness is paid in full, any payment
or distribution to which Securityholders would be entitled but for
this Article 10 shall be made to holders of Senior Indebtedness as
their interests may appear.
SECTION 10.03. Default on Senior Indebtedness. The Issuers
may not pay the principal of, premium (if any) or interest on the Securities or
make any deposit pursuant to Section 8.01 and may not repurchase, redeem or
otherwise retire any Securities (collectively, "pay the Securities") if (i) any
Senior Indebtedness is not paid when due or (ii) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, (x) the default has been
cured or waived and any such acceleration has been rescinded or (y) such Senior
Indebtedness has been paid in full; provided, however, that the Issuers may pay
the Securities without regard to the foregoing if either of the Issuers and the
Trustee receive written notice approving such payment from the Representative
of the Designated Senior Indebtedness with respect to which either of the
events in clause (i) or (ii) of this sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
the Issuers may not pay the Securities for a period (a "Payment Blockage
Period") commencing upon
107
100
the receipt by the Trustee (with a copy to the Issuers) of written notice (a
"Blockage Notice") of such default from the Representative of such Designated
Senior Indebtedness specifying an election to effect a Payment Blockage Period
and ending 179 days thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the Issuers from the Person
or Persons who gave such Blockage Notice, (ii) by repayment in full of such
Designated Senior Indebtedness or (iii) because the default giving rise to such
Blockage Notice is no longer continuing). Notwithstanding the provisions
described in the immediately preceding sentence (but subject to the provisions
contained in the first sentence of this Section), unless the holders of such
Designated Senior Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Issuers may
resume payments on the Securities after such Payment Blockage Period. Not more
than one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period; provided, however, that if any Blockage Notice
within such 360-day period is given by or on behalf of any holders of Designated
Senior Indebtedness (other than the Bank Indebtedness), the Representative of
the Bank Indebtedness may give another Blockage Notice within such period;
provided further, however, that in no event may the total number of days during
which any Payment Blockage Period or Periods is in effect exceed 179 days in the
aggregate during any 360 consecutive day period. For purposes of this Section,
no default or event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Payment Blockage Period by
the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Issuers or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representative) of the acceleration. If any
Designated Senior Indebtedness is outstanding, the Issuers may not pay the
Securities until five Business Days after such holders or the Representative of
the Designated
108
101
Senior Indebtedness receive notice of such acceleration and, thereafter, may
pay the Securities only if this Article 10 otherwise permits payment at that
time.
SECTION 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 10 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and pay it over to
them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness is
paid in full and until the Securities are paid in full, Securityholders shall
be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under
this Article 10 to holders of Senior Indebtedness which otherwise would have
been made to Securityholders is not, as between the Issuers and
Securityholders, a payment by the Issuers on Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the
relative rights of Securityholders and holders of Senior Indebtedness. Nothing
in this Indenture shall:
(1) impair, as between the Issuers and Securityholders, the
obligation of the Issuers, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default, subject to the rights of
holders of Senior Indebtedness to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Issuers.
No right of any holder of Senior Indebtedness to enforce the subordination of
the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Issuers or by their failure to comply with this
Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any
109
102
such payments unless, not less than two Business Days prior to the date of such
payment, a Trust Officer of the Trustee receives notice satisfactory to it that
payments may not be made under this Article 10. The Issuers, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; provided, however, that, if an issue of
Senior Indebtedness has a Representative, only the Representative may give the
notice. The Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or itself to be a holder of any
Senior Indebtedness (or a Representative) to establish that such notice has
been given by a holder of such Senior Indebtedness or a Representative thereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Indebtedness which may at any time be
held by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 10 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any); provided that the Trustee has been given the name and
address of such Representative.
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 10 shall
have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from money
or the proceeds of U.S. Government Obligations held in trust under Article 8 by
the Trustee for the payment of principal of and interest on the Securities
shall not be subordinated to the prior payment
110
103
of any Senior Indebtedness or subject to the restrictions set forth in this
Article 10, and none of the Securityholders shall be obligated to pay over any
such amount to the Issuers or any holder of Senior Indebtedness of either of
the Issuers or any other creditor of either of the Issuers.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of either of the Issuers, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 10. In the event that
the Trustee determines, in good faith, that 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 10, 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 other facts pertinent to the rights of such Person under this Article 10,
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. The provisions of Sections 7.01 and 7.02 shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
its behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness as provided in this Article 10 and appoints the
Trustee as attorney-in-fact for any and all such purposes.
111
104
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if
it shall mistakenly pay over or distribute to Securityholders, the Issuers or
any other Person, money or assets to which any holders of Senior Indebtedness
shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Securities, to acquire and continue to
hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
SECTION 10.17. Trustee's Compensation Not Prejudiced.
Nothing in this Article shall apply to amounts due to the Trustee pursuant to
other sections of this Indenture.
ARTICLE 11
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any
provision of this Indenture limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by the TIA, the
required provision shall control.
112
105
SECTION 11.02. Notices. Any notice or communication shall be
in writing and delivered in person, by overnight delivery service or mailed by
first-class mail addressed as follows:
if to the Issuers:
Southern Foods Group, L.P.
SFG Capital Corporation
Attention of: Chief Financial officer
0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
if to the Trustee:
Texas Commerce Bank National Association
Attention of: Corporate Trust Department
0000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
The Issuers or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears
on the registration books of the Registrar and shall be sufficiently given if
so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by
113
106
the Issuers to the Trustee to take or refrain from taking any action under this
Indenture, the Issuers shall furnish to the Trustee:
(1) an Officers' Certificate of each of the Issuers in form
and substance reasonably satisfactory to the Trustee stating that, in
the opinion of the signers, all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(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 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 or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 11.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by either of
the Issuers or by any Person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, either of the Issuers
shall be disregarded and deemed not to be outstanding, except that, for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, waiver or
114
107
consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 11.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York or the State of Texas. If a payment date is a
Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11.10. No Recourse Against Others. No director,
officer, partner (including any general partner), employee, incorporator or
equityholder of either of the Issuers, as such, shall have any liability for
any obligations of the Issuers under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities. Such waiver may not be effective to waive
liabilities under the federal securities laws, and it is the view of the SEC
that such waiver is against public policy.
SECTION 11.11. Successors. All agreements of each of the
Issuers and each Note Guarantor in this Indenture and the Securities shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors.
115
108
SECTION 11.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
SECTION 11.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
SECTION 11.14. Separability. 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 and such provision shall be ineffective
only to the extent of such invalidity, illegality or unenforceability.
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
SOUTHERN FOODS GROUP, L.P.,
by SFG Management Limited
Liability Company,
its general partner,
by /s/ XXXX XXXXXXXX
-------------------------
Name: Xxxx Xxxxxxxx
Title: President and Chief
Executive Officer
SFG CAPITAL CORPORATION,
by /s/ XXXX XXXXXXXX
-------------------------
Name: Xxxx Xxxxxxxx
Title: President and Chief
Executive Officer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee,
by /s/ ILLEGIBLE
-------------------------
Name:
Title:
000
XXXXX XX XXX XXXX )
) SS
COUNTY OF NEW YORK )
On September 4, 1997, before me personally came F. T. (Xxxx)
Xxxxxxxx, to me known, who, being by me duly sworn, did depose and say that he
is the President and Chief Executive Officer of SFG Management Limited
Liability Company, a Delaware limited liability company, and that he signed his
name thereto on behalf of such limited liability company acting in its capacity
as general partner of Southern Foods Group, L.P., a Delaware limited
partnership.
/s/ APHRODITE XIDAS
----------------------------
Notary Public in and for the
State of New York
Name: Aphrodite Xidas
My commission expires:
Jan. 29, 1998
----------------------------
000
XXXXX XX XXX XXXX )
) SS
COUNTY OF NEW YORK )
On September 4, 1997, before me personally came F. T. (Xxxx)
Xxxxxxxx, to me known, who, being by me duly sworn, did depose and say that he
is the President and Chief Executive Officer of SFG Capital Corporation, a
Delaware corporation, and that he signed his name thereto on behalf of such
corporation.
/s/ APHRODITE XIDAS
----------------------------
Notary Public in and for the
State of New York
Name: Aphrodite Xidas
My commission expires:
Jan. 29, 1998
----------------------------
000
XXXXX XX XXX XXXX )
) SS
COUNTY OF NEW YORK )
On September 4, 1997, before me personally came Xxxx X. Xxxxx,
to me known, who, being by me duly sworn, did depose and say that he is the
Vice President of Texas Commerce Bank National Association, a national banking
association, and that he signed his name thereto on behalf of such association.
/s/ XXXXXXX XXXXXX
----------------------------
Notary Public in and for the
State of New York
Name: Xxxxxxx Xxxxxx
My commission expires:
Sept. 30, 1999
----------------------------
